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Item 1A. Risk Factors

2020-08-21 compared with 2019-08-27 · 429 added, 812 removed, 217 unchanged (85% of the section changed)

Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of the risks and uncertainties that

could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report.

We encourage you to carefully consider all such risk

factors when making investment decisions regarding our company.

If any such risks, or any other risks that we do not currently consider to be material, or which are not known to us, materialize, our

business, financial condition and operating results could be materially adversely affected.

Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report.

We encourage you to carefully consider all such risk factors when making investment decisions regarding our company.

If any such risks, or any other risks that we do not currently consider to be material, or which are not known to us, materialize, our business, financial condition and operating results could be materially adversely affected.

Fluctuations in our operating results may cause our stock price to decline.

Given the nature of the markets in which we participate, it is difficult to reliably predict future revenues and profitability.

competitive, market and economic conditions may cause us to

adjust our operations.

Changes in competitive, market and economic conditions may cause us to adjust our operations.

A high proportion of our costs are fixed, due in part to our significant sales, research and development and manufacturing costs.

Thus, small declines in revenue could

disproportionately affect our operating results.

Factors that may affect our operating results and/or the market price of our Common Stock include, but are not limited

Thus, small declines in revenue could disproportionately affect our operating results.

Factors that may affect our operating results and/or the market price of our Common Stock include, but are not limited to:

● demand for and market acceptance of our products;

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● adverse changes in the level of economic activity in regions in which we do business;

● adverse impacts from the COVID-19 pandemic;

● low or fluctuating levels of political stability in regions in which we do business;

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● availability of equity and credit markets to provide our customers with funding to make equipment purchases;

public guidance that we provide regarding future financial results based on facts, judgments and assumptions made at the time of the

publication of the guidance, all of which may change after the publication of the guidance;

● public guidance that we provide regarding future financial results based on facts, judgments and assumptions made at the time of the publication of the guidance, all of which may change after the publication of the guidance;

● adverse outcomes related to our government investigations and litigation matters;

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Unfavorable currency exchange rate fluctuations could adversely affect our financial results.

Our international sales and our operations in foreign countries expose us to risks associated with fluctuating currency values and exchange

Our international sales and our operations in foreign countries expose us to risks associated with fluctuating currency values and exchange rates.

Gains and losses on the conversion of accounts receivable, accounts payable and other monetary assets and liabilities to U.S.

dollars may contribute to fluctuations in our results of

dollars may contribute to fluctuations in our results of operations.

In addition, since we conduct business in currencies other than the U.S.

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dollars, increases or decreases in the value of the U.S.

relative to other currencies could have an adverse effect on our results of operations.

dollar relative to other currencies could have an adverse effect on our results of operations.

We face aggressive competition in each of our operating divisions.

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We encounter aggressive competition from numerous competitors in each of our divisions.

In the security and inspection and patient monitoring

and cardiology systems markets, competition is based primarily on such factors as product performance, functionality and quality, cost, prior customer relationships, technological capabilities of the

product, price, certification by government authorities, past performance, local market presence and breadth of sales and service organization.

In the optoelectronic devices and electronics

manufacturing markets, competition is based primarily on factors such as expertise in the design and development of optoelectronic devices, product quality, timeliness of delivery, price, customer

technical support and on the ability to provide fully-integrated services from application development and design through volume subsystem production.

We may not be able to compete effectively with

all of our competitors.

To remain competitive, we must develop new products and enhance

existing products and services in a timely manner.

In the security and inspection and patient monitoring and cardiology systems markets, competition is based primarily on such factors as product performance, functionality and quality, cost, prior customer relationships, technological capabilities of the product, price, certification by government authorities, past performance, local market presence and breadth of sales and service organization.

In the optoelectronic devices and electronics manufacturing markets, competition is based primarily on factors such as expertise in the design and development of optoelectronic devices, product quality, timeliness of delivery, price, customer technical support and on the ability to provide fully-integrated services from application development and design through volume subsystem production.

We may not be able to compete effectively with all of our competitors.

To remain competitive, we must develop new products and enhance our existing products and services in a timely manner.

We anticipate that we may have to adjust the prices of many of our products to stay competitive.

In addition, new competitors may emerge and

entire product lines or service offerings may be threatened by new technologies or market trends that reduce the value of these product lines or service offerings.

Heightened demand for our products due to continuing terrorist attacks worldwide might not be sustained in the future.

Continuing terrorist attacks worldwide create increased interest in our security and inspection systems and service offerings.

However, we are

not certain whether the level of demand will continue to be as high as it is now.

In addition, new competitors may emerge and entire product lines or service offerings may be threatened by new technologies or market trends that reduce the value of these product lines or service offerings.

Demand for our products due to terrorist attacks worldwide might not be sustained in the future.

Terrorist attacks worldwide create increased interest in our security and inspection systems and service offerings.

However, we are not certain whether the level of demand will continue to be as high as it has been in the past.

We do not know what solutions will continue to be adopted by the U.S.

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Department of Defense, and similar agencies in other countries and whether our products will be a part of those solutions.

Additionally, should our products and services be considered as a part of

future security solutions, it is unclear what the demand for our products and services may be and how quickly funding to purchase our products and services may be made available.

These factors may

adversely impact us and create unpredictability in revenues and operating results.

If operators of, or algorithms installed in, our security and inspection systems fail to detect weapons, explosives or other devices or materials that are used to commit a terrorist

act, we could be exposed to product and professional liability and related claims for which we may not have adequate insurance coverage.

Our business exposes us to potential product liability risks that are inherent in the development, manufacturing, sale and service of security

and inspection systems as well as in the provision of training to our customers in the use and operation of such systems.

Our customers use our security and inspection systems to help them detect

items that could be used in performing terrorist acts or other crimes.

Some of our security and inspection systems require that an operator interpret an image of suspicious items within a bag, parcel,

container, vehicle or other vessel.

Additionally, should our products and services be considered as a part of future security solutions, it is unclear what the demand for our products and services may be and how quickly funding to purchase our products and services may be made available.

These factors may adversely impact us and create unpredictability in revenues and operating results.

The COVID-19 outbreak has significantly impacted worldwide economic conditions and could adversely impact our business, financial condition and results of operations.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19.

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.

The outbreak has resulted in governments around the world implementing increasingly stringent measures to help combat the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures, and other measures.

The COVID-19 outbreak is a widespread public health crisis that is adversely affecting the economies and financial markets of many countries which may result in a period of regional, national, and global economic slowdown or regional, national, or global recessions.

Any resulting economic downturn or slowdown could curtail or delay spending, adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials.

The progression of this matter could also negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, disrupting raw materials to our factories and assembly plants, inhibiting the manufacture and assembly of products at our factories and assembly plants, delaying or preventing deliveries to our customers, and interruption of our ability to provide servicing and installations of equipment due to travel restrictions, among others.

In response to the COVID-19 pandemic, governments across the world have and are expected to spend unprecedented amounts to fund disease control measures, support healthcare infrastructure, and revive their economies.

Governments could re-direct resources away from military, homeland security, counter-terrorism, drug interdiction, customs or other agencies or departments that typically allocate part of their budgets to the procurement of security inspection systems and services as they look to rein in spending and re-balance budget priorities in response to the COVID-19 pandemic.

If this type of re-direction occurs, it could reduce overall government spending on security screening products and services.

The COVID-19 pandemic has significantly reduced airline passenger traffic, which reduces demand for certain of our security screening products and services.

To slow and limit the transmission of COVID-19, governments across the world have imposed significant air travel restrictions and businesses and individuals have canceled air travel plans.

These restrictions and cancelations have reduced demand for security screening products and related services at airport checkpoints globally as the number of airline passengers requiring screening has fallen.

The pandemic has also hampered our ability to meet with our customers and prospective customers.

We often provide proposals and quotations to customers and prospective customers only after conducting both technical surveys of the site where our security inspection equipment will be installed and in person meetings with technical and operations staff of customers and prospective customers.

Many of our products and services are considered to be essential under federal, state and local guidelines.

Accordingly, we currently continue to operate across our global footprint;

however, given recent government regulations, many of our global facilities are not able to operate at optimal capacity.

Notwithstanding our continued operations, COVID-19 has had and may continue to have further negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins, including as a result of preventative and precautionary measures that we, other businesses and governments are taking.

In addition, the ability of our employees and employees of our suppliers and customers to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels.

Our customers may be directly impacted by business curtailments or weak market conditions and may not be willing or able to fulfill their contractual obligations or open letters of credit and may seek to modify or terminate their contracts with us.

We may also experience delays in obtaining letters of credit or processing letter of credit payments due to the impacts of COVID-19 on foreign issuing and U.S.

intermediary banks.

In addition, the COVID-19 pandemic may create an increased risk of customer defaults or delays in payments.

Our customers may terminate or amend their agreements for the purchase or service of our products due to bankruptcy, lack of liquidity, lack of funding, operational failures, or other reasons.

Further, while we currently do not anticipate issues under our credit agreements, events resulting from the effects of the COVID-19 pandemic may negatively impact our ability to comply with our financial covenants in the future, which could lead us to seek an amendment or waivers from our lenders, limit access to or require accelerated repayment of our existing credit facilities, or require us to pursue alternative financing.

We have no assurance that any such alternative financing, if required, could be obtained at terms acceptable to us, or at all, including as a result of the effects of COVID-19 on financial markets at such time.

The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects.

As we cannot predict the duration or scope of the COVID-19 pandemic, the estimated negative impact to our results of operations, cash flows and financial position cannot be reasonably estimated but might be material and last for an extended period of time.

If operators of, or algorithms installed in, our security and inspection systems fail to detect weapons, explosives or other devices or materials that are used to commit a terrorist act, we could be exposed to product and professional liability and related claims for which we may not have adequate insurance coverage.

Our business exposes us to potential product liability risks that are inherent in the development, manufacturing, sale and service of security and inspection systems as well as in the provision of training to our customers in the use and operation of such systems.

Our customers use our security and inspection systems to help them detect items that could be used in performing terrorist acts or other crimes.

Some of our security and inspection systems require that an operator interpret an image of suspicious items within a bag, parcel, container, vehicle or other vessel.

Others signal to the operator that further investigation is required.

In either case, the training, reliability and competence of the customer's operator are

crucial to the detection of suspicious items.

inspection systems that signal to the operator that further investigation is required are sometimes referred to in the security industry as "automatic" detection systems.

systems utilize software algorithms to interpret data produced by the system and to signal to the operator when a dangerous object or substance may be present.

Such algorithms are probabilistic in

nature and are generally designed to meet requirements established by regulatory agencies.

Nevertheless, if such a system were to fail to signal to an operator when an explosive or other contraband

was in fact present, resulting in significant damage, we could become the subject of significant product liability claims.

security inspection by technological means is circumstance and application-specific.

Our security and inspection systems are not designed to work under all circumstances and

can malfunction.

also offer turnkey security screening solutions under which we perform certain of the security screening tasks that have historically been performed by our customers.

In either case, the training, reliability and competence of the customer’s operator are crucial to the detection of suspicious items.

Security inspection systems that signal to the operator that further investigation is required are sometimes referred to in the security industry as “automatic” detection systems.

Such systems utilize software algorithms to interpret data produced by the system and to signal to the operator when a dangerous object or substance may be present.

Such algorithms are probabilistic in nature and are generally designed to meet requirements established by regulatory agencies.

Nevertheless, if such a system were to fail to signal to an operator when an explosive or other contraband was in fact present, resulting in significant damage, we could become the subject of significant product liability claims.

Furthermore, security inspection by technological means is circumstance and application-specific.

Our security and inspection systems are not designed to work under all circumstances and can malfunction.

We also offer turnkey security screening solutions under which we perform certain of the security screening tasks that have historically been performed by our customers.

Such tasks include:

design, layout and construction of the security checkpoint where the inspection equipment is located;

selection of the security

equipment to be used at the checkpoint;

selection of the security equipment to be used at the checkpoint;

selection, training and management of the personnel operating the checkpoint;

operation of the security screening equipment;

interpretation of the images and

other signals produced by the security screening equipment;

interpretation of the images and other signals produced by the security screening equipment;

maintenance and security of the checkpoint as well as other related services.

Such projects expose us to certain professional liability

risks that are inherent in performing security inspection services (in live checkpoint environments and over extended periods of time) for the purpose of assisting our customers in the detection of

contraband items, including items that could be used in performing terrorist acts or other crimes.

If a contraband item were to pass through the checkpoint and be used to perform a terrorist act or

other crime, we could become the subject of significant professional liability claims.

Such projects expose us to certain professional liability risks that are inherent in performing security inspection services (in live checkpoint environments and over extended periods of time) for the purpose of assisting our customers in the detection of contraband items, including items that could be used in performing terrorist acts or other crimes.

If a contraband item were to pass through the checkpoint and be used to perform a terrorist act or other crime, we could become the subject of significant professional liability claims.

In addition, there are also many other factors beyond our control that could lead to liability claims should an act of terrorism occur.

Past terrorism attacks in

Past terrorism attacks in the U.S.

and in other locations worldwide and the potential for future attacks have caused commercial insurance for such threats to become extremely difficult to obtain.

Although we have been able to

obtain insurance coverage, it is likely that, should we be found liable following a major act of terrorism, the insurance we currently have in place would not fully cover the claims for damages.

Further, if our security and inspection systems fail to, or are perceived to have failed to, help detect a threat, we could experience negative publicity and reputational harm, which could have a

material adverse effect on our business.

Although we have been able to obtain insurance coverage, it is likely that, should we be found liable following a major act of terrorism, the insurance we currently have in place would not fully cover the claims for damages.

Further, if our security and inspection systems fail to, or are perceived to have failed to, help detect a threat, we could experience negative publicity and reputational harm, which could have a material adverse effect on our business.

The Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act) may not shield us against all legal claims we may face following an act of terrorism.

The SAFETY Act provides important legal liability protections for providers of qualified anti-terrorism products and services.

Under the SAFETY

Act, providers, such as our Security division, may apply to the U.S.

Under the SAFETY Act, providers, such as our Security division, may apply to the U.S.

Department of Homeland Security for coverage of the products and services.

If granted coverage, such providers would receive

certain legal protections against product liability, professional liability and certain other claims that could arise following an act of terrorism.

have applied to the U.S.

Department of Homeland Security for many of the products and services offered by our Security division, but we do not enjoy coverage (or the highest level of

coverage) for every product line, model number and service offering that our Security division provides.

If granted coverage, such providers would receive certain legal protections against product liability, professional liability and certain other claims that could arise following an act of terrorism.

We have applied to the U.S.

Department of Homeland Security for many of the products and services offered by our Security division, but we do not enjoy coverage (or the highest level of coverage) for every product line, model number and service offering that our Security division provides.

In addition, the terms of the SAFETY Act coverage decisions awarded to us by the U.S.

Department of Homeland Security contain conditions and requirements that we may not (or may not be able to) continue to satisfy in the future.

the future, if we fail to maintain the coverage that we currently enjoy or fail to apply in a timely way for coverage for new products and services as we acquire or introduce them, or

Department of Homeland Security limits the scope of any coverage previously awarded to us, denies us coverage or continued coverage for a particular product, product line or service

offering, or delays in making decisions about whether to grant us coverage, we may become exposed to legal claims that the SAFETY Act was otherwise designed to prevent.

SAFETY Act was not designed to shield providers of qualified anti-terrorism products and services from all types of claims that may arise from acts of terrorism, including from many

types of claims lodged in courts outside of the United States or acts of terrorism that occur outside of the United States.

This too could leave us exposed to significant legal claims and litigation

defense costs despite the SAFETY Act awards we have received.

In the future, if we fail to maintain the coverage that we currently enjoy or fail to apply in a timely way for coverage for new products and services as we acquire or introduce them, or if the U.S.

Department of Homeland Security limits the scope of any coverage previously awarded to us, denies us coverage or continued coverage for a particular product, product line or service offering, or delays in making decisions about whether to grant us coverage, we may become exposed to legal claims that the SAFETY Act was otherwise designed to prevent.

The SAFETY Act was not designed to shield providers of qualified anti-terrorism products and services from all types of claims that may arise from acts of terrorism, including from many types of claims lodged in courts outside of the United States or acts of terrorism that occur outside of the United States.

This too could leave us exposed to significant legal claims and litigation defense costs despite the SAFETY Act awards we have received.

Our provision of event security services exposes us to heightened risk of personal injury claims.

We have recently begun to provide event security services at sporting events and other public venues, and there are inherent risks associated

The provision of these services includes hiring of a significant number of temporary employees to assist with crowd management, among other things.

As a result, personal injuries and

accidents may occur from time to time, which could subject us to claims and liabilities for personal injuries.

We have recently begun to provide event security services at sporting events and other public venues, and there are inherent risks associated with this.

The provision of these services includes hiring temporary employees to assist with crowd management, among other things.

As a result, personal injuries and accidents may occur from time to time, which could subject us to claims and liabilities for personal injuries.

Our insurance coverage may be inadequate to cover all significant risk exposures.

We are exposed to liabilities that are unique to the products and services we provide.

We maintain insurance for certain risks, and we believe

our insurance coverage is consistent with general practices within our industry.

However, the amount of our insurance coverage may not cover all claims or liabilities and we may be forced to bear

substantial costs.

We maintain insurance for certain risks, and we believe our insurance coverage is consistent with general practices within our industry.

However, the amount of our insurance coverage may not cover all claims or liabilities and we may be forced to bear substantial costs.

While some of our products are shielded from liability within the U.S.

under the SAFETY Act, no such protection is available outside the U.S., potentially resulting in significant

under the SAFETY Act, no such protection is available outside the U.S., potentially resulting in significant liabilities.

The amount of insurance coverage we maintain may be inadequate to cover these or other claims or liabilities.

Our patient monitoring and diagnostic cardiology systems could give rise to product liability claims and product recall events that could materially and adversely affect our

financial condition and results of operations.

The development, manufacturing and sale of medical devices expose us to significant risk of product liability claims, product recalls and,

sometimes, product failure claims.

Our patient monitoring, diagnostic cardiology, and connected care systems could give rise to product liability claims and product recall events that could materially and adversely affect our financial condition and results of operations.

The development, manufacturing and sale of medical devices expose us to significant risk of product liability claims, product recalls and, sometimes, product failure claims.

We face an inherent business risk of financial exposure to product liability claims if the use of our medical devices results in personal injury or death.

Substantial product liability litigation currently exists within the medical device industry.

Some of our patient monitoring and diagnostic cardiology products may become subject to product liability

claims and/or product recalls.

Future product liability claims and/or product recall costs may exceed the limits of our insurance coverages or such insurance may not continue to be available to us on

commercially reasonable terms, or at all.

In addition, a significant product liability claim or product recall could significantly damage our reputation for producing safe, reliable and effective

products, making it more difficult for us to market and sell our products in the future.

Consequently, a product liability claim, product recall or other claim could have a material adverse effect on

our business, financial condition, operating results and cash flows.

If we are unable to sustain high-quality processes for the manufacture and delivery of goods and services, our reputation could be harmed, our competitive advantage could erode and

we could incur significant costs.

Some of our patient monitoring, diagnostic cardiology, and connected care products may become subject to product liability claims and/or product recalls.

Future product liability claims and/or product recall costs may exceed the limits of our insurance coverages or such insurance may not continue to be available to us on commercially reasonable terms, or at all.

In addition, a significant product liability claim or product recall could significantly damage our reputation for producing safe, reliable and effective products, making it more difficult for us to market and sell our products in the future.

Consequently, a product liability claim, product recall or other claim could have a material adverse effect on our business, financial condition, operating results and cash flows.

If we are unable to sustain high-quality processes for the manufacture and delivery of goods and services, our reputation could be harmed, our competitive advantage could erode and we could incur significant costs.

Quality is extremely important to us and our customers, due in part to the serious consequences of product failure.

Our quality certifications

are critical both to the marketing success of our goods and services and to the satisfaction of both regulatory and contractual requirements under which we

sell many of our products.

If we fail to meet these standards or other standards required in our industries, we could lose customers and market share, our revenue could decline and we could face

significant costs and other liabilities.

Government contractor, we are subject to extensive Federal procurement rules and regulations as well as contractual obligations that are unique to doing business with the

Our quality certifications are critical both to the marketing success of our goods and services and to the satisfaction of both regulatory and contractual requirements under which we sell many of our products.

If we fail to meet these standards or other standards required in our industries, we could lose customers and market share, our revenue could decline and we could face significant costs and other liabilities.

Government contractor, we are subject to extensive Federal procurement rules and regulations as well as contractual obligations that are unique to doing business with the U.S.

Non-compliance with any such rules, regulations or contractual obligations could negatively affect current programs, potential awards and our ability to do business with the U.S.

Government in the future.

Government contractors must comply with extensive procurement regulations and other requirements including, but not limited to, those

appearing in the Federal Acquisition Regulation (FAR) and its supplements, as well as specific procurement rules and contractual conditions imposed by various U.S.

Government contractors must comply with extensive procurement regulations and other requirements including, but not limited to, those appearing in the Federal Acquisition Regulation (FAR) and its supplements, as well as specific procurement rules and contractual conditions imposed by various U.S.

Government agencies.

Many of these

types of requirements do not appear in our contracts with commercial customers or foreign governments.

particular, U.S.

Government contracts typically contain provisions and are subject to laws and regulations that give the Government agencies rights and remedies not typically found in

commercial contracts, including providing the Government agency with the ability to unilaterally:

Many of these types of requirements do not appear in our contracts with commercial customers or foreign governments.

In particular, U.S.

Government contracts typically contain provisions and are subject to laws and regulations that give the Government agencies rights and remedies not typically found in commercial contracts, including providing the Government agency with the ability to unilaterally:

● terminate our existing contracts;

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● control and potentially prohibit the export of our products;

cancel or delay existing multiyear contracts and related orders if the necessary funds for contract performance for any subsequent year are not

appropriated;

● cancel or delay existing multiyear contracts and related orders if the necessary funds for contract performance for any subsequent year are not appropriated;

● decline to exercise an option to extend an existing multiyear contract;

● claim rights in technologies and systems invented, developed or produced by us.

Government agencies and the agencies of many other governments with which we contract can terminate their contracts with us for convenience, and in that event we generally may

recover only our incurred or committed costs, settlement expenses and profit on the work completed prior to termination.

If an agency terminates a contract with us for default, we may be denied any

recovery and may be liable for excess costs incurred by the agency in procuring undelivered items from an alternative source.

Decisions by an agency to terminate one of our contracts for default could

negatively affect our ability to win future awards not only from such agency, but also from other government agencies and commercial customers, many of whom evaluate past performance, or are required

to review past performance information, when making their procurement decisions.

Government agencies and the agencies of many other governments with which we contract can terminate their contracts with us for convenience, and in that event we generally may recover only our incurred or committed costs, settlement expenses and profit on the work completed prior to termination.

If an agency terminates a contract with us for default, we may be denied any recovery and may be liable for excess costs incurred by the agency in procuring undelivered items from an alternative source.

Decisions by an agency to terminate one of our contracts for default could negatively affect our ability to win future awards not only from such agency, but also from other government agencies and commercial customers, many of whom evaluate past performance, or are required to review past performance information, when making their procurement decisions.

Government agencies may also initiate civil False Claims Act litigation against us based on allegations related to our performance of contracts for the U.S.

Government, or to our

compliance with procurement regulations and other legal requirements to which such contracts are subject, or both.

Such litigation can be expensive to defend and if found liable can result in treble

damages and significant civil penalties.

Government may also initiate administrative proceedings that, if resulting in an adverse finding against us or any of our subsidiaries as to our

present responsibility to be a U.S.

Government contractor or subcontractor,

could result in our company or our subsidiaries being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges and, if

satisfying the requisite level of seriousness, in our debarment from contracting with the U.S.

Government, or to our compliance with procurement regulations and other legal requirements to which such contracts are subject, or both.

Such litigation can be expensive to defend and if found liable can result in treble damages and significant civil penalties.

Government may also initiate administrative proceedings that, if resulting in an adverse finding against us or any of our subsidiaries as to our present responsibility to be a U.S.

Government contractor or subcontractor, could result in our company or our subsidiaries being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges and, if satisfying the requisite level of seriousness, in our debarment from contracting with the U.S.

Government for a specified term as well as being subject to other remedies available to the U.S.

The loss of certain of our customers, including government agencies that can modify or terminate agreements more easily than other commercial customers with which we contract, the

failure to continue to diversify our customer base or the non-renewal of certain material contracts could have a negative effect on our reputation and could have a material adverse effect on our

business, financial condition and results of operations.

The loss of certain of our customers or distributors, including government agencies that can modify or terminate agreements more easily than other commercial customers with which we contract, the failure to continue to diversify our customer base or the non-renewal of certain material contracts could have a negative effect on our reputation and could have a material adverse effect on our business, financial condition and results of operations.

We sell many of our products to prominent, well-respected institutions, including agencies and departments of the U.S.

Government, state and

local governments, foreign governments, renowned hospitals and hospital networks, and large military-defense and space-industry contractors.

Many of these larger customers spend considerable resources

testing and evaluating our products and our design and manufacturing processes and services.

Some of our smaller customers know this and rely on this as an indication of the high-quality and

reliability of our products and services.

As a result, part of our reputation and success depends on our ability to continue to sell to larger institutions that are known for demanding high standards

of excellence.

loss or termination of a contract by such an institution, even if for reasons unrelated to the quality of our products or services, could therefore have a more wide-spread and

potentially material adverse effect on our business, financial condition and results of operations.

Our revenues are dependent on orders of security and inspection systems, turnkey security screening solutions and patient monitoring and diagnostic cardiology systems, which may have

lengthy and unpredictable sales cycles.

Sales of security and inspection systems and turnkey security screening solutions often depend upon the decision of governmental agencies to

upgrade or expand existing airports, border crossing inspection sites, seaport inspection sites, military facilities and other security installations.

In the case of turnkey security screening

solutions, the commencement of screening operations may be dependent on the approval, by a government agency, of the protocols and procedures that our personnel are to follow during the performance of

their activities.

Sales outside of the United States of our patient monitoring and diagnostic cardiology systems depend in significant part on the decision of governmental agencies to build new

medical facilities or to expand or update existing medical facilities.

Accordingly, a significant portion of our sales of security and inspection systems, turnkey security screening solutions and our

patient monitoring and diagnostic cardiology systems is often subject to delays

with the lengthy approval processes.

Government, state and local governments, foreign governments, renowned hospitals and hospital networks, and large military-defense and space-industry contractors.

Many of these larger customers spend considerable resources testing and evaluating our products and our design and manufacturing processes and services.

Some of our smaller customers know this and rely on this as an indication of the high-quality and reliability of our products and services.

As a result, part of our reputation and success depends on our ability to continue to sell to larger institutions that are known for demanding high standards of excellence.

The loss or termination of a contract by such an institution, even if for reasons unrelated to the quality of our products or services, could therefore have a more wide-spread and potentially material adverse effect on our business, financial condition and results of operations.

Our Security division depends on certain distributors for a substantial portion of our revenues.

The loss of all or a substantial portion of our sales to any of our major distributors could therefore have a material adverse impact on our business, financial position, and results of operations.

Our revenues are dependent on orders of security and inspection systems, turnkey security screening solutions and patient monitoring and diagnostic cardiology systems, which may have lengthy and unpredictable sales cycles.

Sales of security and inspection systems and turnkey security screening solutions often depend upon the decision of governmental agencies to upgrade or expand existing airports, border crossing inspection sites, seaport inspection sites, military facilities and other security installations.

In the case of turnkey security screening solutions, the commencement of screening operations may be dependent on the approval, by a government agency, of the protocols and procedures that our personnel are to follow during the performance of their activities.

Sales outside of the United States of our patient monitoring and diagnostic cardiology systems depend in significant part on the decision of governmental agencies to build new medical facilities or to expand or update existing medical facilities.

Accordingly, a significant portion of our sales of security and inspection systems, turnkey security screening solutions and our patient monitoring and diagnostic cardiology systems is often subject to delays associated with the lengthy approval processes.

During these approval periods, we expend significant financial and management resources in anticipation of future revenues that may not occur.

fail to receive such revenues after expending such resources, such failure could have a material adverse effect on our business, financial condition and results of operations.

U.S and foreign budget control provisions could reduce government spending, which could adversely impact our revenues, earnings, cash flows and financial condition.

If we fail to receive such revenues after expending such resources, such failure could have a material adverse effect on our business, financial condition and results of operations.

and foreign budget control provisions could reduce government spending, which could adversely impact our revenues, earnings, cash flows and financial condition.

In August 2011, Congress enacted the Budget Control Act of 2011 (BCA), committing the U.S.

Government to significantly reduce the federal

deficit over ten years.

The BCA contains provisions commonly referred to as "sequestration", which call for substantial, unspecified automatic spending cuts split between defense and non-defense

programs that may continue for a period of ten years.

The BCA also included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and will stay in

effect through 2024, unless additional Congressional action is taken.

Likewise, various European governments have implemented or intend to implement austerity measures intended to reduce government

Such measures may reduce demand for our products directly by affected governmental agencies and by our customers who derive revenues from these governmental agencies or governmental

healthcare programs.

We are continuing to be challenged by the impact of governmental spending reductions on us and our customers, and we cannot currently predict to what extent our business and

results of operations may be adversely harmed.

If we fail to perform on our existing agreements to provide security screening solutions to customers after expending substantial resources, such failure could have a material

adverse effect on our business, financial condition and results of operations.

Certain of our projects require the expenditure of substantial management and financial resources in anticipation of future revenue generation.

For example, our contract with the Mexican government to provide a turnkey security screening solution at various sites throughout Mexico required substantial expenditures for capital equipment and

infrastructure.

If our performance is not adequate and acceptable to the Mexican government during the term of this contract, our ability to renew the contract prior to its scheduled expiration in

January 2020 could be negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations.

We anticipate that future contracts for turnkey

security screening solutions in other territories could also require the outlay and management of substantial financial resources for capital equipment and infrastructure.

screening solutions projects, in contrast to the sale and installation of security inspection equipment, also require that we hire and manage large numbers of local personnel in

jurisdictions where we may not

have previously operated.

Government to significantly reduce the federal deficit over ten years.

The BCA contains provisions commonly referred to as “sequestration”, which call for substantial, unspecified automatic spending cuts split between defense and non-defense programs.

The BCA, as amended, also included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and will stay in effect through 2030, unless additional Congressional action is taken.

Section 4408 of the CARES Act suspended the Medicare sequestration from May 1, 2020 through December 31, 2020.

Likewise, various European governments have implemented or intend to implement austerity measures intended to reduce government spending.

Such measures may reduce demand for our products directly by affected governmental agencies and by our customers who derive revenues from these governmental agencies or governmental healthcare programs.

We are continuing to be challenged by the impact of governmental spending reductions on us and our customers, and we cannot currently predict to what extent our business and results of operations may be adversely harmed.

If we are unable to continue or fail to perform on our existing agreements to provide security screening solutions to customers after expending substantial resources, such failure could have a material adverse effect on our business, financial condition and results of operations.

Certain of our projects, such as our turnkey screening solutions projects, require the expenditure of substantial management and financial resources in anticipation of future revenue generation.

Turnkey screening solutions projects, in contrast to the sale and installation of security inspection equipment, also require that we hire and manage large numbers of local personnel in jurisdictions where we may not have previously operated.

They also require that we establish, adhere to, adapt and monitor operating procedures over periods that last much longer than our other projects.

If we are unable to

efficiently manage the adaptation and growth of our operations relating to these projects, our operations could be materially and adversely affected.

If we are unable to efficiently manage the adaptation and growth of our operations relating to these projects or retain these projects, our operations could be materially and adversely affected.

If we do not introduce new products in a timely manner, our products could become obsolete and our operating results would suffer.

We sell many of our products in industries characterized by rapid technological changes, frequent new product and service introductions and

evolving industry standards and customer needs.

Without the timely introduction of new products and enhancements, our products could become technologically obsolete over time, in which case our

revenue and operating results would suffer.

We sell many of our products in industries characterized by rapid technological changes, frequent new product and service introductions and evolving industry standards and customer needs.

Without the timely introduction of new products and enhancements, our products could become technologically obsolete over time, in which case our revenue and operating results would suffer.

The success of our new product offerings will depend upon several factors, including our ability to:

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● differentiate our offerings from our competitors’ offerings.

of our products are used by our customers to develop, test and manufacture their products.

We therefore must anticipate industry trends and develop products in advance of the

commercialization of our customers' products.

Some of our products are used by our customers to develop, test and manufacture their products.

We therefore must anticipate industry trends and develop products in advance of the commercialization of our customers’ products.

In developing any new product, we may be required to make a substantial investment before we can determine the commercial viability of the new product.

we fail to accurately foresee our customers' needs and future activities, we may invest heavily in research and development of products that do not lead to significant revenues.

If we fail to accurately foresee our customers’ needs and future activities, we may invest heavily in research and development of products that do not lead to significant revenues.

Interruptions in our ability to purchase raw materials and subcomponents may adversely affect our profitability.

We purchase raw materials and certain subcomponents from third parties.

Standard purchase order terms may be as long as one year at fixed costs,

but we generally do not have guaranteed long-term supply arrangements with our suppliers.

In addition, for certain raw materials and subcomponents that we use, there are a limited number of potential

suppliers that we have qualified or that we are currently able to qualify.

Consequently, some of the key raw materials and subcomponents that we use are currently available to us only from a single

Standard purchase order terms may be as long as one year at fixed costs, but we generally do not have guaranteed long-term supply arrangements with our suppliers.

In addition, for certain raw materials and subcomponents that we use, there are a limited number of potential suppliers that we have qualified or that we are currently able to qualify.

Consequently, some of the key raw materials and subcomponents that we use are currently available to us only from a single vendor.

The reliance on a single qualified vendor could result in delays in delivering products or increases in the cost of manufacturing the affected products.

Any material interruption in our

ability to purchase necessary raw materials or subcomponents could adversely affect our ability to fulfill customer orders and therefore could ultimately have a material adverse effect on our

business, financial condition and results of operations.

Any material interruption in our ability to purchase necessary raw materials or subcomponents could adversely affect our ability to fulfill customer orders and therefore could ultimately have a material adverse effect on our business, financial condition and results of operations.

Delays by the construction firms we engage may interfere with our ability to complete projects on time.

Purchasers of our security and inspection systems and turnkey security screening solutions sometimes require, as a part of our contract, the

construction of the facilities that will house our systems and/or operations.

Purchasers of our security and inspection systems and turnkey security screening solutions sometimes require, as a part of our contract, the construction of the facilities that will house our systems and/or operations.

Some of these construction projects are significant in size and complexity.

We engage qualified construction firms to

perform this work.

However, if such firms experience delays, if they perform sub-standard work or if we fail to properly monitor the quality of their work or the timeliness of their progress, we may

not be able to complete our construction projects on time.

We engage qualified construction firms to perform this work.

However, if such firms experience delays, if they perform sub-standard work or if we fail to properly monitor the quality of their work or the timeliness of their progress, we may not be able to complete our construction projects on time.

In any such circumstance, we could face the imposition of delay penalties and breach of contract claims by our customer.

In addition, we

could be forced to incur significant expenses to rectify the problems caused by the construction firm.

Any material delay caused by our construction firm subcontractors could therefore ultimately have

a material adverse effect on our business, financial condition and results of operations.

In addition, we could be forced to incur significant expenses to rectify the problems caused by the construction firm.

Any material delay caused by our construction firm subcontractors could therefore ultimately have a material adverse effect on our business, financial condition and results of operations.

We contract with third-party service vendors that may be unable to fulfill contracts on time.

We contract with third-party vendors to service our equipment in the field.

We have made such arrangements because sometimes it is more

efficient to outsource these activities than it is for our own employees to service our equipment.

In addition, some of these vendors maintain stocks of spare parts that are more efficiently accessed

in conjunction with a service agreement than would be the case if we were to maintain such spare parts independently.

Any material interruption in the ability of our vendors to fulfill such service

contracts could adversely affect our ability to fulfill customer orders and therefore could ultimately have a material adverse effect on our business, financial condition and results of operations.

We have made such arrangements because sometimes it is more efficient to outsource these activities than it is for our own employees to service our equipment.

In addition, some of these vendors maintain stocks of spare parts that are more efficiently accessed in conjunction with a service agreement than would be the case if we were to maintain such spare parts independently.

Any material interruption in the ability of our vendors to fulfill such service contracts could adversely affect our ability to fulfill customer orders and therefore could ultimately have a material adverse effect on our business, financial condition and results of operations.

We accumulate excess inventory from time to time.

Because of long lead times and specialized product designs, in certain cases we purchase components and manufacture products in anticipation of

customer orders based on customer forecasts.

For a variety of reasons, such as decreased end-user demand for our products or other factors, our customers might not purchase all the products

we have manufactured or for which we have purchased components.

In any such event, we would attempt to recoup material and manufacturing costs by means such as returning components to our

vendors, disposing of excess inventory through other channels, or requiring our OEM customers to purchase or otherwise compensate us for such excess inventory.

However, some of our significant

customer agreements do not give us the ability to require our OEM customers to do this.

To the extent that we are unsuccessful in recouping our material and manufacturing costs, this could have a

material adverse effect on our business, financial condition and results of operations.

In addition, because of the complex customer acceptance criteria associated with some of our products, on some

occasions, products the title of which has passed to our customers are still included in our inventory until revenue recognition criteria are met.

As a result, inventory levels are elevated from time

We may not be able to successfully implement our acquisitions and investment strategies, integrate acquired businesses into our existing business or make acquired businesses

One of our strategies is to supplement our internal growth by acquiring and investing in businesses and technologies that complement or augment

our existing product lines.

Because of long lead times and specialized product designs, in certain cases we purchase components and manufacture products in anticipation of customer orders based on customer forecasts.

For a variety of reasons, such as decreased end-user demand for our products or other factors, our customers might not purchase all the products that we have manufactured or for which we have purchased components.

In any such event, we would attempt to recoup material and manufacturing costs by means such as returning components to our vendors, disposing of excess inventory through other channels, or requiring our OEM customers to purchase or otherwise compensate us for such excess inventory.

However, some of our significant customer agreements do not give us the ability to require our OEM customers to do this.

To the extent that we are unsuccessful in recouping our material and manufacturing costs, this could have a material adverse effect on our business, financial condition and results of operations.

In addition, because of the complex customer acceptance criteria associated with some of our products, on some occasions, products the title of which has passed to our customers are still included in our inventory until revenue recognition criteria are met.

As a result, inventory levels are elevated from time to time.

We may not be able to successfully implement our acquisitions and investment strategies, integrate acquired businesses into our existing business or make acquired businesses profitable.

One of our strategies is to supplement our internal growth by acquiring and investing in businesses and technologies that complement or augment our existing product lines.

This growth has placed, and may continue to place, significant demands on our management, working capital and financial resources.

We may be unable to identify or complete

promising acquisitions for many reasons, including:

We may be unable to identify or complete promising acquisitions for many reasons, including:

● competition among buyers;

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● the high valuations of businesses.

of the businesses we may seek to acquire or invest in may be marginally profitable or unprofitable.

For these businesses to achieve acceptable levels of profitability, we must

improve their management, operations, products and market penetration.

We may not be successful in this regard and we may encounter other difficulties in integrating acquired businesses into our

existing operations.

finance our acquisitions, we may have to raise additional funds, through either public or private financings.

We may be unable to obtain such funds or may be able to do so only on

unfavorable terms.

Our acquisition and alliance activities could result in disruption of our ongoing business and other operational difficulties, unrecoverable costs, and other negative consequences,

any of which could adversely impact our financial condition and results of operations.

Some of the businesses we may seek to acquire or invest in may be marginally profitable or unprofitable.

For these businesses to achieve acceptable levels of profitability, we must improve their management, operations, products and market penetration.

We may not be successful in this regard and we may encounter other difficulties in integrating acquired businesses into our existing operations.

To finance our acquisitions, we may have to raise additional funds, through either public or private financings.

We may be unable to obtain such funds or may be able to do so only on unfavorable terms.

Our acquisition and alliance activities could result in disruption of our ongoing business and other operational difficulties, unrecoverable costs, and other negative consequences, any of which could adversely impact our financial condition and results of operations.

We intend to continue to make investments in companies, products and technologies, either through acquisitions, investments or alliances.

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● disruption of our ongoing business, including diversion of management time;

inability to successfully integrate the acquired technologies and operations into our businesses and maintain uniform standards, controls,

policies and procedures;

unanticipated changes in market or industry practices that adversely impact our strategic and financial expectations regarding an acquired

company or acquired assets and require us to write off or dispose of such acquired company or assets;

● inability to successfully integrate the acquired technologies and operations into our businesses and maintain uniform standards, controls, policies and procedures;

● unanticipated changes in market or industry practices that adversely impact our strategic and financial expectations regarding an acquired company or acquired assets and require us to write off or dispose of such acquired company or assets;

● lacking the experience necessary to enter into new product or technology markets successfully;

difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including disclosure controls and

procedures and internal control over financial reporting, appropriate for public companies of our size at companies that, prior the acquisition, had lacked such controls, procedures and policies.

acquired businesses has been and will continue to be complex, time consuming and expensive, and can negatively impact the effectiveness of our internal control over financial

● difficulty in integrating financial reporting systems and implementing controls, procedures and policies, including disclosure controls and procedures and internal control over financial reporting, appropriate for public companies of our size at companies that, prior the acquisition, had lacked such controls, procedures and policies.

Integrating acquired businesses has been and will continue to be complex, time consuming and expensive, and can negatively impact the effectiveness of our internal control over financial reporting.

The use of debt to fund acquisitions or for other related purposes increases our interest expense and leverage.

If we issue equity securities as consideration in an acquisition, current

stockholders percentage ownership and earnings per share may be diluted.

As a result of these and other risks, we cannot be certain that our previous or future

acquisitions will be successful and will not materially adversely affect the conduct, operating results or financial condition of our business.

If we issue equity securities as consideration in an acquisition, current stockholders percentage ownership and earnings per share may be diluted.

As a result of these and other risks, we cannot be certain that our previous or future acquisitions will be successful and will not materially adversely affect the conduct, operating results or financial condition of our business.

Our ability to successfully adapt to ongoing organizational changes could impact our business results.

We have executed a number of significant business and organizational changes to rationalize our overall cost structure.

These changes have

included and may continue to include the implementation of cost-cutting measures and the consolidation of facilities.

We expect these types of changes may continue from time to time in the future as

we uncover additional opportunities to streamline our operations.

These changes have included and may continue to include the implementation of cost-cutting measures and the consolidation of facilities.

We expect these types of changes may continue from time to time in the future as we uncover additional opportunities to streamline our operations.

Successfully managing these changes is critical to our productivity improvement and business success.

If we are unable to successfully

manage these changes, while continuing to invest in business growth, our financial results could be adversely impacted.

If we are unable to successfully manage these changes, while continuing to invest in business growth, our financial results could be adversely impacted.

Economic, political, legal, operational and other risks associated with international sales and operations could adversely affect our financial performance.

In fiscal 2017, 2018 and 2019 revenues from shipments made to customers outside of the United States accounted for approximately 60%, 58% and

58% of our revenues, respectively.

In fiscal 2018, 2019 and 2020 revenues from shipments made to customers outside of the United States accounted for approximately 58%, 58% and 57% of our revenues, respectively.

Since we sell certain of our products and services worldwide, our businesses are subject to risks associated with doing business internationally.

We anticipate that

revenues from international operations will continue to represent a substantial portion of our total revenue.

In addition, many of our manufacturing facilities, and therefore employees, suppliers,

real property, capital equipment, cash and other assets are located outside the United States.

Accordingly, our future results could be harmed by a variety of factors, including without

We anticipate that revenues from international operations will continue to represent a substantial portion of our total revenue.

In addition, many of our manufacturing facilities, and therefore employees, suppliers, real property, capital equipment, cash and other assets are located outside the United States.

Accordingly, our future results could be harmed by a variety of factors, including without limitation:

● changes in foreign currency exchange rates;

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● increased legal risks arising from differing legal systems;

compliance with export control and anti-corruption legislation, including but not limited to, the Foreign Corrupt Practices Act and UK Bribery

Act and International Traffic in Arms Regulations.

on June 23, 2016, the United Kingdom (UK) held a referendum in which voters approved an exit from the EU, commonly referred to as "Brexit".

The impact of Brexit depends

on the terms of the UK's withdrawal from the EU, which still need to be determined and could take several years to accomplish.

The UK's withdrawal from the EU could result in a global economic

downturn, which could depress the demand for our products and services.

The UK also could lose access to the single EU market and to the global trade deals negotiated by the EU on behalf of its

members, depressing trade between the UK and other countries, which would negatively impact our international operations.

Additionally, we may face new regulations regarding trade, security and

employees, among others in the UK.

● compliance with export control and anti-corruption legislation, including but not limited to, the Foreign Corrupt Practices Act and UK Bribery Act and International Traffic in Arms Regulations.

Further, on June 23, 2016, the United Kingdom (UK) held a referendum in which voters approved an exit from the EU, commonly referred to as “Brexit”.

The UK’s withdrawal from the EU could result in a global economic downturn, which could depress the demand for our products and services.

The UK also could lose access to the single EU market and to the global trade deals negotiated by the EU on behalf of its members, depressing trade between the UK and other countries, which would negatively impact our international operations.

Additionally, we may face new regulations regarding trade, security and employees, among others in the UK.

Compliance with such regulations could be costly, negatively impacting our business, results of operations and financial condition.

Other adverse consequences

concerning Brexit could include instability in global financial markets, policitcal uncertainty, volatility in exchange rates, or adverse changes in cross-border agreements currently in place, any of

which could have a material adverse effect on our business, financial condition and results of operations.

We are facing an increasingly complex international regulatory environment which is constantly changing and if we fail to comply with international regulatory requirements, or are

unable to comply with changes to such requirements, our financial performance may be harmed.

Our international operations and sales subject us to an international regulatory environment which is becoming increasingly complex and is

constantly changing due to factors beyond our control.

Risks associated with our international operations and sales include, without limitation, those arising from the following

Other adverse consequences concerning Brexit could include instability in global financial markets, political uncertainty, volatility in exchange rates, or adverse changes in cross-border agreements currently in place, any of which could have a material adverse effect on our business, financial condition and results of operations.

We are facing an increasingly complex international regulatory environment which is constantly changing and if we fail to comply with international regulatory requirements, or are unable to comply with changes to such requirements, our financial performance may be harmed.

Our international operations and sales subject us to an international regulatory environment which is becoming increasingly complex and is constantly changing due to factors beyond our control.

Risks associated with our international operations and sales include, without limitation, those arising from the following factors:

● differing legal and court systems and changes to such systems;

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● differing import and export requirements and changes to those requirements.

we fail to comply with applicable international regulatory requirements, even if such non-compliance by us is inadvertent, or if we are unable to comply with changes to such

requirements, our financial performance may be harmed.

If we fail to comply with applicable international regulatory requirements, even if such non-compliance by us is inadvertent, or if we are unable to comply with changes to such requirements, our financial performance may be harmed.

Our global operations expose us to legal compliance risks related to certain anti-bribery and anti-corruption laws.

We are required to comply with the U.S.

Foreign Corrupt Practices Act, which prohibits United States companies from engaging in bribery or

making other prohibited payments to foreign officials for the purpose of obtaining or retaining business.

It also requires us to maintain specific record-keeping standards and adequate internal

accounting controls.

Foreign Corrupt Practices Act, which prohibits United States companies from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business.

It also requires us to maintain specific record-keeping standards and adequate internal accounting controls.

In addition, we are subject to similar requirements in other countries.

Bribery, corruption, and trade laws and regulations, and the enforcement thereof, are increasing in

frequency, complexity and severity on a global basis.

Although we have internal policies and procedures with the intention of assuring compliance with these laws and regulations, our employees,

distributors, resellers and contractors involved in our

international

sales may take actions in violations of such policies.

If our internal controls and compliance program do not adequately prevent or deter our employees, distributors, resellers,

contractors and/or other third parties with whom we do business from violating anti-bribery, anti-corruption or similar laws and regulations, we may incur severe fines, penalties and reputational

Bribery, corruption, and trade laws and regulations, and the enforcement thereof, are increasing in frequency, complexity and severity on a global basis.

Although we have internal policies and procedures with the intention of assuring compliance with these laws and regulations, our employees, distributors, resellers and contractors involved in our international sales may take actions in violations of such policies.

If our internal controls and compliance program do not adequately prevent or deter our employees, distributors, resellers, contractors and/or other third parties with whom we do business from violating anti-bribery, anti-corruption or similar laws and regulations, we may incur severe fines, penalties and reputational damage.

We are subject to import and export controls that could subject us to liability or impair our ability to compete in international markets.

Due to the international scope of our operations, we are subject to a complex system of import- and export-related laws and regulations,

including U.S.

Due to the international scope of our operations, we are subject to a complex system of import- and export-related laws and regulations, including U.S.

export control and customs regulations and customs regulations of other countries.

These regulations are complex and vary among the legal jurisdictions in which we operate.

or actual failure to comply with such regulations may subject us to government scrutiny, investigation, and civil and criminal penalties, and may limit our ability to import or export our products or

to provide services outside the United States.

Any alleged or actual failure to comply with such regulations may subject us to government scrutiny, investigation, and civil and criminal penalties, and may limit our ability to import or export our products or to provide services outside the United States.

Depending on severity, any of these penalties could have a material impact on our business, financial condition and results of operations.

There are inherent risks associated with operations in Mexico.

We are currently in the process of fulfilling an agreement to provide a turnkey security scanning solution to the tax and customs authority of

There are certain administrative, legal, governmental and societal risks to operating in Mexico that could adversely impact our operations.

Any one or more of the risks that could adversely

affect our ability to fulfill our agreement and therefore ultimately have a material adverse effect on our business, financial condition and results of operations include, without

regional political and economic instability;

high rate of crime in Mexico where we conduct operations;

ability of key suppliers and subcontractors to fulfill obligations;

ability to hire and maintain a significant work force;

burdensome and evolving government regulations;

cooperation of various departments of the Mexican government in issuing permits, and inspecting our operations on a timely basis;

providing adequate security among other items;

receipt of payments in a timely manner;

termination, non-renewal, or change in scope of program at the election of the government;

change in the value of the Mexican peso.

Our business is subject to complex and evolving U.S.

and international laws and regulation regarding privacy and data protection.

If we fail to meet our compliance obligations under

applicable privacy and data protection regulations, even if such compliance by us is inadvertent, or if we are unable to comply with changes to such requirements, we might be subject to fines, legal

disputes, or other liabilities that could have a material adverse effect on our financial condition and results of operations.

If we fail to meet our compliance obligations under applicable privacy and data protection regulations, even if such compliance by us is inadvertent, or if we are unable to comply with changes to such requirements, we might be subject to fines, legal disputes, or other liabilities that could have a material adverse effect on our financial condition and results of operations.

Regulatory authorities around the world are considering a number of legislative and regulatory proposals concerning data protection.

addition, the interpretation and application of data protection laws in the U.S., the EU, and elsewhere are often uncertain and in flux.

It is possible that these laws may be interpreted and applied

in a manner that is inconsistent with our data practices.

These legislative and regulatory proposals, if adopted, and such

interpretations

could, in addition to the possibility of fines, result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of

must comply with extensive federal and state requirements regarding the use, retention, security, and re-disclosure of patient healthcare information.

HIPAA and the regulations that

have been issued under it contain substantial restrictions and complex requirements with respect to the use and disclosure of certain individually identifiable health information, referred to as

"protected health information".

The HIPAA Privacy Rule prohibits a covered entity or a business associate (essentially, a third party engaged to assist a covered entity with enumerated operational or

compliance functions) from using or disclosing protected health information unless the use or disclosure is validly authorized by the individual or is specifically required or permitted under the

HIPAA Privacy Rule and only if certain complex requirements are met.

The HIPAA Security Rule establishes administrative, organizational, physical, and technical safeguards to protect the privacy,

integrity, and availability of electronic protected health information maintained or transmitted by covered entities and business associates.

The HIPAA Breach Notification Rule requires that covered

entities and business associates, under certain circumstances, notify patients when there has been an improper use or disclosure of protected health information.

Any failure or perceived failure of

our Company or our products to meet HIPAA standards and related regulatory requirements could expose us to certain notification, penalty, and enforcement risks, damage our reputation, and adversely

affect demand for our products and force us to expend significant capital and other resources to address the privacy and security requirements of HIPAA.

addition to our obligations under HIPAA, there are other federal laws that include specific privacy and security obligations, above and beyond HIPAA, for certain types of health

information and impose additional sanctions and penalties.

In addition, the interpretation and application of data protection laws in the U.S., the EU, and elsewhere are often uncertain and in flux.

It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices.

These legislative and regulatory proposals, if adopted, and such interpretations could, in addition to the possibility of fines, result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of operations.

We must comply with extensive federal and state requirements regarding the use, retention, security, and re-disclosure of patient healthcare information.

HIPAA and the regulations that have been issued under it contain substantial restrictions and complex requirements with respect to the use and disclosure of certain individually identifiable health information, referred to as “protected health information”.

The HIPAA Privacy Rule prohibits a covered entity or a business associate (essentially, a third party engaged to assist a covered entity with enumerated operational or compliance functions) from using or disclosing protected health information unless the use or disclosure is validly authorized by the individual or is specifically required or permitted under the HIPAA Privacy Rule and only if certain complex requirements are met.

The HIPAA Security Rule establishes administrative, organizational, physical, and technical safeguards to protect the privacy, integrity, and availability of electronic protected health information maintained or transmitted by covered entities and business associates.

The HIPAA Breach Notification Rule requires that covered entities and business associates, under certain circumstances, notify patients when there has been an improper use or disclosure of protected health information.

Any failure or perceived failure of our Company or our products to meet HIPAA standards and related regulatory requirements could expose us to certain notification, penalty, and enforcement risks, damage our reputation, and adversely affect demand for our products and force us to expend significant capital and other resources to address the privacy and security requirements of HIPAA.

In addition to our obligations under HIPAA, there are other federal laws that include specific privacy and security obligations, above and beyond HIPAA, for certain types of health information and impose additional sanctions and penalties.

These rules are not preempted by HIPAA.

All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands have enacted

legislation requiring notice to individuals of security breaches involving protected health information, which is not uniformly defined among the breach

notification laws.

Organizations must review each state's definitions, mandates, and notification requirements and timelines to appropriately prepare and notify affected individuals and government

agencies, including the attorney general, in compliance with such state laws.

Further, most states have enacted patient confidentiality laws that protect against the disclosure of confidential medical

information, and many states have adopted or are considering adopting further legislation in this area.

All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands have enacted legislation requiring notice to individuals of security breaches involving protected health information, which is not uniformly defined among the breach notification laws.

Organizations must review each state’s definitions, mandates, and notification requirements and timelines to appropriately prepare and notify affected individuals and government agencies, including the attorney general, in compliance with such state laws.

Further, most states have enacted patient confidentiality laws that protect against the disclosure of confidential medical information, and many states have adopted or are considering adopting further legislation in this area.

These state laws may be more stringent than HIPAA requirements.

On June 28, 2018,

California passed the California Consumer Privacy Act, which imposes significant changes in data privacy regulation and is set to take effect on January 1, 2020, and New York has passed the

Stop Hacks and Improve Electronic Data Security Act, which expands the state's existing privacy laws.

It is too early to assess the impact that compliance with these laws will have on our business.

California passed the California Consumer Privacy Act, which imposes significant changes in data privacy regulation, and New York has passed the Stop Hacks and Improve Electronic Data Security Act, which expands the state’s existing privacy laws.

Recent legal developments in the EU have created compliance uncertainty regarding certain transfers of personal data from the EU to the United States.

For example, GDPR, a

regulation implemented on May 25, 2018 in the EU on data protection and privacy for all individuals in the EU and the EEA, applies to all enterprises, regardless of location, that are doing

business in the EU or that collect and analyze data tied to EU and EEA residents.

GDPR creates a range of new compliance obligations, including stringent technical and security controls surrounding

the storage, use, and disclosure of personal information, and significantly increases financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the

preceding financial year or €20 million (whichever is higher) for the most serious infringements).

addition, the European Commission in July 2016 and the Swiss Government in January 2017 approved the EU-U.S.

and the Swiss-U.S.

Privacy Shield frameworks, respectively, which are

designed to allow U.S.

companies that self-certify to the U.S.

Department of Commerce and publicly commit to comply with the Privacy Shield requirements to freely import personal data from the EU and

However, these frameworks face a number of legal challenges and their validity remains subject to legal, regulatory and political developments in both Europe and the U.S.

resulted in some uncertainty, and compliance obligations could cause us to incur costs or require us to change our business practices in a manner adverse to our business.

Our operations are vulnerable to interruption or loss due to natural disasters, epidemics, terrorist acts and other events beyond our control, which could adversely impact our

Although we perform manufacturing in multiple locations, we generally do not have redundant manufacturing capabilities in place for any

particular product or component.

For example, GDPR, a regulation implemented on May 25, 2018 in the EU on data protection and privacy for all individuals in the EU and the EEA, applies to all enterprises, regardless of location, that are doing business in the EU or that collect and analyze data tied to EU and EEA residents.

GDPR creates a range of new compliance obligations, including stringent technical and security controls surrounding the storage, use, and disclosure of personal information, and significantly increases financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whichever is higher) for the most serious infringements).

Our operations are vulnerable to interruption or loss due to natural disasters, epidemics, terrorist acts and other events beyond our control, which could adversely impact our operations.

Although we perform manufacturing in multiple locations, we generally do not have redundant manufacturing capabilities in place for any particular product or component.

As a result, we depend on our current facilities for the continued operation of our business.

A natural disaster, epidemic, terrorist act, act of war, or other natural

or manmade disaster affecting any of our facilities could significantly disrupt our operations, or delay or prevent product manufacturing and shipment for the time required to repair, rebuild, or

replace our manufacturing facilities.

This delay could be lengthy and we could incur significant expenses to

repair or replace the facilities.

A natural disaster, epidemic, terrorist act, act of war, or other natural or manmade disaster affecting any of our facilities could significantly disrupt our operations, or delay or prevent product manufacturing and shipment for the time required to repair, rebuild, or replace our manufacturing facilities.

This delay could be lengthy and we could incur significant expenses to repair or replace the facilities.

Any similar natural or manmade disaster that affects a key supplier or customer could lead to a similar disruption in our business.

Substantial declines in crude oil prices or extended periods of low crude oil prices may adversely affect our business, financial condition, and results of operations.

Some of our international customers have procurement budgets that are strongly correlated with fluctuations in the price of crude oil.

Historically, the market for crude oil has been volatile and unpredictable.

Crude oil prices are subject to rapid and significant fluctuations in response to global events and relatively minor changes in supply and demand.

Recently, as a result of increased supply and decreased demand, crude oil prices have declined sharply.

While factors relating the price of crude oil to demand for our products and services are complex, this period of depressed crude oil prices may adversely affect our business, financial condition, and results of operations.

Third parties may claim we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products.

As we introduce any new and potentially promising product or service, or improve existing products or services with new features or components,

companies possessing competing technologies, or other companies owning patents or other intellectual property rights, may be motivated to assert infringement claims in order to generate royalty

revenues, delay or diminish potential sales and challenge our right to market such products or services.

Even if successful in defending against such claims, patent and other intellectual property

related litigation is costly and time consuming.

In addition, we may find it necessary to initiate litigation in order to protect our patent or other intellectual property rights, and even if the

claims are well-founded and ultimately successful such litigation is typically costly and time-consuming and may expose us to counterclaims, including claims for intellectual property infringement,

antitrust, or other such claims.

Third parties could also obtain patents or other intellectual property rights that may require us to either redesign products or, if possible, negotiate licenses from

such third parties.

Adverse determinations in any such litigation could result in significant liabilities to third parties or injunctions, or could require us to seek licenses from third parties, and

if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, importing, distributing, selling or using certain products, any one of which could have a material

adverse effect on us.

As we introduce any new and potentially promising product or service, or improve existing products or services with new features or components, companies possessing competing technologies, or other companies owning patents or other intellectual property rights, may be motivated to assert infringement claims in order to generate royalty revenues, delay or diminish potential sales and challenge our right to market such products or services.

Even if successful in defending against such claims, patent and other intellectual property related litigation is costly and time consuming.

In addition, we may find it necessary to initiate litigation in order to protect our patent or other intellectual property rights, and even if the claims are well-founded and ultimately successful such litigation is typically costly and time-consuming and may expose us to counterclaims, including claims for intellectual property infringement, antitrust, or other such claims.

Third parties could also obtain patents or other intellectual property rights that may require us to either redesign products or, if possible, negotiate licenses from such third parties.

Adverse determinations in any such litigation could result in significant liabilities to third parties or injunctions, or could require us to seek licenses from third parties, and if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, importing, distributing, selling or using certain products, any one of which could have a material adverse effect on us.

In addition, some licenses may be non-exclusive, which could provide our competitors access to the same technologies.

Under any of these circumstances, we may incur significant

Our ongoing success is dependent upon the continued availability of certain key employees.

We are dependent in our operations on the continued availability of the services of our employees, many of whom are individually key to our

current and future success, and the availability of new employees to implement our growth plans.

Under any of these circumstances, we may incur significant expenses.

Our ongoing success is dependent upon the continued availability of certain key employees and the ability to attract new employees.

We are dependent in our operations on the continued availability of the services of our employees, many of whom are individually key to our current and future success, and the availability of new employees to implement our growth plans.

The market for skilled employees is highly competitive, especially for employees in technical fields.

While our compensation programs are intended to attract and retain the employees required for us to be successful, ultimately, we may not be able to retain the services of all of our key employees or

a sufficient number to execute on our plans.

While our compensation programs are intended to attract and retain the employees required for us to be successful, ultimately, we may not be able to retain the services of all of our key employees or a sufficient number to execute on our plans.

In addition, we may not be able to continue to attract new employees as required.

Healthcare cost containment pressures and legislative or regulatory reforms may affect our ability to sell our products profitably.

All third-party payers, whether governmental or commercial, whether inside the United States or outside, are developing increasingly

sophisticated methods of controlling healthcare costs.

All third-party payers, whether governmental or commercial, whether inside the United States or outside, are developing increasingly sophisticated methods of controlling healthcare costs.

These cost-control methods also potentially limit the amount that healthcare providers may be willing to pay for medical devices.

In the United

States, hospital and other healthcare provider customers, including physicians and ambulatory surgery centers, that purchase our products typically bill various third-party payers to cover all or a

portion of the costs and fees associated with the procedures or tests in which our products are used and bill patients for any deductibles or co-payments.

Because there is often no separate

reimbursement for our products, any decline in the amount payers are willing to reimburse our customers for the procedures and tests associated with our products could make it

for customers to continue using, or adopt, our products and create additional pricing pressure for us.

If we are forced to lower the price we charge for our products, our gross margins will

decrease, which will adversely affect our ability to invest in and grow our business.

have been, and we expect there will continue to be, legislative and regulatory proposals to change the healthcare system, and some could significantly affect the ways in which

doctors, hospitals, healthcare systems and health insurance companies are compensated for the services they provide, which could have a material impact on our business.

It is not clear at this time

what changes may impact the ability of hospitals and hospital networks to purchase the patient monitoring and diagnostic cardiology systems that we sell or if it will alter market-based incentives

that hospitals and hospital networks currently face to continually improve, upgrade and expand their use of such equipment.

by governmental and third-party payers to reduce healthcare costs or the implementation of new legislative reforms imposing additional government controls could cause a reduction

in sales or in the selling price of our products, which could adversely affect our business.

example, the Affordable Care Act is a sweeping measure designed to expand access to affordable health insurance, control healthcare spending and improve healthcare quality.

administration and Congress have taken steps to modify many of the Affordable Care Act's provisions.

Effective for the 2019 calendar year, the Tax Act repealed an Affordable Care Act tax imposed on

individuals who do not maintain insurance coverage throughout the year.

The Trump administration has also taken steps to approve state requests to modify Medicaid eligibility standards, including by

imposition of work and community engagement requirements.

In addition, the Trump administration has revised federal regulations to create more opportunities for individuals to purchase insurance

outside of the individual and small group insurance

markets through short-term, limited duration health insurance policies and association health plans.

This has created uncertainty in the market, which could result in reduced demand for our products,

additional pricing pressure, and increased demand for new and more flexible payment structures.

Substantial government regulation in the United States and abroad may restrict our ability to sell our patient monitoring and diagnostic cardiology systems, and failure to comply

with such laws and regulations may have a material adverse impact on our business.

The FDA and comparable regulatory authorities in foreign countries extensively and rigorously regulate our patient monitoring and diagnostic

cardiology systems, including the research and development, design, testing, clinical trials, manufacturing, clearance or approval, safety and efficacy, labeling, advertising, promotion, pricing,

recordkeeping, reporting, import and export, post-approval studies and sale and distribution of these products.

In the United States, before we can market a new medical device, or a new use of, new

claim for, or significant modification to, an existing product, we must first receive clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act.

In the 510(k) clearance process,

the FDA must determine that a proposed device is "substantially equivalent" to a device legally on the market, known as a "predicate" device, in order to clear the proposed device for marketing.

"substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have

different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.

In the United States, hospital and other healthcare provider customers, including physicians and ambulatory surgery centers, that purchase our products typically bill various third-party payers to cover all or a portion of the costs and fees associated with the procedures or tests in which our products are used and bill patients for any deductibles or co-payments.

Because there is often no separate reimbursement for our products, any decline in the amount payers are willing to reimburse our customers for the procedures and tests associated with our products could make it difficult for customers to continue using, or adopt, our products and create additional pricing pressure for us.

If we are forced to lower the price we charge for our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

There have been, and we expect there will continue to be, legislative and regulatory proposals to change the healthcare system, and some could significantly affect the ways in which doctors, hospitals, healthcare systems and health insurance companies are compensated for the services they provide, which could have a material impact on our business.

It is not clear at this time what changes may impact the ability of hospitals and hospital networks to purchase the patient monitoring, diagnostic cardiology, and connected care systems that we sell or if it will alter market-based incentives that hospitals and hospital networks currently face to continually improve, upgrade and expand their use of such equipment.

Efforts by governmental and third-party payers to reduce healthcare costs or the implementation of new legislative reforms imposing additional government controls could cause a reduction in sales or in the selling price of our products, which could adversely affect our business.

For example, the Affordable Care Act is a sweeping measure designed to expand access to affordable health insurance, control healthcare spending and improve healthcare quality.

The Trump administration and Congress have taken steps to modify many of the Affordable Care Act’s provisions.

Effective for the 2019 calendar year, the Tax Act repealed an Affordable Care Act tax imposed on individuals who do not maintain insurance coverage throughout the year.

The Trump administration has also taken steps to approve state requests to modify Medicaid eligibility standards, including by imposition of work and community engagement requirements.

In addition, the Trump administration has revised federal regulations to create more opportunities for individuals to purchase insurance outside of the individual and small group insurance markets through short-term, limited duration health insurance policies and association health plans.

These developments have created uncertainty in the market, which could result in reduced demand for our products, additional pricing pressure, and increased demand for new and more flexible payment structures.

Substantial government regulation in the United States and abroad may restrict our ability to sell our patient monitoring, diagnostic cardiology, and connected care systems, and failure to comply with such laws and regulations may have a material adverse impact on our business.

The FDA and comparable regulatory authorities in foreign countries extensively and rigorously regulate our patient monitoring, diagnostic cardiology, and connected care systems, including the research and development, design, testing, clinical trials, manufacturing, clearance or approval, safety and efficacy, labeling, advertising, promotion, pricing, recordkeeping, reporting, import and export, post-approval studies and sale and distribution of these products.

In the United States, before we can market a new medical device, or a new use of, new claim for, or significant modification to, an existing product, we must first receive clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act.

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing.

To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.

Clinical data is sometimes required to support substantial equivalence.

modifications made to products cleared through a 510(k) may require a new 510(k).

The FDA can delay, limit or deny clearance or approval of a device for many reasons,

Some modifications made to products cleared through a 510(k) may require a new 510(k).

The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

● we may not be able to demonstrate to the FDA’s satisfaction that our products are safe and effective for their intended uses;

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● the manufacturing process or facilities we use may not meet applicable requirements;

the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner

rendering our clinical data or regulatory filings insufficient for clearance or approval.

future products may not obtain FDA clearance on a timely basis, or at all.

Further, the FDA makes periodic inspections of medical device manufacturers and in connection with such

inspections issues observations when the FDA believes the manufacturer has failed to comply with applicable regulations.

If FDA observations are not addressed to the FDA's satisfaction, the FDA may

issue a warning letter and/or proceed directly to other forms of enforcement action, which could include the shutdown of our production facilities, adverse publicity, and civil and criminal penalties.

The expense and costs of any corrective actions that we may take, which may include product recalls, correction and removal of products from customer sites and/or changes to our product manufacturing

and quality systems, could adversely impact our financial results.

● the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.

Our future products may not obtain FDA clearance on a timely basis, or at all.

Further, the FDA makes periodic inspections of medical device manufacturers and in connection with such inspections issues observations when the FDA believes the manufacturer has failed to comply with applicable regulations.

If FDA observations are not addressed to the FDA’s satisfaction, the FDA may issue a warning letter and/or proceed directly to other forms of enforcement action, which could include the shutdown of our production facilities, adverse publicity, and civil and criminal penalties.

The expense and costs of any corrective actions that we may take, which may include product recalls, correction and removal of products from customer sites and/or changes to our product manufacturing and quality systems, could adversely impact our financial results.

Issuance of a warning letter may also lead customers to delay purchasing decisions or cancel orders.

patient monitoring and diagnostic cardiology systems must also comply with the laws and regulations of foreign countries in which we develop, manufacture and market such products.

general, the extent and complexity of medical device regulation is increasing worldwide.

This trend is likely to continue and the cost and time required to obtain marketing clearance in any given

country may increase as a result.

Our patient monitoring, diagnostic cardiology, and connected care systems must also comply with the laws and regulations of foreign countries in which we develop, manufacture and market such products.

In general, the extent and complexity of medical device regulation is increasing worldwide.

This trend is likely to continue and the cost and time required to obtain marketing clearance in any given country may increase as a result.

Our products may not obtain any necessary foreign clearances on a timely basis, or at all.

any of our patient monitoring or diagnostic cardiology systems is cleared for sale, regulatory authorities may still limit the use of such product, prevent its sale or manufacture

or require a recall or withdrawal of such product from the marketplace.

Once any of our patient monitoring, diagnostic cardiology, or connected care systems is cleared for sale, regulatory authorities may still limit the use of such product, prevent its sale or manufacture or require a recall or withdrawal of such product from the marketplace.

Following initial clearance from regulatory authorities, we continue to be subject to extensive regulatory requirements.

Government authorities can withdraw marketing clearance or impose sanctions due to our failure to comply with regulatory standards or due to the occurrence of unforeseen problems following initial

Government authorities can withdraw marketing clearance or impose sanctions due to our failure to comply with regulatory standards or due to the occurrence of unforeseen problems following initial clearance.

Ongoing regulatory requirements are wide-ranging and govern, among other things:

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We must continually monitor the performance of our products once approved and marketed for signs that their use may elicit serious and unexpected adverse effects.

Any recall of our

products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products that leads to corrective actions, could have

a material adverse impact on us.

Although we believe that existing data continue to support the efficacy and safety of our patient monitoring and cardiology products, in the

future, longer term study outcomes could demonstrate conflicting clinical effectiveness, a reduction of effectiveness, no clinical effectiveness or longer term safety issues.

data could have a detrimental effect on the market penetration and usage of our medical device products.

Any recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products that leads to corrective actions, could have a material adverse impact on us.

Although we believe that existing data continue to support the efficacy and safety of our patient monitoring, cardiology, and connected care products, in the future, longer term study outcomes could demonstrate conflicting clinical effectiveness, a reduction of effectiveness, no clinical effectiveness or longer term safety issues.

This type of differing data could have a detrimental effect on the market penetration and usage of our medical device products.

As a result, our sales may decline or expected growth would be negatively impacted.

This could negatively impact our operating condition and financial results.

generally, all medical devices can experience performance problems that require review and possible corrective action by us or a component supplier.

We cannot provide assurance that

component failures, manufacturing errors, noncompliance with quality system requirements or good manufacturing practices, design defects and/or labeling inadequacies in any device that could result in

an unsafe condition or injury to the patient will not occur.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of

material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.

Manufacturers may also, under their own initiative, stop

shipment or recall a product if any material deficiency is found or withdraw a product to improve device performance or for other reasons.

A government-mandated or voluntary recall by us could occur

as a result of an unacceptable risk to health, component failures, manufacturing errors, noncompliance with good manufacturing practices or quality system requirements, design or labeling defects or

other deficiencies and issues.

Similar regulatory agencies in other countries have similar authority to recall products because of material deficiencies or defects in design or manufacture that could

endanger health.

A recall involving our products could be particularly harmful to our business, financial and operating results.

FDA requires that certain classifications of recalls be reported to the FDA within 10 working days after the recall is initiated.

Notice to the FDA of a correction or removal is

required when undertaken to reduce a risk to health, including when there is a reasonable probability that the product will cause serious adverse health consequences or death, or when use of the

device may cause temporary or medically reversible adverse health consequences or an outcome where the probability of serious adverse health consequences is remote.

In addition, companies are required

to maintain certain records of corrections and removal, even if they are not reportable to the FDA or similar foreign governmental authorities.

We may initiate voluntary recalls

involving our products in the future that we determine do not require notification of the FDA or foreign governmental authorities.

If the FDA or foreign governmental authorities disagree with our

determinations, they could require us to report those actions as recalls.

More generally, all medical devices can experience performance problems that require review and possible corrective action by us or a component supplier.

We cannot provide assurance that component failures, manufacturing errors, noncompliance with quality system requirements or good manufacturing practices, design defects and/or labeling inadequacies in any device that could result in an unsafe condition or injury to the patient will not occur.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.

Manufacturers may also, under their own initiative, stop shipment or recall a product if any material deficiency is found or withdraw a product to improve device performance or for other reasons.

A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, noncompliance with good manufacturing practices or quality system requirements, design or labeling defects or other deficiencies and issues.

Similar regulatory agencies in other countries have similar authority to recall products because of material deficiencies or defects in design or manufacture that could endanger health.

A recall involving our products could be particularly harmful to our business, financial and operating results.The FDA requires that certain classifications of recalls be reported to the FDA within 10 working days after the recall is initiated.

Notice to the FDA of a correction or removal is required when undertaken to reduce a risk to health, including when there is a reasonable probability that the product will cause serious adverse health consequences or death, or when use of the device may cause temporary or medically reversible adverse health consequences or an outcome where the probability of serious adverse health consequences is remote.

In addition, companies are required to maintain certain records of corrections and removal, even if they are not reportable to the FDA or similar foreign governmental authorities.

We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA or foreign governmental authorities.

If the FDA or foreign governmental authorities disagree with our determinations, they could require us to report those actions as recalls.

A future recall announcement could harm our reputation with customers and negatively affect our sales.

In addition, the FDA or

a foreign governmental authority could take enforcement action for failing to report the recalls when they were conducted.

addition, under the FDA's medical device reporting regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or

serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.

Repeated product malfunctions may result in a

voluntary or involuntary product recall.

on the corrective action we take to redress a product's deficiencies or defects, the FDA or applicable foreign regulatory authority may require, or we may decide, that we will

need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.

Seeking such approvals or clearances may delay our ability to replace the recalled

devices in a timely manner.

Moreover, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, civil penalties or

criminal fines.

We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face material adverse publicity or regulatory consequences,

which could harm our business, including our ability to market our products in the future.

adverse event involving our products, whether in the United States or abroad, could result in future voluntary corrective actions, such as recalls or customer notifications, or

agency action, such as inspection, mandatory recall, orders of repair, replacement or refund or other enforcement action.

Any corrective action, whether voluntary or involuntary, as well as defending

ourselves in a lawsuit, will require the dedication of our time and capital and may harm our reputation and financial results.

We may be subject to fines, penalties, injunctions or other enforcement actions if we are determined to be promoting the use of our products for unapproved or "off-label" uses,

resulting in damage to our reputation and business.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the

promotion of a medical device for a use that has not been cleared or approved by the FDA.

In addition, the FDA or a foreign governmental authority could take enforcement action for failing to report the recalls when they were conducted.

In addition, under the FDA’s medical device reporting regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.

Repeated product malfunctions may result in a voluntary or involuntary product recall.

Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA or applicable foreign regulatory authority may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.

Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner.

Moreover, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, civil penalties or criminal fines.

We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face material adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.

Any adverse event involving our products, whether in the United States or abroad, could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection, mandatory recall, orders of repair, replacement or refund or other enforcement action.

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital and may harm our reputation and financial results.

We may be subject to fines, penalties, injunctions, or other enforcement actions if we are determined to be promoting the use of our products for unapproved or “off-label” uses, resulting in damage to our reputation and business.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of a medical device for a use that has not been cleared or approved by the FDA.

Use of a device outside of its cleared or approved indications is known as “off-label” use.

Physicians may use

our products off-label, as the FDA does not restrict or regulate a physician's choice of treatment within the practice of medicine.

However, if the FDA determines that our promotional materials or

training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of

warning letters, untitled letters, fines, penalties, consent decrees, injunctions, or seizures, which

could have an adverse impact on our reputation and financial results.

Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.

However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of warning letters, untitled letters, fines, penalties, consent decrees, injunctions, or seizures, which could have an adverse impact on our reputation and financial results.

We could also be subject to enforcement action under other federal or state laws, including the False Claims Act.

We are subject to additional federal, state, and foreign laws and regulations relating to our healthcare business;

our failure to comply with those laws could have a material adverse

effect on our results of operations and financial condition.

Although we do not provide healthcare services, submit claims for third-party reimbursement or receive payments directly from Medicare, Medicaid

or other third-party payers for our product, we are subject to healthcare fraud and abuse regulation and enforcement by federal and state governments, which could significantly impact our business.

our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.

Although we do not provide healthcare services, submit claims for third-party reimbursement or receive payments directly from Medicare, Medicaid or other third-party payers for our product, we are subject to healthcare fraud and abuse regulation and enforcement by federal and state governments, which could significantly impact our business.

Healthcare fraud and abuse and health information privacy and security laws potentially applicable to our operations include:

the federal Anti-Kickback Statute, which applies to our marketing practices, pricing policies and relationships with healthcare providers, by

prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal

healthcare program, such as the Medicare or Medicaid programs;

federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit,

among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material

to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or

property to the federal government;

the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and its implementing regulations, which created federal

criminal laws that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), imposes certain regulatory and

contractual requirements regarding the privacy, security and transmission of individually identifiable health information;

federal "Sunshine Act" requirements imposed by the Affordable Care Act, on device manufacturers regarding any "payment or other transfer of

value" to physicians and teaching hospitals.

Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of

$1 million per year for "knowing failures") for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual

state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items

or services reimbursed by any third-party payer, including commercial insurers;

state laws that require device companies to comply with the industry's voluntary compliance

and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers;

state laws that require drug and device

manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

and state laws governing the privacy and

security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA/HITECH, thus complicating compliance efforts.

risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the

courts, and their provisions are open to a variety of interpretations.

● the federal Anti-Kickback Statute, which applies to our marketing practices, pricing policies and relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs;

● federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government;

● the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and its implementing regulations, which created federal criminal laws that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), imposes certain regulatory and contractual requirements regarding the privacy, security and transmission of individually identifiable health information;

● federal “Sunshine Act” requirements imposed by the Affordable Care Act, on device manufacturers regarding any “payment or other transfer of value” to physicians and teaching hospitals.

Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of $1 million per year for “knowing failures”) for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission;

● state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers;

state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers;

state laws that require drug and device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA/HITECH, thus complicating compliance efforts.

The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Moreover, recent health care reform legislation has strengthened these laws.

For example, the Affordable Care Act, among other

things, amended the intent requirement of the federal Anti-Kickback Statute and criminal health care fraud statutes;

a person or entity no longer needs to have actual knowledge of these statutes or

specific intent to violate them to have committed a violation.

In addition, the Affordable Care Act provided that the government may assert that a claim including items or

services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of our business activities could

be subject to challenge under one or more of such laws.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses

and divert our management's attention from the operation of our business.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that

apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from governmental health care programs, disgorgement, contractual damages, reputational

harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could impair our ability to operate our business and our financial results.

For example, the Affordable Care Act, among other things, amended the intent requirement of the federal Anti-Kickback Statute and criminal health care fraud statutes;

a person or entity no longer needs to have actual knowledge of these statutes or specific intent to violate them to have committed a violation.

In addition, the Affordable Care Act provided that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from governmental health care programs, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could impair our ability to operate our business and our financial results.

Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations.

The healthcare industry has been consolidating and organizations such as group purchasing organizations, independent delivery networks, and

large single accounts such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our healthcare provider customers.

As a result, transactions with

customers are larger, more complex, and tend to involve more long-term contracts.

The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure

on product pricing.

The healthcare industry has been consolidating and organizations such as group purchasing organizations, independent delivery networks, and large single accounts such as the United States Veterans Administration, continue to consolidate purchasing decisions for many of our healthcare provider customers.

As a result, transactions with customers are larger, more complex, and tend to involve more long-term contracts.

The purchasing power of these larger customers has increased, and may continue to increase, causing downward pressure on product pricing.

If we are not one of the providers selected by one of these organizations, we may be precluded from making sales to its members or participants.

Even if we are one of the selected

providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on purchases of a broader range of products.

Further, we may be required to

commit to pricing that has a material adverse effect on our revenues and profit margins, business, financial condition and results of operations.

We expect that market demand, governmental regulation,

third-party reimbursement policies and societal pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances, which may exert further

downward pressure on the prices of our products and could adversely impact our business, financial condition, and results of operations.

Technological advances and evolving industry and regulatory standards and certifications could reduce our future product sales, which could cause our revenues to grow more slowly or

The markets for our products are characterized by rapidly changing technology, changing customer needs, evolving industry or regulatory

standards and certifications and frequent new product introductions and enhancements.

The emergence of new industry or regulatory standards and certification requirements in related fields may

adversely affect the demand for our products.

This could happen, for example, if new standards and

emerged that were incompatible with customer deployments of our applications.

In addition, any products or processes that we develop may become obsolete or uneconomical before we recover

any of the expenses incurred in connection with their development.

We cannot provide assurance that we will succeed in developing and marketing product enhancements or new products that respond to

technological change, new industry standards, changed customer requirements or competitive products on a timely and cost-effective basis.

Additionally, even if we are able to develop new products and

product enhancements, we cannot provide assurance that they will be profitable or that they will achieve market acceptance.

develop certain of our security inspection technologies to meet the certification requirements of various agencies worldwide, including the U.S.

Transportation Safety Administration

and the European Civil Aviation Conference among others.

Such standards frequently change and there is a risk now and in the future that we may not ultimately be able to develop technologies, or

develop in a timely way, solutions that are ultimately able to meet the new standards.

Even if we are one of the selected providers, we may be at a disadvantage relative to other selected providers that are able to offer volume discounts based on purchases of a broader range of products.

Further, we may be required to commit to pricing that has a material adverse effect on our revenues and profit margins, business, financial condition and results of operations.

We expect that market demand, governmental regulation, third-party reimbursement policies and societal pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances, which may exert further downward pressure on the prices of our products and could adversely impact our business, financial condition, and results of operations.

Technological advances and evolving industry and regulatory standards and certifications could reduce our future product sales, which could cause our revenues to grow more slowly or decline.

The markets for our products are characterized by rapidly changing technology, changing customer needs, evolving industry or regulatory standards and certifications and frequent new product introductions and enhancements.

The emergence of new industry or regulatory standards and certification requirements in related fields may adversely affect the demand for our products.

This could happen, for example, if new standards and technologies emerged that were incompatible with customer deployments of our applications.

In addition, any products or processes that we develop may become obsolete or uneconomical before we recover any of the expenses incurred in connection with their development.

We cannot provide assurance that we will succeed in developing and marketing product enhancements or new products that respond to technological change, new industry standards, changed customer requirements or competitive products on a timely and cost-effective basis.

Additionally, even if we are able to develop new products and product enhancements, we cannot provide assurance that they will be profitable or that they will achieve market acceptance.

We develop certain of our security inspection technologies to meet the certification requirements of various agencies worldwide, including the U.S.

Transportation Safety Administration and the European Civil Aviation Conference among others.

Such standards frequently change and there is a risk now and in the future that we may not ultimately be able to develop technologies, or develop in a timely way, solutions that are ultimately able to meet the new standards.

We are subject to various environmental regulations which may impose liability on us whether or not we knew of or caused the release of hazardous substances on or in our facilities.

We are subject to various U.S.

and international environmental laws, directives, and regulations pertaining to the use, storage, handling and

disposal of hazardous substances used, and hazardous wastes used or generated, in the manufacture of our products.

Such laws mandate the use of controls and practices designed to mitigate the impact

of our operations on the environment, and under such laws we may be held liable for the costs associated with the remediation and removal of any unintended or previously unknown releases of hazardous

substances on, beneath or from our property and associated operations, including the remediation of hazardous waste disposed off-site.

Such laws may impose liability without regard to whether we knew

of or caused the release of such hazardous substances or wastes.

For example, we continue to investigate soil and groundwater contamination at our Hawthorne, California facility that we believe stems

from historical releases and off-site sources.

and international environmental laws, directives, and regulations pertaining to the use, storage, handling and disposal of hazardous substances used, and hazardous wastes used or generated, in the manufacture of our products.

Such laws mandate the use of controls and practices designed to mitigate the impact of our operations on the environment, and under such laws we may be held liable for the costs associated with the remediation and removal of any unintended or previously unknown releases of hazardous substances on, beneath or from our property and associated operations, including the remediation of hazardous waste disposed off-site.

Such laws may impose liability without regard to whether we knew of or caused the release of such hazardous substances or wastes.

For example, we continue to investigate soil and groundwater contamination at our Hawthorne, California facility that we believe stems from historical releases and off-site sources.

See “Business—Environmental Regulations”.

Any failure by us to comply with present or future regulations could subject us to the imposition

of substantial fines, suspension of production, alteration of manufacturing processes, or cessation of operations, any of which could have a material adverse effect on our business, financial

condition and results of operations.

A failure of a key information technology system, process or site could have a material adverse impact on our ability to conduct business.

We rely extensively on information technology systems to interact with our employees and our customers.

These interactions include, but are not

limited to, ordering and managing materials from suppliers, converting materials to finished products, shipping product to customers, processing transactions, summarizing and reporting results of

operations, transmitting data used by our service personnel and by and among our wide-spread personnel and facilities, complying with regulatory, legal and tax requirements, and other processes

necessary to manage our business.

If our systems are damaged or cease to function properly due to any number of causes, ranging from the failures of third-party service providers, to catastrophic

events, to power outages, to security breaches, and our business continuity plans do not effectively compensate on a timely basis, we may suffer interruptions in our ability to manage operations which

may adversely impact our results of operations and/or financial condition.

We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm, and other serious negative consequences if we sustain cyber-attacks or

other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers, suppliers, or other third parties.

Any failure by us to comply with present or future regulations could subject us to the imposition of substantial fines, suspension of production, alteration of manufacturing processes, or cessation of operations, any of which could have a material adverse effect on our business, financial condition and results of operations.

We rely on third parties and our own systems for interaction with our customers and suppliers and employees, and a failure of a key information technology system, process or site or any failure or interruption in the services provided by these third parties or our own systems could have a material adverse impact on our ability to conduct business.

We rely extensively on our information technology systems and systems and services provided by third parties to interact with our employees and our customers and suppliers.

These interactions include, but are not limited to, ordering and managing materials from suppliers, converting materials to finished products, shipping product to customers, processing transactions, summarizing and reporting results of operations, transmitting data used by our service personnel and by and among our wide-spread personnel and facilities, complying with regulatory, legal and tax requirements, and other processes necessary to manage our business.

We do not control our third-party service providers and we do not maintain redundant systems for some of such services, increasing our vulnerability to problems with such services.

If the systems on which we rely are damaged or cease to function properly due to any number of causes, ranging from failures of our third-party service providers, to catastrophic events, to power outages, to security breaches, we may suffer interruptions in our ability to manage operations which may adversely impact our results of operations and/or financial condition.

We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm, and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers, suppliers, or other third parties.

We manage and store proprietary information and sensitive or confidential data relating to our operations.

We may be subject to cyber-attacks on

and breaches of the information technology systems we use for these purposes.

computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system

disruptions, or cause shutdowns.

Computer programmers and hackers also may be able to develop and deploy viruses, worms, malware, ransomware and other malicious software programs that attack our

systems or otherwise exploit any security vulnerabilities of our systems or products.

In addition, sophisticated hardware and operating system software and applications that we produce or procure from

third parties may contain defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of our systems or products.

Cyber-threats in

particular vary in technique and sources, are persistent, frequently change and increasingly are more sophisticated, targeted and difficult to detect and prevent against.

expend significant capital and resources to protect against the threat of security breaches, including cyber-attacks, viruses, worms, malware, ransomware and other malicious software

Substantial additional expenditures may be required before or after a cyber-attack or breach to mitigate in advance or to

alleviate any problems caused by cyber-attacks and breaches, including unauthorized access to or theft of data stored in our information systems and the introduction of computer malware or ransomware

to our systems.

We may be subject to cyber-attacks on and breaches of the information technology systems we use for these purposes.

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions, or cause shutdowns.

Computer programmers and hackers also may be able to develop and deploy viruses, worms, malware, ransomware and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities of our systems or products.

In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our systems or products.

Cyber-threats in particular vary in technique and sources, are persistent, frequently change and increasingly are more sophisticated, targeted and difficult to detect and prevent.

We expend significant capital and resources to protect against the threat of security breaches, including cyber-attacks, viruses, worms, malware, ransomware and other malicious software programs.

Substantial additional expenditures may be required before or after a cyber-attack or breach to mitigate in advance or to alleviate any problems caused by cyber-attacks and breaches, including unauthorized access to or theft of data stored in our information systems and the introduction of computer malware or ransomware to our systems.

Our remediation efforts may not be successful, and there could be interruptions, delays, or cessation of service.

often identify attempts to gain unauthorized access to our systems.

Given the rapidly evolving nature and proliferation of cyber threats, there can be no assurance that our employee

training, operational, and other technical security measures or other controls will detect, prevent or remediate security or data breaches in a timely manner or otherwise prevent unauthorized access

to, damage to, or interruption of our systems and operations.

We often identify attempts to gain unauthorized access to our systems.

Given the rapidly evolving nature and proliferation of cyber threats, there can be no assurance that our employee training, operational, and other technical security measures or other controls will detect, prevent or remediate security or data breaches in a timely manner or otherwise prevent unauthorized access to, damage to, or interruption of our systems and operations.

We are likely to face attempted cyber-attacks in the future.

Accordingly, we may be vulnerable to losses associated with the improper

functioning, security breach, or unavailability of our information systems as well as any systems used in acquired operations.

addition, breaches of our security measures and the unapproved use or disclosure of proprietary information or sensitive or confidential data about us or our suppliers, customers or

other third parties could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and

reputation or otherwise harm our business, even if we were not responsible for the breach.

Furthermore, we are exposed to additional risks because we rely in certain capacities on third-party

software, data management, and cloud service providers with possible security problems and security vulnerabilities beyond our control.

Media or other reports of perceived security vulnerabilities to

our systems or those of our third-party suppliers, even if no breach has been attempted or occurred, could adversely impact our brand and reputation and materially impact our business.

increasing cyber security threats, there can be no assurance that we will not experience business interruptions, data loss, ransom, misappropriation, or corruption or theft or

misuse of proprietary information or related litigation and investigation, any of which could have a material adverse effect on our financial condition and results of operations and harm our business

We may experience difficulties implementing our new global enterprise resource planning system.

We are engaged in a multi-year implementation of a new global enterprise resource planning system (ERP).

The ERP is designed to accurately

maintain our books and records and provide information important to the operation of our business to our management team.

Our ERP will continue to require significant investment of human and financial

In implementing the ERP, we may experience significant delays, increased costs and other difficulties.

Any significant disruption or deficiency in the design and implementation of the ERP

could adversely affect our ability to process orders, ship product, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

While we have invested

significant resources in planning and project management, significant implementation issues may arise.

We receive significant amounts of research and development funding for our security and inspection systems from government grants and contracts, but we may not receive comparable

levels of funding in the future.

Government currently plays an important role in funding the development of certain of our security and inspection systems and

sponsoring their deployment at airports, ports, military installations and border crossings.

However, in the future, additional research and development funds from the government may not be available

If the government does not sponsor our technologies in the future, we may have to expend more resources on product development or cease development of certain technologies, which could

adversely affect our business.

Accordingly, we may be vulnerable to losses associated with the improper functioning, security breach, or unavailability of our information systems as well as any systems used in acquired operations.

In addition, breaches of our security measures and the unapproved use or disclosure of proprietary information or sensitive or confidential data about us or our suppliers, customers or other third parties could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business, even if we were not responsible for the breach.

Furthermore, we are exposed to additional risks because we rely in certain capacities on third-party software, data management, and cloud service providers with possible security problems and security vulnerabilities beyond our control.

Media or other reports of perceived security vulnerabilities to our systems or those of our third-party suppliers, even if no breach has been attempted or occurred, could adversely impact our brand and reputation and materially impact our business.

Given increasing cyber security threats, there can be no assurance that we will not experience business interruptions, data loss, ransom, misappropriation, or corruption or theft or misuse of proprietary information or related litigation and investigation, any of which could have a material adverse effect on our financial condition and results of operations and harm our business reputation.

Our inability to successfully manage the implementation of a company-wide enterprise resource planning (“ERP”) system could adversely affect our operating results.

We are in the process of implementing a new company-wide ERP system.

This process has been and continues to be complex and time-consuming and we expect to incur additional capital outlays and expenses.

This ERP system will replace many of our existing operating and financial systems, which is a major undertaking from a financial management and personnel perspective.

Should the new ERP system not be implemented successfully throughout all our business units on time and within budget, or if the system does not perform in a satisfactory manner, it could be disruptive and adversely affect our operations, including our potential ability to report accurate, timely and consistent financial results;

our ability to purchase supplies, components and raw materials from and pay our suppliers;

and our ability to deliver products and services to customers on a timely basis and to collect our receivables from them.

If the new ERP system is not successfully and fully implemented, it could negatively affect our financial reporting, inventory management and our future sales, profitability and financial condition.

We receive research and development funding for our security and inspection systems from government grants and contracts, but we may not receive comparable levels of funding in the future.

Government currently plays an important role in funding the development of certain of our security and inspection systems and sponsoring their deployment at airports, ports, military installations and border crossings.

However, in the future, additional research and development funds from the government may not be available to us.

If the government does not sponsor our technologies in the future, we may have to expend more resources on product development or cease development of certain technologies, which could adversely affect our business.

Government funded research and development also presents risks associated with government contracting in general that are described elsewhere in our risk factors.

Government agencies can generally terminate their contracts for convenience, and if we fail to meet the goals of government funded research and development, there is a risk that the government agency

may terminate our contracts for default.

In addition, any future grants to our competitors may improve their ability to develop and market competing products and cause our customers to delay purchase

decisions, which could harm our ability to market our products.

Government agencies can generally terminate their contracts for convenience, and if we fail to meet the goals of government funded research and development, there is a risk that the government agency may terminate our contracts for default.

In addition, any future grants to our competitors may improve their ability to develop and market competing products and cause our customers to delay purchase decisions, which could harm our ability to market our products.

Certain of our U.S.

Government contracts are dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances

for the facilities in which we perform sensitive government work.

Government contracts are dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances for the facilities in which we perform sensitive government work.

Certain of our U.S.

Government contracts require our employees to maintain various levels of security clearances, and we are required to

maintain certain facility security clearances.

If we cannot maintain or obtain the required security clearances for our facilities and our employees, or obtain these clearances in a timely manner, we

may be unable to perform certain U.S.

Government contracts require our employees to maintain various levels of security clearances, and we are required to maintain certain facility security clearances.

If we cannot maintain or obtain the required security clearances for our facilities and our employees, or obtain these clearances in a timely manner, we may be unable to perform certain U.S.

Government contracts.

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Government contracts.

could damage our reputation and adversely affect our business, financial condition and results of operations.

This could damage our reputation and adversely affect our business, financial condition and results of operations.

We are involved in various litigation matters, which could have a material adverse effect on our business, financial condition or operating results.

Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management's attention away from the running of our

Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class actions, or by governmental entities in

investigations and proceedings.

If we are unsuccessful in our defense in litigation matters, or any other legal proceeding, we may be forced to pay damages or fines and/or change our business

practices, any of which could have a material adverse effect on our business, financial condition and results of operations.

For more information about our litigation matters, see "Legal Proceedings"

and Note 10 to the consolidated financial statements.

Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from the running of our business.

Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class actions, or by governmental entities in investigations and proceedings.

If we are unsuccessful in our defense in litigation matters, or any other legal proceeding, we may be forced to pay damages or fines and/or change our business practices, any of which could have a material adverse effect on our business, financial condition and results of operations.

For more information about our litigation matters, see “Legal Proceedings” and Note 11 to the consolidated financial statements.

Our credit facility contains provisions that could restrict our ability to finance our future operations or engage in other business activities that may be in our interest.

Our credit facility contains a number of significant covenants that, among other things, limit our ability

Our credit facility contains a number of significant covenants that, among other things, limit our ability to:

● dispose of assets;

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● engage in certain transactions with subsidiaries and affiliates.

covenants could limit our ability to plan for or react to market conditions, finance our operations, engage in strategic acquisitions or disposals or meet our capital needs or

could otherwise restrict our activities or business plans.

These covenants could limit our ability to plan for or react to market conditions, finance our operations, engage in strategic acquisitions or disposals or meet our capital needs or could otherwise restrict our activities or business plans.

Our ability to comply with these covenants may be affected by events beyond our control.

In addition, our credit facility also requires us to

maintain compliance with certain financial ratios.

In addition, our credit facility also requires us to maintain compliance with certain financial ratios.

Our inability to comply with the required financial ratios or covenants could result in an event of default under our credit facility.

A default, if

not cured or waived, may permit acceleration of our indebtedness.

A default, if not cured or waived, may permit acceleration of our indebtedness.

In addition, our lenders could terminate their commitments to make further extensions of credit under our credit facility.

indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or that we will have the ability to refinance accelerated indebtedness on terms

favorable to us or at all.

we are not able to refinance existing indebtedness on acceptable terms, our ability to finance our operations, engage in strategic acquisitions, and otherwise meet our capital needs

would be significantly impaired.

If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or that we will have the ability to refinance accelerated indebtedness on terms favorable to us or at all.

If we are not able to refinance existing indebtedness on acceptable terms, our ability to finance our operations, engage in strategic acquisitions, and otherwise meet our capital needs would be significantly impaired.

The transition away from LIBOR may adversely affect our cost to obtain financing.

Central banks around the world, including the Board of Governors of the Federal Reserve, have commissioned working groups of market participants

and official sector representatives with the goal of finding suitable replacements for the London Interbank Offered Rate ("LIBOR") based on observable market transactions.

It is expected that a

transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next few years.

Financial Conduct Authority, which regulates LIBOR, has announced that

it has commitments from panel banks to continue to contribute to LIBOR through the end of 2021, but that it will not use its powers to compel contributions beyond such date.

Accordingly, there is

considerable uncertainty regarding the publication of such rates beyond 2021.

The Federal Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions

relating to alternatives to U.S.

Central banks around the world, including the Board of Governors of the Federal Reserve, have commissioned working groups of market participants and official sector representatives with the goal of finding suitable replacements for the London Interbank Offered Rate (“LIBOR”) based on observable market transactions.

It is expected that a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next few years.

Financial Conduct Authority, which regulates LIBOR, has announced that it will not compel panel banks to make LIBOR submissions beyond 2021.

Accordingly, it is unlikely that LIBOR will remain sustainable past 2021.

The Federal Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions relating to alternatives to U.S.

dollar LIBOR.

Although the full impact of such reforms and actions, together with any transition away from LIBOR, including the potential or actual discontinuance of

LIBOR publication, remains unclear, these changes may have a material adverse impact on the availability of financing, including LIBOR-based loans, and on our financing costs.

We may not have the ability to raise the funds necessary to settle conversions of our 1.25% convertible senior notes due 2022 (the "Notes") or to repurchase the Notes upon a

fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

Holders of our Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a fundamental change

repurchase price equal to 100% of the principal amount of our Notes to be repurchased, plus accrued and unpaid interest, if any.

In addition, upon

conversion of the Notes, unless we elect to deliver solely shares of our Common Stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required

to make cash payments in respect of the Notes being converted.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes

surrendered or Notes being converted.

In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements

governing our future indebtedness.

Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the Notes as required

by the indenture would constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default

agreements governing our current and future indebtedness.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have

sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversion of the Notes.

Although the full impact of such reforms and actions, together with any transition away from LIBOR, including the potential or actual discontinuance of LIBOR publication, remains unclear, these changes may have a material adverse impact on the availability of financing, including LIBOR-based loans, and on our financing costs.

We may not have the ability to raise the funds necessary to settle conversions of our 1.25% convertible senior notes due 2022 (the “Notes”) or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

Holders of our Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of our Notes to be repurchased, plus accrued and unpaid interest, if any.

In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our Common Stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered or Notes being converted.

In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.

Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay any cash payable on future conversions of the Notes as required by the indenture would constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our current and future indebtedness.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversion of the Notes.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

If the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert them at any time during

specified periods at their option.

The occurrence of certain events will trigger the conditional conversion feature of the Notes and entitle holders of the Notes to convert them at any time during specified periods at their option.

See Note 8 to the consolidated financial statements for additional information.

If one or more holders elect to convert their Notes, unless we elect to

satisfy our conversion obligation by delivering solely shares of our Common Stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all

of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

In addition, even if holders do not elect to convert their Notes, we could be required under

applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net

working capital.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Common Stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results.

Under FASB Staff Position No.

APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion

(Including Partial Cash Settlement), subsequently codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options ("ASC 470-20"), an entity must separately account for the

liability and equity components of the convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer's

economic interest cost.

The effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders'

equity on our consolidated balance sheet, and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the Notes.

we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to their face

amount over the term of the Notes.

Because ASC 470-20 will require interest to include both the current period's amortization of the debt discount and the instrument's coupon interest, we will report

lower net income in our financial results, and the trading price of our Common Stock and the trading price of the Notes could be materially and adversely affected.

addition, under certain circumstances, convertible debt instruments (such as the Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the

treasury stock method, the effect of which is that the shares issuable upon conversion of the Notes are not included in the calculation of diluted earnings per share except to the extent that the

conversion value of the Notes exceeds their principal amount.

APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement), subsequently codified as Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of the convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.

The effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet, and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the Notes.

As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Notes to their face amount over the term of the Notes.

Because ASC 470-20 will require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, we will report lower net income in our financial results, and the trading price of our Common Stock and the trading price of the Notes could be materially and adversely affected.

In addition, under certain circumstances, convertible debt instruments (such as the Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of the Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the Notes exceeds their principal amount.

We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method.

unable to use the treasury stock method in accounting for the shares issuable upon conversion of the Notes, then our diluted earnings per share would be adversely affected.

Changes in our tax rates could affect our future financial results.

Our future effective tax rates could be favorably or unfavorably affected by changes in the valuation of our deferred tax assets and

liabilities, or by changes in tax laws or their interpretation.

In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service ("IRS") and other tax

We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

There can be no assurance that the

outcomes from these examinations will not have an adverse effect on our operating results and financial condition.

Changes in tax laws or tax rulings could materially affect our financial position and results of operations.

On December 22, 2017, the

government enacted the Tax Act, which introduced significant changes to the U.S.

income tax law.

The Tax Act, among other things, includes a reduction to the U.S.

federal corporate income tax

rate from 35% to 21%, imposes significant additional limitations on the deductibility of interest and officers' compensation, and introduces new provisions that took effect in fiscal 2019, including

but not limited to, global intangible low-taxed income tax (GILTI), a minimum base erosion anti-abuse tax (BEAT) based on certain payments from a U.S.

company to foreign related parties, and a tax

deduction for foreign-derived intangible income (FDII).

We included the impact of the above provisions in the computation of our effective tax rate, as applicable.

The changes included in the Tax Act

are broad and complex, and the overall impact of the Tax Act is uncertain.

As regulations and guidance evolve with respect to the Tax Act, and as we gather more information and perform more analysis,

our results may differ from previous estimates and may materially affect our financial position.

addition, many countries in the EU, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively

considering changes to existing tax laws.

Certain proposals could include recommendations that would significantly increase our tax obligations in many countries where we do business.

Due to the large

and expanding scale of our international business activities, any changes in the taxation of such activities may increase our worldwide effective tax rate and harm our financial position and results

of operations.

If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the Notes, then our diluted earnings per share would be adversely affected.

We could be subject to changes in our tax rates, the adoption of new U.S.

or international tax legislation, or exposure to additional tax liabilities.

We are subject to taxes in the U.S.

and numerous foreign jurisdictions.

Tax rates in various jurisdictions may be subject to significant change due to economic and political conditions or otherwise.

Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or adoption of new tax legislation or changes in tax laws or their interpretation.

We are also subject to the examination of our tax returns and other tax matters by the U.S.

Internal Revenue Service and other tax authorities and governmental bodies.

We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes.

There can be no assurance as to the outcome of these examinations.

If our effective tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition and operating results could be materially adversely affected.

If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings.

We have pursued and will continue to seek potential acquisitions to complement and expand our existing businesses, increase our revenues and

profitability, and expand our markets.

As a result of prior acquisitions, we have goodwill and intangible assets recorded on our balance sheet as described in Note 5 to our consolidated

financial statements.

We have pursued and will continue to seek potential acquisitions to complement and expand our existing businesses, increase our revenues and profitability, and expand our markets.

As a result of prior acquisitions, we have goodwill and intangible assets recorded on our balance sheet as described in Note 6 to our consolidated financial statements.

Under current accounting guidelines, we must assess, at least annually, whether the value of goodwill and other intangible assets has been impaired.

Any reduction or impairment

of the value of goodwill or other intangible assets will result in charges against earnings, which could adversely affect our results of operations in future periods.

Any reduction or impairment of the value of goodwill or other intangible assets will result in charges against earnings, which could adversely affect our results of operations in future periods.

Our Certificate of Incorporation and other agreements contain provisions that could discourage a takeover.

Our Certificate of Incorporation authorizes our Board of Directors to issue up to 10,000,000 shares of Preferred Stock in one or more series, to

fix the rights, preferences, privileges and restrictions of Preferred Stock, to fix the number of shares constituting any such series and to fix the designation of any such series, without further

vote or action by stockholders.

The terms of any series of Preferred Stock, which may include economic rights senior to our Common Stock and special voting rights, could adversely affect the rights of

the holders of our Common Stock and thereby reduce the value of our Common Stock.

The issuance of Preferred Stock, coupled with the concentration of ownership in the directors and executive officers,

could discourage certain types of transactions involving an actual or potential change in control of our company, including transactions in which the holders of Common Stock might otherwise receive a

premium for their shares over then current prices, could otherwise dilute the rights of holders of Common Stock and may limit the ability of such stockholders to cause or approve transactions which

they may deem to be in their best interests, all of which could have a material adverse effect on the market price of our Common Stock.

Our Certificate of Incorporation authorizes our Board of Directors to issue up to 10,000,000 shares of Preferred Stock in one or more series, to fix the rights, preferences, privileges and restrictions of Preferred Stock, to fix the number of shares constituting any such series and to fix the designation of any such series, without further vote or action by stockholders.

The terms of any series of Preferred Stock, which may include economic rights senior to our Common Stock and special voting rights, could adversely affect the rights of the holders of our Common Stock and thereby reduce the value of our Common Stock.

The issuance of Preferred Stock, coupled with the concentration of ownership in the directors and executive officers, could discourage certain types of transactions involving an actual or potential change in control of our company, including transactions in which the holders of Common Stock might otherwise receive a premium for their shares over then current prices, could otherwise dilute the rights of holders of Common Stock and may limit the ability of such stockholders to cause or approve transactions which they may deem to be in their best interests, all of which could have a material adverse effect on the market price of our Common Stock.

Our Certificate of Incorporation limits the liability of our directors, which may limit the remedies we or our stockholders have available.

Our Certificate of Incorporation provides that, pursuant to the Delaware General Corporation Law, the liability of our directors for monetary

damages shall be eliminated to the fullest extent permissible under Delaware law, as that law exists currently and as it may be amended in the future.

This is intended to eliminate the personal

liability of a director for monetary damages in an action brought by us, or in our right for breach of a director's duties to us or our stockholders and may limit the remedies available to us or our

stockholders.

Our Certificate of Incorporation provides that, pursuant to the Delaware General Corporation Law, the liability of our directors for monetary damages shall be eliminated to the fullest extent permissible under Delaware law, as that law exists currently and as it may be amended in the future.

This is intended to eliminate the personal liability of a director for monetary damages in an action brought by us, or in our right for breach of a director’s duties to us or our stockholders and may limit the remedies available to us or our stockholders.

Under Delaware law, this provision does not apply to eliminate or limit a director’s monetary liabilities for:

(i) breaches of the director's duty of loyalty to us or our

stockholders;

(i) breaches of the director’s duty of loyalty to us or our stockholders;

(ii) acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law;

(iii) the unlawful payment of dividends or unlawful stock

repurchases or redemptions under Section 174 of the

Delaware General Corporation Law or (iv) transactions in which the director received an improper personal benefit.

Additionally, under Delaware law, this provision does not limit a director's

liability for the violation of, or otherwise relieve us or our directors from complying with, federal or state securities laws, nor does it limit the availability of non-monetary remedies such as

injunctive relief or rescission for a violation of federal or state securities laws.

Regulations related to conflict minerals may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our relationships with

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted requirements for companies that manufacture

products that contain certain minerals and metals, known as conflict minerals.

These rules require public companies to perform diligence and to report annually to the SEC whether such minerals

originate from the Democratic Republic of Congo and adjoining countries.

These requirements could adversely affect the sourcing, availability and pricing of minerals we use in the manufacture of

certain of our products.

In addition, we incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals used in

our products.

Since our supply chain is complex, we may not be able to ascertain the origins for these minerals used in our products through the due diligence procedures that we implement, which may

harm our reputation.

We may also face difficulties in satisfying customers who may require that our products be certified as conflict mineral free, which could harm our relationships with these

customers and lead to a loss of revenue.

These requirements could limit the pool of suppliers that can provide conflict-free minerals, and we may be unable to obtain conflict-free minerals at

competitive prices, which could increase our costs and adversely affect our manufacturing operations and our profitability.

(iii) the unlawful payment of dividends or unlawful stock repurchases or redemptions under Section 174 of the Delaware General Corporation Law or (iv) transactions in which the director received an improper personal benefit.

Additionally, under Delaware law, this provision does not limit a director’s liability for the violation of, or otherwise relieve us or our directors from complying with, federal or state securities laws, nor does it limit the availability of non-monetary remedies such as injunctive relief or rescission for a violation of federal or state securities laws.

Regulations related to conflict minerals may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our relationships with customers.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted requirements for companies that manufacture products that contain certain minerals and metals, known as conflict minerals.

These rules require public companies to perform diligence and to report annually to the SEC whether such minerals originate from the Democratic Republic of Congo and adjoining countries.

These requirements could adversely affect the sourcing, availability and pricing of minerals we use in the manufacture of certain of our products.

In addition, we incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals used in our products.

Since our supply chain is complex, we may not be able to ascertain the origins for these minerals used in our products through the due diligence procedures that we implement, which may harm our reputation.

We may also face difficulties in satisfying customers who may require that our products be certified as conflict mineral free, which could harm our relationships with these customers and lead to a loss of revenue.

These requirements could limit the pool of suppliers that can provide conflict-free minerals, and we may be unable to obtain conflict-free minerals at competitive prices, which could increase our costs and adversely affect our manufacturing operations and our profitability.

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