What changed in this filing

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Item 1A. Risk Factors

2026-02-26 compared with 2025-02-27 · 57 added, 49 removed, 518 unchanged (17% of the section changed)

32 unchanged sentences

● 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.

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

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

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

● The increasing use of AI tools, both internally and by third parties, creates risks of potential financial and reputational harm.

Risks Related to Regulation

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Ltd., Nokia Corporation, Ciena Corporation and Cisco Systems, Inc., to a market with competitors that are characterized by network virtualization, migration to the cloud, and open interfaces.

We believe this shift creates opportunities for us, as well as our direct competitors in telecommunications and networking.

The market is also seeing the growing use of AI in many areas of the network.

We believe these shifts create opportunities for us, as well as our direct competitors in telecommunications and networking.

The shift also creates opportunities for new entrants, including some that may currently be our strategic partners, that could become competitors in the industry.

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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 proposed acquisition of Frontier Communications by Verizon (2024), 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 Cox Communications by Charter Communications (2025), the recently completed acquisition of Frontier Communications by Verizon (2026) and the acquisition of Lumen’s Mass Markets Fiber business by AT&T, the merger between Rogers Communications Inc.

and Shaw Communications 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 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.

by Cisco Systems, Inc.

(April 2023), and the acquisition of certain Lumen Technologies assets by Brightspeed (2022).

Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the acquisition by Alianza of the Metaswitch business held by Microsoft (2024), the acquisition of Infinera by Nokia (2025), the acquisition of Juniper Networks by Hewlett Packard Enterprises (2025), and the combination of ADTRAN, Inc.

and ADVA (2022).

We expect this trend to continue.

Consolidation among our customers may cause delays or reductions in capital expenditure plans by such customers and/or increased competitive pricing pressures as the number of available customers declines and the relative bargaining power of customers increases in relation to suppliers.

Any of these factors could materially adversely affect our business.

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.

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We spend a significant amount of time, money and resources developing new technology, products and solutions to help keep up with rapid technology and market changes.

Our strategic plan, includes a continued shift in our investments from mature technologies that previously generated significant revenue for us toward certain networking technologies.

Our strategic plan includes a continued shift in our investments from mature technologies that previously generated significant revenue for us toward certain networking technologies and the use of AI to assist in network management.

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

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.

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.

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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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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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 any global supply chain disruptions.

These risks are amplified by any global supply chain disruptions, including, as a result of tariffs.

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.

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If we or our contract manufacturers underestimate our requirements, we may not have an adequate supply, which could interrupt manufacturing of our products and result in delays in shipments and revenue.

The imposition of tariffs on components or the countries where our contract manufacturers are located could also result in increased costs that we may not be able to pass on, partially or in full, to our customers.

If any of our sole or limited source suppliers experience capacity constraints, work stoppages or other reductions or disruptions in output, it may not be able to meet, or may choose not to meet, our delivery schedules.

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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.

While we regularly monitor our inventory of supplies, a failure to find acceptable alternative sources could hurt our ability to deliver high-quality products to our customers and negatively affect our operating margins.

While we regularly monitor our inventory

of supplies, a failure to find acceptable alternative sources could hurt our ability to deliver high-quality products to our customers and negatively affect our operating margins.

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

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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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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.

Factors that could impact federal government spending on our products and services include a significant decline in, or reapportioning of, spending by the federal government customers, changes, delays or cancellations of government programs or requirements, the adoption of new laws or regulations, government shutdowns or other delays in the government budget and/or appropriations process, changes in the political climate and general economic conditions.

The loss or significant curtailment of any government contracts or subcontracts, whether due to our performance or due to interruptions or changes in governmental funding, could have a material adverse effect on our business, results of operations and financial condition.

Factors that could impact federal government spending on our products and services include a significant decline in, or reapportioning of, spending by the federal government customers, changes, delays or cancellations of government programs or requirements, the adoption of new laws or regulations, new or prolonged government shutdowns or other delays in the government budget and/or appropriations process, changes in the political climate and general economic conditions.

The loss or significant curtailment of any government contracts or subcontracts, whether due to our performance or due to interruptions or

changes in governmental funding, could have a material adverse effect on our business, results of operations and financial condition.

Further, sales to government customers may require specific testing efforts or impose significant compliance or certification obligations.

For example, the U.S.

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.

While certain of our products are have received the required certifications, if we are unable to obtain future certification as needed, our U.S.

federal sales and results of operations may suffer.

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.

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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.

In addition, our ability to attract and retain key employees could be adversely impacted if we do not have a sufficient number of shares available under the Amended and Restated 2019 Stock Incentive Plan, as amended, to issue to our employees.

In addition, our ability to attract and retain key employees could be adversely impacted if we do not have a sufficient number of shares available under the 2025 Stock Incentive Plan to issue to our employees.

We may not be able to locate suitable employees for any key employee who leaves or offer employment to potential replacements on reasonable terms.

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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.

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

The ongoing war in Ukraine and military action in Israel, 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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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 we operate a facility in Ft.

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

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

1 unchanged sentence

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.

We are developing AI solutions, including generative AI, such as our Acumen AIOps and Automation platform, 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.

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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.

In addition, if our competitors use AI tools to optimize operations and we fail to utilize AI tools in a comparable manner, we may be competitively disadvantaged.

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

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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.

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 to demonstrate acceptable return on investment.

Given the general uncertainty regarding global economic conditions and other factors, such as tariffs, trade barriers, 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 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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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 and separately will require certain products be manufactured in India.

For example, following 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.

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.

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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.

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.

Popular uprisings in various countries in the Middle East over the last few years, including in Iran in January 2026 and 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.

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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● any need to adapt and localize our products for specific countries;

● tariffs and other trade barriers;

● our ability to effectively price our products in competitive international markets;

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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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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 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.

Import tariffs and/or other mandates recently imposed or threatened 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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dollar could increase the cost of local operating expenses and procurement of raw materials from sources outside the United States.

Therefore, changes in the value of the U.S.

Therefore, while we do engage in some currency hedging to reduce potential risks, changes in the value of the U.S.

dollar against other currencies will affect our revenue, income from operations, net income and the value of balance sheet items originally denominated in other currencies.

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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.

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.

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.

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 have previously experienced information technology system failures and cannot guarantee that there will not be additional incidents in the future, 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.

For example, in early September 2025, we became aware that unauthorized persons, reportedly associated with a nation-state actor, had gained access to our IT network.

We promptly initiated our incident response plan and began an investigation, containment and remediation effort using multiple third-party cybersecurity experts, including federal law enforcement.

While we are not aware of evidence indicating that the threat actor accessed or exfiltrated any material information, several customer files saved outside of the main network do appear to have been accessed by the threat actor and those customers have been notified by us.

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

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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.

The increasing use of AI tools, both internally and by third parties, creates risks of potential financial and reputational harm.

A growing number of threat actors are utilizing AI tools that could automate and enhance cybersecurity attacks against us.

We utilize software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect and counteract, which may pose significant risks to our data security and systems.

Such future cybersecurity attacks, if successful, could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm.

If we, or other third parties we conduct business with, experience an actual or perceived breach of privacy or security incident due to the use of AI, we may be adversely impacted, lose confidential information, and incur harm to our reputation and the public perception of the effectiveness of our security measures.

In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us.

The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.

Risks Related to Regulation

Risks associated with data privacy issues, including evolving laws, regulations and associated compliance efforts, may adversely impact our business and financial results.

Legislation in various countries around the world with regard to cybersecurity, privacy and data protection is rapidly expanding and creating a complex compliance environment.

Legislation in various countries around the world with regard to cybersecurity, privacy, use of AI and data protection is rapidly expanding and creating a complex compliance environment.

We are subject to many privacy and data protection laws and regulations in the U.S.

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These laws may increase our compliance costs and potential liability.

Many similar laws have been proposed at the federal level and in the other states.

Many similar laws have been proposed at the federal level and in other states.

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

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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