ITEM 1 A - RISK FACTORS
−Removed: Our profitability may be adversely affected by our continuing dependence on our distribution channels.
−Removed: We market our products primarily through a network of distributors who in turn sell our products to value-added resellers.
−Removed: All of our agreements with such distributors and other distribution participants are non-exclusive, terminable at will by both parties, and generally short-term.
−Removed: No assurances can be given that any or all such distributors or other distribution participants will continue their relationship with us.
−Removed: Distributors and, to a lesser extent, value-added resellers cannot easily be replaced and any loss of revenues from these and other sources or our inability to reduce expenses to compensate for such loss of revenue could adversely affect our net revenue and profit margins.
−Removed: Although we rely on our distribution channels to sell our products, our distributors and other distribution participants are not obligated to devote any specified amount of time, resources, or efforts to the marketing of our products, or to sell a specified number of our products.
−Removed: There are no prohibitions on distributors or other resellers offering products that are competitive with our products, and some do offer competitive products.
−Removed: The support of our products by distributors and other distribution participants may depend on the competitive strength of our products and the price incentives we offer for their support.
−Removed: If our distributors and other distribution participants are not committed to our products, our revenue and profit margins may be adversely affected.
−Removed: Additionally, we offer our distributors price protection on their inventory of our products.
−Removed: If we reduce the list price of our products, we will compensate our distributors for the respective products that remain in their inventory on the date the price adjustment becomes effective, provided that they have been providing inventory reports consistently and the inventory was bought within the six months preceding the price adjustment date.
−Removed: Our net revenue and profit margins could be adversely affected if we reduce product prices significantly or distributors happen to have significant on-hand inventory of the affected product at the time of a price reduction.
−Removed: Further, if we do not have sufficient cash resources to compensate distributors on terms satisfactory to them or us, our price protection obligations may prevent us from reacting quickly to changing market conditions.
−Removed: Product development delays or defects could harm our competitive position and reduce our revenue.
−Removed: We have in the past experienced, and may again experience, technical difficulties and delays with the development and introduction of new products.
−Removed: Many of the products we develop contain sophisticated and complicated circuitry, software and components and utilize manufacturing techniques involving new technologies.
−Removed: Potential difficulties in the development process that we may experience include the following:
−Removed: (a) meeting required specifications and regulatory standards;
−Removed: (b) hiring and keeping a sufficient number of skilled developers;
−Removed: (c) meeting market expectations for performance;
−Removed: (d) obtaining prototype products at anticipated cost levels;
−Removed: (e) having the ability to identify problems or product defects in the development cycle;
−Removed: and (f) achieving necessary manufacturing efficiencies.
Once new products reach the market, they may have defects, or may be met by unanticipated new competitive products, which could adversely affect market acceptance of these products and our reputation.
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We depend on an outsourced manufacturing strategy, and any disruption in outsourced services could negatively impact our product availability and revenues.
−Removed: We outsource the manufacturing of all of our products except digital signage and wireless microphone products to electronics manufacturing services (“EMS”) providers located outside the U.S.
+Added: We outsource the manufacturing of all of our products to electronics manufacturing services (“EMS”) providers located outside the U.S.
If any of these EMS providers experience ( i ) difficulties in obtaining sufficient supplies of components, (ii) component prices significantly exceeding anticipated costs, (iii) an interruption in their operations, or (iv) otherwise suffers capacity constraints, we could experience a delay in production and shipping of these products, which would have a negative impact on our revenue.
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Our operations, and consequently our revenues and profitability, could be materially adversely affected if we are forced to switch from any of our EMS providers to another EMS provider due to any of a number of factors, including financial difficulties faced by the manufacturer, disagreements in pricing negotiations between us and the manufacturer or organizational changes in the manufacturer.
−Removed: ITEM 1 A - RISK FACTORS
The cost of delivered product from our EMS providers is a direct function of their ability to buy components at a competitive price and to realize efficiencies and economies of scale within their overall business structures.
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Further, global economic conditions may result in a tightening in the credit markets, low liquidity levels in many financial markets, decrease in customer demand and ability to pay obligations, and extreme volatility in credit, equity, foreign currency and fixed income markets.
+Added: ITEM 1 A - RISK FACTORS
Such adverse economic conditions could negatively impact our business, particularly our revenue potential, potentially causing losses on investments and the collectability of our accounts receivable.
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Any such unfavorable market fluctuations, reductions in customer spending or increased manufacturing costs could have a negative impact on our business and results of operations.
−Removed: ITEM 1 A - RISK FACTORS
Difficulties in integrating future acquisitions could adversely affect our business.
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Our international business is subject to the financial and operating risks of conducting business internationally, including the following:
+Added: ITEM 1 A - RISK FACTORS
unexpected changes in, or the imposition of, additional legislative or regulatory requirements;
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disruption in services due to natural disaster, economic or political difficulties, transportation, quarantines or other restrictions associated with infectious diseases.
−Removed: ITEM 1 A - RISK FACTORS
We may not be able to hire and retain qualified key and highly-skilled technical employees, which could affect our ability to compete effectively and may cause our revenue and profitability to decline.
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immigration laws, we may not be able attract highly-skilled technical employees from abroad.
−Removed: We rely on third-party technology and license agreements, the loss of any of which could negatively impact our business.
+Added: W e rely on third-party technology and license agreements, the loss of any of which could negatively impact our business.
We have licensing agreements with various suppliers for software and hardware incorporated into our products.
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To help guard against such risks, we carry business interruption loss insurance to help compensate us for losses that may occur, but we cannot assure that such coverage would protect us from all such possible losses.
+Added: ITEM 1 A - RISK FACTORS
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
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Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.
−Removed: ITEM 1 A - RISK FACTORS
+Added: We may require additional financing to fund future operations, which may not be available to us on acceptable terms or at all.
+Added: As of December 31, 2020, we had approximately $ 3.8 million of cash and cash equivalents.
+Added: Although we anticipate having sufficient cash on hand, cash from future operations and cash from the sale of marketable securities to fund our operations for the next twelve months, there can be no assurance that efforts to enforce our patents will be successful or that our marketing and sales efforts will progress as anticipated or that our cash generated from operations will be as expected, and we may need additional debt or equity financing in the next twelve months to execute our business plan and to be able to continue as a going concern.
+Added: If in the future, we fail to satisfy the continued listing standards of NASDAQ, we may not be able to sell shares of our common stock.
+Added: Accordingly, if additional debt or equity financings are needed, market conditions may limit our ability to raise capital on favorable terms, or at all, and the terms of any public or private offerings of debt or equity securities likely would be significantly dilutive to existing shareholders.
Risks Relating to Share Ownership
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The market price of our common stock may be significantly affected by a variety of factors, including the following:
+Added: ITEM 1 A - RISK FACTORS
statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically;
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our ability to successfully utilize our cash reserves resulting from the settlement of litigation and arbitration matters.
−Removed: ITEM 1 A - RISK FACTORS
Our stock price may in the future not meet the minimum bid price for continued listing on the Nasdaq Capital Market.
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The issuance of such shares could dilute the voting power of the currently outstanding shares of our common stock and could dilute earnings per share.
+Added: ITEM 1 A - RISK FACTORS
If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
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There can be no assurance that we will be successful in the defense of these litigation claims, in whole or in part.
+Added: Our certification of incorporation designates the Court of Chancery in the State of Delaware as the sole and exclusive forum for certain actions or proceedings that may be initiated by our stockholders, which could discourage claims or limit stockholders’ ability to make a claim against the Company, our directors, officers, and employees.
+Added: Our certificate of incorporation states that unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company or the Company's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to the Delaware Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
+Added: These exclusive forum provisions do not apply to claims under the Securities Act or the Exchange Act.
+Added: The exclusive forum provision may discourage claims or limit stockholders’ ability to submit claims in a judicial forum that they find favorable and may create additional costs as a result.
+Added: If a court were to determine the exclusive forum provision to be inapplicable and unenforceable in an action, we may incur additional costs in conjunction with our efforts to resolve the dispute in an alternative jurisdiction, which could have a negative impact on our results of operations.
UNRESOLVED STAFF COMMENTS
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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.