−Removed: BUSINESS  
Overview  
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As a result of these trends, fiber-optic networking technology is becoming essential in all four of our target markets, as it is often the only economical way to deliver the desired bandwidth.
−Removed: The internet data center market is our largest and fastest growing market.
+Added: The internet data center market is our largest market.
Our customers in this market are generally large internet-based (“Web 2.0”) data center operators, to whom we supply optical transceivers that plug into switches and servers within the data center and allow these network devices to send and receive data over fiber-optic cables.
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Sales of headend, node and distribution equipment have contributed significantly to our revenue in recent years as a result of our ability to meet the needs of CATV equipment vendors who have continued to outsource both the design and manufacturing of this equipment.  As the complexity of CATV networks has increased over the years, equipment vendors, many of whom are our customers, have been under pressure to supply a wider variety of increasingly complex equipment to CATV multiple system operators ("MSOs").  In order to meet these demands, many equipment vendors have looked to engage with suppliers like AOI who have the capability to design and manufacture various network equipment or subassemblies, rather than always developing these devices themselves.  This outsourcing trend has been a significant contributor to the revenue we derive from the CATV market.  We believe that our extensive high-speed optical, mixed-signal semiconductor and mechanical engineering capabilities position us well to continue to benefit from these industry dynamics.
−Removed: Our vertically integrated manufacturing model provides us several advantages, including rapid product development, fast response times to customer requests and control over product quality and manufacturing costs.
−Removed: We design, manufacture and integrate our own analog and digital lasers using a combination of Metal Organic Chemical Vapor Deposition, or MOCVD, and our proprietary Molecular Beam Epitaxy, or MBE, fabrication process, which we believe is unique in our industry.
+Added: The telecom market is our fastest growing market. 
+Added: In this market we supply lasers and laser subassemblies as well as transceivers. 
+Added: Our customers in this segment consist mostly of network equipment manufacturers ("NEMs") and other manufacturers of optical transceivers. 
+Added: Our NEM customers manufacture equipment used in telecommunications networks and our transceiver manufacturer customers use our lasers and subassemblies in the manufacture of their optical transceivers. 
+Added: Most of our products in this segment are purchased for use in advanced 5G mobile network deployments.
+Added: Our vertically integrated manufacturing model provides us several advantages, including rapid product development, fast response times to customer requests and greater control over product quality and manufacturing costs.
+Added: We design, manufacture and integrate our own analog and digital lasers using proprietary Molecular Beam Epitaxy, or MBE, and Metal Organic Chemical Vapor Deposition (MOCVD) fabrication process, which we believe is unique in our industry.
We manufacture the majority of the laser chips and optical components that are used in our products.
−Removed: The lasers we manufacture are tested extensively to enable reliable operation over time and our devices are often highly tolerant of changes in temperature and humidity, making them well-suited to the CATV and FTTH markets where networking equipment is often installed outdoors.
−Removed: In 2019, 2018 and 2017, our revenue was $190.9 million, $267.5 million, and $382.3 million and our gross margin was 24.2%, 32.8%, and 43.5%.
−Removed: 2019 In the years ended December 31, 2019, 2018 and 2017, we had net income (loss) of $(66.0) million, $(2.1) million, and $74.0 million, respectively.
−Removed: At December 31, 2019 
−Removed: and 2018 , our retained earnings ( accumulated deficit ) were $(30.1) million and $36.0 million , respectively.
+Added: The lasers we manufacture are tested extensively to enable reliable operation over time and our devices are often highly tolerant of changes in temperature and humidity, making them well-suited to the CATV, FTTH and 5G markets where networking equipment is often installed outdoors.
+Added: In 2020, 2019 and 2018, our revenue was $234.6 million, $190.9 million, and $267.5 million and our gross margin was 21.5%, 24.2%, and 32.8%.
+Added: In the years ended December 31, 2020, 2019 and 2018, we had net loss of $58.5 million, $66.0 million, and $2.1 million, respectively.
+Added: At December 31, 2020 and 2019, our accumulated deficit were $88.6 million and $30.1 million, respectively.
In 2020, we earned 73.9% of our total revenue from the internet data center market and 16.2% of our total revenue from the CATV market.
−Removed: In 2019, our key customers in the data center market included Microsoft Corp (Microsoft), Amazon.com (Amazon) and Facebook, Inc.
−Removed: In 2019, 2018, and 2017, Microsoft accounted for 32.2%, 22.1%, and 13.8% of our revenue, Amazon accounted for 24.0%, 12.1%, and 35.4% of our revenue and Facebook accounted for 10.9%, 38.3%, and 28.6% of our revenue, respectively.
−Removed: In 2019, our key customers in the CATV market included Cisco Systems, Inc.
−Removed: (Cisco), CommScope (which in 2019 acquired Arris, who had previously acquired the Motorola Home Business in 2013 and Pace Plc in 2016) , and a US-based public company who provides CATV equipment .
−Removed: In 2019, 2018 and 2017, Cisco accounted for 10.0%, 9.9%, and 4.8% of our revenue, CommScope accounted for 3.7%, 2.1%, and 3.2% of our revenue, and the US-based public company who provides CATV equipment accounted for 1.6%, 0.8% and 0.8% of our revenue, respectively.
+Added: In 2020, our key customers in the data center market included Microsoft Corp, Amazon.com, a US based large datacenter operator, and 
+Added: a US based NEM.
+Added: In 2020, 2019, and 2018, Microsoft accounted for 38.3%, 32.2%, and 22.1% of our revenue, Amazon accounted for 11.5%, 24.0%, and 12.1% of our revenue, the US based large datacenter operator accounted for 8.0%, 0.4%, and 0.0%, and the US based NEM accounted for 7.9%, 1.6%, and 0.0%, respectively.
+Added: In 2020, our key customers in the CATV market included Cisco Systems, Inc., a global CATV NEM, and CommScope (which in 2019 acquired Arris, who had previously acquired the Motorola Home Business in 2013 and Pace Plc in 2016).
+Added: In 2020, 2019 and 2018, Cisco accounted for 7.5%, 10.0%, and 9.9% of our revenue, a global CATV NEM accounted for 3.7%, 0%, and 0% of our revenue, and CommScope accounted for 2.1%, 3.7%, and 2.1% of our revenue, respectively.
Industry Background  
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In recent years, CATV service providers have invested extensively to support high speed, two-way communications and we expect that they will continue to do so.
−Removed: In North America, in particular, CATV service providers have upgraded their networks with new technologies like DOCSIS 3.1, which enables them to offer higher speed connections to their customers.
+Added: In North America, CATV service providers have upgraded their networks with new technologies like DOCSIS 3.1, which enables them to offer higher speed connections to their customers.
In order to increase available bandwidth for their customers beyond the bandwidth possible with the introduction of DOCSIS 3.1, cable MSOs have been reducing the number of customers that are connected to a single node.
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Other new technologies, such as Converged Cable Access Platform ("CCAP") and Remote-PHY are under development by cable equipment suppliers.
−Removed: These technologies are being developed to be a cost-effective solution to provide higher available bandwidth to CATV customers.  AOI has developed a unique Remote-PHY product portfolio which started to generate revenue in 2018.  We believe this product is well positioned in the marketplace and we expect continued deployments in 2020.
+Added: These technologies are being developed to be a cost-effective solution to provide higher available bandwidth to CATV customers.
As the complexity of CATV networks has increased over the years, equipment vendors, many of whom are our customers, have been under pressure to supply a wider variety of increasingly complex equipment to CATV MSOs.  In order to meet these demands, many equipment vendors have looked to engage with suppliers like AOI, who have the capability to design and manufacture various network equipment or subassemblies, rather than always developing these devices themselves.  This outsourcing trend has been a significant contributor to the revenue we derive from the CATV market.
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As a result of these efforts, we anticipate releasing various new or enhanced products over the next several years.
−Removed: Our research and development expenses were approximately $43.4 million, $49.9 million, and $35.4 million for the years 2019, 2018 and 2017, respectively.
−Removed: As of December 31, 2019, we had a total of 306 employees working in the R&D department, including 16 with Ph.D.
+Added: 2020, 2019 and 2018
+Added: As of December 31, 2020, we had a total of 315 employees working in the R&D department, including 14 with Ph.D.
We continue to recruit talented engineers to further enhance our research and development capabilities.
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We generally employ a direct sales model in North America and in the rest of the world we use both direct and indirect sales channels.
−Removed: In 2019 , 
−Removed: 2018 and 2017 , we obtained 98.0%, 96.4%, and 97.0% of our revenue, respectively, through our direct sales efforts and the remainder of our revenue through our indirect sales channels.
−Removed: Our sales channel partners provide l ogistical services and day-to-day customer support.
+Added: In 2020, 2019 and 2018, we obtained 97.6%, 98.0%, and 96.4% of our revenue, respectively, through our direct sales efforts and the remainder of our revenue through our indirect sales channels.
+Added: Our sales channel partners provide logistical services and day-to-day customer support.
Where we sell through an indirect sales channel, we work with the end customer to establish technological specifications for our products.
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Furthermore, we have developed additional original design manufacturer, or ODM, relationships with customers in each of our target markets which should enable us to diversify our revenue base.
−Removed: In 2019, the three customers who contributed most to our data center revenue were Microsoft, Amazon, and Facebook.
−Removed: Our CATV products were used by three large CATV original equipment manufacturers, or OEMs, consisting of Cisco;
−Removed: CommScope (which in 2019 acquired Arris, who had previously acquired the Motorola Home Business in 2013 and Pace Plc in 2016);
−Removed: and a US-based public company who provides CATV equipment .
+Added: In 2020, the three customers who contributed most to our data center revenue were Microsoft, Amazon, and a US based large datacenter operator.
+Added: Our CATV products were used by three large CATV original equipment manufacturers, or OEMs, consisting of Cisco, a global CATV NEM, and CommScope (which in 2019 acquired Arris, who had previously acquired the Motorola Home Business in 2013 and Pace Plc in 2016).
In 2020, revenue from the internet data center market, CATV market, telecom market, FTTH market and other markets provided 73.9%, 16.2%, 9.0%, 0.01% and 0.9% of our revenue, respectively, compared to 75.2%, 19.6%, 4.4%, 0.1% and 0.7%, respectively, in 2019.
In our telecom market, we manufacture and sell optical products which include transceivers designed to transmit signals used in 5th Generation ("5G") mobile networks, and various products targeted at the metro-scale telecom networking market.
−Removed:  We have various other products designed for diverse applications, both inside and outside of communications technology, which generally are derivatives of products developed for our four target markets.
−Removed: We support our sales efforts by attendance at industry trade shows, technical conferences, advertising in various trade journals and magazines and other promotional efforts.
+Added:   We have various other products designed for diverse applications, both inside and outside of communications technology, which generally are derivatives of products developed for our four target markets.
+Added: We support our sales efforts by attendance at industry trade shows (virtually and in person), technical conferences and other promotional efforts.
These efforts are aimed at attracting new customers and enhancing our existing customer relationships.
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We do, however, experience intense competition in each product area from a number of manufacturers and we anticipate that competition will increase.
−Removed: Our major competitors in one or more of our markets include EMCORE Corporation, Finisar Corporation, Foxconn Interconnect Technology Ltd., InnoLight Technology (Suzhou) Ltd., Intel Corporation, Lumentum Holdings, Inc., Mitsubishi, Molex, LLC, Source Photonics, Inc.
+Added: Our major competitors in one or more of our markets include EMCORE Corporation, Finisar Corporation who was acquired by II-VI Incorporated, Foxconn Interconnect Technology Ltd., InnoLight Technology (Suzhou) Ltd., Intel Corporation, Lumentum Holdings, Inc., Mitsubishi, Molex, LLC, Source Photonics, Inc.
and Sumitomo Electric Industries, Ltd.
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regarding seasonality of certain of the Company’s products.
−Removed: Employees  
+Added: Human Capital
As of December 31, 2020, we employed 2,682 full-time employees, of which 42 held Ph.D.
degrees in a science or engineering field.
−Removed: Of our employees, 417 are located in the U.S., 920 are located in Taiwan and 1,778 are located in China.
−Removed: None of our employees are represented by any collective bargaining agreement, but certain employees of our China subsidiary are members of a trade union.
+Added: Of our employees, 476 are located in the U.S., 773 are located in Taiwan and 1,433 are located in China. 
+Added: As of December 31, 2020, none of our employees are represented by any collective bargaining agreement, but certain employees of our China subsidiary are members of a trade union.
We have never suffered any work stoppage as a result of an employment related strike or any employee related dispute and believe that we have satisfactory relations with our employees.
−Removed: Environmental Matters  
+Added: Employee Engagement, Development and Career Planning  
+Added: Our business results depend in part on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent.
+Added: Factors that may affect our ability to attract and retain qualified employees include employee morale, our reputation, competition from other employers, and availability of qualified individuals. 
+Added: We believe our commitment to our human capital resources is an important component of our mission to deliver superior products to our customers.
+Added: We provide all employees with the opportunity to share their opinions in open dialogues with our human resources department and senior management.
+Added: We conduct a confidential annual survey of select workforce members to measure engagement.
+Added: The results are discussed with senior leadership and managers.
+Added: We provide all employees a wide range of professional development experiences, both formal and informal.
+Added: We offer our highest level employees/executives/VPs leadership development programs as part of our talent and succession planning process.
+Added: Also, we have development programs for managers and supervisors and learning opportunities for all employees.
+Added: We provide access to learning platforms so employees can access resources to support their career aspirations and advance their skills.
+Added: Employee Engagement, Development and Career Planning  
+Added: Our business results depend in part on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent.
+Added: Factors that may affect our ability to attract and retain qualified employees include employee morale, our reputation, competition from other employers, and availability of qualified individuals. 
+Added: We believe our commitment to our human capital resources is an important component of our mission to deliver superior products to our customers.
+Added: We provide all employees with the opportunity to share their opinions in open dialogues with our human resources department and senior management.
+Added: We conduct a confidential annual survey of select workforce members to measure engagement.
+Added: The results are discussed with senior leadership and managers.
+Added: We provide all employees a wide range of professional development experiences, both formal and informal.
+Added: We offer our highest level employees/executives/VPs leadership development programs as part of our talent and succession planning process.
+Added: Also, we have development programs for managers and supervisors and learning opportunities for all employees.
+Added: We provide access to learning platforms so employees can access resources to support their career aspirations and advance their skills.
+Added: Employee Safety
+Added: The safety of our employees is a paramount value for us.
+Added: We provide mandatory safety trainings in our production facilities, which are designed to focus on empowering our employees with the knowledge and tools they need to make safe choices and to mitigate risks.
+Added: Supervisors complete safety management courses as well.
+Added: In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees and which comply with government orders in all the states and countries where we operate.
+Added: In an effort to keep our employees safe and to maintain operations during the COVID-19 pandemic, we have implemented a number of new health-related measures including, the requirement to wear company provided face-masks at all times while on company property, implemented temperature taking protocols, increased hygiene, cleaning and sanitizing procedures at all Company sites, 
+Added: implemented social-distancing, implemented restrictions on visitors to our facilities, limiting in-person meetings and other gatherings.
+Added: Compensation, Benefits and Wellness 
+Added: We offer fair, competitive compensation and benefits that support our employees’
+Added: overall wellness.
+Added: Further, the health and wellness of our employees are critical to our success.
+Added: We provide our employees with access to a variety of innovative, flexible and convenient health and wellness programs.
+Added: Such programs are designed to support employees' physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors.
+Added: We offer financial education and financial wellness tools and resources to help employees reach their personal financial goals.
+Added: Additionally, we provide robust compensation and benefits through internal and external benchmarking.
+Added: Governmental Regulations  
Our research and development and manufacturing operations and our products are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations, including those governing discharges of pollutants to air and water, the use, storage, handling and disposal of hazardous materials and solid wastes, employee health and safety, and the hazardous material content in our products.
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Other governmental regulations may require us to reengineer our products to use components that are more environmentally compatible, resulting in additional costs to us.
+Added: The Bureau of Industry and Security (BIS) of the U.S.
+Added: Department of Commerce is responsible for regulating the export of most commercial items that are classified as dual-use goods that may have both commercial and military applications.
+Added: Our products are classified under Export Control Classification Numbers, or ECCNs, 5A991 and 6A995.
+Added: Export Control Classification requirements are dependent upon an item’s technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user.
+Added: Should the ECCN change, then the export of our products to certain countries would be restricted.
+Added: However, we currently do not export our products to any countries on the restricted list, and therefore a change in the ECCN would not materially impact our business.
Sources of Raw Materials
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These rules have imposed and will continue to impose additional costs and may introduce new risks related to our ability to verify the origin of any "conflict minerals" used in our products.
−Removed: Export Regulations  
−Removed: The Bureau of Industry and Security (BIS) of the U.S.
−Removed: Department of Commerce is responsible for regulating the export of most commercial items that are classified as dual-use goods that may have both commercial and military applications.
−Removed: Our products are classified under Export Control Classification Numbers, or ECCNs, 5A991 and 6A995.
−Removed: Export Control Classification requirements are dependent upon an item’s technical characteristics, the destination, the end-use, and the end-user, and other activities of the end-user.
−Removed: Should the ECCN change, then the export of our products to certain countries would be restricted.
−Removed: However, we currently do not export our products to any countries on the restricted list, and therefore a change in the ECCN would not materially impact our business.
Corporate Information  
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In addition, the trading price of our common stock could decline due to the occurrence of any of these risks and you may lose all or part of your investment.
−Removed: Risks Inherent in Our Business  
+Added: Risks Related to the COVID-19 Pandemic 
+Added: Epidemic diseases, such as COVID-19, or the perception of their effects, could have a material adverse effect on our business, financial condition, results of operation, or cash flows.
+Added: Outbreaks of epidemic, pandemic, or contagious diseases, such as the recent COVID-19 or, historically, the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, or the H1N1 virus, could divert medical resources and priorities towards the treatment of that disease.
+Added: Business disruptions could include disruptions or restrictions on our ability to travel or to distribute our products, as well as temporary closures of our facilities or the facilities of our suppliers and their contract manufacturers.
+Added: Any disruption of our suppliers and their contract manufacturers or our customers would likely impact our sales and operating results.
+Added: In addition, a significant outbreak of epidemic, pandemic, or contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products.
+Added: Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows. 
+Added: For example, as a result of the extension of the Lunar New Year holidays due to the recent outbreak of COVID-19, certain of our product shipments from China have been delayed.
+Added: Although we are monitoring the situation on a daily basis, it is currently unknown whether the outbreak will continue to disrupt our product shipments or impact manufacturing in the region or other regions where we operate over a prolonged period.
+Added: If such disruption were to extend over a prolonged period, it could have a material impact on our revenues and our business.
+Added: Any disruption resulting from similar events on a larger scale or over a prolonged period could cause significant delays in shipments of our products until we are able to resume such shipments, or shift our manufacturing, assembly, or test from the affected contractor to another third-party vendor, if needed.
+Added: There can be no assurance that alternative capacity could be obtained on favorable terms, if at all.
+Added: The spread of the COVID-19 virus during 2020 caused an economic downturn on a global scale, as well as significant volatility in the financial markets.
+Added: In March 2020 the World Health Organization declared the spread of the COVID-19 virus a pandemic.
+Added: Our operations have been negatively impacted by the pandemic and are likely to continue to be impacted.
+Added: The extent and duration of this impact is uncertain and will depend on factors including the extent to which our customers' businesses are impacted by the pandemic.
+Added: In order to protect our employees and also minimize the risk of potential disruptions to our business that could occur should a virus outbreak occur in one of our facilities, we have established and implemented a work from home provision for our employees, where possible.
+Added: We have also modified our business practices (including employee travel, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.
+Added: However, even with these precautions, it is not possible to eliminate the risk of a widespread outbreak among our employees and if such an outbreak were to occur, it would likely have a negative impact on our business, results of operations, and our financial condition.
+Added: The impact of the COVID-19 pandemic continues to unfold.
+Added: The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time.
+Added: Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity.
+Added: Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.
+Added: Risks Related to Operating Our Business  
We are dependent on our key customers for a significant portion of our revenue and the loss of, or a significant reduction in orders from, any of our key customers would adversely impact our revenue and results of operations.
We generate much of our revenue from a limited number of customers.
−Removed: For each year ended 2019, 2018 and 2017, our top ten customers represented 88.1%, 92.9%, and 94.9% of our revenue, respectively.
−Removed: In 2019, Microsoft represented 32.2% of our revenue, Amazon represented 24.0% of our revenue, Facebook represented 10.9% of our revenue, and Cisco represented 10.0% of our revenue.
+Added: For each year ended 2020, 2019 and 2018, our top ten customers represented 84.3%, 88.1%, and 92.9% of our revenue, respectively.
+Added: In 2020, Microsoft represented 38.3% of our revenue, and Amazon represented 11.5% of our revenue.
As a result, the loss of, or a significant reduction in orders from any of our key customers would materially and adversely affect our revenue and results of operations.
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If we are unable to qualify and sell any of our new products in volume, on time, or at all, our results of operations may be adversely affected.
−Removed: We face intense competition which could negatively impact our results of operations and market share.
−Removed: The markets into which we sell our products are highly competitive.
−Removed: Our competitors range from large, international companies offering a wide range of products to smaller companies specializing in niche markets.
−Removed: Current and potential competitors may have substantially greater name recognition, financial, marketing, research and manufacturing resources than we do, and there can be no assurance that our current and future competitors will not be more successful than us in specific product lines or markets.
−Removed: Some of our competitors may also have better-established relationships with our current or potential customers.
−Removed: Some of our competitors have more resources to develop or acquire new products and technologies and create market awareness for their products and technologies.
−Removed: In addition, some of our competitors have the financial resources to offer competitive products at below-market pricing levels that could prevent us from competing effectively and result in a loss of sales or market share or cause us to lower prices for our products.
−Removed: In recent years, there has been consolidation in our industry and we expect such consolidation to continue.
−Removed: Consolidation involving our competitors could result in even more intense competition.
−Removed: Network equipment manufacturers, who are our customers, and network service providers may decide to manufacture the optical subsystems incorporated into their network systems in-house instead of outsourcing such products to companies such as us.
−Removed: We also encounter potential customers that, because of existing relationships with our competitors, are committed to the products offered by our competitors.
We must continually develop successful new products and enhance existing products, and if we fail to do so or if our release of new or enhanced products is delayed, our business may be harmed.
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We also may not be able to develop the underlying core technologies necessary to create new products and enhancements, license these technologies from third parties, or remain competitive in our markets.
+Added:     
Our revenues, growth rates and operating results are likely to fluctuate significantly as a result of factors that are outside our control, which could adversely impact our operating results.
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Our expense levels in the future will be based, in large part, on our expectations regarding future revenue sources and, as a result, operating results for any quarterly period in which anticipated material orders fail to occur, or are delayed or deferred, could be significantly harmed.
−Removed: Continued tension in U.S.-China trade relations may adversely impact our business and operating results.
−Removed: government has made statements and amended its U.S.
−Removed: trade policies, resulting in tariffs that affect imported products manufactured in China, by our Chinese subsidiary.
−Removed: In addition, the Chinese government has imposed reciprocal tariffs that affect products manufactured by our U.S.
−Removed: The additional tariffs have increased our cost of goods sold, however we believe that the negative impact of these tariffs has not been material to our financial results.
−Removed: Although we cannot predict the impact of any future tariffs, we intend to continue to adjust our manufacturing processes, supplier lists, and manufacturing locations in order to minimize the impact of any tariffs on both AOI and our customers.
−Removed: It is unknown whether and to what extent additional new tariffs (or other new laws or regulations) will be adopted that increase the cost of importing and/or exporting products to or from the United States, or from China to the United States.
−Removed: Furthermore, it is unknown what effect that any such new tariffs or retaliatory actions would have on us or our industry and customers.
−Removed: As additional new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or if China or other affected countries take retaliatory trade actions, such changes could have a material adverse effect on our business, financial condition, results of operations or cash flows.
−Removed: We are subject to the cyclical nature of the markets in which we compete and any future downturn will likely reduce demand for our products and revenue.
−Removed: In each of our target markets, including the CATV market, our sales depend on the aggregate capital expenditures of service providers as they build out and upgrade their network infrastructure.
−Removed: These markets are highly cyclical and characterized by constant and rapid technological change, price erosion, evolving standards and wide fluctuations in product supply and demand.
−Removed: In the past, these markets have experienced significant downturns, often connected with, or in anticipation of, the maturation of product cycles.
−Removed: These downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.
−Removed: Our historical results of operations have been subject to these cyclical fluctuations, and we may experience substantial period to period fluctuations in our future results of operations.
−Removed: Any future downturn in any of the markets in which we compete could significantly reduce the demand for our products and therefore may result in a significant reduction in our revenue.
−Removed: Our revenue and results of operations may be materially and adversely affected in the future due to changes in demand from individual customers or cyclical changes in any of the markets utilizing our products.
−Removed: We may not be able to accurately predict these cyclical fluctuations and the impact that these fluctuations may have on our revenue and operating results.
If we encounter manufacturing problems, we may lose sales and damage our customer relationships.
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Changes in manufacturing processes required as a result of changes in product specifications, changing customer needs and the introduction of new product lines may significantly reduce our manufacturing yields, resulting in low or negative margins on those products.
−Removed: In addition, we use our Molecular Beam Epitaxy, or MBE, fabrication process to make our lasers, in addition to Metal Organic Chemical Vapor Deposition, or MOCVD, the technique most commonly used in optical manufacturing by communications optics vendors, and our MBE fabrication process relies on custom-manufactured equipment.
+Added: In addition, we use our MBE, fabrication process to make our lasers, in addition to MOCVD, the technique most commonly used in optical manufacturing by communications optics vendors, and our MBE fabrication process relies on custom-manufactured equipment.
If our MBE or MOCVD fabrication facility in Sugar Land, Texas were to be damaged or destroyed for any reason, our manufacturing process would be severely disrupted.
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For example, shipments of certain of our 100 Gbps transceiver products to one of our customers decreased during the three months ended September 30, 2018 due to customer concerns about failures of similar products shipped previously.
−Removed: Although we conducted extensive testing of our products to demonstrate that any potentially affected units could be nearly eliminated from future shipments, and we subsequently resumed shipments with the customer’s agreement,we did incur additional testing costs and costs to enhance the ongoing monitoring of product quality which adversely affected the results of our operations. 
−Removed: It is unclear the extent to which our reputation with this customer, or other customers, may have been affected.
+Added: Although we conducted extensive testing of our products to demonstrate that any potentially affected units could be nearly eliminated from future shipments, and we subsequently resumed shipments with the customer’s agreement, we did incur additional testing costs and costs to enhance the ongoing monitoring of product quality which adversely affected the results of our operations. It is unclear the extent to which our reputation with this customer, or other customers, may have been affected.
Manufacturing problems and any such delays would negatively affect our sales and revenue and could negatively affect our competitive position and reputation.
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As a result, we continue to expect to have a significant amount of working capital invested in inventory.
−Removed: We may be required to write down inventory costs in the future and our high inventory costs may have an adverse effect on our gross profits and our results of operations. 
+Added: We may be required to write down inventory costs in the future and our high inventory costs may have an adverse effect on our gross profits and our results of operations.
Increasing costs and shifts in product mix may adversely impact our gross margins.
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The rate of increase in our costs and expenses may exceed the rate of increase in our revenue, either of which would materially and adversely affect our business, our results of operations and our financial condition.
−Removed: If the CATV market does not continue to develop as we expect, or if there is any downturn in this market, our business would be adversely affected.
−Removed: Historically, we have generated much of our revenue from the CATV market.
−Removed: In 2019, 2018 and 2017, the CATV market represented 19.6%, 19.3%, and 15.9% of our revenue, respectively.
−Removed: In the CATV market, we are relying on expected increasing demand for bandwidth-intensive services and applications such as on-demand television programs, high-definition television channels, or HDTV, social media, peer-to-peer file sharing and online video creation and viewing from network service providers.
−Removed: Without network and bandwidth growth, the need for our products will not increase and may decline, adversely affecting our financial condition and results of operations.
−Removed: Although demand for broadband access is increasing, network and bandwidth growth may be limited by several factors, including an uncertain regulatory environment, high infrastructure costs to purchase and install equipment and uncertainty as to which competing content delivery solution, such as telecom, wireless or satellite, will gain the most widespread acceptance.
−Removed: If the trend of outsourcing for the design and manufacture of CATV equipment does not continue, or continues at a slower pace than currently expected, our customers’
−Removed: demand for our design and manufacturing services may not grow as quickly as expected.
−Removed: If expectations for the growth of the CATV market are not realized, our financial condition and results of operations will be adversely affected.
−Removed: In addition, if the CATV market is adversely impacted, whether due to competitive pressure from telecom service providers, regulatory changes, or otherwise, our business would be adversely affected.
−Removed: We may not be able to offset any potential decline in revenue from the CATV market with revenue from new customers in other markets.
−Removed: We have limited operating history in the telecom and FTTH markets, and our business could be harmed if these markets do not develop as we expect.
−Removed: For 2019 and 2018, respectively, we generated 4.4% and 4.9% of our revenue from the telecom market and 0.1% and 0.3% of our revenue from the FTTH market.
−Removed: In the telecom market, we generally have sold products that were originally designed for other markets (such as internet data center or FTTH) or are variations of such products.
−Removed: As we gain experience in this market, we have begun to develop products specifically designed for telecom customers.
−Removed: Given our limited experience in this market, the products that we develop may prove to be unsuitable for customer use, or we may be unable to derive profit margins from this market that are similar to what we derive from our other markets.
−Removed: The products that we offer in the FTTH market are relatively new and have not yet gained widespread customer acceptance.
−Removed: For example, our WDM-PON products designed for the FTTH market, have not, and may never, gain widespread acceptance by large internet service providers.
−Removed: Our business in this market is dependent on the deployment of our optical components, modules and subassemblies.
−Removed: We are relying on increasing demand for bandwidth-intensive services and telecom service providers’
−Removed: acceptance and deployment of WDM-PON as a technology supporting 1 Gbps service to the home.
−Removed: Without network and bandwidth growth and adoption of our solutions by operators in these markets, we will not be able to sell our products in these markets in high volume or at our targeted margins, which would adversely affect our financial condition and results of operations.
−Removed: For example, WDM-PON technology may not be adopted by equipment and service providers in the FTTH market as rapidly as we expect or in the volumes we need to achieve acceptable margins.
−Removed: Network and bandwidth growth may be limited by several factors, including an uncertain regulatory environment, high infrastructure costs to purchase and install equipment and uncertainty as to which competing content delivery solution, such as CATV, will gain the most widespread acceptance.
−Removed: In addition, as we enter new markets or expand our product offerings in existing markets, our margins may be adversely affected due to competition in those markets and commoditization of competing products.
−Removed: If our expectations for the growth of these markets are not realized, our financial condition and results of operations will be adversely affected.
Our financial results may vary significantly from quarter-to-quarter due to a number of factors, which may lead to volatility in our stock price.
6 unchanged sentences
‑ 
−Removed: new product introductions and enhancements by us or our competitors;
−Removed: ‑ 
the gain or loss of key customers;
‑ 
−Removed: the rate at which our present and potential customers and end users adopt our technologies;
−Removed: ‑ 
changes in our pricing and sales policies or the pricing and sales policies of our competitors;
16 unchanged sentences
‑ 
−Removed: fluctuations in foreign currency exchange rates;
−Removed: ‑ 
−Removed: changes in accounting rules;
−Removed: ‑ 
changes in or limitations imposed by trade protection laws or other regulatory orders or requirements in the United States or in other countries, including tariffs, sanctions, or other costs, restrictions, or requirements which may affect our ability to import or export our products to or from various countries;
trade-related government actions that impose barriers or restrictions that would impact our ability to sell or ship products to Huawei or other customers.
−Removed: ‑ 
−Removed: the evolving and unpredictable nature of the markets for products incorporating our solutions;
−Removed: ‑ 
−Removed: general economic conditions and changes in such conditions specific to our target markets.
The foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly and annual operating results.
−Removed: In addition, a significant amount of our operating expenses is relatively fixed in nature due to our internal manufacturing, research and development, sales and general administrative efforts.
+Added: In addition, a significant amount of our operating expenses are relatively fixed in nature due to our internal manufacturing, research and development, sales and general administrative efforts.
Any failure to adjust spending quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations.
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There can be no assurance that we will be able to successfully address these risks.  
−Removed: Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our indebtedness.
−Removed: As of December 31, 2019, we had approximate ly $133.3 million of consolidated indebtedness.
−Removed: We may also incur additional indebtedness to meet future financing needs.
−Removed: Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:
−Removed: increasing our vulnerability to adverse economic and industry conditions;
−Removed: limiting our ability to obtain additional financing;
−Removed: requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;
−Removed: limiting our flexibility to plan for, or react to, changes in our business;
−Removed: diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Notes;
−Removed: placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
−Removed: Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the Notes, and our cash needs may increase in the future.
−Removed: In addition, our existing Credit Facility with Branch Banking and Trust, contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.
−Removed: If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
We depend on key personnel to develop and maintain our technology and manage our business in a rapidly changing market.
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Our ability to develop, manufacture and sell our products, and thus our financial condition and results of operations, would be adversely affected if we are unable to retain existing personnel or hire additional qualified personnel.
−Removed: Epidemic diseases, or the perception of their effects, could have a material adverse effect on our business, financial condition, results of operation, or cash flows.
−Removed: Outbreaks of epidemic, pandemic, or contagious diseases, such as the recent novel coronavirus or, historically, the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, or the H1N1 virus, could divert medical resources and priorities towards the treatment of that disease.
−Removed: Business disruptions could include disruptions or restrictions on our ability to travel or to distribute our products, as well as temporary closures of our facilities or the facilities of our suppliers and their contract manufacturers.
−Removed: Any disruption of our suppliers and their contract manufacturers or our customers would likely impact our sales and operating results.
−Removed: In addition, a significant outbreak of epidemic, pandemic, or contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products.
−Removed: Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows. 
−Removed: For example, as a result of the extension of the Lunar New Year holidays due to the recent outbreak of novel coronavirus originating in Wuhan, China, certain of our product shipments from China have been delayed.
−Removed: Although we are monitoring the situation on a daily basis, it is currently unknown whether the outbreak will continue to disrupt our product shipments or impact manufacturing in the region over a prolonged period.
−Removed: If such disruption were to extend over a prolonged period, it could have a material impact on our revenues and our business.
−Removed: Any disruption resulting from similar events on a larger scale or over a prolonged period could cause significant delays in shipments of our products until we are able to resume such shipments, or shift our manufacturing, assembly, or test from the affected contractor to another third-party vendor, if needed.
−Removed: There can be no assurance that alternative capacity could be obtained on favorable terms, if at all.
We depend on a limited number of suppliers and any supply interruption could have an adverse effect on our business.
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Our reliance on a limited number of suppliers or a single qualified vendor may result in delivery and quality problems, and reduced control over product pricing, reliability and performance.
−Removed: We depend upon outside contract manufacturers for a portion of the manufacturing process for some of our products.
−Removed: Almost all of our products are manufactured internally.
−Removed: However we also rely upon manufacturers in China, Taiwan and other Asia locations to provide back-end manufacturing and produce the finished portion of a few of our products.
−Removed: Our reliance on a contract manufacturer for these products makes us vulnerable to possible capacity constraints and reduced control over delivery schedules, manufacturing yields, manufacturing quality/controls and costs.
−Removed: If one or more of our contract manufacturers is unable to meet our customer demand in a timely fashion, this could have a material adverse effect on the revenue from our products.
−Removed: If one or more contract manufacturers for one of our products was unable or unwilling to manufacture such product in required volumes and at high quality levels or to continue our existing supply arrangement, we would have to identify, qualify and select an acceptable alternative contract manufacturer or move these manufacturing operations to our internal manufacturing facilities.
−Removed: An alternative contract manufacturer may not be available to us when needed or may not be in a position to satisfy our quality or production requirements on commercially reasonable terms, including price.
−Removed: Any significant interruption in manufacturing our products would require us to reduce our supply of products to our customers, which in turn, would reduce our revenue, harm our relationships with the customer of these products and cause us to forego potential revenue opportunities.
Our products could contain defects that may cause us to incur significant costs or result in a loss of customers.
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Although we carry product liability insurance, this insurance may not adequately cover our costs arising from defects in our products or otherwise.
+Added: Our ability to use our net operating losses and certain other tax attributes may be limited.
+Added: December 31, 2020,
+Added: accumulated net operating losses, or NOLs, of approximately $87.0 million, federal and state research and development credits (“R&D credits”) of $9.0 million, interest expense of $1.8 million and foreign tax credits of $4.6 million for U.S.
+Added: federal income tax purposes.
+Added: Our ability to use our net operating losses, or NOLs, to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
+Added: We may be limited in the portion of NOL carryforwards that we can use in the future to offset taxable income for U.S.
+Added: federal and state income tax purposes, and federal tax credits to offset federal tax liabilities.
+Added: Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, limit the use of NOLs and tax credits after a cumulative change in corporate ownership of more than 50% occurs within a three-year period.
+Added: The statutes place a formula limit on how much NOLs and tax credits a corporation can use in a tax year after a change in ownership.
+Added: Avoiding an ownership change is generally beyond our control.
+Added: Although the ownership changes we experienced in the past and in the year ended
+Added: December 31, 2020
+Added: would not have prevented us from using all NOLs and tax credits accumulated before such ownership changes, assuming we were otherwise able to do so, we could experience another ownership change that might limit our use of NOLs and tax credits in the future.
+Added: Under the Tax Cuts and Jobs Act of 2017, or Tax Act, NOLs from tax years that began after December 31, 2017 do not expire, but NOLs from tax years that began before January 1, 2018 expire after 20 years.
+Added: Further, under the Tax Act, although the treatment of tax losses generated in taxable years ending before December 31, 2017 has generally not changed, tax losses generated in taxable years beginning after December 31, 2017 may offset no more than 80% of taxable income annually.
+Added: Accordingly, if we generate NOLs after the tax year ended December 31, 2017, we might have to pay more federal income taxes in a subsequent year as a result of the 80% taxable income limitation than we would have had to pay under the law in effect before the Tax Act. 
+Added: Also, any foreign NOLs (for example NOLs in our China and Taiwan jurisdictions) are subject to different NOL expirations, generally shorter than in the US.
+Added: Future acquisitions may adversely affect our financial condition and results of operations.
+Added: As part of our business strategy, we may pursue acquisitions of companies that we believe could enhance or complement our current product portfolio, augment our technology roadmap or diversify our revenue base.
+Added: Acquisitions involve numerous risks, any of which could harm our business, including:
+Added: difficulties integrating the acquired business;
+Added: unanticipated costs, capital expenditures or liabilities or changes related to research in progress and product development;
+Added: diversion of financial and management resources from our existing business;
+Added: difficulties integrating the business relationships with suppliers and customers of the acquired business with our existing business relationships;
+Added: risks associated with entering markets in which we have little or no prior experience;
+Added: potential loss of key employees, particularly those of the acquired organizations.
+Added: Acquisitions may also result in the recording of goodwill and other intangible assets subject to potential impairment in the future, adversely affecting our operating results.
+Added: We may not achieve the anticipated benefits of an acquisition if we fail to evaluate it properly, and we may incur costs in excess of what we anticipate.
+Added: A failure to evaluate and execute an acquisition appropriately or otherwise adequately address these risks may adversely affect our financial condition and results of operations.
+Added: Our future results of operations may be subject to volatility as a result of exposure to fluctuations in currency exchange rates.
+Added: We have significant foreign currency exposure and are affected by fluctuations among the U.S.
+Added: dollar, the Chinese Renminbi, or RMB, and the New Taiwan dollar, or NT dollar, because a substantial portion of our business is conducted in China and Taiwan.
+Added: Our sales, raw materials, components and capital expenditures are denominated in U.S.
+Added: dollars, RMB and NT dollars in varying amounts.
+Added: Foreign currency fluctuations may adversely affect our revenue and our costs and expenses, and hence our results of operations.
+Added: The value of the NT dollar or the RMB against the U.S.
+Added: dollar and other currencies may fluctuate and be affected by, among other things, changes in political and economic conditions.
+Added: The RMB currency is no longer being pegged solely to the value of the U.S.
+Added: In the long term, the RMB may appreciate or depreciate significantly in value against the U.S.
+Added: dollar, depending upon the fluctuation of the basket of currencies against which it is currently valued, or it may be permitted to enter into a full float, which may also result in a significant appreciation or depreciation of the RMB against the U.S.
+Added: In addition, our currency exchange variations may be magnified by Chinese exchange control regulations that restrict our ability to convert RMB into foreign currency.
+Added: To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.
+Added: While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure.
+Added: Natural disasters or other catastrophic events could harm our operations.
+Added: Our operations in the U.S., China and Taiwan could be subject to significant risk of natural disasters, including earthquakes, hurricanes, typhoons, flooding and tornadoes, as well as other catastrophic events, such as epidemics, terrorist attacks or wars.
+Added: For example, our corporate headquarters and wafer fabrication facility in Sugar Land, Texas is located near the Gulf of Mexico, an area that is susceptible to hurricanes.
+Added: We use a proprietary MBE laser manufacturing process that requires customized equipment, and this process is currently conducted and located solely at our wafer fabrication facility in Sugar Land, Texas, such that a natural disaster, terrorist attack or other catastrophic event that affects that facility would materially harm our operations.
+Added: In addition, our manufacturing facility in Taipei, Taiwan, is susceptible to typhoons and earthquakes, and our manufacturing facility in Ningbo, China, has from time to time, suffered electrical outages.
+Added: Any disruption in our manufacturing facilities arising from these and other natural disasters or other catastrophic events could cause significant delays in the production or shipment of our products until we are able to shift production to different facilities or arrange for third parties to manufacture our products.
+Added: We may not be able to obtain alternate capacity on favorable terms or at all.
+Added: Our property insurance coverage with respect to natural disaster is limited and is subject to deductible and coverage limits.
+Added: Such coverage may not be adequate or continue to be available at commercially reasonable rates and terms.
+Added: The occurrence of any of these circumstances may adversely affect our financial condition and results of operation.
+Added: Legal and Regulatory Risks
+Added: We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.
+Added: We are subject to export and import control laws, trade regulations and other trade requirements that limit which products we sell and where and to whom we sell our products.
+Added: Specifically, the Bureau of Industry and Security of the U.S.
+Added: Department of Commerce is responsible for regulating the export of most commercial items that are so called dual-use goods that may have both commercial and military applications.
+Added: Our products are classified under Export Control Classification Numbers, or ECCNs, 5A991 and 6A995.
+Added: Export Control Classification requirements are dependent upon an item’s technical characteristics, the destination, the end-use, the end-user, and other activities of the end-user.
+Added: Should the regulations applicable to our products change, or the restrictions applicable to countries to which we ship our products change, then the export of our products to such countries could be restricted.
+Added: As a result, our ability to export or sell our products to certain countries could be restricted, which could adversely affect our business, financial condition and results of operations.
+Added: Changes in our products or any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in delayed or decreased sales of our products to existing or potential customers.
+Added: In such event, our business and results of operations could be adversely affected.
+Added: Our business could be negatively impacted as a result of shareholder activism.
+Added: In recent years, shareholder activists have become involved in numerous public companies.
+Added: Shareholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of the Company.
+Added: We may in the future become subject to such shareholder activity and demands.
+Added: Such demands may disrupt our business and divert the attention of our management and employees, and any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business.
+Added: In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
+Added: The unfavorable outcome of any pending or future litigation or administrative action and expenses incurred in connection with litigation could result in financial losses or harm to our business.
+Added: We have been, and in the future may be, subject to legal actions in the ordinary course of our operations, both domestically and internationally.
+Added: There can be no assurances as to the favorable outcome of any litigation.
+Added: In addition it can be costly to defend litigation and these costs could negatively impact our financial results.
+Added: As disclosed in “Item 3.
+Added: Legal Proceedings,”
+Added: on August 5, 2017, we and certain of our officers are currently subject to class action litigation related to allegations that we made materially false and misleading statements or failed to disclose material facts.
+Added: Such litigation includes requests for damages and other relief.
+Added: As further described in that section, subsequent derivative actions and securities class actions have since been filed. 
+Added: This litigation and any other such litigation could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
+Added: Risks Related to Our Indebtedness and Future Financing 
+Added: Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our indebtedness.
+Added: December 31, 2020, we had approximately $145.9 million of consolidated indebtedness.
+Added: We may also incur additional indebtedness to meet future financing needs.
+Added: Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:
+Added: increasing our vulnerability to adverse economic and industry conditions;
+Added: limiting our ability to obtain additional financing;
+Added: requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;
+Added: limiting our flexibility to plan for, or react to, changes in our business;
+Added: diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Notes;
+Added: placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
+Added: Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the Notes, and our cash needs may increase in the future.
+Added: In addition, our existing Credit Facility with Truist Bank, contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.
+Added: If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
+Added: Our Paycheck Protection Program loan may not be forgiven and could subject us to enhanced scrutiny.
+Added: On April 17, 2020, we were granted a loan of $6.2 million under the Paycheck Protection Program ("PPP"), which is a component of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.
+Added: This program was implemented hastily in response to the unprecedented economic downturn related to the COVID-19, and provides for loans of up to $10 million for eligible small businesses (defined generally as businesses with less than 500 U.S.
+Added: resident employees).
+Added: Due to the speed of implementation of this program, official guidance and interpretations of the requirements of the program have been limited and have changed over time.
+Added: On April 29, 2020, the U.S.
+Added: Department of the Treasury updated its "Frequently Asked Questions" (FAQ) document regarding the PPP program to indicate its intention to review all loans obtained under the program that exceed $2 million.
+Added: We have diligently considered all known guidance and determined that we meet all the requirements for the program; however, we cannot predict with certainty how such a review might be conducted or what new information or interpretations might emerge prior to the completion of the review.
+Added: As such, we cannot be certain whether our loan may be forgiven, even if we meet the currently understood requirements for forgiveness.
+Added: The review could also subject us to additional scrutiny which could adversely affect our financial condition and results of operations.
Our loan agreements contain restrictive covenants that may adversely affect our ability to conduct our business.
−Removed: We have lending arrangements with several financial institutions, including loan agreements with Branch Banking and Trust (BB&T) Bank in the U.S., credit facilities with Taishin International Bank and Far Eastern International Bank, Co., and equipment finance agreements with Chailease Finance Co., Ltd.
+Added: We have lending arrangements with several financial institutions, including loan agreements with Truist Bank in the U.S., credit facilities with Taishin International Bank and equipment finance agreements with Chailease Finance Co., Ltd.
in Taiwan and credit facilities with China Merchants Bank Co.
8 unchanged sentences
Any failure by us or our subsidiaries to comply with these agreements could harm our business, financial condition and operating results.
−Removed: In addition, our obligations under our loan agreements with BB&T are secured by our accounts receivable, inventory, intellectual property, and all business assets including real estate and equipment.
+Added: In addition, our obligations under our loan agreements with Truist Bank are secured by our accounts receivable, inventory, intellectual property, and all business assets including real estate and equipment.
Our credit facilities with Shanghai Pudong Development Bank Co., Ltd.
16 unchanged sentences
Additional financing may not, however, be available on terms favorable to us, or at all, if and when needed, and our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our infrastructure or respond to competitive pressures could be significantly limited.
−Removed: If we cannot raise required capital when needed, including under our Registration Statement filed with the SEC in October 2020, we may be unable to meet the demands of existing and prospective customers, adversely affecting our sales and market opportunities and consequently our business, financial condition and results of operations.
+Added: If we cannot raise required capital when needed, including under our Registration Statement filed with the SEC in October 2019, effective January 2020, we may be unable to meet the demands of existing and prospective customers, adversely affecting our sales and market opportunities and consequently our business, financial condition and results of operations.
+Added: Risks Related to Data Breaches and Network Infrastructures
Data breaches and cyberattacks could compromise our operations, our customers’
20 unchanged sentences
These incidents could also subject us to liability, expose us to significant expense and cause significant harm to our reputation and business.
+Added: We may be subject to disruptions or failures in information technology systems and network infrastructures that could have a material adverse effect on our business and financial condition.
+Added: We rely on the efficient and uninterrupted operation of complex information technology systems and network infrastructures to operate our business.
+Added: A disruption, infiltration or failure of our information technology systems as a result of software or hardware malfunctions, system implementations or upgrades, computer viruses, third-party security breaches, employee error, theft or misuse, malfeasance, power disruptions, natural disasters or accidents could cause a breach of data security, loss of intellectual property and critical data and the release and misappropriation of sensitive competitive information and partner, customer, and employee personal data.
+Added: Any of these events could harm our competitive position, result in a loss of customer confidence, cause us to incur significant costs to remedy any damages and ultimately materially adversely affect our business and financial condition.
+Added: Risks Related to International Trade and Operations
Changes in U.S.
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Since the beginning of 2018, there has been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S.
−Removed: and foreign leaders regarding the possibility of instituting tariffs on the foreign imports of certain materials.
−Removed: Four rounds of U.S.
−Removed: tariffs on imports from China (respectively the "U.S.
−Removed: Tariffs on China Imports") went into effect on July 2018, August 2018, and September 2019.
−Removed: A limited number of our products that have are of Chinese country of origin are currently subject to the U.S.
+Added: and foreign leaders regarding the possibility of instituting tariffs on the foreign imports of certain materials. Five rounds of U.S.
+Added: tariffs on imports from China (respectively the “U.S.
+Added: Tariffs on China Imports”) went into effect on July 2018, August 2018, September 2018, September 2019, and February 2020.
+Added: A limited number of our products that are of Chinese origin are currently subject to the U.S.
Tariffs on China Imports.
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We currently derive, and expect to continue to derive, a significant portion of our revenue from sales to international customers.
−Removed: In 2019, 2018 and 2017, 18.8%, 23.1%, and 22.7% of our revenue was derived from sales that occurred outside of North America, respectively.
+Added: In 2020, 2019 and 2018, 25.4%, 18.8%, and 23.1% of our revenue was derived from sales that occurred outside of North America, respectively.
In addition, a significant portion of our manufacturing operations is based in Ningbo, China and Taipei, Taiwan.
24 unchanged sentences
Factors affecting military, political or economic conditions in China and Taiwan could have a material adverse effect on our financial condition and results of operations, as well as the market price and the liquidity of our common shares.
−Removed: In some instances, we rely on third parties to assist in selling our products, and the failure of those parties to perform as expected could reduce our future revenue.
−Removed: Although we primarily sell our products through direct sales, we also sell our products to some of our customers through third party sales representatives and distributors.
−Removed: Many of such third parties also market and sell products from our competitors.
−Removed: Our third party sales representatives and distributors may terminate their relationships with us at any time, or with short notice.
−Removed: Our future performance will also depend, in part, on our ability to attract additional third party sales representatives and distributors that will be able to market and support our products effectively, especially in markets in which we have not previously distributed our products.
−Removed: If our current third party sales representatives and distributors fail to perform as expected, our revenue and results of operations could be harmed.
−Removed: Changes in our effective tax rate may adversely affect our results of operation and our business.
−Removed: We are subject to income taxes in the U.S.
−Removed: and other foreign jurisdictions, including China and Taiwan.
−Removed: In addition, we are subject to various state taxes in states where we have nexus.
−Removed: We base our tax position on the anticipated nature and conduct of our business and our understanding of the tax laws of the countries and states in which we have assets or conduct activities.
−Removed: Our tax position may be reviewed or challenged by tax authorities.
−Removed: Moreover, the tax laws currently in effect may change, and such changes may have retroactive effect, such as the U.S.
−Removed: tax reform legislation commonly referred to as the U.S.
−Removed: Tax Cuts and Jobs Act of 2017 (the “Tax Act”).
−Removed: We have inter-company arrangements in place providing for administrative and financing services and transfer pricing, which involve a significant degree of judgment and are often subject to close review by tax authorities.
−Removed: The tax authorities may challenge our positions related to these agreements.
−Removed: If the tax authorities successfully challenge our positions, our effective tax rate may increase, adversely affecting our results of operation and our business.
−Removed: The Tax Act made broad and complex changes to the U.S.
−Removed: tax code, including, but not limited to, (1) reducing the U.S.
−Removed: federal corporate tax rate from 35 percent to 21 percent;
−Removed: (2) requiring companies to pay a one-time transition tax (“Transition Tax”) on certain unrepatriated earnings of foreign subsidiaries;
−Removed: (3) generally eliminating U.S.
−Removed: federal income taxes on dividends from foreign subsidiaries;
−Removed: (4) a new provision designed to tax global intangible low-taxed income (“GILTI”);
−Removed: (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized;
−Removed: (6) creating the base erosion anti-abuse tax (“BEAT”), a new minimum tax;
−Removed: (7) creating a new limitation on deductible interest expense;
−Removed: and (8) a limitation of the deduction for net operating losses generated after December 31, 2017 to 80% of current year taxable income and the elimination of net operating loss carrybacks.
−Removed: As a result, the Tax Act significantly changed how the U.S.
−Removed: taxes corporations.
−Removed: The Tax Act requires complex computations to be performed that were not previously required in U.S.
−Removed: tax law, significant judgments to be made in interpretation of the provisions of the Tax Act and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced.
−Removed: Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered that is different from our interpretation.
−Removed: As we interpret any additional guidance, we may make adjustments to amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made.
−Removed: Failure to manage our growth effectively may adversely affect our financial condition and results of operations.
−Removed: Successful implementation of our business plan in our target markets requires effective planning and management.
−Removed: Production volumes for some of our products are increasing and we have announced plans to increase our production capacity in response to demand for certain of our current and future products, including adding personnel in some of our locations as well as expanding our physical manufacturing facilities.
−Removed: We currently operate facilities in Sugar Land, Texas, Ningbo, China, Taipei, Taiwan, and Duluth, Georgia.
−Removed: We currently manufacture our lasers using a proprietary process and customized equipment located only in our Sugar Land, Texas facility, and it will be costly to duplicate that facility, to scale our laser manufacturing capacity or to mitigate the risks associated with operating a single facility.
−Removed: The challenges of managing our geographically dispersed operations have increased and will continue to increase the demand on our management systems and resources.
−Removed: Moreover, we are continuing to improve our financial and managerial controls, reporting systems and procedures.
−Removed: Any failure to manage our expansion and the resulting demands on our management systems and resources effectively may adversely affect our financial condition and results of operations.
−Removed: Future acquisitions may adversely affect our financial condition and results of operations.
−Removed: As part of our business strategy, we may pursue acquisitions of companies that we believe could enhance or complement our current product portfolio, augment our technology roadmap or diversify our revenue base.
−Removed: Acquisitions involve numerous risks, any of which could harm our business, including:
−Removed: difficulties integrating the acquired business;
−Removed: unanticipated costs, capital expenditures or liabilities or changes related to research in progress and product development;
−Removed: diversion of financial and management resources from our existing business;
−Removed: difficulties integrating the business relationships with suppliers and customers of the acquired business with our existing business relationships;
−Removed: risks associated with entering markets in which we have little or no prior experience;
−Removed: potential loss of key employees, particularly those of the acquired organizations.
−Removed: Acquisitions may also result in the recording of goodwill and other intangible assets subject to potential impairment in the future, adversely affecting our operating results.
−Removed: We may not achieve the anticipated benefits of an acquisition if we fail to evaluate it properly, and we may incur costs in excess of what we anticipate.
−Removed: A failure to evaluate and execute an acquisition appropriately or otherwise adequately address these risks may adversely affect our financial condition and results of operations.
−Removed: We may be subject to disruptions or failures in information technology systems and network infrastructures that could have a material adverse effect on our business and financial condition.
−Removed: We rely on the efficient and uninterrupted operation of complex information technology systems and network infrastructures to operate our business.
−Removed: A disruption, infiltration or failure of our information technology systems as a result of software or hardware malfunctions, system implementations or upgrades, computer viruses, third-party security breaches, employee error, theft or misuse, malfeasance, power disruptions, natural disasters or accidents could cause a breach of data security, loss of intellectual property and critical data and the release and misappropriation of sensitive competitive information and partner, customer, and employee personal data.
−Removed: Any of these events could harm our competitive position, result in a loss of customer confidence, cause us to incur significant costs to remedy any damages and ultimately materially adversely affect our business and financial condition.
−Removed: Our future results of operations may be subject to volatility as a result of exposure to fluctuations in currency exchange rates.
−Removed: We have significant foreign currency exposure and are affected by fluctuations among the U.S.
−Removed: dollar, the Chinese Renminbi, or RMB, and the New Taiwan dollar, or NT dollar, because a substantial portion of our business is conducted in China and Taiwan.
−Removed: Our sales, raw materials, components and capital expenditures are denominated in U.S.
−Removed: dollars, RMB and NT dollars in varying amounts.
−Removed: Foreign currency fluctuations may adversely affect our revenue and our costs and expenses, and hence our results of operations.
−Removed: The value of the NT dollar or the RMB against the U.S.
−Removed: dollar and other currencies may fluctuate and be affected by, among other things, changes in political and economic conditions.
−Removed: The RMB currency is no longer being pegged solely to the value of the U.S.
−Removed: In the long term, the RMB may appreciate or depreciate significantly in value against the U.S.
−Removed: dollar, depending upon the fluctuation of the basket of currencies against which it is currently valued, or it may be permitted to enter into a full float, which may also result in a significant appreciation or depreciation of the RMB against the U.S.
−Removed: In addition, our currency exchange variations may be magnified by Chinese exchange control regulations that restrict our ability to convert RMB into foreign currency.
−Removed: Our sales in Europe are denominated in U.S.
−Removed: dollars and fluctuations in the Euro or our customers’
−Removed: other local currencies relative to the U.S.
−Removed: dollar may impact our customers and affect our financial performance.
−Removed: If our customers’
−Removed: local currencies weaken against the U.S.
−Removed: dollar, we may need to lower our prices to remain competitive in our international markets which could have a material adverse effect on our margins.
−Removed: If our customers’
−Removed: local currencies strengthen against the U.S.
−Removed: dollar and if the local sales prices cannot be raised due to competitive pressures, we will experience a deterioration of our margins.
−Removed: To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.
−Removed: While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure.
−Removed: Natural disasters or other catastrophic events could harm our operations.
−Removed: Our operations in the U.S., China and Taiwan could be subject to significant risk of natural disasters, including earthquakes, hurricanes, typhoons, flooding and tornadoes, as well as other catastrophic events, such as epidemics, terrorist attacks or wars.
−Removed: For example, our corporate headquarters and wafer fabrication facility in Sugar Land, Texas is located near the Gulf of Mexico, an area that is susceptible to hurricanes.
−Removed: We use a proprietary MBE laser manufacturing process that requires customized equipment, and this process is currently conducted and located solely at our wafer fabrication facility in Sugar Land, Texas, such that a natural disaster, terrorist attack or other catastrophic event that affects that facility would materially harm our operations.
−Removed: In addition, our manufacturing facility in Taipei, Taiwan, is susceptible to typhoons and earthquakes, and our manufacturing facility in Ningbo, China, has from time to time, suffered electrical outages.
−Removed: Any disruption in our manufacturing facilities arising from these and other natural disasters or other catastrophic events could cause significant delays in the production or shipment of our products until we are able to shift production to different facilities or arrange for third parties to manufacture our products.
−Removed: We may not be able to obtain alternate capacity on favorable terms or at all.
−Removed: Our property insurance coverage with respect to natural disaster is limited and is subject to deductible and coverage limits.
−Removed: Such coverage may not be adequate or continue to be available at commercially reasonable rates and terms.
−Removed: The occurrence of any of these circumstances may adversely affect our financial condition and results of operation.
−Removed: Our business could be negatively impacted as a result of shareholder activism.
−Removed: In recent years, shareholder activists have become involved in numerous public companies.
−Removed: Shareholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of the Company.
−Removed: We may in the future become subject to such shareholder activity and demands.
−Removed: Such demands may disrupt our business and divert the attention of our management and employees, and any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel and business partners, all of which could adversely affect our business.
−Removed: In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
−Removed: The unfavorable outcome of any pending or future litigation or administrative action and expenses incurred in connection with litigation could result in financial losses or harm to our business.
−Removed: We are, and in the future may be, subject to legal actions in the ordinary course of our operations, both domestically and internationally.
−Removed: There can be no assurances as to the favorable outcome of any litigation.
−Removed: In addition it can be costly to defend litigation and these costs could negatively impact our financial results.
−Removed: As disclosed in “Item 3.
−Removed: Legal Proceedings,”
−Removed: on August 5, 2017, we and certain of our officers are currently subject to class action litigation related to allegations that we made materially false and misleading statements or failed to disclose material facts.
−Removed: Such litigation includes requests for damages and other relief.
−Removed: As further described in that section, subsequent derivative actions and securities class actions have since been filed. 
−Removed: This litigation and any other such litigation could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
+Added: Risks Related to Intellectual Property Matters 
If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our business and results of operations could be materially harmed.
37 unchanged sentences
Any indemnity claim could also adversely affect our relationships with our customers and result in substantial costs to us.
−Removed: If we fail to obtain the right to use the intellectual property rights of others that are necessary to operate our business, and to protect their intellectual property, our business and results of operations will be adversely affected.
−Removed: From time to time we may choose to or be required to license technology or intellectual property from third parties in connection with the development of our products.
−Removed: We cannot assure you that third party licenses will be available to us on commercially reasonable terms, if at all.
−Removed: Generally, a license, if granted, would include payments of up-front fees, ongoing royalties or both.
−Removed: These payments or other terms could have a significant adverse impact on our results of operations.
−Removed: Our inability to obtain a necessary third party license required for our product offerings or to develop new products and product enhancements could require us to substitute technology of lower quality or performance standards, or of greater cost, any of which could adversely affect our business.
−Removed: If we are not able to obtain licenses from third parties, if necessary, then we may also be subject to litigation to defend against infringement claims from these third parties.
−Removed: Our competitors may be able to obtain licenses or cross-license their technology on better terms than we can, which could put us at a competitive disadvantage.
−Removed: If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.
−Removed: Preparing our consolidated financial statements involves a number of complex manual and automated processes, which are dependent upon individual data input or review and require significant management judgment.
−Removed: One or more of these elements may result in errors that may not be detected and could result in a material misstatement of our consolidated financial statements.
−Removed: The Sarbanes-Oxley Act requires, among other things, that as a publicly-traded company we disclose whether our internal control over financial reporting and disclosure controls and procedures are effective.
−Removed: We have implemented a system of disclosure and internal controls that we believe provide reasonable assurance that we will be able to timely report our financial results and avoid accounting errors or material weaknesses in future periods.
−Removed: However, our internal controls cannot guarantee that no accounting errors exist or that all accounting errors, no matter how immaterial, will be detected because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute assurance that the control system’s objectives will be met.
−Removed: If we are unable to implement and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to accurately and timely report our financial results could be adversely impacted.
−Removed: This could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our consolidated financial statements, a decline in our stock price, suspension or delisting of our common stock by NASDAQ, or other material adverse effects on our business, reputation, results of operations or financial condition.
−Removed: Our ability to use our net operating losses and certain other tax attributes may be limited.
−Removed: As of December 31, 2019, we had U.S.
−Removed: accumulated net operating losses, or NOLs, of approximately $75.9 million, federal and state research and development credits (“R&D credits”) of $8.3 million, interest expense of $0.8 million and foreign tax credits of $4.6 million for U.S.
−Removed: federal income tax purposes.
−Removed: Our ability to use our net operating losses, or NOLs, to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
−Removed: We may be limited in the portion of NOL carryforwards that we can use in the future to offset taxable income for U.S.
−Removed: federal and state income tax purposes, and federal tax credits to offset federal tax liabilities.
−Removed: Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, limit the use of NOLs and tax credits after a cumulative change in corporate ownership of more than 50% occurs within a three-year period.
−Removed: The statutes place a formula limit on how much NOLs and tax credits a corporation can use in a tax year after a change in ownership.
−Removed: Avoiding an ownership change is generally beyond our control.
−Removed: Although the ownership changes we experienced in the past and in the year ended December 31, 2019 had not prevented us from using all NOLs and tax credits accumulated before such ownership changes, we could experience another ownership change that might limit our use of NOLs and tax credits in the future.
−Removed: Under the Tax Cuts and Jobs Act of 2017, or Tax Act, NOLs from tax years that began after December 31, 2017 do not expire, but NOLs from tax years that began before January 1, 2018 expire after 20 years.
−Removed: Further, under the Tax Act, although the treatment of tax losses generated in taxable years ending before December 31, 2017 has generally not changed, tax losses generated in taxable years beginning after December 31, 2017 may offset no more than 80% of taxable income annually.
−Removed: Accordingly, if we generate NOLs after the tax year ended December 31, 2017, we might have to pay more federal income taxes in a subsequent year as a result of the 80% taxable income limitation than we would have had to pay under the law in effect before the Tax Act.
−Removed: Our manufacturing operations are subject to environmental regulation that could limit our growth or impose substantial costs, adversely affecting our financial condition and results of operations.
−Removed: Our properties, operations and products are subject to the environmental laws and regulations of the jurisdictions in which we operate and sell products.
−Removed: These laws and regulations govern, among other things, air emissions, wastewater discharges, the management and disposal of hazardous materials and solid wastes, the contamination of soil and groundwater, employee health and safety and the content, performance, packaging and disposal of products.
−Removed: Our failure to comply with current and future environmental laws and regulations, or the identification of contamination for which we are liable, could subject us to substantial costs, including fines, clean-up costs, natural resource damages, third-party property damages or personal injury claims, administrative, civil or criminal penalties and could result in injunctive relief requiring us to make significant investments to upgrade our facilities, redesign or change our manufacturing processes, redesign our products, or curtail our operations.
−Removed: Liability under environmental, health and safety laws can be joint and several and without regard to fault or negligence.
−Removed: For example, pursuant to environmental laws and regulations, including but not limited to the Comprehensive Environmental Response Compensation and Liability Act, or CERCLA, we may be liable for the full amount of any remediation-related costs at properties we currently own or formerly owned, such as our currently owned Sugar Land, Texas facility, or at properties at which we previously operated, as well as at properties we will own or operate in the future, and properties to which we have sent hazardous substances, whether or not we caused the contamination.
−Removed: Identification of presently unidentified environmental conditions, more vigorous enforcement by a governmental authority, enactment of more stringent legal requirements or other unanticipated events could give rise to adverse publicity, restrict our operations, affect the design or marketability of our products or otherwise cause us to incur material environmental costs, adversely affecting our financial condition and results of operations.
−Removed: We are exposed to increased expenses and business risk as a result of Restriction on Hazardous Substances, or RoHS directives.
−Removed: Following the lead of the European Union, or EU, various governmental agencies have either already put into place or are planning to introduce regulations that regulate the permissible levels of hazardous substances in products sold in various regions of the world.
−Removed: For example, the RoHS directive for EU took effect on July 1, 2006.
−Removed: The labeling provisions of similar legislation in China went into effect on March 1, 2007.
−Removed: Consequently, many suppliers of products sold into the EU have required their suppliers to be compliant with the new directive.
−Removed: Many of our customers have adopted this approach and have required our full compliance.
−Removed: Though we have devoted a significant amount of resources and effort in planning and executing our RoHS program, it is possible that some of our products might be incompatible with such regulations.
−Removed: In such events, we could experience the following consequences:
−Removed: loss of revenue, damaged reputation, diversion of resources, monetary penalties, and legal action.
−Removed: Failure to comply with the U.S.
−Removed: Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
−Removed: We are subject to the U.S.
−Removed: Foreign Corrupt Practices Act which generally prohibits U.S.
−Removed: companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business.
−Removed: In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls.
−Removed: Foreign companies, including some that may compete with us, may not be subject to these prohibitions, and therefore may have a competitive advantage over us.
−Removed: If we are not successful in implementing and maintaining adequate preventative measures, we may be responsible for acts of our employees or other agents engaging in such conduct.
−Removed: We could suffer severe penalties and other consequences that may have a material adverse effect on our financial condition and results of operations.
−Removed: We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.
−Removed: We are subject to export and import control laws, trade regulations and other trade requirements that limit which products we sell and where and to whom we sell our products.
−Removed: Specifically, the Bureau of Industry and Security of the U.S.
−Removed: Department of Commerce is responsible for regulating the export of most commercial items that are so called dual-use goods that may have both commercial and military applications.
−Removed: Our products are classified under Export Control Classification Numbers, or ECCNs, 5A991 and 6A995.
−Removed: Export Control Classification requirements are dependent upon an item’s technical characteristics, the destination, the end-use, the end-user, and other activities of the end-user.
−Removed: Should the regulations applicable to our products change, or the restrictions applicable to countries to which we ship our products change, then the export of our products to such countries could be restricted.
−Removed: As a result, our ability to export or sell our products to certain countries could be restricted, which could adversely affect our business, financial condition and results of operations.
−Removed: Changes in our products or any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in delayed or decreased sales of our products to existing or potential customers.
−Removed: In such event, our business and results of operations could be adversely affected.
−Removed: Rapidly changing standards and regulations could make our products obsolete, which would cause our revenue and results of operations to suffer.
−Removed: We design our products to conform to regulations established by governments and to standards set by industry standards bodies worldwide, such as the American National Standards Institute, the European Telecommunications Standards Institute, the International Telecommunications Union and the Institute of Electrical and Electronics Engineers, Inc.
−Removed: Various industry organizations are currently considering whether and to what extent to create standards applicable to our products.
−Removed: Because certain of our products are designed to conform to current specific industry standards, if competing or new standards emerge that are preferred by our customers, we would have to make significant expenditures to develop new products.
−Removed: If our customers adopt new or competing industry standards with which our products are not compatible, or the industry groups adopt standards or governments issue regulations with which our products are not compatible, our existing products would become less desirable to our customers and our revenue and results of operations would suffer.
−Removed: Compliance with regulations related to conflict minerals could increase costs and affect the manufacturing and sale of our products.
−Removed: Public companies are required to disclose the use of tin, tantalum, tungsten and gold (collectively, “conflict minerals”) mined from the Democratic Republic of the Congo and adjoining countries (the “covered countries”) if a conflict mineral(s) is necessary to the functionality of a product manufactured, or contracted to be manufactured, by the Company.
−Removed: We filed our latest conflict minerals report on Form SD on May 29, 2019.
−Removed: We have previously determined, as part of our compliance efforts, that certain products or components we obtain from our suppliers contain conflict minerals.
−Removed: Based on our Reasonable Country of Origin Inquiry on the source of our conflict minerals for the year ended December 31, 2018, we had reason to believe that certain of such conflict minerals likely originated in covered countries.
−Removed: If we are unable to conclude in the future that all our products are free from conflict minerals originating from covered countries, this could have a negative impact on our business, reputation and/or results of operations.
−Removed: We may also encounter challenges to satisfy customers who require that our products be certified as conflict free, which could place us at a competitive disadvantage if we are unable to substantiate such a claim.
−Removed: Compliance with these rules could also affect the sourcing and availability of some of the minerals used in the manufacture of products or components we obtain from our suppliers, including our ability to obtain products or components in sufficient quantities and/or at competitive prices.
−Removed: Certain of our customers are requiring additional information from us regarding the origin of our raw materials, and complying with these customer requirements may cause us to incur additional costs, such as costs related to determining the origin of any minerals used in our products.
−Removed: Our supply chain is complex and we may be unable to verify the origins for all metals used in our products.
−Removed: We may also encounter challenges with our customers and stockholders if we are unable to certify that our products are conflict free.
−Removed: Some provisions of our named executive officers’
−Removed: agreements regarding change of control or separation of service contain obligations for us to make separation payments to them upon their termination.
−Removed: Certain provisions contained in our employment agreements with our named executive officers regarding change of control or separation of service may obligate us to make lump sum severance payments and related payments upon the termination of their employment with us, other than such executive officer’s resignation without good reason or our termination of their employment as a result of their disability or for cause.
−Removed: In the event we are required to make these separation payments, it could have a material adverse effect on our results of operations for the fiscal period in which such payments are made.
−Removed:     
+Added:    
Risks Related to Our Operations in China
Our business operations conducted in China are critical to our success.
−Removed: A total of $83.3 million, $143.1 million, and $122.3 million or 43.6%, 53.6%, and 32.0% , of our revenue in the years ended December 31, 2019, 2018 and 2017 was attributable to our product manufactured at our plant in China, respectively.
−Removed: Additionally, a substantial portion of our property, plant and equipment, 37.1%, 36.8%, and 29.9% as of December 31, 2019, 2018 and 2017, was located in China, respectively.
+Added: A total of $85.2 million, $83.3 million, and $143.1 million or 36.3%, 43.6%, and 53.6%, of our revenue in the years ended December 31, 2020, 2019 and 2018 was attributable to our product manufactured at our plant in China, respectively.
+Added: Additionally, a substantial portion of our property, plant and equipment, 40.6%, 37.1%, and 36.8% as of December 31, 2020, 2019 and 2018, was located in China, respectively.
We expect to make further investments in China in the foreseeable future.
13 unchanged sentences
Any of these developments could contribute to a decline in business and consumer spending in addition to other adverse market conditions, which could adversely affect our business.
−Removed: The termination and expiration or unavailability of our preferential tax treatments in China may have a material adverse effect on our operating results.
−Removed: Prior to January 1, 2008, entities established in China were generally subject to a 30% state and 3% local enterprise income tax rate.
−Removed: In accordance with the China Income Tax Law for Enterprises with Foreign Investment and Foreign Enterprises, effective through December 31, 2007, our China subsidiary enjoyed preferential income tax rates.
−Removed: Effective January 1, 2008, the China Enterprise Income Tax Law, or the EIT law, imposes a single uniform income tax rate of 25% on all Chinese enterprises, including FIEs, and eliminates or modifies most of the tax exemptions, reductions and preferential treatment available under the previous tax laws and regulations.
−Removed: As a result, our China subsidiary may be subject to the uniform income tax rate of 25% unless we are able to qualify for preferential status.
−Removed: Since calendar year 2008, we have qualified for a preferential 15% tax rate that is available for state-encouraged new high technology enterprises.
−Removed: In order to retain this preferential tax rate, we must meet certain operating conditions, satisfy certain product requirements, meet certain headcount requirements and maintain certain levels of research expenditures.
−Removed: In November 2017, we received approval from the Chinese government to extend this preferential tax treatment for an additional three years, ending November 2020.
−Removed: If we fail to continue to qualify for this preferential rate in the future, we may incur higher tax rates on our income in China.
−Removed: Any future increase in the enterprise income tax rate applicable to us or the expiration or other limitation of preferential tax rates available to us could increase our tax liabilities and reduce our net income.
The turnover of direct labor in manufacturing industries in China is high, which could adversely affect our production, shipments and results of operations.
18 unchanged sentences
Any further changes to these laws may increase our costs and reduce our flexibility.
−Removed: An increase in our labor costs in China may adversely affect our business and our profitability.
−Removed: A significant portion of our workforce is located in China.
−Removed: Labor costs in China have been increasing recently due to labor unrest, strikes and changes in employment laws.
−Removed: If labor costs in China continue to increase, our costs will increase.
−Removed: If we are not able to pass these increases on to our customers, our business, profitability and results of operations may be adversely affected.
−Removed: We may have difficulty establishing and maintaining adequate management and financial controls over our China operations.
−Removed: Businesses in China have historically not adopted a western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and computer, financial and other control systems.
−Removed: Moreover, familiarity with U.S. GAAP principles and reporting procedures is less common in China.
−Removed: As a consequence, we may have difficulty finding accounting personnel experienced with U.S. GAAP, and we may have difficulty training and integrating our China-based accounting staff with our U.S.-based finance organization.
−Removed: As a result of these factors, we may experience difficulty in establishing and maintaining management and financial controls over our China operations.
−Removed: These difficulties include collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet U.S.
−Removed: public-company reporting requirements.
−Removed: We may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act.
Risks Related to Our Common Stock  
18 unchanged sentences
These lawsuits and any other such litigation could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
−Removed: We have incurred and will continue to incur significant increased expenses and administrative burdens as a public company, which could have a material adverse effect on our operations and financial results.
−Removed: We face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company, and greater expenditures may be necessary in the future with the advent of new laws, regulations and stock exchange listing requirements pertaining to public companies.
−Removed: These increased costs will require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.
−Removed: The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Public Company Accounting Oversight Board and the NASDAQ Global Market, impose additional reporting and other obligations on public companies.
−Removed: Compliance with public company requirements has increased our costs and made some activities more time-consuming.
−Removed: For example, we have created board committees and adopted internal controls and disclosure controls and procedures.
−Removed: In addition, we have incurred and will continue to incur additional expenses associated with our SEC reporting requirements.
−Removed: Furthermore, if we identify any issues in complying with those requirements (for example, if we or our auditors identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions of us.
−Removed: Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase our costs.
−Removed: Legal, accounting, administrative and other costs and expenses may increase in the future as we continue to incur both increased external audit fees as well as additional spending to ensure continued regulatory compliance.
−Removed: We currently do not intend to pay dividends on our common stock and, consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.
−Removed: We currently do not plan to declare or pay dividends on shares of our common stock in the foreseeable future.
−Removed: Consequently, your only opportunity to achieve a return on any shares of our common stock that you may acquire will be if the market price of our common stock appreciates and you sell your shares at a profit.
−Removed: There is no guarantee that the price of our common stock in the market will ever exceed the price that you pay.
Our charter documents, stock incentive plans and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
12 unchanged sentences
These and other provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay for shares of our common stock in the future and result in the market price being lower than it would be without these provisions.
−Removed: If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common stock, our stock price and trading volume could decline.
−Removed: The trading market for our common stock depends on the research and reports that research analysts publish about us and our business.
−Removed: The price of our common stock could decline if one or more research analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.
−Removed: If one or more of the research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline.
+Added: Our Amended and Restated Certificate of Incorporation includes a forum selection clause, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.
+Added:           
+Added: Our Amended and Restated Certificate of Incorporation provides that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Company's Amended and Restated Certificate of Incorporation or By-laws, or (iv) any action asserting a claim against the Company governed by the internal affairs doctrine.
+Added: This exclusive forum provision will not apply to claims under the Securities Exchange Act of 1934 but will apply to other state and federal law claims including actions arising under the Securities Act of 1933 (although our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder).
+Added: Section 22 of the Securities Act of 1933, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act of 1933 or the rules and regulations thereunder.
+Added: Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act of 1933.
+Added: This forum selection provision in our Amended and Restated Certificate of Incorporation may limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.
+Added: It is also possible that a court could rule that such a provision is inapplicable or unenforceable.
   
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