Item 1A. Risk Factors

Our business operations could be affected by factors that are not presently known

to us or that we currently

consider not to be material to our operations, so you should not consider

the risks disclosed in this section to

necessarily represent a complete statement of all risks and uncertainties.

The Company believes that the following

risks could have a material adverse impact on our business, reputation, financial

results, financial condition and/or

the trading price of our common stock.

The order in which these factors appear does not necessarily reflect

their

relative importance or priority.

COMPANY RISKS

We are dependent upon third parties for the manufacture and supply of a significant volume of our products.

We obtain a significant volume of the products we distribute from third parties, with whom we generally do not

have long-term contracts.

While there is typically more than one source of supply, some key suppliers, in the

aggregate, supply a significant portion of the products we sell.

In 2023, our top 10 health care distribution suppliers

and our single largest supplier accounted for approximately 25% and 4%, respectively, of our aggregate purchases.

Because of our dependence upon such suppliers, our operations are

subject to the suppliers’ ability and willingness

to supply products in the quantities that we require, and the risks include delays

caused by interruption in

production based on conditions outside of our control, including

a supplier’s failure to comply with applicable

government requirements (which may result in product recalls and/or

cessation of sales) or an interruption in the

suppliers’ manufacturing capabilities.

In the event of any such interruption in supply, we would need to identify

and obtain acceptable replacement sources on a timely basis.

There is no guarantee that we would be able to obtain

such alternative sources of supply on a timely basis, if at all, and an extended

interruption in supply, particularly of

a high-sales volume product, could result in a significant disruption in our

sales and operations, as well as damage

to our relationships with customers and our reputation.

In addition, certain of our suppliers have had their ability to

service certain markets restricted or negatively impacted because

of allegations of forced labor in their supply

chain.

Forced labor legislation affecting the supply chain has increased around

the world, and the United States

recently passed the Uyghur Forced Labor Prevention Act.

Our supply chain could be materially disrupted if our

suppliers fail to comply with, or are unable to satisfy our demand

for products, as a result of applicable forced labor

legislation and regulations.

Our

future

growth

(especially

for

our

technology

and

value-added

services

segment)

is

dependent

upon

our

ability

to

develop

or

acquire

and

maintain

and

protect

new

products

and

technologies

that

achieve

market

acceptance with acceptable margins.

Our future success depends on our ability to timely develop (or obtain the right

to sell) competitive and innovative

(particularly for our technology and value-added services segment)

products and services and to market them

quickly and cost-effectively.

Our ability to anticipate customer needs and emerging trends and develop or acquire

new products, services and technologies at competitive prices requires significant

resources, including employees

with the requisite skills, experience and expertise, particularly in our

technology segment, including dental practice

management, patient engagement and demand creation software solutions.

The failure to successfully address these

challenges could materially disrupt our sales and operations.

Additionally, our software and e-services products,

like software products generally, may contain undetected errors or bugs when introduced or as new versions are

released.

Any such defective software may result in increased expenses

related to the software and could adversely

affect our relationships with customers as well as our reputation.

With respect to certain software and e-services

that we develop, we rely primarily upon copyright, trademark and

trade secret laws, as well as contractual and

common law protections and confidentiality obligations.

We cannot provide assurance that such legal protections

will be available, adequate or enforceable in a timely manner to protect

our software or e-services products.

Risks inherent in acquisitions, dispositions and joint ventures could

offset the anticipated benefits.

One of our business strategies has been to expand our domestic and

international markets in part through

acquisitions and joint ventures and we expect to continue to make acquisitions

and enter into joint ventures in the

future.

Such transactions require significant management attention,

may place significant demands on our

operations, information systems, legal, regulatory, compliance, financial, and human resources functions, and

there

is risk that one or more may not succeed.

We cannot be sure, for example, that we will achieve the benefits of

revenue growth that we expect from these acquisitions or joint ventures

or that we will avoid unforeseen additional

costs, taxes, or expenses.

Our ability to successfully implement our acquisition and joint venture

strategy depends

upon, among other things, the following:

the availability of suitable acquisition or joint venture candidates at

acceptable prices;

our ability to consummate such transactions, which could potentially

be prohibited due to U.S. or

foreign antitrust regulations;

the liquidity of our investments and the availability of financing on

acceptable terms;

our ability to retain customers or product lines of the acquired businesses or

joint ventures;

our ability to retain, recruit and incentivize the management of the

companies we acquire; and

our ability to successfully integrate these companies’ operations, services,

products and personnel with

our culture, management policies, legal, regulatory, and compliance policies, cybersecurity systems and

policies, internal procedures, working capital management, financial,

and operational controls and

strategies.

Furthermore, some of our acquisitions and future acquisitions may give

rise to an obligation to make contingent

payments or to satisfy certain repurchase obligations, which payments

could have material adverse impacts on our

financial results individually or in the aggregate.

Additionally, when we decide to sell assets or a business, we may encounter difficulty in finding buyers or

executing alternative exit strategies on acceptable terms in a timely manner, which could delay

the accomplishment

of our strategic objectives.

Alternatively, we may dispose of assets or a business at a price or on terms that are less

than we had anticipated.

Dispositions may also involve continued financial involvement

in a divested business,

such as through transition service agreements, indemnities or other current

or contingent financial obligations.

Under these arrangements, performance by the acquired or divested

business, or other conditions outside our

control, could affect our future financial results.

Certain provisions in our governing documents and other documents to

which we are a party may discourage

third parties from seeking to acquire us that might otherwise result in

our stockholders receiving a premium

over the market price of their shares.

The provisions of our certificate of incorporation and by-laws may

make it more difficult for a third-party to

acquire us, may discourage acquisition bids and may impact the price

that certain investors might be willing to pay

in the future for shares of our common stock.

These provisions, among other things require (i) the affirmative vote

of the holders of at least 60% of the shares of common stock entitled to vote

to approve a merger, consolidation, or

a sale, lease, transfer or exchange of all or substantially all of our assets;

and (ii) the affirmative vote of the holders

of at least 66 2/3% of our common stock entitled to vote to (a)

remove a director; and (b) to amend or repeal our

by-laws, with certain limited exceptions.

In addition, certain of our employee incentive plans provide

for

accelerated vesting of stock options and other awards upon termination without

cause within two years following a

change in control, or grant the plan committee discretion to accelerate

awards upon a change of control.

Further,

certain agreements between us and our executive officers provide for increased severance

payments and certain

benefits if those executive officers are terminated without cause by us or if they terminate

for good reason, in each

case within two years following a change in control or within ninety days prior

to the effective date of the change in

control or after the first public announcement of the pendency of the change

in control.

Adverse changes in supplier rebates or other purchasing incentives

could negatively affect our business.

The terms

on which

we purchase

or sell

products from

many suppliers

may entitle

us to

receive a

rebate or

other

purchasing incentive based on the attainment of certain growth

goals.

Suppliers may reduce or eliminate rebates or

incentives

offered

under

their

programs,

or

increase

the

growth

goals

or

other

conditions

we

must

meet

to

earn

rebates

or

incentives

to

levels

that

we

cannot

achieve.

Increased

competition

either

from

generic

or

equivalent

branded products

could result

in us

failing to

earn rebates

or incentives

that are

conditioned upon

achievement of

growth goals.

Additionally, factors outside

of our control, such as customer

preferences, consolidation of suppliers

or supply issues, can have a material impact on

our ability to achieve the growth goals established by

our suppliers,

which

may

reduce the

amount of

rebates

or

incentives we

receive.

The

occurrence

of

any

of

these events

could

have an adverse impact on our business, financial condition or operating

results.

Sales of corporate brand products entail additional risks, including the risk that such sales could

adversely affect

our relationships with suppliers.

We offer

certain corporate brand products that are available exclusively from us.

The sale of such products subjects

us to the risks generally encountered by entities that source, market and sell corporate brand products, including but

not

limited to

potential product

liability risks,

mandatory or

voluntary product

recalls, potential

supply chain

and

distribution

chain

disruptions,

and

potential

intellectual

property

infringement

risks.

Any

failure

to

adequately

address

some

or

all

of

these

risks

could

have

an

adverse

effect

on

our

business, financial

condition

or

operating

results.

In

addition,

an

increase

in

the

sales

of

our

corporate

brand

products

may

negatively

affect

our

sales

of

products owned by our

suppliers which, consequently,

could adversely impact certain

of our supplier relationships.

Our ability to locate qualified, economically stable suppliers who satisfy our requirements, and to

acquire sufficient

products in

a timely

and effective

manner,

is critical

to ensuring,

among other

things, that

customer confidence

is

not diminished.

In addition, we

are exposed to

the risk

that our competitors

or our large

customers may introduce

their own

private label,

generic, or

low-cost products

that compete

with our

products at

lower price

points.

Such

products could

capture significant

market share

or decrease

market prices

overall, eroding

our sales

and margins.

Any failure

to develop sourcing

relationships with a

broad and deep

supplier base could

have an adverse

effect on

our business, financial condition or operating results.

INDUSTRY RISKS

Security risks generally associated with our information systems and our

technology products and services have

in the recent past adversely affected our business and results of operations, and could

in the future materially

adversely affect our business and our results of operations if such products, services,

or systems (or third-party

systems we rely on) are interrupted, damaged by unforeseen events, are subject

to cyberattacks or fail for any

extended period of time.

We rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store

customer, product, supplier and employee data to, among other things:

maintain and manage worldwide systems to facilitate the purchase and

distribution of thousands of

inventory items from numerous distribution centers;

receive, process and ship orders on a timely basis;

manage the accurate billing and collections for our customers;

process payments to suppliers;

provide products and services that maintain certain of our customers’ electronic

medical or dental

records (including protected health information of their patients); and

maintain and manage global human resources, compensation and payroll

systems.

In addition to health information in our customers’ electronic

medical and dental records, certain of our IS stores

other sensitive personal and financial information, such as healthcare

and other information related to our

employees, as well as other sensitive information such as credit card

information from our third-party business

partners, that is confidential,

and in many cases subject to privacy laws.

Our IS are vulnerable to, among other things, natural disasters,

power losses, computer viruses, telecommunication

failures, cybersecurity threats and other criminal activity. Information security risks have significantly increased

in

recent years in part because of an overall increase in cyber incidents,

their increased sophistication, and the

involvement of organized crime, hackers, terrorists and foreign state agents. The healthcare

industry in particular

has been targeted by threat actors seeking to undermine companies’ cybersecurity

defensive measures.

We have processes in place intended to ensure that our security measures keep pace with new and emerging risks.

We regularly review,

monitor and implement multiple layers of security through technology, processes and our

people.

We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our

defenses are monitored and routinely tested internally and by external

parties.

Despite these efforts, our facilities

and systems and those of our third-party service providers have been,

and may in the future be, vulnerable to

privacy and security incidents, cybersecurity attacks and data breaches,

acts of vandalism or theft, computer viruses

and other malicious code, misplaced or lost data, programming and/or human

errors,

attacks or other acts

undermining IS of third party business partners including our customers,

or other similar events that could impact

the security, reliability and availability of our systems.

In addition, hardware, software or applications developed

internally or procured from third parties may contain defects

in design or manufacture or other problems that could

unexpectedly compromise information security.

As a practical matter, so long as we depend on IS to operate our

business, and our business partners do the same, there can be no guaranty

that such measures will successfully stop

any one particular cybersecurity incident given the constantly evolving

nature of the threat.

We may also incur

substantial costs as we update our cybersecurity defense systems and our general

computer controls to meet

evolving challenges, and legislative or regulatory action related to cybersecurity

may increase our costs to develop

or implement new technology products and services.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

information technology (“IT”)

controls (including third-party systems we rely on) causing an IS security breach

may lead, and has in the past led,

to a disruption of our IS business systems (including third-party systems we

rely on), interruption of operations

(including, without limitation, receiving, verifying, and processing customer orders,

customer service, accounts

payable, warehouse management and shipping, and systems tied to internal

controls over financial reporting), the

loss or alteration of business, financial, and other protected information,

a negative impact on our financial

performance, and to an adverse impact on our financial accounting

and reporting controls.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

computer controls or those of third

parties with whom we engage may also lead to claims against us by

affected parties and/or governmental agencies,

and involve fines and penalties, as well as substantial defense and settlement

expenses.

Any of these impacts may

alone, or collectively, have a material impact on our business.

A successful cyberattack has, and may again in the

future, disrupt our business operations, adversely impact our financial

accounting and reporting of results of

operations, divert the attention of management, and adversely impact

our results of operations.

In addition, we develop products and provide services to our customers

that are technology-based, and a

cyberattack that bypasses the IS supporting our products or services causing

a security breach and/or perceived

security vulnerabilities in our products or services could also cause significant

loss of business and reputational

harm, and actual or perceived vulnerabilities may lead to claims against

us by our customers and/or governmental

agencies.

In addition, certain of our practice management products and services

purchased by health care

providers, such as physicians and dentists, are used to store and manage patient

medical or dental records.

These

customers are subject to laws and regulations which require that they

protect the privacy and security of those

records, and our products may be used as part of these customers’ comprehensive

data security programs, including

in connection with their efforts to comply with applicable privacy and security laws.

In addition to immaterial and unrelated prior incidents at certain of

our subsidiaries, in October 2023, Henry Schein

experienced a cybersecurity incident that primarily affected the operations of our

North American and European

dental and medical distribution businesses.

Henry Schein One, our practice management software, revenue

cycle

management and patient relationship management solutions business was

not affected, and our manufacturing

businesses were mostly unaffected.

Once we became aware of the issue, we took steps to assess, contain

and

remediate this incident.

We restored affected systems and applications, our distribution operations resumed and we

reactivated our ecommerce platform.

We also notified law enforcement and our employees, customers, suppliers

and investors, informing them of both the incident and management’s efforts to mitigate its impact on our daily

operations and data maintained on the Company’s systems.

Subsequently, on or about November 8, 2023, we

determined that the threat actor obtained personal and sensitive information

maintained on our systems belonging to

certain third parties and since that date we have notified affected parties and potentially

affected parties as

appropriate.

The scope of personal and sensitive data impacted is still under investigation.

On November 22, 2023,

we experienced a related disruption to our ecommerce platform and

related applications, which has since been

remediated.

The October 2023 cybersecurity incident disrupted key

business operations, adversely impacted our

financial results for the fourth quarter and full year 2023, diverted

attention of management, and caused the

Company to incur significant remediation costs.

We continue to review the effects of the incident on the

Company’s business as we do expect some short-term residual impact on our financial results in 2024.

In January

2024, two putative class actions were filed against us based on the incident

and one of these actions is still pending.

We are spending, and plan to expend in the future, additional resources to continue to protect against, or to address

problems caused by, business interruptions, and data security breaches.

In addition, customers and suppliers may impose additional cybersecurity

requirements on us as a result of the

incident we experienced in October 2023, and some customers and suppliers

have made such requests to date.

We

cannot guarantee that we will be able to satisfy such additional requirements,

and failure to satisfy such

requirements could result in a loss of revenue or diminished product

availability that could materially affect our

business adversely.

We also may be perceived as a more vulnerable target of the cyber hackers as a result of the

October 2023 incident.

If the Company is subject to more attacks in the future as a result of

the recent incident, this

could materially affect our business adversely.

We maintain cyber insurance, subject to certain retentions and policy limitations.

With respect to the October 2023

cybersecurity incident, we have a $60 million insurance policy, following a $5 million retention.

The health care products distribution industry is highly competitive

(including, without limitation, competition

from third-party online commerce sites) and consolidating, and we may not

be able to compete successfully.

We compete with numerous companies, including several major manufacturers and distributors.

Some of our

competitors have greater financial and other resources than we do, which

could allow them to compete more

successfully.

Most of our products are available from several sources and our customers

tend to have relationships

with several distributors.

Competitors could obtain exclusive rights to market particular

products, which we would

then be unable to market.

Manufacturers also could increase their efforts to sell directly to end-users and

thereby

eliminate or reduce our role in distribution.

Industry consolidation among health care product distributors and

manufacturers, price competition, product unavailability, whether due to our inability to gain access to products or

to interruptions in manufacturing supply, or the emergence of new competitors, also could increase competition.

Consolidation has also increased among manufacturers of health care

products, which could have a material

adverse effect on our margins and product availability.

We could be subject to charges and financial losses in the

event we fail to satisfy minimum purchase commitments contained

in some of our contracts.

Additionally,

traditional health care supply and distribution relationships are being challenged

by electronic online commerce

solutions.

The continued advancement of online commerce by third

parties will require us to cost-effectively adapt

to changing technologies, to enhance existing services and to differentiate our business

(including with additional

value-added services) to address changing demands of consumers and

our customers on a timely basis.

The

emergence of such potential competition and our inability to anticipate and

effectively respond to changes on a

timely basis could have a material adverse effect on our business.

The health care industry is experiencing changes due to political, economic

and regulatory influences that could

materially adversely affect our business.

The health care industry is highly regulated and subject to changing

political, economic, and regulatory influences.

In recent years, the health care industry has undergone, and is in the process of undergoing,

significant changes

driven by various efforts to reduce costs, including, among other factors: trends

toward managed care; collective

purchasing arrangements and consolidation among office-based health care practitioners;

and changes in

reimbursements to customers, including increased attention to value-based payment

arrangements, as well as

growing enforcement activities (and related monetary recoveries) by governmental

officials.

Both our profitability

and the profitability of our customers may be materially adversely affected by laws

and regulations reducing

reimbursement rates for pharmaceuticals, medical supplies and devices,

and/or medical treatments or services, or

changes to the methodology by which reimbursement levels are determined.

If we are unable to react effectively to

these and other changes in the health care industry, our business could be materially adversely affected.

The ACA

greatly expanded health insurance coverage in the United States and has been

the target of litigation and

Congressional reform efforts since its adoption.

Any outcome of future court cases that change the ACA, in

addition to future legislation, regulation, guidance and/or Executive Orders

that do the same, could have a

significant impact on the U.S. healthcare industry and the ability or willingness

of individuals to engage with it.

Expansion of GPOs, DSOs or provider networks and the multi-tiered

costing structure may place us at a

competitive disadvantage.

The health care products industry is subject to a multi-tiered costing structure, which

can vary by manufacturer

and/or product.

Under this structure, certain institutions can obtain more favorable

prices for health care products

than we are able to obtain.

The multi-tiered costing structure continues to expand as many large integrated health

care providers and others with significant purchasing power, such as GPOs and DSOs, demand more favorable

pricing terms.

Additionally, the formation of provider networks, GPOs and DSOs may shift purchasing decisions

to entities or persons with whom we do not have a historical relationship

and may threaten our ability to compete

effectively, which could in turn negatively impact our financial results.

In addition, such organizations may

establish direct relationships with manufacturers, thereby either eliminating

or reducing the services historically

provided by distributors.

Although we are seeking to obtain similar terms from manufacturers

to access lower

prices demanded by GPO and DSO contracts or other contracts,

and to develop relationships with existing and

emerging provider networks, GPOs and DSOs, we cannot guarantee that such terms will

be obtained or contracts

executed.

Increases in shipping costs or service issues with our third-party shippers

could harm our business.

Our ability to meet our customers’ expedited delivery expectations is an

integral component of our business

strategy for which our customers rely.

Shipping is a significant expense in the operation of our business.

We ship

almost all of our orders through third-party delivery services, and typically bear

the cost of shipment.

Accordingly,

any significant increase in shipping rates could have a material adverse

effect on our business, financial condition

or operating results.

While we have recently experienced increases in the cost of shipping,

we do not expect these

additional expenses to be material to our results.

However, it is possible that such costs could be material in the

future.

Similarly, strikes or other service interruptions by those shippers, including at transportation centers or

shipping ports, could cause our operating expenses to rise and materially

adversely affect our ability to deliver

products on a timely basis.

MACRO-ECONOMIC AND POLITICAL RISKS

Uncertain global and domestic macro-economic and political conditions

could materially adversely affect our

results of operations and financial condition.

Uncertain global and domestic macro-economic and political conditions

that affect the economy and the economic

outlook of the United States, Europe, Asia, and other parts of the

world could materially adversely affect our results

of operations and financial condition.

These uncertainties, include, among other things:

election results;

changes to laws and policies governing foreign trade, tariffs and sanctions, or greater

restrictions on

imports and exports;

supply chain disruptions;

changes in laws and policies governing health care or data privacy;

changes to the relationship between the United States and China;

sovereign debt levels;

the inability of political institutions to effectively resolve actual or perceived

economic, currency or

budgetary crises or issues;

consumer confidence;

unemployment levels (and a corresponding increase in the uninsured

and underinsured population);

changes in regulatory and tax regulations;

interest rate fluctuations, and strengthening of the dollar, which have and will continue to

impact our

results of operations;

availability of capital;

increases in fuel and energy costs;

the effect of inflation on our ability to procure products and our ability to increase

prices over time and

pass through to our customers price increases we may receive;

changes in tax rates and the availability of certain tax deductions;

increases in labor costs or health care costs;

the threat or outbreak of war, terrorism or public unrest (including, without limitation, the war in

Ukraine, the Israel-Gaza war and other unrest and threats in the Middle East,

and the possibility of a

wider European or global conflict); and

changes in laws and policies governing manufacturing, development, and

investment in territories and

countries where we do business.

Additionally, changes in government, government debt and/or budget crises may lead to reductions in government

spending in certain countries, which could reduce overall health care spending,

and/or higher income or corporate

taxes, which could depress spending overall.

Recessionary or inflationary conditions and depressed levels of

consumer and commercial spending may also cause customers to

reduce, modify, delay,

or cancel plans to purchase

our products and may cause suppliers to reduce their output or change

their terms of sale.

We have experienced

inflationary pressures, including higher freight costs and interest expense.

Although inflation impacts both our

revenues and costs, the depth and breadth of our product portfolio often

allows us to offer lower-cost national brand

solutions or corporate brand alternatives to our more price-sensitive

customers who are unable to absorb price

increases, thus positioning us to protect our gross profit.

The strengthening of the dollar, likewise, has impacted

our revenues and costs, but neither inflation nor exchange rates have

materially impacted our results of operations

in fiscal year 2023.

We generally sell products to customers with payment terms.

If customers’ cash flow or

operating and financial performance deteriorate, or if they are unable to

make scheduled payments or obtain credit,

they may not be able to, or may delay, payment to us.

Likewise, for similar reasons suppliers may restrict credit or

impose different payment terms.

REGULATORY

AND LITIGATION RISKS

Failure to comply with existing and future regulatory requirements

could materially adversely affect our

business.

We strive to be compliant with the applicable laws, regulations and guidance described below in all material

respects, and believe we have effective compliance programs and other controls

in place to ensure substantial

compliance.

However, compliance is not guaranteed either now or in the future as certain laws, regulations

and

guidance may be subject to varying and evolving interpretations that could

affect our ability to comply, as well as,

future changes, additions and enforcement approaches, including in light

of political changes.

When we discover

situations of non-compliance we seek to remedy them and bring

the affected area back into compliance.

Changes

with respect to the applicable laws, regulations and guidance described below

may require us to update or revise

our operations, services, marketing practices, and compliance programs

and controls, and may impose additional

and unforeseen costs on us, pose new or previously immaterial risks to us, or

may otherwise have a material

adverse effect on our business.

There can be no assurance that current and future government

regulations will not

adversely affect our business, and we cannot predict new regulatory priorities, the

form, content or timing of

regulatory actions, and their impact on the health care industry and on our

business and operations.

Global efforts toward healthcare cost containment continue to exert pressure on

product pricing.

In the United

States, in addition to other government efforts to control health care costs, there has been

increased scrutiny on drug

pricing and concurrent efforts to control or reduce drug costs by Congress, the President,

executive branch agencies

and various states.

We and our subsidiaries may be required to report drug pricing data under federal laws and

regulations.

At the state level, several states have adopted laws, that may

apply to some of our operations, that

require drug manufacturers, including re-packagers or re-labelers, to provide

advance notice of certain price

increases and to report information relating to those price increases, while

others have taken legislative or

administrative action to establish prescription drug affordability boards or

multi-payer purchasing pools to reduce

the cost of prescription drugs.

At the federal level, several related bills have been introduced

and regulations

proposed which, if enacted or finalized, respectively, would impact drug pricing and related costs.

Under the Sunshine Act, we are required to collect and report detailed

information regarding certain financial

relationships we have with covered recipients, including physicians, dentists,

teaching hospitals, and certain other

non-physician practitioners.

We and our subsidiaries may be required to report information under certain state

transparency laws that address circumstances not covered by the Sunshine

Act, and some of these state laws, as

well as the federal law, can be unclear.

We are also subject to foreign regulations requiring transparency of certain

interactions between suppliers and their customers.

While we believe we have substantially compliant programs

and controls in place satisfying the above laws and requirements,

such compliance imposes additional costs on us

and the requirements are sometimes unclear.

In the United States, government actions to seek to increase health-

related price transparency may also affect our business.

Our business is subject to additional requirements under various local, state,

federal and international laws and

regulations applicable to the sale and distribution of, and third-party payment

for, pharmaceuticals and medical

devices and HCT/P products.

Among the federal laws with which we must comply are the Controlled Substances

Act, the FDC Act, the Federal Drug Quality and Security Act, including DSCSA,

Section 361 of the Public Health

Services Act and Section 401 of the Consolidated Appropriations Act

of the Social Security Act.

Among other

things, such laws, and the regulations promulgated thereunder:

regulate the introduction, manufacture, advertising, marketing and promotion,

sampling, pricing and

reimbursement, labeling, packaging, storage, handling, returning or

recalling, reporting, and

distribution of, and record keeping for drugs, HCT/P products and

medical devices,

including

requirements with respect to unique medical device identifiers;

subject us to inspection by the FDA and DEA and similar state authorities;

regulate the storage, transportation and disposal of certain of our products

that are considered

hazardous materials;

require us to advertise and promote our drugs and devices in accordance

with applicable FDA

requirements;

require us to report average sales price (ASP) for drugs or biologicals payable

under Medicare Part B to

CMS with or without a Medicaid drug rebate agreement;

require registration with the FDA and the DEA and various state agencies;

require record keeping and documentation of transactions involving drug

products;

require us to design and operate a system to identify and report suspicious

orders of controlled

substances to the DEA and certain states;

require us to manage returns of products that have been recalled and subject

us to inspection of our

recall procedures and activities;

impose on us reporting requirements if a pharmaceutical, HCT/P product or

medical device causes

serious illness, injury or death;

require manufacturers, wholesalers, re-packagers and dispensers of prescription

drugs to identify and

trace certain prescription drugs as they are distributed;

require the licensing of prescription drug wholesalers and third-party

logistics providers; and

mandate compliance with standards for the recordkeeping, storage

and handling of prescription drugs,

and associated reporting requirements.

The FDA has become increasingly active in addressing the regulation of

computer software and digital health

products intended for use in health care settings.

The Cures Act, signed into law on December 13, 2016, among

other things, amended the medical device definition to exclude certain software

from FDA regulation, including

certain clinical decision support software.

On September 27, 2019, the FDA issued a suite of guidance documents

on digital health products, which incorporated applicable Cures Act standards,

and on September 28, 2022, the

FDA subsequently finalized certain of these guidance documents, including

regarding the types of clinical decision

support tools and other software that are exempt from regulation by the FDA as

medical devices, and the FDA

continues to issue new guidance in this area.

Certain of our businesses involve the development and

sale of

software and related products to support physician and dental practice management,

and it is possible that the FDA

or foreign government authorities could determine that one or more of our products

is subject to regulation as a

medical device, which could subject us or one or more of our businesses to

substantial additional requirements,

costs and potential enforcement actions or liabilities for noncompliance with

respect to these products. Some of our

imaging software is regulated as a medical device which subjects our businesses

to substantial additional

requirements, costs and potential enforcement actions or liabilities for noncompliance

with respect to these

products.

Applicable federal, state, local, and foreign laws and regulations also may require

us to meet various standards

relating to, among other things, licensure or registration, program eligibility, procurement, third-party

reimbursement, sales and marketing practices, product integrity, and supply tracking to product manufacturers,

product labeling, personnel, privacy and security of health or other personal

information, installation, maintenance

and repair of equipment and the importation and exportation of products.

The FDA and DEA, as well as CMS

(including with respect to complex Medicare reimbursement requirements

applicable to our specialty home medical

supplies business) and state Medicaid agencies, have recently increased

their regulatory and enforcement activities

and, in particular, the DEA has heightened enforcement activities due to the opioid crisis in the United States.

Our

business is also subject to requirements of similar and other foreign governmental

laws and regulations affecting

our operations abroad.

The failure to comply with any of these laws or regulations, or new interpretations

of existing laws and regulations,

or the imposition of any additional laws and regulations, could

materially adversely affect our business.

The costs

to us associated with complying with the various applicable statutes

and regulations, as they now exist and as they

may be modified, could be material.

Allegations by a governmental body that we have not complied

with these

laws could have a material adverse effect on our businesses.

While we believe that we are substantially compliant

with applicable laws and regulations, and believe we have adequate

compliance programs and controls in place to

ensure substantial compliance, if it is determined that we have not complied

with these laws, we are potentially

subject to warning letters, substantial civil and criminal penalties,

mandatory recall of product, seizure of product

and injunction, consent decrees and suspension or limitation of payments

to us, product sale and distribution.

If we

enter into settlement agreements to resolve allegations of non-compliance, we

could be required to make settlement

payments or be subject to civil and criminal penalties, including

fines and the loss of licenses.

Non-compliance

with government requirements could also adversely affect our ability to participate

in important federal and state

government health care programs, such as Medicare and Medicaid,

and damage our reputation.

The EU Medical Device Regulation (“MDR”) may adversely affect our business.

The EU MDR, applicable since May 26, 2021, significantly modifies and intensifies

the regulatory compliance

requirements for the medical device industry as a whole.

Among other things, the EU MDR:

strengthens the rules on placing devices on the market and reinforces surveillance

once they are

available;

establishes explicit provisions on manufacturers’ responsibilities

for the follow-up of the quality,

performance and safety of devices placed on the market;

improves the traceability of medical devices throughout the supply chain to the end-user

or patient

through a unique identification number;

sets up a central database to provide patients, healthcare professionals and

the public with

comprehensive information on products available in the EU;

strengthens rules for the assessment of certain high-risk devices, such

as implants, which may have to

undergo an additional check by experts before they are placed on the market; and

identifies importers and distributors and medical device products through

registration in a database

(EUDAMED not due, for the time being, until the end of 2027 at

the earliest, as mentioned above).

In particular, the EU MDR imposes strict requirements for the confirmation that a product

meets the regulatory

requirements, including regarding a product’s clinical evaluation and a company’s quality systems, and for the

distribution, marketing and sale of medical devices, including post-market surveillance.

As mentioned above,

pursuant to Regulation 2023/607 and subject to certain conditions, medical devices

that (i) obtained a certificate

under the EU Medical Device Directive from May 25, 2017, (ii) which was

still valid on May 26, 2021, and (iii)

has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into service

until December 31, 2027 for higher risk devices or December 31, 2028 for medium

and lower risk devices.

Nevertheless, EU MDR requirements regarding the distribution,

marketing and sale including quality systems and

post-market surveillance have to be observed by manufacturers, importers

and distributors as of the application date

(i.e., May 26, 2021).

The modifications created by the EU MDR may have an impact

on the way we design and

manufacture products and the way we conduct our business in

the EEA.

If we fail to comply with laws and regulations relating to health care

fraud or other laws and regulations, we

could suffer penalties or be required to make significant changes to our operations,

which could materially

adversely affect our business.

Certain of our businesses are subject to federal and state (and similar

foreign) health care fraud and abuse, referral

and reimbursement laws and regulations with respect to their operations.

Some of these laws, referred to as “false

claims laws,” prohibit the submission or causing the submission of false or fraudulent

claims for reimbursement to

federal, state, and other health care payers and programs.

Other laws, referred to as “anti-kickback laws,” prohibit

soliciting, offering, receiving or paying remuneration in order to induce or reward

the referral of a patient or

ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of,

items or

services that are paid for by federal, state and other health care payers and programs.

Certain additional state and

federal laws, such as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit

physicians and other health care professionals from referring a patient

to an entity with which the physician (or

family member) has a financial relationship, for the furnishing of certain designated

health services (for example,

durable medical equipment and medical supplies), unless an exception applies.

Violations of Anti-Kickback

statutes or the Stark Law may be enforced as violations of the federal False Claims

Act.

The fraud and abuse laws and regulations have been subject to heightened

enforcement activity over the past few

years, and significant enforcement activity has been the result of “relators” who

serve as whistleblowers by filing

complaints in the name of the United States (and if applicable, particular states)

under applicable false claims laws,

and who may receive up to 30% of total government recoveries.

Penalties under fraud and abuse laws may be

severe, including treble damages and substantial civil penalties under

the federal False Claims Act, as well as

potential loss of licenses and the ability to participate in federal and state

health care programs, criminal penalties,

or imposition of a corporate compliance monitor, which could have a material adverse effect on our business.

Also,

these measures may be interpreted or applied by a prosecutorial, regulatory or

judicial authority in a manner that

could require us to make changes in our operations or incur substantial defense

and settlement expenses.

Even

unsuccessful challenges by regulatory authorities or private relators could result

in reputational harm and the

incurring of substantial costs.

Most states have adopted similar state false claims laws, and these state

laws have

their own penalties which may be in addition to federal False Claims

Act penalties, as well as other fraud and abuse

laws.

With respect to measures of this type, the United States government (among others) has expressed concerns

about

financial relationships between suppliers on the one hand and physicians,

dentists, and other health care providers,

on the other.

As a result, we regularly review and revise our marketing practices

as necessary to facilitate

compliance.

Our aspirations, goals and disclosures related to environmental, social

and governance matters and the focus on

regulators and private litigants among other things on related claims made

by companies and funds expose us to

numerous risks, including reputational, financial, legal and other risks,

that could have an adverse impact on us,

including on our stock price.

California has adopted stringent new climate disclosure requirements,

as has the EU,

and the SEC appears about to adopt expansive new disclosure requirements

on climate change.

In the EU, the Directive No. 2019/1937 of October 23, 2019,

on the protection of persons who report breaches of

Union law,

organizes the legal protection of whistleblowers.

This Directive covers whistleblowers reporting

breaches of certain EU laws, in particular as regards public health, the above-mentioned

Directive No. 2001/83,

Regulation No. 726/2004 or, as regards data protection, the GDPR.

The Directive protects a wide range of people

and includes former employees.

All private companies with 50 or more employees are required

to create effective

internal reporting channels.

All EU Member States other than Poland and Estonia have now implemented

the

Directive.

We also are subject to the requirements of the new Directive No. 2022/2464 on corporate sustainability reporting

(“CSR Directive”) adopted on December 14, 2022 and which has to be

implemented by EU members states by July

6, 2024, at the latest.

By amending Directives No. 2004/109, No. 2006/43, No. 2013/34

and Regulation No.

537/2014, the CSR Directive strengthens the existing rules on non-financial

reporting by setting new requirements

for large companies to publish sustainability-related information and, in particular, disclose details about

their risks

and impacts on environmental matters.

We

also are subject to certain United States and foreign laws and regulations

concerning the conduct of our foreign

operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery

Act, German anti-corruption laws

and other anti-bribery laws and laws pertaining to the accuracy of our internal

books and records, which have been

the focus of increasing enforcement activity globally in recent years.

Our businesses are generally subject to

numerous other laws and regulations that could impact our financial

results, including, without limitation,

securities, antitrust, consumer protection, and marketing laws and regulations.

In the EU, both active and passive bribery are criminalized.

The EU Council Framework Decision 2003/568/JHA

of 22 July 2003

on combating corruption in the private sector

establishes more detailed rules on the liability of

legal persons and deterrent sanctions.

However, the liability of legal persons is regulated at a national level.

Failure to comply with fraud and abuse laws and regulations, and other

laws and regulations, could result in

significant civil and criminal penalties and costs, including the loss of

licenses and the ability to participate in

federal and state health care programs, and could have a material adverse

effect on our business.

We may

determine to enter into settlements, make payments, agree to consent decrees

or enter into other arrangements to

resolve such matters.

Intentional or unintentional failure to comply with settlement agreements

or consent decrees

could materially adversely affect our business.

While we believe that we are substantially compliant with applicable fraud and

abuse and other laws and

regulations, and believe we have adequate compliance programs and controls

in place to ensure substantial

compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our

services or marketing practices in response to changes in applicable law or

interpretation of laws, could have a

material adverse effect on our business.

If we fail to comply with laws and regulations relating to the collection,

storage and processing of sensitive

personal information or standards in electronic health records or transmissions,

we could be required to make

significant changes to our products, or incur substantial fines, penalties, or

other liabilities.

Our businesses that involve physician and dental practice management

products, and our specialty home medical

supply businesses, include electronic information technology systems

that store and process personal health,

clinical, financial, and other sensitive information of individuals.

These information technology systems may be

vulnerable to breakdown, wrongful intrusions, data breaches and

malicious attack, which could require us to

expend significant resources to eliminate these problems and address

related security concerns, and could involve

claims against us by private parties and/or governmental agencies.

We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations

that protect the privacy and security of personal information, such as HIPAA, CAN-SPAM, TCPA,

Section 5 of the

FTC Act, the CCPA, and the CPRA that became effective on January 1, 2023.

Laws and regulations relating to

privacy and data protection are continually evolving and subject to

potentially differing interpretations.

These

requirements may not be harmonized, may be interpreted and applied in

a manner that is inconsistent from one

jurisdiction to another or may conflict with other rules or our practices.

Our businesses’ failure to comply with

these laws and regulations could expose us to breach of contract claims, substantial

fines, penalties and other

liabilities and expenses, costs for remediation and harm to our reputation.

Also, evolving laws and regulations in

this area could restrict the ability of our customers to obtain, use or disseminate patient

information, or could

require us to incur significant additional costs to re-design our products

to reflect these legal requirements, which

could have a material adverse effect on our operations.

In addition, the European Parliament and the Council of the EU adopted

the GDPR effective from May 25, 2018,

which increased privacy rights for Data Subjects, including individuals

who are our customers, suppliers and

employees.

The GDPR extended the scope of responsibilities for data controllers

and data processors, and

generally imposes increased requirements and potential penalties on companies,

such as us, that are either

established in the EU and process personal data of Data Subjects (regardless

the Data Subject location), or that are

not established in the EU but that offer goods or services to Data Subjects in the EU

or monitor their behavior in the

EU. Noncompliance can result in penalties of up to the greater of EUR 20

million, or 4% of global company

revenues (sanction that may be public), and Data Subjects may seek damages.

Member states may individually

impose additional requirements and penalties regarding certain limited

matters (for which the GDPR left some

room of flexibility), such as employee personal data.

With respect to the personal data it protects, the GDPR

requires, among other things, controller accountability, consents from Data Subjects or another acceptable legal

basis to process the personal data, notification within 72 hours

of a personal data breach where required, data

integrity and security, and fairness and transparency regarding the storage, use or other processing of the personal

data.

The GDPR also provides rights to Data Subjects relating notably

to information, access, rectification, erasure

of the personal data and the right to object to the processing.

On August 20, 2021, China promulgated the PIPL, which took effect on November

1, 2021.

The PIPL imposes

specific rules for processing personal information and it also specifies

that the law shall also apply to personal

information activities carried out outside China but for the purpose

of providing products or services to PRC

citizens.

Any non-compliance with these laws and regulations may subject

us to fines, orders to rectify or terminate

any actions that are deemed illegal by regulatory authorities, other penalties,

as well as reputational damage or legal

proceedings against us, which may affect our business, financial condition or results

of operations.

The PIPL

carries maximum penalties of CNY50 million or 5% of the annual revenue

of entities that process personal data.

In the United States, the CCPA, which increases the privacy protections afforded California residents, became

effective January 1, 2020.

The CCPA generally requires companies, such as us, to institute additional protections

regarding the collection, use and disclosure of certain personal information

of California residents.

Compliance

with the obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them.

Regulations were released in August of 2020, but there remains some

uncertainty about how the CCPA will be

interpreted by the courts and enforced by the regulators.

If we fail to comply with the CCPA or if regulators assert

that we have failed to comply with the CCPA, we may be subject to certain fines or other penalties and litigation,

any of which may negatively impact our reputation, require us to expend

significant resources, and harm our

business.

Furthermore, California voters approved the CPRA on November 3,

2020, which will amend and expand

the CCPA, including by providing consumers with additional rights with respect to their personal information, and

creating a new state agency to enforce CCPA and CPRA.

The CPRA came into effect on January 1, 2023, applying

to information collected by businesses on or after January 1, 2022.

Other states, as well as the federal government, have increasingly

considered the adoption of similarly expansive

personal privacy laws, backed by significant civil penalties for non-compliance.

While we believe we have

substantially compliant programs and controls in place to comply with

the GDPR, CCPA, PIPL and CPRA

requirements, our compliance with data privacy and cybersecurity laws

is likely to impose additional costs on us,

and we cannot predict whether the interpretations of the requirements, or

changes in our practices in response to

new requirements or interpretations of the requirements, could have a

material adverse effect on our business.

We also sell products and services that health care providers, such as physicians and dentists, use to store and

manage patient medical or dental records.

These customers and we are subject to laws, regulations and

industry

standards, such as HIPAA and the Payment Card Industry Data Security Standards, which require the protection of

the privacy and security of those records.

Our products or services may be used as part of these customers’

comprehensive data security programs, including in connection with their

efforts to comply with applicable data

privacy and security laws and contractual requirements.

Perceived or actual security vulnerabilities in our products

or services, or the perceived or actual failure by us or our customers who

use our products or services to comply

with applicable legal or contractual data privacy and security requirements,

may not only cause us significant

reputational harm, but may also lead to claims against us by our customers

and/or governmental agencies and

involve substantial fines, penalties and other liabilities and expenses

and costs for remediation.

Additionally, under

the GDPR, health data belong to the category of “sensitive data” and benefit

from specific protection.

Processing

of such data is generally prohibited, except for specific exceptions.

Certain of our businesses involve the manufacture and sale of electronic

health record (EHR) systems and other

products linked to government supported incentive programs, where

the EHR systems must be certified as having

certain capabilities designated in evolving standards, such as those adopted

by CMS and ONC.

In order to maintain

certification of our EHR products, we must satisfy the changing governmental

standards.

If any other EHR systems

do not meet these standards, yet have been relied upon by health care providers

to receive federal incentive

payments, we may be exposed to risk, such as under federal health care

fraud and abuse laws, including the False

Claims Act.

Additionally, effective September 1, 2023, the OIG for HHS issued a final rule implementing civil

money penalties for information blocking as established by the Cures Act.

OIG incorporated regulations published

by ONC as the basis for enforcing information blocking penalties.

Each information blocking violation carries a $1

million penalty.

While we believe we are substantially in compliance with such certifications

and with applicable

fraud and abuse laws and regulations and that we have adequate compliance

programs and controls in place to

ensure substantial compliance, we cannot predict whether changes in

applicable law, or interpretation of laws, or

resulting changes in our compliance programs and controls, could have a

material adverse effect on our business.

Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products

may need to

incorporate increasingly complex functionality, such as with respect to reporting and information blocking.

Although we believe we are positioned to accomplish this, the effort may involve

increased costs, and our failure to

implement product modifications, or otherwise satisfy applicable standards,

could have a material adverse effect on

our business.

Additionally, as electronic medical devices are increasingly connected to each other and to other technology, the

ability of these connected systems to safely and effectively exchange and use exchanged

information becomes

increasingly important.

As a medical device manufacturer, we must manage risks including those associated with

an electronic interface that is incorporated into a medical device.

Tax legislation could materially adversely affect our financial results and tax liabilities.

We are subject to the tax laws and regulations of the United States federal, state, and local governments, as well as

foreign jurisdictions.

From time to time, various legislative initiatives may be proposed

that could materially

adversely affect our tax positions.

There can be no assurance that our effective tax rate will not be

materially

adversely affected by legislation resulting from these initiatives.

In addition, tax laws and regulations are extremely

complex and subject to varying interpretations.

Although we believe that our historical tax positions are sound and

consistent with applicable laws, regulations and existing precedent,

there can be no assurance that our tax positions

will not be challenged by relevant tax authorities or that we would be

successful in any such challenge.

We face inherent risk of exposure to product liability, intellectual property infringement and other claims in the

event that the use of the products we sell results in injury.

Our business involves a risk of product liability, intellectual property infringement and other claims in the ordinary

course of business, and from time to time we are named as a defendant

in cases as a result of our distribution of

products.

Additionally, we own interests in companies that manufacture certain dental and medical products.

As a

result, we could be subject to the potential risk of product liability, intellectual property infringement or other

claims relating to the manufacture and distribution of products by

those entities.

In addition, as our corporate brand

business continues to grow, purchasers of such products may increasingly seek recourse directly from us, rather

than the ultimate product manufacturer, for product-related claims.

Another potential risk we face in the

distribution of our products is liability resulting from counterfeit or tainted products

infiltrating the supply chain.

In

addition, some of the products that we transport and sell are considered hazardous

materials.

The improper

handling of such materials or accidents involving the transportation

of such materials could subject us to liability or

at least legal action that could harm our reputation.

Customs policies or legislative import restrictions could hinder the Company’s ability to import goods necessary

to our operations on a timely basis and result in government enforcement

actions and/or sanctions.

Government-imposed import policies and legislation regulating the

import of goods and prohibiting the use of

forced labor or human trafficking could result in delays or the inability to import

goods in a timely manner that are

necessary to our operations, and such policies or legislation could also

result in financial penalties, other sanctions,

government enforcement actions and reputational harm.

While the Company has policies against and seeks to

avoid the import of goods that are manufactured in whole or in part by forced

labor or through human trafficking,

as a result of legislative and governmental policy initiatives, we may be

subject to increasing potential delays,

added costs, supply chain disruption and other restrictions.

GENERAL RISKS

Our business operations, results of operations, cash flows, financial condition

and liquidity may be negatively

impacted by the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread

public health

concerns and other natural or man-made disasters, such as terrorism, civil

unrest, fire, and extreme weather

.

Our business operations, results of operations, cash flows, financial condition

and liquidity may be negatively

impacted by the effects of disease outbreaks, epidemics, pandemics, similar wide-spread

public health concerns and

other natural or man-made disasters, such as terrorism, civil unrest, fire,

and extreme weather (“disasters”).

For

example, as a global healthcare solutions company, the COVID-19 pandemic and the governmental responses

to it

had, and may again have, a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

The impacts and potential impacts from

the COVID-19 pandemic included, and could include as a result of other disasters,

the following, among other

impacts:

significant volatility in supply, demand and selling prices for personal protective equipment (PPE), test

kits and related products;

reduction in peoples’ ability and willingness to be in public;

reduction in peoples’ ability and willingness to seek elective care;

interrupted operations of industries that use or manufacture the products

we distribute;

impact of adapted business practices;

significant changes in political conditions;

volatility in the financial market; and

unavailability or impairment of our manufacturing, distribution, or other

facilities, or firmwide systems

such as our information systems.

The impact from disasters may also exacerbate other risks discussed herein,

any of which could have a material

adverse effect on us.

Our global operations are subject to inherent risks that could materially

adversely affect our business.

Our global operations are subject to risks that could materially adversely affect our business.

The risks that our

global operations are subject to include, among other things:

difficulties and costs relating to staffing and managing foreign operations;

difficulties and delays inherent in sourcing products, establishing channels of distribution

and contract

manufacturing in foreign markets;

fluctuations in the value of foreign currencies;

uncertainties relating to trade agreements and international trade relationships;

longer payment cycles of foreign customers and difficulty of collecting receivables

in foreign

jurisdictions;

repatriation of cash from our foreign operations to the United States;

regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining

to the accuracy of our internal books and records;

litigation risks, new or unanticipated litigation developments and

the status of litigation matters;

unexpected difficulties in importing or exporting our products and import/export

tariffs, quotas,

sanctions or penalties;

limitations on our ability under local laws to protect our intellectual

property;

unexpected regulatory, legal, economic and political changes in foreign markets;

changes in tax regulations that influence purchases of capital equipment;

civil disturbances, geopolitical turmoil, including terrorism, war or political

or military coups; and

risks associated with climate change, including physical risks such as

impacts from extreme weather

events and other potential physical consequences, regulatory and technological

requirements, market

developments, stakeholder expectations and reputational risk.

Our future success is substantially dependent upon our senior

management, and our revenues and profitability

depend on our relationships with capable sales representatives,

service technicians, and other personnel who

interact directly with our customers, as well as customers, suppliers

and manufacturers of the products that we

distribute.

Our future success is substantially dependent upon the efforts and abilities of

members of our existing senior

management, particularly Stanley M. Bergman, Chairman and Chief Executive Officer.

In November 2022, Mr.

Bergman’s employment agreement was extended through December 31, 2025.

Although the Company has an

internal succession plan for its senior leadership team, including Mr. Bergman, the loss of the services of Mr.

Bergman could have a material adverse effect on our business.

We do not currently have “key man” life insurance

policies on any of our employees.

Competition for senior management is intense, burnout and turn-over rates

are

increasing workplace concerns, and we may not be successful in

attracting and retaining key personnel.

Additionally, our future revenues and profitability depend on our ability to maintain satisfactory relationships with

qualified sales representatives, service technicians, and other personnel

who interact directly with our customers, as

well as customers, suppliers, and manufacturers.

If we fail to maintain our existing relationships with such persons

or fail to acquire relationships with such key persons in the future,

our business may be materially adversely

affected.

Disruptions in the financial markets may materially adversely

affect the availability and cost of credit to us.

Our ability to make scheduled payments or refinance our obligations with

respect to indebtedness will depend on

our operating and financial performance, which in turn is subject to prevailing

economic conditions and financial,

business and other factors beyond our control.

Disruptions in the financial markets may materially adversely affect

the availability and cost of credit to us.