What changed in this filing

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Item 1A. Risk Factors

2024-11-08 compared with 2024-05-02 · 438 added, 429 removed, 395 unchanged (69% of the section changed)

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to us or that we currently deem immaterial may also adversely affect our business.

The risks and uncertainties discussed below update and supersede

the risks and uncertainties previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30,

The risks and uncertainties discussed below update and supersede the

risks and uncertainties previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024,

which was filed with the SEC on September 9, 2024.

There have been no material changes to the risks and uncertainties previously

disclosed in such Annual Report on Form 10-K, except for those risks marked with an asterisk (*) below.

There have been no material changes to the risks and uncertainties previously disclosed

in such Annual Report on Form 10-K, except for those risks marked with an asterisk (*) below.

Risks Related to Our Operations and Industry

We depend upon a relatively small number of distributor and end-user

customers for a large portion of our revenue, and a decline in sales to these major customers would materially adversely affect our business,

financial condition, and results of operations.

Historically, we have relied upon a small number of distributors and end-user

customers for a significant portion of our net revenue.

Our customer concentration could fluctuate, depending on future customer requirements,

which will depend on market conditions in the industry segments in which our customers participate.

The loss of one or more significant

customers or a decline in sales to our significant customers could result in a material loss of sales and possible increase in excess

inventories which would adversely affect our business, financial condition, and results of operations.

We have experienced and may in the future experience constraints

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components in sufficient quantities and on acceptable terms.

We and our contract manufacturers are responsible for procuring raw

materials for our products.

Our products incorporate some components and technologies that are only available from single or limited sources

We and our contract manufacturers are responsible for procuring raw materials

for our products.

Our products incorporate some components and technologies that are only available from single or limited sources of

Depending on a limited number of suppliers exposes us to risks, including limited control over pricing, availability, quality

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supply and we may have difficulty identifying additional or replacement suppliers for some of our components.

We outsource substantially all of our manufacturing to contract

manufacturers in Asia.

If our contract manufacturers are unable or unwilling to manufacture our products at the quality and quantity we

request, our business could be harmed.

We outsource substantially all of our manufacturing to contract manufacturers

If our contract manufacturers are unable or unwilling to manufacture our products at the quality and quantity we request, our

business could be harmed.

We use contract manufacturers based in Asia to manufacture substantially

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increased financial accounting and reporting burdens and complexities.

Any problems that we may encounter with the delivery, quality or cost

of our products from our contract manufacturers or suppliers could cause us to lose net revenue, damage our customer relationships and

harm our reputation in the marketplace, each of which could materially and adversely affect our business, financial condition or results

of operations.

Any problems that we may encounter with the delivery, quality or cost of

our products from our contract manufacturers or suppliers could cause us to lose net revenue, damage our customer relationships and harm

our reputation in the marketplace, each of which could materially and adversely affect our business, financial condition or results of

From time to time, we may transition the manufacturing of certain products

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unexpected issues.

The effect of a pandemic or major public health concern such

as the COVID-19 pandemic could result in material adverse effects on our business, financial position, results of operations and cash

The effect of a pandemic or major public health concern such as the

COVID-19 pandemic could result in material adverse effects on our business, financial position, results of operations and cash flows.

The COVID-19 pandemic or another pandemic or similar outbreak has had,

and may in the future have, an adverse impact on the economy generally, our business and the businesses of our suppliers, and our results

of operations and financial condition.

For example, the COVID-19 pandemic resulted in industry events, trade shows and business travel

being suspended, cancelled and/or significantly curtailed.

If these activities are suspended, cancelled and/or significantly curtailed

in the future, whether due to surges of COVID-19 or other possible pandemics and similar outbreaks, our sales may be negatively impacted

in the future.

In addition, the impact of the COVID-19 pandemic or other possible

pandemics subject us to various risks and uncertainties that could materially adversely affect our business, results of operations

and financial condition, including the following:

and may in the future have, an adverse impact on the economy, our business and the businesses of our suppliers, and our results of operations

and financial condition.

For example, the COVID-19 pandemic resulted in industry events, trade shows and business travel being suspended,

cancelled and/or significantly curtailed.

If these activities are suspended, cancelled and/or significantly curtailed in the future, whether

due to surges of COVID-19 or other possible pandemics and similar outbreaks, our sales may be negatively impacted in the future.

In addition, the impact of the COVID-19 pandemic or other possible pandemics

subject us to various risks and uncertainties that could materially adversely affect our business, results of operations and financial

condition, including the following:

significant volatility or decreases in the demand for our products or extended sales cycles;

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further disruptions in our contract manufacturers’ ability to manufacture our products, as some contract manufacturers and suppliers of materials used in the production of our products are, or may be, located in areas more severely impacted by COVID-19 or another possible pandemic, which has limited and could further limit, our ability to obtain sufficient materials to produce and manufacture our products;

volatility in the availability of raw materials and components that our contract manufacturers purchase and volatility in raw material and other input costs.

The duration and extent of the COVID-19 pandemic or another pandemic’s

volatility in the availability of raw materials and components that our

contract manufacturers purchase and volatility in raw material and other input costs.

The duration and extent of a future pandemics or other similar outbreak’s

effect on our operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted

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The adverse impact of the COVID-19 pandemic or another pandemic or similar outbreak on our business, results of operations

and financial condition have been and could continue to be material.

and financial condition have been, could continue to be, and may in the future be material.

Certain of our products are sold into mature markets, which could

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Our ability to sustain and grow our business depends on our ability

to develop, market, and sell new products.

to develop, market, scale, and sell new products.

Certain of our products are sold into mature markets that are characterized

by a trend of declining demand.

As the overall market for these products decreases due to the adoption of new technologies, we expect

that our revenues from these products will continue to decline.

As a result, our future prospects will depend on our ability to develop

and successfully market new products that address new and growing markets.

Our failure to develop new products or failure to achieve widespread

customer acceptance of any new products could cause us to lose market share and cause our revenues to decline.

There can be no assurance

that we will not experience difficulties that could delay or prevent the successful development, introduction, marketing and sale of new

products or product enhancements.

Factors that could cause delays include regulatory and/or industry approvals, product design cycle and

failure to identify products or features that customers demand.

In addition, the introduction and sale of new products often involves

a significant technical evaluation, and we often face delays because of our customers’ internal procedures for evaluating, approving

and deploying new technologies.

For these and other reasons, the sales cycle associated with new products is typically lengthy, often

lasting six to 24 months and sometimes longer.

Therefore, there can be no assurance that our introduction or announcement of new product

offerings will achieve any significant or sustainable degree of market acceptance or result in increased revenue in the near term.

Our software offerings are subject to risks that differ from

those facing our hardware products.

As the overall market for these products decreases due to the adoption of new technologies, our revenues

from these products have declined, and we expect they will continue to decline in the future.

As a result, our future prospects will depend

on our ability to develop and successfully market new products that address new and growing markets.

Our failure to develop new products

or failure to achieve widespread customer acceptance of any new products could cause us to lose market share and cause our revenues to

There can be no assurance that we will not experience difficulties that could delay or prevent the successful development, introduction,

marketing and sale of new products or product enhancements.

Factors that could cause delays include regulatory and/or industry approvals,

product design cycle and failure to identify products or features that customers demand.

In addition, the introduction and sale of new

products often involves a significant technical evaluation, and we often face delays because of our customers’ internal procedures

for evaluating, approving and deploying new technologies.

For these and other reasons, the sales cycle associated with new products is

typically lengthy, often lasting six to 24 months and sometimes longer.

Therefore, there can be no assurance that our introduction or

announcement of new product offerings will achieve any significant or sustainable degree of market acceptance or result in increased revenue

in the near term.

Our software offerings are subject to risks that differ from those

facing our hardware products.

We continue to dedicate significant engineering resources to our management

software platform, applications, and SaaS offerings.These product and service offerings are subject to significant additional risks that

software platform, applications, and SaaS offerings.

These product and service offerings are subject to significant additional risks that

are not necessarily related to our hardware products.

Our ability to succeed with these offerings will depend in large part on our ability

to provide customers with software products and services that offer features and functionality that address the specific needs of businesses.

We may face challenges and delays in the development of this product line as the marketplace for products and services evolves to meet

the needs and desires of customers.

to provide customers with software products and services that offer features and functionality that address their specific needs.

face challenges and delays in the development of this product line as the marketplace for products and services evolves to meet the needs

and desires of customers.

We cannot provide assurances that we will be successful in operating and growing this product line.

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will encounter competition from other solutions providers, many of whom may have more significant resources than us with which to compete.

There can be no assurance that we will recover our investments in this segment, that we will receive meaningful revenue from or realize

There can be no assurance that we will recover our investments in this segment, or that we will receive meaningful revenue from or realize

a profit from this new segment.

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the timing of large orders placed by some of our customers is often project-based.

Our operating results fluctuate because we often receive large orders

from customers that coincide with the timing of the customer’s project.

Our operating results fluctuate because we often receive large orders from

customers that coincide with the timing of the customer’s project.

Sales of our products and services may be delayed if customers

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Because a significant portion of our operating expenses are fixed, even a single order can have a disproportionate effect

on our quarterly revenues and operating results.

As a result of the factors discussed above, and due to the complexities of the industry

in which we operate, it is difficult for us to forecast demand for our current or future products with any degree of certainty, which

means it is difficult for us to forecast our sales.

If our quarterly or annual operating results fall below the expectations of investors

or securities analysts, the price of our common stock could decline substantially.

The lengthy sales cycle for our products and services, along

with delays in customer completion of projects, make the timing of our revenues difficult to predict.

We have a lengthy sales cycle for many of our products that generally

extends between six and 24 months and sometimes longer due to a lengthy customer evaluation and approval process.

on our operating results.

As a result of the factors discussed above, and due to the complexities of the industry in which we operate,

it is difficult for us to forecast demand for our current or future products with any degree of certainty, which means it is difficult

for us to forecast our sales.

If our quarterly or annual operating results fall below the expectations of investors or securities analysts,

the price of our common stock could decline substantially.

The lengthy sales cycle for our products and services, along with

delays in customer completion of projects, make the timing of our revenues difficult to predict.

We have a lengthy sales cycle for many of our products that generally extends

between three and 24 months and sometimes longer due to a lengthy customer evaluation and approval process.

The length of this process

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affect our business, financial condition or results of operations.

The nature of our products, customer base and sales channels

causes us to lack visibility into future demand for our products, which makes it difficult for us to forecast our manufacturing and inventory

The nature of our products, customer base and sales channels results

in lack of visibility into future demand for our products, which makes it difficult for us to forecast our manufacturing and inventory

requirements.

We use forecasts based on anticipated product orders to manage our

manufacturing and inventory levels and other aspects of our business.

However, several factors contribute to a lack of visibility with

respect to future orders, including:

We use forecasts based on anticipated product orders to manage our manufacturing

and inventory levels and other aspects of our business.

However, several factors contribute to a lack of visibility with respect to future

orders, including:

the lengthy and unpredictable sales cycle for our products that can extend from six to 24 months or longer;

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a large number of our customers typically purchase in small quantities.

This lack of visibility impacts our ability to forecast our inventory

requirements.

If we overestimate our customers’ future requirements for products, we may have excess inventory, which would increase

our costs and potentially require us to write-off inventory that becomes obsolete.

Additionally, if we underestimate our customers’

future requirements, we may have inadequate inventory, which could interrupt and delay delivery of our products to our customers, harm

our reputation, and cause our revenues to decline.

If any of these events occur, they could prevent us from achieving or sustaining profitability

and the value of our common stock may decline.

Delays in qualifying revisions of existing products for certain

of our customers could result in the delay or loss of sales to those customers, which could negatively impact our business and financial

This lack of visibility impacts our ability to forecast our inventory requirements.

If we overestimate our customers’ future requirements for products, we may have excess inventory, which would increase our costs

and potentially require us to write-off inventory that becomes obsolete.

Additionally, if we underestimate our customers’ future

requirements, we may have inadequate inventory, which could interrupt and delay delivery of our products to our customers, harm our reputation,

and cause our revenues to decline.

If any of these events occur, they could prevent us from achieving or sustaining profitability and

the value of our common stock may decline.

Delays in qualifying revisions of existing products for certain of

our customers could result in the delay or loss of sales to those customers, which could negatively impact our business and financial

Our industry is characterized by intense competition, rapidly evolving

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of our existing products, which we refer to as revisions.

Prior to purchasing our products, some of our customers require that

products undergo a qualification process, which may involve testing of the products in the customer’s system.

A subsequent revision

to a product’s hardware or firmware, changes in the manufacturing process or our selection of a new supplier may require a new qualification

Prior to purchasing our products, some of our customers require that products

undergo a qualification process, which may involve testing of the products in the customer’s system.

A subsequent revision to a

product’s hardware or firmware, changes in the manufacturing process or our selection of a new supplier may require a new qualification

process, which may result in delays in sales to customers, loss of sales, or us holding excess or obsolete inventory.

After products are qualified, it can take additional time before the

customer commences volume production of components or devices that incorporate our products.

If we are unsuccessful or delayed in qualifying

any new or revised products with a customer, that failure or delay would preclude or delay sales of these products to the customer, and

could negatively impact our financial results.

In addition, new revisions to our products could cause our customers to alter the timing

of their purchases, by either accelerating or delaying purchases, which could result in fluctuations of our net revenue from quarter to

We depend upon a relatively small number of distributor and end-user

customers for a large portion of our revenue, and a decline in sales to these major customers would materially adversely affect our business,

financial condition, and results of operations.

Historically, we have relied upon a small number of distributors and

end-user customers for a significant portion of our net revenue.

Additionally, we expect an increased customer concentration from end-users

in the near future based on existing customer supply agreements and order backlog.

Our customer concentration could fluctuate, depending

on future customer requirements, which will depend on market conditions in the industry segments in which our customers participate.

loss of one or more significant customers or a decline in sales to our significant customers could result in a material loss of sales

and possible increase in excess inventories which would adversely affect our business, financial condition, and results of operations.

We depend on distributors for a majority of our sales and to

complete order fulfillment.

We depend on the resale of products through distributor accounts for

a substantial majority of our worldwide net revenue.

After products are qualified, it can take additional time before the customer

commences volume production of components or devices that incorporate our products.

If we are unsuccessful or delayed in qualifying any

new or revised products with a customer, that failure or delay would preclude or delay sales of these products to the customer, and could

negatively impact our financial results.

In addition, new revisions to our products could cause our customers to alter the timing of their

purchases, by either accelerating or delaying purchases, which could result in fluctuations of our net revenue from quarter to quarter.

We depend on distributors for a majority of our sales and to complete

order fulfillment.

We depend on the resale of products through distributor accounts for a

substantial majority of our worldwide net revenue.

In addition, sales through our top five distributors accounted for approximately 29%

of our net revenue in fiscal 2024.

A significant reduction of effort by one or more distributors to sell our products or a material

change in our relationship with one or more distributors may reduce our access to certain end customers and adversely affect our ability

to sell our products.

Furthermore, if a key distributor materially defaults on a contract or otherwise fails to perform, our business

and financial results would suffer.

A significant reduction of effort by one or more distributors to sell our products or a material change

in our relationship with one or more distributors may reduce our access to certain end customers and adversely affect our ability to sell

our products.

Furthermore, if a key distributor materially defaults on a contract or otherwise fails to perform, our business and financial

results would suffer.

In addition, the financial health of our distributors and our continuing

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their performance and we are unable to secure alternate distributors.

Our ability to sustain and grow our business depends in part

on the success of our distributors and resellers.

Our ability to sustain and grow our business depends in part on the

success of our distributors and resellers.

A substantial part of our revenues is generated through sales by distributors

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This sales structure also could subject us to lawsuits, potential liability and reputational

harm if, for example, any of our distributors or resellers misrepresents the functionality of our products or services to customers, violates

laws or our corporate policies.

If we fail to effectively manage our existing or future distributors and resellers effectively, our business

and operating results could be materially and adversely affected.

harm if, for example, any of our distributors or resellers misrepresents the functionality of our products or services to customers or

violates laws or our corporate policies.

If we fail to effectively manage our existing or future distributors and resellers effectively,

our business and operating results could be materially and adversely affected.

Changes to the average selling prices of our products could affect

our net revenue and gross margins and adversely affect results of operations.

In the past, we have experienced reductions in the average selling

prices and gross margins of our products.

We expect competition to continue to increase, and we anticipate this could result in additional

downward pressure on our pricing.

Our average selling prices for our products might also decline as a result of other reasons, including

promotional programs introduced by us or our competitors and customers who negotiate price concessions.

To the extent we are able to increase

prices, we may experience a decline in sales volumes if customers decide to purchase competitive products.

If any of these were to occur,

our gross margins could decline and we might not be able to reduce the cost to manufacture our products enough or at all to keep up with

the decline in prices.

If we are unable to sell our inventory in a timely manner, it

could become obsolete, which could require us to write-down or write off obsolete inventory, which could harm our operating results.

In the past, we have experienced reductions in the average selling prices

and gross margins of our products.

We expect competition to continue to increase, and we anticipate this could result in additional downward

pressure on our pricing.

Our average selling prices for our products might also decline as a result of other reasons, including promotional

programs introduced by us or our competitors and customers who negotiate price concessions.

To the extent we are able to increase prices,

we may experience a decline in sales volumes if customers decide to purchase competitive products.

If any of these were to occur, our

gross margins could decline and we might not be able to reduce the cost to manufacture our products enough or at all to keep up with the

decline in prices.

If we are unable to sell our inventory in a timely manner, it could

become obsolete, which could require us to write-down or write off obsolete inventory, which could harm our operating results.

At any time, competitive products may be introduced with more attractive

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we would be required to increase our inventory reserves or write off obsolete inventory and our operating results could be substantially

Our failure to compete successfully in our highly competitive

market could result in reduced prices and loss of market share.

The market in which we operate is intensely competitive, subject to

rapid technological advances and highly sensitive to evolving industry standards.

The market can also be affected significantly by new

product and technology introductions and marketing and pricing activities of industry participants.

Our products compete directly with

products produced by a number of our competitors.

Our failure to compete successfully in our highly competitive market

could result in reduced prices and loss of market share.

The market in which we operate is intensely competitive, subject to rapid

technological advances and highly sensitive to evolving industry standards.

The market can also be affected significantly by new product

and technology introductions and marketing and pricing activities of industry participants.

Our products compete directly with products

produced by a number of our competitors.

Many of our competitors and potential competitors have greater financial and human resources

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may impair our capital and equity resources, divert our management’s attention or otherwise negatively impact our operating results.

We may pursue acquisitions, strategic partnerships and joint ventures

that we believe would allow us to complement our growth strategy, increase market share in our current markets and expand into adjacent

markets, broaden our technology and intellectual property and strengthen our relationships with distributors, OEMs and ODMs.

For instance,

we acquired Maestro, Intrinsyc, the Transition Networks and Net2Edge businesses of Communication Systems, Inc., and Uplogix, Inc.

years 2019, 2020, 2021 and 2022, respectively.

Our previous acquisitions have required, and any future acquisition, partnership, joint

venture or investment may also require, that we pay significant cash, issue equity and/or incur substantial debt.

Acquisitions, partnerships

or joint ventures may also result in the loss of key personnel and the dilution of existing stockholders to the extent we are required

to issue equity securities.

In addition, acquisitions, partnerships or joint ventures require significant managerial attention, which

may be diverted from our other operations.

We may pursue acquisitions, strategic partnerships and joint ventures that

we believe would allow us to complement our growth strategy, increase market share in our current markets and expand into adjacent markets,

broaden our technology and intellectual property and strengthen our relationships with distributors, OEMs and ODMs.

For instance, we acquired

Maestro, Intrinsyc, the Transition Networks and Net2Edge businesses of Communication Systems, Inc., and Uplogix, Inc.

in calendar years

2019, 2020, 2021 and 2022, respectively.

Our previous acquisitions have required, and any future acquisition, partnership, joint venture

or investment may also require, that we pay significant cash, issue equity and/or incur substantial debt.

Acquisitions, partnerships or

joint ventures may also result in the loss of key personnel and the dilution of existing stockholders to the extent we are required to

issue equity securities.

In addition, acquisitions, partnerships or joint ventures require significant managerial attention, which may

be diverted from our other operations.

These capital, equity and managerial commitments may impair the operation of our business.

Furthermore, acquired businesses may not be effectively integrated, may be unable to maintain key pre-acquisition business relationships,

may not result in expected synergies, an increase in revenues or earnings or the delivery of new products, may contribute to increased

fixed costs, and may expose us to unanticipated liabilities.

If any of these occur, we may fail to meet our business objectives and our

business, financial condition and operating results could be materially and adversely affected.

acquired businesses may not be effectively integrated, may be unable to maintain key pre-acquisition business relationships, may not result

in expected synergies, an increase in revenues or earnings or the delivery of new products, may contribute to increased fixed costs, and

may expose us to unanticipated liabilities.

If any of these occur, we may fail to meet our business objectives and our business, financial

condition and operating results could be materially and adversely affected.

We may experience difficulties associated with utilizing third-party

logistics providers.

A portion of our physical inventory management process, as well as

the shipping and receiving of our inventory, is performed by a third-party logistics provider in Hong Kong.

There is a possibility that

third-party logistics providers will not perform as expected and we could experience delays in our ability to ship, receive, and process

the related data in a timely manner.

This could adversely affect our financial position, results of operations, cash flows and the market

price of our common stock.

Relying on third-party logistics providers could increase the risk

of the following:

A portion of our physical inventory management process, as well as the

shipping and receiving of our inventory, is performed by a third-party logistics provider in Hong Kong.

There is a possibility that third-party

logistics providers will not perform as expected and we could experience delays in our ability to ship, receive, and process the related

data in a timely manner.

This could adversely affect our financial position, results of operations, cash flows and the market price of

our common stock.

Relying on third-party logistics providers could increase the risk of the

failing to receive accurate and timely inventory data, theft or poor physical security of our inventory, inventory damage,

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Risks Related to Technology, Cybersecurity and Intellectual Property

Cybersecurity breaches and other disruptions could compromise

our information and expose us to liability, which could cause our business and reputation to suffer.

Increased global information technology (“IT”) security

threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality,

availability and integrity of our data.

There have been several recent, highly publicized cases in which organizations of various types

and sizes have reported the unauthorized disclosure of customer or other confidential information, as well as cyberattacks involving the

dissemination, theft and destruction of corporate information, intellectual property, cash or other valuable assets.

There have also been

several highly publicized cases in which hackers have requested “ransom” payments in exchange for not disclosing customer

or other confidential information or for not disabling the target company’s computer or other systems.

The secure processing, maintenance

and transmission of the information that we collect and store on our systems is critical to our operations and implementing security measures

designed to prevent, detect, mitigate or correct these or other IT security threats involves significant costs.

Although we have taken

steps to protect the security of our information systems, we have, from time to time, experienced threats to our data and systems, including

malware, phishing and computer virus attacks, and it is possible that in the future our safety and security measures will not prevent

the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as

in the event of cyber-attacks.

In addition, due to the fast pace and unpredictability of cyber threats, long-term implementation plans

designed to address cybersecurity risks become obsolete quickly and, in some cases, it may be difficult to anticipate or immediately detect

such incidents and the damage they cause.

Any unauthorized access, disclosure or other loss of information could result in legal claims

or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, which could

adversely affect our business.

Cybersecurity breaches and other disruptions could compromise our

information and expose us to liability, which could cause our business and reputation to suffer.

Increased global information technology security threats and more sophisticated

and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity

There have been several recent, highly publicized cases in which organizations of various types and sizes have reported the

unauthorized disclosure of customer or other confidential information, as well as cyberattacks involving the dissemination, theft and

destruction of corporate information, intellectual property, cash or other valuable assets.

There have also been several highly publicized

cases in which hackers have requested “ransom” payments in exchange for not disclosing customer or other confidential information

or for not disabling the target company’s computer or other systems.

The secure processing, maintenance and transmission of the

information that we collect and store on our systems is critical to our operations and implementing security measures designed to prevent,

detect, mitigate or correct these or other cybersecurity threats involves significant costs.

Although we have taken steps to protect the

security of our information systems, we have, from time to time, experienced, and we expect to continue experiencing, threats to our data

and systems, including malware, phishing and computer virus attacks, and it is possible that in the future our safety and security measures

will not prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information

such as in the event of cyber-attacks.

In addition, due to the fast pace and unpredictability of cybersecurity threats, including from

emerging technologies, such as advanced forms of machine learning, AI and quantum computing, long-term implementation plans designed to

address cybersecurity risks become obsolete quickly and, in some cases, it may be difficult to anticipate or immediately detect such incidents

and the damage they cause.

Any unauthorized access, disclosure or other loss of information could result in legal claims or proceedings,

disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect

our business.

If unauthorized access is obtained to the personal and/or proprietary

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risks, which are particularly acute in the cloud-based technologies operated by us and other third parties that form a part of our solutions.

In connection with certain implementations of our management software

platform, application, and SaaS offering, ConsoleFlow™, we expect to store, convey and process data produced by devices.

may include confidential or proprietary information, intellectual property or personally identifiable information of our customers or

other third parties with whom they do business.

It is important for us to maintain solutions and related infrastructure that are perceived

by our customers and other parties with whom we do business to provide a reasonable level of reliability and security.

Despite available

security measures and other precautions, the infrastructure and transmission methods used by our products and services may be vulnerable

to interception, attack or other disruptive problems.

In connection with certain implementations of our management software platform,

application, and SaaS offerings, we expect to store, convey and process data produced by devices.

This data may include confidential or

proprietary information, intellectual property or personally identifiable information of our customers or other third parties with whom

they do business.

It is important for us to maintain solutions and related infrastructure that are perceived by our customers and other

parties with whom we do business to provide a reasonable level of reliability and security.

Despite available security measures and other

precautions, the infrastructure and transmission methods used by our products and services may be vulnerable to interception, attack or

What changed 10-Q

Item 1A. Risk Factors