What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-02-25 compared with 2024-02-29 · 122 added, 118 removed, 663 unchanged (27% of the section changed)

71 unchanged sentences

For example, in 2023, we experienced longer sales cycles and customer uncertainty that resulted in delayed orders.

These circumstances normalized in 2024.

We face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position .

72 unchanged sentences

As a consequence, any acceleration or delay in anticipated product purchases by or requested deliveries to our largest end-customers could materially affect our revenue and operating results in any quarter and cause our revenue and operating results to fluctuate from quarter to quarter.

We cannot provide any assurance that we will be able to sustain or increase our revenue from our largest end-customers nor that we will be able to offset any absence of significant purchases by our largest end-customers in any particular period with purchases by new or existing end-customers in that or a subsequent period.

We expect that sales of our products to a limited number of end-customers will continue to contribute materially to our revenue for the foreseeable future.

27 unchanged sentences

A significant portion of our revenue is generated in international markets, including Japan, Western Europe, Taiwan and South Korea.

During the years ended December 31, 2023, 2022, and 2021, approximately 55%, 54% and 60% of our total revenue, respectively, was generated from customers located outside of the United States.

During the years ended December 31, 2024, 2023, and 2022, approximately 55%, 55% and 54% of our total revenue, respectively, was generated from customers located outside of the U.S.

If we are unable to maintain or continue to grow our revenue in these markets, our financial results may suffer.

3 unchanged sentences

If we are not able to maintain successful distributor relationships internationally or recruit additional companies to enter into distributor relationships, our future success in these international markets could be limited.

Business practices in the international markets that we serve may differ from those in the United States and may require us in the future to include terms in customer contracts other than our standard terms.

Business practices in the international markets that we serve may differ from those in the U.S.

and may require us in the future to include terms in customer contracts other than our standard terms.

To the extent that we may enter into customer contracts in the future that include non-standard terms, our operating results may be adversely impacted.

1 unchanged sentence

We have personnel in numerous countries including in the following countries and regions:

the United States, Western Europe, India, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.

the U.S., Western Europe, India, the Middle East, Japan, Taiwan, South Korea, Southeast Asia and Latin America.

As we maintain our international operations, we are subject to a number of risks, including the following:

17 unchanged sentences

companies may be held liable for actions taken by directors, officers, employees, agents, or other strategic or local partners or representatives.

As such, if we or our intermediaries, such as channel partners and distributors, fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the United States and elsewhere could seek to impose civil and/or criminal fines and penalties which could have a material adverse effect on our business, operating results and financial condition.

As such, if we or our intermediaries, such as resellers and other channels and distributors, fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the U.S.

and elsewhere could seek to impose civil and/or criminal fines and penalties which could have a material adverse effect on our business, operating results and financial condition.

Our success depends on our key personnel and our ability to hire, retain and motivate qualified product development, sales, marketing and finance personnel.

9 unchanged sentences

There can be no assurance that our exploration of strategic alternatives will result in any transaction being consummated, and speculation and uncertainty regarding the outcome of our exploration of strategic alternatives may adversely impact our business.

On July 30, 2019, we announced that our Board of Directors had formed a Strategy Committee tasked and empowered with overseeing and executing specific activities directed to increasing shareholder value.

No assurance can be given that a strategic transaction will be consummated in the near term or at all.

11 unchanged sentences

Volatility in the global economic market or other effects of global or regional economic weakness, including limited availability of credit, a reduction in business confidence and activity, deficit-driven austerity measures that continue to affect governments and educational institutions, and other difficulties may affect one or more of the industries to which we sell our products and services.

If economic conditions in the United States, Europe and other key markets for our products continue to be volatile in response to geopolitical developments, macroeconomic trends, or otherwise, and do not improve, or those markets experience a prolonged downturn, many end-customers may delay or reduce their IT spending.

If economic conditions in the U.S., Europe and other key markets for our products continue to be volatile in response to geopolitical developments, macroeconomic trends, or otherwise, and do not improve, or those markets experience a prolonged downturn, many end-customers may delay or reduce their IT spending.

From time to time this causes reductions in sales of our products and services, longer sales cycles, slower adoption of new technologies and increased price competition.

4 unchanged sentences

Our primary manufacturers are Lanner and AEWIN, each of which is located in Taiwan.

Deterioration of relations between Taiwan and China, the resulting actions taken by either country, and other factors affecting the political or economic conditions of Taiwan in the future, could cause disruption to the manufacturing of our hardware components, which could materially adversely affect our business, financial condition and results of operations and the market price and the liquidity of our shares.

Deterioration of international relations including but not limited to those between Taiwan and China, the resulting actions taken by either country, and other factors affecting the political or economic conditions of Taiwan in the future, could cause disruption to the manufacturing of our hardware components, which could materially adversely affect our business, financial condition and results of operations and the market price and the liquidity of our shares.

Our reliance on these third-party manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product costs, and product supply and timing.

30 unchanged sentences

Additionally, as a well-known provider of enterprise security solutions, our networks, products, and services could be targeted by attacks specifically designed to disrupt our business and harm our reputation.

For example, in January 2023, we identified a cyber-security incident in our corporate IT infrastructure (not related to any of our products or solutions used by customers) (the “Cyber Incident”).

Upon detecting the incident, we launched an investigation and engaged the services of cyber-security experts and advisors, incident response professionals and external counsel to support the investigation.

While, to date, this incident has not had a material impact on our operations, it did result in additional expense incurred in connection with the investigation.

Such an attack could result in additional expense incurred in connection with the response, investigation, mitigation and remediation in response.

For example, in January 2023, we identified a cybersecurity incident in our corporate IT infrastructure (not related to any of our products or solutions used by customers) (the “Cyber Incident”).

Upon detecting the Cyber Incident, we launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation.

As our products are adopted by an increasing number of enterprises and governments, it is possible that the individuals and organizations behind advanced attacks will focus on finding ways to defeat our products.

4 unchanged sentences

If we fail to identify and respond to new and increasingly complex methods of attack and to update our products to detect or prevent such threats in time to protect our end-customers’ critical business data, our business, operating results and reputation could suffer.

If any companies or governments that are publicly known to use our platform are the subject of a cyber-attack that becomes publicized, our other current or potential channel partners or end-customers may look to our competitors for

alternatives to our products.

Real or perceived security breaches of our end-customers’ networks could cause disruption or damage to their networks or other negative consequences and could result in negative publicity to us, damage to our reputation, declining sales, increased expenses and end-customer relations issues.

To the extent potential end-customers or industry analysts believe that the occurrence of any actual or perceived failure of our products to detect or prevent malware, viruses, worms or similar threats is a flaw or indicates that our products do not provide significant value, our reputation and business could be harmed.

To the extent potential end-customers or industry

analysts believe that the occurrence of any actual or perceived failure of our products to detect or prevent malware, viruses, worms or similar threats is a flaw or indicates that our products do not provide significant value, our reputation and business could be harmed.

Any real or perceived defects, errors, or vulnerabilities in our products, or any failure of our products to detect a threat, could result in:

20 unchanged sentences

We expect that these errors or defects will be found from time to time in new or enhanced products after commencement of commercial distribution.

These problems have in the past and may in the future cause us to incur significant warranty and repair costs, divert the

attention of our engineering personnel from our product development efforts and cause significant customer relations problems.

These problems have in the past and may in the future cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts and cause significant customer relations problems.

We may also be subject to liability claims for damages related to product errors or defects.

While we carry insurance policies covering this type of liability, these policies may not provide sufficient protection should a claim be asserted.

While we carry insurance policies

covering this type of liability, these policies may not provide sufficient protection should a claim be asserted.

A material product liability claim may harm our business and results of operations.

7 unchanged sentences

• litigation, regulatory inquiries, or investigations that may be costly and harm our reputation.

Our use of open source software and generative artificial intelligence (AI) in our products could negatively affect our ability to sell our products and subject us to possible litigation.

Our use of open source software and position regarding the potential use of generative artificial intelligence (AI) in our products could negatively affect our ability to sell our products and subject us to possible litigation.

We incorporate open source software such as the Linux operating system kernel into our products.

5 unchanged sentences

We cannot guarantee that our use of open source software has been, and will be, managed effectively for our intended business purposes and/or compliant with applicable open source licenses.

We may face legal action by third parties seeking to enforce their intellectual property rights related to our use of such open source software.

We may face legal action by third parties seeking to enforce their intellectual property rights related to our use of such software.

Failure to adequately manage open source license compliance and our use of open source or AI generated software may result in unanticipated obligations regarding our products and services, such as a requirement that we license proprietary portions of our products or services on unfavorable terms, that we make available source code for modifications or derivative works we created based upon, incorporating or using open source software, that we license such modifications or derivative works under the terms of the particular open source license and/or that we redesign the affected products or services, which could result, for example, in a loss of intellectual property rights, or delay in providing our products and services.

5 unchanged sentences

Further, if our defenses to such a claim were not successful, we could be, for example, subject to significant damages, be required to seek licenses from third parties in order to continue offering our products and services without infringing such third party’s intellectual property rights, be required to re-engineer such products and services, or be required to discontinue making available such products and services if re-engineering cannot be accomplished on a timely or successful basis.

engage in these or other remedies could increase our costs or otherwise adversely affect our business, operating results and financial condition.

The need to engage in these or other remedies could increase our costs or otherwise adversely affect our business, operating results and financial condition.

Our products must interoperate with operating systems, software applications and hardware that are developed by others and if we are unable to devote the necessary resources to ensure that our products interoperate with such software and hardware, we may fail to increase, or we may lose market share and we may experience a weakening demand for our products.

21 unchanged sentences

Conversely, if we underestimate demand for our products, or if our manufacturers fail to supply products we require at the time we need them, we may experience inventory shortages.

Inventory shortages might delay shipments to resellers, distribution channel partners and customers and cause us to lose sales.

These shortages may diminish the loyalty of our distribution channel partners or customers.

Inventory shortages might delay shipments to resellers, distribution channels and customers and cause us to lose sales.

These shortages may diminish the loyalty of our distribution channels or customers.

The difficulty in forecasting demand also makes it difficult to estimate our future financial condition and results of operations from period to period.

6 unchanged sentences

Because of this complexity, prospective end-customers generally consider a number of factors over an extended period of time before committing to purchase our products.

End-customers often view the purchase of our products as a significant and strategic

decision that can have important implications on their existing networks and data centers and, as a result, require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order to ensure that our products will successfully interoperate with our end-customers’ complex network and data centers.

End-customers often view the purchase of our products as a significant and strategic decision that can have important implications on their existing networks and data centers and, as a result, require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order to ensure that our products will successfully interoperate with our end-customers’ complex network and data centers.

Additionally, the budgetary decisions at these entities can be lengthy and require multiple organization reviews.

The length of time that end-customers devote to their evaluation of our products and decision-making process varies significantly.

The length of time that end-customers

devote to their evaluation of our products and decision-making process varies significantly.

The length of our products’ sales cycles typically ranges from three to 12 months but can be longer for our large end-customers.

5 unchanged sentences

When support is purchased our end-customers depend on our support organization to provide a broad range of support services, including on-site technical support, 24-hour support and shipment of replacement parts on an expedited basis.

If our support organization or our distribution channel partners do not assist our end-customers in deploying our products effectively, succeed in helping our end-customers resolve post-deployment issues quickly, or provide ongoing support, it could adversely affect our ability to sell our products to existing end-customers and could harm our reputation with potential end-customers.

We currently have technical support centers in the United States, Japan, India and the Netherlands.

If our support organization or our distribution channels do not assist our end-customers in deploying our products effectively, succeed in helping our end-customers resolve post-deployment issues quickly, or provide ongoing support, it could adversely affect our ability to sell our products to existing end-customers and could harm our reputation with potential end-customers.

We currently have technical support centers in the U.S., Japan, India and the Netherlands.

As we continue to expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training and documentation in languages other than English.

14 unchanged sentences

As a result, most of our subscription revenue arises from agreements entered into during previous periods.

A shortfall in orders for our subscription-based solutions in any one period would most likely not significantly reduce our subscription revenue for that period, but could adversely affect

the revenue contribution in future periods.

A shortfall in orders for our subscription-based solutions in any one period would most likely not significantly reduce our subscription revenue for that period, but could adversely affect the revenue contribution in future periods.

In addition, we may be unable to quickly reduce our cost structure in response to a decrease in these orders.

Accordingly, the effect of downturns in sales of our subscription-based solutions will not be fully reflected in our operating results until future periods.

A subscription revenue model also makes it difficult for us to rapidly increase our revenue through additional subscription sales in any one period, as revenue is generally recognized over a longer period.

A subscription revenue model also makes it difficult for us to rapidly

increase our revenue through additional subscription sales in any one period, as revenue is generally recognized over a longer period.

Our business and operations have experienced growth in certain prior periods and may experience rapid growth at certain times in the future, and if we do not effectively manage any future growth or are unable to sustain and improve our controls, systems and processes, our operating results will be adversely affected.

In certain prior periods, we have significantly increased the number of our employees and independent contractors.

As we hire new employees and independent contractors and expand into new locations outside the United States, we are required to comply with varying local laws for each of these new locations.

As we hire new employees and independent contractors and expand into new locations outside the U.S., we are required to comply with varying local laws for each of these new locations.

We anticipate that further expansion of our infrastructure and headcount will be required.

8 unchanged sentences

We may not be able to sustain or develop new distributor and reseller relationships, and a reduction or delay in sales to significant distribution channel partners could hurt our business.

We sell our products and services through multiple distribution channels in the United States and internationally.

We sell our products and services through multiple distribution channels in the U.S.

and internationally.

We may not be able to increase our number of distributor or reseller relationships or maintain our existing relationships.

Recruiting and retaining qualified distribution channel partners and training them on our technologies requires significant time and resources.

These distribution channel partners may also market, sell and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products.

Our sales channel structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our distribution channel partners misrepresent the functionality of our products or services to end-customers or violate laws or our corporate policies.

If we are unable to establish or maintain our sales channels or if our distribution channel partners are unable to adapt to our future sales focus and needs, our business and results of operations will be harmed.

Recruiting and retaining qualified distribution channels and training them on our technologies requires significant time and resources.

These distribution channels may also market, sell and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products.

Our sales channel structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our distribution channels misrepresent the functionality of our products or services to end-customers or violate laws or our corporate policies.

If we are unable to establish or maintain our sales channels or if our distribution channels are unable to adapt to our future sales focus and needs, our business and results of operations will be harmed.

Our products must conform to industry standards in order to be accepted by end-customers in our markets.

14 unchanged sentences

We may make future acquisitions of complementary companies, products or technologies.

With respect to any acquisitions we may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.

For example, in February 2025 we acquired the assets and key personnel of ThreatX Protect.

With respect to any acquisitions we have or may undertake, we may find that the acquired businesses, products or technologies do not further our business strategy as expected, that we paid more than what the assets are later worth or that economic conditions change, all of which may generate future impairment charges.

Acquisitions may be viewed negatively by customers, financial markets or investors.

8 unchanged sentences

Most of our sales are on an open credit basis, with typical payment terms ranging from 30 to 90 days depending on local customs or conditions that exist in the sale location.

If any of the distribution channel partners or end-customers responsible for a significant portion of our revenue becomes insolvent or suffers a deterioration in its financial or business condition and is unable to pay for our products, our results of operations could be harmed.

If any of the distribution channels or end-customers responsible for a significant portion of our revenue becomes insolvent or suffers a deterioration in its financial or business condition and is unable to pay for our products, our results of operations could be harmed.

The sales price of our products and subscriptions may decrease, which may reduce our gross profits and adversely impact our financial results.

3 unchanged sentences

Additionally, although we price our products and subscriptions worldwide in U.S.

Dollars (except in Japan), currency fluctuations in certain countries and regions may negatively impact actual prices that channel partners and end-customers are willing to pay in those countries and regions.

Dollars (except in Japan), currency fluctuations in certain countries and regions may negatively impact actual prices that distribution channels and end-customers are willing to pay in those countries and regions.

Furthermore, we anticipate that the sales prices and gross profits for our products will decrease over product life cycles.

6 unchanged sentences

In the event our or our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, and our operations could be disrupted, for the affected quarter or quarters.

In addition, large-scale cybersecurity attacks, acts of war or terrorism,

global pandemics such as the COVID-19 pandemic or other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, channels, or end-customers or the economy as a whole.

Any disruption in the business of our supply chain, manufacturers, logistics providers, channels or end-customers that impacts sales at the end of a quarter could have a significant adverse impact on our quarterly results.

In addition, large-scale cybersecurity attacks, acts of war or terrorism, global pandemics such as the COVID-19 pandemic or other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, channels, or end-customers or the economy as a whole.

disruption in the business of our supply chain, manufacturers, logistics providers, channels or end-customers that impacts sales at the end of a quarter could have a significant adverse impact on our quarterly results.

All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.

20 unchanged sentences

We rely on a combination of patent, copyright, trademark and trade secret laws, and contractual restrictions on disclosure of confidential and proprietary information, to protect our intellectual property.

Despite the efforts we take to protect our intellectual property and other proprietary rights, these efforts may not be sufficient or effective at preventing their

unauthorized use.

Despite the efforts we take to protect our intellectual property and other proprietary rights, these efforts may not be sufficient or effective at preventing their unauthorized use.

In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which we have rights.

There may be instances where we are not able to protect intellectual property or other proprietary rights in a manner that maximizes competitive advantage.

There may be instances where we are not able to protect intellectual

property or other proprietary rights in a manner that maximizes competitive advantage.

If we are unable to protect our intellectual property and other proprietary rights from unauthorized use, the value of those assets may be reduced, which could negatively impact our business.

5 unchanged sentences

We have not made such monitoring a priority to date and will not likely make this a priority in the future.

We cannot be certain that the steps we have taken or will take will prevent misappropriation of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

If we fail to protect our intellectual property adequately, our competitors might gain access to our technology, and our business might be harmed.

6 unchanged sentences

Any litigation, whether or not resolved in our favor, could result in significant expense to us and divert the efforts of our management and technical personnel, as well as cause other claims to be made against us, which might adversely affect our business, operating results and financial condition.

Exposure to UK and other political developments, including the effects of Brexit, could have a material adverse effect on us.

On January 31, 2020, the United Kingdom (“UK”) withdrew from the European Union (“EU”), which began a transition period until the end of 2020 during which the UK and the EU negotiated additional arrangements.

For instance, the EU-UK Trade and Cooperation Agreement went into effect on January 1, 2021, which retains the tariff-free and quota-free status on trade between the EU and UK.

Brexit creates an uncertain political and economic environment in the UK and potentially across other EU member states for the foreseeable future and such uncertainties could impair or limit our ability to transact business in the member EU states.

The political and economic uncertainty created by Brexit has caused and may continue to cause significant volatility in global financial markets and in the value of the Pound Sterling currency or other currencies, including the Euro.

Depending on the extent of the effects of Brexit, it is possible that there may be adverse practical and/or operational implications on our business.

Consequently, no assurance can be given as to the overall impact of Brexit and, in particular, no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result.

Enhanced United States tariffs, import/export restrictions, Chinese regulations or other trade barriers may have a negative effect on global economic conditions, financial markets and our business.

There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.

There is currently significant uncertainty about the future relationship between the U.S.

and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.

Some within the U.S.

government have called for substantial changes to U.S.

foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the United States.

In 2018, the Office of the U.S.

Trade Representative (the “USTR”) enacted tariffs on imports into the U.S.

China, including communications equipment products and components manufactured and imported from China.

from China, including communications equipment products and components manufactured and imported from China.

In October 2021 the USTR confirmed these enacted U.S.

11 unchanged sentences

Any reduction in customers’ sales, and/or any apprehension among distributors and customers of a possible reduction in such sales, would likely cause an indirect negative impact on our own sales.

Additionally, the current uncertainty about the future relationship between the United States and China, as well as other countries, with respect to the trade policies, treaties, taxes, government regulations and tariffs makes it difficult to plan for the future.

New developments in these areas, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the United States.

For example, in early 2025, the U.S.

presidential administration threatened or imposed tariffs on imports from various countries, including China, Mexico, and Canada.

In response, some of these countries threatened or announced tariffs on imports from the U.S.

The extent to which these threats will be enacted and the duration for which enacted tariffs will be in place remain uncertain and could lead to economic decline in affected countries, which could negatively impact demand for our products.

Moreover, if our products are subject to tariffs, we may be impacted to a greater degree than our competitors who operate in countries that are not subject to tariffs, placing us at a disadvantage.

result, future U.S.

tariffs on imports and retaliatory tariffs could increase the cost of, and reduce demand for, our products, which may materially adversely affect our results of operations.

Additionally, the current uncertainty about the future relationship between the U.S.

and China, as well as other countries, with respect to the trade policies, treaties, taxes, government regulations and tariffs makes it difficult to plan for the future.

Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations and affect our strategy in China and elsewhere around the world.

3 unchanged sentences

We may also outsource operations to third-party service providers to whom we transmit certain confidential data.

While the Cyber Incident we experienced in January 2023 did not result in material degradation of our systems, it did expose a vulnerability in our security measures which we have corrected.

While the Cyber Incident we experienced in January 2023 did not result in material degradation of our systems, it did expose a vulnerability in our security measures which we believe has been corrected.

There are no assurances that any security measures we have in place, or any additional security measures that our subcontractors may have in place, will be sufficient to protect this confidential information from unauthorized security breaches.

To date, the Cyber Incident has not had a material impact on the Company, although it did result in additional expense incurred in connection with the investigation.

While the Cyber Incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.

We cannot assure you that, despite the implementation of these security measures, including enhanced security measures as a result of the Cyber Incident, we will not be subject to additional security incidents or other data breaches or that this data will not be compromised.

18 unchanged sentences

and other potential liabilities.

In response to the January 2023 Cyber Incident, we launched an investigation and engaged the services of cyber-security experts and advisors, incident response professionals and external counsel to support the investigation.

While to date, this incident has not had a material impact on the Company, it did result in additional expense incurred in connection with the investigation.

Security incidents that occur or are believed to have occurred could damage our reputation and brand, could cause our business to suffer, could require us to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches, could expose us to a risk of loss, litigation or regulatory action and possible liability, and could impair our ability to operate our business, including our ability to provide maintenance and support services to our channel partners and end-customers.

In response to the Cyber Incident, we launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation.

While the Cyber Incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation.

If current or prospective resellers and end-customers believe that our systems and solutions do not provide adequate security for their businesses’ needs, our business and our financial results could be harmed.

Additionally, future actual, potential or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.

Additionally, future actual, potential or

anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.

A significant number of our employees are currently working from home or other remote locations.

7 unchanged sentences

A wide variety of provincial, state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data.

These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

For example, the European Union’s General Data Protection Regulation, or GDPR, which took effect in May 2018, has caused EU data protection requirements to be more stringent and provide for greater penalties.

These data protection, privacy and cyber resilience-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

For example, the European Union’s General Data Protection Regulation, or GDPR, which took effect back in May 2018, has caused EU data protection requirements to be more stringent and provides for greater penalties.

Because the GDPR may be subject to new or changing interpretations by courts, our interpretation of the law and efforts to comply with the rules and regulations of the law may be ruled invalid.

Noncompliance with the GDPR can trigger fines of up to €20 million or 4% of global annual revenues, whichever is higher.

The United Kingdom also recently enacted legislation that substantially implements the GDPR.

Similarly, California recently enacted the California Consumer Privacy Act as well as the California Privacy Rights Act (collectively referred to as “CCPA/CPRA”), which, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers new rights including not sharing personal information upon the consumer’s request and opt-out provisions for the sales of consumer’s personal information.

Aspects of the CCPA/CPRA and its interpretation remain unclear.

In addition, other states have enacted or proposed legislation that regulates the collection, use, and sale of personal information, and such regimes might not be compatible with either the GDPR or the CCPA/CPRA or may require us to undertake additional practices.

We cannot yet predict the impact of the CCPA/CPRA or impending legislation on our business or operations, but it may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including significant fines, imprisonment of company officials and public censure, claims for damages by end-customers and other

affected persons and entities, damage to our reputation and loss of goodwill (both in relation to existing and prospective channel partners and end-customers), and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business.

Evolving and changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere, especially relating to classification of Internet Protocol (“IP”) addresses, machine identification, location data, biometric data and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data.

Noncompliance with the GDPR can trigger regulator fines of up to €20 million or 4% of global annual revenues, whichever is higher, in the most serious cases and/or legal claims.

The United Kingdom enacted legislation that substantially implements the GDPR.

In the EU/UK, various cyber resilience related laws (for example the EU Cyber Resilience Act, Network and Information Systems Directive 2, and the Digital Operational Resilience Act) have either recently been enacted or are in the process of being enacted, which essentially oblige those doing business in the EU/UK to implement robust cybersecurity standards with respect to the products and services they provide.

The EU has also implemented a comprehensive law regulating the development and use of AI systems (the EU AI Act) which also protects data and privacy by requiring confidentiality, transparence and risk assessments where AI systems and built and used.

Breaches of such laws could also lead to significant fines and legal claims, and allegations of breach could lead to significant investigative or defense related costs.

Similarly, California recently enacted the California Consumer Privacy Act (which was then amended by the California Privacy Rights Act) (“CCPA”) which, among other things, requires covered companies to provide new disclosures to California consumers and affords such consumers new rights including not sharing personal information upon the consumer’s request and opt-out provisions for the sales of consumer’s personal information.

In addition, at least 18 other U.S.

states have enacted comprehensive privacy legislations that regulates the collection, use, and sale of personal information, and other states have enacted sectoral privacy laws and introduced bills regarding comprehensive privacy laws, and these privacy laws might not be compatible with either the GDPR or the CCPA or may require us to undertake additional practices.

At a minimum, these U.S.

state comprehensive and sectoral privacy laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Further, U.S.

states have passed or introduced legislations regulating the development and deployment or artificial intelligence and automated decision making technologies across different sectors and in some instances have passed or introduced legislations or regulations that apply across sectors.

Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including significant investigatory costs, fines, imprisonment of company officials and public censure (in the most serious, criminal cases, in certain jurisdictions), claims for damages by end-customers and other affected persons and entities, damage to our reputation and loss of goodwill (both in relation to existing and prospective channel partners and end-customers), and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business.

Evolving and changing definitions of personal data and personal information, within the EU, the U.S., and elsewhere, especially relating to classification of Internet Protocol (“IP”) addresses, machine identification, location data, biometric data and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of

We may be required to expend significant resources to modify our solutions and otherwise adapt to these changes, which we may be unable to do on commercially reasonable terms or at all, and our ability to develop new solutions and features could be limited.

5 unchanged sentences

Selling to governmental organizations can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale.

We have not yet received security clearance from the United States government, which prevents us from being able to sell directly for certain governmental uses.

We have not yet received security clearance from the U.S.

government, which prevents us from being able to sell directly for certain governmental uses.

There can be no assurance that such clearance will be obtained, and failure to do so may adversely affect our operating results.

3 unchanged sentences

Our business is subject to regulation by various federal, state, local and foreign governmental entities, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, artificial intelligence, data privacy laws, federal securities laws, and tax laws and regulations.

In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States.

Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

In certain jurisdictions, these regulatory requirements may be more stringent than those in the U.S.

Noncompliance or perceived noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected.

3 unchanged sentences

Our products are subject to U.S.

export controls and may be exported outside the United States only with the required level of export license or through an export license exception because we incorporate encryption technology into our products.

export controls and may be exported outside the U.S.

only with the required level of export license or through an export license exception because we incorporate encryption technology into our products.

In addition, various countries regulate the import of certain encryption technology and have enacted laws that could limit our ability to distribute our products or our end-customers’ ability to implement our products in those countries.

6 unchanged sentences

We are also subject to laws which restrict certain hazardous substances, including lead, used in the construction of our products, such as the European Union Restriction on the Use of Hazardous Substances in electrical and electronic equipment directive.

We are also subject to the European Union Directive, known as the Waste Electrical and Electronic Equipment Directive (“WEEE Directive”), which requires producers of certain electrical and electronic equipment to properly label products, register as a WEEE producer, and provide for the collection, disposal and recycling of waste electronic products.

properly label products, register as a WEEE producer, and provide for the collection, disposal and recycling of waste electronic products.

Failure to comply with these environmental directives and other environmental laws could result in the imposition of fines and penalties, inability to sell covered products in certain countries, the loss of revenue, or subject us to third-party property damage or personal injury claims, or require us to incur investigation, remediation or engineering costs.

7 unchanged sentences

Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

We are subject to income taxes and other taxes in the United States and various foreign jurisdictions.

We are subject to income taxes and other taxes in the U.S.

and various foreign jurisdictions.

Our domestic and international tax liabilities will be subject to the allocation of income and expenses in differing jurisdictions.

10 unchanged sentences

We are subject to tax in multiple U.S.

tax jurisdictions and foreign tax jurisdictions due to our international expansion.

tax jurisdictions and foreign tax jurisdictions due to our international operations.

The development of our tax strategies requires additional expertise and may impact how we conduct our business.

3 unchanged sentences

If our tax strategies are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results and cash flows could be adversely affected.

In addition, from time to time the United States, foreign, state and local governments make substantive changes to tax rules, including tax policies and rates, that apply to businesses and shareholders.

In addition, from time to time the U.S., foreign, state and local governments make substantive changes to tax rules, including tax policies and rates, that apply to businesses and stockholders.

Such substantive changes could adversely impact our operations and financial results.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles (“GAAP”) in the United States are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.

Generally accepted accounting principles (“GAAP”) in the U.S.

are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.

See Note 1 Description of Business and Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for the effect of new accounting pronouncements on our financial statements.

Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.

3 unchanged sentences

If any new internal control procedures which may be adopted or our existing internal control procedures are deemed inadequate, or if we identify additional material weaknesses in our disclosure controls or internal controls over financial reporting in the future, we will be unable to assert that our internal controls are effective.

If we are unable to do so, or if we are required to restate our financial statements as a result of ineffective internal control over financial reporting, or if our auditors are unable to attest on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

If we are unable to do so, or if we are required to restate our consolidated financial statements as a result of ineffective internal control over financial reporting, or if our auditors are unable to attest on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.

7 unchanged sentences

• the ability of our Board of Directors, by majority vote, to amend the bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;

• advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or not to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law.

15 unchanged sentences

We have established corporate social responsibility programs aligned with sound environmental, social and governance principles.

An overview of these programs can be found on our corporate website at https://investors.A10networks.com within the “Governance - Governance Documents” section.

These programs reflect our current initiatives and are not guarantees that we will be able to achieve them.

Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational,

financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Additionally, the implementation of these initiatives imposes additional costs on us.

If our ESG initiatives fail to satisfy investors, customers, partners and our other stakeholders, our reputation, our ability to sell products and services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted.

Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the

timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

Risks Related to Capitalization and Financial Markets

5 unchanged sentences

Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations that can affect our operating income.

The currency exchange impact of the foreign exchange rates on our net income was $0.1 million favorable during the year ended December 31, 2023.

The currency exchange impact of the foreign exchange rates on our net income was $0.5 million unfavorable during the year ended December 31, 2022.

The currency exchange impact of the foreign exchange rates on our net income was $2.1 million and $0.1 million favorable during the years ended December 31, 2024 and 2023, respectively.

The currency exchange impact of the foreign exchange rates on our net income was $0.5 million unfavorable during the year ended December 31, 2022.

2 unchanged sentences

The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and would not protect us from long term shifts in currency exchange rates.

Concentration of ownership among our existing executive officers, a small number of stockholders, directors and their affiliates may prevent new investors from influencing significant corporate decisions.

As of December 31, 2023, our executive officers and directors, together with affiliated entities, owned 5.7% of our then outstanding common stock (40.6% if other holders of 5% or more of our outstanding common stock are also included).

Accordingly, these stockholders, acting together, have significant influence over the election of our directors, over whether matters requiring stockholder approval are approved or disapproved and over our affairs in general.

The interests of these stockholders could conflict with your interests.

These stockholders may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their investments, even though such transactions might involve risks to you.

In addition, this concentration of ownership could have the effect of delaying or preventing a liquidity event such as a merger or liquidation of our company.

We may need to raise additional funds in future private or public offerings, and such funds may not be available on acceptable terms, if at all.

We may need to or may elect to raise additional funds in future private or public offerings, and such funds may not be available on acceptable terms, if at all.

If we do raise additional funds, existing stockholders will suffer dilution.

We may need to raise additional funds in private or public offerings, and these funds may not be available to us when we need them or on acceptable terms, if at all.

We may also elect to raise additional funds to help us pursue our business or strategic objectives.

If we raise additional funds through further issuances of equity or convertible debt securities, you could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our then-existing capital stock.

14 unchanged sentences

• litigation or investigations involving us, our industry, or both;

• regulatory developments in the United States, foreign countries or both;

• regulatory developments in the U.S., foreign countries or both;

• general economic conditions and trends;

• major catastrophic events, including pandemics, acts of terrorism or war, or other events affecting the global economy, and the responses thereto;

• cyberattacks and other information or security breaches;

• cyber-attacks and other information or security breaches;

• sales of large blocks of our common stock;

4 unchanged sentences

The price of our common stock has been highly volatile since our initial public offering in March 2014.

In the past, we have experienced securities class action and related derivative litigation, and an SEC investigation, all of which have been resolved.

Future securities litigation, including any related shareholder derivative litigation or investigation, could result in substantial costs and divert our management’s attention and resources from our business.

We have experienced securities class action and related derivative litigation and SEC investigations.

Future securities litigation, including any related shareholder derivative litigation, or investigations could result in substantial costs and divert our management’s attention and resources from our business.

This could have a material adverse effect on our business, results of operations and financial condition.

Sales of a substantial amount of our common stock in the public markets, or the perception that such sales might occur, could reduce the price that our common stock might otherwise attain and may dilute your voting power and your ownership interest in us.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

As of December 31, 2023, there were approximately 74.4 million common shares outstanding as of such date.

All outstanding shares and all shares issuable upon exercise of outstanding and vested options are freely tradable, subject in some cases to volume and other restrictions of Rules 144 and 701 under the Securities Act, as well as our insider trading policy.

In addition, holders of certain shares of our outstanding common stock,

including an aggregate of 3.9 million shares held by funds affiliated with Summit Partners, L.P.

as of December 31, 2023 are entitled to rights with respect to registration of these shares under the Securities Act pursuant to an investors’ rights agreement.

If holders of our common stock, whether by exercising their registration rights or otherwise, sell a large number of shares, they could adversely affect the market price for our common stock.

If we file a registration statement for the purposes of selling additional shares to raise capital and are required to include shares held by holders pursuant to the exercise of their registration rights, our ability to raise capital may be impaired.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline.

If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline.

10 unchanged sentences

On October 28, 2021, we announced that our Board of Directors approved a capital allocation strategy to return capital to our stockholders.

As part of this strategy, the Company announced on November 7, 2023 that its Board authorized a $50 million stock repurchase program under which we may repurchase up to $50 million of our outstanding common stock over the following 12 months.

Under the stock repurchase program, we may repurchase shares in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.

As part of this strategy, the Company announced on November 7, 2024, that its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock.

Under the Company’s stock repurchase programs, we may repurchase shares in the open market, privately negotiated transactions, in block trades or a combination of the foregoing.

We are not obligated under the stock repurchase program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the stock repurchase program at any time.

Our management and Board will determine the timing and amount of any repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements.

Our management and Board will determine the timing and

amount of any repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements.

The Company plans to fund repurchases from its existing cash balance and cash provided by operating activities.

2 unchanged sentences

Additionally, these repurchases will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions and would result in lower overall returns on our cash balances.

For example, on September 8, 2022, we entered into a Common Stock Repurchase Agreement with entities affiliated with Summit Partners whereby the Company purchased 3.5 million shares of common stock for $12.75 per share, or an aggregate purchase price of $44.6 million.

For example, in September 2022 and in November 2024, we entered into Common Stock Repurchase Agreements with entities affiliated with Summit Partners whereby the Company purchased shares of its common stock.

There can be no assurance that any additional stock repurchases will, in fact, occur, or, if they occur, that they will enhance stockholder value.

Although the stock repurchase programs is intended to enhance long term stockholder value, short-term stock price fluctuations could reduce the effectiveness.

Although the stock repurchase programs are intended to enhance long term stockholder value, short-term stock price fluctuations could reduce their effectiveness.

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-K

Item 1A. Risk Factors