What changed in this filing

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Item 1A. Risk Factors

2024-02-28 compared with 2023-03-31 · 179 added, 101 removed, 439 unchanged (39% of the section changed)

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Certain important factors may have a material adverse effect on our business prospects, financial condition and results of operations, and they should be carefully considered.

Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors in its entirety in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the Securities and Exchange Commission (“SEC”).

These are factors which, individually or in the aggregate, we think could cause our actual results to differ significantly from anticipated or historical results.

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• 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.

• The market for some of our products depends on the availability and demand for other vendors' products.

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

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• We rely on single or limited sources for supply of some components of our products.

• Failure to correctly estimate future requirements for end-of-life products purchased from third parties could harm our operating results or business.

• Failure to correctly estimate future requirements for end-of-production products purchased from third parties could harm our operating results or business.

• Products may have errors or defects that we find only after full deployment.

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

• Combining ECI, or future companies, may be more difficult, costly or time-consuming than expected, and anticipated benefits and cost savings may not be realized.

• Future investments, mergers or acquisitions could be difficult to integrate, disrupt our business, dilute shareholder value and harm our financial condition.

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Risks Related to Our International Operations

• Worldwide efforts to contain capital spending and global economic conditions and uncertainties may have a material adverse impact on our business.

• The military conflict between Russia and Ukraine could materially impact our sales to customers in that region.

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

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

• Conditions in Israel may materially and adversely affect our business.

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• Data privacy issues, including evolving laws, regulations and associated compliance, may adversely impact our business and financial results.

• Failure to comply with the Foreign Corrupt Practices Act ("FCPA") or the U.K.

Bribery Act ("UKBA") could subject us to significant civil or criminal penalties.

• Failure to comply with the Foreign Corrupt Practices Act (“FCPA”), the U.K.

Bribery Act ("UKBA") and similar regulations could subject us to significant civil or criminal penalties.

• Governmental export and import controls could subject us to liability, require a license from the U.S.

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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.

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• 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.

General Risk Factors

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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 pending merger between Rogers Communications Inc.

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

and Shaw Communications Inc.

(announced in March 2021), the acquisition of certain Lumen Technologies assets by Brightspeed (2022), the merger between T-Mobile US, Inc.

(April 2023), the acquisition of certain Lumen Technologies assets by Brightspeed (2022), the merger between T-Mobile US, Inc.

and Sprint Corporation (2020) and the acquisition of Blue Face Ltd.

by Comcast Corporation (2020).

Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the combination of ADTRAN, Inc.

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

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.

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

by Cisco Systems, Inc.

(2021) and the closing of a strategic partnership between RingCentral, Inc.

and Avaya Holdings Corp.

We expect this trend to continue.

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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.

The market for some of our products depends on the availability and demand for other vendors' products.

Some of our products, particularly those addressing the Unified Communications market, are designed to function with other vendors' products.

In these cases, demand for our products is dependent upon the availability, demand for, and sales of the other vendors' products, as well as the degree to which our products successfully interoperate with the other vendors' products and add value to the solution being provided to the customer.

If the other vendors change the design of their products, delay the issuance of new releases, fail to adequately market their products, or are otherwise unsuccessful in building a market for their products, the demand for our products will be adversely affected, which could adversely affect our business, results of operations and financial condition.

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 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 and Microsoft, 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 a third-party manufacturer involves a number of risks, including a lack of control over the manufacturing process, inventory management and the potential absence or unavailability of adequate capacity.

These risks are amplified by the current supply chain disruptions being experienced globally.

As we do not have the internal manufacturing capabilities, any difficulties or failures to perform by our contract manufacturers could cause delays in customer product shipments, which could negatively affect our relationships with customers and result in delayed revenue.

These risks are amplified by any global supply chain disruptions.

As we do not have internal manufacturing capabilities, any difficulties or failures to perform by our contract manufacturers could cause delays in customer product shipments, which could negatively affect our relationships with customers and result in delayed revenue.

In addition, any future changes to or consolidations of our current contract manufacturers could lead to material shortages or delays in the supply of our products.

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Moreover, we have agreed to compensate our contract manufacturers in the event of termination or cancellation of orders, discontinuance of product or excess material.

We generally do not have long-term supply contracts with our component suppliers and they are not required to supply us with components for any specified periods, in any specified quantities or at any set price, except as may be specified in a particular

purchase order.

In the event of a disruption or delay in supply or our inability to obtain components, we may not be able to develop an alternate source in a timely manner or at favorable prices, or at all.

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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.

Our customer contracts also generally allow customers to reschedule delivery dates or cancel orders within certain time frames before shipment without penalty and outside those times frames with a penalty.

Our customer contracts may allow customers to reschedule delivery dates or cancel orders within certain time frames before shipment without penalty and outside those times frames with a penalty.

Because of these and other factors, there are risks of excess or inadequate inventory that could negatively affect our expenses and results of operations.

If we are unable to correctly estimate future requirements for products and components that we purchase from our third-party vendors that have reached the end of their life cycles, it could harm our operating results or business.

Some of the products and components that we purchase from our third-party vendors have reached the end of their life cycles.

If we are unable to correctly estimate future requirements for products and components that we purchase from our third-party vendors that have reached the end of their production cycle, it could harm our operating results or business.

Some of the products and components that we purchase from our third-party vendors have reached the end of their new production availability.

It may be difficult for us to maintain appropriate levels of the discontinued products or components to adequately ensure that we do not have a shortage or surplus of inventory of these products.

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Further, such government sales 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 contracts with government agencies in the U.S.

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

and other foreign countries.

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

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

Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in a government refusing to continue buying our products and services, a reduction of revenue or fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could materially adversely impact our operating results.

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For example, the U.S.

Department of Defense ("DOD") has issued specific requirements for IP networking

products for features and interoperability.

Department of Defense ("DOD") has issued specific requirements for IP networking products for features and interoperability.

In order for our products to be used to connect to the DOD network, that product must pass a series of significant tests and be certified by the Joint Interoperability Test Command (“JITC”).

While certain of our products are certified by JITC, if we are unable to obtain future JITC certification as needed, our DOD sales and results of operations, may suffer.

Combining ECI, or future companies, may be more difficult, costly or time-consuming than expected and the anticipated benefits and cost savings of the ECI Acquisition, or future mergers may not be realized.

We have a history of significant mergers and acquisitions, including, most recently, the ECI Acquisition.

The success of the ECI Acquisition, and any future merger or acquisition, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine and integrate the businesses.

It is possible that the integration process could result in the loss of key employees, higher than expected costs, diversion of management attention, the disruption of our ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits and cost savings of the ECI Acquisition or any future merger or acquisition.

We have incurred and will incur transaction fees, including legal, regulatory and other costs associated with closing the ECI Acquisition as well as expenses relating to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs.

Additional unanticipated costs may be incurred in the ECI Acquisition and the integration of the two companies’ businesses, or in future acquisitions.

While we expect that the elimination of duplicative operating costs as well as the realization of other efficiencies related to the integration of the businesses should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term or at all.

As part of the integration process, we may also attempt to divest certain assets of the combined company, which may not be possible on favorable terms, or at all, or if successful, may change the profile of the combined company.

If we experience difficulties with the integration process, the anticipated benefits of the ECI Acquisition, or any future acquisition, may not be realized fully or at all, or may take longer to realize than anticipated.

The actual cost savings of the ECI Acquisition could also be less than expected.

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.

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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None of our officers or key employees is bound by an employment agreement for any specific term.

The loss of the services of any of our executive officers or key employees could

delay the development and introduction of, and negatively impact our ability to sell, our products and achieve our business objectives.

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

The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause disruptions to the economies of the United States and other countries.

The loss of the services of any of our executive officers or key employees could delay the development and introduction of, and negatively impact our ability to sell, our products and achieve our business objectives.

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

The ongoing wars in Israel and Ukraine, as well as the continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause disruptions to the economies of the United States and other countries.

Events such as work stoppages or widespread blackouts could have similar negative impacts.

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Natural catastrophic events, such as earthquakes, fires, floods, tornadoes, or pandemics (such as the COVID-19 pandemic) may also affect our or our customers' operations.

For example, we have offices located in the San Jose area of Northern California;

Mexico City, Mexico;

and Tokyo, Japan, regions known for seismic activity.

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.

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

Risks Related to our International Operations

Worldwide efforts to contain capital spending and global economic conditions and uncertainties in the geopolitical environment have been and may continue to be materially adverse to our business.

Worldwide economic conditions and uncertainties in the geopolitical environment have been and may continue to be materially adverse to our business.

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, rising 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.

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

While the current import bans do not include our products, if India expands the bans to include the products we sell in India that are currently manufactured in China, we may be required to find new manufacturing locations for such products.

While we have developed plans to relocate our manufacturing sites if needed, the timing required for relocation, or if we are not successful in relocating, 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 manufacturing of such products could also negatively impact the margin earned on the sale of such products.

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.

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.

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

In 2022, approximately 7 % of our sales were to customers in Eastern European countries, including the Ukraine, Russia, and surrounding countries.

In February 2022, Russia commenced military action in Ukraine, and the uncertainty resulting from this military action and the threat for expansion of the conflict has resulted in some of our customers delaying purchases from us.

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

In 2023, approximately 6 % of our sales were to customers in Eastern European countries, including Ukraine, Russia, and the surrounding countries.

In February 2022, Russia commenced a military action in Ukraine.

The uncertainty and the threat of an expansion of the war has resulted in some of our customers delaying purchases from us.

Further, the U.S.

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

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

The sanctions continue to evolve and further changes in the current 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.

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.

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 conflict, 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 Russia and other countries for an extended period, it could have a material impact on our financial results.

Conditions in Israel may materially and adversely affect the Company’s business.

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.

Conditions in Israel may materially and adversely affect our business.

We have a significant number of employees located in Israel.

As a result, political, economic and military conditions in Israel may directly affect the Company’s business.

In early 2023 there have been a number of changes proposed to the political system in Israel by the current government which, if implemented as planned, could lead to large-scale protests and additional uncertainty, negatively impacting the operating environment in Israel.

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

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

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.

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

Any armed conflicts, terrorist activities or political instability involving Israel or other countries in the region could adversely affect our business, results of operations, financial condition, cash flows and prospects.

Although the Israeli Government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot ensure shareholders that this coverage will be maintained or will be adequate in the event we submit a claim.

The ongoing war against Hamas and any additional conflicts, terrorist activities or political instability involving Israel or other countries in the region could adversely affect our business, results of operations, financial condition, cash flows and prospects.

Although the Israeli Government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot ensure stockholders that this coverage will be maintained or will be adequate in the event we submit a claim.

A number of countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continue or increase.

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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 increases in terrorist activity, there have been periods of significant call-ups of military reservists and it is possible that there will be similar large-scale military reserve duty call-ups in the future.

Any of these circumstances could have a material adverse effect on our business, results of operations, financial condition, cash flows and prospects.

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.

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.

We may face risks associated with our international operations that could impair our ability to grow our international revenue.

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There is no guarantee that our financial results will not be adversely affected by currency exchange rate fluctuations.

Our use and reliance upon research and development resources in global locations may expose us to unanticipated costs and/or liabilities.

We have research and development offices in various global locations, including the United States, Canada, India, Israel and China.

Our use and reliance upon R&D resources in global locations may expose us to unanticipated costs and/or liabilities.

We have R&D offices in various global locations, including the United States, Canada, India and Israel.

Our development efforts and other operations in these locations could involve significant risks, including, among others, difficulty hiring and retaining appropriate engineering and management resources due to intense competition for such resources and resulting wage inflation;

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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.

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.

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and around the world, some of which place restrictions on our ability to process personal data across our business.

For example, the General Data Protection Regulation (the “GDPR”) has caused more stringent data protection requirements in the European Union.

The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.

For example, the General Data Protection Regulation has caused more stringent data protection requirements in the U.K.

and the European Union, which has adopted similar regulations.

These privacy laws impose onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework.

It also requires data controllers to be transparent and disclose to data subjects how their personal information is to be used;

imposes limitations

on retention of personal data;

imposes limitations on retention of personal data;

introduces mandatory data breach notification requirements;

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We are subject to the supervision of local data protection authorities in those E.U.

jurisdictions where we are established or otherwise subject to the GDPR.

Certain breaches of the GDPR requirements could result in substantial fines.

In addition to the foregoing, a breach of the GDPR could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well potential civil claims including class action type litigation where individuals suffered harm.

jurisdictions where we are established or otherwise subject to these privacy regulations.

Certain breaches of the privacy requirements could result in substantial fines.

In addition to the foregoing, a breach of privacy regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well potential civil claims including class action type litigation where individuals suffered harm.

Similarly, California and other states have enacted privacy laws that purport to create individual privacy rights for consumers and increase the privacy and security obligations of entities handling certain personal data.

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Any liability from our failure to comply with the requirements of these laws could adversely affect our financial condition.

We have invested, and continue to invest, human and technology resources in our GDPR compliance efforts and our data privacy compliance efforts.

We have invested, and continue to invest, human and technology resources in our privacy regulation compliance efforts and our data privacy compliance efforts.

These compliance efforts may be time-intensive and costly.

Despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to protect the privacy of third party data or comply with the applicable regimes.

Failure to comply with the FCPA or the UKBA could subject us to significant civil or criminal penalties.

Failure to comply with the FCPA, the UKBA and similar regulations could subject us to significant civil or criminal penalties.

We earn a significant portion of our total revenue from international sales generated through our foreign direct and indirect operations.

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The telecommunications industry is highly regulated and our business and financial condition could be adversely affected by changes in the regulations relating to the telecommunications industry.

Currently, there are few laws or regulations that apply

directly to access to or delivery of voice services on IP networks.

Currently, there are few laws or regulations that apply directly to access to or delivery of voice services on IP networks.

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

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If we are prevented from borrowing or if we are unable to extend, renew or replace the credit facilities under the 2020 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 2020 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 may not be able to refinance our debt or obtain additional financing on favorable terms or at all.

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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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.

Based on the results of our 2019 annual impairment test, we determined that our carrying value for goodwill exceeded our fair value and accordingly, we recorded a goodwill impairment charge of $164.3 million, which had a material impact on both our net loss and loss per share for the year ended December 31, 2019.

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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We have committed and will be required to continue to commit significant financial and managerial resources in order to comply with these requirements.

Further, we are required to integrate ECI and other acquired businesses into our system of disclosure controls and procedures and internal control over financial reporting.

As may be the case with other companies we acquire, prior to the ECI Acquisition, ECI was not required to implement or maintain the disclosure controls and procedures or internal control over financial reporting that are required of public companies.

Further, we are required to integrate any acquired businesses into our system of disclosure controls and procedures and internal control over financial reporting.

Such companies may not have previously been required to implement or maintain the disclosure controls and procedures or internal control over financial reporting that are required of U.S.

public companies.

We cannot provide assurance as to the effectiveness of those integrations.

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.

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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.

Provisions of the Company’s Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management, including, generally, provisions that:

Provisions of our Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management, including, generally, provisions that:

• do not provide cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

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• only allow stockholder action to be taken at an annual or special meeting;

• require a vote of holders of at least 66 2/3% of the voting power of our outstanding voting stock entitled to vote thereon to amend or repeal certain provisions of the Company’s Certificate of Incorporation or its By-laws;

• require a vote of holders of at least 66 2/3% of the voting power of our outstanding voting stock entitled to vote thereon to amend or repeal certain provisions of our Certificate of Incorporation or its By-laws;

• limit the ability of stockholders to call a special meeting;

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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.

Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) is, to the fullest extent permitted by law, the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of the Company to the Company or the Company's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim arising pursuant to any provision of the Company’s Certificate of Incorporation or the Company’s By-laws or governed by the internal affairs doctrine.

Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) is, to the fullest extent permitted by law, the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of ours, to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim arising pursuant to any provision of our Certificate of Incorporation or our By-laws or governed by the internal affairs doctrine.

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.

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.

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.

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.

To the extent such warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the then existing holders of common stock and increase the number of shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock.

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

In the future, we may increase our capital resources by entering into debt or debt-like financing or issuing debt or equity securities, which could include issuances of senior notes, subordinated notes or preferred stock.

In the event of our liquidation, our lenders and holders of our debt or preferred securities would receive a distribution of our available assets before distributions to the holders of our common stock.

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.

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.

The outstanding warrants to purchase shares of our common stock will have value only if price of our common stock exceeds the exercise price of the warrants.

There can be no assurance that the market price of our common stock will equal or exceed the exercise price of the warrants.

In the event that the price of our common stock does not exceed the exercise price of the warrants, the warrants will not have any value.

Holders of the warrants may exercise their right to acquire the shares of common stock and pay an exercise price of $3.77 per share prior to four years from the date of issuance, after which date any unexercised warrants will expire and have no further value.

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

Until holders of the warrants acquire shares of our common stock upon exercise of the warrants, the holders will have no rights with respect to the common stock underlying the warrants.

Upon exercise of the warrants, the holder will be entitled to exercise the rights of a common stockholder as to our common stock only as to matters for which the record date occurs after the exercise.

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

Volatility in the trading price of our common stock could significantly affect the value or trading price, if any, of the warrants.

This could result in significant volatility in the value or trading price, if any, of the warrants.

The warrants will have value only if the price of our common stock exceeds the exercise price of the warrant.

There can be no assurance that the market price of our common stock will equal or exceed the exercise price of the warrants.

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.

General Risk Factors

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The Stockholders Agreement sets forth certain arrangements and contains various provisions relating to board size, board representation, standstill restrictions and transfer restrictions as further described therein, including the right of the JPM Stockholders and Swarth to each designate up to three directors for nomination to our nine-member board of directors, subject to the JPM Stockholders and Swarth maintaining certain levels of beneficial ownership of our common stock.

Therefore, the JPM Stockholders and Swarth will be able to exert significant influence over

matters requiring board approval, and our stockholders other than the JPM Stockholders and Swarth will have limited or no ability to influence the outcome of certain key transactions.

Therefore, the JPM Stockholders and Swarth will be able to exert significant influence over matters requiring board approval, and our stockholders other than the JPM Stockholders and Swarth will have limited or no ability to influence the outcome of certain key transactions.

The interests of the parties to the Stockholders Agreement may differ from those of other holders of our common stock.

Additionally, the Company is party to a Second Amended and Restated Registration Rights Agreement, dated as of August 12, 2022, with the JPM Stockholders, Swarth and certain other stockholders (the "Registration Rights Agreement").

Additionally, we are party to a Second Amended and Restated Registration Rights Agreement, dated as of August 12, 2022, with the JPM Stockholders, Swarth and certain other stockholders.

The JPM Stockholders and Swarth collectively own approximately 46% of our common stock as of December 31, 2023, and may decide to sell their shares in bulk or from time to time, except as provided under the Stockholders Agreement, which timing we cannot control.

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Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if such a transaction would be beneficial to our stockholders.

Some provisions in our amended and restated certificate of incorporation, our amended and restated by-laws, as well as provisions of Delaware law, may discourage, delay or prevent a merger or acquisition that may be deemed undesirable by our Board of Directors but that a stockholder may consider favorable.

Some provisions in our Certificate of Incorporation, our By-Laws, as well as provisions of Delaware law, may discourage, delay or prevent a merger or acquisition that may be deemed undesirable by our Board of Directors but that a stockholder may consider favorable.

These include provisions, among others,

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As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.

These provisions of our amended and restated certificate of incorporation, our amended and restated by-laws or Delaware law could have the effect of delaying or deterring a change in control that some stockholders may consider beneficial and therefore could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

Unresolved Staff Comments

These provisions of our Certificate of Incorporation, our By-Laws or Delaware law could have the effect of delaying or deterring a change in control that some stockholders may consider beneficial and therefore could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

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