Except as discussed below, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report, under the heading “Risk Factors”, and investors should review the risks provided herein and in the Annual Report, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Annual Report, under “Risk Factors”, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial conditions and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
The risk factors below which we have marked with an asterisk (*) reflect substantive changes from, or additions to, the risks described in the Annual Report.
If we make acquisitions, they may disrupt or have a negative impact on our business.*
If we make acquisitions in the future, funding permitting, which may not be available on favorable terms, if at all, we could have difficulty integrating the acquired company’s assets, personnel and operations with our own. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:
| ● | the difficulty of integrating acquired products, services or operations; |
| ● | the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; |
| ● | difficulties in maintaining uniform standards, controls, procedures and policies; |
| ● | the potential impairment of relationships with employees and customers as a result of any integration of new management personnel; |
| ● | the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; |
| ● | the effect of any government regulations which relate to the business acquired; |
| ● | potential unknown liabilities associated with acquired businesses or product lines, or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition; and |
| ● | potential expenses under the labor, environmental and other laws of various jurisdictions. |
Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.
We are considering a number of strategic alternatives, which could have an adverse impact on our business or the price of our Common Stock.
We are considering a number of strategic alternatives focused on maximizing shareholder value. These strategic alternatives include, but are not limited to, an acquisition, merger, sale of the Company or material assets of the Company, strategic partnership, capital raise and a distribution of the Company’s capital and assets. There can be no assurance that this process will result in the approval or completion of any particular strategic alternative or transaction in the future, or that any such strategic alternative or transaction, if approved or completed, will yield additional shareholder value. The process of exploring, reviewing, and pursuing strategic alternatives, could involve significant risks to our operations, financial results and the price of our Common Stock, whether or not any such transaction is ultimately consummated. These risks include, among others:
| ● | diversion of our management's attention from the operation of our business; |
| ● | significant transaction costs, including legal, financial advisor, accounting and other third-party fees and expenses, which may be incurred even if no transaction is consummated and which may not be recovered; |
| ● | dilution of our existing equity interests or a decrease in the value of our Common Stock; |
| ● | a change in control or a third party's acquisition of a controlling stake in our business, which could trigger rights and remedies available to our contractual counterparties; |
| ● | restrictions on our ability to raise additional capital, incur indebtedness or otherwise control decisions regarding our operations and management; |
| ● | loss of, or inability to attract, retain or motivate, key management personnel and other employees, and deterioration of our relationships with our employees; |
| ● | disruption of, or adverse changes to, our relationships with customers, suppliers, contract counterparties and other stakeholders; |
| ● | negative publicity, market speculation, or harm to our reputation; and |
| ● | shareholder litigation and other legal proceedings, and the substantial costs associated with defending against such proceedings, that may arise in connection with the strategic review process or any resulting transaction. |
Any one or more of these factors or other risks could have a material adverse effect on our business, results of operations, financial condition or the trading price of our Common Stock.
