What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-08-07 compared with 2020-02-07 · 94 added, 72 removed, 299 unchanged (36% of the section changed)

6 unchanged sentences

Our quarterly and annual revenues, expenses and operating results have varied significantly and are likely to vary in the future.

For example, in the eleven fiscal quarters ended December 31, 2019 , we recorded net revenues of as much as $14.7 million and as little as $9.6 million and quarterly operating income of as much as $2.2 million and, in ten quarters, operating losses, including an operating loss of $4.7 million in the quarter ended December 31, 2019.

For example, in the nine fiscal quarters ended June 30, 2020, we recorded net revenues of as much as $14.7 million and as little as $6.6 million and quarterly operating income of as much as $2.2 million and, in eight quarters, operating losses, including an operating loss of $5.7 million in the quarter ended June 30, 2020.

We therefore believe that period-to-period comparisons of our operating results are not a good indication of our future performance, and you should not rely on them to predict our future performance or the future performance of our stock price.

In future periods, we may not have any revenue growth, or our revenues could decline.

In future periods, we may not have any revenue growth, or our revenues could decline or continue to be further adversely impacted by the COVID-19 global pandemic.

Furthermore, if our operating expenses exceed our expectations, our financial performance could be adversely affected.

Factors that may affect periodic operating results in the future include:

● commercial acceptance of our associative computing products;

● changes in our customers' inventory management practices;

9 unchanged sentences

If our operating results in future quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.

The COVID-19 global pandemic has caused increased stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may continue to experience decreased sales and revenues in the future.

We expect such impact will in particular affect our SRAM sales and may also impact the launch of our APU product to some degree.

However, the magnitude of such impact on our business and its duration is highly uncertain.

Our largest OEM customer accounts for a significant percentage of our net revenues.

1 unchanged sentence

Nokia, our largest customer, purchases our products directly from us and through contract manufacturers and distributors.

Purchases by Nokia represented approximately 40%, 45%, 36% and 41% of our net revenues in the nine months ended December 31, 2019 and in fiscal 2019, 2018 and 2017, respectively.

Purchases by Nokia represented approximately 27%, 38%, 45% and 36% of our net revenues in the three months ended June 30, 2020 and in fiscal 2020, 2019 and 2018, respectively.

We expect that our operating results in any given period will continue to depend significantly on orders from our key OEM customers, particularly Nokia, and our future success is dependent to a large degree on the business success of this customer over which we have no control.

1 unchanged sentence

We expect that future direct and indirect sales to Nokia and our other key OEM customers will continue to fluctuate significantly on a quarterly basis and that such fluctuations may substantially affect our operating results in future periods.

The decline in economic activity resulting from the COVID-19 global pandemic is expected to cause a continued reduction in orders from Nokia and our other key OEM customers.

If we fail to continue to sell to our key OEM customers, distributors or contract manufacturers in sufficient quantities, our business could be harmed.

We have incurred significant losses in prior periods and may incur losses in the future.

We have incurred significant losses in prior periods.

We incurred net losses of $4.5 million and $115,000 during fiscal 2018 and 2017, respectively.

The ongoing COVID-19 global pandemic may continue to adversely affect our revenues, results of operations and financial condition.

Our business is expected to continue to be materially adversely affected by global outbreak of respiratory illness caused by a novel coronavirus known as COVID-19.

COVID-19 has been declared by the World Health Organization to be a “pandemic” and has spread to many of the countries in which we, our customers, our suppliers and our other business partners conduct business.

National, state and local governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary.

Many organizations and individuals, including the Company and our employees, are taking additional steps to avoid or reduce infection, including limiting travel and working from home.

These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.

We continue to monitor our operations and government recommendations and have made modifications to our normal operations because of the COVID-19 global pandemic.

We have instituted many preventative measures and are regularly evaluating those measures and others as we continue to better understand our current and future operating environment.

Except for our employees located in Taiwan, the majority of our employees are working from home around the world, and productivity remains high.

We have maintained a substantial portion of our manufacturing operational capacity at our primary manufacturing support facility located in Hsin Chu, Taiwan where our suppliers are located and where all of our products are manufactured.

Since the outbreak of COVID-19, aside from the lengthening of lead times for wafers and assembly services, we have experienced minimal impact on our manufacturing operations in Taiwan.

Final testing of our product is conducted in house.

Shipping and receiving operations at our Sunnyvale headquarters facility are being maintained by a skeleton crew with minimal impact.

Our revenues have been and are expected to continue to be impacted by changes in customer buying patterns and communication limitations related to shelter in place restrictions that require a significant number of our customer contacts to work from home.

We may experience a number of adverse impacts as a result of the COVID-19 global pandemic, including reductions in demand for our products, delays and cancellations of orders, difficulties in obtaining raw materials and components, shortages of labor to manufacture products, inefficiencies caused by remote worker’s difficulties in performing their normal work outputs, closures of the facilities of some of our suppliers and customers, delays in shipments and delays in collecting accounts receivable.

Although we cannot estimate the length or gravity of the

impact of the COVID-19 outbreak at this time, if the pandemic continues, it is expected to have an adverse effect on our results of operations, financial position, and liquidity during fiscal year 2021.

This includes results from new information that may emerge concerning COVID-19 and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

The disruption to the marketplace resulting from the COVID-19 global pandemic that we continue to experience is unlike anything we have ever had to deal with.

While we continue to monitor the business metrics that we have historically used to predict our financial performance, we are uncertain as to whether these metrics will operate consistently with our historical experience.

Disruptions in the capital markets as a result of the COVID-19 global pandemic may also adversely affect our ability to obtain additional liquidity should the impacts of the global pandemic continue for a prolonged period.

We have incurred significant losses and may incur losses in the future.

We have incurred significant losses.

We incurred net losses of $10.3 million and $4.5 million during fiscal 2020 and 2018, respectively.

There can be no assurance that our Very Fast SRAMs will continue to receive broad market acceptance, that our new product development initiatives will be successful or that we will be able to achieve sustained revenue growth or profitability.

1 unchanged sentence

We derive most of our revenues from the sale of Very Fast SRAMs, and we expect that sales of these products will represent the substantial majority of our revenues for the foreseeable future.

Our business depends in large part upon continued demand for our products in the markets we currently serve, and adoption of our products in new markets.

Our business depends in large part upon continued demand for our products in the markets we currently serve, which could continue to be adversely impacted by the COVID-19 global pandemic, and adoption of our products in new markets.

Market adoption will be dependent upon our ability to increase customer awareness of the benefits of our products and to prove their high-performance and cost-effectiveness.

1 unchanged sentence

Any decrease in revenues from sales of our products could harm our business more than it would if we offered a more diversified line of products.

Our future success is substantially dependent on the successful development of new in-place associative computing products which entails significant risks.

Since 2015, our principal strategic objective has been the development of a new category of in-place associative computing products based on patented technology that we acquired in the acquisition.

We have devoted, and are continuing to devote, substantial efforts and resources to this development effort.

This ongoing project involves the commercialization of new, cutting-edge technology, will require a substantial effort during fiscal 2021 and beyond and will be subject to significant risks.

In addition to the typical risks associated with the development of technologically advanced products (as further detailed in the next paragraph), this project will be subject to enhanced risks of technological problems related to the development of an entirely new category of products, substantial risks of delays or unanticipated costs that may be encountered, and risks associated with the establishment of entirely new markets and customer relationships.

The establishment of new customer relationships and selling our in-place associative computing products to such new customers will be a significant undertaking that will require us to invest heavily in our sales team, enter into new channel partner relationships, expand our marketing activities and change the focus of our business and operations.

Our inability to successfully conclude this major development effort and establish a market for the products we hope to develop would have a material adverse effect on our future financial and business success, including our prospects for increased revenues.

Additionally, if we are unable to meet the expectations of market analysts and investors with respect to this major development effort, then the price of our common stock could fall.

If we do not successfully develop new products to respond to rapid market changes due to changing technology and evolving industry standards, particularly in the networking and telecommunications markets, our business will be harmed.

4 unchanged sentences

We may experience development, marketing and other technological difficulties that may delay or limit our ability to respond to technological changes, evolving industry standards, competitive developments or end-user requirements.

For example, because we have limited experience developing integrated circuits, or IC, products other than Very Fast SRAMs and LLDRAMs, our efforts to introduce new products may not be successful and our business may suffer.

For example, because we have limited experience developing integrated circuits, or IC, products other than Very Fast SRAMs, our efforts to introduce new products may not be successful and our business may suffer.

Other challenges that we face include:

2 unchanged sentences

● we may not have sufficient resources to develop or acquire new technologies or to introduce new products capable of competing with future technologies;

new products that we develop may not successfully integrate with our end-users’

products into which they are incorporated;

● new products that we develop may not successfully integrate with our end-users’ products into which they are incorporated;

● we may be unable to develop new products that incorporate emerging industry standards;

1 unchanged sentence

● when introducing new or enhanced products, we may be unable to manage effectively the transition from older products.

Our future success is substantially dependent on the successful development of new in-place associative computing products which entails significant risks.

Since 2015, our principal strategic objective has been the development of a new category of in-place associative computing products based on patented technology that we acquired in the acquisition.

We have devoted, and are continuing to devote, substantial efforts and resources to this development effort.

This ongoing project involves the commercialization of new, cutting-edge technology, will require a substantial effort during fiscal 2020 and beyond and will be subject to significant risks.

In addition to the typical risks associated with the development of technologically advanced products (as outlined in the previous paragraph), this project will be subject to enhanced risks of technological problems related to the development of an entirely new category of products, substantial risks of delays or unanticipated costs that may be encountered and risks associated with the establishment of entirely new markets and customer relationships.

Additionally, if we are unable to meet the expectations of market analysts and investors with respect to this major development effort, then the price of our common stock could fall.

We are subject to the highly cyclical nature of the networking and telecommunications markets.

10 unchanged sentences

● the rate at which OEMs incorporate our products into their systems;

the success of our customers’

● the success of our customers’ products;

● our ability to develop and market new products;

4 unchanged sentences

Our failure to compete successfully in these or other areas could harm our business.

Global economic and market conditions may adversely affect our business, financial condition and results of operations.

We sell our products to end customers both in the United States and internationally.

Current unfavorable economic and market conditions, domestically and internationally, may adversely affect our business, financial condition, results of operations and cash flows.

We have significant customer sales both in the United States and internationally.

We also rely heavily on our suppliers in Asia.

We are therefore susceptible to adverse domestic and international economic and market conditions.

In recent years, turmoil in global financial markets and economic conditions has impacted credit availability, consumer spending and capital expenditures, including expenditures for networking and telecommunications equipment.

Weakness in global networking and telecommunications markets, particularly in Asia, has continued to adversely impact our revenues in recent quarters.

Slowness in economic growth, domestically and in our key markets, uncertainty regarding macroeconomic trends, and volatility in financial markets may continue to adversely affect our business, financial condition and results of operations over coming quarters.

We are therefore susceptible to adverse U.S.

and international economic and market conditions, including the economic difficulties resulting from the COVID-19 global pandemic that currently exist in the United States and worldwide.

If any of our manufacturing partners, customers, distributors or suppliers experiences serious financial difficulties or ceases operations, our business could be adversely affected.

We are dependent on a number of single source suppliers, and if we fail to obtain adequate supplies, our business will be harmed and our prospects for growth will be curtailed.

1 unchanged sentence

If any of these suppliers cannot provide components on a timely basis, at the same price or at all, our ability to manufacture our products will be constrained and our business will suffer.

For example, due to the COVID-19 global pandemic, we could see disruptions in our supply chain, although there have been none to date.

Most significantly, we obtain wafers for our Very Fast SRAM and APU products from a single foundry, TSMC, and most of them are packaged at ASE.

Wafers for our LLDRAM products are obtained exclusively from Powerchip.

If we are unable to obtain an adequate supply of wafers from TSMC or Powerchip or find alternative sources in a timely manner, we will be unable to fulfill our customer orders and our operating results will be harmed.

We do not have supply agreements with TSMC, Powerchip, ASE or any of our other independent assembly and test suppliers, and instead obtain manufacturing services and products from these suppliers on a purchase-order basis.

Our suppliers, including TSMC and Powerchip, have no obligation to supply products or services to us for any specific product, in any specific quantity, at any specific price or for any specific time period.

If we are unable to obtain an adequate supply of wafers from TSMC or find alternative sources in a timely manner, we will be unable to fulfill our customer orders and our operating results will be harmed.

We do not have supply agreements with TSMC, ASE or any of our other independent assembly and test suppliers, and instead obtain manufacturing services and products from these suppliers on a purchase-order basis.

Our suppliers, including TSMC, have no obligation to supply products or services to us for any specific product, in any specific quantity, at any specific price or for any specific time period.

As a result, the loss or failure to perform by any of these suppliers could adversely affect our business and operating results.

Should any of our single source suppliers experience manufacturing failures or yield shortfalls, be disrupted by natural disaster or political instability, choose to prioritize capacity or inventory for other uses or reduce or eliminate deliveries to us for any other reason, we likely will not be able to enforce fulfillment of any delivery commitments and we would have to identify and qualify acceptable replacements from alternative sources of supply.

Should any of our single source suppliers experience manufacturing failures or yield shortfalls, be disrupted by the COVID-19 global pandemic, natural disaster or political instability, choose to prioritize capacity or inventory for other uses or reduce or eliminate deliveries to us for any other reason, we likely will not be able to enforce fulfillment of any delivery commitments and we would have to identify and qualify acceptable replacements from alternative sources of supply.

In particular, if TSMC is unable to supply us with sufficient quantities of wafers to meet all of our requirements, we would have to allocate our products among our customers, which would constrain our growth and might cause some of them to seek alternative sources of supply.

Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that

we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations.

Since the manufacturing of wafers and other components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and there is no assurance that we would be able to find and qualify another supplier without materially adversely affecting our business, financial condition and results of operations.

We rely heavily on distributors and our success depends on our ability to develop and manage our indirect distribution channels.

A significant percentage of our sales are made to distributors and to contract manufacturers who incorporate our products into end products for OEMs.

For example, in the nine months ended December 31, 2019 and in fiscal 2019, 2018 and 2017, our largest distributor Avnet Logistics accounted for 34.7%, 31.3%, 35.3% and 25.5%, respectively, of our net revenues.

For example, in the three months ended June 30, 2020 and in fiscal 2020, 2019 and 2018, our largest distributor Avnet Logistics accounted for 35.5%, 34.3%, 31.3% and 35.3%, respectively, of our net revenues.

Avnet Logistics and our other existing distributors may choose to devote greater resources to marketing and supporting the products of other companies.

3 unchanged sentences

System security risks, data protection, cyber-attacks and systems integration issues could disrupt our internal operations or the operations of our business partners, and any such disruption could harm our reputation or cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Security breaches, computer malware and cyber-attacks have become more prevalent and sophisticated in recent years.

Security breaches, computer malware and cyber-attacks have become more prevalent and sophisticated in recent years and may increase in the future due to a large number of our employees working from home during the COVID-19 global pandemic.

Experienced computer programmers and hackers may be able to penetrate our network security or the network security of our business partners, and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns.

14 unchanged sentences

A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our financial position and operating results will suffer.

At December 31, 2019 , two customers accounted for 54% and 21% of our accounts receivable, respectively.

At June 30, 2020, four customers accounted for 44%, 20%, 13% and 11% of our accounts receivable, respectively.

If any of these customers do not pay us, our financial position and operating results will be harmed.

1 unchanged sentence

Because we outsource our wafer manufacturing and independent wafer foundry capacity is limited, we may be required to enter into costly long-term supply arrangements to secure foundry capacity.

We do not have long-term supply agreements with TSMC or Powerchip, but instead obtain our wafers on a purchase order basis.

In order to secure future wafer supply from TSMC or Powerchip or from other independent foundries, we may be required to enter into various arrangements with them, which could include:

We do not have a long-term supply agreement with TSMC, but instead obtain our wafers on a purchase order basis.

In order to secure future wafer supply from TSMC or from other independent foundries, we may be required to enter into various arrangements with them, which could include:

● contracts that commit us to purchase specified quantities of wafers over extended periods;

13 unchanged sentences

In recent years, there has been significant litigation in the semiconductor industry involving patents and other intellectual property rights.

intellectual property rights or that our use of intellectual property otherwise violates the law.

We have recently been involved in protracted patent infringement litigation, and we could become subject to additional claims or litigation in the future as a result of allegations that we infringe others’ intellectual property rights or that our use of intellectual property otherwise violates the law.

Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers, distributors or manufacturers against the alleged infringement.

5 unchanged sentences

● obtain a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all;

● pay damages;

● redesign those products that use the disputed technology.

22 unchanged sentences

Members of our senior management team have long-standing and important relationships with our key customers and suppliers.

The loss of services of Lee-Lean Shu, our President and Chief Executive Officer, Robert Yau, our Vice President of Engineering, Dr.

The loss of services, whether as a result of illness, retirement or death, of Lee-Lean Shu, our President and Chief Executive Officer, Robert Yau, our Vice President of Engineering, Dr.

Avidan Akerib, our Vice President of Associative Computing, any other executive officer or other key employee could significantly delay or prevent the achievement of our development and strategic objectives.

22 unchanged sentences

In order to remain competitive, we expect to continue to transition the manufacture of our products to smaller geometry process technologies.

This transition will require us to migrate to new manufacturing processes for

our products and redesign certain products.

This transition will require us to migrate to new manufacturing processes for our products and redesign certain products.

The manufacture and design of our products is complex, and we may experience difficulty in transitioning to smaller geometry process technologies or new manufacturing processes.

These difficulties could result in reduced manufacturing yields, delays in product deliveries and increased expenses.

We are dependent on our relationships with TSMC and Powerchip to transition successfully to smaller geometry process technologies and to more advanced manufacturing processes.

We cannot assure you that TSMC or Powerchip will be able to effectively manage the transition or that we will be able to maintain our relationship with them.

If we or TSMC or Powerchip experience significant delays in this transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.

We are dependent on our relationships with TSMC to transition successfully to smaller geometry process technologies and to more advanced manufacturing processes.

We cannot assure you that TSMC will be able to effectively manage the transition or that we will be able to maintain our relationship with them.

If we or TSMC experience significant delays in this transition or fail to implement these transitions, our business, financial condition and results of operations could be materially and adversely affected.

Manufacturing process technologies are subject to rapid change and require significant expenditures for research and development.

15 unchanged sentences

Demand for our products may decrease if our OEM customers experience difficulty manufacturing, marketing or selling their products.

Our products are used as components in our OEM customers’

products, including routers, switches and other networking and telecommunications products.

Our products are used as components in our OEM customers’ products, including routers, switches and other networking and telecommunications products.

Accordingly, demand for our products is subject to factors affecting the ability of our OEM customers to successfully introduce and market their products, including:

capital spending by telecommunication and network service providers and other end-users who purchase our OEM customers’

● capital spending by telecommunication and network service providers and other end-users who purchase our OEM customers’ products;

● the competition our OEM customers face, particularly in the networking and telecommunications industries;

4 unchanged sentences

Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.

Our products are generally incorporated in our OEM customers’

products at the design stage.

Our products are generally incorporated in our OEM customers’ products at the design stage.

However, their decisions to use our products often require significant expenditures by us without any assurance of success, and often precede volume sales, if any, by a year or more.

If an OEM customer decides at the design stage not to incorporate our products into their products, we will not have another opportunity for a design win with respect to that customer’s product for many months or years, if at all.

Our sales cycle can take up to 24 months to complete, and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and development and our sales and marketing efforts and the generation of volume production revenues, if any, from these expenditures.

Moreover, the value of any design win will largely depend on the commercial success of our OEM customers’

Moreover, the value of any design win will largely depend on the commercial success of our OEM customers’ products.

There can be no assurance that we will continue to achieve design wins or that any design win will result in future revenues.

14 unchanged sentences

Our international business exposes us to additional risks.

Products shipped to destinations outside of the United States accounted for 63.2%, 62.5%, 51.5% and 59.1% of our net revenues in the nine months ended December 31, 2019 and in fiscal 2019, 2018 and 2017, respectively.

Products shipped to destinations outside of the United States accounted for 62.7%, 59.6%, 62.5% and 51.5% of our net revenues in the three months ended June 30, 2020 and in fiscal 2020, 2019 and 2018, respectively.

Moreover, a substantial portion of our products is manufactured and tested in Taiwan, and the software development for our associative computing products occurs in Israel.

We intend to continue expanding our international business in the future.

We intend to continue expanding our international business

in the future.

Conducting business outside of the United States subjects us to additional risks and challenges, including:

3 unchanged sentences

● potential political and economic instability in, or foreign conflicts that involve or affect, the countries in which we, our customers and our suppliers are located;

● local authorities’ decisions regarding travel restrictions, stay-at-home orders, testing requirements and other policies to address public health crises such as the COVID-19 global pandemic which have an adverse impact on the economy and demand for our products;

● difficulties in collecting accounts receivable and longer accounts receivable payment cycles;

14 unchanged sentences

corporate tax provisions related to international commerce as we develop, manufacture, market and sell our products globally.

Any action to withdraw from or materially modify international trade agreements, or change corporate tax policy related to international commerce, could adversely affect our business, financial condition and results of operations.

Changes in Taiwan’s political, social and economic environment may affect our business performance.

Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment.

For example, any political instability resulting from the relationship among the United States, Taiwan and the People’s Republic of China could damage our business.

Any action to withdraw from or materially modify international trade agreements, change corporate tax policy related to international commerce or mandate domestic production of goods, could adversely affect our business, financial condition and results of operations.

Changes in Taiwan’s political, social and economic environment may affect our business performance.

Because much of the manufacturing and testing of our products is conducted in Taiwan, our business performance may be affected by changes in Taiwan’s political, social and economic environment.

For example, any political instability resulting from the relationship among the United States, Taiwan and the People’s Republic of China could damage our business.

Moreover, the role of the Taiwanese government in the Taiwanese economy is significant.

Taiwanese policies toward economic liberalization, and laws and policies affecting technology companies, foreign investment, currency exchange rates, taxes and other matters could change, resulting in greater restrictions on our ability and our suppliers’

ability to do business and operate facilities in Taiwan.

If any of these changes were to occur, our business could be harmed and our stock price could decline.

TSMC and Powerchip, as well as our other independent suppliers and many of our OEM customers, have operations in the Pacific Rim, an area subject to significant earthquake risk and adverse consequences related to the outbreak of contagious diseases such as the coronavirus.

The foundries that manufacture our Fast SRAM and LLDRAM products, TSMC and Powerchip, and all of the principal independent suppliers that assemble and test our products are located in Taiwan.

TSMC, as well as our other independent suppliers and many of our OEM customers, have operations in the Pacific Rim, an area subject to significant risk of earthquakes, typhoons and other natural disasters and adverse consequences related to the outbreak of contagious diseases such as COVID-19.

The foundry that manufactures our Fast SRAM, TSMC, and all of the principal independent suppliers that assemble and test our products are located in Taiwan.

Many of our customers are also located in the Pacific Rim.

The risk of an earthquake in these Pacific Rim locations is significant.

The occurrence of an earthquake or other natural disaster near the fabrication facilities of TSMC or our other independent suppliers could result in damage, power outages and other disruptions that impair their production and

assembly capacity.

The occurrence of an earthquake, typhoon or other natural disaster near the fabrication facilities of TSMC or our other independent suppliers could result in damage, power outages and other disruptions that impair their production and assembly capacity.

Any disruption resulting from such events could cause significant delays in the production or shipment of our products until we are able to shift our manufacturing, assembling, packaging or production testing from the affected contractor to another third-party vendor.

In such an event, we may not be able to obtain alternate foundry capacity on favorable terms, or at all.

The coronavirus outbreak in the People’s Republic of China is in its early stages, but if it significantly affects the Asia-Pacific region, the operations of our key suppliers could be disrupted.

In addition, our business could be harmed if the outbreak results in travel being restricted for a significant length of time, or if it adversely affected the operations of our suppliers or our OEM customers or the demand for our products or our OEM customers’

The COVID-19 global pandemic, along with the previous outbreaks of SARS, H1N1 and the Avian Flu, has curtailed travel between and within countries, including in the Asia-Pacific region.

Outbreaks of new contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific region could disrupt the operations of our key suppliers and manufacturing partners.

In addition, our business could be harmed if such an outbreak resulted in travel being restricted, the implementation of stay-at-home or shelter-in-place orders or if it adversely affected the operations of our OEM customers or the demand for our products or our OEM customers’ products.

We may need to raise additional capital in the future, which may not be available on favorable terms or at all, and which may cause dilution to existing stockholders.

35 unchanged sentences

Due to the potential volatility of our stock price, we may in the future be the target of similar litigation.

Securities litigation could result in substantial costs and divert management’s attention and resources.

This could harm our business and cause the value of our stock to decline.

Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks and disadvantages to us and our continuing stockholders.

self-tender offer that we completed in August 2014 and additional shares repurchased in the open market pursuant to our stock repurchase program.

At March 31, 2019, we had outstanding authorization from our Board of Directors to purchase up to an additional $4.3 million of our common stock from time to time under our repurchase program.

From November 2008 through December 2019 we repurchased and retired an aggregate of 12,004,779 shares of our common stock at a total cost of $60.7 million, including 3,846,153 shares repurchased at a total cost of $25 million pursuant to a modified “Dutch auction” self-tender offer that we completed in August 2014 and additional shares repurchased in the open market pursuant to our stock repurchase program.

At June 30, 2020, we had outstanding authorization from our Board of Directors to purchase up to an additional $4.3 million of our

common stock from time to time under our repurchase program.

Although our Board has determined that these repurchases are in the best interests of our stockholders, they expose us to certain risks including:

the risks resulting from a reduction in the size of our “public float,”

which is the number of shares of our common stock that are owned by non-affiliated stockholders and available for trading in the securities markets, which may reduce the volume of trading in our shares and result in reduced liquidity and, potentially, lower trading prices;

● the risks resulting from a reduction in the size of our “public float,” which is the number of shares of our common stock that are owned by non-affiliated stockholders and available for trading in the securities markets, which may reduce the volume of trading in our shares and result in reduced liquidity and, potentially, lower trading prices;

● the risk that our stock price could decline and that we would be able to repurchase shares of our common stock in the future at a lower price per share than the prices we have paid in our tender offer and repurchase program;

1 unchanged sentence

Our executive officers, directors and entities affiliated with them hold a substantial percentage of our common stock.

As of January 31, 2020 , our executive officers, directors and entities affiliated with them beneficially owned approximately 35% of our outstanding common stock.

As of July 31, 2020 , our executive officers, directors and entities affiliated with them beneficially owned approximately 35% of our outstanding common stock.

As a result, these stockholders will be able to exercise substantial influence over, and may be able to effectively control, matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, which could have the effect of delaying or preventing a third party from acquiring control over or merging with us.

15 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 1A. Risk Factors