What changed in this filing

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Item 1A. Risk Factors

2022-07-26 compared with 2022-04-26 · 55 added, 42 removed, 453 unchanged (18% of the section changed)

51 unchanged sentences

• Ability to forecast and manage inventory liability with vendors.

We have experienced unanticipated increases in demand from customers, in part as a result of higher consumer demand for internet services and improved WiFi due to COVID-19;

We have experienced unanticipated increases in demand from customers, in part as a result of higher consumer demand for internet services and improved Wi-Fi due to COVID-19;

in turn, this has resulted in our shipments being delayed.

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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 may continue to be, negatively affected by the on-going effects of the COVID-19 pandemic that has severely impacted the global economy.

Our business and results of operations have been, and may continue to be, negatively affected by the on-going effects of the COVID-19 pandemic and related severe impacts on the global economy.

For over two years 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, including our third-party manufacturers, logistics providers and suppliers, and significantly limited our business travel, customer engagements and normal business activities, all of which heighten our business and operational risks.

Although global economic conditions have generally improved with the rollout of COVID-19 vaccines, business activity may not recover as quickly as anticipated, including as a result of inflationary pressures and the responses by central banking authorities to control such inflation, rising interest rates, debt and equity market fluctuations, diminished liquidity and credit availability, increased unemployment rates, decreased investor and consumer confidence, political turmoil, and supply chain challenges.

As the effects of the pandemic persist, we may continue to 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.

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 at home for work and entertainment, as the pandemic appears to be subsiding, the future of broadband expansion is unclear.

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We continue to monitor evolving pandemic conditions and focus on the safety, well-being and productivity of our workforce.

The recent rapid emergence and subsidence of multiple COVID-19 variants and sub-variants suggest that effects of current and potential future COVID-19 variants on our business will continue to make planning responses to new outbreaks an on-going challenge.

The rapid emergence and subsidence of multiple COVID-19 variants and sub-variants suggest that effects of current and potential future COVID-19 variants on our business will continue to make planning responses to new outbreaks an on-going challenge.

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

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Such losses also could damage our reputation, lead to liability given the increasing development of strict privacy and data security laws and regulations around the world, and adversely affect our business, financial condition, operating results and cash flows.

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

Although we maintain insurance that may

apply to cybersecurity risks and liabilities, there can be no guarantee that any or all costs or losses incurred will be partially or fully insured.

Business and operational risks associated with expanding our international operations could harm our business.

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Once our products are deployed within our customers’ networks, they depend on our support organization to resolve any issues relating to those products.

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

customers and harm our reputation with potential new customers.

As a result, our failure to maintain high quality support and services could result in the loss of customers, which would harm our business.

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although we do not believe we infringe the asserted patents, the defense of these cases could be time-consuming, expensive, and divert the efforts of our engineering teams and management.

If our products are found to infringe, these claims could also result in the suspension of our ability to import, market and sell our products and services, product shipment delays or requirements to modify our products or enter into costly settlements or licensing agreements.

costly settlements or licensing agreements.

Such royalty or licensing agreements, if required, may not be available to us on acceptable terms, if at all.

Furthermore, we may additionally be financially responsible for claims made against our customers, including costs of litigation and damages awarded, under indemnity obligations which could further negatively impact our

results of operations.

Protracted litigation could cause us to incur significant defense costs, which would negatively impact our results of operations.

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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.

We have operated using a “work-from-anywhere” model since the first half of 2020, and if we do not continue to 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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Any errors, bugs, defects or security vulnerabilities discovered in our products after commercial release could result in loss of revenue or delay in revenue recognition, loss of customers and increased service and warranty and retrofit costs, any of which could adversely affect our business, operating results and financial condition.

In addition, we could face claims for security and data breach, product liability, tort or breach of warranty.

In addition, we could face claims for security and data breach,

product liability, tort or breach of warranty.

Our contracts with customers contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld.

Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our products.

In addition, if our business liability

insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business, operating results and financial condition could be adversely impacted.

In addition, if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business, operating results and financial condition could be adversely impacted.

If we are unable to ensure that our products interoperate properly and as required within our customers’ networks, our business will be harmed.

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Third parties may also choose to not renew licenses with us, demand unreasonable license fees or cease to offer technologies that we require.

The inability to obtain necessary third-party licenses or to secure reasonable license terms at a cost acceptable to us

could harm the competitiveness of our products and solutions, result in lost revenue and adversely affect our operating results.

The inability to obtain necessary third-party licenses or to secure reasonable license terms at a cost acceptable to us could harm the competitiveness of our products and solutions, result in lost revenue and adversely affect our operating results.

For example, we may be forced to forego product features or platform offerings, including features and offerings we believe are critical to our strategy, accept substitute technology of lower quality or performance standards or incur higher costs, or the time-to-market of our products or product features could be delayed.

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Macroeconomic and Industry Risks

Adverse global economic conditions, geopolitical issues and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.

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

Adverse global economic, market and industry conditions, geopolitical issues and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.

As a global company, our performance is affected by global economic, market and industry conditions (including the current inflationary economic environment and rising interest rates) 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.

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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.

In addition, the uncertainty and potential negative consequences of macroeconomic events such increases in lending rates by the U.S.

Federal Reserve Bank could negatively affect our business.

In addition, historically high rising interest rates in the United States have begun to affect businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components, and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets.

To the extent there is a sustained general economic downturn, and our platforms and services are perceived by customers or potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in spending.

Sustained or worsening of global economic conditions and geopolitical issues 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.

Any or all of these factors could negatively affect demand for our products and our business, financial condition and result of operations.

We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry.

If the economic conditions of the general economy or markets in which we operate worsen from present levels, demand for our products, and our business, financial condition, and results of operations, could be adversely affected.

We face intense competition that could reduce our revenue and adversely affect our financial results.

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Capital spending for network infrastructure projects could be delayed or canceled in response to factors outside our control, such as reduced consumer spending, challenging capital markets or declining liquidity trends.

BSP spending is also affected by reductions in budgets, delays in purchasing cycles, access to government funding programs or capital markets, and seasonality and delays in capital allocation decisions.

BSP spending is also affected by reductions in budgets, including as a result of a general economic downturn, delays in purchasing cycles, access to government funding programs or capital markets, and seasonality and delays in capital allocation decisions.

Historically, our customers may spend less or have less deployments in the first quarter due to pending annual budgets or, in certain regions, due to weather conditions that inhibit outside fiber deployment, resulting in weaker demand for our products in the first quarter.

Softness in demand in any of our customer markets, including due to macro-economic conditions beyond our control or uncertainties associated with regulatory reforms, has in the past and could in the future lead to unexpected decline or slowdown

in customer capital expenditure.

Further, BSPs may pursue capital investment in network technologies other than those offered by us or may choose not to adopt our products and platform solutions in their networks.

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federal government shutdowns could reduce the ability of IOCs to access capital or secure funding these programs to purchase our products and services and thus reduce our revenue opportunities.

Customers may curtail purchases if they receive less funding than planned, are negatively impacted by federal government shutdowns or changes in government regulations and subsidies, or as funding winds down, any of which could have an adverse effect on our operating results and financial condition.

Customers may curtail purchases if they receive less funding than planned,

are negatively impacted by federal government shutdowns or changes in government regulations and subsidies, or as funding winds down, any of which could have an adverse effect on our operating results and financial condition.

Government and Regulatory Risks

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The interpretation and application of these data protection laws and regulations are often uncertain and changing, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our data practices.

For example, the General Data Protection Regulation, or GDPR, adopted by the European Union, or EU, imposes specific duties and requirements upon companies that collect, process or control personal data of EU residents.

Although we currently do not have material operations or business in the EU, we would incur substantial costs in order to expand our business and operations to the EU.

Furthermore, the GDPR imposes significant penalties for noncompliance of at least €20 million, or up to 4% of a company’s worldwide revenue;

thus, any non-compliance with the

GDPR could result in a material adverse effect on our business, financial condition and results of operations.

Twice, the European Court of Justice has invalidated regulations designed to facilitate the transfer of data from European countries to the United States.

For example, the General Data Protection Regulation, or EU GDPR, adopted by the European Union, or EU, and the UK General Data Protection Regulation, or UK GDPR, adopted by the United Kingdom, or UK (the EU GDPR and UK GDPR hereinafter referred to as the GDPR) and national data protection supplementing laws in these jurisdictions impose specific duties and requirements upon companies that collect, process or control personal data of individuals located in the EU/UK, including a principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.

Although we currently do not have material operations or business in the EU or the UK, we are in the process of expanding in these jurisdictions and we have incurred and will continue to incur substantial costs in this respect.

Furthermore, the GDPR imposes significant penalties for noncompliance of at least €20 million (for the EU GDPR) or £17.5 million (for the UK GDPR), or up to 4% of a company’s worldwide revenue;

thus, any non-compliance with the GDPR could result in a material adverse effect on our business, financial condition and results of operations.

Twice, the Court of Justice of the European Union, or the CJEU, has invalidated regulations designed to facilitate the transfer of data from European countries to the United States and in July 2020, the CJEU held that transfers must be assessed on a case-by-case basis and reliance on standard contractual clauses (a standard form of contract approved by the European Commission as an adequate mechanism for personal data transfers) may not be sufficient in all circumstances.

In March 2022, the U.S.

and EU announced a new regulatory regime intended to replace the invalidated regulations;

however, those regulations have not yet been published.

Since 2020, several U.S.

states, including California, Colorado, Oklahoma, Utah and Virginia have enacted laws and regulations to protect consumers’ personal information.

however, this new regime has not yet been published.

We currently rely on the standard contractual clauses and the UK International Data Transfer Agreement (or Addendum) to transfer personal data outside the European Economic Area and the UK respectively, including to the United States.

As the enforcement landscape further develops, and supervisory authorities issue further guidance on – and revised standard contractual clauses for - international data transfers, we could suffer additional costs, complaints and/or regulatory investigations or fines;

we may have to stop using certain tools and vendors and make other operational changes;

we have had to and will have to implement revised standard contractual clauses for existing intragroup, customer and vendor arrangements within required time frames;

and/or it could otherwise affect the manner in which we provide our services, and could adversely affect our business, operations and financial condition.

We and/or our customers are also subject to evolving EU and UK privacy laws on cookies, tracking technologies, e-marketing and electronic communications.

Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies.

If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of marketing activities conducted on behalf of our customers, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities.

In light of the complex and evolving nature of EU, EU Member State and UK privacy laws, there can be no assurances that we will be successful in our efforts to comply with such laws;

violations of such laws could result in regulatory investigations, fines, orders to cease/ change our use of technologies, as well as lead to civil claims including class actions, and reputational damage.

Since 2020, a number of U.S.

states, including California, Colorado, Oklahoma, Utah and Virginia have enacted laws and regulations to protect consumers’ personal information and efforts to enact a comprehensive federal privacy law have intensified.

Most of the new or proposed laws include restrictions on processing consumer information for targeted advertising, which could negatively affect our marketing cloud product.

Complying with new and changing laws could cause us to incur substantial costs in order to market and sell our cloud-based solutions in the U.S.

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Our products must comply with these standards in order to be widely marketable.

In some cases, we are required to obtain certifications or authorizations before our products can be introduced, marketed or sold in new markets or to new customers.

In some cases, we are required to obtain certifications or

authorizations before our products can be introduced, marketed or sold in new markets or to new customers.

For example, our ability to maintain Operations System Modification for Intelligent Network Elements certification for our products will affect our ongoing ability to continue to sell our products to large BSPs.

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As emissions of greenhouse gases continue to alter the composition of the atmosphere, affecting large-scale weather patterns and the global climate, any new regulation of greenhouse gas emissions may result in additional costs to our customers and our manufacturers.

In addition, the physical impacts of climate change and other natural events, including changes in weather patterns, drought, rising ocean and temperature levels, earthquakes and tsunamis may impact our customers, suppliers and

manufacturers, and our operations.

These potential physical effects may adversely affect our revenue, costs, production and delivery schedules, and cause harm to our results of operations and financial condition.

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Moreover, various international regulatory bodies have jurisdiction over certain of our customers outside the U.S.

Changes in any of these standards, laws and regulations, or judgments in favor of plaintiffs in lawsuits against BSPs based on changed standards, laws and regulations could adversely affect the development of broadband networks and services.

Changes in any of these standards, laws and regulations, or judgments in favor of plaintiffs in lawsuits against BSPs based

on changed standards, laws and regulations could adversely affect the development of broadband networks and services.

This, in turn, could directly or indirectly adversely impact the communications industry in which our customers operate.

Risks Related to Ownership of Our Common Stock

Risks Related to Ownership of Our Common Stock and Other Risks

Our stock price may continue to be volatile, and the value of an investment in our common stock may decline.

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(6) the requirement that a special meeting of stockholders may be called only by the chairman of the Board of Directors, the chief executive officer or the Board of Directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

and (7) advance notice procedures that stockholders must comply with in order to nominate candidates to our Board of Directors or 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.

and (7) advance notice procedures that stockholders must comply with in order to nominate candidates to our Board of Directors or 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.

We are also subject to certain anti-takeover provisions under Delaware law, which prohibits a corporation, in general, from engaging in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board of Directors has approved the transaction.

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

Furthermore, if we are unable to generate sufficient cash flows to support our operational needs, we may need to seek additional sources of liquidity, including borrowings, to support our working capital needs, even if we believe we have generated sufficient cash flows to support our operational needs.

Furthermore, if we are unable to generate sufficient cash flows to support our operational needs, we may need to cease our repurchase program or seek additional sources of liquidity, including borrowings, to support our working capital needs, even if we believe we have generated sufficient cash flows to support our operational needs.

There is no assurance that any other sources of liquidity may be available to us on acceptable terms or at all.

If we are unable to generate sufficient cash flows or obtain other sources of liquidity, 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.

If we are unable to generate sufficient cash flows or obtain other

sources of liquidity, 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.

We do not currently intend to pay dividends on our common stock and, consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.

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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