Automatic Data Processing

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 5 Aug 2026, and no later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Failure to comply with privacy, data protection, artificial intelligence and cyber security laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences

  Could happen

  In addition, laws and regulations covering marketing, advertising, and email, telephone and text messaging communications, including the Telephone Consumer Protection Act, are applicable to our business. Claims that we have violated such laws or regulations could expose us to costly litigation, and if successful, significant statutory damages or other liabilities that could adversely affect our reputation, business, financial condition or results of operations.

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• Failure to comply with, compliance with or changes in, laws and regulations applicable to our businesses could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences

  Could happen

  For our PEO to sponsor many of its employee benefit plan offerings, it must qualify as the employer of the WSEs under certain provisions of the Internal Revenue Code and ERISA. Additionally, our PEO’s status as an employer for purposes of ERISA is important because ERISA preempts certain state laws that could limit our PEO’s ability to offer certain benefit plan offerings as we do today. The definition of employer under the Internal Revenue Code and ERISA is not uniform and there is no definitive judicial or legislative interpretation of employer in the context of PEOs. Because many of our PEO employee benefit plan offerings are subject to ERISA, our PEO must administer and operate these plans in accordance with ERISA requirements. We believe that our PEO benefit plans satisfy all applicable ERISA requirements, but if it were determined that the PEO benefit plans fail to satisfy any such requirements, our PEO would likely be required to modify its current business model, and the PEO could be subject to material fines or penalties. Any such event could have an adverse impact on our financial results and liquidity.

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