What changed in this filing

/stocks — the workspaceLOADING

Item 1. Legal Proceedings

2022-08-04 compared with 2022-05-06 · 63 added, 61 removed, 832 unchanged (13% of the section changed)

18 unchanged sentences

The coronavirus outbreak has had, and could continue to have, a materially disruptive effect on our business.

The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

The ongoing war between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

We are controlled by a single stockholder, whose interest in our business may be different than yours.

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If gaming, including streaming and esports, does not grow as expected or declines our business could be seriously harmed.

Over the past two decades, gaming has grown from a relatively niche industry to a significant segment of the global entertainment industry with a wide following across various demographic groups globally.

Over the past three decades, gaming has grown from a relatively niche industry to a significant segment of the global entertainment industry with a wide following across various demographic groups globally.

This growth includes, and has been driven by, the rapid expansion of live game streaming by content creators and the growing popularity of professional competitive gaming, also referred to as esports.

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dollars, any decline in the value of the U.S.

dollar relative to the applicable local currency, such as the Chinese Renminbi or the New Taiwan dollar, may cause our suppliers and manufacturers to raise the prices they charge us.

dollar relative to the applicable local currency, such as the Chinese Yuan or the New Taiwan dollar, may cause our suppliers and manufacturers to raise the prices they charge us.

In addition, we generally pay our employees located outside the United States in the local currency and, as a result of our foreign sales and operations, we have other expenses, assets and liabilities that are denominated in foreign currencies and changes in the value of the U.S.

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higher costs for promotions, customer incentive programs and other initiatives used to stimulate demand;

constraints on consumer spending caused by higher inflation, leading to weaker consumer demand for our products;

increased risk of excess and obsolete inventories, which may require write-downs or impairment charges;

constraints on consumer spending caused by higher inflation and increased interest rates, leading to weaker consumer demand for our products;

increased risk of excess and obsolete inventories, which may require write-downs or impairment charges, such as the $22.5 million inventory impairment and related charges recognized during the second quarter of 2022;

financial distress or bankruptcy of key suppliers or third-party manufacturers, resulting in insufficient product quantities to meet demand or increases in the cost of producing our gear;

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Additionally, certain individuals or teams with greater access to capital may increase the cost of certain sponsorships to levels we may choose not to match.

If this were to occur, our sponsored individuals, teams or events may terminate their relationships with us and endorse our competitors’ products, and we may be unable to obtain endorsements from other comparable alternatives.

In addition, if any of our sponsored individuals or teams become unpopular or engage in activities perceived negatively in the gaming community or

more broadly, our sponsorship expenditures could be wasted and our brand reputation could be damaged which, in turn, could seriously harm our business.

If this were to occur, our sponsored individuals, teams or events may terminate their relationships with us and

endorse our competitors’ products, and we may be unable to obtain endorsements from other comparable alternatives.

In addition, if any of our sponsored individuals or teams become unpopular or engage in activities perceived negatively in the gaming community or more broadly, our sponsorship expenditures could be wasted and our brand reputation could be damaged which, in turn, could seriously harm our business.

DRAM integrated circuits account for most of the cost of producing our DRAM modules and fluctuations in the market price of DRAM integrated circuits may have a material impact on our net revenue and gross profit.

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the extended closures in early February 2020 and slow ramp up of capacity of many factories in China and other countries in Asia where many of our products and the components and subcomponents used in the manufacture of our gear created, and could continue to create, supply chain disruptions for our gear;

supply and transportation costs have increased, and may continue to increase, as alternate suppliers are sought;

supply chain challenges, including longer production and shipping times, and increased supply, shipping and logistics costs, each of which has negatively impacted our gross margins, as well as the need to purchase long-lead time items ahead of demand due to supply constraints ;

labor shortages within delivery and other industries due to extended worker absences could create further supply chain disruptions;

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significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity, including our ability to repay the indebtedness outstanding from our credit facilities.

Since early 2020, we have experienced an increase in demand for our gea r as more people were under shelter-in-place restrictions, which we believe have limited people’s access to alternative forms of entertainment and social interaction, and thus have increased the demand for home entertainment and connecting with others through content creation.

Since early 2020, we have experienced an increase in demand for our gear as more people were under shelter-in-place restrictions, which we believe have limited people’s access to alternative forms of entertainment and social interaction, and thus have increased the demand for home entertainment and connecting with others through content creation.

In contrast, as the COVID-19 pandemic subsides, it has resulted in shelter-in-place and other similar restrictions being eased, starting earlier 2021.

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Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

The ongoing war between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

In February 2022, Russian military forces invaded Ukraine.

In response, Ukrainian military personnel and civilians are actively resisting the invasion.

Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

Russia's recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People's Republic and the so-called Luhansk People's Republic.

Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict has contributed to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

Russia's recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have also led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People's Republic and the so-called Luhansk People's Republic.

The situation is rapidly evolving as a result of the conflict in Ukraine, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.

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While we do not expect this decision to have a material adverse effect on our business, results of operations or financial condition, such sanctions and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations.

In addition, the conflict and sanctions against Russia could negatively impact the production and sales of consumer electronics due to a variety of factors such as lower consumer confidence, increase the ongoing disruption of supply chains, worsen the current semiconductor chip shortage since Russia and Ukraine are critical suppliers of neon gas and palladium used in chip production, exacerbate energy shortages and high energy prices, and increase cybersecurity threats.

These impacts could have a material adverse effect on our operations, sales and profitability.

In addition, the conflict and sanctions against Russia has and could continue to negatively impact the production and sales of consumer electronics due to a variety of factors such as lower consumer confidence, increase the ongoing disruption of supply chains, worsen the current semiconductor chip shortage since Russia and Ukraine are critical suppliers of neon gas and palladium used in chip production, exacerbate energy shortages and high energy prices, and increase cybersecurity threats.

These impacts have adversely impacted our operations, sales and profitability, and could continue to do so

We are actively monitoring the situation in Ukraine and assessing its impact on our business, including our suppliers and customers.

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A significant percentage of our net revenue is generated by sales of DRAM modules.

In particular, net revenue generated by sales of DRAM modules accounted for a total of 32.0% and 27.7% of our net revenue in the three months ended March 31, 2022 and 2021, respectively.

In particular, net revenue generated by sales of DRAM modules accounted for a total of 32.4% and 27.3% of our net revenue in the six months ended June 30, 2022 and

2021 , respectively.

As a result, any significant decrease in average selling prices of our DRAM modules, whether as a result of declining market prices of DRAM ICs or for any other reason, would seriously harm our business.

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Sales to a limited number of customers represent a significant portion of our net revenue, and the loss of one or more of our key customers may seriously harm our business.

In the three months ended March 31, 2022 and 2021, sales to Amazon accounted for 30.4% and 24.6% of our net revenue, respectively.

Sales to our ten largest customers accounted for 52.5% and 49.3% of the same periods, respectively, of our net revenue.

In the six months ended June 30, 2022 and 2021, sales to Amazon accounted for 27.5% and 24.6% of our net revenue, respectively.

Sales to our ten largest customers accounted for 52.0% and 50.0% of the same period ended June 30, 2022 and 2021, respectively, of our net revenue.

Our customers typically do not enter into long-term agreements to purchase our gear but instead enter into purchase orders with us from time to time.

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Risks relating to product quality .

Our manufacturers or suppliers may provide us with products or components that do not perform reliably or do not meet our quality standards or performance specifications or are susceptible to early failure or contain other defects.

This may seriously harm our reputation, increase our warranty and other costs or lead to product returns or recalls, any of which may seriously harm our business.

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We believe one of the most significant risks associated with this concentration is that production may be interrupted or limited because of labor shortages in southern China and by strains on the local infrastructure.

In addition, production at facilities located in

China, Taiwan or Southeast Asia, including our own manufacturing, testing and packaging facility in Taiwan, and deliveries from those facilities, may be adversely affected by tensions, hostilities or trade disputes involving China, Taiwan, the United States or other countries.

In addition, production at facilities located in China, Taiwan or Southeast Asia, including our own manufacturing, testing and packaging facility in Taiwan, and deliveries from those facilities, may be adversely affected by tensions, hostilities or trade disputes involving China, Taiwan, the United States or other countries.

There is considerable potential political instability in Taiwan related to its disputes with China.

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Because our gear must cross international borders, we are subject to risk of delay if our documentation does not comply with customs rules and regulations or for similar reasons.

In addition, any increases in customs duties or tariffs, as a result of changes to

existing trade agreements between countries or otherwise, could increase our costs or the final cost of our gear to our retailer customers or gamers or decrease our margins.

In addition, any increases in customs duties or tariffs, as a result of changes to existing trade agreements between countries or otherwise, could increase our costs or the final cost of our gear to our retailer customers or gamers or decrease our margins.

The laws governing customs and tariffs in many countries are complex, subject to many interpretations and often include substantial penalties for non-compliance.

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Our industry is characterized by rapidly evolving technology and standards.

These technological developments require us to integrate new technology and standards into our gear, create new and relevant categories of gear and adapt to changing business models in a timely manner.

These technological developments require us to integrate new technology and standards into our gear, create new and relevant categories of gear and adapt to changing business

models in a timely manner.

Our competitors may develop or acquire alternative and competing technologies and standards that could allow them to create new and disruptive products or produce similar competitive products at lower costs of production.

the development of gaming, computing and audiovisual technology could render our gear less competitive or obsolete.

Advances in the development of gaming, computing and audiovisual technology could render our gear less competitive or obsolete.

For example, the emergence of augmented reality and virtual reality headsets could render certain of our gamer and creator peripherals such as keyboards and mice less relevant, similar to how cloud computing could drastically reduce the need for gaming components and systems.

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As a result, we may need to invest significant resources in research and development to maintain our market position, keep pace with technological changes and compete effectively.

Our product development expenses were $ 17.1 million and $ 15.2 million for the three months ended March 31, 2022 and 202 1 , respectively, representing 4.5 % and 2.9 % of our net revenue for these periods, respectively.

Our product development expenses were $ 35.1 million and $ 30.7 million for the six months ended June 30 , 2022 and 2021 , respectively, representing 5.3 % and 3.1 % of our net revenue for these periods, respectively.

Our failure to improve our gear, create new and relevant categories of gear and adapt to changing business models in a timely manner may seriously harm our business.

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In addition, we provide a variety of rebates to both customers and gamers, including instant rebates, volume incentive rebates, back end rebates and mail-in rebates.

We also have contractual agreements and cooperative marketing, promotional and other arrangements that provide rebates and other financial incentives to our retailer customers and gamers.

We also have contractual agreements and cooperative marketing, promotional and other

arrangements that provide rebates and other financial incentives to our retailer customers and gamers.

To a limited extent, we also offer financial incentives related to retailer customer inventory of specific products.

The aggregate amount of charges incurred as a

result of all of these rebates and other financial incentives is offset from our gross revenue.

For the three months ended 202 2 and 2021, our gross revenue was reduced approximately by 9.9 % and 6.7 %, respectively, as a result of these rebates.

The aggregate amount of charges incurred as a result of all of these rebates and other financial incentives is offset from our gross revenue.

For the six months ended June 30, 202 2 and 2021, our gross revenue was reduced approximately by 9.5 % and 7.3 %, respectively, as a result of these rebates.

In the future, we also may be required to write down inventory or receivables due to product obsolescence or because of declines in market prices of our gear.

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We need substantial working capital to operate our business, and we rely to a significant degree upon credit extended by our manufacturers and suppliers and borrowings under our revolving credit facility to meet our working capital needs.

unable to meet our working capital needs, we may be required to reduce expenses or product purchases, or delay the development, commercialization and marketing of our gear, which would seriously harm our business.

If we are unable to meet our working capital needs, we may be required to reduce expenses or product purchases, or delay the development, commercialization and marketing of our gear, which would seriously harm our business.

We need substantial working capital to operate our business.

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Additional financing may not be available on terms acceptable to us or at all.

In particular, our access to other debt financing is limited by the negative covenant in our credit agreement restricting our ability to incur other indebtedness, as well as the financial covenants therein prohibiting our Consolidated Total Net Leverage Ratio from exceeding 3.5 to 1.0 from the quarter ending September 30, 2022 through and including March 31, 2023 and not exceeding 3.0 to 1.0 from the quarter ended June 30, 2023 and each quarter thereafter (provided that upon the occurrence of a Qualified Acquisition, as defined in the credit agreement, such ration can be increased to 3.5 to 1.0 temporarily provided all the requirements defined in the credit agreement are met) or our Consolidated Interest Coverage Ratio being less than 3.0 to 1.0 (both tested quarterly on a trailing four fiscal quarter basis).

As a result, such restrictions could limit, perhaps substantially, the amount of indebtedness we are permitted to borrow under other debt arrangements.

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Indebtedness and the terms of our credit facilities may impair our ability to respond to changing business and economic conditions and may seriously harm our business.

We had $246.5 million of indebtedness as of March 31, 2022.

We had $245.1 million of indebtedness as of June 30, 2022.

We have incurred significant indebtedness under our credit facilities to fund working capital and other cash needs and we expect to incur additional indebtedness in the future, particularly if we use borrowings or other debt financing to finance all or a portion of any future acquisitions.

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Upon an event of default under our credit facilities, the lender may require the immediate repayment of all outstanding loans and accrued interest.

In addition, during the continuance of certain events of default under our credit facilities (subject to a cure period for some events of default), interest may accrue at a rate that is 200 basis points above the otherwise applicable rate.

In addition, during the continuance of certain events of default under our credit facilities (subject to a cure period for some events of default), interest may accrue at a rate

that is 200 basis points above the otherwise applicable rate.

As a result, any breach or failure to comply with covenants contained in our debt instruments could seriously harm our business.

Moreover, our credit facilities are secured by substantially all of our assets (including capital stock of our subsidiaries), except assets of our foreign subsidiaries and shares of some of our foreign subsidiaries, and if we are unable to pay indebtedness secured by collateral when due, whether at maturity or if declared due and payable by the lender following a default, the lender generally has the right to seize and sell the collateral securing that indebtedness.

There can be no assurance that we will not breach the covenants or other terms of our credit facilities or any other debt instruments in the future and, if

a breach occurs, there can be no assurance that we will be able to obtain necessary waivers or amendments from the lender or to refinance the related indebtedness on terms we find acceptable, or at all.

There can be no assurance that we will not breach the covenants or other terms of our credit facilities or any other debt instruments in the future and, if a breach occurs, there can be no assurance that we will be able to obtain necessary waivers or amendments from the lender or to refinance the related indebtedness on terms we find acceptable, or at all.

As a result, any breach or default of this nature may seriously harm our business.

Restrictions under our credit facilities .

We must comply with covenants under our current credit facilities, which require the maintenance of a maximum Consolidated Total Net Leverage Ratio of 3.0 to 1.0 and a minimum Consolidated Interest Coverage Ratio of 3.0 to 1.0 (as defined in our credit facilities).

While we were in compliance with all applicable financial covenants under our credit facilities as of March 31, 2022, there can be no assurance that we will not breach these financial covenants in our credit facilities in the future or other covenants in our future credit facilities.

We must comply with covenants under our current credit facilities, which require the maintenance of a maximum Consolidated Total Net Leverage Ratio of 3.5 to 1.0 from the quarter ending September 30, 2022 through and including March 31, 2023 and not exceeding 3.0 to 1.0 from the quarter ended June 30, 2023 and each quarter thereafter (provided that upon the occurrence of a Qualified Acquisition, as defined in the credit agreement, such ration can be increased to 3.5 to 1.0 temporarily provided all the requirements defined in the credit agreement are met) and a minimum Consolidated Interest Coverage Ratio of 3.0 to 1.0 (as defined in our credit facilities).

While we were in compliance with all applicable financial covenants under our credit facilities as of June 30, 2022, there can be no assurance that we will not breach these financial covenants in our credit facilities in the future or other covenants in our future credit facilities.

Our credit facilities also include covenants that limit or restrict our ability to, among other things, incur liens on our properties, make acquisitions and other investments and sell assets, in each case, subject to specified exceptions.

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We conduct our operations and sell our gear internationally and the effect of business, legal and political risks associated with international operations may seriously harm our business.

Sales to customers outside the United States accounted for 56.4% and 63.8% our net revenue for three months ended March 31, 2022 and 2021, respectively.

Sales to customers outside the United States accounted for 55.8% and 64.3% our net revenue for six months ended June 30, 2022 and 2021, respectively.

In addition, substantially all of the gear that we sell is manufactured at facilities in Asia.

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These threats are constantly evolving, making it increasingly difficult to successfully defend against them or implement adequate preventative measures.

These attacks have occurred on our systems in the past and are expected to occur in the future.

These malicious attempts have occurred on our systems in the past and are expected to occur in the future.

Experienced computer programmers, hackers and employees may penetrate our security controls and misappropriate or compromise our confidential information or that of our employees or third parties.

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We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, including the Payment Card Industry Data Security Standard, or PCI DSS, a security standard applicable to companies that collect, store or transmit certain data regarding credit and debit cards, holders and transactions.

Any data security incidents, such as those described above, and/or other issues involving payment card information, can constitute a failure to comply with PCI DSS, which may therefore violate payment card association operating rules and the terms of our contracts with payment networks,

processors and merchant banks.

Such failure to comply may result in the loss of our ability to accept credit and debit card payments, subject us to fines, penalties, and damages.

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At present, there are few if any viable alternatives to the Standard Contractual Clauses.

As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.

could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results .

We are also subject to evolving European Union and United Kingdom privacy laws on cookies, tracking technologies and e-marketing.

In the European Union and the United Kingdom under national laws derived from the ePrivacy Directive, informed

consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing.

In the European Union and the United Kingdom under national laws derived from the ePrivacy Directive, informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing.

The GDPR also imposes conditions on obtaining valid consent for cookies, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology.

The current national laws that implement the ePrivacy Directive are highly likely to be replaced across the E uropean U nion (but not directly in the United Kingdom ) by an E uropean U nion regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance.

While the text of the ePrivacy Regulation is still under development, recent European court decisions a nd regulators’ recent guidance are driving increased attention to cookies and tracking technologies.

The current national laws that implement the ePrivacy Directive are highly likely to be replaced across the European Union (but not directly in the United Kingdom) by an European Union regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance.

While the text of the ePrivacy Regulation is still under development, recent European court decisions and regulators’ recent guidance are driving increased attention to cookies and tracking technologies.

If the trend of increasing enforcement by regulators of the strict approach in recent guidance and decisions continues, this could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.

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In addition, a retailer or distributor experiencing financial difficulties generally increases our exposure to uncollectible receivables.

Moreover, if one of our distributor or retailer customers experiences financial distress or bankruptcy, they may be required to liquidate their inventory of our gear, or similar products that compete with our gear, at reduced prices, which can result in substantial over-supply and reduced demand for our gear over the short term.

Moreover, if one of our distributor or retailer customers experiences financial distress or bankruptcy, they may be required to liquidate their inventory of our

gear, or similar products that compete with our gear, at reduced prices, which can result in substantial over-supply and reduced demand for our gear over the short term.

If any of these circumstances were to occur, it could seriously harm our business.

Likewise, our competitors may from time to time experience similar financial difficulties or may elect to terminate their sales of certain products.

If one of our competitors experiences financial distress or bankruptcy and is forced to liquidate inventory or exits a

product line and disposes of inventory at reduced prices, this may also result in over-supply of and reduced demand for our gear and could have a short-term adverse effect on our results of operations and financial condition.

If one of our competitors experiences financial distress or bankruptcy and is forced to liquidate inventory or exits a product line and disposes of inventory at reduced prices, this may also result in over-supply of and reduced demand for our gear and could have a short-term adverse effect on our results of operations and financial condition.

Our online operations are subject to numerous risks that may seriously harm our business.

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We are required to test goodwill, intangible assets and other long-lived assets for recoverability and may be required to record charges if there are indicators of impairment, and we have in the past recognized impairment charges.

As of March 31, 2022, we had approximately $348.4 million of goodwill, $249.8 million of intangible assets and $74.7 million of other long-lived assets.

As of June 30, 2022, we had approximately $347.9 million of goodwill, $236.5 million of intangible assets and $72.3 million of other long-lived assets.

One of our strategies is to grow through acquisitions of other businesses or technologies and, if we are successful in doing so, these acquisitions may result in goodwill and other long-lived assets.

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Likewise, we hold a trademark registration on certain brands such as K70 only in the United States, Australia and New Zealand and therefore such brands do not have trademark protection in other parts of the world.

If third parties misappropriate or infringe on our brands or we are unable to protect our brands, or if third parties use the Corsair, Corsair ONE, Dark Core, Dominator, Elgato, Glaive, Harpoon, iCUE, Ironclaw, K70, K100, Nightsword, Origin, SCUF, Slipstream, Scimitar, Vengeance, Virtuoso and Void brand names, or other brand names we maintain, to sell their products in countries where we do not have trademark protection, it may seriously harm our business.

If third parties misappropriate or infringe on our brands or we are unable to protect

our brands, or if third parties use the Corsair, Corsair ONE, Dark Core, Dominator, Elgato , Glaive, Harpoon, iCUE , Ironclaw , K70, K100, Nightsword , Origin, SCUF, Slipstream, Scimitar, Vengeance , Virtuoso and Void brand names, or other brand names we maintain, to sell their products in countries where we do not have trademark protection, it may seriously harm our business.

We hold a limited number of patents and pending patent applications.

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In order to avoid these restrictions, we may have to seek a license for the technology.

Any such license may

not be available on reasonable terms or at all, could require us to pay significant royalties and may significantly increase our operating expenses or otherwise seriously harm our business or operating results.

Any such license may not be available on reasonable terms or at all, could require us to pay significant royalties and may significantly increase our operating expenses or otherwise seriously harm our business or operating results.

As a result, we may be required to develop alternative non-infringing technologies, which could require significant effort and expense and might not be successful or, if alternative non-infringing technologies already exist, we may be required to license those technologies from third parties, which may be expensive or impossible.

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In addition, the United Kingdom and the State of California have issued laws that require us to disclose our policy and practices for identifying and eliminating forced labor and human trafficking in our supply chain.

While we have a policy and management systems to identify and avoid these practices in our supply chain, we cannot guarantee that our suppliers will always be in conformance to these laws and expectations.

While we have a policy and management systems to identify and avoid these practices in our supply chain, we cannot guarantee that our suppliers will always

be in conformance to these laws and expectations.

We may face enforcement liability and reputational challenges if we are unable to sufficiently meet these expectations.

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We are controlled by EagleTree, whose interests in our business may be different than yours.

As of March 31, 2022, EagleTree beneficially owned approximately 56.8% of our common stock and is able to control our affairs in all cases.

As of June 30, 2022, EagleTree beneficially owned approximately 56.6% of our common stock and is able to control our affairs in all cases.

Further, pursuant to the terms of an Investor Rights Agreement between us and EagleTree, EagleTree has the right, among other things, to designate the chairman of our board of directors, as well as the right to nominate up to five out of eight directors to our board of directors as long as affiliates of EagleTree beneficially own at least 50% of our common stock, four directors as long as affiliates of EagleTree beneficially own at least 40% and less than 50% of our common stock, three directors as long as affiliates of EagleTree beneficially own at least 30% and less than 40% of our common stock, two directors as long as affiliates of EagleTree beneficially own at least 20% and less than 30% of our common stock and one director as long as affiliates of EagleTree beneficially own at least 10% and less than 20% of our common stock.

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As a result, the market price of our common stock is likely to be volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value of their common stock or the loss of their entire investment for a number of reasons, including reasons unrelated to our operating performance or prospects.

The market price of our common stock could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section and the following:

The market price of our common stock could be subject to wide

fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section and the following:

variations in our operating performance and the performance of our competitors;

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If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public, the trading price of our common stock could decline.

Based upon the number of shares outstanding as of March 31, 2022, we had outstanding a total of 95.4 million shares of common stock.

Based upon the number of shares outstanding as of June 30, 2022, we had outstanding a total of 95.8 million shares of common stock.

Of these shares, all of the shares of our common stock sold in the initial public offering and in the secondary offering in January 2021, are freely tradable, without restriction, in the public market.

As of March 31, 2022, the holders of approximately 54.2 million shares of our common stock, or approximately 56.8% of our total outstanding common stock based upon the number of shares outstanding as of March 31, 2022, will be entitled to rights with respect to the registration of their shares under the Securities Act.

As of June 30, 2022, the holders of approximately 54.2 million shares of our common stock, or approximately 56.6% of our total outstanding common stock based upon the number of shares outstanding as of June 30, 2022, will be entitled to rights with respect to the registration of their shares under the Securities Act.

Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates.

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We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock.

As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount.

As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at

such discount.

In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock.

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For instance, a director of our company who also serves as a director, officer or employee of EagleTree, or any of its respective portfolio companies, funds or other affiliates may pursue certain acquisitions or other opportunities that may be complementary to our business and, as a result, such acquisition or other opportunities may not be available to us.

As of March 31, 2022, this provision of our amended and restated certificate of incorporation relates only to the EagleTree director designees.

As of June 30, 2022, this provision of our amended and restated certificate of incorporation relates only to the EagleTree director designees.

These potential conflicts of interest could seriously harm our business if attractive corporate opportunities are allocated by EagleTree to itself or its respective portfolio companies, funds or other affiliates instead of to us.

69 unchanged sentences

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 1. Legal Proceedings