What changed in this filing

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Item 1A. Risk Factors

2024-02-21 compared with 2023-02-27 · 103 added, 88 removed, 374 unchanged (34% of the section changed)

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In addition, new risks may emerge at any time and we cannot predict those risks or estimate the extent to which they may affect us.

Risks Relating to Economic Conditions and Other External Factors

The COVID-19 pandemic, including private and public sector responses, could materially adversely affect our business, financial condition, results of operations and/or cash flows.

The ongoing COVID-19 pandemic and related countermeasures have caused economic and financial disruptions in most of the regions in which we sell our products and services and conduct our business operations.

Governmental authorities have implemented numerous and evolving measures to address the virus as it continues to mutate.

There is no certainty that measures implemented by governmental authorities or by us in our operations will be sufficient to mitigate the risks posed by the COVID-19 virus.

Changes in customer demand, supply chain constraints experienced by us, our suppliers and our customers, pandemic fears and market downturns, and restrictions on business and individual activities has created significant economic and demand uncertainty.

COVID-19 may impact different markets at different times with disparate severity.

We have experienced and expect to continue to experience unpredictable volatility in demand in several of our end-markets.

The degree to which the COVID-19 pandemic impacts our financial condition, cash flows and results of operations depends upon future developments, which are highly uncertain and cannot be predicted, including but not limited to the duration, location and spread of outbreak, the emergence, contagiousness, and threat of new and different strains of virus, the availability, acceptance, and effectiveness of vaccines, governmental and business measures to contain the virus and address its

impact, and how quickly and to what extent normal economic and operating conditions can resume.

These factors, and others that are currently unknown or considered immaterial, could have a material adverse effect on our business, prospects, financial condition, cash flows and results of operations.

The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations.

In the first quarter of 2022, Russian military forces invaded Ukraine.

This military action had significant and immediate adverse economic impacts globally.

Given the nature of our business and our global operations, particularly those in Russia and Belarus, the current conflict between Russia and Ukraine has affected and may adversely affect our business and results of operations.

Historically we have manufactured a variety of components, including proprietary fiber-based components, and sub-assemblies at our facility in Russia and mechanical components at our facility in Belarus.

Our operations in Russia and Belarus are subject to additional regulatory and political constraints and additional compliance costs in connection with sanctions, other trade controls and higher tariffs imposed by the United States, the European Union and other governments in response to Russia’s military operations in Ukraine.

The European Union enacted additional sanctions effective in January 2023 that restrict our ability to import components in Europe from Russia.

While certain components can be exported from Russia to the United States, the United States imposed significant import tariffs that make it commercially undesirable.

We continue to implement steps to mitigate the impacts of the Russia-Ukraine conflict on our business and reduce reliance on our facilities in Russia and Belarus, such as migrating the production of a number of our components that had been manufactured in Russia and Belarus into other countries.

The current conflict between Russia and Ukraine and our continued operations in Russia and Belarus may also have the effect of heightening many other risks disclosed in our public filings, any of which could adversely affect our business and results of operations.

Such risks include, but are not limited to, increases in tariffs;

adverse effects on global macroeconomic conditions;

increased exposure to cyberattacks;

impact of export controls and economic sanctions;

limitations in our ability to implement and execute our business strategy;

risks to employees, assets and operations we have in Russia and Belarus;

disruptions in global supply chains;

asset write-downs;

exposure to foreign currency fluctuations and potential nationalizations and asset seizures in Russia;

constraints or disruption in the capital markets and our sources of liquidity;

and potential contractual breaches and litigation.

We must comply with and could be impacted by various export controls and trade and economic sanctions laws and regulations that could negatively affect our business and may change due to diplomatic and political considerations outside of our control.

A significant part of our business involves the export and import of components and products among many countries, including the U.S., Germany, Russia, Belarus and China.

government and governments of other countries in which we do business have Trade Controls that impact our ability to export, re-export or transfer products, software and technology originating in those countries.

Trade Controls may require that we obtain a license before we can export, re-export or transfer certain products, software or technology.

The requirement to obtain a license could put us at a competitive disadvantage by restricting our ability to sell products to customers in certain countries or by giving rise to delays or expenses related to obtaining a license.

We have experienced and, in the future, may experience delays in obtaining export licenses based on issues solely within the control of the applicable government agency.

Licenses may also include conditions that limit the use, resale, transfer, re-export, modification, disassembly, or transfer of a product, software or technology after it is exported without first obtaining permission from the relevant government agency.

Delays in obtaining or failure to obtain required export licenses may require us to defer shipments for substantial periods or cancel orders.

Any of these circumstances could adversely affect our operations and, as a result, our financial results could suffer.

Although we have implemented compliance measures designed to prevent transactions prohibited by current or future Trade Controls, we have previously identified, and may continue to identify, instances in which we exported products without obtaining the required export authorizations and/or submitting the required requests.

As a result, we have submitted a limited number of voluntary self-disclosures regarding compliance with export control laws and regulations with the U.S.

Department of Commerce’s Bureau of Industry and Security (“BIS”).

In October 2021, the U.S.

Department of Justice (“DOJ”) advised us it was conducting an investigation into certain shipments of equipment.

We believe the DOJ's investigation has concluded however BIS continues its investigation and we received an administrative subpoena from BIS regarding our export practices.

While we are cooperating fully with BIS’s review, we are unable to estimate its ultimate impact on the Company.

Our failure to comply with these laws and regulations could result in costly government investigations, government sanctions, including substantial monetary penalties, civil or criminal penalties, denial of export privileges, debarment from government contracts, and a loss of revenues and reputational harm.

Our manufacturing facilities in the U.S., Germany and Russia provide finished products to China, our largest market.

Should the United States, the European Union or Russia implement new or broad-based Trade Controls directed at each other or China, our production and/or deliveries as well as results of operations and/or financial condition could be affected.

In connection with the Russia-Ukraine conflict, broad-based sanctions (including asset-freeze/blocking sanctions) have been imposed by the U.S., UK, EU, and numerous other governments targeting Russia, including but not limited to major Russian banks.

In the U.S., these sanctions are administered by the Office of Foreign Assets Control (“OFAC”) and are typically known as the OFAC regulations.

These regulations are extensive and complex, and they differ from one sanctions regime to another.

Failure to comply with these regulations could subject us to legal and reputational consequences, including civil and criminal penalties.

In addition, Trade Controls and their implementation are fluid and may change due to diplomatic and political considerations outside of our control.

The United States, the European Union and Russia have imposed numerous additional trade restrictions and sanctions in response to the Russia-Ukraine conflict.

Such changes, including the potential expansion of sanctions and sanctions designations, as well as public statements by government officials, could be significant.

While the Company has a trade compliance program, there is a risk that IPG may not be able to comply due to the number, complexity and fast-changing nature of sanctions being added in response to the Russia-Ukraine conflict.

Trade Controls and governmental responses to the conflict may require us to take certain actions, including increasing costs and abandoning operations or writing-down asset values, or respond to nationalization or expropriation of assets abroad, adversely affect prevailing market prices of our common stock, have a reputational impact, or otherwise have a material adverse impact on us, our business and financial results.

Risks Relating to Economic Conditions

Uncertainty and adverse changes in the general economic conditions of markets in which we participate negatively affect our business.

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As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole.

It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the materials processing, telecommunications, advanced and medical markets and applications in which we participate.

It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the materials processing, medical procedures and advanced applications in which we participate.

Because all components of our budgeting and forecasting are dependent upon estimates of growth or contraction in the markets and applications we serve and demand for our products, the prevailing economic uncertainties render estimates of future income and expenditures very difficult to make.

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Adverse changes have occurred and may occur in the future as a result of declining or flat global or regional economic conditions, fluctuations in currency and commodity prices, wavering confidence, capital expenditure reductions, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, or other factors affecting economic conditions generally.

These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, increase the risk of loss on investments, or increase costs associated with manufacturing and distributing products.

These changes may negatively affect the sales of

our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, increase the risk of loss on investments, or increase costs associated with manufacturing and distributing products.

An economic downturn could have a material adverse effect on our business, financial condition and results of operations.

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or global economies or other factors, may result in decreased revenue or growth for our customers and may lead to decreased demand for our products, which would reduce our sales and margins.

We may not be able to respond by decreasing our expenses quickly enough or sufficiently, due in part, to our fixed overhead structure related to our

vertically integrated operations and our commitments to continuing investment in research and development and infrastructure for long term growth.

We may not be able to respond by decreasing our expenses quickly enough or sufficiently, due in part, to our fixed overhead structure related to our vertically integrated operations and our commitments to continuing investment in research and development and infrastructure for long term growth.

Risks Relating to Industry Dynamics and Competition

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As a result of the foregoing factors, competitive pressures have resulted in price reductions, reduced margins, loss of sales and loss of market share.

The laser and amplifier industries are experiencing declining average selling prices, which could cause our gross margins to decline and harm our operating results.

The laser industry is experiencing declining average selling prices, which could cause our gross margins to decline and harm our operating results.

Our products are experiencing and may in the future continue to experience a significant decline in average selling prices ("ASPs") as a result of increased competition, pressure to reduce prices from significant customers and new product and technology introductions.

Market participants, particularly in China, have reduced and may continue to reduce, prices of competing products to gain market share.

If the ASPs of our products decline further and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected.

If the ASPs of our products decline further and we are unable to increase our unit

volumes, introduce new or enhanced products with higher margins or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected.

In addition, because of our significant fixed costs, we are limited in our ability to reduce total costs quickly in response to any revenue shortfalls.

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We are adding manufacturing capabilities and capacity outside of Russia in response to trade sanctions imposed on Russia, where we have large production facilities.

The trade restrictions impose limits our our ability to purchase components and other items from our subsidiary in Russia.

The trade restrictions impose limits on our ability to purchase components and other items from our subsidiary in Russia.

A significant portion of our manufacturing facilities and production equipment, such as our semiconductor production and processing equipment, diode packaging equipment and diode burn-in stations, are special-purpose in nature and cannot be adapted easily to make other products.

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To maintain our competitive position and to meet anticipated demand for our products, we invest significantly in the expansion of our manufacturing and operations throughout the world and may do so in the future.

We had capital expenditures of $110 million and $123 million in 2022 and 2021, respectively, and we expect to incur approximately $140 million to $160 million in capital expenditures, excluding acquisitions, in 2023.

We had capital expenditures of $110 million in both 2023 and 2022, and we expect to incur approximately $120 million to $130 million in capital expenditures in 2024, net of asset divestitures.

In connection with these projects, we may incur cost overruns, construction delays, project cancellations, labor difficulties or regulatory issues which could cause our capital expenditures to be higher than what we currently anticipate, possibly by a material amount, which would in turn adversely impact our operating results.

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We generally do not enter into long-term agreements with our customers obligating them to purchase our fiber lasers or amplifiers.

Our business is characterized by short-term purchase orders and shipment schedules and, in some cases, orders may be canceled or delayed without significant penalty or any penalty.

Our business is characterized by short-term purchase orders and shipment schedules and, in some cases, orders may

be canceled or delayed without significant penalty or any penalty.

As a result, it is difficult to forecast our revenues and to determine the appropriate levels of inventory required to meet future demand.

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These are not readily available from other sources at our current costs and may not be available at all.

If our manufacturing activities were obstructed or hampered significantly, it could take a considerable length of time, or it could increase our costs, to resume

manufacturing or find alternative sources of supply.

If our manufacturing activities were obstructed or hampered significantly, it could take a considerable length of time, or it could increase our costs, to resume manufacturing or find alternative sources of supply.

Many of the tools and equipment we use are custom-designed, and it could take a significant period of time to repair or replace them.

Our primary manufacturing facilities are located in Massachusetts, Germany, Russia and Belarus.

Our primary manufacturing facilities are located in the United States and Germany, and we have added production in Italy and Poland.

Despite our efforts to mitigate the impact of any flood, fire, natural disaster, political unrest, act of terrorism, war, trade sanctions, outbreak of disease or other similar event, our business could be adversely affected to the extent that we do not have redundant production capabilities if any of our major manufacturing facilities or equipment should become inoperable, inaccessible, damaged or destroyed.

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If our suppliers face financial or other difficulties, if our suppliers do not maintain sufficient inventory on hand or if there are significant changes in demand for the components and materials we obtain from them, they could limit the availability of these components and materials to us, which in turn could adversely affect our business.

The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations.

In the first quarter of 2022, Russian military forces invaded Ukraine.

This military action had significant and immediate adverse economic impacts globally.

Our operations worldwide are subject to additional regulatory and political constraints and additional compliance costs in connection with sanctions, other trade controls and higher tariffs imposed by the United States, the European Union and other governments in response to Russia’s military operations in Ukraine.

The United States and the European Union have enacted numerous sanctions packages and may enact additional sanctions until the conflict has been resolved.

These sanctions restrict our ability to import components in Europe from Russia, and provide or receive services from our Russian subsidiary.

While certain components can be exported

from Russia to the United States, the United States imposed significant import tariffs that make it commercially undesirable.

Further, transfer of funds to and from Russia and Belarus are difficult or slow because of bank compliance with sanctions.

In addition, we are not able to access cash held by or receive dividends from our Russian and Belarus subsidiaries because of various sanctions.

Such risks include, but are not limited to, increases in tariffs;

adverse effects on global macroeconomic conditions;

increased exposure to cyberattacks;

impact of export controls and economic sanctions;

limitations in our ability to implement and execute our business strategy;

risks to employees, assets and operations we have in Russia and Belarus;

disruptions in global supply chains;

asset write-downs;

exposure to foreign currency fluctuations and potential nationalizations and asset seizures in Russia;

constraints or disruption in the capital markets and our sources of liquidity;

and potential contractual breaches and litigation.

Additionally, many of our scientists and managers were born in Russia and now reside in Europe and the United States.

Such persons have had, and may continue to have, difficulties or delays in obtaining or renewing the necessary visas to enter the United States and other countries in which we operate.

Such difficulties or delays have and may further adversely impact our ability to effectively manage operations, oversee existing projects, develop new business relationships, and conduct product research and development.

A significant part of our business involves the export and import of components and products among many countries, including the U.S., Germany and China.

We also export and import a limited number of components and products in Russia and Belarus.

Trade Controls may require that we obtain a license before we can export, re-export or transfer certain products, software or technology.

We have experienced and, in the future, may experience delays in obtaining export licenses based on issues solely within the control of the applicable government agency.

Delays in obtaining or failure to obtain required export licenses may require us to defer shipments for substantial periods or cancel orders.

Any of these circumstances could adversely affect our operations and, as a result, our financial results could suffer.

As a result, we have submitted a limited number of voluntary self-disclosures regarding compliance with export control laws and regulations with the U.S.

Department of Commerce’s Bureau of Industry and Security (“BIS”).

BIS issued warning letters to the Company in response to the self-disclosures.

Following the submission of the self-disclosures, the Company received subpoenas from the U.S.

Department of Justice (“DOJ”) and BIS in October 2021 and October 2022, respectively, with respect to exports by the Company.

The Company has been informed by the DOJ and BIS that the Company has satisfied its obligations under the subpoenas.

The Company believes that those investigations are concluded.

Our manufacturing facilities in the U.S., Germany and Russia provide finished products to China, our largest market.

In the U.S., these sanctions are administered by the Office of Foreign Assets Control (“OFAC”) and are typically known as the OFAC regulations.

These regulations are extensive and complex, and they differ from one sanctions regime to another.

Failure to comply with these regulations could subject us to legal and reputational consequences, including civil and criminal penalties.

In addition, Trade Controls and their implementation are fluid and may change due to diplomatic and political considerations outside of our control.

The United States, the European Union and Russia have imposed numerous additional trade restrictions and sanctions in response to the Russia-Ukraine conflict.

Such changes, including the potential expansion of sanctions and sanctions designations, as well as public statements by government officials, could be significant.

We may experience lower than expected manufacturing yields, which would adversely affect our gross margins.

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If we do not achieve planned yields, our product costs could increase resulting in lower gross margins, and key component availability would decrease.

We are highly dependent on the significant experience and specialized expertise of our CEO and other senior management and scientific staff.

We are highly dependent on the significant experience and specialized expertise of our senior management and scientific staff.

The unavailability or loss of one or more of these key employees or our failure to attract other highly skilled personnel necessary to compete successfully could harm our business and results of operations.

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We have defended against several patent infringement claims in the past and we engage in patent office opposition proceedings internationally for patents owned by others.

There can be no assurance that we will be able to dispose without a material effect any claims or other allegations made or asserted in the future.

There can be no assurance that, in the future, we will be able to dispose of any claims or other allegations made or asserted against us without them having a material impact on our results of operations.

Even if we ultimately are successful on the merits of any such litigation or re-examination, legal and administrative proceedings related to intellectual property are typically expensive and time-consuming, generate negative publicity and divert financial and managerial resources.

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These developments could adversely affect our ability to compete for customers and increase our revenues.

Plaintiffs in intellectual property cases often seek, and sometimes obtain, injunctive relief.

Plaintiffs in intellectual property cases often seek, and sometimes

obtain, injunctive relief.

Intellectual property litigation commenced against us could force us to take actions that could be harmful to our business, including the following:

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While our system is designed with access security, if a third party gains unauthorized access to our data or technology, including information regarding our customers, employees and service providers, such security breach could expose us to a risk of loss of this information, loss of business, litigation and possible liability.

Our security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise.

Our security measures may be breached as a result of third-party action, including intentional misconduct by computer

hackers, employee error, malfeasance or otherwise.

Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers' data or our data, including our intellectual property and other confidential business information, employee information or our information technology systems.

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We would incur any such costs with the intent that proactively preventing a cybersecurity incident ultimately helps to mitigate potential cybersecurity liability.

As previously disclosed, on September 14, 2020, the Company detected a ransomware attack impacting certain of our operational and information technology systems that did not have a material impact on the Company's business, operations or financial condition.

As previously disclosed, on September 14, 2020, the Company detected a ransomware attack impacting certain of our operational and information technology systems that we do not believe had a material impact on the Company's business, operations or financial condition.

The costs to address the foregoing security problems and security vulnerabilities before or after a cyber-incident could be significant.

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In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting.

We have experienced rapid growth and have extensive and complex international manufacturing and sales and service locations which may make us more vulnerable to weaknesses in our internal controls.

We have extensive and complex international manufacturing and sales and service locations which may make us more vulnerable to weaknesses in our internal controls.

Although we test our internal control over financial reporting in order to ensure compliance with the Section 404 requirements, our failure to maintain adequate internal controls over financial reporting could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements or a delay in our ability to timely file our periodic reports with the SEC, which ultimately could negatively impact our stock price.

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The development and sale of medical devices and component products involves an inherent risk of product liability claims.

Defects, integration issues or other performance problems in our fiber laser and other products could also result in personal injury or financial or other damages to our customers, which in turn could damage market acceptance of our products and result in significant product liability claims being brought against us .

acceptance of our products and result in significant product liability claims being brought against us .

A product liability claim brought against us, even if unsuccessful, could be time-consumin g and costly to defend.

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Scherbakov, our CEO, is the sole managing director of IPFD.

Trustees of the trusts are officers or employees of the Company.

Trustees of the trusts are officers of the Company and a third-party corporate trustee.

These trustees and Dr.

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• expenses associated with acquisition-related activities;

• health pandemic;

• regional epidemics or a global pandemic, such as COVID-19;

• our ability to control expenses.

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We have significant facilities in and our products are sold in numerous countries.

Our principal markets include China, the United States, the European Union, Japan, Korea, Turkey and Russia.

A substantial majority of our revenues are derived from customers outside the United States.

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Russia has responded in kind.

Sanctions imposed by any of these countries has and could disrupt our supply of critical components among our manufacturing facilities in the U.S., Germany, Russia or Belarus, and cause us to shift all or portions of work occurring in Russia or Belarus to other countries.

Sanctions imposed by any of these countries has and could disrupt our supply of critical components among our manufacturing facilities in the U.S., Germany, Italy, Poland, Russia or Belarus, and cause us to shift all or portions of work occurring in Russia or Belarus to other countries.

In addition, sanctions targeting the banking sector have impacted the transfer of cash to and from Russia to fund operations or repatriate surplus liquidity.

At December 31, 2023, we had $76.4 million of cash and cash equivalents in Russia and $5.5 million cash in Belarus.

Such disruptions could negatively affect our ability to provide critical components to affiliates or produce finished goods for customers, which could increase our costs, require capital expenditures and harm our results of operations and financial condition.

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Further, given the volatility of exchange rates, we may not be able to effectively manage our currency risks, and any volatility in currency exchange rates may increase the price of our products in local currency to our foreign customers or increase the manufacturing cost of our products, which may have an adverse effect on our financial condition, cash flows and profitability.

We incurred a foreign exchange gain of $1.4 million in 2023 and a loss of $4.1 million in 2022.

We pursue acquisitions and investments in new businesses, products, patents or technologies.

These involve risks which could disrupt our business and may harm our financial results and condition.

We make acquisitions of and investments in new businesses, products, patents and technologies and expand into new geographic areas, or we may acquire operations, products or technologies that expand our current capabilities.

We may make acquisitions of and investments in new businesses, products, patents and technologies and expand into new geographic areas, or we may acquire operations, products or technologies that expand our current capabilities.

Although we have pursued relatively small acquisitions in the past, we may pursue larger transactions in the future.

Acquisitions present a number of potential risks and challenges that could, if not met, disrupt our business operations, increase our operating costs, reduce consolidated margins, cause us to incur impairment charges and reduce the value of the acquired company, asset or technology to us.

We may not be able to effectively integrate acquired businesses, business cultures, products, patents or

technologies into our existing business and products, or retain key employees.

We may not be able to effectively integrate acquired businesses, business cultures, products, patents or technologies into our existing business and products, or retain key employees.

As a result of the rapid pace of technological change in our industry, we may misjudge the long-term potential of an acquired business, product, patent or technology, or the acquisition may not be complementary to our existing business.

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In 2022, long-lived asset impairments related to our Russian operations were $79.0 million.

At December 31, 2023, the net asset value of our Russian subsidiary was $103.9 million.

The net value of assets in Russia was reduced by $138.5 million due to the cumulative translation effect of the Russian ruble compared to the U.S.

Depending upon the outcome of our review of our Russian operations, we may incur additional asset impairment charges and the cumulative translation effect of foreign exchange fluctuations that is currently included in accumulated other comprehensive loss on our consolidated balance sheets may be charged to our consolidated statements of income.

We are exposed to credit risk and fluctuations in the market values of our cash, cash equivalents and marketable securities.

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We occasionally borrow under our existing credit facilities to fund operations, including working capital investments.

Our major credit lines in the United States and Germany expire in April 2025 and July 2023, respectively.

Our major credit line in the United States expires in April 2025.

Uncertainty or disruptions in financial markets may negatively impact our ability to access additional financing or to refinance our existing credit facilities or existing debt arrangements on favorable terms or at all, which could negatively affect our ability to fund current and future expansion as well as future acquisitions and development.

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Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.

UNRESOLVED STAFF COMMENTS

Our short-term investment portfolio and certain cash balances could experience a decline in market value or otherwise become illiquid, which could materially and adversely affect our financial results.

As of December 31, 2023, we had approximately $515 million of cash and cash equivalents and $663 million in short-term investments.

See Note 3, "Fair Value Measurements" in the Notes to Consolidated Financial Statements in Part IV, Annual Report for further information about our cash equivalents and short-term investments.

We currently do not use derivative financial instruments to adjust our investment portfolio risk or income profile.

These investments, as well as any cash deposited in bank accounts, are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by unusual events, such as the COVID-19 pandemic, the Eurozone crisis and the U.S.

debt ceiling crisis, which affected various sectors of the financial markets and led to global credit and liquidity issues.

For example, in March 2023, certain US banks were closed and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver.

While we were not directly impacted by these closures and did not have any deposits with these banks, there can be no assurance that our current or future banks will not face similar risks, and that we would be able to recover in full our deposits in the event of similar closures.

We regularly maintain cash balances that are not insured or are in excess of the FDIC’s insurance limit.

If the global financial markets continue to experience volatility or deteriorate, our investment portfolio and cash balances may be impacted and some or all of our investments may become illiquid or otherwise experience loss which could adversely impact our financial results and position.

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