Financial Reporting and Compliance - Management's estimates and assumptions in financial reporting are subject to change, which may adversely affect operating results and stock price [101]. - The company must maintain effective internal controls over financial reporting to ensure accuracy and timeliness, as required by the Sarbanes-Oxley Act [102]. - Changes in accounting principles could lead to unfavorable charges that adversely affect financial results and growth prospects [105]. - The company faces increased legal and financial compliance costs due to public company requirements, which may divert management's attention from core business activities [123]. - The evolving regulatory landscape may create uncertainty and increase compliance costs, impacting operational efficiency [125]. - Future financing may require compliance with restrictive covenants, and violations could accelerate debt maturity and limit distributions to shareholders [120]. Dividend and Financing Strategy - The company does not intend to pay dividends for the foreseeable future, focusing instead on retaining earnings for business expansion [113]. - The issuance of additional stock could dilute existing shareholders' investments and potentially decrease the market price of common stock [111]. - The company may seek credit facilities to fund operations, which could expose it to additional risks associated with leverage [118]. - The company may need to engage in equity or debt financings to support growth, which could lead to significant dilution for existing shareholders [122]. Leadership and Human Resources - The company is highly dependent on the services of its Chief Executive Officer, Jamie Benoit, whose leadership is critical to its market presence and strategic direction [126]. - The company faces intense competition for highly skilled personnel, which may hinder its ability to hire and retain qualified employees necessary for its operations [130]. - Organizational changes and leadership transitions may lead to uncertainty and disruptions, increasing the likelihood of turnover among key personnel [127]. - The company does not maintain key person life insurance policies on its key employees, which poses a risk if any of them resign or cease to provide services [129]. Operational Risks and Challenges - The company’s results of operations may vary significantly from period to period, affecting the trading price of its common stock [132]. - The company must continue to improve its operational, financial, and management systems to achieve organic growth and maintain its competitive edge [138]. - The company is subject to risks from natural disasters and man-made problems, which could disrupt its supply chain and impact sales [142]. - The company must keep pace with rapidly changing technology in the IT industry to avoid negative impacts on its business [143]. - The company’s ability to attract and retain customers is influenced by its brand reputation and the quality of its security solutions and services [138]. - The company may face substantial costs and management distractions from potential litigation, which could harm its financial condition and results of operations [141].
WaveDancer(WAVD) - 2022 Q4 - Annual Report