What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-02-26 · 109 added, 46 removed, 239 unchanged (39% of the section changed)

The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business, financial condition and results of operations.

We serve 47 countries, most of which were significantly impacted by the COVID-19 pandemic.

We offer our services in 50 countries, most of which were significantly impacted by the COVID-19 pandemic.

The extent of the impact of the COVID-19 pandemic on our business and financial results will continue to depend on numerous evolving factors that we are not able to accurately predict and which will vary by market.

Such future uncertain and unpredictable developments include the ultimate duration and scope of the pandemic, the availability and efficacy of vaccines and therapeutic treatments, governmental actions that have been taken, or may be taken in the future, in response to the pandemic, and global economic conditions during and after the pandemic.

Such future uncertain and unpredictable developments include the ultimate duration and scope of the pandemic, the rise and spread of new COVID-19 variants, the availability and efficacy of vaccines and therapeutic treatments and the willingness of the public to accept such vaccines and treatments, governmental actions that have been taken, or may be taken in the future, in response to the pandemic, and global economic conditions during and after the pandemic.

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Approximately 60.8% of our revenue for the year ended December 31, 2021 was from our corporate customers.

Corporate customers are located in multi-tenant office buildings, almost exclusively in the United States and Canada.

Authorities in many of these markets have implemented numerous measures in response to the pandemic, such as travel bans and restrictions, quarantines, curfews, shelter-in-place and stay-at-home orders and business shutdowns and closures, and have also implemented multi-step polices with the goal of re-opening these markets.

Authorities in many of these markets implemented numerous measures in response to the pandemic, such as travel bans and restrictions, quarantines, curfews, shelter-in-place and stay-at-home orders and business shutdowns and closures, and also implemented multi-step polices with the goal of re-opening these markets.

These measures have impacted, and continue to impact, us and our employees, customers, suppliers and other third parties with whom we do business.

The geographic areas in which we operate are in varying stages of restrictions or re-opening.

Some jurisdictions have re-opened, while other jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases.

Many jurisdictions have re-opened, while other jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases.

Considerable uncertainty exists regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether such measures will result in further changes in demand for our services, impair our ability to access buildings to install our services or maintain our network or impact our supply chain.

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In addition, a significant number of our corporate customers have continued remote work policies instituted at the beginning of the COVID-19 pandemic, slowed the pace of opening new offices and closed offices due to global economic conditions.

We believe the rapid spread of the Delta and Omicron variants during 2021 further exacerbated the unwillingness of corporate customers to end their remote work policies.

In addition, the prevalence of hybrid or fully remote work environments during the pandemic has caused some companies to transition to such environments on a permanent basis, and we do not know what impact this may have on demand for commercial office space and for our services.

As a result, through much of 2021, we saw corporate customers take a cautious approach to adding new services and upgrading existing services as well as reduced demand for connecting smaller satellite offices.

We also witnessed a deteriorating real estate market in and around the buildings we service, with rising vacancy levels and falling lease initiations or renewals resulting in fewer sales opportunities for our salesforce.

As a result, we experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth.

In the future, these trends may continue.

We have taken measures to protect our workforce and minimize their exposure to COVID-19 such as requiring our entire workforce to work remotely whenever possible, establishing safety procedures for our on-site technical personnel and severely curtailing all business travel.

Since the beginning of the pandemic we have experienced a deteriorating real estate market in the buildings we serve.

Vacancy rates for many of our multi-tenant office buildings have risen as a result of many tenants terminating leases and exiting buildings and as a result of lower new leasing activity.

The impact of this greater level of vacancy rates was more pronounced in Northern cities and in the California market and less impactful in our Southern markets

Where permitted, we will require our employees to return to the office on a full-time basis.

We have taken measures to protect our workforce and minimize their exposure to COVID-19, such as requiring our entire workforce to get vaccinated and wear masks in the office, establishing safety procedures in the event an employee tests positive for COVID-19 and severely curtailing all business travel.

In addition to the associated costs incurred, these measures may be insufficient in protecting our employees.

If a significant percentage of our workforce is unable to work due to the impact of COVID-19, our operations will be negatively impacted.

As we consider a future return to our offices, even on a strictly voluntary basis, compliance with governmental measures imposed in response to COVID-19 has caused, and will continue to cause, us to incur additional costs, and any inability to comply with such measures may subject us to restrictions on our business activities, fines, and other penalties, any of which can adversely affect our business.

In December 2021, with the rapid spread of the Omicron variant, a number of our offices were required to close by local order and we voluntarily shifted a majority of our workforce to fully remote status.

We intend to return to full-time, in-office status when permitted and when we deem it to be safe.

As we consider this return, the impact of COVID-19, our response to the pandemic, and compliance with governmental measures imposed in response to COVID-19 has caused, and will continue to cause us to incur additional costs and any inability to comply with such measures may subject us to restrictions on our business activities, fines, and other penalties, any of which may adversely affect our business.

In addition, the shift of our workforce to working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured.

Any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business.

We may find it difficult to retain existing employees or to hire new employees because we have required all employees in the United States to receive the COVID-19 vaccine and boosters and to return to the office on a full-time basis.

In August 2021, we notified our employees in the United States that they would be required to return to the office on a full-time basis beginning in September 2021 and that they would be required to attest that they were fully vaccinated against the COVID-19 virus unless they received a medical or religious exemption.

Fully vaccinated employees in the United States began returning to our offices on a full-time basis in early September 2021.

Employees had until October 11, 2021 to provide their vaccine self-attestation.

In October 2021, we opened most of our non-US offices for employees to return on a voluntary basis and in November 2021, wherever permitted by local law, we required our employees outside of the United States to return to full-time, in-office work.

Where permitted by, and subject to, local laws, we will require employees outside of the United States to be fully vaccinated against the COVID-19 virus.

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The spread of the Omicron variant around the world in December 2021 caused us to further modify our office environment.

First, we mandated that all U.S.

employees receive a COVID-19 booster vaccine no later than six weeks after first becoming eligible for such vaccine.

Second, we mandated that all U.S.

employees provide proof of vaccination to us.

Third, for offices around the world that had not been closed by government order, we shifted much of our workforce to fully remote status on a temporary basis at the end of 2021 in order to reduce the density of our offices.

Sales representatives with less than 12 months tenure, sales representative on performance improvement plans and their managers are currently still working in our offices on a full-time basis, as we believe that the training and coaching required by new sales representatives is significantly more effective when provided in an in-office environment.

Our employees have largely complied with our vaccine mandate in the United States and Canada.

However, we experienced an increase in employee departures, particularly within our sales department in the third and fourth quarters of 2021.

We believe that this rise in departures was attributable in part to the unwillingness of some employees to be vaccinated and/or to return to a full-time, in-office environment.

If we continue to mandate COVID-19 vaccinations and require employees to return to our offices on a full-time basis, we may find it difficult to retain existing employees or hire new employees.

If this occurs, this may impact our revenue growth and profitability.

We are experiencing delays in the delivery of networking equipment and other services from certain of our vendors.

We have seen a slowdown in the delivery of network equipment and delays in the projected delivery time of network equipment orders.

In addition, vendors who supply us with dark fiber or lit circuits are being impacted by the spread of COVID-19 in their workforce, and this may slow the delivery of services from these vendors to us.

While we believe that we can adequately manage the operation, maintenance, upgrading and growth of our network, a worsening or prolonged slowdown of the delivery of network equipment, dark fiber and lit circuits may impact our ability to expand and augment our network and service offerings.

If this occurs, this may impact our revenue growth and profitability.

Our growth and financial health are subject to a number of economic risks.

A downturn in the world economy, especially the economies of North America and Europe would negatively impact our growth.

We would be particularly impacted by a decline in the development of new applications and businesses that make use of the Internet.

Our revenue growth is predicated on growth in the use of the Internet that makes up for the declining prices of Internet service.

An economic downturn could impact the Internet business more significantly than other businesses that are less dependent on new

applications and growth in the use of those applications because of the retrenchment by consumers and businesses that typically occurs in an economic downturn.

Our net-centric business would be particularly impacted by a decline in the development of new applications and businesses that make use of the Internet.

Our corporate business would be particularly impacted by an increase in vacancy rates in the multi-tenant office buildings that we serve.

Our total revenue growth is predicated on growth in the use of the Internet that makes up for the declining prices of Internet service.

An economic downturn could impact the Internet business more significantly than other businesses that are less dependent on new applications and growth in the use of those applications and an increase in office vacancy rates because of the retrenchment by consumers and businesses that typically occurs in an economic downturn.

Our historical reductions in our prices are expected to continue in an inflationary economy.

Many of the regions in which we operate are experiencing an increase in inflation rates.

Due to the nature of our product offerings and the industry in which we operate, which is deflationary, we may be unable to raise our prices.

We expect that our historical pricing patterns will continue for the foreseeable future.

Events beyond our control may impact our ability to provide our services to our customers or increase the costs or reduce the profitability of providing our services

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We are particularly vulnerable to acts of terrorism because our largest customer concentration is located in New York, our headquarters is located in Washington, D.C., and we have significant operations in Paris, Madrid and London, cities that have historically been targets for terrorist attacks and vulnerable to pandemics.

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If these or any other of our key facilities were destroyed or seriously damaged, a significant amount of our network traffic could be disrupted.

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We need to retain existing customers and continue to add new customers in order to become consistently profitable and cash flow positive.

In order to become consistently profitable and consistently cash flow positive, we need to both retain existing customers and continue to add a large number of new customers.

In order to be consistently profitable and consistently cash flow positive, we need to both retain existing customers and continue to add a large number of new customers.

The precise number of additional customers required is dependent on a number of factors, including the turnover of existing customers, the pricing of our product offerings and the revenue mix among our customers.

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A substantial and long-term shift to remote work may impact our ability to add new customers and to retain existing customers.

Through much of 2020, we saw corporate customers institute remote work policies and take a cautious approach to new services and upgrades, as well as a reduced demand for connecting smaller satellite offices.

Through much of 2021, we saw corporate customers continue their remote work policies and take a cautious approach to new services and upgrades, as well as a reduced demand for connecting smaller satellite offices.

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These trends may negatively impact our revenue growth, cash flows and profitability.

Lower vacancy rates as a result of diminished lease terminations and increased leasing and subleasing activity will be a key factor in driving renewed growth in our corporate business.

During the Pandemic we saw increasing vacancy rates in many of our buildings due to higher lease terminations and lower leasing activity.

This reduction in tenancy levels was particularly challenging in our Northern and Californian markets.

As a result, our level of activity in our corporate business has been adversely affected.

In order to see a growing level of corporate activity we believe there will need to be an improvement in the tenancy levels of our buildings through a reduction in tenant exits and increased leasing activity.

Our business and operations are growing rapidly and we may not be able to efficiently manage our growth.

We have grown our company rapidly through network expansion, by obtaining new customers through our sales efforts and through increasing the number of our sales personnel.

We have grown our company rapidly through network expansion and by obtaining new customers through our sales efforts.

Our expansion places significant strains on our management, operational and financial infrastructure.

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● maintain and enhance our system of internal controls to ensure timely and accurate compliance with our financial and regulatory reporting requirements;

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● expand our accounting and operational information systems in order to support our growth.

If we fail to implement these measures successfully, our ability to manage our growth will be impaired.

Demand from certain employees to work remotely may reduce the attractiveness of our business as an employer versus some competitors who are allowing employees to work remotely.

In the fall of 2021 we began to implement an in-office work policy designed to return the vast majority of our employees to an in-office work environment.

A small minority of our workforce declined to return to full time in-office employment and left our employment.

We are experiencing modest competitive challenges versus some competitors who are offering some employees a hybrid work option.

Increasing demands to work in a hybrid work style may reduce our ability to attract and retain employees, in particular attracting and retaining salespeople.

Competitive Risks

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By entering into what are known as settlement-free peering arrangements, providers agree to exchange traffic between their respective networks without charging each other.

Our ability to avoid the higher costs of acquiring paid dedicated network capacity (transit or paid peering) and to maintain high network performance is dependent upon our ability to establish and maintain settlement-free peering relationships and to increase the capacity of the interconnections provided by these relationships.

Our ability to avoid the higher costs of acquiring paid dedicated network capacity (transit or paid peering) and to maintain high network performance is dependent upon our ability to establish and maintain settlement-free peering relationships and to increase the capacity or to add additional locations of the interconnections provided by these relationships.

The terms and conditions of our settlement-free peering relationships may also be subject to adverse changes, which we may not be able to control.

If we are not able to maintain or increase our settlement-free peering relationships in all of our markets on favorable terms or to upgrade the capacity of our existing settlement-free peering relationships, we may not be able to provide our customers with high performance, affordable or reliable services, which could cause us to lose existing and potential customers, damage our reputation and have a material adverse effect on our business.

Additionally, certain of our current customers may seek to become settlement-free peers with us.

We cannot assure you that we will be able to continue to establish and maintain relationships with other ISPs, favorably resolve disputes with such providers, or increase the capacity of our interconnections with such providers.

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Decreasing prices for high-speed Internet services have somewhat diminished the competitive advantage that we have enjoyed as a result of our service pricing.

Our business is premised on the idea that customers want simple Internet access and private networks rather than a combination of such services with other services such as VOIP and complex enterprise services.

Our business is premised on the idea that customers want simple Internet access and private networks rather than a combination of such services with other services such as voice services and complex managed services.

Our competitors offer such services.

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Our competitors may also upgrade their existing services or introduce new technologies or services, such as satellite-based Internet or 5G services that could make our services less attractive to potential customers.

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Our business could suffer because telephone companies and cable companies may provide better delivery of certain Internet content, including content originating on their own networks, than content on the public Internet.

Broadband connections provided by cable TV and telephone companies have become the predominant means by which consumers connect to the Internet.

Broadband connections provided by cable TV, telephone, and fixed and mobile companies have become the predominant means by which consumers connect to the Internet.

The providers of these broadband connections may treat Internet content or other broadband content delivered from different sources differently.

The possibility of this has been characterized as an issue of "net neutrality."

As many of our customers operate websites and services that deliver content to consumers our ability to sell our services would be negatively impacted if Internet content delivered by us was less easily received by consumers than Internet content delivered by others.

The possibility of this has been characterized as an issue of “net neutrality.” As many of our customers operate websites and services that deliver content to consumers our ability to sell our services would be negatively impacted if Internet content delivered by us was less easily received by consumers than Internet content delivered by others.

The FCC had promulgated rules that would have banned practices such as blocking and throttling of Internet traffic, but those rules were rescinded by the FCC in December 2017.

Some US states have either issued or are trying to issue their own net neutrality rules.

Some US states have either issued or are considering their own net neutrality rules.

Also, the European Union and other countries in which we operate, have issued similar net neutrality rules.

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Such failures or delays could result in increased capital expenditures, customer and vendor dissatisfaction, loss of business or the inability to add new customers or additional services, and the inability to prepare accurate and timely financial statements all of which would adversely affect our business and results of operations.

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Network Augmentation and Maintenance Risks

Our network is comprised of a number of separate pieces, and we may be unable to obtain or maintain the agreements necessary to augment or maintain our network.

Our network is comprised of a number of separate components, and we may be unable to obtain or maintain the agreements necessary to augment or maintain our network.

Our network is primarily composed of (i) leased capacity on transoceanic optical fiber;

(ii) terrestrial inter-city optical fiber;

(iii) intra-city optical fiber;

(ii) terrestrial inter-city dark optical fiber;

(iii) intra-city dark optical fiber;

and (iv) the buildings that we serve and the associated optical fiber connecting those buildings.

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A number of our leases, both for fiber and building access, are up for renewal in any given year.

A deterioration

in our existing relationship with these operators could impact our network, harm our sales and marketing efforts and could substantially reduce our potential customer base.

A deterioration in our existing relationship with these operators could impact our network, harm our sales and marketing efforts and could substantially reduce our potential customer base.

In addition, portions of our long-haul optical fiber and metro optical fiber are nearing the end of their original projected useful life.

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Failure to acquire new facilities to augment our network could keep us from adding new markets, capacity or buildings to our network and negatively impact our growth opportunities.

Our business could suffer delays and problems due to the actions of "last mile"

providers on whom we are partially dependent.

Our off-net customers are connected to our network by means of communications lines that are provided as services by local telephone and cable companies and others.

We may experience problems with the installation, maintenance and pricing of these lines which could adversely affect our results of operations and our plans to add additional customers to our network using such services.

Our off-net business could suffer delays and problems due to the actions of “last mile” providers on whom we are partially dependent.

Our off-net customers are connected to our network by means of fiber optic capacity that are provided as services by local telephone and cable companies and others.

We may experience problems with the installation, maintenance and pricing of these lines which could adversely affect our results of operations and our plans to add additional off-net customers to our network using such services.

We have historically experienced installation and maintenance delays when the network provider is devoting resources to other services, such as traditional telephony, cable TV services and private network services.

We have also experienced pricing problems when a lack of alternatives allows a provider to charge high prices for services in a particular area.

We attempt to reduce this problem by using many different providers so that we have alternatives for linking a customer to our network.

We have also experienced pricing problems when a lack of alternatives allows a provider to charge high prices for capacity in a particular area or to a particular building.

We attempt to reduce this problem by using many different providers so that we have alternatives for linking an off-net customer to our network.

Competition among the providers tends to improve installation intervals, maintenance and pricing.

Additionally, these providers are often competing with us for the same customers, and have marketed their own service to our customers when our initial contract with our customer nears the end of its term.

Additionally, these providers are often competing with us for the same customers, and have marketed their own service to our off-net customers when our initial contract with our customer nears the end of its term.

Our business could suffer from an interruption of service from our fiber providers.

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If these carriers fail to maintain the fiber or disrupt our fiber connections due to our default or for other reasons, such as business disputes with us, bankruptcy, and governmental takings, our ability to provide service in the affected markets or parts of markets would be impaired unless we have or can obtain alternative fiber routes.

Some of the companies that maintain our inter-city dark fiber and some of the companies that maintain our intra-city dark fiber are also competitors of ours.

Some of the companies that maintain our inter-city dark fiber and some of the companies that maintain our intra-city dark fiber are also competitors of ours in portions of our business.

Consequently, they may have incentives to act in ways unfavorable to us.

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(“Cisco”) the routers and transmission equipment used in our network.

We have recently experienced delays in obtaining certain network equipment from Cisco due to supply chain issues.

If Cisco fails to provide equipment on a timely basis or fails to meet our performance expectations, including in the event that Cisco fails to enhance, maintain, upgrade or improve its products, hardware or software we purchase from them when and how we need them, we may be delayed or unable to provide services as and when requested by our customers.

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Any such disruption could increase our costs, decrease our operating efficiencies and have an adverse effect on our business, results of operations and financial condition.

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Cisco may also be subject to litigation with respect to the technology on which we depend, including litigation involving claims of patent infringement.

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● difficulties in staffing and managing our foreign operations;

● changes in political and economic conditions, such as the exit of the United Kingdom from the European Union, and

● changes in political and economic conditions, and

● exposure to additional and potentially adverse tax regimes.

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The primary impact of these rules are on businesses that collect personal information about consumer users of their services.

We do not provide services to consumers and do not collect such personal information.

We do not provide services to individual consumers and do not collect such personal information.

However, we transmit data across the Internet, which data may include personal information collected by our customers.

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Moreover, for our customers who collect personal information, increased regulation of the collection, processing and use of personal data may impact their business and their use of services in unknown ways.

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Changes in laws, rules, and enforcement could adversely affect us.

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For example, a possible repeal or curtailing of Section 230 of the Communications Decency Act in the United States could have an adverse impact on our customers and, consequently, on us.

While our top 25 customers reprented less than 5.5% of our revenue for the year ended December 31, 2020, several large net-centric customers are or may be the subject of increased regulatory scrutiny, which may impact their businesses and, consequently, their use of our services in unknown ways.

While our top 25 customers represented less than 6.0% of our revenue for the year ended December 31, 2021, several large net-centric customers are or may be the subject of increased regulatory scrutiny, which may impact their businesses and, consequently, their use of our services in unknown ways.

We may be required to censor content on the Internet, which we may find difficult to do and which may impact our ability to provide our services in some countries as well as impact the growth of Internet usage, upon which we depend.

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We could also be subject to penalties if we fail to implement the censorship.

Governments may assert that we are liable for taxes which we have not collected from our customers and we may have to begin collecting a multitude of taxes if Internet services become subject to taxation similar to the taxation of telephone service.

Governments may assert that we are liable for taxes which we have not collected from our customers or paid to our vendors and we may have to begin collecting a multitude of taxes if Internet services become subject to taxation similar to the taxation of telephone service.

In the United States Internet services are generally not subject to taxes.

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Finally, the cumulative effect of these taxes levied on Internet services could discourage potential customers from using Internet services to replace traditional telecommunication services and negatively impact our ability to grow our business.

Our private network services, such as our VPN services, are subject to taxes and fees in various jurisdictions.

Our private network services, such as our VPN services, are subject to taxes and fees in various jurisdictions including the Universal Service Contribution tax in the US.

We believe we collect all required taxes, however, a jurisdiction may assert we have failed to collect certain taxes.

The expense of paying any unpaid taxes could be substantial and we might not be able to collect such back taxes from our customers.

We are subject to value-added taxes and other taxes in many jurisdictions outside of the United States.

We are also subject to audit of our tax compliance in numerous jurisdictions.

These may result in the assessment of amounts due that are material and therefore would have an adverse effect on us.

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The utilization of certain of our net operating loss carryforwards is limited and depending upon the amount of our taxable income we may be subject to paying income taxes earlier than planned.

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We have substantial debt which we may not be able to repay when due.

Our total indebtedness, at par, at December 31, 2020 was $1.1 billion and included $445.0 million of our 5.375% senior secured notes and €350.0 million of our 4.375% senior unsecured notes.

Our $445.0 million senior secured notes are due in March 2022 and require annual interest payments of $23.9 million per year - paid semi-annually.

Our total indebtedness, at par, at December 31, 2021 was $1.1 billion and includes $500.0 million of our 3.50% senior secured notes and €350.0 million of our 4.375% senior unsecured notes.

Our $500.0 million senior secured notes are due in May 2026 and require annual interest payments of $17.5 million per year - paid semi-annually.

Our €350.0 million of senior unsecured notes are due in June 2024 and require annual interest payments of €15.3 million per year - paid semi-annually.

All of our noteholders have the right to be paid the principal upon default and upon certain designated events, such as certain changes of control.

Our total indebtedness at December 31, 2020 included $219.1 million of finance lease obligations for dark fiber primarily under 15 — 20 year IRUs and $7.7 million due under an installment payment agreement with a vendor.

Our total indebtedness at December 31, 2021 included $245.9 million of finance lease obligations for dark fiber primarily under 15 — 20 year IRUs.

Our total indebtedness at December 31, 2021 excludes $124.0 million of operating lease liabilities which we were required to be recorded as right-to-use assets and operating lease liabilities in connection with the adoption of ASU No.

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The amount of US dollars required to fund our interest and principal obligations for our Euro-denominated notes may be impacted due to fluctuations in the Euro to US Dollar exchange rate.

We may not have sufficient funds to pay the interest and principal related to these obligations at

the time we are obligated to do so, which could result in bankruptcy, or we may only be able to raise the necessary funds on unfavorable terms.

We may not have sufficient funds to pay the interest and principal related to these obligations at the time we are obligated to do so, which could result in bankruptcy, or we may only be able to raise the necessary funds on unfavorable terms.

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our notes and our other indebtedness.

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Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy.

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We have assumed the risk associated with variable interest rates under our interest rate swap agreement.

Beginning in August 2021 we used a derivative financial instrument to manage our interest rate risk on our 2026 Notes.

As of December 31, 2021, we were party to an interest rate swap agreement (the Swap Agreement”) that has the economic effect of modifying the fixed-interest rate obligation associated with our 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”).

The Swap Agreement is recorded at its fair value at each reporting period and we incur gains and losses due to changes in market interest rates.

We have a $20.0 million interest-bearing deposit with the counterparty to the Swap Agreement.

If the fair value of the Swap Agreement exceeds a net liability of $20.0 million, we will be required to deposit additional funds with the counterparty equal to the net liability fair value in excess of $20.0 million.

As of December 31, 2021, the fair value of the Swap Agreement was a net liability of $9.0 million and, as a result, $9.0 million of the $20.0 million deposit was restricted and $11.0 million was unrestricted.

The values that we report for the Swap Agreement as of each reporting date are recognized as interest expense with the corresponding amounts included in assets or liabilities in our consolidated balance sheets.

By entering into this Swap Agreement, we have assumed the risk associated with variable interest rates based upon SOFR relate to our 2026 Notes.

We did not elect hedge accounting for our Swap Agreement.

We do not use derivative financial instruments for trading purposes.

Despite our leverage we may still be able to incur more debt.

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In addition, the indentures allow us to issue additional notes and other indebtedness secured by the collateral under certain circumstances.

Moreover, we are not prevented from incurring other liabilities that do not constitute indebtedness as defined in the indentures, including additional finance lease obligations in the form of IRUs.

Moreover, we are not prevented from incurring other liabilities that do not constitute indebtedness as defined in the indentures, including additional operating leases obligations and finance lease obligations in the form of IRUs.

These liabilities may represent claims that are effectively prior to the claims of our note holders.

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Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which, in turn, is subject to general economic, financial, competitive, regulatory and other factors, many of which are beyond our control.

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Our business may not generate sufficient cash flow from operations and we may not have available to us future borrowings in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.

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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-K

Item 1A. Risk Factors