−Removed: Actual or anticipated epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’ financial condition and the operations of our business.
−Removed: Our business could be materially and adversely affected by the impact of the disease caused by the novel coronavirus, COVID-19, which was recently declared a pandemic by the World Health Organization, or the actual or public perception of the risks related to any epidemic, pandemic, outbreak, or other public health crisis.
−Removed: The risk of COVID-19 pandemic, or public perception of the risks associated with the COVID-19 pandemic, could cause customers to delay or cancel orders, and could cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our products and services to our customer.
−Removed: Quarantines or other cancellations of public events as well as governmental containment actions could also adversely affect our customers’ financial condition, resulting in reduced spending for the products and services we sell or uncollectible accounts receivable, leases or notes receivable.
−Removed: Moreover, the COVID-19 pandemic has resulted in a high percentage of our employees working from home, which could adversely affect our ability to adequately staff and manage our businesses.
−Removed: Risks or regulations related to an epidemic, pandemic or other health crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our offices or configuration centers or the operations of our customers or our sourcing partners.
+Added: There are many factors that could adversely affect our business, results of operations and cash flows, some of which are beyond our control.
+Added: The following is a description of some important factors that may cause our business prospects, results of operations and cash flows in future periods to differ materially from those currently expected or desired.
+Added: Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows.
+Added: Risks Specific to Our Business
+Added: Actual or anticipated epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’ and suppliers’ financial condition and the operations of our business.
+Added: Our business could be materially and adversely affected by the impact of the disease caused by the novel coronavirus, COVID-19, which was declared a pandemic by the World Health Organization, or the actual or public perception of the risks related to any epidemic, pandemic, outbreak, or other public health crisis.
+Added: The risk of COVID-19 pandemic, or public perception of the risks associated with the COVID-19 pandemic, could cause customers to delay or cancel orders, and could cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our products and services to our customers.
+Added: Quarantines or other cancellations of public events as well as governmental containment actions could also adversely affect our customers' financial condition, resulting in reduced spending for the products and services we sell or uncollectible accounts receivable, leases or notes receivable or our customers’ ability to receive goods we ship to their locations.
+Added: Moreover, the COVID-19 pandemic has resulted in a high percentage of our employees who work from home, which could adversely affect our ability to adequately staff and manage our businesses.
+Added: Risks or regulations related to an epidemic, pandemic, or other health crisis, such as COVID-19, has and may continue to lead to the complete or partial closure of one or more of our offices or configuration centers or the operations of our customers or our sourcing partners.
Office closures of our customers may reduce our ability to provide onsite professional services and staffing.
−Removed: The ultimate extent to which the current COVID-19 pandemic will affect the financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and duration of the current pandemic.
+Added: The ultimate extent to which the current COVID-19 pandemic and the distribution and efficacy of the vaccine will affect the financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and duration of the current pandemic.
We began monitoring the COVID-19 outbreak and following the guidance of public health authorities in January 2020.
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These measures include having employees work from home to the extent their job function enables them to do so, cancelling all non-essential business travel, asking some employees to self-quarantine at home, adjusting our facilities’ janitorial and sanitary policies.
−Removed: We may include various health-related measures, such as requiring employees and visitors to undergo a health screening or wear a mask.
+Added: We have and may continue to include various health-related measures, such as requiring employees and visitors to undergo a health screening or wear a mask.
In addition, our employees may have health issues related to COVID-19 and may have unpredictable work schedules due to childcare responsibilities as many schools and childcare centers are closed.
We are regularly revisiting the measures we are taking in response to the evolving COVID-19 pandemic, and we are likely to take additional action in response to the various requirements and recommendations of governmental and other health authorities.
−Removed: In addition, as Stay at Home orders by state and local governments are lifted or changed, additional risk may arise, including infections within our employee base, office closures, and/or closures at customers sites.
+Added: In addition, as Stay at Home orders by state and local governments are lifted or changed, additional risks may arise, including infections within our employee base, office closures, and/or closures at customers sites.
These existing measures and any future actions, such as additional or renewed Stay at Home orders, may result in a disruption to our business.
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If our information systems are not operational for reasons which may include cyber security attacks, data center failures, failures by telecom providers to provide service to our business and to our employees’ homes, power failures, or failures of off-premise software such as SaaS based software, our business and financial results may be adversely impacted.
−Removed: As our employees return to the workplace, we may face challenges implementing newly required processes technologies, and procedures specific to COVID-19, including paid time off laws and health screening.
+Added: As our employees return to the workplace, we may face challenges implementing newly required processes technologies, and procedures specific to COVID-19, including paid time off laws and health screenings.
Additionally, as the facts, guidance and perception are rapidly changing, we may face challenges responding to actual or possible COVID-19 exposure in the workplace, training managers to address an anticipated uptick in leave and accommodation issues, and issuing corporate communications to effectively assuage and respond to employee concerns regarding COVID-19.
−Removed: General economic weakness may harm our operating results and financial condition.
−Removed: Our results of operations are largely dependent upon the state of the economy.
−Removed: Global economic weakness and uncertainty may result in decreased sales, gross margin, earnings and/or growth rates from our US based customers and from customers outside the US.
−Removed: For example, there continues to be substantial uncertainty regarding the economic impact of the Referendum on the UK’s Membership of the European Union (“EU”) (referred to as “Brexit”).
−Removed: In June 2016, the United Kingdom (the “UK”) held a referendum in which voters opted for the country’s exit from the EU, Consistent with the outcome of this referendum, the UK left the EU on January 31, 2020.
−Removed: Thus, the UK is no longer a member of the EU;
−Removed: however, the UK will continue to be subject to EU rules and remain a member of the single market and customs union during an implementation period.
−Removed: The implementation period runs to December 31, 2020, but may be extended for up to two years.
−Removed: The UK government is negotiating with the EU on trade and other terms for such exit.
−Removed: Leaving without any agreement on such terms would lead to disruption to UK/EU trade.
−Removed: The uncertainty concerning Brexit has also caused global stock market volatility and currency exchange rate fluctuations that resulted in strengthening of the US dollar relative to other foreign currencies in which we conduct business.
−Removed: The impact of Brexit could adversely affect our business, financial condition, operating results and cash flows.
If we lost one or more of our large volume customers, our earnings may be affected.
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The loss of one or more of our largest customers, the failure of such customers to pay amounts due to us, or a material reduction in the amount of purchases made by such customers could have a material adverse effect on our business, financial position, results of operations and cash flows.
−Removed: Our accounts receivable-trade balance as of March 31, 2020, included approximately 20% concentration of invoices due from Verizon.
+Added: Our accounts receivable-trade balance as of March 31, 2021, and 2020, included approximately 20% concentration of invoices due from Verizon Communications Inc.
We depend on having creditworthy customers to avoid an adverse impact on our operating results and financial condition.
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Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments.
−Removed: Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets in our financing segment.
+Added: Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net earnings, and assets in our financing segment.
Unfavorable economic conditions also could increase our financing segment’s funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.
These events could prevent us from increasing our financing portfolio and harm our operating results.
−Removed: The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain.
−Removed: Some economists and major investment banks have expressed concern that the continued spread of the virus globally will lead to a world-wide economic downturn, which could have an adverse economic effect on the companies and state and local government and educational institution (“SLED”) organizations for which we provide products, services and financing.
−Removed: As of March 31, 2020, and 2019, we had reserves for credit losses of $3.2 million and $2.6 million, respectively.
+Added: As of March 31, 2021, and 2020, we had an allowance for credit losses of $4.4 million and $3.2 million, respectively.
The terms of our Credit Facility or lines of credit with our vendors or loss thereof may restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and to manage our operations.
−Removed: Our technology segment, through our subsidiary e Plus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC or WFCDF.
+Added: Our technology segment, primarily through our subsidiary e Plus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC or WFCDF.
This facility provides short-term capital for our technology segment.
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(1) a floor plan component and (2) an accounts receivable component.
−Removed: As of March 31, 2020, the facility agreement had an aggregate limit of the two components of $300 million, and the accounts receivable component had a sub-limit of $75 million, which bears interest assessed at a rate of the One Month LIBOR plus two and one-half percent.
+Added: As of March 31, 2021, the facility agreement had an aggregate limit of the two components of $275 million, and the accounts receivable component had a sub-limit of $100 million, which bears interest assessed at a rate of two percent (2.00%) plus the greater of one month LIBOR or seventy-five hundredths of one percent (0.75%).
The loss of the technology segment’s credit facility could have a material adverse effect on our future results as we rely on this facility and its components for daily working capital and the operational function of our accounts payable process.
−Removed: Our credit agreement contains various covenants that must be met each quarter and either party may terminate the agreement for any reason with a 90-days’ notice.
+Added: Our credit agreement contains various covenants that must be met each quarter and either party may terminate the agreement for any reason with 90-days notice.
There can be no assurance that we will continue to meet those covenants and failure to do so may limit availability of, or cause us to lose, such financing.
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The loss or decrease of our working capital facility or lines of credit with our vendors may have a material adverse effect on our business, results of operations and financial condition.
−Removed: The uncertainty regarding the potential phase-out of LIBOR may negatively impact our operating results .
−Removed: LIBOR, the interest rate benchmark used as a reference rate on our credit facility variable rate debt is expected to be phased out after 2021, when private-sector banks are no longer required to report the information used to set the rate.
−Removed: Without this data, LIBOR may no longer be published, or the lack of quality and quantity of data may cause the rate to no longer be representative of the market.
−Removed: At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although the US Federal Reserve, in connection with the Alternative Reference Rates Committee, a steering committee comprised of large US financial institutions, is considering replacing US dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”).
−Removed: SOFR is a more generic measure than LIBOR and considers the cost of borrowing cash overnight, collateralized by US Treasury securities.
−Removed: Given the inherent differences between LIBOR and SOFR or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR, including but not limited to the need to amend all contracts with LIBOR as the referenced rate and how this will impact the our cost of variable rate debt.
−Removed: We will also need to consider new contracts and whether the contracts should reference an alternative benchmark rate or include suggested fallback language, as published by the Alternative Reference Rates Committee.
−Removed: The consequences of these developments with respect to LIBOR cannot be entirely predicted and span multiple future periods but could result in an increase in the cost of our variable rate debt which may be detrimental to our financial position or operating results.
−Removed: We rely on a small number of key vendors, and do not have long- term supply or guaranteed price agreements or assurance of stock availability with our vendors.
+Added: We rely on a small number of key vendors in our supply chain, and do not have long- term supply or guaranteed price agreements or assurance of stock availability with our vendors.
A substantial portion of our revenue within our technology segment depends on a small number of key vendors.
Products manufactured by Cisco Systems represented approximately 36%, 40%, and 42% of our technology segment net sales for the years ended March 31, 2021, 2020, and 2019, respectively.
−Removed: Products manufactured by NetApp, Hewlett Packard, Juniper Networks, Dell/EMC, and Arista Networks, represented approximately 21% - 24% of technology segment net sales for the last three years.
−Removed: Risks related to the COVID-19 pandemic or other health crisis could also lead to the complete or partial closure of one or more of the operations of our sourcing partners, resulting in disruptions of our supply chain or distribution channels .
−Removed: The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted;
−Removed: including new information that may emerge concerning the severity of the current COVID-19 pandemic and actions taken to contain or prevent its further spread, among others.
+Added: Products manufactured by NetApp, Hewlett Packard, Juniper Networks, Dell/EMC, and Arista Networks, collectively represented approximately 23% - 24% of technology segment net sales for the last three years.
+Added: Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, changes or the addition of trade laws, duties or tariffs, currency fluctuations, significant labor disputes such as strikes, natural disasters, political or social unrest, pandemics (such as the COVID-19 pandemic) or other public health crises, or other adverse events affecting any of our vendors’ facilities, could disrupt our supply chain.
+Added: We could experience product constraints due to the unavailability of raw materials or components, delays in shipping, failure of vendors to accurately forecast customer demand or to manufacture or otherwise obtain sufficient quantities of product or component parts to meet customer demand, among other reasons.
If we experience significant supply chain disruptions, we may not be able to develop alternate sourcing quickly on favorable terms, if at all, which could result in increased costs, loss of sales and a loss of customers, and adversely impact our financial condition and results of operations.
−Removed: Our industry frequently experiences periods of product shortages from our vendors or our vendors’ distributors as a result of our vendors’ difficulties in projecting demand for certain products we sell;
−Removed: additional trade law provisions or regulations;
−Removed: additional duties, tariffs or other charges on imports or exports;
−Removed: natural disasters affecting our suppliers’ facilities;
−Removed: and significant labor disputes.
−Removed: As we do not stock inventory that is not related to an order we have received from our customer, we depend upon the supply of products available from our vendors to fulfill orders from our customers on a timely basis.
−Removed: The loss of, or change in business relationship with, any of these or any other key vendor partners, the diminished availability of their products, or backlogs for their products leading to manufacturer allocation could reduce the supply and increase the cost of products we sell and negatively impact our competitive position.
+Added: As we do not stock inventory that is not related to an order we have received from our customers, we depend upon the supply of products available from our vendors to fulfill orders from our customers on a timely basis.
The loss of a key vendor or changes in its policies could adversely impact our financial results.
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We rely on arrangements with third-parties to perform certain professional services, staffing services, managed services, warranties, configuration services, and other services for our customers.
−Removed: If these third-parties do not perform these in accordance with the terms of our agreement and of a professional standard customary for the services, or if they cause disruption of or security weaknesses in our customers’ businesses, results to our organization could include legal claims and associated costs, monetary damages paid to our customers, and an adverse effect on our customer relationships, our brand, and our reputation, and our results of operations or cash flows could be affected.
+Added: If these third-parties do not perform these services in accordance with the terms of our agreement and of a professional standard customary for the services, or if they cause disruption of or security weaknesses in our customers’ businesses, results to our organization could include legal claims and associated costs, monetary damages paid to our customers, and an adverse effect on our customer relationships, our brand, and our reputation, and our results of operations or cash flows could be affected.
+Added: In addition, the acquisition of third-party companies by our competitors may impact our revenue.
We rely on independent shipping companies to deliver products from us and our vendors to our customers.
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We may also be adversely affected by an increase in freight surcharges that may result from economic, supply-chain, geopolitical, or other disruptions.
−Removed: COVID-19 has disrupted shipping lanes globally due to a variety of issues including significantly less air transportation, Stay at Home orders which affect port operations or other carrier operations, shippers’ prioritization of packages needed to combat COVID-19, and shippers’ employees becoming ill with the virus.
−Removed: In addition, governmental containment actions including Stay at Home orders may impact third-parties to perform services for our customers.
−Removed: We may incorrectly import or export products when shipping to and from different countries.
−Removed: Violation of trade laws may disrupt our international operations negatively or impair our reputation or we may incur monetary damage.
−Removed: Violation of trade laws may also result in audits, fines, penalties, litigation, or administrative enforcement actions with associated costs.
−Removed: Changes in the IT industry, customers’ usage or procurement of IT, and/or rapid changes in product standards may result in reduced demand for the IT hardware and software solutions and services we sell.
−Removed: Our results of operations are influenced by a variety of factors, including the condition of the IT industry, shifts in demand for, or availability of, IT hardware, software, peripherals and services, and industry introductions of new products, upgrades, methods of distribution, and the nature of how IT is consumed and procured.
−Removed: The IT industry is characterized by rapid technological change and the frequent introduction of new products, product enhancements and new distribution methods or channels, each of which can decrease demand for current products or render them obsolete.
−Removed: In addition, the proliferation of cloud technology, IaaS, SaaS, platform as a service (“PaaS”), software defined networking, or other emerging technologies may reduce the demand for products and services we sell to our customers.
−Removed: Cloud offerings may influence our customers to move workloads to cloud providers, which may reduce the procurement of products and services from us.
−Removed: Changes in the IT industry may also affect the demand for our advanced professional and managed services.
−Removed: We have invested a significant amount of capital in our strategy to provide certain products and services, and this strategy may adversely impact our financial position due to competition or changes in the industry or improper focus or selection of the products and services we decide to offer.
−Removed: If we fail to react in a timely manner to such changes, our results of operations may be adversely affected.
−Removed: Our sales can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material adverse effect on our results of operations.
−Removed: We depend on continued innovations in hardware, software and services offerings by our vendors, as well as the competitiveness of their offerings and our ability to partner with new and emerging technology providers.
−Removed: The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software and services offerings, such as cloud-based solutions, including IaaS, SaaS and PaaS.
−Removed: We depend on innovations in hardware, software and services offerings by our vendors, as well as the acceptance of those innovations by our customers for the offerings we sell.
−Removed: A decrease in the rate of innovation by our vendors, or the lack of acceptance of innovations by our customers, or a shift by customers to technology platforms that we do not sell could have an adverse effect on our business, results of operations or cash flows.
−Removed: In addition, if we are unable to keep up with changes in technology and new hardware, software and services offerings––for example by not providing the appropriate training to our account managers, sales technology specialists and engineers to enable them to effectively sell and deliver such new offerings to customers––our business, results of operations or cash flows could be adversely affected.
−Removed: We also depend upon our vendors for the development and marketing of hardware, software and services to compete effectively with hardware, software and services of vendors whose products and services we do not currently offer or are not authorized to offer in one or more customer channels.
−Removed: In addition, our success depends on our ability to develop relationships with and sell hardware, software and services and emerging vendors, as well as vendors that we have not historically represented in the marketplace.
−Removed: To the extent that a vendor’s offering that is highly in demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, or we are unable to develop relationships with new technology providers or companies that we have not historically represented, or we partner with a vendor that is not in demand or the demand for whose products significantly decreases, our business, results of operations, or cash flows could be adversely impacted.
+Added: Breaches of data security and the failure to protect our information technology systems from cybersecurity threats could adversely impact our business.
+Added: Our business involves the storage and transmission of proprietary information and sensitive or confidential data, including personal information of our employees, customers, and others.
+Added: In addition, we rely on our vendors that provide goods and services to us to operate our business to have adequate security measures in place to protect our operations.
+Added: Also, we operate data centers for our customers that host their technology infrastructure and may store and transmit both business-critical data and confidential information.
+Added: In connection with our services business, some of our employees also have access to our customers’ confidential data and other information.
+Added: We have privacy and data security policies in place that are designed to prevent security breaches;
+Added: however, as newer technologies evolve, and the portfolio of the service providers with whom we share confidential information grows, we could be exposed to increased risk of breaches in security and other illegal or fraudulent acts, including ransomware attacks and other types of cyberattacks.
+Added: The evolving nature of such threats, considering new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering and forgery, are making it increasingly challenging to anticipate and adequately mitigate these risks.
+Added: As a result of COVID-19, a high percentage of our employees are working from home.
+Added: As a result of employees’ desire to remain current on the virus and its impacts, there may be increased risks relating to cyber security in the form of malware, hacking or phishing schemes, as criminals and cyberterrorists attempt to steal passwords, cookies, and other sensitive data.
+Added: In addition, the vulnerability of our employees’ home network may also increase this risk.
We may fail to innovate or create new solutions which align with changing market and customer demand.
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Further, we may provide customized solutions and services that are solely reliant on our own marketing, design, and fulfillment services, and we may lack the skills or personnel to execute, or COVID-19 may impact our ability to innovate due to travel restrictions, staff availability, or closed lab or data center locations.
−Removed: Our failure to innovate and provide bespoke value to our customers may erode our competitive position, market share and lead to reduce revenue and financial performance.
+Added: Our failure to innovate and provide bespoke value to our customers may erode our competitive position, market share and lead to reduced revenue and financial performance.
In the software market, a number of companies market business-to-business electronic commerce solutions similar to ours, and competitors are adapting their product offerings to a SaaS platform.
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If we are unable to react timely to any fundamental changes in the programs of vendors, including the elimination of funding for some of the activities for which we have been compensated in the past, such changes could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We may not have designed or maintained our IT systems or have adequate or competent IT personnel to support our business.
+Added: We may not have adequately designed or maintained our IT systems for internal use or solutions we offer to our customers or have adequate or competent IT personnel to support our business.
We depend heavily upon the accuracy and reliability of our information, telecommunication, cybersecurity, and other systems which are used for customer management, sales, distribution, marketing, purchasing, inventory management, order processing and fulfillment, customer service and general accounting functions.
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Illness, including from COVID-19, or improper training, performance or supervision may negatively affect the services we provide our customers resulting in decreased revenue and the potential for litigation.
+Added: Products as complex as those used to provide our electronic commerce solutions or cloud automation solutions can contain unknown and undetected errors, performance problems, or use open-source code.
+Added: We may have serious defects following introduction of new products or enhancements to existing products.
+Added: Undetected errors or performance problems may be discovered in the future and certain errors we consider to be minor may be serious to our customers.
+Added: Our software products, or automation solutions, may be circumvented or sabotaged by third-parties such as hackers, which could result in the disclosure of sensitive information or personal information, unauthorized procurement, or cause other business interruptions that could damage our reputation and disrupt our business.
+Added: Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats .
+Added: In addition, our customers may experience a loss in connectivity to our proprietary software solutions because of a power loss at our data center, interruption in internet availability, or defects in our software.
+Added: This could result in lost revenues, delays in customer acceptance, security breaches, and unforeseen liabilities that would be detrimental to our reputation and to our business.
We rely on the competency of our internal IT personnel.
Our failure to hire, develop, retain, and supervise competent IT personnel to secure our data, or design and maintain resilient technology systems including our data and voice networks, infrastructure, and applications, could significantly interrupt our business causing a negative impact on our results.
−Removed: Rising interest rates or the loss of key lenders or the constricting of credit markets may affect our future profitability and our ability to monetize our financing investments.
−Removed: We finance transactions with our customers utilizing fix-rate borrowing.
−Removed: If we fund such transactions at inception with a third-party lender, we are able to lock an interest rate spread on the transaction between the customer rate and third-party rate.
−Removed: However, we may delay funding the transaction, and if interest rates increase in the interim, the interest rate spread will decrease, which will adversely impact our profitability, or we may not choose to fund the transaction due to higher interest rates, thus inhibiting our ability to monetize our portfolio to generate cash.
−Removed: We rely on lenders to fund financing transactions we originate with our customers.
−Removed: Loss of any lender or group of lenders may significantly impact our ability to originate financing transactions, which may negatively impact our financial condition.
−Removed: In addition, our lenders may no longer be willing to provide funding under our current terms and conditions and may demand new terms and conditions that negatively impact our ability to consummate a financing transaction with our customers.
−Removed: We are also subject to changes, if any, in our lenders’ willingness to provide financing for different, particularly lower, credit quality lessees.
−Removed: COVID-19 has resulted in a tightened credit market, which may impede our ability to fund on a recourse or non-recourse basis certain of our lesser credit quality customers or other general customers.
−Removed: This may result in less earnings, use of our own cash, or lesser credit quality in our financing portfolio.
−Removed: Breaches of data security and the failure to protect our information technology systems from cybersecurity threats could adversely impact our business.
−Removed: Our business involves the storage and transmission of proprietary information and sensitive or confidential data, including personal information of our employees, customers and others.
−Removed: In addition, we operate data centers for our customers that host their technology infrastructure and may store and transmit both business-critical data and confidential information.
−Removed: In connection with our services business, some of our employees also have access to our customers’ confidential data and other information.
−Removed: We have privacy and data security policies in place that are designed to prevent security breaches;
−Removed: however, as newer technologies evolve, and the portfolio of the service providers with whom we share confidential information grows, we could be exposed to increased risk of breaches in security and other illegal or fraudulent acts, including cyberattacks.
−Removed: The evolving nature of such threats, in light of new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering and forgery, are making it increasingly challenging to anticipate and adequately mitigate these risks.
−Removed: As a result of COVID-19, a high percentage of our employees are working from home.
−Removed: As a result of employees’ desire to remain up-to-date on the virus and its impacts, there may be increased risks relating to cyber security in the form of malware, hacking or phishing schemes, as criminals and cyberterrorists attempt to steal passwords, cookies, and other sensitive data.
−Removed: In addition, the vulnerability of our employees’ home network may also increase this risk.
−Removed: We may be required to take impairment charges for goodwill or other intangible assets related to acquisitions.
−Removed: We have acquired certain portions of our business and assets through acquisitions.
−Removed: Further, as part of our long-term business strategy, we may continue to pursue acquisitions of other companies or assets.
−Removed: In connection with prior acquisitions, we have accounted for the portion of the purchase price paid in excess of the book value of the assets acquired as goodwill or intangible assets, and we may be required to account for similar premiums paid on future acquisitions in the same manner.
−Removed: Under the applicable accounting principles, goodwill is not amortized and is carried on our books at its original value, subject to annual review and evaluation for impairment, whereas intangible assets are amortized over the life of the asset.
−Removed: Changes in the business itself, the economic environment (including business valuation levels and trends), or the legislative or regulatory environment may trigger a review and evaluation of our goodwill and intangible assets for potential impairment outside of the normal review periods.
−Removed: These changes may adversely affect either the fair value of the business or our individual reporting units and we may be required to take an impairment charge.
−Removed: If market and economic conditions deteriorate as a result of COVID-19 or otherwise, this could increase the likelihood that we will need to record impairment charges to the extent the carrying value of our goodwill exceeds the fair value of our overall business.
−Removed: Such impairment charges could materially adversely affect our net earnings during the period in which the charge is taken.
−Removed: As of March 31, 2020, we had goodwill and other intangible assets of $118.1 million and $34.5 million, respectively.
−Removed: We may not be able to realize our entire investment in the equipment we lease.
−Removed: The realization of the residual value of the equipment we lease, predominantly at the end of the term of a lease, as well as during the life of the lease, is an important element in our financing segment.
−Removed: At the inception of certain leases, we record a residual value for the leased equipment based on our estimate of the value of the equipment at the expected disposition date.
−Removed: A decrease in the market value of leased equipment at a rate greater than the rate we projected, whether due to rapid technological or economic obsolescence, excessive or unusual wear and tear on the equipment, or other factors, would adversely affect the recoverability of the estimated residual values of such equipment.
−Removed: Further, certain equipment residual values are dependent on the vendor’s warranties, reputation, rules regarding relicensing of software to operate the equipment, and other factors, including market liquidity.
−Removed: In addition, we may not realize the full market value of equipment if we are required to sell it to meet liquidity needs or for other reasons outside of the ordinary course of business.
−Removed: Consequently, there can be no assurance that we will realize our estimated residual values for equipment.
−Removed: The degree of residual realization risk varies by transaction type.
−Removed: Sales-type leases bear less risk because contractual payments typically cover 90% or more of the equipment’s lease cost at inception.
−Removed: Operating leases have a higher degree of risk because a smaller percentage of the equipment’s value is covered by contractual cash flows at lease inception.
−Removed: The impact of COVID-19 may affect the fair value of our assets on lease and result in an impairment, loss or write off.
−Removed: Our earnings may fluctuate, which could adversely affect the price of our common stock.
−Removed: Our earnings are susceptible to fluctuations for a number of reasons, including, but not limited to, the risk factors discussed herein .
−Removed: In the event our sales or net earnings are less than the level expected by the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock.
−Removed: Failure to comply with new laws or changes to existing laws may adversely impact our business.
−Removed: Our operations are subject to numerous US and foreign laws and regulations in a number of areas including, but not limited to, areas of labor and employment, immigration, advertising, e-commerce, tax, import and export requirements, anti-corruption, data privacy requirements, anti-competition, and environmental, health, and safety.
−Removed: Compliance with these laws, regulations, and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business, and the risk of noncompliance.
−Removed: We have implemented policies and procedures designed to help comply with applicable laws and regulations, but there can be no certainty that against employees, contractors, or agents will fully comply with laws and regulations or our policies and procedures.
−Removed: In addition, many countries and state and local governments have issued Stay at Home orders to combat COVID-19.
−Removed: These orders may mandate or recommend office closures, telework, or health or safety actions, such as social distancing in the workplace, masks or health screening.
−Removed: The orders frequently change, and each order is different and must be interpreted and applied to the jurisdiction.
−Removed: Additional risk may arise from these orders as they are lifted or changed which may include infections in our employee base, office closures, closures at customers sites, and additional Stay at Home orders or mandated or recommended safety actions.
−Removed: Additionally, a large number of employment related regulations, such as leave and accommodation matters, have been issued by federal, state, and local governments.
−Removed: These regulations continue to undergo revisions.
−Removed: We may fail to interpret or follow the regulations or orders properly which may result in sanction, penalties, fines or litigation.
+Added: We may not be able to hire and/or retain personnel that we need.
+Added: To increase market awareness and sales of our offerings, we may need to expand our marketing efforts and sales operations in the future.
+Added: Our products and services require a sophisticated sales effort and significant technical engineering talent.
+Added: For example, our sales and engineering candidates must have highly technical hardware and software knowledge to create a customized solution for our customers’ business processes.
+Added: Competition for qualified sales, marketing and engineering personnel fluctuates depending on market conditions.
+Added: Prior to COVID-19, the US was in a low unemployment environment which resulted in difficulties in hiring or retaining sufficient personnel to maintain and grow our business.
+Added: COVID-19 initially resulted in significant unemployment;
+Added: however, recently unemployment has reduced.
+Added: While we are currently experiencing an increasingly competitive labor market, we are uncertain as to the employment environment in the future, or how that environment will impact our workforce.
+Added: In addition, changes to immigration laws, prior to, because of, and subsequent to COVID-19, may impact our ability to hire or retain talent.
+Added: Changes in laws relating to non-compete and non-solicitation agreements make it difficult to manage hiring and retention.
+Added: In some cases, our competitors have required their employees to agree to such agreements as part of their employment, and in some cases, we may not be able to enforce similar restrictions;
+Added: both scenarios present challenges and costs.
+Added: Additionally, in some cases our relationship with a customer may be impacted by turnover in our sales or engineering team.
+Added: If we fail to identify acquisition candidates, or perform sufficient due diligence prior to completing an acquisition, or fail to integrate a completed acquisition our earnings may be affected.
+Added: Mergers and acquisitions are significant factors in our growth strategy.
+Added: If we fail to identify businesses available for purchase or at an acceptable valuation, our growth strategy may be negatively affected and, as such, our results of operations.
+Added: Our ability to successfully integrate the operations we acquire, reduce costs, or leverage these operations to generate revenue and earnings growth, could significantly impact future revenue and earnings.
+Added: Integrating acquired operations is a significant challenge particularly during the pandemic where most tasks must take place remotely, may divert management’s attention from other business concerns, and there is no assurance that we will be able to manage the integrations successfully.
+Added: Failure to successfully integrate acquired operations may adversely affect our cost structure thereby reducing our earnings and return on investment.
+Added: In addition, we may fail to perform adequate due diligence and acquire entities with unknown liabilities, fraud, cultural or business environment issues, or that may not have adequate internal controls as may be required by law.
+Added: If we acquire a company that does not fit culturally, strategically, or in some other fashion, the acquisition may not produce the expected results or may negatively affect our reputation, which may negatively affect our business, results of operations, or cash flows.
+Added: The unpredictability of the economic impact of COVID-19 will also make it difficult to properly value or anticipate the future success of acquisition targets and impact our overall growth strategy.
+Added: To the extent the value of goodwill or identifiable assets with indefinite lives becomes impaired;
+Added: we may be required to incur material charges relating to the impairment of those assets.
We face substantial competition from other companies.
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Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats.
−Removed: As a high percentage of our employees are currently working from home as a result of the COVID-19 pandemic, we are highly reliant on the availability and functionality of our information systems to enable for our operations.
+Added: As a high percentage of our employees are currently working from home as a result of the COVID-19 pandemic, we are highly reliant on the availability and functionality of our information systems to enable our operations.
Working from home may increase risk of data loss, including privacy-related events.
12 unchanged sentences
Advances in computer capabilities, new discoveries in the field of cryptography, or other events or developments may result in a compromise or breach of the security practices we use to protect sensitive customer transaction information and employee information.
−Removed: A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations.
+Added: A party that can circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations.
Further, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user-names, passwords, or other information or otherwise compromise the security of our internal networks and/or our customers’ information.
−Removed: Since techniques used to obtain unauthorized access change frequently and the size and severity of security breaches are increasing, we may be unable to implement adequate preventative measures or timely identify or stop security breaches while they are occurring.
+Added: Since techniques used to obtain unauthorized access change frequently and the impact and severity of security breaches are increasing, we may be unable to implement adequate preventative measures or timely identify or stop security breaches while they are occurring.
We may be required to expend significant capital and other resources to protect against security breaches or to remediate the subsequent risks and issues caused by such breaches.
2 unchanged sentences
We also cannot be sure that our existing insurance coverage for errors and omissions or security breaches will continue to be available on acceptable terms or in sufficient amounts to cover one or more large claims, or that our insurers will not deny coverage as to any future claim.
−Removed: The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our business, financial condition, and results of operations.
−Removed: We may not adequately protect ourselves through our contract vehicles, or our insurance policies may not be adequate to address potential losses or claims.
−Removed: Our contracts may not protect us against the risks inherent in our business including, but not limited to, warranties, limitations of liability, indemnification obligations, human resources and subcontractor-related claims, patent and product liability, regulatory and compliance obligations, data security and privacy, and financing activities.
−Removed: Also, we face pressure from our customers for competitive pricing and contract terms.
−Removed: In addition, order cancellations by our customers may result from COVID-19 or the economic consequences thereof.
−Removed: If orders are cancelled and the equipment has shipped to us, we may have an increased risk of dispute resulting in non-payment.
−Removed: Such disputes may be complicated by novel legal arguments relating to contract enforceability, such as the application of force majeure, impossibility or impracticability of performance, and frustration of purpose.
−Removed: Despite the non-recourse nature of the loans financing certain of our activities, non-recourse lenders may file suit if the underlying transaction turns out poorly for the lenders.
−Removed: We are subject to such claims and the cost of defending such claims due to the nature of our business.
−Removed: We also are subject to audits by various vendor partners and customers, including government agencies, relating to purchases and sales under various contracts.
−Removed: In addition, we are subject to indemnification claims under various contracts.
−Removed: Failure to comply with our public-sector contracts or applicable laws and regulations could result in, among other things, termination, fines or other liabilities, and changes in procurement regulations could adversely impact our business.
−Removed: Revenues in our public sector are derived from sales to SLED customers, through various contracts and open market sales of products and services.
−Removed: Sales to SLED customers are highly regulated.
−Removed: Noncompliance with contract provisions, government procurement regulations, or other applicable laws or regulations could result in civil, criminal, and administrative liability, including substantial monetary fines or damages, termination of SLED sector customer contracts, and suspension, debarment, or ineligibility from doing business with the government and other customers in the SLED sector.
−Removed: Contracts in the SLED sector are generally terminable at any time for convenience of the contracting agency or upon default and are subject to audits.
−Removed: In addition, most contracts require successfully bidding and award of the contract.
−Removed: These bid processes can be complex and require extensive review of terms and conditions and data compilation.
−Removed: Multiple bidders may win a product category, which creates aggressive competition even after contract award.
−Removed: The effect of any of these possible actions could adversely affect our business, results of operations or cash flows.
−Removed: In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations, or cash flows.
+Added: The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or changes in our insurance policies, including additional exclusions, premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our business, financial condition, and results of operations.
Loss of services by any of our executive officers or senior management and/or failure to successfully implement a succession plan could adversely affect our business.
2 unchanged sentences
Our executive officers are at the forefront in determining our strategic direction and focus.
−Removed: The loss of our executive officers’ and senior management’s services without replacement by qualified successors could adversely affect our ability to manage effectively our overall operations and successfully execute current or future business strategies, and could cause other instability within our workforce
−Removed: We may not be able to hire and/or retain personnel that we need.
−Removed: To increase market awareness and sales of our offerings, we may need to expand our marketing efforts and sales operations in the future.
−Removed: Our products and services require a sophisticated sales effort and significant technical engineering talent.
−Removed: For example, our sales and engineering candidates must have highly technical hardware and software knowledge to create a customized solution for our customers’ business processes.
−Removed: Competition for qualified sales, marketing and engineering personnel fluctuates depending on market conditions.
−Removed: Prior to COVID-19, the US was in a low unemployment environment which resulted in difficulties in hiring or retaining sufficient personnel to maintain and grow our business.
−Removed: COVID-19 has resulted in significant unemployment;
−Removed: however, we are uncertain as to the duration and severity of this impact on the employment environment in the future, or how that environment will impact our workforce.
−Removed: In addition, changes to immigration laws, prior to, because of, and subsequent to COVID-19, may impact our ability to hire or retain talent.
−Removed: Frequently, our competitors require their employees to agree to non-compete and non-solicitation agreements as part of their employment.
−Removed: This makes it more difficult for us to hire and increases our costs by reviewing and managing non-compete restrictions.
−Removed: Additionally, in some cases our relationship with a customer may be impacted by turnover in our sales or engineering team.
+Added: The loss of our executive officers’ and senior management’s services without replacement by qualified successors could adversely affect our ability to effectively manage our overall operations and successfully execute current or future business strategies and could cause other instability within our workforce.
+Added: A natural disaster or other adverse event at one of our primary configuration centers or a third-party provider location could negatively impact our business.
+Added: We have configuration centers in the US and third-party providers in the UK and Netherlands.
+Added: The configuration centers contain inventory owned by us and our customers, which serve as distribution centers for orders, as we do not drop ship directly to the customer.
+Added: We perform services in those warehouses such as product configuration services, and warehouse and logistics services.
+Added: If the configuration centers were to be seriously damaged or disrupted by a natural disaster or other adverse event, including disruption related to political or social unrest, we could utilize another distribution center or third-party distributors to ship products to our customers.
+Added: However, this may not be sufficient to avoid interruptions in our service and may not enable us to meet all of the needs of our customers and would cause us to incur incremental operating costs.
+Added: In addition, we operate in facilities which may contain both business-critical data and confidential information of our customers and third parties, such as data center colocation and hosted solution partners.
+Added: A natural disaster or other adverse event at locations such as these or third-party provider locations could negatively impact our business, results of operations or cash flows.
+Added: Our earnings may fluctuate, which could adversely affect the price of our common stock.
+Added: Our earnings are susceptible to fluctuations for several reasons, including, but not limited to, variability in the timing of large transactions in our technology and financing segments, and the risk factors discussed herein .
+Added: In addition, our cost structure is based, in part, on expected sales and gross profit.
+Added: Therefore, if we experience any unexpected sales or gross profit shortfall, we may not be able to adjust our cost structure rapidly which could have an adverse effect on our business, results of operations or cash flows.
+Added: In the event our sales or net earnings are less than the level expected by the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock.
Our results of operations are subject to fluctuations in foreign currency.
3 unchanged sentences
As a result, fluctuations in the exchange rate of the US dollar relative to the functional currencies of our subsidiaries could cause fluctuations in our results of operations.
−Removed: Our operations in our foreign countries is insignificant.
+Added: Our operations in foreign countries are insignificant.
We also have foreign currency exposure to the extent net sales and purchases are not denominated in a subsidiary’s functional currency, which could have an adverse effect on our business, results of operations, or cash flows.
COVID-19 has had an effect on the global economy and as such may have or continue to have an effect on currency valuations which may cause currency losses for us.
−Removed: Changes in accounting standards, or the misapplication of current accounting standards, may adversely affect our future financial results.
−Removed: We prepare our financial statements in conformity with accounting principles generally accepted in the US These accounting principles are subject to interpretation by the Financial Accounting Standards Board, the Public Company Accounting Oversight Board, the SEC, the American Institute of Certified Public Accountants (“AICPA”) and various other bodies formed to interpret and create appropriate accounting policies.
−Removed: Future periodic assessments required by current or new accounting standards may result in noncash charges and/or changes in presentation or disclosure.
−Removed: In addition, any change in accounting standards may influence our customers’ decision to purchase from us or finance transactions with us, which could have a significant adverse effect on our financial position or results of operations.
−Removed: We are required to determine if we are the principal or agent in all transactions with our customers.
−Removed: The voluminous number of products and services we sell, and the manner in which they are bundled, are technologically complex.
−Removed: Mischaracterization of these products and services could result in misapplication of revenue recognition polices.
−Removed: We use estimates where necessary, such as the fair value of assets acquired, and liabilities assumed in a business combination, the analysis for goodwill impairment, allowance for doubtful accounts and the cost to perform professional and managed services, which require judgment and are based on best available information.
−Removed: If we are unable to accurately estimate the cost of these services or the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected.
−Removed: If we fail to perform sufficient due diligence prior to completing an acquisition, or entering into a strategic alliance, or fail to integrate a completed acquisition our earnings may be affected.
−Removed: Our ability to successfully integrate the operations we acquire, reduce costs, or leverage these operations to generate revenue and earnings growth, could significantly impact future revenue and earnings.
−Removed: Integrating acquired operations is a significant challenge, may divert management’s attention from other business concerns, and there is no assurance that we will be able to manage the integrations successfully.
−Removed: Failure to successfully integrate acquired operations may adversely affect our cost structure thereby reducing our gross margins and return on investment.
−Removed: In addition, we may fail to perform adequate due diligence and acquire entities with unknown liabilities, fraud, cultural or business environment issues, or that may not have adequate internal controls as may be required by law.
−Removed: If we acquire a company that does not fit culturally, strategically, or in some other fashion, the acquisition may not produce the expected results or may negatively affect our reputation, which may negatively affect our business, results of operations, or cash flows.
−Removed: The unpredictability of the economic impact of COVID-19 will also make it difficult to properly value or anticipate the future success of acquisition targets and impact our overall growth strategy.
−Removed: To the extent the value of goodwill or identifiable assets with indefinite lives becomes impaired;
−Removed: we may be required to incur material charges relating to the impairment of those assets.
−Removed: If we publish inaccurate catalog content data, our business could suffer.
−Removed: Any defects or errors in our electronic catalog content data could harm our customers or deter businesses from participating in our offerings, damage our business reputation, harm our ability to attract new customers, and potentially expose us to liability.
−Removed: In addition, from time to time vendors who provide us electronic catalog data could submit to us inaccurate pricing or other catalog data.
−Removed: Even though such inaccuracies are not caused by us and are outside of our control, such inaccuracies could deter current and potential customers from using our products or result in inaccurate pricing to our customers.
−Removed: If our proprietary software products contain defects, our business could suffer.
−Removed: Products as complex as those used to provide our electronic commerce solutions or cloud automation solutions, such as scripts, often contain unknown and undetected errors, performance problems, or use open source code.
−Removed: We may have serious defects immediately following introduction of new products or enhancements to existing products.
−Removed: Undetected errors or performance problems may be discovered in the future and certain errors we consider to be minor may be serious to our customers.
−Removed: Our software products, or automation solutions, may be circumvented or sabotaged by third-parties such as hackers, which could result in the disclosure of sensitive information or personal information, unauthorized procurement, or cause other business interruptions that could damage our reputation and disrupt our business.
−Removed: Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats .
−Removed: In addition, our customers may experience a loss in connectivity to our proprietary software solutions because of a power loss at our data center, Internet interruption, or defects in our software.
−Removed: This could result in lost revenues, delays in customer acceptance, security breaches, and unforeseen liabilities that would be detrimental to our reputation and to our business.
+Added: We may be required to take impairment charges for goodwill or other intangible assets related to acquisitions.
+Added: We have acquired certain portions of our business and assets through acquisitions.
+Added: Further, as part of our long-term business strategy, we may continue to pursue acquisitions of other companies or assets.
+Added: In connection with prior acquisitions, we have accounted for the portion of the purchase price paid in excess of the book value of the assets acquired as goodwill or intangible assets, and we may be required to account for similar premiums paid on future acquisitions in the same manner.
+Added: Under the applicable accounting principles, goodwill is not amortized and is carried on our books at its original value, subject to annual review and evaluation for impairment, whereas intangible assets are amortized over the life of the asset.
+Added: Changes in the business itself, the economic environment (including business valuation levels and trends), or the legislative or regulatory environment may trigger a review and evaluation of our goodwill and intangible assets for potential impairment outside of the normal review periods.
+Added: These changes may adversely affect either the fair value of the business or our individual reporting units and we may be required to take an impairment charge.
+Added: If market and economic conditions deteriorate as a result of COVID-19 or otherwise, this could increase the likelihood that we will need to record impairment charges to the extent the carrying value of our goodwill exceeds the fair value of our overall business.
+Added: Such impairment charges could materially adversely affect our net earnings during the period in which the charge is taken.
+Added: As of March 31, 2021, we had goodwill and other intangible assets of $126.6 million and $38.6 million, respectively.
+Added: We may not be able to realize our entire investment in the equipment we lease.
+Added: The realization of the residual value of the equipment we lease, predominantly at the end of the term of a lease, as well as during the life of the lease, is an important element in our financing segment.
+Added: At the inception of certain leases, we record a residual value for the leased equipment based on our estimate of the value of the equipment at the expected disposition date.
+Added: A decrease in the market value of leased equipment at a rate greater than the rate we projected, whether due to rapid technological or economic obsolescence, excessive or unusual wear and tear on the equipment, or other factors, would adversely affect the recoverability of the estimated residual values of such equipment.
+Added: Further, certain equipment residual values are dependent on the vendor’s warranties, reputation, rules regarding relicensing of software to operate the equipment, and other factors, including market liquidity.
+Added: In addition, we may not realize the full market value of equipment if we are required to sell it to meet liquidity needs or for other reasons outside of the ordinary course of business.
+Added: Consequently, there can be no assurance that we will realize our estimated residual values for equipment.
+Added: The degree of residual realization risk varies by transaction type.
+Added: Sales-type leases bear less risk because contractual payments typically cover 90% or more of the equipment’s lease cost at inception.
+Added: Operating leases have a higher degree of risk because a smaller percentage of the equipment’s value is covered by contractual cash flows at lease inception.
+Added: Risks Related to the Economy and our Industry
+Added: General economic weakness may harm our operating results and financial condition.
+Added: Our results of operations are largely dependent upon the state of the economy.
+Added: Global economic weakness and uncertainty may result in decreased sales, gross margin, earnings and/or growth rates from our US based customers and from customers outside the US.
+Added: For example, there continues to be substantial uncertainty regarding the economic impact of the Referendum on the UK’s Membership of the European Union (“EU”) (referred to as “Brexit”).
+Added: An agreement was reached between the UK and the EU in relation to their future relationship in certain areas, which included a new trade and cooperation agreement relating principally to the free trade in goods (the "EU-UK Trade and Cooperation Agreement").
+Added: While the EU-UK Trade and Cooperation Agreement provides clarity in respect of the free trade in goods between the UK and the EU, there remain uncertainties related to the stability and effects of the new relationship.
+Added: Potential adverse consequences of Brexit and the uncertainties around EU-UK Trade and Cooperation Agreement include global market uncertainty, volatility in currency exchange rates, additional costs and operational burdens associated with increased operational restrictions on imports and exports between the UK and other countries and potentially increased regulatory complexities, each of which could have a negative impact on our business, financial condition, or results of operations.
+Added: We have established two subsidiaries in the Netherlands to help address future developments, as needed, for Brexit, which could add complexity to our international operations as well as result in higher costs associated with serving our customers.
+Added: Changes in the IT industry, customers’ usage, or procurement of IT, and/or rapid changes in product standards may result in reduced demand for the IT hardware and software solutions and services we sell.
+Added: Our results of operations are influenced by a variety of factors, including the condition of the IT industry, shifts in demand for, or availability of, IT hardware, software, peripherals and services, and industry introductions of new products, upgrades, methods of distribution, and the nature of how IT is consumed and procured.
+Added: The IT industry is characterized by rapid technological change and the frequent introduction of new products, product enhancements and new distribution methods or channels, each of which can decrease demand for current products or render them obsolete.
+Added: In addition, the proliferation of cloud technology, IaaS, SaaS, PaaS, software defined networking, or other emerging technologies may reduce the demand for products and services we sell to our customers.
+Added: Cloud offerings may influence our customers to move workloads to cloud providers, which may reduce the procurement of products and services from us.
+Added: Changes in the IT industry may also affect the demand for our advanced professional and managed services.
+Added: These ‘as a service’ offerings in many cases are recorded on a net basis which results in a reduction of net sales and an increase in gross margin.
+Added: Over the past several years, we have seen a significant increase in adjusted gross billings recorded on a net basis due to the industry shift to ‘as a service’ offerings.
+Added: We have invested a significant amount of capital in our strategy to provide certain products and services, and this strategy may adversely impact our financial position due to competition or changes in the industry or improper focus or selection of the products and services we decide to offer.
+Added: If we fail to react in a timely manner to such changes, our results of operations may be adversely affected.
+Added: Our sales can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material adverse effect on our results of operations.
+Added: Rising interest rates or the loss of key lenders or the constricting of credit markets may affect our future profitability and our ability to monetize our financing receivables and investments in operating leases.
+Added: We finance transactions with our customers utilizing fix-rate borrowing.
+Added: If we fund such transactions at inception with a third-party lender, we are able to lock an interest rate spread on the transaction between the customer rate and third-party rate.
+Added: However, we may delay funding the transaction, and if interest rates increase in the interim, the interest rate spread will decrease, which will adversely impact our profitability, or we may not choose to fund the transaction due to higher interest rates, thus inhibiting our ability to monetize our portfolio to generate cash.
+Added: We rely on lenders to fund financing transactions we originate with our customers.
+Added: Loss of any lender or group of lenders may significantly impact our ability to originate financing transactions, which may negatively impact our financial condition.
+Added: In addition, our lenders may no longer be willing to provide funding under our current terms and conditions and may demand new terms and conditions that negatively impact our ability to consummate a financing transaction with our customers.
+Added: We are also subject to changes, if any, in our lenders’ willingness to provide financing for different, particularly lower, credit quality lessees.
+Added: COVID-19 has resulted in a tightened credit market, which may impede our ability to fund on a recourse or non-recourse basis certain of our lesser credit quality customers or other general customers.
+Added: This may result in less earnings, use of our own cash, or lesser credit quality in our financing portfolio.
+Added: We depend on continued innovations in hardware, software, and services offerings by our vendors, as well as the competitiveness of their offerings and our ability to partner with new and emerging technology providers.
+Added: The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software, and services offerings, such as cloud-based solutions, including IaaS, SaaS, and PaaS.
+Added: We depend on innovations in hardware, software, and services offerings by our vendors, as well as the acceptance of those innovations by our customers for the offerings we sell.
+Added: A decrease in the rate of innovation by our vendors, or the lack of acceptance of innovations by our customers, or a shift by customers to technology platforms that we do not sell could have an adverse effect on our business, results of operations or cash flows.
+Added: In addition, if we are unable to keep up with changes in technology and new hardware, software, and services offerings––for example by not providing the appropriate training to our account managers, sales technology specialists and engineers to enable them to effectively sell and deliver such new offerings to customers––our business, results of operations or cash flows could be adversely affected.
+Added: We also depend upon our vendors for the development and marketing of hardware, software, and services to compete effectively with hardware, software, and services of vendors whose products and services we do not currently offer or are not authorized to offer in one or more customer channels.
+Added: In addition, our success depends on our ability to develop relationships with and sell hardware, software, and services from emerging vendors, as well as vendors that we have not historically represented in the marketplace.
+Added: To the extent that a vendor's offering that is highly in demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, or we are unable to develop relationships with new technology providers or companies that we have not historically represented, or we partner with a vendor that is not in demand or the demand for whose products significantly decreases, our business, results of operations, or cash flows could be adversely impacted.
+Added: Risks Related to Laws and Regulations
+Added: Failure to comply with new laws or changes to existing laws may adversely impact our business.
+Added: Our operations are subject to numerous US and foreign laws and regulations in a number of areas including, but not limited to, areas of labor and employment, immigration, advertising, e-commerce, tax, import and export requirements, anti-corruption, data privacy requirements, anti-competition, and environmental, health, and safety.
+Added: Compliance with these laws, regulations, and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business, and the risk of noncompliance.
+Added: We have implemented policies and procedures designed to help comply with applicable laws and regulations, but there can be no certainty that our employees, contractors, or agents will fully comply with laws and regulations or our policies and procedures.
+Added: In addition, many countries and state and local governments have issued Stay at Home orders to combat COVID-19.
+Added: These orders may mandate or recommend office closures, telework, or health or safety actions, such as social distancing in the workplace, masks, or health screening.
+Added: The orders frequently change, and each order is different and must be interpreted and applied to the jurisdiction.
+Added: Additional risk may arise from these orders as they are lifted or changed which may include infections in our employee base, office closures, closures at customers sites, and additional Stay at Home orders or mandated or recommended safety actions.
+Added: Additionally, many employment related regulations, such as leave and accommodation matters, have been issued by federal, state, and local governments.
+Added: These regulations continue to undergo revisions.
+Added: We may fail to interpret or follow the regulations or orders properly which may result in sanction, penalties, fines, or litigation.
+Added: Failure to comply with our public-sector contracts or applicable laws and regulations could result in, among other things, termination, fines or other liabilities, and changes in procurement regulations could adversely impact our business.
+Added: Revenues in our public sector are derived from sales to SLED customers, through various contracts and open market sales of products and services.
+Added: Sales to SLED customers are highly regulated and SLED customer purchases are subject to availability of funds from taxation, grants, or other sources.
+Added: Noncompliance with contract provisions, government procurement regulations, or other applicable laws or regulations could result in civil, criminal, and administrative liability, including substantial monetary fines or damages, termination of SLED sector customer contracts, and suspension, debarment, or ineligibility from doing business with the government and other customers in the SLED sector.
+Added: Contracts in the SLED sector are generally terminable at any time for convenience of the contracting agency or upon default and are subject to audits.
+Added: In addition, most contracts require successfully bidding and award of the contract.
+Added: These bid processes can be complex and require extensive review of terms and conditions and data compilation.
+Added: Multiple bidders may win a product category, which creates aggressive competition even after contract award.
+Added: The effect of any of these possible actions could adversely affect our business, results of operations or cash flows.
+Added: In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations, or cash flows.
+Added: We may not adequately protect ourselves through our contract vehicles, or our insurance policies may not be adequate to address potential losses or claims.
+Added: Our contracts may not protect us against the risks inherent in our business including, but not limited to, warranties, limitations of liability, indemnification obligations, human resources and subcontractor-related claims, patent and product liability, regulatory and compliance obligations, data security and privacy, and financing activities.
+Added: Also, we face pressure from our customers for competitive pricing and contract terms.
+Added: In addition, order cancellations by our customers may result from COVID-19 or the economic consequences thereof.
+Added: If orders are cancelled and the equipment has shipped to us, we may have an increased risk of dispute resulting in non-payment.
+Added: Such disputes may be complicated by novel legal arguments relating to contract enforceability, such as the application of force majeure, impossibility or impracticability of performance, and frustration of purpose.
+Added: Despite the non-recourse nature of the loans financing certain of our activities, non-recourse lenders may file suit if the underlying transaction turns out poorly for the lenders.
+Added: We are subject to such claims and the cost of defending such claims due to the nature of our business.
+Added: We also are subject to audits by various vendor partners and customers, including government agencies, relating to purchases and sales under various contracts.
+Added: In addition, we are subject to indemnification claims under various contracts.
+Added: The uncertainty regarding the phase-out of LIBOR may negatively impact our operating results .
+Added: LIBOR, the interest rate benchmark used as a reference rate on our credit facility variable rate debt is expected to cease publication as of June 30, 2023.
+Added: The US Federal Reserve, in connection with the Alternative Reference Rates Committee, a steering committee comprised of large US financial institutions, announced the replacement of the US dollar LIBOR with the Secured Overnight Financing Rate (“SOFR”).
+Added: SOFR is a new index calculated by short-term repurchase agreements, backed by US Treasury securities.
+Added: Whether or not SOFR attains market traction as a LIBOR replacement for US dollar denominated instruments, and whether other benchmarks will attain traction in other markets, remains in question and the future of LIBOR at this time is uncertain.
+Added: We will also need to consider new contracts and whether the contracts should reference an alternative benchmark rate or include suggested fallback language, as published by the Alternative Reference Rates Committee.
+Added: The consequences of these developments with respect to LIBOR cannot be entirely predicted and span multiple future periods but could result in an increase in the cost of our variable rate debt which may be detrimental to our financial position or operating results.
We face risks of claims from third-parties for intellectual property infringement, including counterfeit products, that could harm our business.
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We could incur substantial costs in defending infringement claims against ourselves and our customers.
−Removed: In the event such claims, we and our customers may be required to obtain one or more licenses from third parties.
+Added: In the event of such claims, we and our customers may be required to obtain one or more licenses from third parties.
We may not be able to obtain such licenses from third parties at a reasonable cost or at all.
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Costs relative to lawsuits are usually expensed in the periods incurred and there is no certainty in recouping any of the amounts expended regardless of the outcome of any action.
+Added: Risks Related to Ownership of Our Stock
If securities analysts do not publish research or reports about our company, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
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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.