What changed in this filing

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Item 1A. Risk Factors

2021-10-26 compared with 2021-07-27 · 87 added, 70 removed, 424 unchanged (27% of the section changed)

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Business and Operational Risks

Our business and results of operations have been and are expected to continue to be negatively affected by the COVID-19 pandemic that has severely impacted the global economy.

Since late 2019, the COVID-19 pandemic has severely impacted the global economy, disrupting financial markets, global manufacturing activities, customer purchasing patterns and general business operations, resulting in business closures, significant unemployment rates and substantial and prolonged government restrictions on business, travel and personal activities.

These measures have disrupted our global supply chain activities and significantly limited our business travel, customer engagements and normal business activities, all of which heighten our business and operational risks.

With the increased availability of vaccines in the U.S., we recently reopened our offices for fully-vaccinated employees who choose to work at the office and resumed business travel with safety precautions as we continue to focus on the safety, well-being and productivity of our workforce amid the pandemic.

We cannot predict the continued impact of the pandemic and the degree to which our business and results of operations may be affected, particularly given the extended duration of the pandemic and lack of global vaccine availability and adoption.

There continue to be outbreaks, and variants that are more highly transmissible and/or that cause more severe disease may continue to emerge.

There are no assurances that the global economy will recover quickly or at all, or that impacted areas will be able to adequately contain COVID-19 infections.

In particular, the pandemic and related restrictions continue to adversely impact our global supply chain operations with materially longer lead times, increased competition for limited supplies, shortages of key components and materials and disruptions in operations, including office and factory closures, at our third-party manufacturers, logistics partners and suppliers.

If the pandemic and related restrictive measures continue for a prolonged period, we may experience a sustained shortage of components and materials, which may have a material negative impact on our ability to supply products to meet customer requirements and could materially adversely affect our business and results of operations.

Business closures, infection outbreaks, travel restrictions and other impacts of the COVID-19 pandemic have also adversely affected economies, financial markets and the financial viability and liquidity of businesses in the U.S.

and internationally, heightening our collections risk.

Our customers’ purchasing decisions may be impacted by the pandemic, which could in turn impact our sales and results of operations.

Although demand for our products has been strong in the short-term as subscribers seek more bandwidth and better Wi-Fi, customers’ purchasing decisions over the long-term may be impacted by the pandemic and its impact on the economy.

For example, BSPs may choose not to invest at this time in our new platforms or delay infrastructure improvements due to the uncertainty in the global economy.

The prolonged disruptions to our business and operations and other adverse impacts of the COVID-19 pandemic or further disruptions we may experience in the future could have a material adverse effect on our business, results of operations and financial condition.

We have risks associated with material dependencies on third-party vendors for our global supply chain operations that could disrupt our business and adversely impact our gross margin and results of operations.

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If any of these third-party vendors stop providing their services, for any reason, we would have to obtain similar services from alternative sources, which may not be available on commercially reasonable terms, if at all.

also have limited control over disruptions that may occur at the facilities of these third-party partners, such as supply interruptions, labor shortages, strikes, design and manufacturing failures, quality control issues, transportation backlogs, systems failures or even facility closures arising from the COVID-19 pandemic or natural disasters.

We also have limited control over disruptions that may occur at the facilities of these third-party partners, such as supply interruptions, labor shortages, strikes, shipping backlogs at ports and similar disruptions to transportation infrastructure, design and manufacturing failures, quality control issues, systems failures or even facility closures arising from the COVID-19 pandemic or natural disasters.

In addition, switching development firms or manufacturers could delay the manufacture and availability of products and/or require us to re-qualify our products with our customers, which would be costly and time-consuming.

For example, in recent years, we transitioned substantially all of our product manufacturing to locations outside of China, which required significant resources and involved unanticipated costs, disruptions in our operations and product shortages due to manufacturing and production delays that impaired our ability to fulfill customer orders and resulted in revenue below our plan in the first quarter of 2019.

Any interruption in the development, supply or distribution of our products would adversely affect our ability to meet scheduled product deliveries to our customers and could result in lost revenue or higher costs, which would negatively impact our gross margin and operating results and harm our business.

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where we generate a substantial majority of our revenue.

These supply chain

challenges are further exacerbated by shipping backlogs at ports and similar disruptions to transportation infrastructure due to an increasing surge in global demand for goods.

• Extended lead times;

component and materials shortages;

global logistics challenges .

We source components and materials to manufacture our products from a limited number of suppliers, resulting in our product supply being subject to such suppliers’ lead times, volume constraints and increasing costs.

We have experienced and may continue to experience extended lead times and product unavailability due to factory disruptions or closures as well as delays and unanticipated costs associated with the supply of our products, including transportation backlogs, particularly in light of the COVID-19 pandemic.

We have experienced and may continue to experience extended lead times and product unavailability due to factory disruptions or closures as well as delays and unanticipated costs associated with the supply of our products, including expedite fees and air freight charges to mitigate delays in product supply, particularly in light of the COVID-19 pandemic.

We also expect continued shortages and/or delay of critical components and related services as a result of growing demand in the industry or other sectors.

For example, increases in computing needs, Internet-of-Things devices, wireless products, automotive electronics and artificial intelligence all drive increased demand for certain components, such as chipsets and memory products, which have resulted and may continue to result in lower availability, longer lead times, increased prices for such components and increasing competition for logistics services.

More recently, one of our silicon suppliers extended their lead time from 32 to 50 weeks and increased prices.

For example, substantially all our silicon suppliers have extended their lead times to 52 weeks and increased prices.

Our supply chain operations span several geographies globally, and we are heavily dependent upon third party logistics and transportation services to deliver our products to customers.

We have experienced and expect to continue to experience increased competition for and disruptions in logistics and transportation services due to transportation backlogs and labor shortages, which have resulted in longer lead times, increased prices and surcharges and increased investments in resources and higher overall costs to manage our supply chain logistics.

Extended lead times and shortages could impair our ability to meet our customer requirements, require us to pay higher prices or incur expedite fees, which would harm our business and negatively impact our gross margin and results of operations.

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For example, we have experienced disruptions in our supply of certain components that are sourced from suppliers in China, Southeast Asia, Mexico and other countries as a result of the COVID-19 pandemic, which have caused delays in supply of our products due to production disruptions, factory closures and longer lead times for components and from uncertainty around trade and tariff policies between the U.S.

Sole-source or limited-source dependencies on these suppliers limit our ability to mitigate these disruptions

in our supply chain and such disruptions, particularly if prolonged, may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices or at all, which would adversely affect our ability to meet scheduled product deliveries to our customers, increase costs and in turn harm our business and results of operations.

Sole-source or limited-source dependencies on these suppliers limit our ability to mitigate these disruptions in our supply chain and such disruptions, particularly if prolonged, may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices or at all, which would adversely affect our ability to meet scheduled product deliveries to our customers, increase costs and in turn harm our business and results of operations.

• Limitations on ability to manage third-party risks.

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• Ability to forecast and manage inventory liability with vendors.

We have experienced unanticipated increases in demand from customers, including from higher consumer demand for internet services and improved WiFi due to COVID-19, which in turn has resulted in delayed shipments and variable shipping patterns.

We have experienced unanticipated increases in demand from customers, including from higher consumer demand for internet services and improved WiFi due to

COVID-19, which in turn has resulted in delayed shipments and variable shipping patterns.

If we underestimate our product demand, our manufacturers may have inadequate component inventory, which could interrupt our product manufacturing, increase our cost of product revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders.

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We may incur liabilities for certain component inventory purchases that have been rendered excess or obsolete, which may have an adverse effect on our gross margin, financial condition and results of operations.

Our business and results of operations have been and are expected to continue to be negatively affected by the COVID-19 pandemic that has severely impacted the global economy.

With the increased availability of vaccines in the U.S., we recently reopened our offices for fully-vaccinated employees who choose to work at the office and resumed business travel with safety precautions as we continue to monitor evolving pandemic regulations and focus on the safety, well-being and productivity of our workforce.

Recently, the Biden administration announced a proposed regulation requiring all U.S.

private businesses with 100 or more employees to ensure that their employees are fully vaccinated or require unvaccinated workers to undergo weekly COVID-19 testing.

We cannot predict the continued impact of the pandemic, including the impact of the proposed U.S.

vaccine mandate, and the degree to which our business and results of operations may be affected, particularly given the extended duration of the pandemic and lack of global vaccine availability and adoption.

There continue to be outbreaks, and variants that are more highly transmissible and/or that cause more severe disease may continue to emerge.

There are no assurances that the global economy will recover quickly or at all, or that impacted areas will be able to adequately contain COVID-19 infections.

In particular, the pandemic and related restrictions continue to adversely impact our global supply chain operations with materially longer lead times, increased competition for limited supplies, shortages of key components and materials and disruptions in operations, including office and factory closures at our third-party manufacturers, logistics partners and suppliers.

and internationally, heightening our collections risk.

Our customers’ purchasing decisions may be impacted by the pandemic, which could in turn impact our sales and results of operations.

For example, BSPs may choose not to invest at this time in our new platforms or delay infrastructure improvements due to the uncertainty in the global economy.

Security breaches and data loss may expose us to liability, harm our reputation and adversely affect our business.

As part of our business operations, we collect, store, process, use and/or disclose sensitive data relating to our business, including in connection with the provision of our cloud services and in our information systems and data centers (including third-party data centers).

We also engage third-party providers to assist in the development of our products and for services that may include the collection, handling, processing and/or storage of personal data on our behalf.

We also engage third-party providers to support various internal functions, such as human resources, finance, information technology and electronic communications, as well as the development and delivery of our products and cloud services, which includes collecting, handling, processing and/or storage of data on our behalf.

These internal and external functions involve an array of software, systems and technologies (including cloud-based), which enable us to conduct, monitor and/or protect our business, operations, systems and IT assets.

In addition, we host our customers’ subscriber data in third-party data centers in the course of providing our products and cloud-based platform solutions and services to our customers.

While we and our third-party providers apply multiple layers of security to control access to data and use encryption and authentication technologies to secure data from unauthorized access, use, alteration and disclosure, these security measures may be compromised.

be compromised.

Malicious hackers may attempt to gain access to our network or data centers;

steal proprietary information related to our business, products, employees and customers;

steal proprietary or personal information related to our business, products, employees and customers;

hold data ransom;

or otherwise interrupt our systems and services or those of our supply chain partners, vendors, customers or others.

In particular, there has been a spike in the number of high-profile cybersecurity attacks and security breaches and as we continue to increase our reliance on virtual environments and communications systems, cloud-based solutions and other technologies to support our work-from-anywhere culture and overall business needs, our exposure to third-party vulnerabilities and security risks similarly increase.

The theft, loss or misuse of proprietary or personal data collected, stored or processed by us or our service providers to run our business could result in significant security and remediation costs,

regulatory fines and penalties, and/or costs related to defending legal claims.

If we or our third-party providers do not allocate and effectively implement and manage the resources necessary to maintain adequate security and data protection measures, we could be subjected to data loss, unauthorized data disclosure or a compromise or breach of our systems, products or those of our third-party data centers.

In particular, there have been increasing instances of high-profile cybersecurity attacks and security breaches, including sophisticated supply chain attacks, and as we and our third-party providers continue to increase our reliance on virtual environments and communications systems, cloud-based solutions and other technologies to support our work-from-anywhere culture and overall business needs, our exposure to third-party vulnerabilities and security risks similarly increase.

Although we monitor our networks and continue to enhance our security protections, particularly as we transitioned to a work-from-anywhere workforce, hackers are increasingly more sophisticated and aggressive, and our efforts may be inadequate to prevent all incidents of data breach or theft due, for example, to the increased use by attackers of tools and techniques that are specifically designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.

We and certain of our third-party providers have, from time to time, been subject to cyberattacks and security incidents.

The theft, loss or misuse of proprietary or personal data collected, stored or processed by us or our service providers to run our business could result in significant security and remediation costs, regulatory fines and penalties, and/or costs related to defending legal claims.

Even if we and our third-party providers allocate, implement and manage resources to maintain reasonable security and data protection measures, we could be subjected to data loss, unauthorized data disclosure or a compromise or breach of our systems, products or those of our third-party data centers that materially impact our operations and financial results.

As we continue to grow our cloud-based platforms and services portfolio and increase reliance on third-party development partners and third-party software and cloud-based solutions, risks arising from or related to security breaches or data loss are likely to increase.

Any loss of data or compromise of our systems, including our product platforms that collect and process personal data, or third-party data centers upon which our product platforms rely, could result in loss of confidence in the security of our offerings and loss of customer goodwill, damage our reputation, cause the loss of current or potential customers or partners, lead to legal and regulatory liability and adversely affect our business, financial condition, operating results and cash flows.

Any loss of data or compromise of our systems, including our product platforms that collect and process personal data, or third-party data centers upon which our product platforms rely, could result in loss of confidence in the security of our offerings and loss of customer goodwill, damage our reputation, cause the loss of current or potential customers or partners, lead to legal and regulatory liability given the accelerated development of strict privacy and data security laws around the world, and adversely affect our business, financial condition, operating results and cash flows.

Although we maintain insurance coverage that may apply to various cybersecurity risks and liabilities, there can be no guarantee that any or all costs or losses incurred will be partially or fully insured.

We are subject to business and operational risks associated with our international operations that could harm our business.

We are subject to business and operational risks associated with our international operations, which include our global supply chain operations, our development center located in Nanjing, China and dependencies on third-party development partners in India, and, to a lesser extent, our international sales operations.

We are subject to business and operational risks associated with our international operations, which include our global supply chain operations, our international offices located in Nanjing, China and Bangalore, India, dependencies on third-party development partners in India, and, to a lesser extent, dependencies on our international sales operations.

We face a number of risks associated with our international operations, including costs of complying with differing and changing laws and regulatory requirements, tariffs, export quotas, custom duties and other trade restrictions;

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The majority of our revenue is not recurring in nature, and our customers generally have no committed purchase requirements, may cancel orders and may cease to purchase our products at any time.

If our customers stop purchasing our products for any reason, our business and results of operations would be harmed.

If our customers stop purchasing our products for any reason, our business and results of operations

would be harmed.

If we are unable to successfully increase our sales to new and existing BSPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

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Moreover, adoption of our cloud product offerings, such as our Revenue EDGE, is dependent on the success of our customers in investing, marketing, selling and deploying broader services—including ancillary services—to their subscribers, and our ability to differentiate our products from competing or substitutive product and service offerings.

For example, our EDGE Suites include network security, parental controls and a growing ecosystem of services from partners like Arlo and Servify.

For example, our Revenue EDGE Suites include network security, parental controls and a growing ecosystem of services from partners like Arlo and Servify.

However, if subscriber demand for such services does not grow as expected or declines, or our customers are unable or unwilling to invest in our platforms to deploy and market these services, demand for our products may decrease or fail to grow at rates we anticipate.

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The risk of such claims is heightened as we expand our products and services and increasingly rely on more technologies, including third-party IP rights that we license and incorporate into our products and services.

Third parties from whom we license IP may be unable or unwilling to indemnify us for such claims or offer any other remedy to us.

Third parties from whom we license IP may be unable or unwilling to indemnify us for such claims or offer any other

remedy to us.

Increasingly, patent infringement claims are asserted by patent holding companies, which are non-practicing entities that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation.

Further, in our industry, the number of assertions by non-practicing entities against technology companies have continued to trend higher, including as a result of patent divestitures by operating companies to non-practicing entities and availability of litigation financing.

We have received and expect to continue to receive assertions from non-practicing entities and other third parties alleging that we may be infringing their patents or other IP rights;

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We have a history of net operating losses and fluctuations in our quarterly and annual gross margin and operating results, including due to factors outside of our control.

customers, the impact of global economic conditions, our ability to effectively manage our global supply chain operations, our ability to effectively manage third parties upon whom we depend to conduct our business, our customers’ spending patterns and purchasing decisions, the impact of competition, customer adoption of our products, our ability to manage our legal, contractual and regulatory obligations and liabilities, and other risk factors identified in the lead-in to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above and in this “Risk Factors” section.

Factors that impact variability of our operating results include our ability to predict our revenue and reduce and control our costs, our ability to predict product functions and features desired by our customers, the impact of global economic conditions, our ability to effectively manage our global supply chain operations, our ability to effectively manage third parties upon whom we depend to conduct our business, our customers’ spending patterns and purchasing decisions, the impact of competition, customer adoption of our products, our ability to manage our legal, contractual and regulatory obligations and liabilities, and other risk factors identified in the lead-in to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above and in this “Risk Factors” section.

Our gross margin is further impacted by customer, geographic and product mix, the impact of competition on our prices, our ability to manage our costs associated with components and materials, excess and obsolescence, expedite fees and logistics-related activities, contractual commitments and other product costs.

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We will have to generate and sustain significant and consistent increased revenue, while continuing to control our expenses, to maintain profitability.

If we are unable to generate positive operating income and positive cash flows from operations, our liquidity, results of operations and financial condition will be adversely affected.

If we are unable to generate cash flows or obtain other sources of liquidity to support our operational needs, we will be forced to limit our development activities, reduce our investment in growth initiatives and institute cost-cutting measures, all of which would adversely impact our business and growth.

Historically, our customer base has been concentrated, and the loss of any of our key customers may adversely impact our revenue and results of operations, and any delays in payment by a key customer could negatively impact our cash flows and working capital.

Historically, a large portion of our sales has been, and in the future may be, to a limited number of large customers.

Changes in the BSP market, such as financial difficulties, spending cuts or corporate consolidations that impact purchasing decisions by these customers have and may again negatively impact our revenue, and as a result, revenue from such customers may remain flat or continue to decline.

For example, Lumen, our only greater than 10% customer in 2018, 2019 and 2020, completed a large acquisition in 2017 and more recently reorganized and rebranded, which disrupted its historical levels of purchases with us and has continued to result in significantly reduced levels of purchases.

There is no assurance that purchasing levels by Lumen will increase from current levels.

We have continued to experience delays or declines in purchases by certain BSPs due to deterioration in their financial condition.

For example, Windstream and Frontier, two of our medium-sized customers, each completed a financial restructuring and emerged from Chapter 11 bankruptcy in September 2020 and April 2021, respectively.

Any decrease or delay in purchases and/or capital expenditure plans of any of our key customers, particularly if prolonged or sustained, or our inability to grow our sales with existing customers, may have a material negative impact on our revenue and results of operations.

In addition, some larger customers may demand discounts and rebates or desire to purchase their access systems and software from multiple providers.

As a result of these factors, our future revenue opportunities may be limited, and we may face pricing pressures, which in turn could adversely impact our gross margin and our profitability.

The loss of, reduction in or pricing discounts associated with orders from any key customer would significantly reduce our revenue and harm our business.

Furthermore, delays in payment and/or extended payment terms from any of our key or larger customers could have a material negative impact on our cash flows and working capital to support our business operations.

Over the years, the BSP market has undergone substantial consolidation, reducing the number of potential customers and delays or decreases in capital spending.

Continued consolidation of the BSP industry and among independent local exchange carriers and IOC customers, who represent a large part of our business, could make it more difficult for us to grow our customer base, increase sales of our products and maintain adequate gross margin.

If we are unable to sustain our operating income and positive cash flows from operations, our liquidity, results of operations and financial condition will be adversely affected, and we may be forced to limit our development activities, reduce our investment in growth initiatives and institute cost-cutting measures, any of which would adversely impact our business and growth.

We are exposed to customer credit risks that could adversely affect our operating results and financial condition.

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Our success depends, in large part, on the continued contributions of our key personnel who are highly skilled and would be difficult to replace.

Competition for skilled personnel is intense.

Competition for skilled personnel, particularly in software development and engineering, is intense.

We cannot be certain that we will be successful in attracting and retaining qualified personnel, or that newly hired personnel will function effectively, both individually and as a group.

If we are unable to effectively recruit, hire and utilize new employees to align with our company objectives, execution of our business strategy and our ability to react to changing market conditions may be impeded, and our business, financial condition and results of operations may suffer.

A year ago, we transitioned to a “work-from-anywhere” model and if we do not effectively manage our distributed workforce, we could face challenges maintaining our corporate culture, which could increase attrition or limit our ability to attract personnel.

In the first half of 2020, we transitioned to a “work-from-anywhere” model and if we do not effectively manage our distributed workforce, we could face challenges maintaining our corporate culture, which could increase attrition or limit our ability to attract personnel.

None of our key personnel are bound by a written employment contract to remain with us for a specified period.

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We are subject to significant accounting, legal and regulatory requirements, including requirements and rules under the Sarbanes-Oxley Act, or SOX, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, among other rules and regulations implemented by the SEC, as well as listing requirements of the New York Stock Exchange, or NYSE.

accounting and financial reporting, proper documentation and testing procedures among other requirements.

We incur significant accounting, legal and other expenses and must invest substantial time and resources to comply with public company reporting and compliance requirements, including costs to ensure we have adequate internal controls over accounting and financial reporting, proper documentation and testing procedures among other requirements.

We cannot be certain that the actions we have taken to implement internal controls over financial reporting will be sufficient.

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A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company will have been detected.

Because of the inherent

limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company will have been detected.

If we are unable to produce accurate financial statements on a timely basis, investors could lose confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline and make it more difficult for us to finance our operations and growth.

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Our success and ability to compete depend on proprietary technology.

We rely significantly upon patent, copyright, trademark, trade secret and other IP laws, IP registration rights and agreements with our employees, customers, partners, suppliers and other parties, to establish and maintain IP rights necessary for our business and operations.

We rely significantly upon patent, copyright, trademark, trade secret and other IP laws, IP registration rights and agreements with our employees, customers, partners, suppliers and

other parties, to establish and maintain IP rights necessary for our business and operations.

IP laws afford us only limited protection, and the laws of some foreign countries do not protect proprietary rights to the same extent.

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As a global company, our performance is affected by global economic conditions as well as geopolitical issues and other conditions with global reach.

In recent years, concerns about the global economic outlook have adversely affected market and

business conditions in general.

In recent years, concerns about the global economic outlook have adversely affected market and business conditions in general.

Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations and accurately forecast revenue, gross margin and expenses.

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The global impact of the COVID-19 pandemic continues to create shortages in component and supplies and otherwise disrupt and delay our global supply chain operations.

Moreover, shipping backlogs and similar disruptions to transportation infrastructure due to an increasing surge in the global demand for goods has exacerbated supply chain challenges.

Sustained or worsening of global economic conditions, geopolitical issues and other adverse global economic conditions may increase our cost of doing business, materially disrupt our supply chain operations, cause our customers to reduce or delay spending and intensify pricing pressures.

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Investment in third-party development services for our product and service platforms reduces our direct control and may result in increased challenges in design, integration and support of the third-party features in our product and service offerings.

addition, these investments may take several years to generate positive returns, if ever.

In addition, these investments may take several years to generate positive returns, if ever.

We have engineering services arrangements that include future revenue-share payments on our sale of the developed products and that require us to make minimum payments whether or not we achieve the desired revenue levels.

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We spend substantial time, effort and money in our sales efforts without any assurance that our efforts will produce sales.

In addition, product purchases are frequently subject to budget constraints, multiple approvals and unplanned administrative, processing and other delays.

In addition, product purchases are

frequently subject to budget constraints, multiple approvals and unplanned administrative, processing and other delays.

The timing of revenue related to sales of products and services that have installation requirements may be difficult to predict due to interdependencies that may be beyond our control, such as BSP testing and turn-up protocols or other vendors’ products, services or installations of equipment upon which our products and services rely.

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As a consequence, our results for a particular period may be difficult to predict, and our prior results are not necessarily indicative of results in future periods.

Historically, a large portion of our sales has been, and in the future may be, to a limited number of large customers.

For example, Lumen, our only greater than 10% customer in 2019 and 2020, completed a large acquisition in 2017 and subsequently reorganized and rebranded, which disrupted its historical levels of purchases with us and has continued to result in significantly reduced levels of purchases such that they have not been a 10% customer in the last year.

There is no assurance that purchasing levels by Lumen will increase from current levels.

We have continued to experience delays or declines in purchases by certain BSPs due to deterioration in their financial condition.

In addition, some larger customers may demand discounts and rebates or desire to purchase their access systems and software from multiple providers.

As a result of these factors, our future revenue opportunities may be limited, and we may face pricing pressures, which in turn could adversely impact our gross margin and our profitability.

The loss of, reduction in or pricing discounts associated with orders from any key customer would significantly reduce our revenue and harm our business.

Over the years, the BSP market has undergone substantial consolidation, reducing the number of potential customers and delays or decreases in capital spending.

Government-sponsored programs and U.S.

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The Federal Communications Commission, or FCC, and some states may consider changes to such payments and subsidies, and these changes could reduce IOC revenue.

Furthermore, many IOCs use or expect to use government-supported loan programs or grants, such as Rural Utility Service loans and grants, to finance capital spending.

Furthermore, many IOCs use or expect to use government-supported loan programs or grants, such as Rural

Utility Service loans and grants, to finance capital spending.

These government-supported loan programs and grants generally include conditions such as deployment criteria, domestic preference provisions and other requirements that apply to the project and selected equipment as conditions for funding.

For example, the U.S.

government recently introduced legislation imposing domestic preference requirements for infrastructure programs that receive federal funding.

Changes to the terms or administration of these programs, including uncertainty from government and administrative change, increasing focus on domestic requirements by the U.S.

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Any failure by us or our third-party manufacturers to comply with these requirements could result in regulatory penalties, legal claims or disruption of production of our products.

In addition, any failure to properly manage the use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials could subject us to increased costs or liabilities.

In addition, any failure to properly manage the use, transportation, emission, discharge, storage, recycling or

disposal of hazardous materials could subject us to increased costs or liabilities.

Existing and future environmental regulations and other legal requirements may restrict our use of certain materials to manufacture, assemble and test products.

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Changes in our products or changes in export and import regulations or duties may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products or, in some cases, prevent the export or import of our products to certain countries altogether.

Any change in export or import regulations, duties or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons

or technologies targeted by such regulations, could negatively impact our ability to sell, profitably or at all, our products to existing or potential international customers.

Any change in export or import regulations, duties or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could negatively impact our ability to sell, profitably or at all, our products to existing or potential international customers.

Regulatory and physical impacts of climate change and other natural events may affect our customers and our manufacturers, resulting in adverse effects on our operating results.

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Similarly, changes to regulatory tariff requirements or other regulations relating to pricing or terms of carriage on communication networks could slow the development or expansion of network infrastructures, which could adversely affect the sale of our products and services.

Many of our customers are subject to FCC rate regulation of interstate telecommunications services and are recipients of CAF incentive payments.

Many of our customers are subject to FCC rate regulation of interstate telecommunications services and are recipients of government stimulus payments.

The imposition of limits or restrictions on access to these programs could affect the ability of IOCs to access capital, which would in turn reduce our revenue opportunities.

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and a slowdown in the communications industry or the general economy.

In recent years, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.

Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance.

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Our ability to incur debt could be limited by covenants in our loan and security agreement for our revolving credit facility.

The BofA Loan Agreement includes covenants that place certain restrictions on our ability to, among other things, borrow secured debt or unsecured debt beyond a certain amount, create or suffer to exist any liens, sell or transfer any assets, make distributions, liquidate, dissolve, merge, amalgamate, combine or consolidate, or become a party to certain agreements restricting our ability to incur or repay debt, grant liens, make distributions or modify loan agreements, in each case subject to certain exceptions.

certain exceptions.

Failure to maintain these covenants can limit the amount of borrowings that are available to us, increase the cost of borrowings under the facility and/or require us to make immediate payments to reduce borrowings.

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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