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For example, we have implemented a work-from-home policy for the vast majority of employees, and we may take further actions that alter our operations as may be required by federal, state or local authorities, or which we determine are in the best interests of our employees, customers, partners and stockholders.
+Added: The effects of pandemic adversely affected our product shipments and financial results for the second quarter ended June 28, 2020.
In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
The COVID-19 pandemic also could reduce demand for our products and services as our largest channel partners focus on selling essential goods, temporarily close stores or experience decreases in foot traffic.
−Removed: In addition, a recession or market correction resulting from the spread of COVID-19 could further decrease technology spending, adversely affecting demand for our products and services, our business and the value of our common stock.
+Added: addition, a recession or market correction resulting from the spread of COVID-19 could further decrease technology spending, adversely affecting demand for our products and services, our business and the value of our common stock.
The COVID-19 pandemic may adversely affect the ability of our third-party manufacturers and other suppliers to fulfill their obligations to us.
62 unchanged sentences
Currently, reviews of our products and services are a significant factor in the success of our new product and service launches.
−Removed: If we are unable to generate a high number of positive reviews or quickly respond to negative reviews, including end-user reviews posted on various prominent online retailers, our ability to
−Removed: sell our products and services will be harmed.
+Added: If we are unable to generate a high number of positive reviews or quickly respond to negative reviews, including end-user reviews posted on various prominent online retailers, our ability to sell our products and services will be harmed.
Any future delays in product and service development and introduction, or product and service introductions that do not meet broad market acceptance, or unsuccessful launches of new product and service lines could result in:
8 unchanged sentences
*We may need additional financing to meet our future long-term capital requirements and may be unable to raise sufficient capital on favorable terms or at all.
−Removed: We have recorded a net loss of $39.3 million and $41.3 million for the three months ended March 29, 2020 and March 31, 2019 , respectively, and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.
−Removed: As of March 29, 2020 , our accumulated deficit was $170.8 million .
−Removed: As of March 29, 2020 , our cash and cash equivalents and short-term investments totaled $206.6 million .
−Removed: While we anticipate that our current cash, cash equivalents and cash to be generated from operations will be sufficient to meet our projected operating plans through at least the next twelve months, we may require additional funds, either through equity or debt financings or collaborative agreements or from other sources.
+Added: We have recorded a net loss of $29.3 million and $68.6 million for the three and six months ended June 28, 2020, respectively, and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.
+Added: As of June 28, 2020, our accumulated deficit was $200.1 million.
+Added: As of June 28, 2020, our cash and cash equivalents and short-term investments totaled $205.5 million.
+Added: While we anticipate that our current cash, cash equivalents and cash to be generated from operations will be sufficient to meet our projected operating plans through at least the next 12 months, we may require additional funds, either through equity or debt financings or collaborative agreements or from other sources.
We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.
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We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition.
−Removed: Our principal competitors include Amazon (Blink and Ring), Google (Nest), Swann, Night Owl, Wyze, Foxconn Corporation (Belkin), Samsung, D-Link, and Canary.
+Added: Our principal competitors include Amazon (Blink and Ring), Google (Nest), Swann,
+Added: Night Owl, Wyze, Foxconn Corporation (Belkin), Samsung, D-Link, and Canary.
Other competitors include numerous local vendors such as Netatmo, Logitech, Bosch, Instar, and Uniden.
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Many of our existing and potential competitors have longer operating histories, greater brand recognition, and substantially greater financial, technical, sales, marketing, and other resources.
−Removed: These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and
−Removed: manufacturers, and exert more influence on sales channels than we can.
+Added: These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and manufacturers, and exert more influence on sales channels than we can.
In addition, certain competitors may have different business models, such as integrated manufacturing capabilities, that may allow them to achieve cost savings and to compete on the basis of price.
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If any of these companies are successful in competing against us, our sales could decline, our margins could be negatively impacted, and we could lose market share, any of which could seriously harm our business, financial condition, and results of operations.
+Added: If we lose the services of key personnel, we may not be able to execute our business strategy effectively.
+Added: Our future success depends in large part upon the continued services of our key technical, engineering, sales, marketing, finance, and senior management personnel.
+Added: The competition for qualified personnel with significant experience in the design, development, manufacturing, marketing, and sales in the markets in which we operate is intense, both where our U.S.
+Added: operations are based, including Silicon Valley, and in global markets in which we operate.
+Added: Our inability to attract qualified personnel, including hardware and software engineers and sales and marketing personnel, could delay the development and introduction of, and harm our ability to sell, our products and services.
+Added: Decreases in our stock price may negatively affect our efforts to attract and retain qualified personnel.
+Added: Changes to U.S.
+Added: immigration policies that restrict our ability to attract and retain technical personnel may negatively affect our research and development efforts.
+Added: We will continue to replace key personnel, from within or looking outside, wherever we find the best candidates.
+Added: We do not maintain any key person life insurance policies.
+Added: Our business model requires extremely skilled and experienced senior management who are able to withstand the rigorous requirements and expectations of our business.
+Added: Our success depends on senior management being able to execute at a very high level.
+Added: The loss of any of our senior management or other key engineering, research, development, sales, or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business strategy and respond to the rapidly changing needs of our business.
+Added: If we suffer the loss of services of any key executive or key personnel, our business, results of operations, and financial condition could be materially adversely affected.
+Added: In addition, we may not be able to have the proper personnel in place to effectively execute our long-term business strategy if key personnel retire, resign or are otherwise terminated.
*We recently entered into an asset purchase agreement (the “Asset Purchase Agreement”) and supply agreement (the “Supply Agreement”) with Verisure Sàrl (“Verisure”) that will give Verisure exclusive marketing and distribution rights for our products in Europe as well as the ability to sell our products through their direct channel globally.
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In addition, our operations may not provide sufficient cash to meet the repayment obligations of debt incurred under the Credit Agreement.
−Removed: The Credit Agreement contains provisions that limit our future borrowing availability to the lesser of (x) $40.0 million and (y) an amount equal to 60% of our eligible receivables and eligible accounts receivable, less such reserves as
−Removed: Western Alliance Bank may deem proper and necessary from time to time.
+Added: The Credit Agreement contains provisions that limit our future borrowing availability to the lesser of (x) $40.0 million and (y) an amount equal to 60% of our eligible receivables and eligible accounts receivable, less such reserves as Western Alliance Bank may deem proper and necessary from time to time.
The Credit Agreement also contains other customary covenants, including certain restrictions on maintaining a minimum cash balance, our ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on our capital stock, redeem, retire or purchase shares of our capital stock, make investments or pledge or transfer assets, in each case subject to limited exceptions.
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System security risks, data protection breaches and cyber-attacks could disrupt our products, services, internal operations, or information technology systems, and could lead to theft of our intellectual property, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation, and cause our stock price to decline significantly.
−Removed: Information security risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign private parties and state actors.
+Added: Information security risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized crime, hackers, terrorists and other external
+Added: parties, including foreign private parties and state actors.
Our products and services may contain unknown security vulnerabilities.
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A significant business interruption could result in losses or damages and harm our business.
−Removed: If our computer systems and servers become unavailable at the
−Removed: end of a fiscal quarter, our ability to recognize revenue may be delayed until we are able to utilize back-up systems and continue to process and ship our orders.
+Added: If our computer systems and servers become unavailable at the end of a fiscal quarter, our ability to recognize revenue may be delayed until we are able to utilize back-up systems and continue to process and ship our orders.
This could cause our stock price to decline significantly.
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In addition, the cost and operational consequences of implementing further data protection measures could be significant and theft of our intellectual property or proprietary business information could require substantial expenditures to remedy.
−Removed: If we lose the services of key personnel, we may not be able to execute our business strategy effectively.
−Removed: Our future success depends in large part upon the continued services of our key technical, engineering, sales, marketing, finance, and senior management personnel.
−Removed: The competition for qualified personnel with significant experience in the design, development, manufacturing, marketing, and sales in the markets in which we operate is intense, both where our U.S.
−Removed: operations are based, including Silicon Valley, and in global markets in which we operate.
−Removed: Our inability to attract qualified personnel, including hardware and software engineers and sales and marketing personnel, could delay the development and introduction of, and harm our ability to sell, our products and services.
−Removed: Decreases in our stock price may negatively affect our efforts to attract and retain qualified personnel.
−Removed: Changes to U.S.
−Removed: immigration policies that restrict our ability to attract and retain technical personnel may negatively affect our research and development efforts.
−Removed: We will continue to replace key personnel, from within or looking outside, wherever we find the best candidates.
−Removed: We do not maintain any key person life insurance policies.
−Removed: Our business model requires extremely skilled and experienced senior management who are able to withstand the rigorous requirements and expectations of our business.
−Removed: Our success depends on senior management being able to execute at a very high level.
−Removed: The loss of any of our senior management or other key engineering, research, development, sales, or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business strategy and respond to the rapidly changing needs of our business.
−Removed: If we suffer the loss of services of any key executive or key personnel, our business, results of operations, and financial condition could be materially adversely affected.
−Removed: In addition, we may not be able to have the proper personnel in place to effectively execute our long-term business strategy if key personnel retire, resign or are otherwise terminated.
+Added: Our future success depends on our ability to increase sales of our paid subscription services.
+Added: Our future success is largely dependent on increasing sales of our paid subscription services.
+Added: Even if we are successful in selling our smart connected devices and accessories, if we are unable to maintain or increase sales of Arlo Smart services, our revenue and overall gross margin would likely decline.
Interruptions with the cloud-based systems that we use in our operations provided by an affiliate of Amazon.com, Inc.
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If that happens, affected end-users or others may file actions against us alleging product liability, tort, or breach of warranty claims.
−Removed: *We rely on a limited number of traditional and online retailers and wholesale distributors for a substantial portion of our sales, and our revenue could decline if they refuse to pay our requested prices or reduce their level of
−Removed: purchases or if there is significant consolidation in our sales channels, which results in fewer sales channels for our products.
+Added: *We rely on a limited number of traditional and online retailers and wholesale distributors for a substantial portion of our sales, and our revenue could decline if they refuse to pay our requested prices or reduce their level of purchases or if there is significant consolidation in our sales channels, which results in fewer sales channels for our products.
We sell a substantial portion of our products through traditional and online retailers, including Best Buy Co., Inc.
("Best Buy"), and Costco Wholesale Corporation (“Costco”), and Amazon and their respective affiliates.
−Removed: For the three months ended March 29, 2020 , we derived 20.7% , 19.2% , 13.1% , and 11.0% of our revenue from Costco, Best Buy, Amazon, and Verisure Ireland DAC and their affiliates, respectively.
+Added: For the three and six months ended June 28, 2020, we derived 18.4% and 15.8% of our revenue from Amazon and its affiliates, 15.1% and 17.9% of our revenue from Costco and its affiliates, 13.6% and 6.8% of our revenue from Verisure Ireland DAC and its affiliates, and 4.7% and 11.8% of our revenue from Best Buy and its affiliates, respectively.
In addition, we sell to wholesale distributors, including Also Holdings AG, Ingram Micro, Inc., D&H Distributing Company, Exertis (UK) Ltd., and Synnex Corporation.
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If we are unable to manage the cost of older products or successfully introduce new products with higher gross margin, our revenue and overall gross margin would likely decline.
−Removed: Our future success depends on our ability to increase sales of our paid subscription services.
−Removed: Our future success is largely dependent on increasing sales of our paid subscription services.
−Removed: Even if we are successful in selling our smart connected devices and accessories, if we are unable to maintain or increase sales of Arlo Smart services, our revenue and overall gross margin would likely decline.
The reputation of our services may be damaged, and we may face significant direct or indirect costs, decreased revenue, and operating margins if our services contain significant defects or fail to perform as intended.
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Several proposals are pending before federal, state and foreign legislative and regulatory bodies that could significantly affect our business.
−Removed: For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by European legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance.
+Added: For example, a revision to the 1995 European Union Data Protection Directive is currently
+Added: being considered by European legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance.
In addition, the EU General Data Protection Regulation 2016/679 (“GDPR”), which came into effect on May 25, 2018, establishes new requirements applicable to the processing of personal data ( i.e.
5 unchanged sentences
The CCPA, which went into effect on January 1, 2020, requires covered companies to provide new disclosures to California consumers, and provides such consumers new ways to opt-out of certain sales of personal information.
−Removed: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach
+Added: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
The CCPA may increase our compliance costs and potential liability.
2 unchanged sentences
GDPR and CCPA may require us to change our policies and procedures and, if we are not compliant, could materially adversely affect our business, results of operations, and financial condition.
+Added: * Global economic conditions could materially adversely affect our revenue and results of operations.
+Added: Our business has been and may continue to be affected by a number of factors that are beyond our control, such as general geopolitical, economic, and business conditions, conditions in the financial markets, and changes in the overall demand for connected lifestyle products.
+Added: Our products and services may be considered discretionary items for our consumer and small business end-users.
+Added: A severe and/or prolonged economic downturn, including as a result of the COVID-19 pandemic, could adversely affect our customers’ financial condition and the levels of business activity of our customers.
+Added: Weakness in, and uncertainty about, global economic conditions may cause businesses to postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for our products.
+Added: In the recent past, various regions worldwide have experienced slow economic growth.
+Added: In addition, current economic challenges in China, including any global economic ramifications of these challenges, may continue to put negative pressure on global economic conditions.
+Added: If conditions in the global economy, including Europe, China, Australia and the United States, or other key vertical or geographic markets deteriorate, such conditions could materially adversely affect our business, results of operations, and financial condition.
+Added: If we are unable to successfully anticipate changing economic and political conditions, we may be unable to effectively plan for and respond to those changes, which could materially adversely affect our business, results of operations, and financial condition.
+Added: In addition, the economic problems affecting the financial markets and the uncertainty in global economic conditions resulted in a number of adverse effects, including a low level of liquidity in many financial markets, extreme volatility in credit, equity, currency, and fixed income markets, instability in the stock market, and high unemployment.
+Added: For example, the challenges faced by the European Union to stabilize some of its member economies, such as Greece, Portugal, Spain, Hungary, and Italy, have had international implications, affecting the stability of global financial markets and hindering economies worldwide.
+Added: Many member nations in the European Union have been addressing the issues with controversial austerity measures.
+Added: In addition, the potential consequences of the “Brexit” process in the United Kingdom have led to significant uncertainty in the region.
+Added: Should the European Union monetary policy measures be insufficient to restore confidence and stability to the financial markets, or should the United Kingdom’s “Brexit” decision lead to additional economic or political instability, the global economy, including the U.S.
+Added: and European Union economies where we have a significant presence, could be hindered, which could have a material adverse effect on us.
+Added: There could also be a number of other follow-on effects from these economic developments on our business, including the inability of customers to obtain credit to finance purchases of our products, customer insolvencies, decreased customer confidence to make purchasing decisions, decreased customer demand, and decreased customer ability to pay their trade obligations.
+Added: In addition, availability of our products from third-party manufacturers and our ability to distribute our products into non-U.S.
+Added: jurisdictions may be impacted by factors such as an increase in duties, tariffs, or other restrictions on trade;
+Added: raw material shortages, work stoppages, strikes and political unrest;
+Added: economic crises and international disputes or conflicts;
+Added: changes in leadership and the political climate in countries from which we import products;
+Added: and failure of the United States to maintain normal trade relations with China and other countries.
+Added: A portion of our global and U.S.
+Added: sales are comprised of goods assembled and manufactured in our facilities in Taiwan and the People’s Republic of China, and components for a number of our goods are sourced from suppliers in the People’s Republic of China.
+Added: When tariffs, duties, or other restrictions are placed on goods imported into the United States from China or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed.
+Added: On September 17, 2018, President Trump announced the imposition of an additional 10% ad valorem duty on approximately $200 billion worth of Chinese imports, known as List 3, pursuant to Section 301 of the Trade Act of 1974.
+Added: The Office of the U.S.
+Added: Trade Representative concurrently published the final list of products that are subject to the additional duty, effective September 24, 2018.
+Added: On May 10, 2019, the President increased the additional duty to 25% ad valorem, and has since proposed a further increase of this rate to 30% in the coming months.
+Added: In addition, on August 20, 2019, the President announced an additional 15% import duty on other Chinese imports, known as List 4, with the additional duties on certain items (List 4A) effective September 1, 2019, and the remainder (List 4B) effective December 15, 2019.
+Added: While the additional duty on List 4A has gone into effect, the implementation of the additional duty on List 4B has been suspended in definitely.
+Added: Further, as of February 14, 2020, the additional duty rate on items listed on List 4A is reduced from 15% to 7.5%.
+Added: We are actively addressing the risks related to these additional and potential ad valorem duties, which have affected, or have the potential to affect, at least some of our imports from China.
+Added: Although we have already taken some steps to mitigate these risks, including by moving a significant portion of our manufacturing and assembly to Vietnam and other areas in the Asia Pacific region outside of China, if these duties are imposed, the cost of our products may increase.
+Added: These duties may also make our products more expensive for consumers, which may reduce consumer demand.
+Added: We may need to offset the financial impact by, among other things, moving even more of our product manufacturing to other locations, modifying other business practices or raising prices.
+Added: If we are not successful in offsetting the impact of any such duties, our revenue, gross margins, and operating results may be materially adversely affected.
*Our stock price may be volatile and your investment in our common stock could suffer a decline in value.
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Other factors that may affect our suppliers’ ability or willingness to supply components to us include internal management or reorganizational issues, such as roll-out of new equipment which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers.
−Removed: It could be difficult, costly, and time consuming to obtain alternative sources for these
−Removed: components, or to change product designs to make use of alternative components.
+Added: It could be difficult, costly, and time consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components.
In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
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In addition, as we contemplate moving manufacturing into different jurisdictions, we may be subject to additional significant challenges in ensuring that quality, processes, and costs, among other issues, are consistent with our expectations.
−Removed: For example, while we expect our manufacturers to be responsible for penalties assessed
−Removed: on us because of excessive failures of the products, there is no assurance that we will be able to collect such reimbursements from these manufacturers, which causes us to take on additional risk for potential failures of our products.
+Added: For example, while we expect our manufacturers to be responsible for penalties assessed on us because of excessive failures of the products, there is no assurance that we will be able to collect such reimbursements from these manufacturers, which causes us to take on additional risk for potential failures of our products.
Our reliance on third-party manufacturers also exposes us to the following risks over which we have limited control:
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As a result, we would be unable to sell our products and our sales and profitability could be reduced, our relationships with our sales channel could be harmed, and our reputation and brand would suffer.
−Removed: Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, primarily in Vietnam, and any disruptions due to natural disasters, health epidemics, and political, social, and economic instability in the region would affect the ability of our third-party manufacturers to manufacture our products.
+Added: Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, primarily in Vietnam, and any disruptions due to natural disasters, health epidemics, and political, social, and economic instability in
+Added: the region would affect the ability of our third-party manufacturers to manufacture our products.
In particular, in the event the labor market in Vietnam becomes saturated, our third-party manufacturers in Vietnam may increase our costs of production.
10 unchanged sentences
To maintain and grow our market share, revenue, and brand, we must maintain and expand our sales channels.
−Removed: Our sales channels consist primarily of traditional retailers, online retailers, and wholesale distributors, but also include
−Removed: service providers such as wireless carriers and telecommunications providers.
+Added: Our sales channels consist primarily of traditional retailers, online retailers, and wholesale distributors, but also include service providers such as wireless carriers and telecommunications providers.
We generally have no minimum purchase commitments or long-term contracts with any of these third parties.
9 unchanged sentences
For example, Amazon, one of our primary retailers, produces the Amazon Cloud Cam, which competes with our security camera products, and also recently acquired two of our competitors, Blink and Ring.
−Removed: For the three months ended March 29, 2020 , we derived 13.1% of our revenue from Amazon and its affiliates.
+Added: For the three and six months ended June 28, 2020, we derived 18.4% and 15.8% of our revenue from Amazon and its affiliates, respectively.
We must also continuously monitor and evaluate emerging sales channels.
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If we are unable to secure and protect our intellectual property rights, our ability to compete could be harmed.
−Removed: We rely on a combination of copyright, trademark, patent, and trade secret laws, nondisclosure agreements with employees, consultants, and suppliers, and other contractual provisions to establish, maintain, and protect our intellectual property and technology.
+Added: We rely on a combination of copyright, trademark, patent, and trade secret laws, nondisclosure agreements with employees, consultants, and suppliers, and other contractual provisions to establish, maintain, and protect our intellectual
+Added: property and technology.
Despite efforts to protect our intellectual property, unauthorized third parties may attempt to design around, copy aspects of our product design or obtain and use technology or other intellectual property associated with our products.
8 unchanged sentences
In addition, these licenses may require royalty payments or other consideration to the third-party licensor.
−Removed: Our success will depend, in part, on our continued ability to access these technologies, and we do not know whether these third-party technologies will continue to
−Removed: be licensed to us on commercially acceptable terms, if at all.
+Added: Our success will depend, in part, on our continued ability to access these technologies, and we do not know whether these third-party technologies will continue to be licensed to us on commercially acceptable terms, if at all.
In addition, if these third-party licensors fail or experience instability, then we may be unable to continue to sell products and services that incorporate the licensed technologies, in addition to being unable to continue to maintain and support these products and services.
9 unchanged sentences
International sales comprise a significant amount of our overall revenue.
−Removed: International sales were 30.4% and 27.8% of overall revenue in the three months ended March 29, 2020 and March 31, 2019 , respectively.
+Added: International sales were 29.6% and 26.4% of overall revenue in the three months ended June 28, 2020 and June 30, 2019, respectively, and 30.0% and 27.0% of overall revenue in the six months ended June 28, 2020 and June 30, 2019.
We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful and could be impacted by COVID-19 pandemic.
22 unchanged sentences
We will depend on these systems in order to timely and accurately process and report key components of our results of operations, financial condition, and cash flows.
−Removed: If the systems fail to operate appropriately or we experience any disruptions or delays in enhancing their functionality to meet current business requirements, our ability to fulfill customer orders, bill, and track our customers, fulfill contractual obligations, accurately report our financials, and otherwise run our business could be adversely affected.
+Added: If the systems fail to operate appropriately or we experience any disruptions or delays in enhancing their functionality to meet
+Added: current business requirements, our ability to fulfill customer orders, bill, and track our customers, fulfill contractual obligations, accurately report our financials, and otherwise run our business could be adversely affected.
Even if we do not encounter these adverse effects, the development and enhancement of systems may be much more costly than we anticipated.
21 unchanged sentences
We cannot ensure that we will be successful in selecting, executing, and integrating acquisitions.
−Removed: Failure to manage and successfully integrate acquisitions could materially harm our business, financial condition, and results of operations.
+Added: Failure to manage and successfully integrate acquisitions could materially harm our business, financial condition, and results of
In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.
−Removed: * Global economic conditions could materially adversely affect our revenue and results of operations.
−Removed: Our business has been and may continue to be affected by a number of factors that are beyond our control, such as general geopolitical, economic, and business conditions, conditions in the financial markets, and changes in the overall demand for connected lifestyle products.
−Removed: Our products and services may be considered discretionary items for our consumer and small business end-users.
−Removed: A severe and/or prolonged economic downturn, including as a result of the COVID-19 pandemic, could adversely affect our customers’ financial condition and the levels of business activity of our customers.
−Removed: Weakness in, and uncertainty about, global economic conditions may cause businesses to postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for our products.
−Removed: In the recent past, various regions worldwide have experienced slow economic growth.
−Removed: In addition, current economic challenges in China, including any global economic ramifications of these challenges, may continue to put negative pressure on global economic conditions.
−Removed: If conditions in the global economy, including Europe, China, Australia and the United States, or other key vertical or geographic markets deteriorate, such conditions could materially adversely affect our business, results of operations, and financial condition.
−Removed: If we are unable to successfully anticipate changing economic and political conditions, we may be unable to effectively plan for and respond to those changes, which could materially adversely affect our business, results of operations, and financial condition.
−Removed: In addition, the economic problems affecting the financial markets and the uncertainty in global economic conditions resulted in a number of adverse effects, including a low level of liquidity in many financial markets, extreme volatility in credit, equity, currency, and fixed income markets, instability in the stock market, and high unemployment.
−Removed: For example, the challenges faced by the European Union to stabilize some of its member economies, such as Greece, Portugal, Spain, Hungary, and Italy, have had international implications, affecting the stability of global financial markets and hindering economies worldwide.
−Removed: Many member nations in the European Union have been addressing the issues with controversial austerity measures.
−Removed: In addition, the potential consequences of the “Brexit” process in the United Kingdom have led to significant uncertainty in the region.
−Removed: Should the European Union monetary policy measures be insufficient to restore confidence and stability to the financial markets, or should the United Kingdom’s “Brexit” decision lead to additional economic or political instability, the global economy, including the U.S.
−Removed: and European Union economies where we have a significant presence, could be hindered, which could have a material adverse effect on us.
−Removed: There could also be a number of other follow-on effects from these economic developments on our business, including the inability of customers to obtain credit to finance purchases of our products, customer insolvencies, decreased customer confidence to make purchasing decisions, decreased customer demand, and decreased customer ability to pay their trade obligations.
−Removed: In addition, availability of our products from third-party manufacturers and our ability to distribute our products into non-U.S.
−Removed: jurisdictions may be impacted by factors such as an increase in duties, tariffs, or other restrictions on trade;
−Removed: raw material shortages, work stoppages, strikes and political unrest;
−Removed: economic crises and international disputes or conflicts;
−Removed: changes in leadership and the political climate in countries from which we import products;
−Removed: and failure of the United States to maintain normal trade relations with China and other countries.
−Removed: A portion of our global and U.S.
−Removed: sales are comprised of goods assembled and manufactured in our facilities in Taiwan and the People’s Republic of China, and components for a number of our goods are sourced from suppliers in the People’s Republic of China.
−Removed: When tariffs, duties, or other restrictions are placed on goods imported into the United States from China or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed.
−Removed: On September 17, 2018, President Trump announced the imposition of an additional 10% ad valorem duty on approximately $200 billion worth of Chinese imports, known as List 3, pursuant to Section 301 of the Trade Act of 1974.
−Removed: The Office of the U.S.
−Removed: Trade Representative concurrently published the final list of products that are subject to the additional duty, effective September 24, 2018.
−Removed: On May 10, 2019, the President increased the additional duty to 25% ad valorem, and has since proposed a further increase of this rate to 30% in the coming months.
−Removed: In addition, on August 20, 2019, the President announced an additional 15% import duty on other Chinese imports, known as List 4, with the additional duties on certain items (List 4A) effective September 1, 2019, and the remainder (List 4B) effective December 15, 2019.
−Removed: While the additional duty on List 4A has gone into effect, the implementation of the additional duty on List 4B has been suspended in definitely.
−Removed: Further, as of February 14, 2020, the additional duty rate on items listed on List 4A is reduced from 15% to 7.5%.
−Removed: We are actively addressing the risks related to these additional and potential ad valorem duties, which have affected, or have the potential to affect, at least some of our imports from China.
−Removed: Although we have already taken some steps to mitigate these risks, including by moving a significant portion of our manufacturing and assembly to Vietnam and other areas in the Asia Pacific region outside of China, if these duties are imposed, the cost of our products may increase.
−Removed: These duties may also make our products more expensive for consumers, which may reduce consumer demand.
−Removed: We may need to offset the financial impact by, among other things, moving even more of our product manufacturing to other locations, modifying other business practices or raising prices.
−Removed: If we are not successful in offsetting the impact of any such duties, our revenue, gross margins, and operating results may be materially adversely affected.
The success of our business depends on customers’ continued and unimpeded access to our platform on the internet.
1 unchanged sentence
Some providers may take measures that affect their customers’ ability to use our platform, such as degrading the quality of the data packets we transmit over their lines, giving those packets lower priority, giving other packets higher priority than ours, blocking our packets entirely, or attempting to charge their customers more for using our platform.
−Removed: In December 2010, the Federal Communications Commission (the “FCC”), adopted net neutrality rules barring internet providers from blocking or slowing down access to online content, protecting services like ours from such
−Removed: interference.
+Added: In December 2010, the Federal Communications Commission (the “FCC”), adopted net neutrality rules barring internet providers from blocking or slowing down access to online content, protecting services like ours from such interference.
Recently, the FCC voted in favor of repealing the net neutrality rules, and it is currently uncertain how the U.S.
207 unchanged sentences
On December 31, 2018, NETGEAR completed the Distribution to its stockholders of the 62,500,000 shares of Arlo common stock that it owned.
−Removed: As of March 29, 2020 , we have 77,361,231 shares of common stock outstanding.
+Added: As of June 28, 2020, we have 78,089,035 shares of common stock outstanding.
In the future, we may issue our securities in connection with investments or acquisitions.
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Any such action could harm our reputation and the confidence of investors and customers in us and could materially adversely affect our business and cause our share price to fall.
−Removed: Any impairment of goodwill and other intangible assets could negatively impact our results of operations.
−Removed: Under generally accepted accounting principles, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
+Added: *Any impairment of goodwill, other intangible assets, and long-lived assets could negatively impact our results of operations.
+Added: Under generally accepted accounting principles, we review our intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Goodwill is required to be tested for impairment at least annually.
−Removed: Factors that may be considered when determining if the carrying value of our goodwill or intangible assets may not be recoverable include a significant decline in our expected future cash flows or a sustained, significant decline in our stock price and market capitalization.
+Added: Factors that may be considered when determining if the carrying value of our goodwill, other intangible assets and long-lived assets may not be recoverable include a significant decline in our expected future cash flows or a sustained, significant decline in our stock price and market capitalization.
If, in any period our stock price decreases to the point where the fair value of our assets (as partially indicated by our market capitalization) is less than our book value, this could indicate a potential impairment and we may be required to record an impairment charge in that period.
1 unchanged sentence
We operate in highly competitive environments and projections of future operating results and cash flows may vary significantly from actual results.
−Removed: As a result, we may incur substantial impairment charges to earnings in our financial statements should an impairment of our goodwill or intangible assets be determined resulting in an adverse impact on our results of operations.
+Added: As a result, we may incur substantial impairment charges to earnings in our financial statements should an impairment of our goodwill, other intangible assets and long-lived assets be determined resulting in an adverse impact on our results of operations.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could materially adversely affect our business, results of operations, financial condition, and stock price.
5 unchanged sentences
We may not be able to conclude on an ongoing basis that we have effective internal control over our financial reporting in accordance with Section 404 or our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting.
−Removed: If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy.
−Removed: If either we are unable to conclude that we have effective internal control over our
−Removed: financial reporting or our independent auditors are unable to provide us with an unqualified report as required by Section 404, then investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
+Added: If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation,
+Added: testing and remediation actions or their effect on our operations because there is presently no precedent available by which to measure compliance adequacy.
+Added: If either we are unable to conclude that we have effective internal control over our financial reporting or our independent auditors are unable to provide us with an unqualified report as required by Section 404, then investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock, or if our operating results do not meet their expectations, our stock price could decline.
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We are an “emerging growth company,” as defined in the JOBS Act.
−Removed: For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions
−Removed: from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
+Added: For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable
+Added: to other public companies that are not emerging growth companies, including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We will remain an emerging growth company until the earliest of (1) December 31, 2023, (2) the last day of the fiscal year in which we have total annual revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then most recently completed second fiscal quarter, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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In addition, because we have not elected to be exempt from Section 203 of the Delaware General Corporation Law (the “DGCL”), this provision could also delay or prevent a change of control that you may favor.
−Removed: Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
−Removed: (ii) upon consummation of the transaction that resulted in the stockholder becoming an
−Removed: interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan);
+Added: Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the
+Added: board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
+Added: (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan);
or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.
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*Our amended and restated certificate of incorporation contains exclusive forum provisions that may discourage lawsuits against us and our directors and officers.
−Removed: Our amended and restated certificate of incorporation provides that unless the board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Arlo, any action asserting a claim of breach of a fiduciary duty owed by any director or officer of Arlo to Arlo or Arlo’s stockholders, any action asserting a claim against Arlo or any director or officer of Arlo arising pursuant to any provision of the DGCL or Arlo’s amended and restated certificate of incorporation or bylaws, or any action asserting a claim against Arlo or any director or officer of Arlo governed by the internal affairs doctrine under Delaware law.
−Removed: Our amended and restated certificate of incorporation further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
+Added: Our amended and restated certificate of incorporation provides that unless the board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
+Added: any derivative action or proceeding brought on behalf of Arlo, any action asserting a claim of breach of a fiduciary duty owed by any director or officer of Arlo to Arlo or Arlo’s stockholders, any action asserting a claim against Arlo or any director or officer of Arlo arising pursuant to any provision of the DGCL or Arlo’s amended and restated certificate of incorporation or bylaws, or any action asserting a claim against Arlo or any director or officer of Arlo governed by the internal affairs doctrine under Delaware law.
+Added: This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
+Added: Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
+Added: Accordingly, both state and federal courts have jurisdiction to entertain such claims.
+Added: To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
+Added: While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.
+Added: In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation.
+Added: This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
These exclusive forum provisions may limit the ability of Arlo’s stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with Arlo or Arlo’s directors or officers, which may discourage such lawsuits against Arlo and Arlo’s directors and officers.
−Removed: Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Arlo may incur additional costs associated with resolving such matters in other jurisdictions or forums, which could materially and adversely affect Arlo’s business, financial condition, or results of operations.
−Removed: On December 19, 2018, the Delaware Chancery Court issued an opinion in Sciabacucchi v.
−Removed: Salzberg, C.A.
−Removed: 2017-0931-JTL, invalidating provisions in the certificates of incorporation of Delaware companies that purport to limit to federal court the forum in which a stockholder could bring a claim under the Securities Act.
−Removed: The Chancery Court held that a Delaware corporation can only use its constitutive documents to bind a plaintiff to a particular forum where the claim involves rights or relationships established by or under Delaware’s corporate law.
−Removed: This case may be appealed to the Delaware Supreme Court.
−Removed: As such, and in light of the recent Sciabacucchi decision, we do not intend to enforce the foregoing federal forum selection provision unless the Sciabacucchi decision is appealed and the Delaware Supreme Court reverses the decision.
−Removed: If there is no appeal of the Sciabacucchi decision or if the Delaware Supreme Court affirms the Chancery Court’s decision, then we will seek approval by our stockholders to amend our amended and restated certificate of incorporation at our next regularly-scheduled annual meeting of stockholders to remove the invalid provision.
+Added: Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Arlo may incur further significant additional costs associated with resolving such matters in other jurisdictions or forums, all of which could materially and adversely affect Arlo’s business, financial condition, or results of operations.
Our board of directors has the ability to issue blank check preferred stock, which may discourage or impede acquisition attempts or other transactions.
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Exhibit Number
−Removed: Exhibit Description
−Removed: Filed Herewith
+Added: Exhibit Description Form Date Number Filed Herewith
Amended and Restated Certificate of Incorporation of Arlo Technologies, Inc.
+Added: 8-K 8/7/2018 3.1
Amended and Restated Bylaws of Arlo Technologies, Inc.
+Added: 8-K 8/7/2018 3.2
Common Stock Certificate of Arlo Technologies, Inc.
+Added: S-1/A 7/23/2018 4.1
+Added: Separation Agreement, dated April 23, 2020, by and among Arlo Technologies, Inc., NETGEAR, Inc.
+Added: and Christine Gorjanc
+Added: Confirmatory Employment Letter with Gordon Mattingly
+Added: Form of Change in Control and Severance Agreement for non-CEO Executive Officers
+Added: Form of Service and Cash Balance Performance-Based Restricted Stock Unit Agreement for Executive Officers
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
2 unchanged sentences
Section 1350 Certification of Principal Financial Officer
−Removed: Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
−Removed: Inline XBRL Taxonomy Extension Schema Document
−Removed: Inline XBRL Taxonomy Extension Calculation Linkbase Document
−Removed: Inline XBRL Taxonomy Extension Definition Linkbase Document
−Removed: Inline XBRL Taxonomy Extension Label Linkbase Document
−Removed: Inline XBRL Taxonomy Extension Presentation Linkbase Document
−Removed: 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
+Added: 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
+Added: 101.SCH Inline XBRL Taxonomy Extension Schema Document X
+Added: 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
+Added: 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
+Added: 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
+Added: 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
+Added: 104 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
+Added: * Indicates management contract or compensatory plan or arrangement.
# This certification is deemed to accompany this Quarterly Report on Form 10-Q and will not be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section.
6 unchanged sentences
(Principal Executive Officer)
−Removed: /s/ CHRISTINE M.
+Added: /s/ GORDON MATTINGLY
+Added: Gordon Mattingly
Chief Financial Officer
(Principal Financial and Accounting Officer)
+Added: August 6, 2020
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.