American Virtual Cloud Technologies, Inc. (AVCT) 2020年年度報告「NASDAQ」.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March 31,2020 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Commiss

2、ion file number:001-38167 American Virtual Cloud Technologies,Inc.Delaware 81-2402421(State or other jurisdiction of(I.R.S.Employer incorporation or organization)Identification Number)1720 Peachtree Street,Suite 629Atlanta,GA 30309(404)234-3098(Address,including zip code,and telephone number,includi

3、ng area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Common Stock,par value$0.0001 per shareWarrants,each exercisable for one share of Common Stock at an exercise price of$11.50 Name of each exchange on which registered:NASDAQ Capital Mark

4、et Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No X.Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section

5、15(d)of the Exchange Act.Yes No X.Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period that the registrant was required to file such reports),an

6、d(2)has been subject to such filing requirements for the past 90 days.Yes X No .Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best ofregistrants knowledge,in definitive proxy or information st

7、atements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.X Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to besubmitted and posted pursuant to Rule

8、 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was requiredto submit and post such files).Yes X No .Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a

9、smaller reporting company,or an emerging growthcompany.See definition of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer X Smaller reporting company X

10、Emerging growth company X If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whet

11、her the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No X.The aggregate market value of the voting common stock held by non-affiliates of the registrant computed by reference to the closing sales price for the registrantscommon stock on September 30,2019(the last b

12、usiness day of the registrants most recently completed second fiscal quarter),as reported on the NASDAQ Capital Market,wasapproximately$21,486,012 million.For purposes of this computation,all officers,directors and 10%beneficial owners of the registrant are deemed to be affiliates.Suchdetermination

13、should not be deemed to be an admission that such officers,directors or 10%beneficial owners are,in fact,affiliates of the registrant.Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.0001

14、per share AVCT The Nasdaq Stock Market LLCWarrants,each whole Warrant entitling the holder topurchase one share of Common Stock at an exerciseprice of$11.50 AVCTW The Nasdaq Stock Market LLC As of June 29,2020,19,635,830 shares of the Companys common stock,par value$0.0001 per share,were outstanding

15、.TABLE OF CONTENTS PART I Item 1.Business1Item 1A.Risk Factors4Item 1B.Unresolved Staff Comments21Item 2.Properties21Item 3.Legal Proceedings21Item 4.Mine Safety Disclosures21 PART II Item 5.Market For Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities22I

16、tem 6.Selected Financial Data24Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations24Item 7A.Quantitative and Qualitative Disclosures About Market Risk30Item 8.Financial Statements and Supplementary Data30Item 9.Changes in and Disagreements with Accountants on

17、Accounting and Financial Disclosure30Item 9A.Controls and Procedures31Item 9B.Other Information31 PART III Item 10.Directors,Executive Officers and Corporate Governance32Item 11.Executive Compensation37Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Mat

18、ters38Item 13.Certain Relationships and Related Transactions,and Director Independence40Item 14.Principal Accountant Fees and Services41 PART IV Item 15.Exhibits and Financial Statement Schedules42 i CERTAIN TERMS Unless otherwise stated in this annual report on Form 10-K:references to“we,”“us”or“th

19、e Company”refer to American Virtual Cloud Technologies,Inc.(f/k/a Pensare Acquisition Corp.);references to“founder shares”refer to the 7,762,500 ordinary shares issued prior to our initial public offering(after giving effect to the stock dividend effected prior toour initial public offering);referen

20、ces to“initial stockholders”refer to the holders of the founder shares;references to“common stock”are to our common stock,par value$0.0001 per share;references to our“public shares,”“public warrants”and“rights”refer to common stock,warrants and rights which were sold as part of the units in our init

21、ial publicoffering and references to“public stockholders”and“public warrantholders”refer to the holders of our public shares and public warrants,including our sponsor andmanagement team to the extent they purchase public shares or public warrants,provided that their status as“public stockholders”and

22、“public warrantholders”shallexist only with respect to such public shares or public warrants;references to“private warrants”refer to the warrants that we sold privately to our sponsor,MasTec and EBC upon consummation of our initial public offering;references to our“sponsor”refer to Pensare Sponsor G

23、roup,LLC;references to“MasTec”refer to MasTec,Inc.;andreferences to“EBC”refer to EarlyBirdCapital,Inc.references to“Business Combination”refer to the transactions contemplated by the Business Combination Agreement.References to the“Agreement”refer to the Business Combination Agreement dated July 24,

24、2019,as amended,among the Company,Stratos Management Systems,Inc.,a Delaware corporation,Tango Merger Sub Corp.,a Delaware corporation and Stratos Management Systems Holdings,LLC,a Delaware limited liability company.CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain of the statements conta

25、ined in this annual report on Form 10-K constitute“forward-looking statements”for purposes of federal securities laws.Our forward-looking statements include,but are not limited to,statements regarding our or our managements expectations,hopes,beliefs,intentions or strategies regarding the future.Ina

26、ddition,any statements that refer to projections,forecasts or other characterizations of future events or circumstances,including any underlying assumptions,are forward-looking statements.The words“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“intend,”“may,”“might,”“plan,”“possible,”

27、“potential,”“predict,”“project,”“should,”“would”and similar expressions may identify forward-looking statements,but the absence of these words does not mean that a statement is not forward-looking.Forward-looking statements in this report may include,for example,statements about our:the benefits of

28、the Business Combination;our future financial performance following the Business Combination;changes in our strategy,future operations,financial position,estimated revenues and losses,projected costs,prospects,plans and objectives of management;our ability to complete acquisitions of other businesse

29、s;expansion plans and opportunities;and the outcome of any known and unknown litigation and regulatory proceedings.The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects onus.Future developm

30、ents affecting us may not be those that we have anticipated.These forward-looking statements involve a number of risks,uncertainties(some of which arebeyond our control)or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by the

31、se forward-lookingstatements.These risks and uncertainties include,but are not limited to,those factors described under the heading“Risk Factors”elsewhere in this report.Should one or more ofthese risks or uncertainties materialize,or should any of our assumptions prove incorrect,actual results may

32、vary in material respects from those projected in these forward-lookingstatements.We undertake no obligation to update or revise any forward-looking statements,whether as a result of new information,future events or otherwise,except as may berequired under applicable securities laws.ii PART I Item 1

33、.Business Introduction We were incorporated as a blank check company on April 7,2016 in Delaware for the purpose of entering into a merger,share exchange,asset acquisition,stock purchase,recapitalization,reorganization or other similar business combination with one or more target businesses(a“Busine

34、ss Combination”).The registration statements for the Companys initial public offering of securities(the“Initial Public Offering”)were declared effective on July 27,2017.On August 1,2017,the Company consummated the Initial Public Offering of 27,000,000 units(“Units”and with respect to the common stoc

35、k included in the Units,the“Public Shares”)at$10.00 perUnit,generating gross proceeds of$270,000,000.Simultaneously with the closing of the Initial Public Offering,the Company consummated the sale of private placement warrants(“Private Placement Warrants”)at a priceof$1.00 per Private Placement Warr

36、ant in a private placement(the“Private Placement”)to the Sponsor,MasTec,Inc.and EarlyBirdCapital,Inc.,generating gross proceeds of$9,500,000.Following the closing of the Initial Public Offering on August 1,2017,an amount of$270,000,000($10.00 per Unit)from the net proceeds of the sale of the Units i

37、n theInitial Public Offering and the Private Placement Warrants was placed in a trust account(the“Trust Account”)and were invested in U.S.government securities,within the meaningset forth in Section 2(a)(16)of the Investment Company Act of 1940,as amended(the“Investment Company Act”),with a maturity

38、 of 180 days or less or in any open-endedinvestment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs(d)(2),(d)(3)and(d)(4)of Rule 2a-7 of theInvestment Company Act,as determined by the Company,until the earlier of:(i)the completion of

39、a Business Combination and(ii)the distribution of the Trust Account,asdescribed below,except that interest earned on the Trust Account can be released to pay the Companys income tax obligations On August 4,2017,the underwriters exercised their over-allotment option in full resulting in an additional

40、 4,050,000 Units being issued for$40,500,000,less theunderwriters discount of$1,012,500,netting$39,487,500,which was deposited into the Trust Account.In connection with the underwriters exercise of their over-allotment optionin full,the Company also consummated the sale of an additional 1,012,500 Pr

41、ivate Placement Warrants at$1.00 per Private Placement Warrant,generating total gross proceeds of$1,012,500,less the advance payment on August 1,2017 of$600,000 towards this transaction(see Note 5),resulting in another$412,500 being deposited into the Trust Accountbringing the balance in the Trust A

42、ccount on August 4,2017 to$310,500,000.Transaction costs amounted to$8,646,303,consisting of$7,762,500 of underwriting fees,and$883,803 of other costs.In addition,as of December 31,2019,$163,211 ofcash was held outside of the Trust Account,available for working capital purposes.On January 28,2019,at

43、 the Special Meeting in lieu of the 2019 Annual Meeting of the Companys Stockholders(the“Special Meeting”),the Companys stockholdersapproved an amendment to the Companys Amended and Restated Certificate of Incorporation(the“Charter Amendment”)to extend the date by which the Company has toconsummate

44、a business combination(the“Extension”)for an additional three months,from February 1,2019 to May 1,2019(the“Extended Date”).The purpose of the Extension isto allow the Company more time to complete a Business Combination.In connection with the Special Meeting and the resulting Charter Amendment,2,79

45、6,290 of the shares of theCompanys Common Stock were redeemed from funds available in the Trust Account,for a redemption amount of approximately$10.18 per share.On April 29,2019,at the Special Meeting in lieu of the 2019 Annual Meeting of the Companys Stockholders(the“Special Meeting”),the Companys

46、stockholdersapproved an amendment to the Companys Amended and Restated Certificate of Incorporation(the“Charter Amendment”)to extend the date by which the Company has toconsummate a business combination(the“Extension”)for an additional three months,from May 1,2019 to August 1,2019(the“Extended Date”

47、).The purpose of the Extension isto allow the Company more time to complete a Business Combination.In connection with the Special Meeting and the resulting Charter Amendment,3,381,985of the shares of theCompanys Common Stock were redeemed from funds available in the Trust Account,for a redemption am

48、ount of approximately$10.33 per share.On July 18,2019,at the Special Meeting of the Companys stockholders,the Companys stockholders approved an amendment to the Companys Amended and RestatedCertificate of Incorporation to extend the date by which the Company has to consummate a business combination

49、for an additional four months,from August 1,2019 to December1,2019.The affirmative vote of at least a majority of the outstanding shares of Common Stock was required to approve the extension.The charter amendment was approved with11,297,309 votes cast in favor of the proposal,886,001 votes cast agai

50、nst the proposal and no abstentions.The purpose of the extension was to allow the Company more time tocomplete a business combination.In connection with the special meeting and the resulting charter amendment,5,754,273 of the shares of the Companys Common Stock wereredeemed from funds available in t

51、he Trust Account,for a redemption amount of approximately$10.48 per share.1 On July 25,2019,we issued a press release announcing the execution of the Agreement among the Company,Stratos Management Systems,Inc.,a Delaware corporation(“Computex”),Tango Merger Sub Corp.,a Delaware corporation(“Merger S

52、ub”)and Stratos Management Systems Holdings,LLC,a Delaware limited liability company(“Holdings”),pursuant to which the Company agreed to acquire Computex in a transaction(the“Transaction”)that would result in Computex becoming a wholly owned subsidiaryof the Company.Computex is an industry-leading I

53、T service provider of choice focused on helping customers transform their businesses through technology.Computex offers acomprehensive portfolio of managed IT services to a wide range of clients including Unified Communications-as-a-Service(“UCaaS”),directory and messaging services,enterprisenetwork

54、ing,cybersecurity,collaboration,data center,integration,storage,backup,virtualization,and converged infrastructure.On December 20,2019,we entered into AmendmentNo.1 to the Agreement(the“Amendment”).The Amendment amended the Agreement to,among other things,(i)reduce the aggregate merger consideration

55、 payable from$65million to$60 million,(ii)change the allocation of the merger consideration so that would be payable as follows:(a)an amount in cash equal to two-thirds of the cash raised byPensare in the PIPE transaction less$5 million,subject to a cap of$20 million,(b)$5 million of any securities,

56、other than shares of Pensares common stock,sold in the PIPEtransaction(the“PIPE Securities”),and(c)the balance of the merger consideration in shares of the Companys common stock,(iii)provide for the optional redemption of some orall of the PIPE Securities following the closing of the merger,to the e

57、xtent that Pensare raises additional funds in private placements following the of the merger,(iv)adjust acondition to the closing of the merger to require that Pensare shall have at least an aggregate of$35 million of cash held either in or outside of the Trust Account at the effectivetime of the me

58、rger(reduced from$150 million);and(v)adjust the date by which the closing of the merger must occur from December 31,2019 to April 1,2020.On November 26,2019,at the Special Meeting of the Companys stockholders,the Companys stockholders approved an amendment to the Companys Amended andRestated Certifi

59、cate of Incorporation to extend the date by which the Company has to consummate a business combination for an additional four months,from December 1,2019 toApril 1,2020.The affirmative vote of at least a majority of the outstanding shares of common stock was required to approve the charter amendment

60、.The charter amendment wasapproved with 7,731,372 votes cast in favor of the proposal,one vote cast against the proposal and no abstentions.The purpose of the extension was to allow the Company moretime to complete a business combination.In connection with the special meeting and the resulting chart

61、er amendment,135,288 of the shares of the Companys common stock wereredeemed from funds available in the Trust Account,for a redemption amount of approximately$10.56 per share.In connection with the proposed Transaction,the Company filed a definitive proxy statement with the Securities Exchange Comm

62、ission(“SEC”)relating to theTransaction on February 13,2020.The definitive proxy statement was mailed to the Companys stockholders as of a record date established for voting on the Transaction.On February 27,2020,the Company held a special meeting of stockholders in connection with the proposed busi

63、ness combination of the Company and Computex.At thespecial meeting,the Companys stockholders approved the Business Combination Proposal,the Certificate Proposal and the Incentive Plan Proposal,in each case as defined anddescribed in greater detail in the definitive proxy statement.Approval of the Bu

64、siness Combination Proposal required the affirmative vote of a majority of the outstanding shares ofthe Companys common stock present and entitled to vote at the Special Meeting.Approval of the Certificate Proposal required the affirmative vote of a majority of theoutstanding shares of the Companys

65、common stock entitled to vote at the Special Meeting.Approval of the Incentive Plan Proposal required the affirmative vote of the holders ofa majority of the shares of the Companys common stock that were voted thereon at the Special Meeting.Each of the proposals were approved with 6,030,888 votes ca

66、st in favor ofthe proposals,two votes cast against the proposals and no abstentions.91,637 shares of the Companys common stock were redeemed in connection with the special meeting.On April 3,2020,the Company,Merger Sub,Holdings,and Computex entered into Amendment No.2,which provided for,among other

67、things:(i)changing the aggregatemerger consideration payable to$65 million(subject to adjustment based on Computexs working capital and net debt at closing),consisting of$20 million of units of the Company,shares of Pensares common stock,and the assumption of Computexs indebtedness;(ii)extending the

68、 date by which the combined company must file a resale registrationstatement from five days to fifteen business days following the closing of the Transaction;(iii)the right of Holdings to nominate one,two or three members of the board ofdirectors of the combined company,provided that Holdings owns a

69、t least 10%,30%or 50%,respectively,of the stock consideration and converted shares,collectively,issuable toHoldings in connection with the closing of the Transaction;(iv)adjusting certain terms and definitions relating to the consideration issued in the Transaction to,among otherthings,provide for t

70、he Units to be issued by the Company in the private placement;(v)the removal of the previously contemplated Lock-Up Agreement by and among theCompany,Holdings and Navigation Capital Partners II,L.P.;and(vi)the acknowledgement by the Company and Merger Sub that certain actions taken by Computex prior

71、 to theeffective time of the Transaction related to the Coronavirus Disease 2019 shall not constitute a Company Material Adverse Effect under the Agreement.2 Also on April 3,2020,the Company entered into a Securities Purchase Agreement(the“Securities Purchase Agreement”)pursuant to which certain inv

72、estors(each an“Investor”)agreed to purchase,and the Company agreed to sell to the Investors,in a private placement(the“Private Placement”),units of securities of the Company(“Units”),each Unit consisting of(i)$1,000 in principal amount of the Companys Series A convertible debentures(the“Debentures”)

73、and(ii)a warrant to purchase 100 shares of theCompanys common stock at an exercise price of$0.01 per whole share.The initial closing of the sale of Units pursuant to the Securities Purchase Agreement was contingent upon,among other customary closing conditions,the substantially concurrent consummati

74、on of the Transaction,and occurred on April 7,2020.On April 7,2020,we consummated the transaction pursuant to the Agreement pursuant to which Computex merged with and into Merger Sub(the“Merger”),with MergerSub surviving the Merger as a wholly owned subsidiary of the Company.In connection with the C

75、losing,the Company changed its name from“Pensare Acquisition Corp.”to“American Virtual Cloud Technologies,Inc.”and Merger Subchanged its name from“Tango Merger Sub Corp.”to“Stratos Management Systems,Inc.”As a result of the consummation of the Merger,the Company ceased to be a shellcompany,as define

76、d in Rule 12b-2 of the Exchange Act,as of the Closing Date.Employees As of March 31,2020,we had three executive officers.These individuals are not obligated to devote any specific number of hours to our matters and intend to devoteonly as much time as they deem necessary to our affairs.The amount of

77、 time they will devote in any time period will vary based on whether a target business has been selected forthe business combination and the stage of the business combination process the company is in.Subsequent to the closing of the Business Combination,the Company has sevenfull-time employees incl

78、uding three executive officers.Periodic Reporting and Audited Financial Statements We have registered our units,common stock,rights and warrants under the Securities Exchange Act of 1934(the“Exchange Act”)and have reporting obligations,including the requirement that we file annual,quarterly and curr

79、ent reports with the SEC.In accordance with the requirements of the Exchange Act,our annual report will containfinancial statements audited and reported on by our independent registered public accountants.These filings are available to the public via the Internet at the SECs websitelocated at http:/

80、www.sec.gov.You may also read and copy any document that we file with the SEC at the SECs public reference room located at 100 F Street,N.E.,Washington,D.C.20549.For more information,please call the SEC at 1-800-SEC-0330.You may request a copy of our filings with the SEC(excluding exhibits)at no cos

81、t by writing ortelephoning us at the following address or telephone number:American Virtual Cloud Technologies,Inc.1720 Peachtree StreetSuite 629Atlanta,GA 30309Tel:(404)234-3098 We are an emerging growth company as defined in the JOBS Act and will remain such for up to five years.However,if our non

82、-convertible debt issued within a three-yearperiod exceeds$1.0 billion or our total annual revenues exceed$1.07 billion or the market value of our ordinary shares that are held by non-affiliates exceeds$700 million on the lastday of the second fiscal quarter of any given fiscal year,we would cease t

83、o be an emerging growth company as of the following fiscal year.As an emerging growth company,wehave elected,under Section 107(b)of the JOBS Act,to take advantage of the extended transition period provided in Section 7(a)(2)(B)of the Securities Act of 1933,as amended,orthe Securities Act,for complyi

84、ng with new or revised accounting standards.3 Item 1A.Risk Factors An investment in our common stock involves a high degree of risk.You should consider carefully all of the risks described below,together with the other informationcontained in this Current Report on Form 10-K,before making a decision

85、 to invest in our common stock.If any of the following events occur,our business,financial conditionand operating results may be materially adversely affected.In that event,the trading price of our common stock could decline,and you could lose all or part of yourinvestment.Risks Related to Our Busin

86、ess and Industry General economic weakness may harm the Companys operating results and financial condition.The Companys results of operations are largely dependent upon the state of the economy.Global economic weakness and uncertainty may result in decreased sales,gross margin,earnings and/or growth

87、 rates from its U.S.based customers and from customers outside the U.S.In addition,material changes in trade agreements between the U.S.and other countries may,for example,negatively affect the Companys ability to purchase product,and import or export product,increasing product pricing and negativel

88、yimpacting availability of product.Adverse economic conditions may decrease the Companys customers demand for its products and services or impair the ability of its customersto pay for products and services they have purchased.As a result,the Companys sales could decrease,and reserves for its credit

89、 losses and write-offs of receivables mayincrease.The Companys business could be adversely affected by the recent coronavirus(COVID-19)outbreak.In December 2019,a novel strain of coronavirus(COVID-19)was reported to have surfaced in Wuhan,China,which has and is continuing to spread throughout China

90、andother parts of the world,including the United States.On January 30,2020,the World Health Organization declared the outbreak of COVID-19 a“Public Health Emergency ofInternational Concern.”On January 31,2020,U.S.Health and Human Services Secretary Alex M.Azar II declared a public health emergency f

91、or the United States to aid the U.S.healthcare community in responding to COVID-19,and on March 11,2020,the World Health Organization characterized the COVID-19 outbreak as a“pandemic.”The COVID-19outbreak has severely restricted the level of economic activity within the United States and around the

92、 world.In response to the COVID-19 outbreak,the governments of many countries,states,cities and other geographic regions have taken preventative or protective actions,such as imposing restrictions on travel and business operations.Temporary closures of businesses have been ordered and numerous other

93、 businesses have temporarily closedvoluntarily.These actions may continue to expand in scope,type and impact.These measures,while intended to protect human life,are expected to have significant adverseimpacts on domestic and foreign economies of uncertain severity and duration.It is likely that the

94、current outbreak or continued spread of COVID-19 will cause an economicslowdown,which may result in a global recession.The effectiveness of economic stabilization efforts being taken to mitigate the effects of the COVID-19 outbreak is currentlyuncertain.A public health pandemic,including COVID-19,po

95、ses the risk that the Company or its affiliates,employees,suppliers,customers and others may be prevented fromconducting business activities for an indefinite period of time,including as a result of shutdowns,travel restrictions and other actions that may be requested or mandated bygovernmental auth

96、orities.Such actions may prevent the Company from accessing the facilities of its customers to deliver products and provide services.In addition,theCompanys customers may choose to delay or abandon projects on which it provides products and/or services as a result of such actions.Further,the Company

97、 has experienced,and may continue to experience,disruptions or delays in its supply chain as a result of such actions.The Company can give no assurance that its businesses will be classified asessential in each of the jurisdictions in which it operates.4 The COVID-19 outbreak has impacted,and may co

98、ntinue to impact,the Companys facilities,as well as those of its third-party vendors and customers,including throughthe effects of facility closures,reductions in operating hours and other social distancing efforts.In addition,the Company has modified its business practices(including employeetravel,

99、employee work locations,and cancellation of physical participation in meetings,events and conferences),and the Company may take further actions as may be required bygovernment authorities or that the Company determines are in the best interests of its employees,customers,partners,and suppliers.The C

100、ompanys liquidity could be negatively impacted if these conditions continue for a significant period of time and we may be required to pursue additional sources offinancing to obtain working capital,maintain appropriate inventory levels and meet our financial obligations.Our ability to obtain any re

101、quired financing is not guaranteed andlargely dependent upon evolving market conditions and other factors.Depending on the continued impact of the COVID-19 outbreak,further actions may be required to improvethe Companys cash position and capital structure.The Company cannot assure you that it would

102、be able to take any of these actions on terms that are favorable to the Companyor at all,that these actions would be successful and permit the Company to meet its scheduled debt service obligations or satisfy its capital requirements,or that these actionswould be permitted under the terms of its exi

103、sting or future debt agreements,including the Companys Comerica Credit Agreement assumed by American Virtual as of April 7,2020(the“Credit Agreement”).The Company may also experience impacts from market downturns and changes in demand for the Companys products and services related to pandemic fears

104、andimpacts on its workforce as a result of COVID-19.If the COVID-19 outbreak becomes more pronounced in the Companys markets,or if another significant natural disaster orpandemic were to occur in the future,the Companys operations in areas impacted by such events could experience further adverse fin

105、ancial impacts due to market changes andother resulting events and circumstances.The extent to which the COVID-19 outbreak impacts the Companys results of operations,financial condition and cash flows will dependon future developments that are highly uncertain and cannot be predicted,including new i

106、nformation that may emerge concerning the severity of COVID-19,the longevity ofCOVID-19 and the actions to contain COVID-19 or treat its impact,and how quickly and to what extent normal economic and operating conditions can resume.Although it isdifficult to predict the effect and ultimate impact of

107、the COVID-19 outbreak on the Companys business,it is likely that the impact of COVID-19 will adversely affect the Companysresults of operations,financial conditions and cash flows in fiscal year 2020.Even after the COVID-19 outbreak has subsided,the Company may continue to experience significant imp

108、acts to its business as a result of the global economic impact ofthe COVID-19 outbreak,including any economic downturn or recession or other long-term effects that have occurred or may occur in the future.If the Company loses one or more of its large volume customers,its earnings may be materially a

109、ffected.Many of the contracts for the provision of products and services from the Company to its customers are generally non-exclusive agreements without volume purchasecommitments and are terminable by either party upon 30 days notice.The loss of one or more of its largest customers,the failure of

110、such customers to pay amounts due to it,or amaterial reduction in the amount of purchases made by such customers could have a material adverse effect on the Companys business,financial position,results of operationsand cash flows.5 Changes in the IT industry,customers usage or procurement of IT,and/

111、or rapid changes in product standards may result in reduced demand for the IT hardware andsoftware solutions and services the Company sells.The Companys 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

112、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.The ITindustry is characterized by rapid technological change and the frequent introduction of new products,product enhancements an

113、d new distribution methods or channels,each ofwhich can decrease demand for current products or render them obsolete.In addition,the proliferation of cloud technology,infrastructure as a service(IaaS),software as a service(SaaS),platform as a service(PaaS),software defined networking,or other emergi

114、ng technologies may reduce the demand for products and services the Company sells to itscustomers.Cloud offerings may influence the Companys customers to move workloads to cloud providers,which may reduce the procurement of products and services from theCompany.Changes in the IT industry may also af

115、fect the demand for the Companys advanced professional and managed services.The Company has invested a significantamount of capital in personnel,and this strategy may adversely impact its financial position due to competition or changes in the industry or improper focus or selection of theproducts a

116、nd services the Company decides to offer.If the Company fails to react in a timely manner to such changes,its results of operations may be adversely affected.TheCompanys sales can be dependent on demand for specific product categories,and any change in demand for or supply of such products could hav

117、e a material adverse effect onits results of operations.A substantial or an extended decline in oil and gas prices could result in lower expenditures by the Companys customers in the oil and gas industry,which could have amaterial adverse impact on its financial condition,results of operations and c

118、ash flows.Demand for the Companys products and services depends on expenditures by its customers involved in the oil and natural gas industry.These expenditures aregenerally dependent on the Companys customers views of future oil and natural gas prices and are sensitive to its customers views of fut

119、ure economic growth and the resultingimpact on demand for oil and natural gas.Declines,as well as anticipated declines,in oil and gas prices could result in project modifications,delays or cancellations,generalbusiness disruptions,and delays in payment of,or nonpayment of,amounts that are owed to th

120、e Company.These effects could have a material adverse effect on the Companysfinancial condition,results of operations and cash flows.The oil and gas industry has historically experienced periodic downturns,which have been characterized by diminisheddemand for the Companys products and services as we

121、ll as and downward pressure on the prices it charges.Sustained market uncertainty can also result in lower demand andpricing for the Companys products and services within such industry.A significant downturn or sustained market uncertainty could result in a reduction in demand for theCompanys servic

122、es and could adversely affect its financial condition,results of operations and cash flows.The Company may fail to innovate or create new solutions which align with changing market and customer demand.As a provider of a comprehensive set of solutions,which involves the offering of bundled solutions

123、consisting of direct IT sales,advanced professional and managedservices,the Company expects to encounter some of the challenges,risks,difficulties,and uncertainties frequently encountered by companies providing bundled solutions inrapidly evolving markets.Some of these challenges include the Company

124、s ability to increase the total number of users of its services or adapt to meet changes in its markets andcompetitive developments.The Companys personnel must continually stay current with vendor and marketplace technology advancements,create solutions which may integrateevolving vendor products an

125、d services as well as services and solutions the Company provides,to meet changing marketplace and customer demand.Further,the Company mayprovide customized solutions and services that are solely reliant on its own marketing,design and fulfillment services,and the Company may lack the skills or pers

126、onnel to execute.The Companys failure to innovate and provide value to its customers may erode its competitive position and market share and may lead to a decrease in revenue and financialperformance.In all of the Companys markets,some of its competitors have greater financial,technical,marketing,an

127、d other resources than the Company does.In addition,some ofthese competitors may be able to respond more quickly to new or changing opportunities,technologies,and customer requirements.Many current and potential competitorsengage in more extensive promotional marketing and advertising activities,off

128、er more attractive terms to customers,and adopt more aggressive pricing and credit policies than theCompany does.The Company may not be successful in achieving revenue growth which may have a material adverse effect on its future operating results as a whole.6 The Companys business depends on its ve

129、ndor partner relationships and the availability of their products.The Companys solutions portfolio includes products from OEMs,software publishers and cloud providers.The Company is authorized by these vendor partners to sellall or some of their products via direct marketing activities.Its authoriza

130、tion with each vendor partner is subject to specific terms and conditions regarding such things as saleschannel restrictions,product return privileges,price protection policies,purchase discounts and vendor partner programs and funding,including purchase rebates,sales volumerebates,purchasing incent

131、ives and cooperative advertising reimbursements.However,the Company does not have any long-term contracts with its vendor partners and many ofthese arrangements are terminable upon notice by either party.A reduction in vendor partner programs or funding or the Companys failure to timely react to cha

132、nges in vendorpartner programs or funding could have an adverse effect on the Companys business,results of operations or cash flows.In addition,a reduction in the amount or a change in theterms of credit granted to the Company by its vendor partners could increase the Companys need for,and the cost

133、of,working capital and could have an adverse effect on theCompanys business,results of operations or cash flows,particularly given the Companys substantial indebtedness.From time to time,vendor partners may terminate or limit the Companys right to sell some or all of their products or change the ter

134、ms and conditions or reduce ordiscontinue the incentives that they offer the Company.For example,there is no assurance that,as the Companys vendor partners continue to sell directly to end users andthrough resellers,they will not limit or curtail the availability of their products to solutions provi

135、ders like the Company.Any such termination or limitation or the implementation ofsuch changes could have a negative impact on the Companys business,results of operations or cash flows.The Company purchases the products included in its solutions portfolio both directly from its vendor partners and fr

136、om wholesale distributors.Although the Companypurchases from a diverse vendor base,in the year ended December 31,2019,products it purchased from wholesale distributors Ingram Micro and Techdata,both represented morethan 5%of total purchases.In addition,sales of products manufactured by Cisco,Dell,an

137、d Nutanix whether purchased directly from these vendor partners or from a wholesaledistributor,represented in the aggregate nearly 30%of the Companys fiscal year 2019 consolidated net sales.The loss of,or change in business relationship with,any of these orany other key vendor partners,or the dimini

138、shed availability of their products,including due to backlogs for their products,could reduce the supply and increase the cost ofproducts the Company sells and negatively impact its competitive position.Additionally,the relocation of key distributors utilized in the Companys purchasing model could i

139、ncrease its need for,and the cost of,working capital and have anadverse effect on its business,results of operations or cash flows.Further,the sale,spin-off or combination of any of the Companys vendor partners and/or certain of theirbusiness units,including any such sale to or combination with a ve

140、ndor with whom the Company does not currently have a commercial relationship or whose products theCompany does not sell,could have an adverse impact on the Companys business,results of operations or cash flows.Breaches of data security and the failure to protect the Companys information technology s

141、ystems from cybersecurity threats could adversely impact its business.The Companys business involves the storage and transmission of proprietary information and sensitive or confidential data,including personal information of itsemployees,customers and others.In addition,the Company operates data ce

142、nters for its customers that host their technology infrastructure and may store and transmit bothbusiness-critical data and confidential information.In connection with the Companys services business,some of its employees also have access to its customers confidentialdata and other information.The Co

143、mpany has privacy and data security policies in place that are designed to prevent security breaches;however,as newer technologies evolve,and the portfolio of the service providers with which the Company shares confidential information with grows,the Company could be exposed to increased risk of bre

144、aches insecurity and other illegal or fraudulent acts,including cyberattacks.The evolving nature of such threats,in light of new and sophisticated methods used by criminals andcyberterrorists,including computer viruses,malware,phishing,misrepresentation,social engineering and forgery,are making it i

145、ncreasingly challenging to anticipate andadequately mitigate these risks.7 The Company may not be able to hire and/or retain personnel that it needs.To increase market awareness and sales of the Companys offerings,the Company may need to expand its marketing efforts and sales operations in the futur

146、e.TheCompanys products and services require a sophisticated sales effort and significant technical engineering talent.For example,its sales and engineering candidates must havehighly technical hardware and software knowledge to create a customized solution for its customers business processes.Compet

147、ition for qualified sales,marketing andengineering personnel fluctuates depending on market conditions,and the Company may not be able to hire or retain sufficient personnel to maintain and grow its business.Frequently,the Companys competitors require their employees to agree to non-compete and non-

148、solicitation agreements as part of their employment.This makes it more difficultfor the Company to hire and increases the Companys costs by reviewing and managing non-compete restrictions.Additionally,in some cases the Companys relationship with acustomer may be impacted by turnover in its sales or

149、engineering team.For example,in the first quarter of fiscal year 2019,several sales representatives and managers voluntarilyresigned their employment with the Company.These sales representatives and managers were the relationship managers to a number of the Companys customers.The loss ofthese custom

150、ers adversely affected the net sales of the Company for fiscal year 2019 and could have the same effect on subsequent periods if such lost sales are not offset by theCompanys new sales representatives and newly acquired customers.The Company faces substantial competition from other companies.In its

151、technology segment,the Company competes in all areas of its business against local,regional,national,and international firms,including other direct marketers;national and regional resellers;online marketplace competitors;and regional and national service providers.In addition,the Company faces compe

152、tition from vendors,which maychoose to market their products directly to end-users,rather than through channel partners such as the Company,and this could adversely affect the Companys future sales.Many competitors compete based principally on price and may have lower costs or accept lower selling p

153、rices than the Company does and,therefore,the Companys grossmargins may not be maintainable.Online market place competitors are continually improving their pricing and offerings to customers as well as ease of use of their onlinemarketplaces.The Companys competitors may offer better or different pro

154、ducts and services than the Company offers.In addition,the Company does not have guaranteedpurchasing volume commitments from its customers and,therefore,its sales volume may be volatile.The Company may not have designed or maintained its IT systems to support its business.The Company depends heavil

155、y upon the accuracy and reliability of its information,telecommunication,cybersecurity and other systems including the operation ofredundant systems if there are failures in its primary systems,which are used for customer management,sales,distribution,marketing,purchasing,inventory management,orderp

156、rocessing and fulfillment,customer service and general accounting functions.The Company must continually maintain,secure and improve its systems.The protections theCompany has in place address a variety of threats to its information technology systems,both internal and external,including human error

157、.Inadequate security practices or designof the Companys IT systems,or IT systems from third-parties which it utilizes,or third-party service providers failure to provide adequate services could result in the disclosureof sensitive or confidential information or personal information or cause other bu

158、siness interruptions that could damage the Companys reputation and disrupt its business.Inadequate design or interruption of the Companys information systems,Internet availability,telecommunications systems or power failures could have a material adverse effecton its business,its reputation,financia

159、l condition,cash flows,or results of operations.The Companys managed services business requires it to monitor its customers devices on their networks across varying levels of service.If the Company has notdesigned its IT systems to provide this service accurately or if there is a security breach in

160、its IT system or the customers systems,the Company may be liable for claims.The Company relies on the competency of its internal IT personnel.The Companys failure to hire,develop,retain,and supervise competent IT personnel to secure itsdata,design redundant systems,or design and maintain its technol

161、ogy systems including its data and voice networks,and applications,could significantly interrupt its businesscausing a negative impact on its results.8 The Company may not adequately protect itself through its contracts,or its insurance policies may not be adequate to address potential losses or cla

162、ims.The Companys contracts may not protect it against the risks inherent in its business including,but not limited to,warranties,limitations of liability,indemnificationobligations,human resources and subcontractor-related claims,patent and product liability,regulatory and compliance obligations,and

163、 data security and privacy.Also,theCompany faces pressure from its customers for competitive pricing and contract terms.The Company also is subject to audits by various vendor partners and customers relating topurchases and sales under various contracts.In addition,the Company is subject to indemnif

164、ication claims under various contracts.The Company depends on having creditworthy customers to avoid an adverse impact on its operating results and financial condition.If the credit quality of the Companys customer base materially decreases,or if the Company experiences a material increase in its cr

165、edit losses,the Company may find itdifficult to continue to obtain the required capital for its business,and its operating results and financial condition may be harmed.In addition to the impact on the Companysability to attract capital,a material increase in its delinquency and default experience w

166、ould itself have a material adverse effect on its business,operating results,and financialcondition.The Companys ability to successfully attract and retain qualified sales personnel is important to its success.The Companys success depends on its ability to attract,motivate,and retain a sufficient nu

167、mber of qualified sales representatives,who understand and appreciate theCompanys strategy and culture and are able to adequately represent the Company to its customers.Qualified individuals of the requisite caliber and number needed to fill thesepositions may be in short supply in some areas.If the

168、 Company is unable to hire and retain personnel capable of consistently providing a high level of customer service its salescould be materially adversely affected.Additionally,any material increases in existing employee turnover rates or increases in labor costs could have a material adverse effect

169、onthe Companys business,financial condition or operating results.The Company may be liable for misuse of its customers or employees information.Third-parties,such as hackers,could circumvent or sabotage the security practices and products used in the Companys product and service offerings,and/or the

170、security practices or products used in the Companys internal IT systems,which could result in disclosure of sensitive or personal information,unauthorized procurement,or otherbusiness interruptions that could damage the Companys reputation and disrupt its business.Attacks may range from random attem

171、pts to coordinated and targeted attacks,including sophisticated computer crime and advanced persistent threats.If third-parties or the Companys employees are able to maliciously penetrate its network security or otherwise misappropriate its customers information or employeespersonal information,or o

172、ther information for which its customers may be responsible and for which the Company agrees to be responsible in connection with service contractsinto which it may enter,or if the Company gives third-parties or its employees improper access to certain information,the Company could be subject to lia

173、bility.This liability couldinclude claims for unauthorized access to devices on its network;unauthorized access to its customers networks,applications,data,devices,or software;and identity theft orother similar fraud-related claims.This liability could also include claims for other misuses of or ina

174、ppropriate access to personal information.Other liability could include claimsalleging misrepresentation of the Companys privacy and data security practices.Any such liability for misappropriation of this information could decrease the Companysprofitability.In addition,federal and state agencies hav

175、e been investigating various companies regarding whether they misused or inadequately secured information.TheCompany could incur additional expenses when new laws or regulations regarding the use of information are enacted,or if governmental agencies require the Company tosubstantially modify its pr

176、ivacy or security practices.The Company could fail to comply with applicable data privacy laws,the violation of which may result in audits,fines,penalties,litigation,or administrative enforcement actions with associated costs.9 Advances in computer capabilities,new discoveries in the field of crypto

177、graphy,or other events or developments may result in a compromise or breach of the securitypractices the Company uses to protect sensitive customer transaction information and employee information.A party who is able to circumvent the Companys security measurescould misappropriate proprietary inform

178、ation or cause interruptions in the Companys operations.Further,third-parties may attempt to fraudulently induce employees or customersinto disclosing sensitive information such as user names,passwords,or other information or otherwise compromise the security of the Companys internal networks and/or

179、 itscustomers information.Since techniques used to obtain unauthorized access change frequently and the size and severity of security breaches are increasing,the Company may beunable to implement adequate preventative measures or timely identify or stop security breaches while they are occurring.The

180、 Company may be required to expend significant capital and other resources to protect against security breaches or to remediate the subsequent risks and issuescaused by such breaches.The Companys security measures are designed to protect against security breaches,but its failure to prevent such secu

181、rity breaches could cause it toincur significant expense to investigate and respond to a security breach and correct any problems caused by any breach,subject it to liability,damage its reputation,and diminishthe value of its brand.There can be no assurance that the limitations of liability in Compa

182、ny contracts would be enforceable or adequate or would otherwise protect the Companyfrom any such liabilities or damages with respect to any particular claim.The Company also cannot be sure that its existing insurance coverage for errors and omissions or securitybreaches will continue to be availabl

183、e on acceptable terms or in sufficient amounts to cover one or more large claims,or that its insurers will not deny coverage as to any futureclaim.The successful assertion of one or more large claims against the Company that exceeds its available insurance coverage,or changes in its insurance polici

184、es,includingpremium increases or the imposition of large deductible or co-insurance requirements,could have an adverse effect on the Companys business,financial condition,and results ofoperations.Failure to comply with new laws or changes to existing laws may adversely impact the Companys business.T

185、he Companys operations are subject to numerous U.S.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,data privacy requirements,anti-competition,and environmental,health,and safety

186、.Compliance withthese laws,regulations,and similar requirements may be onerous and expensive,and they may be inconsistent from jurisdiction to jurisdiction,further increasing the cost ofcompliance and doing business,and the risk of noncompliance.The Company has implemented policies and procedures de

187、signed to help comply with applicable laws andregulations,but there can be no certainty that employees,contractors,or agents will fully comply with laws and regulations or the Companys policies and procedures.Loss of services by any of the Companys executive officers or senior management and/or fail

188、ure to successfully implement a succession plan could adversely affect theCompanys business.The loss of the services by the Companys executive officers or senior management and/or failure to successfully implement a succession plan could disrupt managementof the Companys business and impair the exec

189、ution of its business strategies.The Company believes that its success depends in part upon its ability to retain the services of itsexecutive officers and senior management and successfully implement a succession plan.The Companys executive officers are at the forefront in determining its strategic

190、 directionand focus.The loss of its executive officers and senior managements services without replacement by qualified successors could adversely affect the Companys ability tomanage effectively its overall operations and successfully execute current or future business strategies,and could cause ot

191、her instability within the Companys workforce.10 The Company relies on its primary credit facility for working capital and its accounts payable processing.The loss of the Companys primary credit facility with Comerica Bank pursuant to the Credit Agreement could have a material adverse effect on its

192、future results as it relieson this facility and its components for daily working capital and the operational function of its accounts payable process.The Credit Agreement contains various covenants thatmust be met each quarter and either party may terminate the agreement for any reason with a 90-day

193、s notice.There can be no assurance that the Company will continue to meetthose covenants and failure to do so may limit availability of,or cause the Company to lose,such financing.There can be no assurance that such financing will continue to beavailable to the Company in the future on acceptable te

194、rms.Changes in accounting standards,or the misapplication of current accounting standards,may adversely affect the Companys future financial results.The Company prepares its financial statements in conformity with U.S.Generally Accepted Accounting Principles(“GAAP”).These accounting principles are s

195、ubject tointerpretation by the Financial Accounting Standards Board,the Public Company Accounting Oversight Board(“PCAOB”),the SEC,the American Institute of Certified PublicAccountants(“AICPA”)and various other bodies formed to interpret and create appropriate accounting policies.Future periodic ass

196、essments required by current or newaccounting standards may result in noncash charges and/or changes in presentation or disclosure.In addition,any change in accounting standards may influence the Companyscustomers decision to purchase from the Company or finance transactions with the Company,which c

197、ould have a significant adverse effect on the Companys financial positionor results of operations.The Company is required to determine if it is the principal or agent in all transactions with its customers.The voluminous number of products and services the Companysells,and the manner in which they a

198、re bundled,are technologically complex.Mischaracterization of these products and services could result in misapplication of revenuerecognition polices.The Company uses estimates where necessary,such as the fair value of assets acquired,and liabilities assumed in a business combination,the analysis f

199、orgoodwill impairment,allowance for doubtful accounts and the cost to perform professional and managed services,which require judgment and are based on best availableinformation.If the Company is unable to accurately estimate the cost of these services or the time-line for completion of contracts,th

200、e profitability of its contracts may be materiallyand adversely affected.A natural disaster or other adverse occurrence at one of the Companys facilities could damage its business.The Company has one warehouse and distribution facility in the U.S.If the warehouse and distribution equipment at its di

201、stribution center were to be seriously damagedby a natural disaster or other adverse occurrence,the Company could utilize another distribution center or third-party distributors to ship products to its customers.However,thismay not be sufficient to avoid interruptions in the Companys service and may

202、 not enable the Company to meet all of the needs of its customers and would cause the Company toincur incremental operating costs.In addition,the Company operates two customer facing data centers which contain its Securities Operations Center,Network Operations Center,and numerous sales offices whic

203、h may contain both business-critical data and confidential information of the Companys customers.A natural disaster or other adverseoccurrence at any of the customer data centers or at any of the Companys major sales offices could negatively impact its business,results of operations or cash flows.Th

204、e Company could be exposed to additional risks if it continues to make strategic investments or acquisitions or enter into alliances.The Company may continue to pursue transactions,including strategic investments,acquisitions or alliances,in an effort to extend or complement its existing business.Th

205、ese types of transactions involve numerous business risks,including finding suitable transaction partners and negotiating terms that are acceptable to the Company,thediversion of managements attention from other business concerns,extending the Companys product or service offerings into areas in whic

206、h the Company has limited experience,entering into new geographic markets,the potential loss of key coworkers or business relationships and successfully integrating acquired businesses.There can be no assurancethat the intended benefits of the Companys investments,acquisitions and alliances will be

207、realized,or that those benefits will offset these numerous risks or other unforeseenfactors,any of which could adversely affect the Companys business,results of operations or cash flows.11 In addition,the Companys financial results could be adversely affected by financial adjustments required by U.S

208、.GAAP in connection with these types of transactionswhere significant goodwill or intangible assets are recorded.To the extent the value of goodwill or identifiable intangible assets with indefinite lives becomes impaired,theCompany may be required to incur material charges relating to the impairmen

209、t of those assets.The Company may be required to take impairment charges for goodwill or other intangible assets related to acquisitions.The Company has acquired certain portions of its business and assets through acquisitions.Further,as part of its long-term business strategy,the Company maycontinu

210、e to pursue acquisitions of other companies or assets.In connection with prior acquisitions,the Company has accounted for the portion of the purchase price paid inexcess of the book value of the assets acquired as goodwill or intangible assets,and it may be required to account for similar premiums p

211、aid on future acquisitions in the samemanner.Under the applicable accounting principles,goodwill is not amortized and is carried on the Companys books at its original value,subject to annual review and evaluationfor impairment,whereas intangible assets are amortized over the life of the asset.Change

212、s in the business itself,the economic environment(including business valuation levelsand trends),or the legislative or regulatory environment may trigger a review and evaluation of the Companys goodwill and intangible assets for potential impairment outside ofthe normal review periods.These changes

213、may adversely affect either the fair value of the business or the Companys individual reporting units and the Company may be requiredto take an impairment charge.If market and economic conditions deteriorate,this could increase the likelihood that the Company will need to record impairment charges t

214、o the extent the carrying valueof its goodwill exceeds the fair value of its overall business.Such impairment charges could materially adversely affect the Companys net earnings during the period in which thecharge is taken.As of December 31,2019,the Company had goodwill and other intangible assets

215、of$21.2 million and$2.4 million,respectively.The Company faces risks of claims from third-parties for intellectual property infringement,including counterfeit products,that could harm its business.The Company may be subject to claims that products that it resells infringe on the intellectual propert

216、y rights of third-parties and/or are counterfeit products.The vendorof certain products or services the Company resells may not provide the Company with indemnification for infringement or indemnification;however,the Companys customersmay seek indemnification from the Company.The Company could incur

217、 substantial costs in defending infringement claims against itself and its customers.In the event of suchclaims,the Company and its customers may be required to obtain one or more licenses from third-parties.The Company may not be able to obtain such licenses from third-partiesat a reasonable cost o

218、r at all.Defense of any lawsuit or failure to obtain any such required license could significantly increase the Companys expenses and/or adversely affect itsability to offer one or more of its services.12 Risks Related to Our Indebtedness The Company has a substantial amount of indebtedness,which co

219、uld have important consequences to its business.The Company has a substantial amount of indebtedness.As of March 31,2020,the Company had$16.4 million of total debt outstanding,as defined by U.S.GAAP,and$0.2 million of obligations outstanding under equipment financing agreements,and the ability to bo

220、rrow an additional$10.9 million under the Credit Agreement,subject to aborrowing base and a liquidity condition.The Companys substantial indebtedness could have important consequences,including the following:making it more difficult for the Company to satisfy its obligations with respect to its inde

221、btedness;requiring the Company to dedicate a substantial portion of its cash flow from operations to debt service payments on its and its subsidiaries debt,which reduces thefunds available for working capital,capital expenditures,acquisitions and other general corporate purposes;requiring the Compan

222、y to comply with restrictive covenants in the Credit Agreement,which limit the manner in which it conducts its business;making it more difficult for the Company to obtain vendor financing from its vendor partners,including original equipment manufacturers and software publishers;limiting the Company

223、s flexibility in planning for,or reacting to,changes in the industry in which it operates;placing the Company at a competitive disadvantage compared to any of its less-leveraged competitors;increasing the Companys vulnerability to both general and industry-specific adverse economic conditions;andlim

224、iting the Companys ability to obtain additional debt or equity financing to fund future working capital,capital expenditures,acquisitions or other generalcorporate requirements and increasing its cost of borrowing.Restrictive covenants under the Credit Agreement may adversely affect its operations a

225、nd liquidity.The Credit Agreement contains and any future indebtedness of the Company may contain,various covenants that limit its ability to,among other things:incur or guarantee additional debt;pay dividends or make distributions to holders of the Companys capital stock or to make certain other re

226、stricted payments or investments;repurchase or redeem capital stock;make loans,capital expenditures or investments or acquisitions;receive dividends or other payments from its subsidiaries;enter into transactions with affiliates;pledge its assets as collateral;merge or consolidate with other compani

227、es or transfer all or substantially all of its assets;transfer or sell assets,including capital stock of subsidiaries;andprepay,repurchase or redeem debt.As a result of these covenants,the Company is limited in the manner in which it conducts its business and it may be unable to engage in favorable

228、business activities orfinance future operations or capital needs.A breach of any of these covenants or any of the other covenants in the Credit Agreement(including without limitation financialcovenants)would result in a default under the Credit Agreement.Upon the occurrence of an event of default un

229、der the Credit Agreement,the lenders:will not be required to lend any additional amounts to the Company;could elect to declare all borrowings outstanding thereunder,together with accrued and unpaid interest and fees,to be due and payable;or could require the Company to apply all of its available cas

230、h to repay these borrowings.13 If the Company were unable to repay those amounts,the lender under the Credit Agreement could proceed against the collateral granted to it to secure the Companysborrowings thereunder.The Company has pledged a significant portion of its assets as collateral under the Cr

231、edit Agreement.If the lender under the Credit Agreement acceleratesthe repayment of borrowings,the Company cannot assure you that it will have sufficient assets to repay the Credit Agreement and its other indebtedness or the ability to borrowsufficient funds to refinance such indebtedness.Even if th

232、e Company were able to obtain new financing,it may not be on commercially reasonable terms,or terms that areacceptable to the Company.As of March 31,2020,under the Credit Agreements revolving credit facility,the Company is permitted to borrow up to$20.0 million.However,its ability to borrow underthe

233、 Credit Agreement is limited by a borrowing base and a liquidity condition.The borrowing base at any time equals the sum of up to 85%of eligible accounts receivable plus 50%of eligible inventory.The borrowing base in effect as of March 31,2020 was$10.4 million and,therefore,did restrict the Companys

234、 ability to borrow under the Credit Agreement asof that date.The Company will be required to generate sufficient cash to service its indebtedness and,if not successful,the Company may be forced to take other actions to satisfy itsobligations under its indebtedness.The Companys ability to make schedu

235、led payments on or to refinance its debt obligations depends on its financial and operating performance,which is subject toprevailing economic and competitive conditions and to certain financial,business and other factors beyond its control.The Companys outstanding long-term debt will imposesignific

236、ant cash interest payment obligations on the Company and,accordingly,the Company will have to generate significant cash flow from operating activities to fund its debtservice obligations.The Company cannot assure you that it will maintain a level of cash flows from operating activities sufficient to

237、 permit it to pay the principal,premium,if any,and interest on its indebtedness.If the Companys cash flows and capital resources are insufficient to fund its debt service obligations,the Company may be forced to reduce or delay capital expenditures,sell assets or operations,seek additional debt or e

238、quity capital,restructure or refinance its indebtedness,or revise or delay its strategic plan.The Company cannot assure you thatit would be able to take any of these actions on terms that are favorable to the Company or at all,that these actions would be successful and permit the Company to meet its

239、scheduled debt service obligations or satisfy its capital requirements,or that these actions would be permitted under the terms of its existing or future debt agreements,includingthe Credit Agreement.In the absence of such operating results and resources,the Company could face substantial liquidity

240、problems and might be required to dispose of materialassets or operations to meet its debt service and other obligations.The Credit Agreement restricts the Companys ability to dispose of assets and use the proceeds from thedisposition.The Company may not be able to consummate those dispositions or t

241、o obtain the proceeds which it could realize from them and these proceeds may not be adequateto meet any debt service obligations then due.If the Company cannot make scheduled payments on its debt,it will be in default and,as a result:the Companys debt holders could declare all outstanding principal

242、 and interest to be due and payable;the lenders under the Credit Agreement could foreclose against the assets securing the borrowings from them and the lenders under the Credit Agreement couldterminate their commitments to lend it money;andthe Company could be forced into bankruptcy or liquidation.1

243、4 Despite the Companys indebtedness levels,the Company may be able to incur substantially more debt,including secured debt.This could further increase the risksassociated with its leverage.The Company may be able to incur substantial additional indebtedness in the future.The terms of the Credit Agre

244、ement do not fully prohibit it from doing so.To theextent that the Company incurs additional indebtedness,the risks associated with its substantial indebtedness described above,including its possible inability to service its debt,will increase.As of March 31,2020,the Company had$10.9 million availab

245、le for additional borrowing under the Credit Agreement,subject to a borrowing base and a liquiditycondition.Variable rate indebtedness subjects the Company to interest rate risk,which could cause its debt service obligations to increase significantly.Certain of the Companys borrowings,primarily borr

246、owings under the Credit Agreement,are at variable rates of interest and expose the Company to interest rate risk.Asof March 31,2020,the Company had$15.8 million of variable rate debt outstanding.If interest rates increase,the Companys debt service obligations on the variable rateindebtedness would i

247、ncrease even though the amount borrowed remained the same,and its net income would decrease.Risks Related to Our Securities and the Business Combination Nasdaq may delist our securities from quotation on its exchange which could limit investors ability to make transactions in our securities and subj

248、ect us to additionaltrading restrictions.Our common stock and warrants are currently listed on Nasdaq.There can be no assurance that we will continue to be able to meet Nasdaqs listing standards withrespect to our securities.If Nasdaq delists our common stock from trading on its exchange for failure

249、 to meet the listing standards,we and our stockholders could face significantmaterial adverse consequences including:a limited availability of market quotations for our securities;reduced liquidity with respect to our securities;a determination that our shares of common stock are“penny stock”which w

250、ill require brokers trading in our shares of common stock to adhere to more stringentrules,possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock;a limited amount of news and analyst coverage for our company;anda decreased ability to

251、issue additional securities or obtain additional financing in the future.On April 9,2020,the Company received a letter(the“Determination Letter”)from Nasdaq notifying the Company that it had not complied with the requirements of NasdaqListing Rule IM-5101-2,which requires that the Company meet the r

252、equirements for initial listing after completion of the Business Combination.The Determination Letter statedthat the Companys common stock does not meet the minimum$4.00 bid price and the$15 million market value of publicly held shares requirements,which are set forth in NasdaqListing Rule 5505.On M

253、ay 27,2020 Nasdaq granted the Company an extension to September 7,2020 to demonstrate compliance Nasdaq Listing Rule IM-5101-2.The National Securities Markets Improvement Act of 1996,which is a federal statute,prevents or preempts the states from regulating the sale of certain securities,whichare re

254、ferred to as“covered securities.”Because our common stock and warrants are currently listed on Nasdaq,our common stock and warrants are covered securities.Althoughthe states are preempted from regulating the sale of our securities,the federal statute does allow the states to investigate companies if

255、 there is a suspicion of fraud,and,if there is afinding of fraudulent activity,then the states can regulate or bar the sale of covered securities in a particular case.Further,if we were no longer listed on Nasdaq,our securitieswould not be covered securities and we would be subject to regulation in

256、each state in which we offer our securities.15 If the Business Combinations benefits do not meet the expectations of investors or securities analysts,the market price of our securities may decline.If the benefits of the Business Combination do not meet the expectations of investors or securities ana

257、lysts,the market price of our securities may decline.Fluctuations inthe price of our securities could contribute to the loss of all or part of your investment.Prior to the Business Combination,there was not a public market for Computexs securities.Even if an active market for our securities develops

258、 and continues,the trading price of our securities could be volatile and subject to wide fluctuations in response to variousfactors,some of which are beyond our control.Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities maytra

259、de at prices significantly below the price you paid for them.In such circumstances,the trading price of our securities may not recover and may experience a further decline.Factors affecting the trading price of our securities may include:actual or anticipated fluctuations in our quarterly financial

260、results or the quarterly financial results of companies perceived to be similar to us;changes in the markets expectations about our operating results;success of competitors;our operating results failing to meet the expectation of securities analysts or investors in a particular period;changes in fin

261、ancial estimates and recommendations by securities analysts concerning the Company or the IT industry in general;operating and stock price performance of other companies that investors deem comparable to the Company;our ability to market new and enhanced products on a timely basis;changes in laws an

262、d regulations affecting our business;our ability to meet compliance requirements;commencement of,or involvement in,litigation involving the Company;changes in our capital structure,such as future issuances of securities or the incurrence of additional debt;the volume of shares of our common stock av

263、ailable for public sale;any major change in our board of directors or management;sales of substantial amounts of common stock by our directors,executive officers or significant stockholders or the perception that such sales could occur;andgeneral economic and political conditions such as recessions,

264、interest rates,fuel prices,international currency fluctuations,acts of war or terrorism and global healthcrises,including the coronavirus(COVID-19)pandemic.Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.The stock mar

265、ket in general,andNasdaq in particular,have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companiesaffected.The trading prices and valuations of these stocks,and of our securities,may not be predictable.A l

266、oss of investor confidence in the market for retail stocks or the stocksof other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business,prospects,financial conditions or results ofoperations.A decline in the market price of our securi

267、ties also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in thefuture.16 The JOBS Act permits the Company to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are noteme

268、rging growth companies for so long as the Company is an“emerging growth company.”The Company qualifies as an“emerging growth company”as defined in Section 2(a)(19)of the Securities Act,as modified by the JOBS Act.As such,the Company iseligible for and intends to take advantage of certain exemptions

269、from various reporting requirements applicable to other public companies that are not emerging growth companiesfor as long as it continues to be an emerging growth company,including(i)the exemption from the auditor attestation requirements with respect to internal control over financialreporting und

270、er Section 404 of the Sarbanes-Oxley Act,(ii)the exemptions from say-on-pay,say-on-frequency and say-on-golden parachute voting requirements and(iii)reduceddisclosure obligations regarding executive compensation in its periodic reports and proxy statements.The Company will remain an emerging growth

271、company until the earliest of(i)the last day of the fiscal year in which the market value of its common stock that is held by non-affiliates exceeds$700 million as of June 30 of that fiscal year,(ii)the last day of thefiscal year in which it has total annual gross revenue of$1.07 billion or more dur

272、ing such fiscal year,(iii)the date on which it has issued more than$1 billion in non-convertible debtin the prior three-year period or(iv)the last day of the fiscal year following the fifth anniversary of the date of the first sale of its common stock in the IPO,which would beDecember 31,2022.If the

273、 Company continues to expand its business through acquisitions and/or continues to grow revenues organically,we may cease to be an emerging growthcompany prior to December 31,2022.In addition,Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemptio

274、n from complying with new or revisedaccounting standards provided in Section 7(a)(2)(B)of the Securities Act as long as such company is an emerging growth company.An emerging growth company can thereforedelay the adoption of certain accounting standards until those standards would otherwise apply to

275、 private companies.We have elected to take advantage of such extendedtransition period,which means that when a standard is issued or revised and it has different application dates for public or private companies,we,as an emerging growth company,can adopt the new or revised standard at the same time

276、private companies adopt the new or revised standard.Investors may find our common stock less attractive because theCompany will rely on these exemptions,which may result in a less active trading market for our common stock and its stock price may be more volatile.Our management and their affiliates

277、control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.As of June 26,2020,our management and their affiliates beneficially own approximately 86.0%of our issued and outstanding shares of common stock,including anaggregate of 18,787,253 shares underlyi

278、ng warrants and convertible debentures.Accordingly,these individuals would have considerable influence regarding the outcome of anytransaction that requires stockholder approval.Furthermore,our board of directors is divided into three classes,each of which will generally serve for a term of three ye

279、ars withonly one class of directors being elected in each year.As a consequence of our“staggered board,”only a minority of our board of directors will be considered for election in anygiven year and our management and their affiliates,because of their ownership position,will have considerable influe

280、nce regarding the outcome of such elections.We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act that are applicable to us.As a public company,we are required to comply with the SECs rules implementing Sections 302 and 404 o

281、f the Sarbanes-Oxley Act,which require management to certifyfinancial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting.Tocomply with the requirements of being a public company,we are re

282、quired to provide attestation on internal controls,and we may need to undertake various actions,such asimplementing additional internal controls and procedures and hiring additional accounting or internal audit staff.The standards required for a public company under Section 404 ofthe Sarbanes-Oxley

283、Act are significantly more stringent than those that were required of Computex as a privately held company.Management may not be able to effectively andtimely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that are applicab

284、le to us after the BusinessCombination.If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance,the Company may not be able to assesswhether its internal control over financial reporting is effective,which may subject it to adverse reg

285、ulatory consequences and could harm investor confidence and the market priceof our common stock.Further,as an emerging growth company,our independent registered public accounting firm is not required to formally attest to the effectiveness of ourinternal control over financial reporting pursuant to

286、Section 404 until the date we are no longer an emerging growth company.At such time,our independent registered publicaccounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which our controls are documented,designed or operating.17 In addition,our m

287、anagement and other personnel will need to continue to devote a substantial amount of time to compliance initiative applicable to public companies,including compliance with Section 404 and the evaluation of the effectiveness of our internal control over financial reporting within the prescribed time

288、frame.In connection withthe audit of Computexs consolidated financial statements for the years ended December 31,2019 and 2018,certain material weaknesses and significant deficiencies were identifiedin its internal control over financial reporting.The Company has begun the process of evaluating the

289、adequacy of its accounting personnel staffing level and other matters relatedto internal control over financial reporting to remediate these deficiencies.The Company may discover additional deficiencies in existing systems and controls that it may not beable to remediate in an efficient or timely ma

290、nner.Provisions in our Charter and Bylaws and Delaware law may inhibit a takeover of us,which could limit the price investors might be willing to pay in the future for ourcommon stock and could entrench management.Our Charter and Bylaws contain provisions that may discourage unsolicited takeover pro

291、posals that stockholders may consider to be in their best interests.Our board ofdirectors is divided into three classes,each of which serves for a term of three years with only one class of directors being elected in each year.As a result,at a given annualmeeting only a minority of the board of dire

292、ctors may be considered for election.Since our“staggered board”may prevent our stockholders from replacing a majority of our boardof directors at any given annual meeting,it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders.Mor

293、eover,our board of directors has the ability to designate the terms of and issue new series of preferred stock.We are also subject to anti-takeover provisions under Delaware law,which could delay or prevent a change of control.Together these provisions may make more difficultthe removal of managemen

294、t and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.Changes in laws or regulations,or a failure to comply with any laws and regulations,may adversely affect our business,investments and results of operations.We are subj

295、ect to laws and regulations enacted by national,regional and local governments.In particular,we are required to comply with certain SEC and other legalrequirements.Compliance with,and monitoring of,applicable laws and regulations may be difficult,time consuming and costly.Those laws and regulations

296、and their interpretationand application may also change from time to time and those changes could have a material adverse effect on our business,investments and results of operations.In addition,afailure to comply with applicable laws or regulations,as interpreted and applied,could have a material a

297、dverse effect on our business and results of operations.Our Charter provides,subject to limited exceptions,that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigationmatters,which could limit our stockholders ability to obtain a favorab

298、le judicial forum for disputes with us or our directors,officers,employees or stockholders.Our Charter provides,to the fullest extent permitted by law,that derivative actions brought in our name,actions against directors,officers and employees for breach offiduciary duty and other similar actions ma

299、y be brought only in the Court of Chancery in the State of Delaware and,if brought outside of Delaware,the stockholder bringing thesuit will be deemed to have consented to service of process on such stockholders counsel;provided that the exclusive forum provision will not apply to(i)suits brought to

300、enforce any liability or duty created by the Exchange Act,(ii)any other claim for which the federal courts have exclusive jurisdiction,(iii)any claim as to which the Court ofChancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery(and the indi

301、spensable party does not consent to the personaljurisdiction of the Court of Chancery within ten days following such determination),(iv)any claim which is vested in the exclusive jurisdiction of a court or forum other than theCourt of Chancery,or(v)any claim for which the Court of Chancery does not

302、have subject matter jurisdiction.Furthermore,our Charter also provides that unless we consent inwriting to the selection of an alternative forum,the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause ofaction arising under

303、the Securities Act.Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty orliability created by the Securities Act or the rules and regulations thereunder.Accordingly,there is uncertainty as to whether a court would e

304、nforce such provision with respect tosuits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.Stockholders will not be deemed to have waived our compliancewith the federal securities laws and the rules and regulations thereunder.Any person

305、or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall bedeemed to have notice of and consented to the forum provisions in our Charter.18 This choice of forum provision may limit a stockholders ability to bring a claim in a judicial forum that it finds favorabl

306、e for disputes with us or any of our directors,officers,other employees or stockholders,which may discourage lawsuits with respect to such claims,although our stockholders will not be deemed to have waived ourcompliance with federal securities laws and the rules and regulations thereunder.Alternativ

307、ely,if a court were to find the choice of forum provision contained in our Charter to beinapplicable or unenforceable in an action,we may incur additional costs associated with resolving such action in other jurisdictions,which could harm our business,operatingresults and financial condition.Sales o

308、f a substantial number of shares of our common stock in the public market,or the perception that they might occur,could have an adverse effect on the market price ofour common stock.As of March 31,2020,we had warrants to purchase an aggregate of 25,531,250 shares of common stock outstanding.In conne

309、ction with the IPO,we issued unit purchaseoptions to purchase 1,350,000 units which,if exercised,will result in the issuance of up to 1,485,000 shares of common stock and warrants to purchase an additional 675,000 sharesof common stock.Additionally,the PIPE Debentures(“PIPE Debentures”)are convertib

310、le,in whole or in part,at any time at the option of the holder thereof into that number ofshares of common stock calculated by dividing the principal amount being converted,together with all accrued but unpaid interest thereon,by the applicable conversion price,andare subject to mandatory conversion

311、 under certain conditions,as described elsewhere in this Current Report on Form 10-K.To the extent such warrants,unit purchase options orPIPE Debentures are exercised or converted,as applicable,additional shares of common stock will be issued,which will result in dilution to our stockholders and inc

312、rease thenumber of shares of common stock eligible for resale in the public market.In addition,pursuant to the Incentive Plan,equity incentive awards representing an aggregate of up to5,794,500 shares of our common stock were available for issuance as of June 26,2020.Sales of substantial numbers of

313、such shares in the public market or the fact that the warrants,unit purchase options or PIPE Debentures may be exercised or converted,as applicable,could adversely affect the market price of our common stock or on our ability to obtainfuture financing.Because we have no current plans to pay cash div

314、idends on our common stock for the foreseeable future,you may not receive any return on investment unless you sell yourcommon stock for a price greater than that which you paid for it.We may retain future earnings,if any,for future operations,expansion and debt repayment and have no current plans to

315、 pay any cash dividends for the foreseeablefuture.Any decision to declare and pay dividends as a public company in the future will be made at the discretion of our board of directors and will depend on,among otherthings,our results of operations,financial condition,cash requirements,contractual rest

316、rictions and other factors that our board of directors may deem relevant.In addition,ourability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur.As a result,you may not receive any returnon an investment in our common stock

317、 unless you sell your shares of common stock for a price greater than that which you paid for it.19 Following the consummation of the Business Combination,the Company has incurred and will continue to incur significant increased expenses and administrative burdensas a public company,which could have

318、 an adverse effect on its business,financial condition and results of operations.Following the consummation of the Business Combination,the Company has face increased legal,accounting,administrative and other costs and expenses as a publiccompany that Computex did not incur as a private company.The

319、Sarbanes-Oxley Act,including the requirements of Section 404,as well as rules and regulations subsequentlyimplemented by the SEC,the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder,the PCAOB and the securiti

320、es exchanges,impose additional reporting and other obligations on public companies.Compliance with public company requirements will increasecosts and make certain activities more time-consuming.A number of those requirements will require the Company to carry out activities Computex has not done prev

321、iously.Inaddition,additional expenses associated with SEC reporting requirements have been and will continue to be incurred.In connection with the audit of Computexs consolidatedfinancial statements for the years ended December 31,2019 and 2018,certain material weaknesses and significant deficiencie

322、s were identified in its internal control over financialreporting.The Company has begun the process of evaluating the adequacy of its accounting personnel staffing level and other matters related to internal control over financialreporting to remediate these deficiencies.Furthermore,if any issues in

323、 complying with those requirements are identified(for example,if the auditors identify additional materialweaknesses or significant deficiencies in the internal control over financial reporting),the Company could incur additional costs rectifying those issues,and the existence of thoseissues could a

324、dversely affect the Companys reputation or investor perceptions of it.It may also be more expensive to obtain director and officer liability insurance.Risksassociated with the Companys status as a public company may make it more difficult to attract and retain qualified persons to serve on the board

325、 of directors or as executiveofficers.The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal,accounting and administrative activities.These increased costs will require the Company to div

326、ert a significant amount of money that could otherwise be used to expand thebusiness and achieve strategic objectives.Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements,which could further increase costs.Our public stockhold

327、ers at the time of the Business Combination who purchased their units in our initial public offering and who did not exercise their redemption rights maypursue rescission rights and related claims.Our public stockholders may allege that some aspects of the Business Combination were inconsistent with

328、 the disclosure contained in the final prospectus for our initialpublic offering of units,including the structure of the Business Combination.Consequently,a public stockholder who purchased shares in the initial public offering(excluding theInitial Stockholders)and still held them at the time of the

329、 Business Combination and who did not seek to exercise redemption rights might seek rescission of the purchase of theunits such holder acquired in the initial public offering.A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decreasein the

330、value of such holders shares caused by the alleged violation(including,possibly,punitive damages),together with interest,while retaining the shares.If publicstockholders bring successful rescission claims against the Company,our results of operations could be adversely affected and we may be require

331、d in connection with the defenseof such claims to incur expenses and divert employee attention from other business matters.Future issuances of any equity securities may dilute the interests of our stockholders and decrease the trading price of our common stock.Any future issuance of equity securitie

332、s could dilute the interests of our stockholders and could substantially decrease the trading price of our common stock.We mayissue equity or equity-linked securities in the future for a number of reasons,including to finance the Companys operations and business strategy(including in connection with

333、acquisitions and other transactions),to adjust the Companys ratio of debt to equity,to satisfy its obligations upon the exercise of then-outstanding options or other equity-linkedsecurities,if any,or for other reasons.20 Item 1B.Unresolved Staff Comments Not applicable.Item 2.Properties We currently maintain our principal executive offices at 1720 Peachtree Street,Suite 629,Atlanta,GA 30309,along