What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-11-08 compared with 2022-08-10 · 32 added, 24 removed, 573 unchanged (9% of the section changed)

10 unchanged sentences

In response to the COVID-19 pandemic, many state governments in the U.S.

and abroad have issued restrictive orders, including “shelter in place” or “stay at home” orders, that have restricted their residents from leaving their homes or returning to work.

For example, Shanghai was recently on lockdown in response to China’s “zero COVID” policy, and as a result, our Shanghai office was working fully remote.

and abroad issued restrictive orders, including “shelter in place” or “stay at home” orders, that have restricted their residents from leaving their homes or returning to work.

Since March 2022, various cities in China have imposed lockdowns in response to China’s “zero COVID” policy, leading to weaker consumer demand which has had, and we anticipate may continue to have, an adverse impact on China’s economy, on our customers and on our business.

If such measures continue for an extended period of time, our business and results of operations will be adversely impacted.

Our Shanghai and Shenzhen offices have been alternating between full in-person staffing and remote staffing as local ordinances continue to change in response to new outbreaks.

At Pixelworks, our offices in Japan and North America are currently operating in office and remotely.

The potential future impact of any “stay at home” orders or other similar COVID-related restraints on movement, may adversely impact the efficiency and effectiveness of our organization, as well as the operations of our suppliers and customers.

The potential future impact of any new or continuing “stay at home” orders or other similar COVID-related restraints on movement, may adversely impact the efficiency and effectiveness of our organization, as well as the operations of our suppliers and customers.

We face additional risks and challenges related to having a portion of our workforce working from home, including added pressure on our IT systems and the security of our network, and new challenges as our team adjusts to online collaboration.

13 unchanged sentences

If we fail to meet the evolving needs of our markets, identify new products, services or technologies, or successfully compete in our target markets, our revenue and financial results will be adversely impacted.

Pixelworks designs, develops and markets visual processing and advanced media processing solutions in the mobile video, digital projection and video delivery markets.

Pixelworks designs, develops and markets visual processing and advanced media processing solutions for the mobile, projection, video delivery, and cinema markets.

Our success depends to a significant extent on our ability to meet the evolving needs of these markets and to enhance our existing products, solutions and technologies.

8 unchanged sentences

We have adopted a product strategy that focuses on our core competencies in visual display processing and delivering high levels of video and digital image quality.

With this strategy, we continue to make further investments in the development of our image processor architecture for the digital projector market, with particular focus on adding increased performance and functionality.

With this strategy, we continue to make further investments in the development of our image processor architecture for the projector market, with particular focus on adding increased performance and functionality.

For the mobile device market, our strategy focuses on implementing our intellectual property ("IP") to improve the video performance of our customers’ image processors through the use of our MotionEngine® advanced video co-processor integrated circuits.

15 unchanged sentences

Even if our products are chosen to be incorporated into a developer’s products, we may still not realize significant revenue from the developer if its products are not commercially successful or it chooses to qualify, or incorporate the products, of a second source.

Additionally, even if our product strategy is successful at achieving design wins and increasing our revenue, we may continue to incur operating losses due to the significant research and development costs that are required to develop competitive products for the digital projection market and mobile market.

System security and data protection breaches, as well as cyber-attacks, could disrupt our operations, reduce our expected revenue and increase our expenses, which could adversely affect our stock price and damage our reputation.

36 unchanged sentences

The display manufacturing market is highly concentrated and we are, and will continue to be, dependent on a limited number of customers and distributors for a substantial portion of our revenue.

Sales to our top distributor for the first six months of 2022 represented 35% of revenue.

Sales to our top distributor for the first nine months of 2022 represented 33% of revenue.

Sales to our top distributor for the years ended December 31, 2021 and 2020 represented 27% and 7% of revenue, respectively.

1 unchanged sentence

The loss of any of our top distributors could negatively affect our results of operations.

Additionally, revenue attributable to our top five end customers represented 79%, 76% and 58% of revenue for the six months ended June 30, 2022 and the years ended December 31, 2021 and 2020, respectively.

As of June 30, 2022 we had four accounts that each represented 10% or more of accounts receivable.

As of December 31, 2021, we had three accounts that each represented 10% or more of accounts receivable.

Additionally, revenue attributable to our top five end customers represented 79%, 76% and 58% of revenue for the nine months ended September 30, 2022 and the years ended December 31, 2021 and 2020, respectively.

As of September 30, 2022 and December 31, 2021, we had three accounts that each represented 10% or more of accounts receivable.

All of the orders included in our backlog are cancelable.

10 unchanged sentences

Additionally, our business is subject to seasonality related to the markets we serve and the location of our customers.

For example, we have historically experienced higher revenue from the digital projector market in the third quarter of the year, and lower revenue in the first quarter of the year.

For example, we have historically experienced higher revenue from the projector market in the third quarter of the year, and lower revenue in the first quarter of the year.

As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indications of our future revenue or operating performance.

34 unchanged sentences

Sales outside the U.S.

accounted for approximately 97%, 97% and 93% of revenue for the six months ended June 30, 2022 and the years ended December 31, 2021 and 2020, respectively.

accounted for approximately 97%, 97% and 93% of revenue for the nine months ended September 30, 2022 and the years ended December 31, 2021 and 2020, respectively.

We anticipate that sales outside the U.S.

38 unchanged sentences

For example, if China were to take action against the United States in response to actual or perceived political or economic threats or changes in policy, our operations could be adversely affected.

Additionally, our Chinese subsidiary, PWSH is considered a foreign-invested enterprise and is subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to foreign-invested enterprises.

Uncertainties with respect to the PRC legal systems, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China could adversely affect us and limit the legal protections available to the Company and its stockholders.

Our Chinese subsidiary, PWSH is considered a foreign-invested enterprise and is subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to foreign-invested enterprises.

For example, China's government imposes control over the convertibility of RMB into foreign currencies, which can cause difficulties converting cash held in RMB to other currencies.

While the overall effect of legislation over the past two decades has significantly enhanced the protections afforded to various foreign investments in China, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.

Because these laws and regulations are relatively new, and published court decisions are limited and nonbinding in nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

Because the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to the Company.

Uncertainties due to evolving laws and regulations could also impede the ability of a China-based company, such as our subsidiary, to obtain or maintain permits or licenses required to conduct business in China.

While we believe our subsidiary currently has all required permits and licenses required to conduct business in China, changes in laws and regulations could impede our ability to obtain any newly required permits or licenses that may be required in the future.

In the absence of any required permits or licenses, governmental authorities could impose material sanctions or penalties on PWSH.

In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible.

In addition, China's legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, which may have a retroactive effect.

3 unchanged sentences

These uncertainties may also impede our ability to enforce the contracts entered into by our Chinese subsidiary and could materially and adversely affect our business and results of operations.

The PRC government at times will exercise significant oversight and discretion over the conduct of business in the PRC and may intervene or influence business operations as the government deems appropriate to further regulatory, political and societal goals.

There is no guarantee that the PRC government will refrain from releasing regulations or policies regarding the Company’s industry that could adversely affect our business, financial condition and results of operations.

Our international operations expose us to risks resulting from the fluctuations of foreign currencies.

We are exposed to risks resulting from the fluctuations of foreign currencies, primarily those of Japan, Taiwan, China and Canada.

We sell our products to OEMs that incorporate our products into other products that they sell outside of the U.S.

We sell our products to original equipment manufacturers ("OEMs") that incorporate our products into other products that they sell outside of the U.S.

While sales of our products to OEMs are denominated in U.S.

19 unchanged sentences

While we have policies and procedures to address compliance with such laws, we cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

Any violation of the FCPA or other applicable anti-bribery, anti-

corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S.

Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S.

government contracts, all of which may have an adverse effect on our reputation, our business, results of operations and financial condition.

91 unchanged sentences

Shortages of materials used in the manufacturing of our products and other key components of our customers ’ products may increase our costs, impair our ability to ship our products on time and delay our ability to sell our products.

We are currently facing shortages of components and materials that are critical to the manufacture of our products and our customers’ products.

We may from time-to-time face shortages of components and materials that are critical to the manufacture of our products and our customers’ products.

Such critical components and materials may include semiconductor wafers and packages, double data rate memory die, display components, analog-to-digital converters, digital receivers, video decoders and voltage regulators.

These shortages are resulting in additional costs to us and we may be unable to ship our products to our customers in a timely fashion, both of these factors could harm our business and adversely affect our results of operations.

These shortages result in additional costs to us and we may be unable to ship our products to our customers in a timely fashion, both of these factors could harm our business and adversely affect our results of operations.

Our highly integrated products and high-speed mixed signal products are difficult to manufacture without defects and the existence of defects could result in increased costs, delays in the availability of our products, reduced sales of products or claims against us.

88 unchanged sentences

We rely on a combination of patent, copyright, trademark and trade secret laws, as well as nondisclosure agreements and other methods, to help protect our proprietary technologies.

As of June 30, 2022, we held 301 patents and had 17 patent applications pending for protection of our significant technologies.

As of September 30, 2022, we held 297 patents and had 17 patent applications pending for protection of our significant technologies.

Competitors in both the U.S.

115 unchanged sentences

Additionally, pursuant to our “at the market” equity offering program, we may sell shares of our common stock having aggregate sales proceeds of up to $25 million from time to time through Cowen and Company, LLC, as our agent.

Through June 30, 2022, we sold an aggregate of 1,808,484 shares of our common stock under this at the market offering.

Through September 30, 2022, we sold an aggregate of 1,808,484 shares of our common stock under this at the market offering.

The issuance and sale of additional shares of our common stock pursuant to our “at the market” equity offering program or otherwise will have a dilutive impact on our existing shareholders.

8 unchanged sentences

Under the Nasdaq Marketplace Rules our common stock must maintain a minimum price of $1.00 per share for continued inclusion on the Nasdaq Global Market.

Our stock price was previously below $1.00 on May 6, 2009 and was $1.79 on July 6, 2022 and we cannot guarantee that our stock price will remain at or above $1.00 per share.

Our stock price was previously below $1.00 on May 6, 2009 and was $1.34 on October 27, 2022 and we cannot guarantee that our stock price will remain at or above $1.00 per share.

If the price again drops below $1.00 per share, our stock could become subject to delisting, and we may seek shareholder approval for a reverse stock split, which in turn could produce adverse effects and may not result in a long-term or permanent increase in the price of our common stock.

4 unchanged sentences

or (iii) a minimum of $10.0 million in shareholders' equity, at least 750,000 publicly held shares and at least $5 million in market value of publicly held shares and at least two registered and active market makers.

As of June 30, 2022, we were in compliance with these listing requirements.

As of September 30, 2022, we were in compliance with these listing requirements.

Our stock price is volatile and we believe that we continue to remain susceptible to the market value of our listed securities and/or the market value of our publicly held securities falling below $50.0 million and $15.0 million, respectively.

18 unchanged sentences

(incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K filed on March 10, 2010).

10.1 Form of Equity Transfer Agreement

10.2 Schedule identifying agreements substantially identical to the form of Agreement filed as Exhibit 10.1 hereto

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

18 unchanged sentences

PIXELWORKS, INC.

August 10, 2022 /s/ Haley F.

November 8, 2022 /s/ Haley F.

Chief Financial Officer,

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors