CNXN

New in FY2025

• To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted. ​ Substantial competition could reduce our market share and may negatively affect our business. ​ The direct marketing industry and the computer products retail business, in particular, are highly competitive.
• For example, a global memory (DRAM and NAND) shortage is expected in 2026.
• Other events related to international activities that could cause disruptions to our supply chain include: ​ ● the imposition of additional trade law provisions or regulations, the adoption or expansion of trade restrictions, including new or expanded economic sanctions in response to the ongoing conflicts between Russia and Ukraine and in Venezuela and the Middle East; ​ ● the imposition of additional duties, tariffs and other charges on imports and exports, including any resulting retaliatory tariffs or charges and any reductions in the production of products subject to such tariffs and charges; ​ ● foreign currency fluctuations; and ​ ● restrictions on the transfer of funds. ​ We cannot predict whether the countries in which the products we sell, or any components of those products, are purchased or manufactured will be subject to new or additional trade restrictions or sanctions imposed by the United States or foreign governments, including the likelihood, type or effect of any such restrictions.
• For example, as discussed in our prior Form 10-K and Form 10-Q filings, our operations were impacted by the COVID-19 pandemic and its related economic challenges.
• If, for example, a new health epidemic or outbreak were to occur, we likely would experience broad and varied impacts, including potentially to our workforce and supply chain, with inflationary pressures and increased costs, schedule or production delays, market volatility and other financial impacts.
• More generally, geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts.
• Although we purchase from a diverse vendor base, product purchases from TD Synnex Corporation, Ingram Micro, Inc., and Microsoft Corporation accounted for approximately 25%, 21%, and 13%, respectively, of our total product purchases in 2025.
• No other singular vendor supplied more than 10% of our total product purchases in the year 2025.
• If we are unable to acquire products, or if we experienced a change in business relationship with any of these vendors, we could experience a short-term disruption in the availability of products, and such disruption could have a material adverse effect on our results of operations and cash flows. ​ Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 16%, 13%, and 12%, respectively, of our total product purchases in 2025.
• No other singular product manufacturer produced more than 10% of our total product purchases in the year 2025.
• Most of our product vendors provide us with trade credit, of which the amount outstanding at December 31, 2025 was $338.2 million.
• Failure to pass on these cost increases to our customers or mitigate the increase in wages by increasing our operational efficiency could have a material adverse effect on our profitability and results of operations. ​ Risks Related to Our Technology, Data and Intellectual Property ​ Cyberattacks or the failure to safeguard personal information and our IT systems could result in liability and harm our reputation, which could adversely affect our business. ​ Our business is heavily dependent upon IT networks and systems.
• Future internal or external attacks on our networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation. ​ Our business also involves the use, storage and transmission of proprietary information and sensitive or confidential data, including personal information about our employees, our clients and customers of our clients.
• The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing conflicts between Russia and Ukraine and in the Middle East, including potential proliferation of malware from the conflict into systems unrelated to the conflict. ​ Breaches in security could expose us, our supply chain, our customers or other individuals to significant disruptions, a risk of public disclosure, loss or misuse of this information.
• Such breaches, costs and consequences could adversely affect our business, results of operations, or cash flows. ​ Our business could be materially adversely affected by system failures, interruption, integration issues, or security lapses of our IT systems or those of our third-party providers. ​ Our ability to effectively manage our business depends significantly on our information systems and infrastructure as well as, in certain instances those of our business partners and third-party providers.
• We use AI in our business, as do certain of our business partners, and challenges with properly managing its use could result in reputational harm, competitive harm, significant unexpected expenses and legal liability, which may adversely affect our results of operations. ​ Our business utilizes AI and machine learning technologies, which are offered by third parties, to add AI-based applications to our offerings.
• Our offerings utilize machine learning algorithms, predictive analytics, and other AI technologies.
• If these AI or machine learning models are incorrectly designed, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws or contracts to which we are a party.
• In addition, market acceptance of AI and machine learning technologies is uncertain. ​ Additionally, we are making, and plan to make in the future, investments in adopting AI and machine learning technologies across our business.
• Our investments in deploying such technologies may be substantial and may be more expensive than anticipated. ​ As with many technological innovations, AI presents risks and challenges that could affect its adoption, and therefore our business.
• Any of these factors could adversely affect our business, financial condition, and results of operations. ​ We are reliant on the continued development of electronic commerce and Internet infrastructure development to grow our overall sales. ​ We continue to have increasing levels of sales made through our e-commerce sites.
• The online experience for our clients continues to improve, but the competitive nature of the e-commerce channel also continues to increase.
• Growth of our overall sales is dependent on customers continuing to expand their online purchases in addition to traditional channels to purchase products and services.
• We cannot accurately predict the rate at which online purchases will expand. ​ Our success in growing our Internet business will depend in large part upon our development of an increasingly sophisticated e-commerce experience and infrastructure.
• As the number of online users continues to grow, such growth may impact the performance of our existing Internet infrastructure, which would adversely impact our business. ​ We could experience Internet and other system failures which would interfere with our ability to process orders. ​ We depend on the accuracy and proper use of our management information systems, including our telephone system.
• Many of our key functions depend on the quality and effective utilization of the information generated by our management information systems, including our ability to: ​ ● purchase, sell, and ship products efficiently and on a timely basis; ​ ● manage inventory and accounts receivable collection; and ​ ● maintain our operations. ​ Our management information systems require continual upgrades to effectively manage our operations and customer database.
• Although we maintain some redundant systems, with full data backup, a significant component of our computer and telecommunications hardware is located in a single facility in New Hampshire, and a substantial interruption in our management information systems or in our telephone communication systems, including those resulting from extreme weather and natural disasters, as well as power loss, telecommunications failure, or similar events, would substantially hinder our ability to process customer orders and thus could have a material adverse effect on our business. ​ Privacy concerns with respect to list development and maintenance may materially adversely affect our business. ​ We mail catalogs and other promotional materials to names in our customer database and to potential customers whose names we obtain from rented or exchanged mailing lists.
• Legislation enacted limiting or prohibiting the use of rented or exchanged mailing lists could negatively affect our business. ​ Risks Related to Regulatory and Legal Matters ​ We are exposed to risks from legal proceedings and audits, which may result in substantial costs and expenses or interruption of our normal business operations. ​ We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation. ​ We are subject to intellectual property infringement claims against us from time to time in the ordinary course of our business, either because of the products and services we sell or the business systems and processes we use to sell such products and services, in the form of cease-and-desist letters, licensing inquiries, lawsuits and other communications and demands.
• Increasingly, many of these assertions are brought by non-practicing entities whose principal business model is to secure patent licensing revenue, but we may also be subject to demands from inventors, competitors or other patent holders who may seek licensing revenue, lost profits and/or an injunction preventing us from engaging in certain activities, including selling certain products or services. ​ We also are subject to proceedings, investigations and audits by federal, state, international, national, provincial and local authorities, including as a result of our sales to governmental entities.
• In addition, we are subject to indemnification claims under various contracts. ​ Current and future litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome.
• Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows. ​ The failure to comply with our public sector contracts could result in, among other things, fines or liabilities. ​ Revenues from the Public Sector Solutions segment are derived from sales to federal, state, and local government departments and agencies, as well as to educational institutions, through various contracts and open market sales.
• Our three sales companies are registered in substantially all states, however, if a state were to determine that our earlier contacts with that state exceeded the constitutionally permitted contacts, the state could assess a tax liability relating to our prior year sales. ​ Risks Related to Our Common Stock ​ Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our common stock could lose a significant portion of their investment. ​ The market price for our common stock may be volatile.
• Our stockholders may not be able to resell their shares of common stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock, which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this Annual Report on Form 10-K and the following: ​ ● changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock; ​ ● downgrades by any securities analysts who follow our common stock; ​ ● future sales of our common stock by our officers, directors and significant stockholders; ​ ● market conditions or trends in our industry or the economy as a whole; ​ ● investors’ perceptions of our prospects; ​ ● announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and ​ ● changes in key personnel. ​ In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including companies in our industry.
• If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business. ​ In the future, we may also issue our securities in connection with investments or acquisitions.
• The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock and depress our stock price. ​ We are controlled by one principal stockholder. ​ Patricia Gallup, our principal stockholder, beneficially owned or controlled, in the aggregate, approximately 55% of the outstanding shares of our common stock as of December 31, 2025.

Gone since FY2024

• To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted. ​ We use artificial intelligence in our business, as do certain of our business partners, and challenges with properly managing its use could result in reputational harm, competitive harm, significant unexpected expenses and legal liability, which may adversely affect our results of operations. ​ Our business utilizes artificial intelligence and machine learning technologies, which are offered by third parties, to add AI-based applications to our offerings.
• Our offerings utilize machine learning algorithms, predictive analytics, and other artificial intelligence technologies.
• If these artificial intelligence or machine learning models are incorrectly designed, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws or contracts to which we are a party.
• In addition, market acceptance of artificial intelligence and machine learning technologies is uncertain. ​ Additionally, we are making, and plan to make in the future, investments in adopting artificial intelligence and machine learning technologies across our business.
• Our investments in deploying such technologies may be substantial and may be more expensive than anticipated. ​ As with many technological innovations, artificial intelligence presents risks and challenges that could affect its adoption, and therefore our business.
• Any of these factors could adversely affect our business, financial condition, and results of operations. ​ Substantial competition could reduce our market share and may negatively affect our business. ​ The direct marketing industry and the computer products retail business, in particular, are highly competitive.
• Other events related to international activities that could cause disruptions to our supply chain include: ​ ● the imposition of additional trade law provisions or regulations, the adoption or expansion of trade restrictions, including new or expanded economic sanctions in response to the ongoing conflicts between Russia and Ukraine and in the Middle East; ​ ● the imposition of additional duties, tariffs and other charges on imports and exports, including any resulting retaliatory tariffs or charges and any reductions in the production of products subject to such tariffs and charges; ​ ● foreign currency fluctuations; and ​ ● restrictions on the transfer of funds.
• We cannot predict whether the countries in which the products we sell, or any components of those products, are purchased or manufactured will be subject to new or additional trade restrictions or sanctions imposed by the United States or foreign governments, including the likelihood, type or effect of any such restrictions.
• More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts.
• Although we purchase from a diverse vendor base, product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc. accounted for approximately 25%, 23%, and 11%, respectively, of our total product purchases in 2024.
• No other singular vendor supplied more than 10% of our total product purchases in the year 2024.
• If we are unable to acquire products, or if we experienced a change in business relationship with any of these vendors, we could experience a short-term disruption in the availability of products, and such disruption could have a material adverse effect on our results of operations and cash flows. ​ Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 15%, 12%, and 12%, respectively, of our total product purchases in 2024.
• No other singular product manufacturer produced more than 10% of our total product purchases in the year 2024.
• Most of our product vendors provide us with trade credit, of which the amount outstanding at December 31, 2024 was $300.2 million.
• Failure to pass on these cost increases to our customers or mitigate the increase in wages by increasing our operational efficiency could have a material adverse effect on our profitability and results of operations. ​ We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows. ​ We face a wide variety of risks related to health epidemics, pandemics and similar outbreaks, especially of infectious diseases.
• For example, the COVID-19 pandemic dramatically impacted the global health and economic environment, including millions of confirmed cases and deaths, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in government spending and requirements, regulatory challenges, inflationary pressures and market volatility.
• As discussed in our prior Form 10-K and Form 10-Q filings, our operations were impacted by the COVID-19 pandemic and its related economic challenges.
• However, we have worked hard to address and mitigate adverse impacts attributable to COVID-19, and we do not currently anticipate significant additional direct impacts from the pandemic itself on our operations.
• Nonetheless, we cannot predict the future course of events. ​ If, for example, a new health epidemic or outbreak were to occur, we likely would experience broad and varied impacts, including potentially to our workforce and supply chain, with inflationary pressures and increased costs (which may or may not be fully recoverable), schedule or production delays, market volatility and other financial impacts.
• If any or all of these items were to occur, we could experience adverse impacts on our overall performance, operations and financial results.
• Given the tremendous uncertainties and variables, we cannot at this time predict the impact of any future health epidemics, pandemics or similar outbreaks, but any one could have a material adverse effect on our business, financial position, results of operations and/or cash flows. ​ Risks Related to Our Technology, Data and Intellectual Property Cyberattacks or the failure to safeguard personal information and our IT systems could result in liability and harm our reputation, which could adversely affect our business.
• Our business is heavily dependent upon IT networks and systems.
• Future internal or external attacks on our networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation.
• Our business also involves the use, storage and transmission of proprietary information and sensitive or confidential data, including personal information about our employees, our clients and customers of our clients.
• The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing conflicts between Russia and Ukraine and in the Middle East, including potential proliferation of malware from the conflict into systems unrelated to the conflict.
• Breaches in security could expose us, our supply chain, our customers or other individuals to significant disruptions, a risk of public disclosure, loss or misuse of this information.
• Such breaches, costs and consequences could adversely affect our business, results of operations, or cash flows.
• Our business could be materially adversely affected by system failures, interruption, integration issues, or security lapses of our IT systems or those of our third-party providers.
• Our ability to effectively manage our business depends significantly on our information systems and infrastructure as well as, in certain instances those of our business partners and third-party providers.
• We are reliant on the continued development of electronic commerce and Internet infrastructure development to grow our overall sales. ​ We continue to have increasing levels of sales made through our e-commerce sites.
• The on-line experience for our clients continues to improve, but the competitive nature of the e-commerce channel also continues to increase.
• Growth of our overall sales is dependent on customers continuing to expand their on-line purchases in addition to traditional channels to purchase products and services.
• We cannot accurately predict the rate at which on-line purchases will expand. ​ Our success in growing our Internet business will depend in large part upon our development of an increasingly sophisticated e-commerce experience and infrastructure.
• As the number of on-line users continues to grow, such growth may impact the performance of our existing Internet infrastructure, which would adversely impact our business. ​ We could experience Internet and other system failures which would interfere with our ability to process orders. ​ We depend on the accuracy and proper use of our management information systems, including our telephone system.
• Many of our key functions depend on the quality and effective utilization of the information generated by our management information systems, including: ​ ● our ability to purchase, sell, and ship products efficiently and on a timely basis; ​ ● our ability to manage inventory and accounts receivable collection; and ​ ● our ability to maintain our operations.
• Our management information systems require continual upgrades to effectively manage our operations and customer database.
• Although we maintain some redundant systems, with full data backup, a significant component of our computer and telecommunications hardware is located in a single facility in New Hampshire, and a substantial interruption in our management information systems or in our telephone communication systems, including those resulting from extreme weather and natural disasters, as well as power loss, telecommunications failure, or similar events, would substantially hinder our ability to process customer orders and thus could have a material adverse effect on our business.
• Privacy concerns with respect to list development and maintenance may materially adversely affect our business. ​ We mail catalogs and other promotional materials to names in our customer database and to potential customers whose names we obtain from rented or exchanged mailing lists.
• Legislation enacted limiting or prohibiting the use of rented or exchanged mailing lists could negatively affect our business. ​ Risks Related to Regulatory and Legal Matters ​ We are exposed to risks from legal proceedings and audits, which may result in substantial costs and expenses or interruption of our normal business operations.
• We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation.

and 16 more.