PFSWEB (PFSW)

Risks

• Our service fee revenue and gross margin are dependent upon our clients’ business and transaction volumes and our costs. A reduction in our clients’ eCommerce business, our inability to grow our business or increase service fee revenue from new or existing clients, or our inability to manage expected costs could result in financial performance shortfalls and negatively impact our operating results.
• Our business may suffer if we are unable to hire and retain sufficient temporary and seasonal workers or if labor costs increase.
• We are dependent on our key officers, managers and highly skilled personnel, and if we are unable to attract and retain key personnel in all our geographic locations, our business and our results of operations may be materially adversely affected.
• We face competition from many sources that could adversely affect our business, and growth in our clients’ eCommerce business may make it more efficient for the client to perform some of our service offerings themselves.
• Our operating results are materially impacted by our client concentration and mix and the seasonality of our clients' business.
• Our business is subject to the risk associated with timing of contracts, adherence to contract terms and certain recovery of costs under the contract.
• Our business could be adversely affected if our clients are not satisfied with our services or our third party provider services resulting in client attrition.
• We may experience fluctuations in the utilization of our distribution facilities as a result of shifts in our client concentration, attrition or growth, some of which we may not be able to control, which could adversely impact our operations and financial condition.
• The rise in cyber warfare, ransomware attacks and the like, increases the potential for a breach of our e-commerce security measures, which could adversely affect our business or expose us to significant financial loss or liability and reputational harm.
• Our business is susceptible to risks associated with international operations.
• Our financial results may be adversely affected by fluctuations in the foreign currency exchange markets.
• We or our clients may be a party to litigation involving intellectual property rights used in the provision of services we render. If third parties claim we or our clients are infringing their intellectual property rights under the indemnification obligations within our contracts with our clients and business partners, we could incur significant litigation costs and be required to pay damages, which may have a material adverse effect upon our business, results of operations and financial condition.
• We and our clients may be subject to existing, new or expanded imposition of sales tax in one or more jurisdictions, which could adversely affect our business.
• Determinations under government audits could negatively affect our business.
• Our future capital needs and growth of our business may depend on access to and the ability to secure financing on favorable terms.
• We anticipate incurring significant expenses in the foreseeable future, which may reduce our ability to achieve or maintain profitability.
• Our financial results may be negatively impacted by impairment in the carrying value of our goodwill.
• If our estimates relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
• Our expenses could be adversely impacted by increases in healthcare costs.
• We have recently had to delay the flings of certain of our SEC reports as result of the complexity of the closing process associated with the sale of our LiveArea business unit and the related required financial reporting and accounting segmentation of previously commingled business entities, and we expect our Form 10-Q for the period ending March 31, 2022, due on May 10, 2022, will be delayed, which will mean that we will not have met the Nasdaq Global Market continued listing standards, and Nasdaq may delist our common stock which could have a material adverse effect on our company, the price of our common stock and your ability to sell our common stock.
• Institutional shareholders hold a significant amount of our common stock and these shareholders may have conflicts of interests with the interests of our other shareholders.
• The market price of our common stock may be volatile. You may not be able to sell your shares at or above the price at which you purchased such shares.
• Our certificate of incorporation, our bylaws, our shareholder rights plan and Delaware law make it difficult for a third party to acquire us, despite the possible benefit to our shareholders.
• We incur significant costs as a result of operating as a public company.
• Our stock price could decline if a significant number of shares become available for sale.
• Actions of activist shareholders could be disruptive and potentially costly, and the possibility that activist shareholders may seek changes that conflict with our strategic direction could cause uncertainty about the strategic direction of our business.
• We have identified a material weakness in our internal control over financial reporting which, if not timely remediated, may adversely affect the accuracy and reliability of our financial statements, and our reputation, business and the price of our common stock, as well as lead to a loss of investor confidence in us.
• We have made, and may make in the future, strategic acquisitions and divestitures that may involve significant risks and uncertainties. We may not realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disrupt our business and divert management attention. Likewise, any future divestitures may be unsuccessful and negatively impact our business.
• Our business, operations and profitability could be adversely affected as the result of acts of God, natural disasters, pandemics, and/or endemics, political unrest and conflict and other catastrophic events beyond our control, in particular if one or more of our distribution facilities were interrupted or shut down.
• The global coronavirus pandemic and any new strains of the virus could harm our business, results of operations, and financial condition.
• Our insurance policies may not fully cover all losses we may incur.