What changed in this filing

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Item 1A. Risk Factors

2023-11-08 compared with 2023-08-04 · 48 added, 7 removed, 1 unchanged (98% of the section changed)

There have been no material changes to the risk factors disclosed in Item 1A, entitled “Risk Factors,” in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, other than as set forth below.

An Impairment of Goodwill Could Reduce our Earnings.

Throughout the year, we consider whether any events or changes in the business environment have occurred which indicate that goodwill may be impaired.

For example, a significant decline in the closing share price of our common stock and market capitalization may suggest that the fair value of our reporting unit has fallen below its carrying amount, indicating that an interim goodwill impairment test is required.

We monitor changes in our stock price during interim periods between annual goodwill impairment tests and consider overall stock market conditions, the underlying reasons for the decline in our stock price, the significance of the decline, and the duration of time that our securities have been trading at a lower value.

While our stock price has experienced volatility, we have experienced a decline in its market capitalization as a result of a decline in our stock price.

As of July 31, 2023 our market value was $346.5 million which is below our carrying value.

If our stock price remains at such levels or deteriorates, our goodwill may be determined to be impaired and we would record a non-cash impairment charge, which could have a material adverse effect on our consolidated balance sheet, results of operations or our stock price

We have identified a material weakness in our internal control over financial reporting.

Failure to remediate such material weakness or any other material weakness that we may identify in the future could result in material misstatements in our financial statements or cause us to fail to meet our periodic reporting obligations.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to report on, and our independent registered public accounting firm is required to attest to, the effectiveness of our internal control over financial reporting.

The rules governing the standards that must be met for management to determine the adequacy of our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation if a deficiency is identified.

Annually, we perform activities that include reviewing, documenting, and testing our internal control over financial reporting.

If we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with legal requirements.

Any failure to achieve and maintain an effective internal control environment could result in materially misstated consolidated financial statements and a failure to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.

This could result in significant expenses to remediate any internal control deficiency and lead to a decline in our stock price.

Management identified a material weakness in our internal control over financial reporting related to customer pricing in the revenue recognition process and concluded that our disclosure controls and procedures were not effective due to the existence of the material weakness as of September 30, 2023.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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weakness will not be remediated until all necessary internal controls have been implemented, tested and determined to be operating effectively.

In addition, we may need to take additional measures to address such material weakness or modify the planned remediation steps, and we cannot be certain that the measures we have taken, and expect to take, to improve our internal controls will be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that the identified material weakness will not result in a material misstatement of our consolidated financial statements.

Moreover, other material weaknesses or deficiencies may develop or be identified in the future.

If we are unable to correct material weaknesses or deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC, will be adversely affected.

This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and otherwise have a material adverse effect on our consolidated balance sheet, results of operations or our stock price.

For further discussion of this material weakness, see Item 4, Controls and Procures of Part II in this Quarterly report on Form 10-Q.

An Impairment of Goodwill Could Reduce the Company's Earnings.

Throughout the year, the Company's consider whether any events or changes in the business environment have occurred which indicate that goodwill may be impaired.

For example, a significant decline in the closing share price of the Company's common stock and market capitalization may suggest that the fair value of the Company's reporting unit has fallen below its carrying amount, indicating that an interim goodwill impairment test is required.

The Company monitors changes in its stock price during interim periods between annual goodwill impairment tests and consider overall stock market conditions, the underlying reasons for the decline in the Company's stock price, the significance of the decline, and the duration of time that the Company's securities have been trading at a lower value.

The Company performed its annual goodwill impairment assessment as of July 31, 2023 using a quantitative assessment given the volatility in the Company's stock and the decline in its market capitalization.

This assessment resulted in no impairment.

Security Breaches and Other Disruptions Could Compromise Our Information, Expose Us To Liability and Harm Our Reputation and Business.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, personal information, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our employees in our data centers and on our networks.

Secure maintenance and transmission of this information is critical to our operations business strategy.

We generally rely on commercially available systems, software, tools and domestically available monitoring to provide security for processing, transmitting and storing this sensitive date.

Cyber-attacks could result in unauthorized access to our computer systems or our third-party IT service provider’s systems and, if successful, misappropriate personal or confidential information.

We have in the past and may in the future experience phishing and other security incidents, and such attacks are an ongoing threat.

Due to the nature of some of these attacks, there is a risk that they may remain undetected for a period of time.

If successful, these activities could lead to service interruptions, extortion, theft of confidential, personal or proprietary information, the compromise of data integrity or unauthorized information disclosure.

Any technology service interruption or breach of our systems could adversely affect our business operations and/or result in the loss of personal data, confidential information or intellectual property.

Such incidents could require disclosure to government authorities and/or regulators and could require notification to impacted individuals and any incident could result in financial, legal, business and reputational harm to us.

We maintain cyber liability insurance;

however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems.

We have outsourced significant elements of our IT infrastructure and, as a result, we manage relationships with third-party providers who may or could have access to our confidential information.

We rely on technology developed, supplied and/or maintained by third-parties that may make us vulnerable to “supply chain” style cyber-attacks.

Further, technology and security vulnerabilities of acquisitions, business partners or third-party providers may not be identified during due diligence or soon enough to mitigate exploitation.

The size and complexity of our IT and information security systems, and those of our third-party providers (and the large amounts of confidential information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by, but not limited to, our employees, service providers, business partners, customers or malicious attackers.

In addition, a contractor or other third party with whom we do business may attempt to circumvent our security measures or obtain such

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information, and may purposefully or inadvertently cause a breach involving sensitive information.

While we will continue to evaluate and implement additional protective measures to reduce the risk and detect cyber incidents, cyberattacks are becoming more sophisticated and frequent and the techniques used in such attacks change rapidly.

Despite our cybersecurity measures (including employee and third-party training, monitoring of networks and systems and maintenance of back up of protective systems) which are continuously reviewed and upgraded, our information technology networks and infrastructure may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, voyeur or malfeasance.

Even the most well protected IT networks, systems and facilities remain potentially vulnerable because the techniques used in attempted security breaches are continually evolving and generally are not recognized until launched against a target or, in some cases, are designed not to be detected and, in fact, may not be detected.

Any such compromise of our or our third party’s IT service providers’ data security and access, public disclosure, or loss of personal or confidential business information, could result in legal claims and proceedings, liability under laws to protect privacy of personal information, and regulatory penalties, and could disrupt our operations, require significant management attention and resources to remedy any damages that result, and damage our reputation and customers willingness to transact business with us, any of which could adversely affect our business.

As our activities continue to evolve and expand, we may be subject to additional laws which impose further restrictions on the transfer, access, use, and disclosure of health and other personal information which may impact our business either directly or indirectly.

Our failure to comply with applicable privacy or security laws or significant changes in these laws could significantly impact our business and future business plans.

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-Q

Item 1A. Risk Factors