What changed in this filing

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Item 1A. Risk Factors

2022-06-09 compared with 2021-06-08 · 399 added, 399 removed, 95 unchanged (89% of the section changed)

You should carefully consider the following risks

and all other information included in this report.

The risks and uncertainties described below and elsewhere in this report are not the

only ones facing our business.

If any of the following risks were to actually occur, our business, financial condition or results of operations

would likely suffer.

You should carefully consider the following

risks and all other information included in this report.

The risks and uncertainties described below and elsewhere in this report are

not the only ones facing our business.

If any of the following risks were to actually occur, our business, financial condition or results

of operations would likely suffer.

Macroeconomic and Business Risks

Our business, results of operations and

financial condition may be adversely impacted by the COVID-19 pandemic .

The COVID-19 pandemic has negatively affected the U.S.

and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, and created significant

disruption of the financial markets.

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including

impacting our customers, employees and supply

Given the critical nature of the services and products that we provide, our calibration labs, distribution centers and support

offices have remained open during the pandemic.

While the COVID-19 pandemic did not have a material adverse effect on our reported results

for fiscal year 2021, we are unable to predict the ultimate impact that it may have on our business, future results of operations, financial

position or cash flows.

The extent to which our operations may be impacted by the COVID-19 pandemic and recovery will depend largely on

future developments, which are highly uncertain and cannot be accurately predicted.

We may experience additional operating costs due to

increased challenges with our workforce (including as a result of illness, absenteeism or government orders), access to supplies, capital,

and fundamental support services (such as shipping and transportation).

Even after the COVID-19 pandemic has subsided, we may experience

materially adverse impacts to our business due to any resulting supply chain disruptions, economic recession or depression.

the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets

remain unknown.

The impact of the COVID-19 pandemic may also

exacerbate other risks discussed in this section, any of which could have a material adverse effect on us.

This situation is changing

rapidly and additional impacts may arise that we are not aware of currently.

Adverse changes in general economic

conditions, including from the impact of the COVID-19 pandemic, or uncertainty about future economic conditions could materially and adversely

We are subject to the risks arising from adverse changes in general economic market conditions, including the negative

impact to the U.S.

and global economy from the COVID-19 pandemic or other global health situation, inflation, and any recessionary impacts.

Uncertainty about future economic conditions could negatively affect our current and prospective customers causing them to delay the purchase

of necessary services or test and measurement instruments.

Poor economic conditions could harm our business, financial condition, operating

results and cash flows.

The COVID-19 pandemic has negatively

affected the U.S.

and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, and

created significant disruption of the financial markets.

While the COVID-19 pandemic did not have a material adverse effect on our reported

results for fiscal year 2022, we continue to closely monitor the impact of the COVID-19 pandemic and emerging variants on all aspects

of our business, including the impact to our customers, employees and supply chain.

The health of our workforce, customers and communities

continues to be of primary concern and we have taken, and may take in the future, actions as may be required by government authorities

or as we determine are in the best interests of our employees, customers and others.

These actions have required, and may continue to

require, expenditures of significant time, attention and resources to manage the effects of the pandemic on our business and workforce.

The extent to which our operations may be impacted by the COVID-19 pandemic or any global health situation will depend largely on future

developments which are highly uncertain and we are unable to predict the ultimate impact that it may have on our business, future results

of operations, financial position or cash flows.

Even while government restrictions and responses to the COVID-19 pandemic have lessened,

we may experience materially adverse impacts to our business due to any resulting supply chain disruptions, economic recession or depression.

Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the

financial markets remain unknown.

Our management team has, and will likely continue to, spend significant time, attention and resources

monitoring the COVID-19 pandemic and seeking to manage its effects on our business and workforce.

The impact of the COVID-19 pandemic

may also exacerbate other risks discussed in this section, any of which could have a material adverse effect on us.

This pandemic is still

ongoing and additional impacts may arise that we are not aware of currently.

The COVID-19 pandemic may significantly

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percentage of our employees are unable to work due to illness, quarantines, government actions, facility closures in response to the pandemic,

fear of acquiring COVID-19 while performing essential business functions, or as a result of changes to unemployment insurance where unemployed

workers can receive, in the short-term, benefits in excess of what would be offered for working for us.

As part of our response to the

pandemic, during the first quarter of fiscal year 2021,we instituted hazard pay for certain employees that perform essential work at customer

While we remain fully operational as an essential business, we cannot guarantee that we will be able to adequately staff our operations

or fear of acquiring COVID-19 while performing essential business functions.

During the fourth quarter of fiscal year 2022, we experienced

a higher than usual rate of employee absenteeism related to COVID-19, which resulted in additional employee related costs which, in turn,

impacted our operational costs.

We cannot predict the extent to which the COVID-19 pandemic may disrupt our workforce and internal operations

We have taken certain precautions due to

the COVID-19 pandemic that could negatively impact our business .

In response to the COVID-19 pandemic, we have taken measures

intended to protect the health and well-being of our employees, customers, and communities, which could negatively impact our business.

These measures include temporarily requiring all non-essential employees (personnel whose roles allow) to work remotely, restricting work-related

travel except for direct onsite service to our customers, restricting non-essential visitors from entering our sites, increasing the frequency

and extent of cleaning and disinfecting facilities, workstations, and equipment, developing social distancing plans, and instituting specialized

training to ensure the safe handling of our customers’ critical equipment.

The health of our workforce, customers and communities

is of primary concern and we may take further actions as may be required by government authorities or as we determine are in the best

interests of our employees, customers and others.

In addition, our management team has, and will likely continue to, spend significant

time, attention and resources monitoring the COVID-19 pandemic and seeking to manage its effects on our business and workforce.

to which the pandemic and our precautionary measures may impact our business will depend on future developments, which are highly uncertain

and cannot be predicted at this time.

The industries in which we compete are

highly competitive, and we may not be able to compete successfully.

and we cannot guarantee that we will be able to adequately staff our operations when needed.

Rising inflation may result in

increased costs of operations and negatively impact the credit and securities markets generally, which could have a material adverse effect

on our results of operations and the market price of our common stock.

Inflation has accelerated in the U.S.

and globally due

in part to global supply chain issues, a rise in energy prices, and strong consumer demand as economies continue to reopen from restrictions

related to the COVID-19 pandemic.

An inflationary environment can increase our cost of labor as well as our energy and other operating

costs which may have a material adverse impact on our financial results.

In addition, economic conditions could impact and reduce the

number of customers who purchase our products or services as credit becomes more expensive or unavailable.

Although interest rates have

increased and are expected to increase further, inflation may continue.

Further, increased interest rates could have a negative effect

on the securities markets generally which may, in turn, have a material adverse effect on the market price of our common stock.

The industries in which we compete

are highly competitive, and we may not be able to compete successfully.

Within our Service segment, we provide calibration services

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compliance services for their products.

Within our Distribution segment, we compete with

numerous companies, including several major manufacturers and distributors.

Most of our products are available from several sources and

our customers tend to have relationships with several distributors.

Competitors in the product distribution industry could also obtain

exclusive rights to market particular products, which we would then be unable to market.

Manufacturers could also increase their efforts

to sell directly to end-users and bypass distributors like us.

Industry consolidation among distributors, the unavailability of products,

whether due to our inability to gain access to products or interruptions in supply from manufacturers, including as a result of the COVID-19

pandemic, or the emergence of new competitors could also increase competition and adversely affect our business or results of operations.

In each of the industries in which we compete,

some of our competitors have greater financial and other resources than we do, which could allow them to compete more successfully.

the future, we may be unable to compete successfully and competitive pressures may reduce our sales.

Competition in our Distribution segment

is changing with an increase in web-based distributors.

Within our Distribution segment, we

compete with numerous companies, including several major manufacturers and distributors.

Most of our products are available from several

sources and our customers tend to have relationships with several distributors.

Competitors in the product distribution industry could

also obtain exclusive rights to market particular products, which we would then be unable to market.

Manufacturers could also increase

their efforts to sell directly to end-users and bypass distributors like us.

Industry consolidation among distributors, the unavailability

of products, whether due to our inability to gain access to products or interruptions in supply from manufacturers, or the emergence of

new competitors could also increase competition and adversely affect our business or results of operations.

In each of the industries in which

we compete, some of our competitors have greater financial and other resources than we do, which could allow them to compete more successfully.

In the future, we may be unable to compete successfully and competitive pressures may reduce our sales.

Competition in our Distribution

segment is changing with an increase in web-based distributors.

We may not be able to compete successfully.

We face substantial and increased

competition throughout the world, especially in our Distribution segment.

The competition is changing, with web-based distributors becoming

more prevalent and increasing their market share.

We face substantial

and increased competition throughout the world, especially in our Distribution segment.

The competition is changing, with web-based distributors

becoming more prevalent and increasing their market share.

Some of our competitors are much larger than us.

Changes in the competitive landscape

pose new challenges that could adversely affect our ability to compete.

Entry or expansion of other vendors into this market may establish

competitors that have larger customer bases and substantially greater financial and other resources with which to pursue marketing and

distribution of products.

Their current customer base and relationships, as well as their relationships and ability to negotiate with

manufacturers, may also provide them with a competitive advantage.

Changes in the competitive

landscape pose new challenges that could adversely affect our ability to compete.

Entry or expansion of other vendors into this market

may establish competitors that have larger customer bases and substantially greater financial and other resources with which to pursue

marketing and distribution of products.

Their current customer base and relationships, as well as their relationships and ability to negotiate

with manufacturers, may also provide them with a competitive advantage.

If we are unable to effectively compete with our current and future

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

Volatility in the oil and gas industry

has had, in the past, and could have in the future, a negative impact on our operating results.

A portion of our products and

services customer base is directly or indirectly related to the oil and gas industry.

As a result, demand for some of our products is

dependent on the level of expenditures by the oil and gas industry.

In addition to the more significant impact on our Distribution segment,

an extended downturn in the oil and gas industry or continued volatility in oil and gas prices could impact customers’ demand for

some of our services (generally excluding life sciences, our largest industry customer sector), which could have a material adverse effect

on our financial condition, results of operations and cash flows.

Volatility in the oil and gas

industry has had, in the past, and could have in the future, a negative impact on our operating results.

A portion of our products

and services customer base is directly or indirectly related to the oil and gas industry.

As a result, demand for some of our products

is dependent on the level of expenditures by the oil and gas industry.

In addition to the more significant impact on our Distribution

segment, an extended downturn in the oil and gas industry or continued volatility in oil and gas prices, including as a result of any

global hostilities, could impact customers’ demand for some of our services (generally excluding life sciences, our largest industry

customer sector), which could have a material adverse effect on our financial condition, results of operations and cash flows.

Our Service segment has a concentration

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affect customer demand for our services, which could have a material adverse effect on our financial results.

Adverse changes in general economic conditions

or uncertainty about future economic conditions, including economic uncertainty from the current pandemic, could adversely affect us.

We are subject to the risks arising from adverse changes in general economic market conditions, including the negative impact

and global economy from the COVID-19 pandemic.

Uncertainty about future economic conditions could negatively affect our current

and prospective customers causing them to delay the purchase of necessary services or test and measurement instruments.

Poor economic

conditions could harm our business, financial condition, operating results and cash flows.

Tariffs imposed by the U.S.

and those imposed

in response by other countries, as well as rapidly changing trade relations, could have a material adverse effect on our business and

results of operations.

those imposed in response by other countries, as well as rapidly changing trade relations, could have a material adverse effect on our

business and results of operations.

Changes in U.S.

and foreign governments’ trade policies have resulted in, and may continue to result

in, tariffs on imports into and exports from the U.S.

In response, some foreign governments have proposed or implemented their own tariffs

on certain products, increasing our costs of doing business.

If we are unable to recover these costs, our profit margins may be negatively

In addition, significant changes to U.S.

trade policy may occur as a result of the change in the U.S.

President and administration,

including the U.S.

re-entering, withdrawing from or renegotiating various trade agreements, or other actions that would change current

trade policies.

We cannot predict which, if any, of these actions will be taken or, if taken, their ultimate effect.

Continued diminished

trade relations between the U.S.

and other countries, as well as the continued escalation of tariffs, could have a material adverse effect

on our financial performance and results of operations.

Any impairment of goodwill or intangible

assets could negatively impact our results of operations.

Our goodwill and intangible assets are subject to an impairment test

on an annual basis and are also tested whenever events and circumstances indicate that goodwill and/or intangible assets may be impaired.

and foreign governments’ trade policies have resulted in, and may continue

to result in, tariffs on imports into and exports from the U.S.

In response, some foreign governments have proposed or implemented their

own tariffs on certain products, increasing our costs of doing business.

If we are unable to recover these costs, our profit margins may

be negatively impacted.

In the event of diminished trade relations between the U.S.

and other countries, as well as any escalation of

tariffs, could have a material adverse effect on our financial performance and results of operations.

Any impairment of goodwill or

intangible assets could negatively impact our results of operations.

Our goodwill and intangible assets are subject to an impairment

test on an annual basis and are also tested whenever events and circumstances indicate that goodwill and/or intangible assets may be impaired.

Any excess goodwill and/or indefinite-lived intangible assets value resulting from the impairment test must be written-off in the period

of determination.

Intangible assets (other than goodwill and indefinite-lived intangible assets) are generally amortized over the useful

life of such assets.

In addition, from time to time, we may acquire or make an investment in a business that will require us to record

goodwill based on the purchase price and the value of the acquired tangible and intangible assets.

We may subsequently experience unforeseen

issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets

and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business.

Future determinations

of significant write-offs of

goodwill or intangible assets because of an impairment

test or any accelerated amortization of other intangible assets could have a material negative impact on our results of operations and

financial condition.

Intangible assets (other than goodwill and indefinite-lived intangible assets) are amortized over the useful life of

In addition, from time to time, we may acquire or make an investment in a business that will require us to record goodwill

based on the purchase price and the value of the acquired tangible and intangible assets.

We may subsequently experience unforeseen issues

with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and

trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business.

Future determinations of

significant write-offs of goodwill or intangible assets because of an impairment test or any accelerated amortization of other intangible

assets could have a material negative impact on our results of operations and financial condition.

Operational Risks

Cybersecurity incidents could adversely

affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and/or damage

to our business relationships, all of which could negatively impact our business, results of operations or financial condition.

rely extensively on information technology (“IT”) systems, some of which are provided by third parties, to support our business

activities, including for orders and the storage, processing and transmission of our electronic, business-related, information assets

used in or necessary to conduct business.

Cybersecurity incidents could

adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and/or

damage to our business relationships, all of which could negatively impact our business, results of operations or financial condition.

We rely extensively on information technology (“IT”) systems, some of which are provided by third parties, to support

our business activities, including for orders and the storage, processing and transmission of our electronic, business-related, information

assets used in or necessary to conduct business.

The data we store and process may include customer payment information, personal information

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and integrity of our data.

To mitigate the spread of COVID-19, some of our office personnel transitioned to remote work environments which

may exacerbate various cybersecurity risks to our business, including an increased risk of phishing and other social engineering attacks,

and an increased risk of unauthorized dissemination of sensitive personal, proprietary or other confidential information.

Global cybersecurity

threats can range from uncoordinated individual attempts to gain unauthorized access to our IT systems to sophisticated and targeted measures

known as advanced persistent threats.

The techniques used in these attacks change frequently and may be difficult to detect for periods

of time and we may face difficulties in anticipating and implementing adequate preventative measures.

While we employ comprehensive measures

to prevent, detect, address and mitigate these threats (including access controls, data encryption, vulnerability assessments, management

training, continuous monitoring of our IT networks and systems and maintenance of backup and protective systems), cybersecurity incidents,

depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical

data or proprietary information and the disruption of business operations.

The potential consequences of a material cybersecurity incident

include reputational damage, compromised employee, customer, or third-party information, litigation with third parties, regulatory actions,

and increased cybersecurity protection and remediation costs, which in turn could adversely affect our business and results of operations.

In addition, the laws and regulations governing security of data on IT systems and otherwise held by companies is evolving and adding

layers of complexity in the form of new requirements and increasing costs of attempting to protect IT systems and data and complying with

new cybersecurity regulations.

If we experience a significant disruption in,

or breach in security of, our IT systems, or if we fail to implement new systems and software successfully, our business could be adversely

Our IT systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication

failures, user errors, catastrophes or other unforeseen events.

Our IT systems also may experience interruptions, delays or cessations

of service or produce errors in connection with system integration, software upgrades or system migration work that takes place from time

In addition, technology resources may be strained due to the increase in the number of remote users in response to the COVID-19

If we were to experience a prolonged system disruption in the IT systems that involve our interactions with customers or suppliers,

it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business.

Our revenue and ability to achieve our

stated corporate objectives depends on our senior management and our ability to retain recruit, train and retain quality employees.

Our success is dependent on our senior management and our ability to attract, retain and motivate qualified personnel, especially skilled

service technicians.

Competition for senior management is intense, and we may not be successful in attracting and retaining key personnel.

Some of our office personnel work in remote environments which may exacerbate various cybersecurity risks to

our business, including an increased risk of phishing and other social engineering attacks, and an increased risk of unauthorized dissemination

of sensitive personal, proprietary or other confidential information.

Global cybersecurity threats can range from uncoordinated individual

attempts to gain unauthorized access to our IT systems to sophisticated and targeted measures known as advanced persistent threats.

techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in

anticipating and implementing adequate preventative measures.

While we employ comprehensive measures to prevent, detect, address and mitigate

these threats (including access controls, data encryption, vulnerability assessments, management training, continuous monitoring of our

IT networks and systems and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope,

could potentially result in the misappropriation, destruction, corruption or unavailability of critical data or proprietary information

and the disruption of business operations.

The potential consequences of a material cybersecurity incident include reputational damage,

compromised employee, customer, or third-party information, litigation with third parties, regulatory actions, and increased cybersecurity

protection and remediation costs, which in turn could adversely affect our business and results of operations.

We maintain insurance intended

to cover certain cybersecurity events, but such insurance may not cover all risks and losses that we experience.

In addition, the laws

and regulations governing security of data on IT systems and otherwise held by companies is evolving and adding layers of complexity in

the form of new requirements and increasing costs of attempting to protect IT systems and data and complying with new cybersecurity regulations.

If we experience a significant

disruption in, or breach in security of, our IT systems, or if we fail to implement new systems and software successfully, our business

could be adversely affected.

Our IT systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware

failures, telecommunication failures, user errors, catastrophes or other unforeseen events.

Our IT systems also may experience interruptions,

delays or cessations of service or produce errors in connection with system integration, software upgrades or system migration work that

takes place from time to time.

In addition, technology resources may be strained due to our remote users.

If we were to experience a prolonged

system disruption in the IT systems that involve our interactions with customers or suppliers,

it could result in the loss

of sales and customers and significant incremental costs, which could adversely affect our business.

Our revenue and ability to achieve

our stated corporate objectives depends on our senior management and our ability to retain recruit, train and retain quality employees.

Our success is dependent on our senior management and our ability to attract, retain and motivate qualified personnel, especially

skilled service technicians.

Competition for senior management is intense, and we may not be successful in attracting and retaining key

Qualified skilled service technicians are in high demand and are subject to competing offers.

The ability to meet our labor needs while

controlling costs associated with hiring and training new employees is subject to external factors such as unemployment levels and prevailing

The loss of services of any member of our senior management team or key employees, and the inability to attract and retain

other qualified personnel, especially skilled service technicians, could affect our ability to achieve our stated corporate objectives

and could adversely impact our business and results of operations.

We expect that our quarterly results of

operations will fluctuate.

The ability to meet our labor

needs while controlling costs associated with hiring and training new employees is subject to external factors such as unemployment levels

and prevailing wage rates.

The loss of services of any member of our senior management team or key employees, and the inability to attract

and retain other qualified personnel, especially skilled service technicians, could affect our ability to achieve our stated corporate

objectives and could adversely impact our business and results of operations.

We expect that our quarterly

results of operations will fluctuate.

Such fluctuations could cause our stock price to decline.

A large portion of our expenses for our Service

segment, including expenses for facilities, equipment and personnel are relatively fixed.

Accordingly, if revenues decline or do not grow

as we anticipate, we may not be able to correspondingly reduce our expenses in any particular quarter.

Our quarterly revenues and operating

results have fluctuated in the past and are likely to do so in the future.

Historically, our fiscal third and fourth quarters have been

stronger than our fiscal first and second quarters due to industrial operating cycles.

Fluctuations in industrial demand

for products we sell and services we provide,

including as a result of the COVID-19 pandemic, could cause our revenues and operating results to fluctuate.

If our operating results

in some quarters fail to meet the expectations of stock market analysts and investors, our stock price may decline.

If we do not effectively compete in the

rental test and measurement equipment market, our operating results may be adversely affected.

We compete in the rental market

on the basis of a number of factors, including equipment availability, price, service and reliability.

Some of our competitors may offer

similar equipment for rent at lower prices and may offer more extensive servicing, or financing options.

In addition, if the supply of

rental equipment available on the market significantly increases, demand for and pricing of our rental products could be adversely impacted

lowering our gross margins on rentals.

Further, customers confronting competing budget priorities and more limited resources as a result

of the COVID-19 pandemic could lead to less demand for rental equipment and increased pressure on pricing.

Failure to adequately forecast

the adoption of and demand for equipment may cause us not to meet our customers’ rental equipment requirements and may adversely

affect our operating results.

If we fail to adapt our technology to meet

customer needs and preferences, the demand for our products and services may diminish.

Our future success will depend on our ability

to develop services and solutions that keep pace with technological change, evolving industry standards and changing customer preferences

in the markets we serve.

We cannot be sure that we will be successful in adapting existing or developing new technology or services in

a timely or cost-effective manner or that the solutions we do develop will be successful in the marketplace.

Our failure to keep pace

with changes in technology, industry standards and customer preferences in the markets we serve could diminish our ability to retain and

attract customers and retain our competitive position, which could adversely impact our business and results of operations.

We rely on our CalTrak® , Application

Plus (our enterprise resource planning system) and other management information systems for inventory management, distribution, workflow,

accounting and other functions.

If our CalTrak® , Application Plus or other management information systems fail to adequately

perform these functions, experience an interruption in their operation or a security breach, our business and results of operations could

be adversely affected.

The efficient operation of our business depends on our management information systems.

A large portion of our expenses

for our Service segment, including expenses for facilities, equipment and personnel are relatively fixed.

Accordingly, if revenues decline

or do not grow as we anticipate, we may not be able to correspondingly reduce our expenses in any particular quarter.

Our quarterly revenues

and operating results have fluctuated in the past and are likely to do so in the future.

Historically, our fiscal third and fourth quarters

have been stronger than our fiscal first and second quarters due to industrial operating cycles.

Fluctuations in industrial demand for

products we sell and services we provide could cause our revenues and operating results to fluctuate.

If our operating results in some

quarters fail to meet the expectations of stock market analysts and investors, our stock price may decline.

If we do not effectively compete

in the rental test and measurement equipment market, our operating results may be adversely affected.

We compete in the rental

market on the basis of a number of factors, including equipment availability, price, service and reliability.

Some of our competitors

may offer similar equipment for rent at lower prices and may offer more extensive servicing, or financing options.

In addition, if the

supply of rental equipment available on the market significantly increases, demand for and pricing of our rental products could be adversely

impacted lowering our gross margins on rentals.

Further, customers confronting competing budget priorities and more limited resources

could lead to less demand for rental equipment and increased pressure on pricing.

Failure to adequately forecast the adoption of and demand

for equipment may cause us not to meet our customers’ rental equipment requirements and may adversely affect our operating results.

If we fail to adapt our technology

to meet customer needs and preferences, the demand for our products and services may diminish.

Our future success will depend

on our ability to develop services and solutions that keep pace with technological change, evolving industry standards and changing customer

preferences in the markets we serve.

We cannot be sure that we will be successful in adapting existing or developing new technology or

services in a timely or cost-effective manner or that the solutions we do develop will be successful in the marketplace.

Our failure to

keep pace with changes in technology, industry standards and customer preferences in the markets we serve could diminish our ability to

retain and attract customers and retain our competitive position, which could adversely impact our business and results of operations.

We rely on our CalTrak® ,

Application Plus and other management information systems to effectively manage accounting and financial functions, customer service,

warehouse management, order entry, order fulfillment, inventory replenishment, documentation, asset management, and workflow.

Our management

information systems are vulnerable to damage or interruption from computer viruses or hackers, natural or man-made disasters, vandalism,

terrorist attacks, power loss, or other computer systems, internet, telecommunications or data network failures.

Any such interruptions

to our management information systems could disrupt our business and could result in decreased revenues, increased overhead costs, excess

inventory and product shortages, causing our business and results of operations to suffer.

In addition, our management information systems

are vulnerable to security breaches.

Our security measures or those of our third-party service providers may fail to detect or prevent

such security breaches.

Security breaches could result in the unauthorized publication of our confidential business or proprietary information,

the unauthorized release of customer, vendor, or employee data and payment information, the violation of privacy or other laws, and the

exposure to litigation, any of which could harm our business and results of operations.

Our enterprise resource planning system

is aging, and we may experience issues from any implementation of a new enterprise resource planning system.

We have an enterprise

resource planning system (“ERP”) to assist with the collection, storage, management and interpretation of data from our business

activities to support future growth and to integrate significant processes.

Although we use current versions of software and have support

agreements in place, due to the age of our ERP, we anticipate that a new ERP will be required to be implemented sometime in the future.

ERP implementations are complex and time-consuming and involve substantial expenditures on system software and implementation activities,

as well as changes in business processes.

Our ERP system is critical to our ability to accurately maintain books and records, record transactions,

provide important information to our management and prepare our consolidated financial statements.

ERP implementations also require the

transformation of business and financial processes in order to reap the benefits of the ERP system;

any such transformation involves risks

inherent in the conversion to a new computer system, including loss of information and potential disruption to our normal operations.

Any disruptions, delays or deficiencies in the design and implementation of a new ERP system could adversely affect our ability to process

orders, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate

our business.

Additionally, if the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting

could be adversely affected or our ability to assess it adequately could be delayed.

A change in vendor rebate programs could

adversely affect our gross margins and results of operations .

The terms on which we purchase products from certain of our suppliers

entitle us to receive a rebate based on the volume of our

These rebates effectively reduce our

costs for products.

During fiscal year 2021, we saw a number of our vendors significantly reduce the rebates offered to us as they implemented

cost cutting measures in response to the COVID-19 pandemic.

We recorded vendor rebates of $0.7 million and $1.6 million in fiscal years

2021 and 2020, respectively, as a reduction of cost of distribution sales.

If suppliers adversely change the terms of some or all of these

programs, or COVID-19 pandemic related cost-cutting measures continue after the recovery from the pandemic, the changes may lower our

gross margins on products we sell and may have an adverse effect on our operating results.

We depend on manufacturers to supply inventory

to our Distribution segment and if our vendors fail to provide desired products to us, increase prices, or fail to timely deliver products,

our revenue and gross profit could suffer.

Like other distributors in our industry, we occasionally experience supplier shortages

and are unable to purchase our desired volume of products.

If we are unable to enter into and maintain satisfactory distribution arrangements

with leading manufacturers, if we are unable to maintain an adequate supply of products, or if manufacturers do not regularly invest in,

introduce to us, and/or make new products available to us for distribution, our Distribution segment sales could suffer considerably.

The COVID-19 pandemic has disrupted the supply of products, and we may experience increased difficulties in obtaining products at stable

pricing levels.

As a result, we may need to restructure or change some of our product lines in the future.

We cannot provide any assurance

that particular products, or product lines, will be available to us, or available in quantities sufficient to meet customer demand.

is of particular significance to our Distribution segment business because the products we sell are often only available from one source.

Application Plus (our enterprise resource planning system) and other management information systems for inventory management, distribution,

workflow, accounting and other functions.

If our CalTrak® , Application Plus or other management information systems

fail to adequately perform these functions, experience an interruption in their operation or a security breach, our business and results

of operations could be adversely affected.

The efficient operation of our business depends on our management information systems.

We rely on our CalTrak®, Application Plus and other management information systems to effectively manage accounting and financial

functions, customer service, warehouse management, order entry, order fulfillment, inventory replenishment, documentation, asset management,

and workflow.

Our management information systems are vulnerable to damage or interruption from computer viruses or hackers, natural or

man-made disasters, vandalism, terrorist attacks, power loss, or other computer systems, internet, telecommunications or data network

Any such interruptions to our management information systems could disrupt our business and could result in decreased revenues,

increased overhead costs, excess inventory and product shortages, causing our business and results of operations to suffer.

our management information systems are vulnerable to security breaches.

Our security measures or those of our third-party service providers

may fail to detect or prevent such security breaches.

Security breaches could result in the unauthorized publication of our confidential

business or proprietary information, the unauthorized release of

customer, vendor, or employee data and payment information, the violation

of privacy or other laws, and the exposure to litigation, any of which could harm our business and results of operations.

Our enterprise resource planning

system is aging, and we may experience issues from any implementation of a new enterprise resource planning system.

enterprise resource planning system (“ERP”) to assist with the collection, storage, management and interpretation of data

from our business activities to support future growth and to integrate significant processes.

Although we use current versions of software

and have support agreements in place, due to the age of our ERP, we anticipate that a new ERP will be required to be implemented sometime

in the future.

ERP implementations are complex and time-consuming and involve substantial expenditures on system software and implementation

activities, as well as changes in business processes.

Our ERP system is critical to our ability to accurately maintain books and records,

record transactions, provide important information to our management and prepare our consolidated financial statements.

ERP implementations

also require the transformation of business and financial processes in order to reap the benefits of the ERP system;

any such transformation

involves risks inherent in the conversion to a new computer system, including loss of information and potential disruption to our normal

Any disruptions, delays or deficiencies in the design and implementation of a new ERP system could adversely affect our ability

to process orders, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise

operate our business.

Additionally, if the ERP system does not operate as intended, the effectiveness of our internal control over financial

reporting could be adversely affected or our ability to assess it adequately could be delayed.

A change in vendor rebate programs

could adversely affect our gross margins and results of operations .

The terms on which we purchase products from certain of our

suppliers entitle us to receive a rebate based on the volume of our purchases.

These rebates effectively reduce our costs for products.

During fiscal year 2022, we saw a number of our vendors continue to reduce the rebates offered to us as a result of current economic conditions.

If suppliers adversely change the terms of some or all of these programs, the changes may lower our gross margins on products we sell

and may have an adverse effect on our operating results.

We depend on manufacturers to

supply inventory to our Distribution segment and if our vendors fail to provide desired products to us, increase prices, or fail to timely

deliver products, or if supply chain delays, interruptions, or product shortages occur, our revenue and gross profit could suffer.

to other distributors in our industry, we occasionally experience supplier shortages and are unable to purchase our desired volume of

Our ability to offer a wide variety of products to our customers is dependent upon our ability to obtain adequate product supply

from manufacturers and other suppliers.

Any disruption in our sources of supply, particularly of the most commonly sold items, could result

in a loss of revenues, reduced margins, and damage to our relationships with customers.

Supply shortages may occur as a result of unanticipated

increases in demand or difficulties in production or delivery.

In addition, we may be adversely impacted by disruptions within our supply

chain network.

Such disruptions may result from weather-related events, natural disasters, international trade disputes or trade policy

changes or restrictions, tariffs or import-related taxes, third-party strikes, lock-outs, work stoppages or slowdowns, shortages of supply

chain labor and truck drivers, shipping capacity constraints, military conflicts, acts of terrorism, public health issues (including pandemics

or quarantines), civil unrest or other factors beyond our control.

For example, in fiscal year 2022, our supply chains have been and may

continue to be negatively impacted by the COVID-19 pandemic and general economic factors such as rising inflation.

When shortages occur,

our suppliers often allocate products among distributors.

The loss of, or a substantial decrease in the availability of, products from

our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cash flows,

as well as our ability to benefit from ongoing supply chain initiatives.

Due to current global supply chain

disruptions, we may experience increased difficulties in obtaining products at stable pricing levels.

As a result, we may need to restructure

or change some of our product lines in the future.

We cannot provide any assurance that particular products, or product lines, will be

available to us, or available in quantities sufficient to meet customer demand.

If we are unable to enter into and maintain satisfactory

distribution arrangements with leading manufacturers, if we are unable to maintain an adequate supply of products, or if manufacturers

do not regularly invest in, introduce to us, and/or make new products available to us for distribution, our Distribution segment sales

could suffer materially.

This is of particular significance to our Distribution segment business because the products we sell are often

only available from one source.

Any limits to product access could materially and adversely affect our Distribution segment business.

Our future success may be affected by our

current and future indebtedness.

Under our credit agreement, as of March 27, 2021, we owed $19.6 million to our secured creditor,

a commercial bank, including $10.6 million borrowed under a $15.0 million term loan to fund acquisitions and provide additional working

Our future success may be affected

by our current and future indebtedness.

Under our credit agreement, as of March 26, 2022, we owed $48.5 million to our secured

creditor, a commercial bank, including $8.5 million borrowed under a $15.0 million term loan to fund acquisitions and provide additional

working capital.

We may borrow additional funds in the future to support our growth and working capital needs.

We are required to meet financial

tests on a quarterly basis and comply with other covenants customary in secured financings.

Although we believe that we will continue

to comply with such covenants, if we do not remain in compliance with such covenants, our lender may demand immediate repayment of amounts

We are required to meet

financial tests on a

quarterly basis and comply with other covenants customary in secured financings.

Although we believe that we will

continue to comply with such covenants, if we do not remain in compliance with such covenants, our lender may demand immediate repayment

of amounts outstanding.

Furthermore, we are dependent on credit from manufacturers of our products to fund our inventory purchases.

If our debt burden

increases to high levels, such manufacturers may restrict our credit.

Our cash requirements will depend on numerous factors, including

the rate of growth of our revenues, the timing and levels of products purchased, payment terms, and credit limits from manufacturers,

our debt burden increases to high levels, such manufacturers may restrict our credit.

Our cash requirements will depend on numerous factors,

including the rate of growth of our revenues, the timing and levels of products purchased, payment terms, and credit limits from manufacturers,

the timing and level of our accounts receivable collections and our ability to manage our business profitably.

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be impacted by prevailing economic conditions and financial, business, and other factors described in this report, many of which are beyond

We face risks associated with foreign currency

rate fluctuations.

We currently transact a portion of our business in foreign currencies, namely the Canadian dollar.

During fiscal

years 2021 and 2020, less than 10% of our total revenues were denominated in Canadian dollars.

Conducting business in currencies other

dollars subjects us to fluctuations in currency exchange rates that could have a negative impact on our reported operating results.

We face risks associated with

foreign currency rate fluctuations.

We currently transact a portion of our business in foreign currencies, namely the Canadian

dollar and the Euro.

During fiscal years 2022 and 2021, less than 10% of our total revenues were denominated in Canadian dollars and Euros.

Conducting business in currencies other than U.S.

dollars subjects us to fluctuations in currency exchange rates that could have a negative

impact on our reported operating results.

Fluctuations in the value of the U.S.

dollar relative to the Canadian dollar impact our revenues, cost of revenues and operating margins

and result in foreign currency transaction gains and losses.

During fiscal years 2021 and 2020, the value of the U.S.

dollar relative

to one Canadian dollar ranged from 1.24 to 1.42 and from 1.30 to 1.45, respectively.

We continually utilize short-term foreign exchange

forward contracts to reduce the risk that our earnings would be adversely affected by changes in currency exchange rates.

However, this

strategy does not eliminate our exposure.

If there is a significant or prolonged downturn in the Canadian dollar, it could have an adverse

impact on our business and financial condition.

Our inability to adequately enforce and

protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete.

dollar relative to the Canadian dollar and the Euro impact

our revenues, cost of revenues and operating margins and result in foreign currency transaction gains and losses.

During fiscal year 2022,

the value of the U.S.

dollar relative to one Canadian dollar and to one Euro ranged from 1.20 to 1.29 and from 0.81 to 0.92, respectively.

We continually utilize short-term foreign

exchange forward contracts to reduce the risk that future earnings denominated in Canadian dollars would be adversely affected by changes

in currency exchange rates.

However, this strategy does not eliminate our exposure.

If there is a significant or prolonged downturn in

the Canadian dollar or the Euro, it could have an adverse impact on our business and financial condition.

Our inability to adequately enforce

and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete.

rely on intellectual property in order to maintain a competitive advantage.

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focus away from operations.

Hurricanes, other adverse weather events, national

or regional catastrophes or natural disasters could negatively affect the local economies we serve or disrupt our operations, which could

have an adverse effect on our business or results of operations .

Our market areas include the Gulf Coast and Mid-Atlantic regions

of the United States, and Puerto Rico, which are susceptible to hurricanes.

Such weather events can disrupt our operations, result in

damage to our properties and negatively affect the local economies in which we operate.

Future hurricanes could result in damage

to certain of our facilities and the equipment located

at such facilities, or equipment on rent with customers in those areas.

Even if our properties suffer no direct damage from such events,

the operations of our customers could be disrupted, and our supply chain impacted.

In addition, climate change could lead to an increase

in intensity or occurrence of hurricanes or other adverse weather events, including severe winter storms.

Future occurrences of these

events, as well as regional or national catastrophes or natural disasters, and their effects may adversely impact our business or results

of operations.

Hurricanes, other adverse weather

events, national or regional catastrophes or natural disasters could negatively affect the local economies we serve or disrupt our operations,

which could have an adverse effect on our business or results of operations .

Our market areas include the Gulf Coast and Mid-Atlantic

regions of the United States, and Puerto Rico, which are susceptible to hurricanes.

Such weather events can disrupt our operations, result

in damage to our properties and negatively affect the local economies in which we operate.

Future hurricanes could result in damage to

certain of our facilities and the equipment located at such facilities, or equipment on rent with customers in those areas.

properties suffer no direct damage from such events, the operations of our customers could be disrupted, and our supply chain impacted.

In addition, climate change could lead to an increase in intensity or occurrence of hurricanes or other adverse weather events, including

severe winter storms.

Future occurrences of these events, as well as regional or national catastrophes or natural disasters, and their

effects may adversely impact our business or results of operations.

Risks Related to Acquisitions

We may not successfully integrate business

acquisitions.

We completed one acquisition during fiscal year 2021 and three acquisitions during fiscal year 2020.

to accurately assess and successfully integrate any recent or future business acquisitions, we may not achieve the anticipated benefits,

which could result in lower revenues, unanticipated operating expenses, reduced profitability and dilution of our book value per share.

We may not successfully integrate

business acquisitions.

We completed three acquisitions during fiscal year 2022 and one acquisition during fiscal year 2021.

we fail to accurately assess and successfully integrate any recent or future business acquisitions, we may not achieve the anticipated

benefits, which could result in lower revenues, unanticipated operating expenses, reduced profitability and dilution of our book value

Successful integration involves many challenges, including:

The difficulty of integrating acquired operations and personnel

with our existing operations, which could be exacerbated by the impact of the COVID-19 pandemic;

The difficulty of integrating acquired operations and personnel with our existing operations;

The difficulty of developing and marketing new products and services;

The diversion of our management’s attention as a result of evaluating,

negotiating and integrating acquisitions;

The diversion of our management’s attention as a result of evaluating, negotiating and integrating acquisitions;

Our exposure to unforeseen liabilities of acquired companies;

The loss of key employees of an acquired operation.

In addition, an acquisition could adversely impact

cash flows and/or operating results, and dilute shareholder interests, for many reasons, including:

Charges to our income to reflect the impairment of acquired

intangible assets, including goodwill;

Interest costs and debt service requirements for any debt incurred in

connection with an acquisition or new business venture;

Any issuance of securities in connection with an acquisition or new

business venture that dilutes or lessens the rights of our current shareholders.

If the integration of any or all of our acquisitions

or future acquisitions is not successful, it could have a material adverse impact on our operating results and stock price.

Our future business acquisition efforts

may not be successful, which may limit our growth or adversely affect our results of operations, and financing of any future acquisitions

In addition, an acquisition could adversely

impact cash flows and/or operating results, and dilute shareholder interests, for many reasons, including:

Charges to our income to reflect the impairment of acquired intangible assets, including goodwill;

Contingent consideration payments;

Interest costs and debt service requirements for any debt incurred in connection with an acquisition or new business venture;

Any issuance of securities in connection with an acquisition or new business venture that dilutes or lessens the rights of our current shareholders.

If the integration of any or all of

our acquisitions or future acquisitions is not successful, it could have a material adverse impact on our operating results and stock

Our future business acquisition

efforts may not be successful, which may limit our growth or adversely affect our results of operations, and financing of any future acquisitions

could result in shareholder dilution and/or increase our leverage.

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If we identify an appropriate acquisition candidate, we may not be able to successfully negotiate terms or finance the acquisition.

disruptions from the COVID-19 pandemic and related government measures, economic downturns or other matters of global concern continue

for an extensive period of time or recur, our ability to pursue and consummate potential acquisitions could be materially adversely affected.

In addition, to successfully complete targeted acquisitions, we may issue additional equity securities that could dilute our stockholders’

ownership, or we may incur additional debt, which could increase our leverage and our risk of default under our existing credit facility.

If we fail to successfully acquire businesses, our growth and results of operations could be adversely affected.

economic downturns or other matters of national or global concern continue for an extensive period of time or recur, our ability to pursue

and consummate potential acquisitions could be materially adversely affected.

In addition, to successfully complete targeted acquisitions,

we may issue additional equity securities that could dilute our stockholders’ ownership, or we may incur additional debt, which

could increase our leverage and our risk of default under our existing credit facility.

If we fail to successfully acquire businesses,

our growth and results of operations could be adversely affected.

Risks Related to our Stock

Our stock price may be volatile.

stock market, from time to time, has experienced significant price and volume fluctuations that are both related and unrelated to the

operating performance of companies.

The stock market, from time to time, has experienced significant price and volume fluctuations that are both related and unrelated

to the operating performance of companies.

Our stock may be affected by market volatility and by our own performance.

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among others, may have a significant effect on the market price of our common stock:

The impact of the COVID-19 pandemic on the capital markets;

Developments in our relationships with current or future manufacturers

of products we distribute;

Announcements by us or our competitors of significant acquisitions,

strategic partnerships, joint ventures or capital commitments;

Litigation or governmental proceedings or announcements involving us

or our industry;

Economic and other external factors, such as disasters or other crises;

The impact of the COVID-19 pandemic;

Developments in our relationships with current or future manufacturers of products we distribute;

Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

Litigation or governmental proceedings or announcements involving us or our industry;

Economic and other external factors, such as inflation, recession, disasters or other national or global crises;

Sales of our common stock or other securities in the open market;

Repurchases of our common stock on the open market or in

privately-negotiated transactions;

Repurchases of our common stock on the open market or in privately-negotiated transactions;

Period-to-period fluctuations in our operating results;

Our ability to satisfy our debt obligations.

The relatively low trading volume of our

common stock may limit your ability to sell your shares.

Although our shares of common stock are listed on the Nasdaq Global Market,

we have historically experienced a relatively low trading volume of approximately 30,000 shares a day.

If our low trading volume continues

in the future, holders of our shares may have difficulty selling shares of our common stock in the manner or at a price that they desire.

If significant existing shareholders sell

large numbers of shares of our common stock, our stock price could decline.

The relatively low trading volume

of our common stock may limit your ability to sell your shares.

Although our shares of common stock are listed on the Nasdaq Global

Market, we have historically experienced a relatively low trading volume of approximately 35,000 shares a day.

If our low trading volume

continues in the future, holders of our shares may have difficulty selling shares of our common stock in the manner or at a price that

If significant existing shareholders

sell large numbers of shares of our common stock, our stock price could decline.

The market price of our common stock could decline

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Regulatory Risks

Tax rates applicable to us may change.

Tax rates applicable to us may

Tax legislation initiatives could adversely affect our net earnings and tax liabilities.

We are subject to the tax laws and regulations

of the United States federal, state and local governments, as well as foreign jurisdictions.

From time to time, various legislative initiatives

may be enacted that could adversely affect our tax positions.

Tax laws and regulations are extremely complex and subject to varying interpretations.

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) made broad and complex changes to the U.S.

tax code, including, but not

limited to reducing the Federal corporate income tax rate from 35% to 21%.

The current U.S.

President and administration, however, have

indicated that they intend to modify key aspects of the tax code, which could materially affect our tax obligations and negatively impact

our effective tax rate.

Although we believe that our tax positions are sound and consistent with applicable laws, regulations and existing

precedent, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful

in any such challenge.

Changes in accounting standards, legal

requirements and the Nasdaq Global Market listing standards, or our ability to comply with any existing requirements or standards, could

adversely affect our operating results.

We are subject to the tax laws

and regulations of the United States federal, state and local governments, as well as foreign jurisdictions.

From time to time, various

legislative initiatives may be enacted that could adversely affect our tax positions.

Tax laws and regulations are extremely complex and

subject to varying interpretations.

Tax Cuts and Jobs Act of 2017 (the “Tax Act”) made broad and complex changes to the

tax code, including, but not limited to reducing the Federal corporate income tax rate from 35% to 21%.

Any additional modifications

to key aspects of the tax code could materially affect our tax obligations and negatively impact our effective tax rate.

Although we believe

that our tax positions are sound and consistent with applicable laws, regulations and existing precedent, there can be no assurance that

our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge.

Changes in accounting standards,

legal requirements and the Nasdaq Global Market listing standards, or our ability to comply with any existing requirements or standards,

could adversely affect our operating results.

Extensive reforms relating to public company financial reporting, corporate governance

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What changed 10-K

Item 1A. Risk Factors