Risks and uncertainties

3 Months Ended

Mar. 31, 2020

Risks and Uncertainties [Abstract]

Risks and uncertainties

The full impact of the COVID-19 outbreak continues to evolve. As such, we are uncertain of the full impact the pandemic will have on our future financial condition, liquidity and results of operations. This uncertainty affected several of the assumptions made and estimates used in the preparation of our consolidated financial statements for the quarter ended March 31, 2020. As discussed in Note 7, the COVID-19 outbreak resulted in a goodwill impairment triggering event, as the adverse economic effects of the outbreak have materially decreased demand for the products and services we provide to small businesses, particularly through our Promotional Solutions and Cloud Solutions segments. The extent to which the outbreak will impact our business depends on future developments, including the severity and duration of the outbreak, business and workforce disruptions and the ultimate number of small businesses that fail. Our evaluation of asset impairment required us to make assumptions about these future events over the life of the assets being evaluated. This required significant judgment and actual results may differ significantly from our estimates. We may be required to record additional goodwill or other asset impairment charges in the future.

We held loans and notes receivable from our Safeguard distributors of $59,227 as of March 31, 2020. These distributors sell their products and services primarily to small businesses, which have been significantly impacted by the COVID-19 outbreak. As of March 31, 2020, our past due receivables and those on non-accrual status were not material, and we granted a loan forbearance to all of our distributors for the month of April 2020 and a forbearance on principal payments for the month of May 2020. We utilized all available information in determining the allowance for uncollectible accounts related to

these loans and notes receivable, as well as our trade accounts receivable and unbilled receivables. Based on our current knowledge and related assumptions, we did not record any additional allowances resulting from the COVID-19 outbreak. If our assumptions prove to be incorrect, we may be required to record additional bad debt expense in the future. Additionally, uncertainty surrounding the impact of the COVID-19 outbreak could affect estimates we made regarding inventory obsolescence and workers' compensation liabilities and thus, could result in additional expense in the future.