What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-08-05 compared with 2021-05-06 · 150 added, 136 removed, 759 unchanged (27% of the section changed)

14 unchanged sentences

• We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costs.

• We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.

If these third-party manufacturers experience any delay, disruption, or quality control problems in their operations, including due to the COVID-19 pandemic, we could lose market share and our brand may suffer.

• We expect our results of operations to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.

4 unchanged sentences

• We 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.

We cannot provide assurance that the arrangement with Verisure will be a successful collaboration.

• We are subject to financial and operating covenants in our business financing agreement with Western Alliance Bank (the “Credit Agreement”) and any failure to comply with such covenants, or obtain waivers in the event of non-compliance, could limit our borrowing availability under the Credit Agreement, resulting in our being unable to borrow under the Credit Agreement and materially adversely impact our liquidity.

In addition, our operations may not provide sufficient cash to meet the repayment obligations of debt incurred under the Credit Agreement.

We cannot provide assurance that the arrangement with Verisure will continue to be a successful collaboration.

• We are dependent on information technology systems, infrastructure and data.

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.

System security risks, breaches of data protection, cyber-attacks, and erroneous or non-malicious actions or failures to act by our employees or others with authorized access to our networks 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.

• Our future success depends on our ability to increase sales of our paid subscription services.

• We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.

• If disruptions in our transportation network occur or our shipping costs substantially increase, we may be unable to sell or timely deliver our products, and our operating expenses could increase.

2 unchanged sentences

• Our current and future products may experience quality problems, including defects or errors, from time to time that can result in adverse publicity, product recalls, litigation, regulatory proceedings, and warranty claims resulting in significant direct or indirect costs, decreased revenue, and operating margin, and harm to our brand.

• 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.

Risks Related to Our Business

2 unchanged sentences

On March 11, 2020, the World Health Organization announced that COVID-19, a respiratory illness, caused by a novel coronavirus is a pandemic.

The President of the United States has declared the COVID-19 pandemic a national emergency.

In response to the COVID-19 pandemic, many state, local and foreign governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders and similar government orders and restrictions in order to control the spread of the disease.

1 unchanged sentence

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.

The effects of pandemic adversely affected our product shipments and financial results for the three months ended March 28, 2021.

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.

8 unchanged sentences

If our manufacturers and other suppliers are unable to fulfill their obligations to us, we could face products shortages, delay in new product introductions, services to our customers could be interrupted, and our products distribution could be delayed and thus adversely affecting our revenue.

For the three months ended March 28, 2021, our freight-in expense increased by 88%, compared to the prior year period.

For example, increased demand for electronics as a result of the COVID-19 pandemic, effects of the U.S.

trade war with China, increased demand for chips in the automotive industry and certain other factors have led to a global

shortage of semiconductors.

As a result, we have experienced component shortages, including longer lead times for components and supply constraints, that have affected both our ability to meet scheduled product deliveries and worldwide demand for our products.

Also, as a result of the COVID-19 pandemic, our supply chain partners are limited by production capacity, constrained by material availability, labor shortages, factory uptime and freight capacity, each of which constrains our ability to capitalize fully on end market demand.

As of June 27, 2021, international freight capacity has dropped, causing air and ocean freight rates to materially increase.

Furthermore, transit times have also increased, causing us to rely more on air freight in order to meet our customers' demands.

For the three and six months ended June 27, 2021, we saw an 89% increase in freight-in expense compared to the prior year periods, respectively, as a result of the higher sea and air freight rates and component shortages which necessitated use of air freight to meet customer requested delivery dates.

We expect supply chain constraints to exist through 2021 and potentially beyond.

While we have been successful in navigating COVID-19 related challenges to date, any further disruptions brought about by the COVID-19 pandemic to our supply chain and operations could have a significant negative impact on our net revenue, gross and operating margin performance.

The global pandemic of COVID-19 continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and

subject to change.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, operations or the global economy as a whole.

19 unchanged sentences

If our forecasts are not timely provided or are less than our actual requirements, our third-party manufacturers may be unable to manufacture products in a timely manner.

If our forecasts are too high, our third-party manufacturers will be unable to use the components they have purchased on our behalf.

If our forecasts are

too high, our third-party manufacturers will be unable to use the components they have purchased on our behalf.

The cost of the components used in our products tends to drop rapidly as volumes increase and the technologies mature.

6 unchanged sentences

At times, we have elected to use more expensive transportation methods, such as air freight, to make up for manufacturing delays caused by component shortages, which reduces our margins.

In addition, at times sole suppliers of highly specialized components have provided components that were either

defective or did not meet the criteria required by our retailers, distributors, or other channel partners, resulting in delays, lost revenue opportunities, and potentially substantial write-offs.

In addition, at times sole suppliers of highly specialized components have provided components that were either defective or did not meet the criteria required by our retailers, distributors, or other channel partners, resulting in delays, lost revenue opportunities, and potentially substantial write-offs.

We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.

All of our products are manufactured, assembled, tested and generally packaged by a limited number of third-party original design manufacturers (“ODMs”).

In most cases, we rely on these manufacturers to procure components and, in some cases, subcontract engineering work.

We currently outsource manufacturing to Foxconn Cloud Network Technology Singapore Pte.

Ltd., Pegatron Corporation, and Sky Light Industrial Ltd.

We do not have any long-term contracts with any of these third-party manufacturers, although we have executed product supply agreements with these manufacturers, which typically provide indemnification for intellectual property infringement, epidemic failure clauses, agreed-upon price concessions, and certain product quality requirements.

Some of these third-party manufacturers produce products for our competitors.

In addition, one of our principal manufacturers, Foxconn closed its acquisition of Belkin International in September 2018, which includes the WeMo brand of home automation products, which may compete directly with us.

Due to changing economic conditions, including due to the COVID-19 pandemic, the viability of some of these third-party manufacturers may be at risk.

The loss of the services of any of our primary third-party manufacturers could cause a significant disruption in operations and delays in product shipments.

Qualifying a new manufacturer and commencing volume production is expensive and time consuming.

Ensuring that a contract manufacturer is qualified to manufacture our products to our standards is time consuming.

In addition, there is no assurance that a contract manufacturer can scale its production of our products at the volumes and in the quality that we require.

If a contract manufacturer is unable to do these things, we may have to move production for the products to a new or existing third-party manufacturer, which would take significant effort and our business, results of operations, and financial condition could be materially adversely affected.

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.

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:

• unexpected increases in manufacturing and repair costs;

• inability to control the quality and reliability of finished products;

• inability to control delivery schedules;

• potential liability for expenses incurred by third-party manufacturers in reliance on our forecasts that later prove to be inaccurate;

• potential lack of adequate capacity to manufacture all or a part of the products we require;

• potential labor unrest affecting the ability of the third-party manufacturers to produce our products.

All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications.

Our third-party manufacturers are primarily responsible for conducting the tests that support our applications for most regulatory approvals for our products.

If our third-party manufacturers fail to timely and accurately conduct these tests, we would be unable to obtain the necessary domestic or foreign regulatory approvals or certificates to sell our products in certain jurisdictions.

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.

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.

In particular, in the event the labor market in Vietnam becomes saturated, our third-party manufacturers in Vietnam may increase our costs of production.

If these costs increase, it may affect our margins and ability to lower prices for our products to stay competitive.

Labor unrest may also affect our third-party manufacturers, as workers may strike and cause production delays.

If our third-party manufacturers fail to maintain good relations with their employees or contractors, and production and manufacturing of our products are affected, then we may be subject to shortages of products and the quality of products delivered may be affected.

Further, if our manufacturers or warehousing facilities are disrupted or destroyed, we could have no other readily available alternatives for manufacturing and assembling our products, and our business, results of operations, and financial condition could be materially adversely affected.

In the future, we may work with more third-party manufacturers on a contract manufacturing basis, which could result in our exposure to additional risks not inherent in a typical ODM arrangement.

Such risks may include our inability to properly source and qualify components for the products, lack of software expertise resulting in increased software defects, and lack of resources to properly monitor the manufacturing process.

In our typical ODM arrangement, our ODMs are generally responsible for sourcing the components of the products and warranting that the products will work according to a product’s specification, including any software specifications.

In a contract manufacturing arrangement, we would take on much more, if not all, of the responsibility around these areas.

If we are unable to properly manage these risks, our products may be more susceptible to defects, and our business, results of operations, and financial condition could be materially adversely affected.

We expect our results of operations to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.

43 unchanged sentences

In order to differentiate our products and services from our competitors’ products, we must continue to increase our focus and capital investment in research and development, including software development.

We have committed a substantial amount of resources to the manufacture, development and sale of our Arlo Smart services and our wire-free smart Wi-Fi cameras, advanced baby monitors, and smart lights, and to introducing additional and improved models in these lines.

We have committed a substantial amount of resources to the manufacture, development and sale of our Arlo Smart services and our wire-free

smart Wi-Fi cameras, advanced baby monitors, and smart lights, and to introducing additional and improved models in these lines.

In addition, we plan to continue to introduce new categories of smart connected devices to the Arlo platform in the near future.

21 unchanged sentences

Our future success depends in large part upon the continued services of our key technical, engineering, sales, marketing, finance, and senior management personnel.

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.

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

operations are based, including Silicon Valley, and in global markets in which we operate.

11 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.

We have recorded a net loss of $10.7 million and $39.3 million for the three months ended March 28, 2021 and March 29, 2020, respectively, and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.

As of March 28, 2021 and December 31, 2020, our accumulated deficit was $243.5 million and $232.8 million, respectively.

As of March 28, 2021, our cash and cash equivalents and short-term investments totaled $177.1 million.

In November 2019, we entered into a business financing agreement with Western Alliance Bank providing for a credit facility to up to $40.0 million and as of March 28, 2021, we have not borrowed against this credit facility.

We have recorded a net loss of $23.3 million and $34.0 million for the three and six months ended June 27, 2021, respectively, and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.

As of June 27, 2021, our accumulated deficit was $266.8 million.

As of June 27, 2021, our cash and cash equivalents and short-term investments totaled $178.7 million.

In November 2019, we entered into a business financing agreement with Western Alliance Bank providing for a credit facility to up to $40.0 million and as of June 27, 2021, we have not borrowed against this credit facility.

Refer to Note 8.

2 unchanged sentences

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.

If adequate financing is not available, we may further delay, postpone or terminate product and service expansion and curtail

certain selling, general and administrative operations.

If adequate financing is not available, we may further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations.

The inability to raise additional financing may have a material adverse effect on our future performance.

8 unchanged sentences

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.

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.

Other competitors may have fewer resources, but may be more nimble in developing new or disruptive technology or in entering new markets.

11 unchanged sentences

*We 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.

We cannot provide assurance that the arrangement with Verisure will be a successful collaboration.

Verisure will have the exclusive right to market and distribute our products in Europe.

Our results of operations may be negatively impacted if Verisure is not successful in selling our products in Europe.

Even though the Supply Agreement provides for minimum purchase commitments, if Verisure fails to pay on a timely basis, or at all, including because of effects from COVID-19, or otherwise does not perform under the Supply Agreement our cash flow would be

We cannot provide assurance that the arrangement with Verisure will continue to be a successful collaboration.

Verisure has the exclusive right to market and distribute our products in Europe.

Our results of operations may be negatively impacted if Verisure is not successful in continuing to sell our products in Europe.

We are also exposed to increased credit risk if Verisure fails or becomes insolvent.

We also cannot provide any assurance that we will successfully develop custom products as specified by Verisure under the Supply Agreement.

The Purchase Agreement and Supply Agreement with Verisure contains customary representations and warranties regarding, the Business and the Assets, indemnification provisions, termination rights, certain financial covenants and other customary provisions.

The Purchase Agreement and Supply Agreement with Verisure contain customary representations and warranties regarding, the Business and the Assets, indemnification provisions, termination rights, certain financial covenants and other customary provisions.

Additionally, we have agreed not to engage in any business that competes with the Business for a period of three years.

Our failure to comply with these provisions may have a material adverse effect on our future performance.

We are subject to financial and operating covenants in our business financing agreement with Western Alliance Bank (the “Credit Agreement”) and any failure to comply with such covenants, or obtain waivers in the event of non-compliance, could limit our borrowing availability under the Credit Agreement, resulting in our being unable to borrow under the Credit Agreement and materially adversely impact our liquidity.

In addition, our operations may not provide sufficient cash to meet the repayment obligations of debt incurred under the Credit Agreement.

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.

There can be no assurance that we will be able to comply with the financial and other covenants in the Credit Agreement, and the effects of the COVID-19 pandemic may increase the risk of our inability to comply with such covenants.

Our failure to comply with these covenants could cause us to be unable to borrow under the Credit Agreement and may constitute an event of default which, if not cured or waived, could result in the acceleration of the maturity of any indebtedness then outstanding under the Credit Agreement, which would require us to pay all amounts then outstanding.

If we are unable to repay those amounts, the Lender could proceed against the collateral granted to them to secure that debt, which would seriously harm our business.

Such an event could materially adversely affect our financial condition and liquidity.

Additionally, such events of non-compliance could impact the terms of any additional borrowings and/or any credit renewal terms.

Any failure to comply with such covenants may be a disclosable event and may be perceived negatively.

Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future.

*We are dependent on information technology systems, infrastructure and data.

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.

Our products and services may contain unknown security vulnerabilities.

Our products and services may contain unknown security

vulnerabilities.

For example, the firmware, software, and open source software that we or our manufacturing partners have installed on our products may be susceptible to hacking, unauthorized manipulation, or misuse.

2 unchanged sentences

Operating an online cloud service and direct to consumer store are a relatively new businesses for us, and we may not have the expertise to properly manage risks related to data security and systems security.

We rely on third-party providers for a number of critical aspects of our cloud services and customer support, including web hosting services, billing, and payment processing, and consequently we do not

maintain direct control over the security or stability of the associated systems.

If we or our third-party providers are unable to properly secure our system or successfully prevent breaches of security relating to our products, services, or user private information, including user videos and user personal identification information, or if these third-party systems fail for other reasons, our management could need to spend increasing amounts of time and effort in this area.

As a result, we could incur substantial expenses, our brand and reputation could suffer and our business, results of operations, and financial condition could be materially adversely affected.

Maintaining the security of our computer information systems and communication systems is a critical issue for us and our customers but the multitude and complexity of our computer systems may make them vulnerable to service interruption or destruction, disruption of data integrity, inadvertent errors that expose our data or systems, malicious intrusion, or random attacks.

Likewise, data privacy or security incidents or breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, customers or other business partners may be exposed to unauthorized persons or to the public.

Maintaining the security of our computer information systems and communication systems is a critical issue for us and our customers and we devote considerable internal and external resources to network security, data encryption, and other security measures to protect our systems, customers, and users, but these security measures cannot provide absolute security.

The multitude and complexity of our computer systems may make them vulnerable to service interruption or destruction, breaches of security, disruption of data integrity, inadvertent errors that expose our data or systems, malicious intrusion, or random attacks.

Likewise, data privacy or security incidents or intentional or non-malicious breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, customers or users, or other business partners may be exposed to unauthorized persons or to the public, or that risk of loss or misuse of this information could occur, resulting in litigation and potential liability for us, damage our brand and reputation, or otherwise materially adversely affect our business, results of operations, and financial condition.

Malicious actors may develop and deploy malware that is designed to manipulate our systems, including our internal network, or those of our vendors or customers.

1 unchanged sentence

We have established a crisis management plan and business continuity program.

While we regularly test the plan and the program, there can be no assurance that the plan and program can withstand an actual or serious disruption in our business, including cyber-attack.

While we regularly test the plan and the program, there can be no assurance that the plan and program can withstand an actual disruption in our business, including a cyber-attack, hacking, fraud, social engineering, or other forms of deception.

While we have established service-level and geographic redundancy for our critical systems, our ability to utilize these redundant systems must be tested regularly, failing over to such systems always carries risk and we cannot be assured that such systems are fully functional.

1 unchanged sentence

A significant business interruption could result in losses or damages and harm our business.

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.

If our computer systems and servers become unavailable at the end of a fiscal quarter, for example, 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.

Changes in how our employees work and access our systems during the current COVID-19 pandemic also could lead to additional opportunities for bad actors to launch cyberattacks or for employees to cause inadvertent security risks or incidents.

We devote considerable internal and external resources to network security, data encryption, and other security measures to protect our systems, customers, and users, but these security measures cannot provide absolute security.

Potential breaches of our security measures and the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information or sensitive or confidential data about us, our employees, or our customers or users, including the potential loss or disclosure of such information or data as a result of employee error or other employee actions or inactions, hacking, fraud, social engineering, or other forms of deception could expose us, our customers, or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation, or otherwise materially adversely affect our business, results of operations, and financial condition.

The effects of a security breach or privacy violation could be further amplified during the current COVID-19 pandemic.

7 unchanged sentences

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.

We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.

All of our products are manufactured, assembled, tested and generally packaged by a limited number of third-party original design manufacturers (“ODMs”).

In most cases, we rely on these manufacturers to procure components and, in some cases, subcontract engineering work.

We currently outsource manufacturing to Foxconn Cloud Network Technology Singapore Pte.

Ltd., Pegatron Corporation, and Sky Light Industrial Ltd.

Some of these third-party manufacturers produce products for our competitors.

Due to changing economic conditions, including due to the COVID-19 pandemic, the viability of some of these third-party manufacturers may be at risk.

The loss of the services of any of our primary third-party manufacturers could cause a significant disruption in operations and delays in product shipments.

Qualifying a new manufacturer and commencing volume production is expensive and time consuming.

Ensuring that a contract manufacturer is qualified to manufacture our products to our standards is time consuming.

In addition, there is no assurance that a contract manufacturer can scale its production of our products at the volumes and in the quality that we require.

Our reliance on third-party manufacturers also exposes us to the following risks over which we have limited control:

• unexpected increases in manufacturing and repair costs;

• inability to control the quality and reliability of finished products;

• inability to control delivery schedules;

• potential liability for expenses incurred by third-party manufacturers in reliance on our forecasts that later prove to be inaccurate;

• potential lack of adequate capacity to manufacture all or a part of the products we require;

• potential labor unrest affecting the ability of the third-party manufacturers to produce our products.

All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications.

Our third-party manufacturers are primarily responsible for conducting the tests that support our applications for most regulatory approvals for our products.

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.

If these costs increase, it may affect our margins and ability to lower prices for our products to stay competitive.

Labor unrest may also affect our third-party manufacturers, as workers may strike and cause production delays.

In the future, we may work with more third-party manufacturers on a contract manufacturing basis, which could result in our exposure to additional risks not inherent in a typical ODM arrangement.

In a contract manufacturing arrangement, we would take on much more, if not all, of the responsibility around these areas.

If disruptions in our transportation network occur or our shipping costs substantially increase, including due to the COVID-19 pandemic, we may be unable to sell or timely deliver our products, and our operating expenses could increase.

39 unchanged sentences

Costs or payments we make in connection with an epidemic failure could materially adversely affect our business, results of operations, and financial condition.

If our products contain defects or errors, or are found to be noncompliant with industry standards, we could experience decreased sales and increased product returns, loss of customers and market share, and increased service,

warranty, and insurance costs.

In addition, defects in, or misuse of, certain of our products could cause safety concerns, including the risk of property damage or personal injury.

5 unchanged sentences

("Best Buy"), and Costco Wholesale Corporation (“Costco”) and Verisure and their respective affiliates.

For the three months ended March 28, 2021, we derived 10.0% and 29.8% of our revenue from Best Buy and Verisure and their affiliates, respectively.

For the three and six months ended June 27, 2021, we derived 12.2% and 10.4% of our revenue from Amazon and its affiliates, 18.5% and 14.6% of our revenue from Best Buy and its affiliates, and 25.5% and 27.4% of our revenue from Verisure and its affiliates, respectively.

In addition, we sell to wholesale distributors, including Ingram Micro, Inc., D&H Distributing Company, and Synnex Corporation.

19 unchanged sentences

These retailers have in the past increased their market share and may continue to do so in the future by expanding through acquisitions and construction of additional stores.

These situations concentrate our credit risk with a relatively small number of retailers, and, if any of these retailers were to experience a

shortage of liquidity, it could increase the risk that their outstanding payables to us may not be paid.

These situations concentrate our credit risk with a relatively small number of retailers, and, if any of these retailers were to experience a shortage of liquidity, it could increase the risk that their outstanding payables to us may not be paid.

In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces its purchases of our devices, we may be unable to find a sufficient number of other retail outlets for our products to sustain the same level of sales.

2 unchanged sentences

The loss of recurring orders from any of our more significant retailers, distributors, and other channel partners could cause our revenue and profitability to suffer.

Our ability to attract new retailers, distributors, and other channel partners will depend on a variety of factors, including the cost-effectiveness, reliability, scalability, breadth, and depth of our products.

Our ability to attract new retailers, distributors, and other channel

partners will depend on a variety of factors, including the cost-effectiveness, reliability, scalability, breadth, and depth of our products.

In addition, a change in the mix of our retailers, distributors, and other channel partners, or a change in the mix of direct and indirect sales, could adversely affect our revenue and gross margin.

21 unchanged sentences

Internal quality assurance testing and end-user testing may reveal service performance issues or desirable feature enhancements that could lead us to reallocate service development resources or postpone the release of new versions of our software.

The reallocation of resources or any postponement could cause delays in the development and release of future enhancements to our currently available software, damage the reputation of our services in the marketplace, and result in potential loss of revenue.

The reallocation of resources or any postponement could cause delays in the development and release of future enhancements to

our currently available software, damage the reputation of our services in the marketplace, and result in potential loss of revenue.

Although we attempt to resolve all errors that we believe would be considered serious by our partners and customers, the software powering our services is not error-free.

4 unchanged sentences

These laws can be particularly restrictive in countries outside the United States.

Both in the United States and abroad, these laws and regulations constantly evolve and remain subject to significant change.

Both in the United States and abroad, these laws and regulations are constantly evolving and remain subject to significant change.

In addition, the application and interpretation of these laws and regulations are often unpredictable and uncertain, particularly in the new and rapidly evolving industry in which we operate.

Because we store, process, and use data, some of which contain personal information, we are subject to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, and other matters.

Many of these laws and regulations could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could materially adversely affect our business, results of operations, and financial condition.

Alleged violations of any of these laws and regulations could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could materially adversely affect our business, results of operations, and financial condition.

In the EU/EEA, the General Data Protection Regulation (2016/679) (“GDPR”) went into effect in 2018 and replaced Directive 95/46/EC (the EU Privacy Directive), becoming directly applicable in all European Union member states.

The GDPR establishes new requirements applicable to the processing of personal data ( i.e.

, data which identifies an individual or from which an individual is identifiable), affords new data protection rights to individuals ( e.g ., the right to erasure of personal data) and imposes penalties for serious data breaches.

The GDPR establishes new requirements applicable to the processing of personal data (i.e., data which identifies an individual or from which an individual is identifiable), affords new data protection rights to individuals (e.g., the right to erasure of personal data) and imposes penalties for serious data breaches.

Individuals also have a right to compensation under GDPR for financial or non-financial losses.

2 unchanged sentences

With the expiry of the transition period on December 31, 2020, companies will have to comply with the GDPR and the GDPR as incorporated into United Kingdom national law, which has the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, for example around how data can lawfully be transferred between each jurisdiction, which exposes us to further compliance risk.

We may incur liabilities, expenses, costs, and other operational losses under

GDPR and applicable EU Member States and the United Kingdom privacy laws in connection with any measures we take to comply with them.

On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the UK ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the EEA to the UK.

Some uncertainty remains, however, as this adequacy determination must be renewed after four years and may be modified or revoked in the interim.

We cannot fully predict how the Data Protection Act, the UK GDPR, and other UK data protection laws or regulations may develop in the medium to longer term nor the effects of divergent laws and guidance regarding how data transfers to and from the UK will be regulated.

California also recently enacted legislation that has been dubbed the first “GDPR-like” law in the U.S.

7 unchanged sentences

New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.

Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts.

Some observers have noted that the CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

For example, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act ("CDPA") which becomes effective on January 1, 2023, and on June 8, 2021, Colorado enacted the Colorado Privacy Act ("CPA") which takes effect on July 1, 2023.

The CPA and CDPA are similar to the CCPA and CPRA but aspects of these state privacy statutes remain unclear, resulting in further legal uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.

Complying with the GDPR, CCPA, CPRA, CDPA, CPA, or other laws, regulations, amendments to or re-interpretations of existing laws and regulations, and contractual or other obligations relating to privacy, data protection, data transfers, data localization, or information security may require us to make changes to our services to enable us or our customers to meet new legal requirements, incur substantial operational costs, modify our data practices and policies, and restrict our business operations.

Any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.

Some observers have noted that the CCPA, CPRA, CDPA, and CPA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

GDPR and CCPA will impose additional responsibility and liability in relation to our processing of personal data.

GDPR, CCPA, and CPRA 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.

In addition, our operations may not provide sufficient cash to meet the repayment obligations of debt incurred under the Credit Agreement.

If we are unable to repay those amounts, the Lender could proceed against the collateral granted to them to secure that debt, which would seriously harm our business.

Such an event could materially adversely affect our financial condition and liquidity.

Additionally, such events of non-compliance could impact the terms of any additional borrowings and/or any credit renewal terms.

Any failure to comply with such covenants may be a disclosable event and may be perceived negatively.

Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future.

Global economic conditions could materially adversely affect our revenue and results of operations.

10 unchanged sentences

Many member nations in the European Union have been addressing the issues with controversial austerity measures.

In addition, the potential consequences of the “Brexit” process in the United

Kingdom have led to significant uncertainty in the region.

In addition, the potential consequences of the “Brexit” process in the United Kingdom have led to significant uncertainty in the region.

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.

14 unchanged sentences

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%, though the increase is not currently scheduled to take effect.

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.

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.

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.

23 unchanged sentences

A competitor with more extensive product lines and stronger brand identity may have greater bargaining power with these retailers.

Any reduction in available shelf space or increased competition for such shelf space would require us to increase our marketing expenditures simply to maintain current levels of retail shelf space, which would harm our operating margin.

Any reduction in available shelf space or increased competition for such shelf space would require us

to increase our marketing expenditures simply to maintain current levels of retail shelf space, which would harm our operating margin.

Our traditional retail customers have faced increased and significant competition from online retailers.

5 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.

For the three months ended March 28, 2021, we derived 8.2% of our revenue from Amazon and its affiliates.

For the three and six months ended June 27, 2021, we derived 12.2% and 10.4% of our revenue from Amazon and its affiliates.

We must also continuously monitor and evaluate emerging sales channels.

2 unchanged sentences

If we are unable to properly monitor, control, and manage our sales channel inventory and maintain an appropriate level and mix of products with our distributors and within our sales channels, we may incur increased and unexpected costs associated with this inventory.

We generally allow distributors and traditional retailers to return a limited

amount of our products in exchange for other products.

We generally allow distributors and traditional retailers to return a limited amount of our products in exchange for other products.

Under our price protection policy, if we reduce the list price of a product, we are often required to issue a credit in an amount equal to the reduction for each of the products held in inventory by our wholesale distributors and retailers.

10 unchanged sentences

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.

Furthermore, our competitors may independently develop similar technology or design around our intellectual property.

Furthermore, our competitors may independently develop similar technology or design around our

intellectual property.

Our inability to secure and protect our intellectual property rights could materially adversely affect our brand and business, results of operations, and financial condition.

10 unchanged sentences

However, there is no guarantee that we would be able to fully understand and use the source code, as we may not have the expertise to do so.

increasingly exposed to these risks as we continue to develop and market more products containing third-party technology and software.

We are increasingly exposed to these risks as we continue to develop and market more products containing third-party technology and software.

If we are unable to license the necessary technology, we may be forced to acquire or develop alternative technology, which could be of lower quality or performance standards.

5 unchanged sentences

International sales comprise a significant amount of our overall revenue.

International sales were 40.0% and 26.2% of overall revenue for the three months ended March 28, 2021 and March 29, 2020, respectively.

International sales were 32.5% and 25.2% of overall revenue for the three months ended June 27, 2021 and June 28, 2020, respectively, and 35.9% and 25.7% of overall revenue for the six months ended June 27, 2021 and June 28, 2020, respectively.

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.

13 unchanged sentences

We are also required to comply with local environmental legislation, and those who sell our products rely on this compliance in order to sell our products.

If those who sell our products do not agree with our interpretations and

requirements of new legislation, they may cease to order our products and our business, results of operations, and financial condition could be materially adversely affected.

If those who sell our products do not agree with our interpretations and requirements of new legislation, they may cease to order our products and our business, results of operations, and financial condition could be materially adversely affected.

Governmental regulations of imports or exports affecting internet security could affect our revenue.

8 unchanged sentences

Our industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding infringement of patents, trade secrets, and other intellectual property rights.

From time to time, third parties have asserted, and may continue to assert, exclusive patent, copyright, trademark, and other intellectual property rights against us, demanding license or royalty payments or seeking payment for damages, injunctive relief, and other available legal remedies through litigation.

From time to time, third parties have asserted, and may continue to assert, exclusive patent, copyright, trademark, and other intellectual property

rights against us, demanding license or royalty payments or seeking payment for damages, injunctive relief, and other available legal remedies through litigation.

These also include third-party non-practicing entities who claim to own patents or other intellectual property that they believe cover our products.

83 unchanged sentences

In addition, any new regulations or laws in the environmental area might increase the cost of raw materials we use in our products.

Environmental regulations require us to reduce product energy usage, monitor and exclude an expanding list of restricted substances, and participate in required recovery and recycling of our products.

Environmental regulations require us to reduce product energy usage, monitor and exclude an expanding list of

restricted substances, and participate in required recovery and recycling of our products.

While future changes in regulations are certain, we are currently unable to predict how any such changes will impact us and if such impacts will be material to our business.

10 unchanged sentences

Any failure on our part or on the part of our employees, agents, distributors, or other business partners to comply with the laws and regulations governing competition can result in negative publicity and diversion of management time and effort and may subject us to significant litigation liabilities and other penalties.

We are exposed to the credit risk of some of our customers and to credit exposures in certain markets, which could result in material losses.

We are exposed to the credit risk of some of our customers and sublease counterparties and to credit exposures in certain markets, which could result in material losses.

A substantial portion of our sales are on an open credit basis, with typical payment terms of 30 to 60 days in the United States and, because of local customs or conditions, longer in some markets outside the United States.

We monitor individual customer financial viability in granting such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay and maintain reserves we believe are adequate to cover exposure for doubtful accounts.

Any bankruptcies or illiquidity among our customer base could harm our business and have a material adverse effect on our financial condition and results of operations.

To the degree that turmoil in the credit markets makes it more difficult for some customers to obtain financing, our customers’ ability to pay could be adversely impacted, which in turn could materially adversely affect our business, results of operations, and financial condition.

Any bankruptcies or illiquidity among our customer base or sublease counterparties could harm our business and have a material adverse effect on our financial condition and results of operations.

To the degree that turmoil in the credit markets makes it more difficult for some customers or sublease counterparties to obtain financing, our customers’ or sublease counterparties' ability to pay could be adversely impacted, which in turn could materially adversely affect our business, results of operations, and financial condition.

If our products are not compatible with some or all leading third-party IoT products and protocols, we could be materially adversely affected.

35 unchanged sentences

federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code.

The opinion was based upon and relied on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of NETGEAR and us, including those relating to the past and future conduct of NETGEAR and us.

The opinion was based upon and relied on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of NETGEAR and us, including those

relating to the past and future conduct of NETGEAR and us.

If any of these representations, statements or undertakings are, or become, incomplete or inaccurate, or if we or NETGEAR breach any of the respective covenants in any of the separation-related agreements, the opinion of the outside tax counsel could be invalid and the conclusions reached therein could be jeopardized.

6 unchanged sentences

federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, in general, NETGEAR would recognize taxable gain as if it had sold our common stock in a taxable sale for its fair market value, and NETGEAR stockholders who receive shares of our common stock in the Distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

We entered into the tax matters agreement with NETGEAR to indemnify NETGEAR for any taxes (and any related costs and other damages) resulting from the Separation and Distribution, and certain other related transactions, to the extent such amounts were to result from (i) an acquisition after the Distribution of all or a portion of our equity securities, whether by merger or otherwise (and regardless of whether we participated in or otherwise facilitated the acquisition), (ii) other actions or failures to act by us or (iii) any of the representations or undertakings contained in any of

the Separation-related agreements or in the documents relating to the opinion of counsel being incorrect or violated.

Any such indemnity obligations arising under the tax matters agreement could be material.

7 unchanged sentences

federal income tax purposes, under Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code, to the extent that the failure to so qualify is attributable to actions, events or transactions relating to such party’s respective stock, assets or business, or a breach of the relevant representations or covenants made by that party in the tax matters agreement.

The transition services agreement generally provides that the applicable service recipient indemnifies the applicable service provider for liabilities that such service provider incurs arising from the provision of services other than liabilities arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement, and that the applicable service provider indemnifies the applicable service recipient for liabilities that such service recipient incurs arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement.

service recipient incurs arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement.

Pursuant to the registration rights agreement, we have agreed to indemnify NETGEAR and its subsidiaries that hold registrable securities (and their directors, officers, agents and, if applicable, each other person who controls such holder under Section 15 of the Securities Act) registering shares pursuant to the registration rights agreement against certain losses, expenses and liabilities under the Securities Act, common law or otherwise.

14 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.

As of March 28, 2021, we have 81,250,176 shares of common stock outstanding.

As of June 27, 2021, we have 82,916,535 shares of common stock outstanding.

In the future, we may issue our securities in connection with investments or acquisitions.

25 unchanged sentences

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 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.

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.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

13 unchanged sentences

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;

(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);

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.

1 unchanged sentence

These provisions are not intended to make Arlo immune from takeovers.

However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent

an acquisition that our board of directors determines is not in the best interests of Arlo and its stockholders.

However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of Arlo and its stockholders.

These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

15 unchanged sentences

Our board of directors will make any determination to issue shares of preferred stock on its judgment as to our and our stockholders’ best interests.

Our board of directors, in so acting, could issue shares of preferred stock having terms which could discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders may believe to be in their best interests or in which stockholders would have received a premium for their stock over the then prevailing market price of the stock.

Our board of directors, in so acting, could issue shares of preferred stock having terms which could discourage an

acquisition attempt or other transaction that some, or a majority, of the stockholders may believe to be in their best interests or in which stockholders would have received a premium for their stock over the then prevailing market price of the stock.

General Risks

20 unchanged sentences

Prior to the Separation, we historically operated our business as a segment of a public company.

As a standalone public company, we have additional legal, accounting, insurance, compliance, and other expenses that we had not incurred historically.

As a standalone public company, we have additional legal, accounting, insurance, compliance, and other expenses that we had not incurred

historically.

We are obligated to file with the SEC annual and quarterly reports and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We are also required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting

requirements on a timely basis.

We are also required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis.

In addition, we are and will continue to become subject to other reporting and corporate governance requirements, including certain requirements of the NYSE, and certain provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the regulations promulgated thereunder, which will impose significant compliance obligations upon us.

29 unchanged sentences

S-1/A 7/23/2018 4.1

Form of Service and Cash Balance Performance-Based Restricted Stock Unit Agreement for Executive Officers Granted in 2021

Sublease, by and between Vocera Communications, Inc.

and Arlo Technologies, Inc.

dated as of May 25, 2021

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

21 unchanged sentences

(Principal Financial and Accounting Officer)

August 5, 2021

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.

What changed 10-Q

Item 1A. Risk Factors