Item 8.01. Other Events
On
The Company is supplementing its risk factors previously disclosed in the
Company's Annual Report on Form 10-K for the year ended
An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations and financial results.
In recent years, there have been outbreaks of epidemics in various countries,
including
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Our headquarters are located in
· temporary closure of our offices and manufacturing facility, travel restrictions or suspension of production and shipment of our products to our customers, which may lead to loss of customers, as well as reputational, competitive and business harm to us; our suppliers have been negatively affected, and could continue to be · negatively affected, in their ability to supply our demand for raw materials, which could disrupt our production and negatively impact our sales; · our customers that are negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase our products, which may materially adversely impact our revenue; · our customers may require additional time to pay us or fail to pay us at all, which could significantly increase the amount of accounts receivable and require us to record additional allowances for doubtful accounts. We may have to provide significant sales incentives to our customers and distributors in response to the outbreak, which may in turn materially adversely affect our financial condition and operating results; · the business operations of our distributors have been and could continue to be negatively impacted by the outbreak, which may negatively impact our distribution channel, or result in loss of customers or disruption of our production and sales, which may in turn materially adversely affect our financial condition and operating results; · any disruption of our supply chain, logistics providers or customers could adversely impact our business and results of operations, including causing us or our suppliers to cease manufacturing products for a period of time or materially delay delivery to customers, which may also lead to loss of customers, as well as reputational, competitive and business harm to us; · many of our customers, distributors, suppliers and other partners are individuals and small and medium-sized enterprises (SMEs), which may not have strong cash flows or be well capitalized, and may be vulnerable to a pandemic outbreak and slowing macroeconomic conditions. If the SMEs that we work with cannot weather the COVID-19 and the resulting economic impact, or cannot resume business as usual after a prolonged outbreak, our revenues and business operations may be materially and adversely impacted; and · the global stock markets have experienced, and may continue to experience, significant decline from the COVID-19 outbreak, which could materially adversely affect our stock price.
Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the coronavirus cannot be reasonably estimated at this time, but our results for the first two quarters of and full year 2020 may be adversely affected. We expect our total revenues in the first and second quarters of 2020 to decrease year over year, and there is no guarantee that our total revenues will grow or remain at a similar level year over year in the last two quarters of 2020.
The global economy has also been materially negatively affected by the COVID-19
and there is continued severe uncertainty about the duration and intensity of
its impacts. The
While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.
Further, as we do not have access to a revolving credit facility, there can be no assurance that we would be able to secure commercial debt financing in the future in the event that we require additional capital. We currently believe that our financial resources will be adequate to see us through the outbreak. However, in the event that we do need to raise capital in the future, outbreak-related instability in the securities markets could adversely affect our ability to raise additional capital.
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In general, our business could be adversely affected by the effects of epidemics, including, but not limited to, COVID-19, avian influenza, severe acute respiratory syndrome (SARS), the influenza A virus, the Ebola virus, or other outbreaks. In response to an epidemic or other outbreaks, government and other organizations may adopt regulations and policies that could lead to severe disruption to our daily operations, including temporary closure of our offices and other facilities. These severe conditions may cause us and/or our partners to make internal adjustments, including but not limited to, temporarily closing down business, limiting business hours, and setting restrictions on travel and/or visits with clients and partners for a prolonged period of time. Various impacts arising from severe conditions may cause business disruption, resulting in material, adverse effects to our financial condition and results of operations.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" related to the Company that involve substantial risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These statements are subject to numerous risks and uncertainties and are often identified by the use of words such as "will", "could", "expect", or "may" and similar expressions or variations. Such forward-looking statements include, but are not limited to, the following: the Company's ability to rely on the SEC Order to delay the filing of its Form 10-Q, the Company's timeline for its quarterly financial statement and expected filing date of its Form 10-Q, and the impact of COVID-19 on the Company's operations and financial performance, including supply chain impacts. These statements are based on the beliefs and assumptions of the Company's management based on information currently available to management. These statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. The Company disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
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