What changed in this filing

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Item 1A. Risk Factors

2025-04-01 compared with 2024-03-27 · 31 added, 45 removed, 232 unchanged (25% of the section changed)

21 unchanged sentences

Currently, certain of our products are subject to tariffs imposed by one country on goods manufactured in the other country.

This has materially impacted our gross margins negatively.

There is uncertainty regarding the tariffs expected to be imposed, and any increase in tariff rates and subjecting additional items to tariffs, could impact our costs, revenues and the competitiveness of our products due to our manufacturing locations.

There is uncertainty regarding the tariffs expected to be imposed, and any increase in tariff rates and subjecting additional items to tariffs could increase our costs, revenues and the competitiveness of our products due to our manufacturing locations.

Trade and tariff issues are creating business uncertainty and may spread to and impact other jurisdictions.

3 unchanged sentences

We endeavor to have multi-sourced manufacturing, but this is not currently practical for all products in all locations.

War based restrictions, embargos, and supply chain disruptions have and are occurring as a result of the Russian invasion of Ukraine, which could have economic and other indirect impacts to our business.

War based restrictions, embargos, and supply chain disruptions have and are occurring because of the Russian invasion of Ukraine, which could have economic and other indirect impacts to our business.

We do not have any operations in Russia or Ukraine, nor do we rely on any software or hardware components sourced from these two countries.

5 unchanged sentences

In the security deployment area, we have introduced a pay per use business model and service fees that may not be accepted by our customers who are accustomed to paying for capital equipment upfront, rather than paying per use charges.

Failure to adapt to technology trends in our industry may impact our competitiveness and financial results.

Failure to adapt to new technological trends in our industry may impact our competitiveness and financial results.

Product and service technology in our industry evolves rapidly, making timely product innovation essential to success in the marketplace.

48 unchanged sentences

additional burden of support for an acquired programmer architecture.

Future acquisitions may also impact our financial position.

Future acquisitions may also affect our financial position.

For example, we may use significant cash or incur debt, which would weaken our balance sheet, or issue additional shares, potentially diluting existing shareholders.

5 unchanged sentences

We attempt to protect our rights in proprietary software products, including our user interface, product firmware, software module options and other software products by retaining the title to and copyright of the software and documentation, by including appropriate contractual restrictions on use and disclosure in our licenses, and by requiring our employees to execute non-disclosure agreements.

Because of the rapidly changing technology in the semiconductor, electronic equipment and software industries, portions of our products might possibly infringe upon existing patents or copyrights, and we might be required to obtain licenses or discontinue the use of the infringing technology.

We believe that any exposure we may have regarding possible infringement claims is a reasonable business risk similar to that assumed by other companies in the electronic equipment and software industries.

18 unchanged sentences

Because we rely on a small number of suppliers for certain parts, we are subject to possible price increases by these suppliers.

As experienced in 2022, we have seen more part shortages and larger price increases than in recent years.

While this has returned to a stable situation in 2023, our volumes typically are not high enough to maintain multiple suppliers.

Also, we may be unable to accurately forecast our production schedule.

3 unchanged sentences

Over estimation of demand or excessive minimum order quantities may lead to excess inventories that may become obsolete.

Part shortages, especially semiconductor parts as experienced in 2021 and 2022, impact availability, lead times, and pricing that may be disruptive to our production plans, lead times, margins and may result in lost sales.

Part shortages impact availability, lead times and pricing that may be disruptive to our production plans, lead times, margins and may result in lost sales.

Some of our sockets, parts, subassemblies and boards are currently manufactured to our specifications by third-party foreign contract manufacturers and we are sourcing certain parts or options from foreign manufacturers, particularly in China.

For example, due to geopolitical considerations, we may not be able to obtain a sufficient quantity of these products if and when needed or the quality of these parts or options may not meet our standards, which may result in lost sales.

For example, due to geopolitical considerations, we may not be able to obtain sufficient quantity of these products if and when needed or the quality of these parts or options may not meet our standards, which may result in lost sales.

If we are unable to attract and retain qualified third-party distributors and representatives, our business may be adversely affected.

We have an internal sales force and also utilize third-party distributors and representatives.

We utilize an internal sales force and third-party distributors and representatives.

Therefore, the financial stability of these distributors and representatives is important.

6 unchanged sentences

A decline in economic and market conditions may result in delayed or decreased capital spending and delayed or defaulted payments from our customers.

The coronavirus derivatives or similar items may affect economic and market conditions as surges and spreads.

Global impacts of the Russian invasion of Ukraine continue to evolve with sanctions and trade issues.

Current and future public health crise, geo-political conflicts, and economic barriers, tariffs and constraints can adversely impact the Company’s financial performance.

Our business is highly impacted by capital spending plans and other economic cycles that affect the users and manufacturers of integrated circuits.

The industries are highly cyclical and are characterized by rapid technological change, short product life cycles and fluctuations in manufacturing capacity and pricing and gross margin pressures.

As we experienced in this and recent prior years, our operations may in the future reflect substantial fluctuations from period-to-period as a consequence of these industry patterns, general economic conditions affecting the timing of orders from major customers, and other factors affecting capital spending.

In a difficult economic climate, it may take us longer to receive payments from our customers and some of our customers’ business may fail, resulting in non-payment.

Our market growth forecasts and related business decisions may be wrong.

Our market growth outlook and related business decisions may be wrong.

These factors could have a material adverse effect on our business and financial condition.

3 unchanged sentences

International sales may fluctuate due to various factors, including:

the impact of COVID-19, the coronavirus and variants of it, or other viruses;

fluctuations in foreign currency exchange rates because 90% of our sales are to international markets, volatile exchange rates may also impact our competitiveness and margins, especially where we have subsidiary operations;

economic uncertainty related to the European energy cost increases;

China economic challenges, as this is a major market for our products and a significant production location;

migration of manufacturing to low cost geographies;

current and future global health crisis, similar to COVID-19;

economic trade barriers and constraints such as tariffs and taxes;

economic challenges in China, Europe and Latin America, as these are major markets for our products, with China being a significant production location;

foreign currency exchange rate fluctuations in our major international markets as volatile exchange rates may impact our competitiveness and margins, especially where we have subsidiary operations;

unexpected changes in regulatory requirements;

tariffs and taxes;

bi-lateral and multi-lateral trade agreements;

difficulties in staffing and managing foreign operations;

2 unchanged sentences

product safety and other certification requirements;

difficulties in integrating foreign and outsourced operations;

war, civil unrest, political and economic instability, including the Russian invasion of Ukraine and the Israel – Hamas war;

ability to protect our intellectual property in multiple patent jurisdictions;

4 unchanged sentences

As applicable, our products currently meet these requirements;

however, failure to obtain either a CE certification or a waiver for any product may prevent us from marketing that product in Europe.

however, failure to obtain either CE certification or a waiver for any product may prevent us from marketing that product in Europe.

The EU also has directives concerning the Reduction of Hazardous Substances (“RoHS”) and we believe we are classified within the EU RoHS Directive category list as Industrial Monitoring and Control Equipment (category 9).

2 unchanged sentences

We have subsidiaries in Germany and China and large balances of cash are in our foreign subsidiaries.

Our business and financial condition is sensitive to currency exchange rates and any restrictions imposed on their currencies including restrictions on repatriations of cash.

Our business and financial condition is sensitive to currency exchange rates and any restrictions imposed on their currencies including restrictions on repatriation of cash.

A repatriation of cash has, and could in the future, result in tax costs and corresponding deferred tax assets with related tax valuation allowances.

Currency exchange fluctuations in these countries may adversely affect our investment in our subsidiaries.

Quarterly fluctuations in our operating results may adversely affect our stock price.

Fluctuations in our quarterly operating results may adversely affect our stock price.

Our operating results tend to vary from quarter to quarter.

3 unchanged sentences

As a result, operating results for that quarter will suffer.

Our results of operations for any one quarter are not necessarily indicative of results for any future periods.

Our operating results for any one quarter are not necessarily indicative of results for any future periods.

Other factors, which may cause our quarterly operating results to fluctuate, include:

21 unchanged sentences

We have a history of operating losses and may be unable to generate enough revenue to achieve and maintain profitability.

We have incurred operating losses in four of the last ten years.

We have incurred operating losses in five of the last ten years.

We operate in a cyclical industry.

2 unchanged sentences

As a result, we may need to generate greater revenues than we have recently in order to maintain profitability.

However, we cannot provide assurance that our revenues will continue to increase and our business strategies may not be successful, resulting in future losses.

However, we cannot provide assurance that our revenues will increase and our business strategies will be successful, resulting in future losses.

The loss of key employees may adversely affect our operations.

13 unchanged sentences

Our working capital may be used to fund possible losses, business growth, project initiatives, share repurchases, and business development initiatives including acquisitions, which could reduce our liquidity and result in a requirement for additional cash before that time.

Any substantial inability to achieve our current business plan could have a material adverse impact on our financial position, liquidity, or results of operations and may require us to reduce expenditures and/or seek additional financing.

Any substantial inability to achieve our current business plan could have an adverse impact on our financial position, liquidity, or results of operations and may require us to reduce expenditures and/or seek additional financing.

Therefore, we may seek additional funding through public or private debt or equity financing or from other sources.

We have no commitments for additional financing, and given a potential future unfavorable economic climate and our financial results, we may experience difficulty in obtaining funding on favorable terms, if at all.

We have no commitments for additional financing and given a potential future unfavorable economic climate and our financial results, we may experience difficulties in obtaining funding on favorable terms, if at all.

Any financing we obtain may contain covenants that restrict our freedom to operate our business or may require us to issue securities that have rights, preferences or privileges senior to our Common Stock and may dilute your ownership interest.

Our stock price may be volatile and, as a result, our shareholders may lose some or all of their investment.

Our stock price may be volatile and, as a result, our shareholders may lose some or all their investment.

The stock prices of technology companies tend to fluctuate significantly.

We believe factors such as announcements of new products or services by us or our competitors and quarterly variations in financial results and outlook may cause the market price of our Common Stock to fluctuate substantially.

In addition, overall volatility in the stock market, particularly in the technology company sector, is often unrelated to the operating performance of companies.

In addition, overall volatility in the stock market, particularly in the technology sector, is often unrelated to the operating performance of companies.

If these market fluctuations continue in the future, they may adversely affect the price of our Common Stock.

Additionally, securities of certain companies have recently experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in both the stock prices of those companies and in the market, and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment, as in many cases the price per share has declined steadily as interest in those stocks have abated.

While we have no reason to believe our shares would be the target of a short squeeze, there can be no assurance that we won’t be in the future, and you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly disconnected from our underlying value.

CYBERSECURITY RISKS

Cybersecurity breaches or terrorism could result in liabilities or costs as well as damage to or loss of our data or customer access to our website and information systems.

The collection, storage, transmission, use and disclosure of user data and personal information, if accessed improperly, could give rise to liabilities or additional costs as a result of laws, governmental regulations and evolving views of personal privacy rights.

Cybersecurity attacks may increase as a result of the Russian invasion of Ukraine, and/or deterioration of the geopolitical environment.

The collection, storage, transmission, use and disclosure of user data and personal information, if accessed improperly, could give rise to liabilities or additional costs as a result of laws, government regulations and evolving views of personal privacy rights.

Cybersecurity attacks may increase due to geo-political disagreements with countries and regions such as Russia, China, Korea and the Middle East.

Cybersecurity breaches or terrorism could result in the exposure or theft of private or confidential information as well as interrupt our business, including denying customer access to our website and information systems.

1 unchanged sentence

In jurisdictions around the world, personal information is becoming increasingly subject to legislation and regulations intended to protect consumers’ privacy and security.

The interpretation of privacy and data protection laws and regulations regarding the collection, storage, transmission, use and disclosure of such information in some jurisdictions is unclear and evolving.

The interpretation of privacy and data protection laws and regulations regarding collection, storage, transmission, use and disclosure of such information in some jurisdictions are unclear and evolving.

These laws may be interpreted and applied in conflicting ways from country to country and in a manner that is not consistent with our current data protection practices.

Complying with these varying international requirements could cause us to incur additional costs and change our business practices.

Because our services are accessible in many foreign jurisdictions, some of these jurisdictions may claim that we are required to comply with their laws, even where we have no local entity, employees or infrastructure.

We could be forced to incur significant expenses if we were required to modify our products, our services or our existing security and privacy procedures in order to comply with new or expanded regulations.

Because our services are accessible in many foreign jurisdictions, some of these jurisdictions may claim that we are required to comply with their laws, even if we have no local entity, employees or infrastructure.

We could be forced to incur significant expenses if we were required to modify our products, our services or our existing security and privacy procedures to comply with new or expanded regulations.

REGULATORY REQUIREMENTS

Failure to comply with increasing regulatory requirements may adversely affect our stock price and business.

As a public company, we are subject to numerous governmental and stock exchange requirements, with which we believe we are in compliance.

As a public company, we are subject to numerous governmental and stock exchange requirements which we believe, we are in compliance with.

Our failure to meet regulatory requirements and exchange listing standards may result in actions such as:

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Further, if we are unable to comply with the new laws or regulations or if our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us.

We may need to incur additional costs and invest additional resources, including management’s time, in order to comply with the new regulations and anticipated additional reporting and disclosure obligations.

We may need to incur additional costs and invest additional resources, including management’s time, to comply with the new regulations and additional reporting and disclosure obligations.

Climate focused regulations and related disclosures are a similar evolving regulatory area, and we may be required to invest in systems, processes and personnel to address new requirements in the ESG area.

1 unchanged sentence

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