What changed in this filing

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Item 1A. Risk Factors

2022-10-25 compared with 2022-07-26 · 38 added, 44 removed, 464 unchanged (15% of the section changed)

32 unchanged sentences

We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets and certain of our application-specific integrated circuit processors and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries.

Any of these suppliers could stop producing our components and raise the prices they charge us, in addition those products may be subject to higher tariffs, epidemics or other conditions that disrupt their operations, cease operations or enter into exclusive arrangements with our competitors, consequently affecting our operations and results.

Any of these suppliers could stop producing our components, raise the prices they charge us, be subject to higher product tariffs, epidemics or other conditions that disrupt their operations, cease operations or enter into exclusive arrangements with our competitors, consequently affecting our operations and results.

For example, we have experienced disruptions in our supply of certain components that we source from suppliers in China and other Asian countries as a result of the effects of the COVID-19 pandemic, causing 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.

24 unchanged sentences

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 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.

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.

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

A prolonged disruption to our business and operations and other adverse residual impacts of the COVID-19 pandemic or further future disruptions could have a material adverse effect on our business, results of operations and financial condition.

With the increased availability of vaccines in the U.S., we reopened our offices in July 2021 for fully-vaccinated employees who choose to work at the office and resumed business travel with safety precautions.

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

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.

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).

third-party data centers).

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.

14 unchanged sentences

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.

39 unchanged sentences

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.

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

21 unchanged sentences

We may, from time to time, adjust inventory valuations downward or end of life certain of our products in response to our assessment of our business strategy as well as consideration of demand from our customers for specific products or product lines.

We also periodically evaluate our supplier purchase commitments, which have increased significantly due to extended lead-times in the current supply chain environment.

periodically evaluate our supplier purchase commitments, which have increased significantly due to extended lead-times in the current supply chain environment.

We record a liability for excess and obsolete components based on our estimated future demand for our products, potential obsolescence of technology and product life cycles.

If we fail to accurately plan our inventory levels, which becomes more challenging as component lead times increase, we may have to write off excess or obsolete inventory, or accrue a liability for component inventory held by our suppliers, both of which could have a material adverse effect on our 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 and related severe impacts on the global economy.

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

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

We could become subject to litigation that could harm our business or negatively impact our results of operations.

9 unchanged sentences

and/or threatening litigation.

Recently, two NPEs filed litigation against us alleging patent infringement;

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.

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

27 unchanged sentences

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

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

30 unchanged sentences

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.

31 unchanged sentences

We and our third-party providers may be unable to adequately prevent unauthorized third-party copying or use of our IP.

For example, contractual provisions protecting our IP could be breached, our IP could be reverse engineered or unlawfully distributed.

For example, contractual provisions protecting our IP could be breached, or our IP could be reverse engineered or unlawfully distributed.

It may become more difficult to adequately protect our IP as we expand our reliance on third parties for the design, development and/or manufacture of our products.

91 unchanged sentences

Furthermore, delays in payment and/or extended payment terms from any of our 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 independent operating company, or 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.

Government-sponsored programs and U.S.

federal government shutdowns could impact the timing and buying patterns of BSPs, which may cause fluctuations in our operating results.

We sell to BSPs, including U.S.-based IOCs, which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding such as the Federal Communications Commission’s, or FCC’s, Rural Digital Opportunity Fund, the CARES Act or the American Rescue Plan Act.

We sell to BSPs, including U.S.-based independent operating companies, or IOCs, which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding such as the Federal Communications Commission’s, or FCC’s, Rural Digital Opportunity Fund, the CARES Act or the American Rescue Plan Act.

The FCC and some states may change such payments and subsidies, which could reduce IOC revenue.

6 unchanged sentences

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

9 unchanged sentences

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

however, this new regime has not yet been published.

however, this new EU-US Data Privacy Framework has not yet been implemented beyond an executive order signed by President Biden on October 7, 2022 on Enhancing Safeguards for United States Signals Intelligence Activities.

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.

19 unchanged sentences

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.

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.

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.

In addition, our ability to expand our international operations may be limited by standards in countries or may require us to redesign our products or develop new products to meet local standards.

30 unchanged sentences

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.

39 unchanged sentences

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.

7 unchanged sentences

In addition, the anticipated benefit of any acquisition may never materialize or the process of integrating acquired businesses, products or technologies may create unforeseen operating difficulties and expenditures.

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

We cannot guarantee that our stock repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value.

Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.

In July 2022, our Board of Directors authorized a one-year stock repurchase program for up to $100 million of our common stock.

Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.

The specific timing, price and size of the purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations consistent with our capital allocation strategy.

Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations.

The repurchase program does not obligate us to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion, which may result in a decrease in the trading prices of our common stock.

Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.

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