What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-28 · 85 added, 136 removed, 482 unchanged (31% of the section changed)

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● Failure of our products to interoperate with our customers’ existing networks could result in customer losses.

• Delay in the anticipated shift to more virtualized networks, or failure for customers to adopt our new products and services focused on virtualized networks, could reduce our revenues.

● Failure for customers to adopt our new products and services focused on virtualized networks, could reduce our revenues.

● Failure by our strategic partners or by us in integrating products could harm our business.

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● Man-made problems, such as terrorism, and natural catastrophic events may disrupt our operations and harm our operating results.

● We may not be successful in our artificial intelligence initiatives and such initiatives may expose us to greater litigation and regulatory risk.

Risks Related to Our International Operations

● Worldwide global economic conditions and uncertainties may have a material adverse impact on our business.

● Increases in tariffs, trade restrictions or taxes on our products could have an adverse impact on our operations.

● The wars in Israel and Ukraine could materially impact our sales to customers in that region.

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● Risks associated with our international operations could impair our ability to grow our international revenue.

• Increases in tariffs, trade restrictions or taxes on our products could have an adverse impact on our operations.

● Fluctuations in currency exchange rates could negatively impact our financial results and cash flows.

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● Our business could be jeopardized if we are unable to protect our intellectual property.

• Failure to obtain necessary licenses or ongoing maintenance and support of third-party technology at acceptable prices on acceptable terms, or at all, it could harm our operating results or business.

● Failure to obtain necessary licenses or ongoing maintenance and support of third-party technology at acceptable prices on acceptable terms, or at all, could harm our operating results or business.

● A breach of the security of our information systems or those of our third-party providers could adversely affect our operating results.

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● The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations.

• The terms of the Series A Preferred Stock and warrants impose additional challenges on our ability to raise capital.

● Impairment of our goodwill or intangible assets may require us to record a significant charge to earnings.

● Failure to maintain appropriate internal controls in the future may adversely affect our stock price and our business.

Risks Related to Ownership of our Common Stock

Risks Related to Ownership of our Common Stock and Warrants

● The choice of forum provision in our Certificate of Incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents.

● Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.

• Our Series A Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our common stock.

• The existence of the liquidation preference of the Series A Preferred Stock may reduce the value of our common stock.

● The outstanding warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders.

● We may issue debt and equity securities that are senior to our common stock, which could negatively affect the value of our common stock.

Risks Related to Ownership of our Series A Preferred Stock and Warrants

• Obligations to pay dividends or make distributions and potential liquidation payments in respect of the Series A Preferred Stock are subordinate.

• Holders of our Series A Preferred Stock have limited voting rights.

• Holders of our Series A Preferred Stock bear dividend risk.

• We may issue preferred stock in the future that ranks senior to or equally with the Series A Preferred Stock.

● The outstanding warrants are speculative in nature and may not have any value.

● Holders of our warrants will have no rights as a common stockholder until they acquire our common stock.

• An active trading market for the Series A Preferred Stock and warrants does not exist and may not develop.

● The market price of shares of our common stock may experience volatility, which could cause holders of the warrants to incur substantial losses.

● An active trading market for the warrants does not exist and may not develop.

General Risk Factors

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Further, some of our competitors sell significant amounts of other products to our current and prospective customers and have the ability to offer lower prices to win business.

Our competitors' broad product portfolios, coupled with already existing relationships, may cause our customers to buy our competitors' products or harm our ability to attract new customers.

Our competitors’ broad product

portfolios, coupled with already existing relationships, may cause our customers to buy our competitors’ products or harm our ability to attract new customers.

If we are unable to compete successfully against our current and future competitors, we could experience price reductions, order cancellations and loss of customers and revenue, and our operating results could be adversely affected.

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Consolidation in the telecommunications industry could harm our business.

The telecommunications industry, including many of our customers, has experienced consolidation, including, in the carrier space, the merger between Rogers Communications Inc.

The telecommunications industry, including many of our customers, has experienced consolidation, including, in the carrier space, the proposed acquisition of Frontier Communications by Verizon (2024), the merger between Rogers Communications Inc.

and Shaw Communications Inc.

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by Comcast Corporation (2020).

Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the proposed acquisition of Juniper Networks by Hewlett Packard Enterprises (January 2024), the combination of ADTRAN, Inc.

Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the proposed acquisition by Alianza of the Metaswitch business held by Microsoft (December 2024), the proposed merger of Infinera with Nokia (June 2024), the proposed acquisition of Juniper Networks by Hewlett Packard Enterprises (January 2024), the combination of ADTRAN, Inc.

and ADVA (2022) and the acquisition of Acacia Communications, Inc.

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Any of these factors could materially adversely affect our business.

Further consolidation among our competitors may create additional opportunities for us as customers look to maintain multiple vendors in their networks, but it could also provide those competitors with much larger scale making it more difficult for us to compete against them.

Restructuring activities could adversely affect our ability to execute our business strategy.

We recorded restructuring expense of $10.2 million and $16.2 million in 2024 and 2023, respectively, including severance and related costs, facilities restructuring and accelerated amortization of lease assets.

In 2024, we expect to record additional restructuring expense of approximately $5 million as we look to further streamline operations and consolidate our global footprint to reflect, among other things, a greater percentage of our workforce working from home on a go-forward basis.

In 2025, we expect to record additional restructuring expense of approximately $5 million as we look to further streamline operations and consolidate our global footprint.

Our current restructuring and any future restructuring, should it become necessary for us to further restructure our business due to market conditions or other factors that reduce the demand for our products and services, could adversely affect our ability to execute our business strategy in a number of ways, including through loss of key employees;

potential work stoppages by our unionized employees;

diversion of management’s attention from normal daily operations of the business;

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We continue to enhance our sales strategy, which we expect will include more partner sales engagements to resell our products and services through authorized distributors, value-added resellers (“VARs”), system integrators and other channel partners.

Our future success is dependent upon establishing and maintaining successful relationships with a variety of distributors, VARs,

system integrators and other channel partners.

Our future success is dependent upon establishing and maintaining successful relationships with a variety of distributors, VARs, system integrators and other channel partners.

We may also need to pursue strategic partnerships with vendors that have broader technology or product offerings in order to compete with end-to-end solution providers.

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Our choices of specific technologies to pursue, and those to de-emphasize, may prove to be inconsistent with our customers’ investment spending.

Moreover, if we invest in the development of technologies, products and solutions that do not function as expected, are not adopted by the industry, are not ready in time, are not accepted by our customers as quickly as anticipated or at all, mature more quickly than we anticipated or are not successful in the marketplace, our sales and earnings may suffer and, as a result, our stock price could decline.

mature more quickly than we anticipated or are not successful in the marketplace, our sales and earnings may suffer and, as a result, our stock price could decline.

To achieve market acceptance for our products, we must effectively anticipate, and adapt in a timely manner to, customer requirements and offer products and services that meet changing customer demands.

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We believe the telecommunications industry is in a major architectural shift to the virtualization of networks.

If the architectural shift does not occur, if it does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenue could decline.

We believe the telecommunications industry remains in the early stages of transitioning to the virtualization of networks.

While we anticipate that the industry shift to a software-centric cloud-based architecture is likely to happen, fundamental changes like this often take time to accelerate.

In addition, our customers may adapt to such changes at varying rates.

If the architectural shift does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenue could decline.

We believe the telecommunications industry continues to transition to the virtualization of networks.

However, our customers may adapt to such changes at varying rates.

As our customers take time to determine their future network architectures, we may encounter delayed timing of orders, deferred purchasing decisions and reduced expenditures by our customers.

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Virtualization of our product portfolio, particularly in our Cloud and Edge segment, to increasingly focus on more software-based products could also adversely impact our revenue growth.

As we virtualize our product portfolio, we expect our margins

to improve due to decreased costs tied to production and sales of our appliance products, however, our revenue may decline as a result of the decreases in sales of appliance products, many of which have generated higher revenue on a per-unit basis than certain of our software products.

As we virtualize our product portfolio, we expect our margins to improve due to decreased costs tied to production and sales of our appliance products, however, our revenue may decline as a result of the decreases in sales of appliance products, many of which have generated higher revenue on a per-unit basis than certain of our software products.

Failure by our strategic partners or by us in integrating products provided by our strategic partners could harm our business.

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and/or network performance penalties.

In addition to cooperating with our strategic partners, such as Dell and Microsoft, on specific customer projects, we also may compete in some areas with these same partners.

In addition to cooperating with our strategic partners, such as Dell, on specific customer projects, we also may compete in some areas with these same partners.

If these strategic partners fail to perform or choose not to cooperate with us on certain projects, in addition to the effects described above, we could experience loss of customers and market share, or fail to attract new customers.

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Reliance on our suppliers also exposes us to potential quality variations and unforeseen price increases.

Any disruption in the supply of key components would seriously adversely affect our ability to meet committed delivery dates and could result in loss of customers, harm to our ability to attract new customers, or legal action.

Additionally, any unforeseen increases in the prices of components could reduce our profitability or force us to increase our prices, which could result in a loss of customers or harm our ability to attract new customers and could have a material adverse effect on our results of operations.

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If we do not correctly forecast the demand for such products that utilize third-party components, we could have excess inventory and may need to write off the costs related to such purchases and such write-offs could materially adversely affect our operating results.

However, if we underestimate our forecast and our customers place orders to purchase more products than are available, we may not have sufficient inventory to support their needs.

However, if we underestimate our forecast and our customers place orders to purchase more products than are available, we may not have

sufficient inventory to support their needs.

If we are unable to provide our customers with enough of these products, it could make it difficult to retain certain customers, which could have a material and adverse effect on our business.

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Disruptions to, or our failure to effectively develop, manage and maintain our government customer relationships could adversely affect our ability to generate revenue from these customers.

Further, such government sales are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.

Further, sales to government customers are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.

A portion of our total revenue from product sales comes from sales to government agencies in the U.S.

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Any future investments, mergers or acquisitions we make or enter into, as applicable, could be difficult to integrate, disrupt our business, dilute shareholder value and seriously harm our financial condition.

We have a history of significant acquisitions, including the recent ECI Acquisition, and we may merge with or acquire additional businesses, products or technologies in the future or sell a portion of our business.

No assurance can be given that any future merger, acquisition or disposition will be successful or will not materially adversely affect our business, operating

results or financial condition.

We have a history of significant acquisitions and we may merge with or acquire additional businesses, products or technologies in the future or sell a portion of our business.

No assurance can be given that any future merger, acquisition or disposition will be successful or will not materially adversely affect our business, operating results or financial condition.

We continue to review opportunities to merge with or acquire other businesses or technologies that would add to our existing product line, complement and enhance our current products, expand the breadth of our product and service offerings, enhance our technical capabilities or otherwise offer growth opportunities.

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Competition for these personnel is intense, especially during times of economic recovery or growth.

In addition, for certain mature technologies, the availability of qualified personnel necessary to provide maintenance and professional services is smaller and such personnel may be difficult to find.

Any failure to hire, assimilate in a timely manner and retain key qualified personnel, particularly engineering and sales personnel, could impair our growth and make it difficult to meet key objectives, such as timely and effective product introductions.

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For example, we have offices located in Mexico City, Mexico;

and Tokyo, Japan, regions known for seismic activity, which could be impacted in the event of an earthquake.

and Tokyo, Japan, regions known for seismic activity, which could be impacted in the event of an earthquake and we operate a facility in Ft.

Lauderdale, Florida that is subject to the impact of hurricanes.

A significant natural disaster, such as wildfires, earthquakes or floods, could have a material adverse effect on our business in these locations.

We may not be successful in our artificial intelligence (“AI”) initiatives, which could adversely affect our business, reputation, or financial results.

We are developing AI initiatives, including generative AI, to, among other things, enhance our features for new and existing products, and create greater operation efficiencies for us.

There are significant risks involved in developing and deploying AI, and there can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability.

For example, our AI-related efforts, particularly those related to generative AI, subject us to risks related to harmful content, inaccuracies, bias, discrimination, toxicity, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and sanctions and export controls, among others.

It is also uncertain how various laws will apply to content generated by AI.

We are subject to the risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results.

As a result of the complexity and rapid development of AI, it is the subject of evolving review by various U.S.

governmental and regulatory agencies, and other foreign jurisdictions are applying, or are considering applying, their intellectual property, cybersecurity, data protection and other laws to AI and/or are considering general legal frameworks on AI.

We may not always be able to anticipate how to respond to these frameworks, given that they are still rapidly evolving.

We may also have to expend resources to adjust our use of AI in certain jurisdictions if the legal frameworks on AI are not consistent across jurisdictions.

As such, it is not possible to predict all of the risks related to the use of AI, and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.

Risks Related to our International Operations

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A factor that significantly affects our operating results is the impact of economic conditions on the willingness of our current and potential customers to make capital investments.

Given the general uncertainty regarding global economic conditions and other factors, such as inflation, high interest rates and foreign exchange rate fluctuations, we believe that customers have tried to maintain or improve profitability through cost control and constrained capital spending, which places additional pressure on IT departments to demonstrate acceptable return on investment.

Some of our customers have canceled or delayed, and current and prospective customers may continue to cancel and delay, spending on the development or roll-out of capital and technology projects with us due to economic uncertainty and, consequently, our results of operations have been, and may continue to be, adversely affected.

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Our revenue is likely to decline in such circumstances, which may result in erosion of our profit margins and significant losses.

Moreover, economic conditions worldwide may contribute to slowdowns in the communications and networking industries, as well as to specific segments and markets in which we operate, particularly the telecom sector, resulting in, among other things, reduced demand for our products and services as a result of our customers choosing to refrain from building capital intensive networks;

increased price competition for our products, not only from our competitors, but also as a consequence of customers disposing of unutilized products;

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Continuing turmoil in the geopolitical environment in many parts of the world may continue to put pressure on global economic conditions, which in turn could materially adversely affect our operating results.

For example, following recent border clashes with China, India has enacted bans on the import of some goods manufactured in China.

These bans are expected to expand to include our products that are currently manufactured in China and, as a result, we had to identify new manufacturing locations for such products.

While we have developed plans to relocate our manufacturing sites, the timing required for relocation could impact our ability to sell such products or timely deliver the products, and could result in lower or lost sales in India.

For example, following recent border clashes with China, India has enacted bans on the import of some goods manufactured in China and separately will require certain products be manufactured in India.

These requirements include our products that are currently manufactured outside of India and, as a result, we are working to identify local manufacturing for such products.

While we are developing plans to relocate our manufacturing sites, the timing required for relocation could impact our ability to sell such products or timely deliver the products and could result in lower or lost sales in India.

The need to move the manufacturing of such products could also negatively impact the margin earned on the sale of such products.

If these or other sanctions are enacted, they may limit our ability to provide products and services in an important country or region for our business.

If these restrictions or other sanctions are enacted, they may limit our ability to provide products and services in an important country or region for our business.

The war between Russia and Ukraine, and the sanctions imposed as a result, could materially impact our sales to customers in that region.

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and other European countries have imposed sanctions against Russia in connection with the war.

These sanctions currently prohibit our ability to sell certain products and services to customers in Russia.

These sanctions currently prohibit our ability to sell our hardware products and certain services to customers in Russia.

The sanctions continue to evolve and further changes in the sanctions could further limit our ability to sell products and services to customers in Russia and our ability to collect on outstanding accounts receivable from such customers.

We attempt to mitigate some of the risk in this region by requiring a portion of the purchase orders to be paid in advance.

Since the start of the war, our customers have continued to meet their obligations to pay us.

If we are further limited in our ability to sell products and services to customers in Russia and other countries for an extended period, it could have a material impact on our financial results.

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As a result, political, economic and military conditions in Israel may directly affect our business.

In October 2023, Hamas conducted several terrorist attacks in Israel resulting in ongoing war across the country, forcing the closure of our offices in Israel for several days.

In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities.

Popular uprisings in various countries in the Middle East over the last few years have also affected the political stability of those countries and have led to a decline in the regional security situation.

In October 2023, Hamas conducted several terrorist attacks in Israel resulting in

ongoing war across the country.

In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon, as well as groups in Syria and Iran which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities.

Popular uprisings in various countries in the Middle East over the last few years, including in Syria in December 2024, have also affected the political stability of those countries and have led to a decline in the regional security situation.

Such instability may also lead to deterioration in the political and trade relationships that exist between Israel and these countries.

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Some of our employees in Israel are obliged to perform military reserve duty, which generally accumulates over a period of three years from several days to up to a maximum of 84 days (and up to 108 days, in special circumstances specified under applicable law) and, in certain emergency circumstances, employees may be called to immediate and unlimited active duty.

In response to the Hamas terrorist attacks in October 2023, a number of our employees in Israel have been activated for military duty and we expect that additional employees may also be activated if the war in Israel continues or expands into additional geographic areas.

In response to the Hamas terrorist attacks in October 2023, a number of our employees in Israel have been activated for military duty.

While we have business continuity plans in place to address the military call-ups of our employees, any of these circumstances could have a material adverse effect on our business, results of operations, financial condition, cash flows and prospects.

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In addition, we may not be able to develop international market demand for our products, which could impair our ability to grow our revenue.

In many international markets, long-standing relationships between potential customers and their local suppliers and protective regulations, including local content requirements and approvals, create barriers to entry.

In many international markets, long-standing relationships between potential customers and their local

suppliers and protective regulations, including local content requirements and approvals, create barriers to entry.

We have limited experience marketing, distributing and supporting our products in certain international locations and, to do so, we expect that we will need to develop versions of our products that comply with local standards.

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Increases in tariffs, trade restrictions or taxes on our products, as well as other risks of international operations, could have an adverse impact on our operations.

We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, China and other foreign countries.

We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, Thailand, Israel, China and other foreign countries.

The commerce we conduct in the international marketplace makes us subject to tariffs, trade restrictions and other taxes when the raw materials or components we purchase, and the products we ship, cross international borders.

Import tariffs and/or other mandates recently imposed by the United States have and could in the future lead to retaliatory actions by affected countries, including China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business.

While we have developed plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs.

Import tariffs and/or other mandates recently imposed by the United States, have led to and could in the future lead to retaliatory actions by affected countries, including Canada, Mexico and China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business.

While some of the tariffs have been temporarily stayed, we continue to develop plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs.

In addition, tariff increases may have a similar impact on other suppliers and certain other customers, which could increase the negative impact on our operating results or future cash flows.

Without any mitigation and assuming customers continue to purchase at their current levels, the current tariffs, if enacted, could add approximately $5 million in annual costs which we would work with our customers to offset.

We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.

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Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise misappropriate our products or technology.

Monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States.

rights as fully as in the United States.

The legal systems of many foreign countries do not protect or honor intellectual property rights to the same extent as the legal system of the United States.

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Such cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving, are becoming more sophisticated and can take many forms.

For example, we are aware of a third party gaining unauthorized access to a portion of our network in the first quarter of 2021, although we do not believe they were able to obtain any material internal or customer data or otherwise disrupt our information systems before the intrusion was detected and remediated.

While we believe that we leverage appropriate detection and prevention systems and services and that we focus on continuous improvement based upon the latest attack vectors in the industry, we cannot guarantee that there will never be any information technology system failures, including future breaches of our or our third-party providers' data security measures through a cyberattack, other cyber incident or otherwise, or the theft or loss of laptops, other mobile devices or electronic records used to back up our systems or our third-party providers' systems, which could result in a disclosure of customer, employee, or our information or otherwise disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer

orders or disruptions in the manufacture or shipment of products or delivery of services, any of which could have a material adverse effect on our operating results.

Additionally, the compromise of our information systems, or the information systems of our third party providers and our customers, could lead to unauthorized tampering with our products.

While we believe that we leverage appropriate detection and prevention systems and services and that we focus on continuous improvement based upon the latest attack vectors in the industry, we cannot guarantee that there will never be any information technology system failures, including future breaches of our or our third-party providers’ data security measures through a cyberattack, other cyber incident or otherwise, or the theft or loss of laptops, other mobile devices or electronic records used to back up our systems or our third-party providers’ systems, which could result in a disclosure of customer, employee, or our information or otherwise disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer orders or disruptions in the manufacture or shipment of products or delivery of services, any of which could have a material adverse effect on our operating results.

Additionally, the compromise of our information systems, or the information systems of the U.S.

government, financial markets, financial institutions, our third-party providers or our customers, could disrupt our normal business operations, and in some cases lead to unauthorized tampering with our products.

Unauthorized tampering may result in, among other things, the disruption of our customers’ businesses, errors or defects occurring in the software due to such unauthorized tampering, and our products not operating as expected after such unauthorized tampering.

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Our insurance coverage may be insufficient to cover all losses related to cyberattacks.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

Additionally, proprietary, confidential, and/or sensitive information of the Company could be leaked, disclosed, or revealed as a result of or in connection with the use of generative artificial intelligence technologies.

Risks Related to Regulation

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Under these laws and regulations, we are responsible for obtaining all necessary licenses or other approvals, if required, for exports.

If we were to fail to comply with existing or future export licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and criminal penalties, including fines and incarceration for responsible employees and managers, and the possible loss of export or import privileges.

Similarly, various countries regulate the import of certain encryption technology and have enacted laws that could limit our ability to distribute our products or our customers’ ability to implement our products in those countries.

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We could be adversely affected by regulation of IP networks and commerce in any country where we operate, including the United States.

Such regulations could include matters such as voice over the Internet or using Internet Protocol, encryption technology, and access charges for service providers.

Such regulations could include matters such as VoIP or using Internet Protocol, encryption technology, and access charges for service providers.

The adoption of such regulations could decrease demand for our products, and at the same time increase the cost of selling our products, which could have a material adverse effect on our business and results of operations.

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The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations.

Our Senior Secured Credit Facilities Credit Agreement, as amended, provides $475 million of commitments, comprised of a $400 million term loan (the “2020 Loan Facility”) and a $75 million revolving facility (the “2020 Revolving Credit Facility” and, together with the 2020 Loan Facility, the "2020 Credit Facility").

Our Senior Secured Credit Facilities Credit Agreement, provides $385 million of commitments, comprised of a $350 million term loan and a $35 million revolving facility (the “2024 Credit Facility”).

Terms in the 2024 Credit Facility impose limitations on our ability to, among other things, incur additional indebtedness, create liens, make acquisitions or engage in mergers, enter into transactions with affiliates, dispose of assets, make certain investments and amend or repay certain junior debt.

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In addition, we may not be able to refinance our debt or obtain additional financing on favorable terms, or at all.

In addition, we are required to meet certain financial covenants for financings of this type, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Consolidated Net Leverage Ratio (each as defined in the 2020 Credit Agreement) which are tested on a quarterly basis.

The maximum Consolidated Net Leverage Ratio covenant uses our EBITDA (calculated in accordance with the 2020 Credit Agreement) for the last 12 months (as of the testing date) to determine compliance.

While we were in compliance with the covenants at December 31, 2023, the maximum Consolidated Net Leverage Ratio and the minimum Consolidated Fixed Charge Coverage Ratio we are required to maintain under the 2020 Credit Agreement will decrease and increase, respectively, in future quarters.

As a result, it could impact our ability to continue to satisfy these requirements in future periods.

Our failure to comply with these covenants may result in the declaration of an event of default, which could cause us to be unable to borrow under the credit facility or result in the acceleration of the maturity of indebtedness outstanding under the 2020 Credit Facility at such time.

In addition, we are required to comply with a maximum Consolidated Net Leverage Ratio (as defined in the 2024 Credit Facility) which is tested on a quarterly basis.

The maximum Consolidated Net Leverage Ratio covenant uses our EBITDA (calculated in accordance with the 2024 Credit Facility) for the last 12 months (as of the testing date) to determine compliance.

We were in compliance with this covenant at December 31, 2024.

However, if we should fail to comply with this covenant in future periods, it may result in the declaration of an event of default, which could cause us to be unable to borrow or result in the acceleration of the maturity of indebtedness outstanding under the 2024 Credit Facility at such time.

If we are prevented from borrowing or if we are unable to extend, renew or replace the credit facilities under the 2024 Credit Facility by the maturity dates, on favorable terms, or at all, this could have a material adverse effect on our liquidity and cause our business, operations and financial condition to suffer.

In addition, we may not have sufficient funds available for

repayment or we may not have the ability to borrow or obtain sufficient funds to replace the indebtedness on terms acceptable to us, or at all.

In addition, we may not have sufficient funds available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the indebtedness on terms acceptable to us, or at all.

We cannot be sure that our current cash and available borrowings under our 2024 Credit Facility will be sufficient to meet our future needs.

If we are unable to generate sufficient cash flows in the future, and if availability under our current facility is not sufficient to support our operations, we may need to refinance our debt or obtain additional financing.

We expect to refinance our 2020 Credit Facility in 2024, however, no assurance can be provided that we will refinance our debt or obtain additional financing on favorable terms or at all.

The terms of the Series A Preferred Stock and warrants impose additional challenges on our ability to raise capital.

The terms of our Series A Preferred Stock and our outstanding warrants contain a number of restrictive covenants that may impose significant operating and financial restrictions on us while the Series A Preferred Stock and warrants remain outstanding, unless the restrictions are waived by the consent of at least 66 2 ∕ 3 % of the then-issued and outstanding shares of Series A Preferred Stock.

These restrictions include, but are not limited to, restrictions on our ability to pay dividends or make other distributions or repurchase or redeem our capital stock;

issue additional equity ranking senior or pari passu to the Series A Preferred Stock;

and enter into certain transactions, among other restrictions.

A breach of the covenants or restrictions under the agreements related to the sale of the Series A Preferred Stock and warrants and related agreements governing our indebtedness could result in an event of default under such agreements.

As a result of these restrictions, we may be limited in how we conduct our business, unable to finance our operations through additional debt or equity financings and/or unable to compete effectively or to take advantage of new business opportunities.

Further, while we could potentially receive up to an aggregate of $18.3 million in gross proceeds from the exercise of the outstanding warrants, no assurances can be made that the holders of such warrants will elect to exercise any or all of such warrants and, accordingly, no assurance that we will receive any proceeds from the exercise of the warrants.

We believe the likelihood that the holders will exercise the warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock, which as of the date this filing was below the exercise price of $3.77 for the warrants.

If the trading price for our common stock is less than the exercise price for the warrants, we believe the holders of such warrants will be unlikely to exercise their warrants.

Accordingly, we may not receive cash proceeds with respect to the warrants, and we are restricted in our ability to conduct additional debt or equity financings.

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.

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Goodwill is tested annually for impairment and, along with our intangible assets, is also reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Based on the results of impairment testing for 2021, we determined that the carrying value of our IP Optical Networks segment exceeded its fair value and accordingly, we recorded a goodwill impairment charge of $116.0 million, which had a material impact on both our net loss and loss per share for the year ended December 31, 2021.

Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or intangible assets may not be recoverable include significant underperformance relative to plan or long-term projections, strategic changes in business strategy, significant negative industry or economic trends, significant change in circumstances relative to a large customer, significant decline in our stock price for a sustained period and decline in our market capitalization to below net book value.

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Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud.

If we are unable to maintain effective internal controls, we may not have adequate or timely financial information, and we may be unable to meet our reporting obligations as

a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002.

If we are unable to maintain effective internal controls, we may not have adequate or timely financial information, and we may be unable to meet our reporting obligations as a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002.

This could result in a restatement of our financial statements, the imposition of sanctions, or investigation by regulatory authorities, and could cause investors to lose confidence in our reported financial information.

Any such consequence or other negative effect of our inability to meet our reporting requirements or comply with legal and regulatory requirements, as well as any disclosure of an accounting, reporting or control issue, could adversely affect the trading price of our common stock and our business.

Risks Related to the Ownership of our Common Stock

Risks Related to the Ownership of our Common Stock and Warrants

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.

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The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or agents, which may discourage such lawsuits against us and our directors, officers and agents.

Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action,

we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Our Series A Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our common stock, which could adversely affect our liquidity and financial condition, and may result in the interests of holders of the Series A Preferred Stock differing from holders of our common stock.

The holders of Series A Preferred Stock have the right under the Certificate of Designation to receive a liquidation preference entitling them to be paid out of our assets available for distribution to stockholders before any payment may be made to holders of any other class or series of capital stock junior to the Series A Preferred Stock, subject to the rights of existing and future creditors, an amount equal to the stated value of their shares of Series A Preferred Stock plus all accrued and unpaid dividends.

The holders of the Series A Preferred Stock will be entitled to receive cumulative dividends, at a rate of 9.25% prior to the first anniversary of the Closing Date, 9.75% per annum on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date and 12.00% on or after the second anniversary of the Closing Date and thereafter, and in accordance with the terms of the Certificate of Designation.

The dividends on each share of Series A Preferred Stock are to be paid in cash or in-kind through an increase in the stated value of such share, as set forth in the Certificate of Designation.

We may redeem shares of Series A Preferred Stock on or after March 30, 2024 for cash at the redemption prices per share of Series A Preferred Stock of (i) 103% of the Liquidation Preference (as defined in the Certificate of Designation) if redeemed during the 12-month period beginning on March 30, 2024 to March 30, 2025 and (ii) 102% of the Liquidation Preference if redeemed on March 30, 2025 and thereafter.

We are also required to redeem all shares of Series A Preferred Stock on the Maturity Date (as defined in the Certificate of Designation) at a purchase price per share of Series A Preferred Stock equal to the Mandatory Redemption Price (as defined in the Certificate of Designation), provided that such purchase can be made out of funds legally available therefor.

In addition, upon certain change of control events, holders of shares of Series A Preferred Stock may require us to redeem all or part of such holder’s shares of Series A Preferred Stock at a purchase price per share of Series A Preferred Stock, payable in cash, equal to the Change of Control Purchase Price (as defined in the Certificate of Designation), provided that such purchase can be made out of funds legally available therefor.

These dividend and share redemption obligations could adversely affect our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

Our obligations to the holders of Series A Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

The preferential rights could also result in divergent interests between the holders of our Series A Preferred Stock and holders of shares of our Common Stock.

The existence of the liquidation preference of the Series A Preferred Stock may reduce the value of our common stock.

Our Series A Preferred Stock has a liquidation preference that is required to be paid prior to any payment on our common stock (including the shares underlying our outstanding stock purchase warrants).

The payment of the liquidation preference could result in common stockholders and holders of our warrants not receiving any consideration if we were to liquidate, dissolve or wind up, either voluntarily or involuntarily.

The existence of the liquidation preference may reduce the value of our common stock, make it harder for us to sell shares of our common stock in offerings in the future, or prevent or delay a change of control.

Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

The warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders.

The warrants to purchase an aggregate of 4,858,090 shares of our common stock are immediately exercisable.

The warrants to purchase an aggregate of 4,858,090 shares of our common stock are currently exercisable.

Each such warrant entitles the holder thereof to purchase one share of common stock at a price of $3.77 per whole share, subject to adjustment.

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Our decision to incur debt and issue other securities in future offerings will depend on market conditions and other factors beyond our control.

We cannot predict or estimate the amount, timing or nature

of our future offerings and debt financings.

We cannot predict or estimate the amount, timing or nature of our future offerings and debt financings.

Future offerings could reduce the value of our common stock and dilute the interests of our stockholders.

Risks Related to Ownership of our Series A Preferred Stock and Warrants

Our obligations to pay dividends or make distributions and, upon our liquidation, liquidation payments in respect of the Series A Preferred Stock are subordinate to our obligations to make any principal and interest payments due and owing with respect to our outstanding debt.

Our obligations to pay dividends or make distributions and, upon our liquidation, liquidation payments in respect of our Series A Preferred Stock are subordinate to our obligations to make any principal and interest payments due and owing with respect our outstanding debt.

Accordingly, our outstanding debt has the effect of creating special risks for our Series A Preferred Stockholders that would not be present in a capital structure that did not include such securities.

Holders of our Series A Preferred Stock have limited voting rights.

Holders of Series A Preferred Stock have no voting rights with respect to matters that generally require the approval of voting stockholders.

Holders of Series A Preferred Stock have the right to vote, subject to certain exceptions, with respect to any amendment of our Restated Certificate of Incorporation, as amended, (including the Certificate of Designation for the Series A Preferred Stock), any issue of Capital Stock (as defined in the Certificate of Designation), any increase or decrease of the authorized number of shares of Series A Preferred Stock and any merger or consolidation, and are not entitled to vote on any other matter except to the extent required under the General Corporation Law of the State of Delaware.

Holders of our Series A Preferred Stock bear dividend risk.

We may not have sufficient funds to pay dividends on the Series A Preferred Stock.

In addition, contractual restrictions may prevent us from declaring or paying dividends.

Our ability to declare and pay dividends on the Series A Preferred Stock depends on many factors, including the following:

• our financial condition, including the amount of cash we have on hand;

• the amount of cash, if any, generated by our operations and financing activities;

• our anticipated financing needs, including the amounts needed to service our indebtedness or other obligations;

• the degree to which we decide to reinvest any cash generated by our operations or financing activities to fund our future operations;

• the ability of our subsidiaries to distribute funds to us;

• regulatory restrictions on our ability to pay dividends, including under the Delaware General Corporation Law;

• contractual restrictions on our ability to pay dividends.

Holders of Series A Preferred Stock may receive less than the full amount of accrued dividends on their Series A Preferred Stock.

In addition, if we fail to declare and pay accrued dividends on the Series A Preferred Stock in full, then the value or trading price, if any, of the Series A Preferred Stock will likely decline.

If the terms of our indebtedness restrict or prohibit us from paying dividends, then we may seek to refinance that indebtedness or seek a waiver that would permit the payment of dividends.

However, we may be unable or may choose not to refinance the indebtedness or obtain such a waiver.

Under the DGCL, we may declare dividends on the Series A Preferred Stock only out of our “surplus” (which generally means our total assets less total liabilities, each measured at their fair market values, less statutory capital), or, if there is no surplus, out of our net profits for the current or the immediately preceding fiscal year.

We may not have sufficient surplus or net profits to declare and pay dividends on the Series A Preferred Stock.

If we fail to declare and pay full dividends on the Series A Preferred Stock, then we will be prohibited from paying dividends on our common stock and any other junior securities, subject to limited exceptions.

A reduction or elimination of dividends on our common stock may cause the trading price of our common stock to decline, which, in turn, will likely depress the value or trading price, if any, of the Series A Preferred Stock.

We may issue preferred stock in the future that ranks senior to or equally with the Series A Preferred Stock with respect to dividends and liquidation rights, which may adversely affect the rights of holders of the Series A Preferred Stock.

With the consent of the holders of at least two-thirds of the outstanding Series A Preferred Stock (and any other voting stock with similar voting rights), we may authorize and issue preferred stock that ranks senior to or equally with the Series A

Preferred Stock with respect to the payment of dividends or the distribution of assets upon our liquidation, dissolution or winding up.

If we issue any such preferred stock in the future, the rights of holders of the Series A Preferred Stock will be diluted and the value or trading price, if any, of the Series A Preferred Stock may decline.

The warrants are speculative in nature and may not have any value.

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In the event that the price of our common stock does not exceed the exercise price of the warrants, or if the price of our common stock falls below the exercise price of the warrants after a holder exercises its option, the warrants will not have any value and the holders of our warrants may incur substantial losses.

An active trading market for the Series A Preferred Stock and warrants does not exist and may not develop.

The Series A Preferred Stock and warrants have no established trading market and are not listed on any securities exchange, and we do not intend to list the Series A Preferred Stock and warrants on any securities exchange.

We cannot assure you that an active trading market in the Series A Preferred Stock or the warrants will develop and, even if it develops, we cannot assure you that it will last.

In either case, the trading prices of the Series A Preferred Stock and warrants could be adversely affected and holders’ ability to transfer shares of Series A Preferred Stock or warrants will be limited.

An active trading market for the warrants does not exist and may not develop.

The warrants have no established trading market and are not listed on any securities exchange, and we do not intend to list the warrants on any securities exchange.

We cannot assure you that an active trading market in the warrants will develop and, even if it develops, we cannot assure you that it will last.

In either case, the trading prices of the warrants could be adversely affected and holders’ ability to transfer the warrants will be limited.

General Risk Factors

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From time to time, we are subject to litigation regarding intellectual property rights or other claims and have indemnification clauses in most of our customer contracts that may require us to indemnify customers against similar claims.

We have also been named as a defendant in securities class action and stockholder derivative lawsuits and have also been subject to investigations by the government.

We have also previously been named as a defendant in securities class action and stockholder derivative lawsuits and have also been subject to investigations by the government.

For more information on currently pending litigation, please see “Part I, Item 3.

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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