What changed in this filing

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Item 1A. Risk Factors

2023-03-08 compared with 2022-03-04 · 160 added, 146 removed, 350 unchanged (47% of the section changed)

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Because there is no way to determine in advance whether, or to what extent, any present uncertainty will ultimately impact our business, you should give equal weight to each of the following:

Risks Relating to Economic Conditions and Global Events

General economic factors beyond our control could adversely affect our business and results of operations.

These factors include, but are not limited to, supply chain disruptions, labor shortages, wage pressures, geo-political matters and conflicts, rising inflation and potential economic slowdown or recession, as well as increases in costs including fuel and energy costs, foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.

Additionally, the invasion of Ukraine by Russia has escalated tensions among the United States, the North Atlantic Treaty Organization ("NATO") and Russia.

Such invasion, ongoing military conflict, resulting sanctions and related countermeasures by NATO states, the United States and other countries could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, and supply chain interruptions.

Global markets continued to face threats and uncertain economic and financial market conditions that may also adversely affect the financial condition of our customers, suppliers and other business partners.

Any significant decrease in customers' purchases of our products or our inability to collect accounts receivable resulting from an adverse impact of the global markets on customers' financial condition could have a material adverse effect on our business, financial condition and results of operations.

Additionally, disruptions in financial markets could reduce our access to debt capital markets, negatively affecting our ability to implement our business strategy.

Risks Relating to the COVID-19 Pandemic

The global spread of COVID-19 has been and continues to be a complex and rapidly-evolving situation, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of gatherings, closures of or occupancy or other operating limitations on ports, work facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs.

The COVID-19 pandemic and its consequences have and will continue to impact our business, operations, and financial results.

The COVID-19 pandemic and its consequences, including related measures to curtail its spread, have and will continue to impact our business, operations, and financial results.

The extent to which the COVID-19 pandemic impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the COVID-19 pandemic (including the location and extent of resurgences of the virus, particularly in light of new variants, and the availability of effective treatments or vaccines);

and the negative impact the COVID-19 pandemic has on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending.

Because the severity, magnitude and duration of the COVID-19 pandemic are uncertain, rapidly changing, and difficult to predict, the pandemic's impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategy and initiatives, remains uncertain.

As the COVID-19 pandemic continues, the full extent of this outbreak and the related governmental, business and travel restrictions in order to contain the COVID-19 pandemic are continuing to evolve globally.

Our COVID-19 task force, which includes a cross-functional group of senior-level executives, continues to manage and respond to the ever-changing health and safety requirements across the globe and communicate our responses and recommended course of action to our global factory and office leaders.

In addition, we continue to maintain safety measures for all our employees across the globe as pandemic conditions require, including implementing work-from-home arrangements, restricting travel except where essential and approved in advance, frequent office and factory sanitation, temperature scans upon entry, hand sanitizer stations located throughout our facilities and offices, mask wearing, social distancing measures in gathering places and restricting visitor access.

All factories are up to or near labor capacity as of the issuance of this report.

Further, we continue to monitor and follow suggested guidelines by the Centers for Disease Control and Prevention, the World Health Organization, and local governmental orders and recommendations.

The continued safety and welfare of our employees will remain at the forefront of our decision-making.

We anticipate that these actions and the global health crisis caused by the COVID-19 pandemic will continue to negatively impact business activity across the globe, including our business.

We expect our sales demand to be negatively impacted into, at least, the first half of 2022 given the global reach and economic impact of the COVID-19 pandemic and the various quarantine and social distancing measures put in place to contain the spread of the COVID-19 pandemic.

A closure of one of our factories for a sustained period of time would, in the short run, impact our ability to meet customer demand and would negatively impact our results.

We have also seen disruptions in our supply chain, due to difficulty in obtaining ICs and substantial delays in the transportation and the onloading and offloading of our product due to significant congestion at ports throughout the world.

This, in turn, causes significant congestion in other downstream transportation, such as via trucks and rail.

As such, these congestions have caused and continue to cause difficulty and delays in our ability to fulfill customer orders and have resulted in increased logistics costs.

We will continue to actively monitor these situations and may take further actions altering our business operations as necessary or as required by federal, state, or local authorities.

The potential effects of any such alterations or modifications may have a material adverse impact on our business during 2022.

Even after the COVID-19 pandemic subsides or effective treatments or vaccines become available, our business, markets, growth prospects and business model could be materially impacted or altered.

Because the severity, magnitude and duration of the COVID-19 pandemic, including any new variants, are uncertain, rapidly changing, and difficult to predict, the pandemic's impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategy and initiatives, remains uncertain.

We anticipate that the global health crisis caused by the COVID-19 pandemic will continue to negatively impact business activity across the globe, and as such, we expect our sales demand to be negatively impacted into, at least, the first half of 2023 given the global reach and economic impact of the COVID-19 pandemic and the various governmentally imposed lockdowns, quarantine and social distancing measures put in place to contain the spread of the COVID-19 pandemic.

A future suspension of our manufacturing operations would impact our ability to meet customer demand and could have a significant adverse effect on our financial condition and results of operations.

COVID-19 also continues to impact the global supply chain causing disruptions to service providers, logistics and the flow and availability of supplies and products.

Our manufacturing sites, as well as our suppliers and outsourcing partners, and our supply chain have been adversely affected and may continue to be adversely impacted as a result of restrictions and logistics and operational challenges.

These disruptions have resulted in and may continue to result in supply shortages and delays impacting market conditions and business operations across all industries worldwide, including our own.

As a result, we may experience further disruptions to our manufacturing operations, supply chain and/or distribution channels in the future, and these disruptions may be prolonged.

We remain cautious about how the economy might behave for the next few years and we continue to actively monitor the potential impact on our operations and may take further actions altering our business operations as necessary or as required by international, federal, state, or local authorities.

Risks Relating to Operations

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Security Breaches, Failure to Maintain the Integrity of and Protect Internal or Customer Data May Result in Faulty Business Decisions, Operational Inefficiencies, Damage to our Reputation and/or Subject Us to Costs, Fines, or Lawsuits

Our business requires collection, processing, and retention of large volumes of internal and sensitive and confidential customer data, including personally identifiable information of our customers in various information systems that we maintain and in those maintained by third parties with whom we contract to provide services, including in areas such as customer product servicing, human resources outsourcing, website hosting, and various forms of electronic communications.

Our business requires collection, processing, and retention of large volumes of internal and sensitive and confidential customer data, including personally identifiable information of our customers in various information systems that we maintain and in those maintained by third parties with whom we contract, including in areas such as customer product servicing, human resources outsourcing, website hosting, and various forms of electronic communications.

We and third parties who provide services to us also maintain personally identifiable information about our employees.

The integrity and protection of that customer, employee, and company data, including proprietary information, is critical to us.

If that data is inaccurate or incomplete, we may make faulty decisions.

If that data is inaccurate or

incomplete, we may make faulty decisions.

Our customers and employees also have a high expectation that we and our service providers will adequately protect their personal information.

Despite the security measures we have in place, our facilities and systems, and those of the retailers, dealers, licensees and other third-party suppliers and vendors with which we do business, may be vulnerable to security breaches, cyber attacks, acts of vandalism or misconduct, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.

Despite the security measures we have in place, our facilities and systems, and those of the retailers, dealers, licensees and other third-party suppliers and vendors with which we do business, may be vulnerable to security breaches, cyberattacks, acts of vandalism or misconduct, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.

Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer, employee, supplier or Company information, whether caused by us, an unknown third party, or the retailers, dealers, licensees or other third-party suppliers and vendors with which we do business, could result in losses, severely damage our reputation, expose us to the risks of litigation and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.

As cyber security threats evolve in sophistication and become more prevalent in numerous industries worldwide, we continue to increase our sensitivity and attention to these threats, seek additional investments and resources to address these threats and enhance the security of our facilities and systems and strengthen our controls and procedures implemented to monitor and mitigate these threats.

As cybersecurity threats evolve in sophistication and become more prevalent worldwide, we continue to increase our sensitivity and attention to these threats, seek additional investments and resources to address these threats and enhance the security of our facilities and systems and strengthen our controls and procedures to monitor, protect against and mitigate these threats.

The domestic and international regulatory environment related to information security, data collection and privacy is increasingly rigorous and complex, with new and constantly changing requirements applicable to our business.

Compliance with these requirements, including the European Union's General Data Protection Regulation and other domestic and international regulations, could result in additional costs and changes to our business practices.

Compliance with these requirements, including the European Union's General Data Protection Regulation ("GDPR"), China's newly enacted Personal Information Protection Law ("PIPL") and other domestic and international regulations, could result in additional costs and changes to our business practices.

Moreover, we rely heavily on computer systems to manage and operate our business, record and process transactions, and manage, support and communicate with our employees, customers, suppliers and other vendors.

Computer systems are important to production planning, finance, company operations and customer service, among other business-critical processes.

Despite efforts to prevent disruptions to our computer systems, our systems may be affected by damage or interruption from, among other causes, power outages, system failures, computer viruses and other intrusions, including cyber attacks.

Despite our efforts to prevent disruptions to our computer systems, these systems may be affected by damage or interruption from, among other causes, power outages, system failures, computer viruses and other intrusions, including cyberattacks.

Computer hardware and storage equipment that is integral to efficient operations, such as email, telephone and other functionality, is concentrated in certain physical locations in the various continents in which we operate.

Additionally, we rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party vendors, and our business may be adversely affected by service disruptions in or security breaches to such third-party systems.

We rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party vendors, and our business may be adversely affected by service disruptions in or security breaches to such systems.

Remote work and remote access to our systems has increased, which also increases the risk of cybersecurity attacks on our systems surface.

In addition, there has been a global increase in cyberattack volume, frequency, and sophistication driven by the global enablement of remote workforces.

Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cybersecurity attacks.

We continue to mitigate these risks in a number of ways, including through additional investment, engagement of third-party experts and consultants, improving the security of our facilities and systems (including through upgrades to our security and information technology systems), providing training for all employees (with more enhanced or frequent training based on role or responsibility), assessing the continued appropriateness of relevant insurance coverage and strengthening our controls and procedures to monitor, mitigate and respond appropriately to these threats.

We carry cyber insurance, and while we have not incurred any material losses due to any failure of or disruptions to our systems, or from any breaches of or attacks, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or that any insurer will not deny coverage as to any future claim.

Proprietary Technologies

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An inability to cure or repair such a defect may result in the failure of a product line, temporary or permanent withdrawal of a product or market, damage to our reputation, increased inventory costs, or product re-engineering expenses, any of which may have a material impact on our operating results, financial condition and cash flows.

Technology Changes in Wireless Control and Sensing

We currently derive substantial revenue from the sale of wireless remote controls, sensors and home automation products based on IR and RF and other technologies.

Other control technologies exist or may be developed that may compete with this technology.

Technology Changes in Control and Sensing

We currently derive substantial revenue from the sale of remote controls, sensors and home automation products based on IR and RF and other technologies.

Other control technologies exist or may be developed that may compete with our technology.

In addition, we develop and maintain our own database of IR and RF codes.

There are other IR and RF libraries offered by companies that we compete within the marketplace.

The advantage that we may have compared to our competitors is difficult to measure.

In addition, if competing wireless control and sensing technology and products gain acceptance and start to be integrated into home electronics devices and home security and automation products that are currently utilizing our remote controllers and sensors, demand for our products may decrease, resulting in decreased operating results, financial condition and cash flows.

There are other IR and RF libraries offered by companies that we compete with in the marketplace.

In addition, if competing control and sensing technology and products gain acceptance and start to be integrated into home electronics devices and home security and automation products, demand for our products may decrease, resulting in decreased operating results, financial condition and cash flows.

Our Technology Development Activities May Experience Delays

We may experience technical, financial, resource or other difficulties or delays related to the further development of our technologies.

Delays may have adverse financial effects and may allow competitors with comparable technology offerings to gain an advantage over us in the marketplace or in the standards setting arena.

Delays may have adverse financial effects and may allow competitors to gain an advantage over us in the

marketplace or in the standards setting arena.

There can be no assurance that we will continue to have adequate staffing or that our development efforts will ultimately be successful.

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Any failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product development or introduction, may have a material adverse effect on our operating results, financial condition and cash flows.

In addition, the introduction of new products may require significant expenditures for R&D, tooling, manufacturing processes, inventory and marketing.

Moreover, the introduction of new products may require significant expenditures for R&D, tooling, manufacturing processes, inventory and marketing.

In order to achieve high-volume production of any new product, we may have to make substantial investments in inventory and expand our production capabilities.

We cannot be certain that we will recover the costs we incurred in developing new products, investing in inventory, to expand our production capabilities, or that those new products will be successful.

We cannot be certain that we will recover the costs we incurred in developing new products, investing in inventory, expanding our production capabilities, or that those new products will be successful.

Dependence on Consumer Preference

We are susceptible to fluctuations in our business based upon consumer demand for our products.

In addition, we cannot guarantee that increases in demand for our products associated with increases in the deployment of new technology will continue.

We cannot guarantee that increases in demand for our products associated with increases in the deployment of new technology will continue.

We believe that our success depends on our ability to anticipate, gauge and respond to fluctuations in consumer preferences.

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The economic strength and weakness of our worldwide customers affect our performance.

We sell our wireless control products, AV accessory products, and proprietary technologies to video service providers, OEMs, retailers and private label customers.

We also supply our products to our wholly owned, non-U.S.

We sell our products, accessory products, and proprietary technologies to video service providers, OEMs, retailers and private label customers.

We also supply our products, accessory products, and technologies to our wholly owned, non-U.S.

subsidiaries and to independent foreign distributors, who in turn distribute our products worldwide.

While we generally have a broad and varied customer base, during the years ended December 31, 2022, 2021 and 2020, Comcast Corporation accounted for sales totaling more than 10% of our net sales.

During the year ended December 31, 2021, Daikin Industries Ltd.

During the years ended December 31, 2022 and 2021, Daikin Industries Ltd.

also accounted for sales totaling more than 10% of our net sales.

In addition to these customers, we have some customers that, individually, purchase a large amount of products from us.

In addition to these customers, we have some customers that, individually or through their subsidiaries or affiliated partners, purchase a large amount of products from us.

Although our broad distribution channels help to minimize the impact of the loss of any one customer, the loss of any of these large individual customers, or our inability to maintain order volume with these customers, may have an adverse effect on our sales, operating results, financial condition and cash flows.

Demand for Consumer Service and Support

We have continually provided domestic and international consumer service and support to our customers to add overall value and to help differentiate us from our competitors.

We continually review our service and support group and are marketing our expertise in this area to other potential customers.

In addition, certain of our products have more features and are more complex than others and therefore require more end-user technical support.

In some instances, we rely on distributors or dealers to provide the initial level of technical support to the end-users.

We provide the second level of technical support for bug fixes and other issues at no additional charge.

Therefore, as the mix of our products includes more of these complex product lines, support costs may increase, which may have an adverse effect on our business, operating results, financial condition and cash flows.

Dependence on Foreign Manufacturing

Although we operate factories in the PRC, Brazil and Mexico and expect to commence manufacturing operations in a new factory in Vietnam in the third quarter of 2022, third-party manufacturers located in Asia continue to manufacture a portion of our products.

We believe that the loss of any one or more of our manufacturers would not have a long-term material adverse effect on our business, results of operations and cash flows, because numerous other manufacturers are available to fulfill our requirements;

We provide consumer service and support to our retail customers to add overall value and to help differentiate us from our competitors.

Certain of our products have more features than others and therefore require more end-user technical support, which may increase our support costs and have an adverse effect on our business, operating results, financial condition and cash flows.

We continually review our service and support group and are marketing our expertise in this area to other potential retail customers.

Manufacturing Risks

We operate factories in the PRC, Brazil and Mexico and expect to commence manufacturing operations in a new factory in Vietnam in the first half of 2023.

We are currently evaluating our manufacturing footprint with the expectation that once the Vietnam factory is operating efficiently, we will reduce our manufacturing capacity, most likely, by shutting down an existing facility.

If this were to occur, we would record an impairment charge and severance expense in amounts that are not presently calculable, yet could be material.

In addition, we utilize third-party manufacturers located in Asia to manufacture a portion of our products.

We believe that the loss of any one or more of these third-party manufacturers would not have a long-term material adverse effect on our business, results of operations and cash flows, because numerous other manufacturers are

available to fulfill our requirements;

however, the loss of any of our major third-party manufacturers may adversely affect our business, operating results, financial condition and cash flows until alternative manufacturing arrangements are secured.

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Legislation Pertaining to Forced Labor

On December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act (the "UFLPA") which is to take effect on June 21, 2022.

On December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act (the "UFLPA") which took effect on June 21, 2022.

The UFLPA creates a rebuttable presumption that all goods produced or manufactured, even partially, in XUAR, were made with forced labor and, therefore, would not be allowed entry at U.S.

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Dependence upon Key Suppliers

We continue to operate in a supply-constrained environment, and we are heavily dependent on third-party suppliers and their ability to deliver sufficient quantities of key components and products at reasonable prices and in time for us to meet schedules

for the delivery of our products and services.

Most of the components used in our products are available from multiple sources.

However, we purchase integrated circuits, used principally in our wireless control products, from a small number of key suppliers.

To reduce our dependence on our integrated circuit suppliers we continually seek additional sources.

We maintain inventories of our integrated circuits, which may be used in part to mitigate, but not eliminate, delays resulting from supply interruptions.

We have identified alternative sources of supply for our integrated circuit, component parts, and finished goods needs;

however, there can be no assurance that we will be able to continue to obtain these inventory purchases on a timely basis.

However, we purchase integrated circuits ("ICs") used in products, from a small number of key suppliers.

To reduce our dependence on our IC suppliers we continually seek additional sources.

We maintain inventories of our ICs, which may be used in part to mitigate, but not eliminate, delays resulting from supply interruptions.

Further, we have identified alternative sources of supply for our ICs, component parts, and finished goods;

however, there can be no assurance that we will be able to continue to obtain these inventory purchases on a timely basis or in the quantities we need.

Any extended interruption, shortage or termination in the supply of any of the components used in our products, or a reduction in their quality or reliability, or a significant increase in prices of components, would have an adverse effect on our operating results, financial position and cash flows.

Difficulty in Ordering ICs and Increases in Commodities and Freight Costs Have Adversely Affected and Will Continue to Adversely Affect Our Business.

We continue experiencing difficulty in ordering ICs for future use and that difficulty is expected to continue through at least mid to late 2022.

The global shortage of ICs is affecting a multitude of industries and we expect it to continue to adversely affect our business.

While we are identifying other sources of ICs and taking other production and inventory control steps in order to mitigate the effects caused by this shortage, we cannot guarantee that we will find alternative sources to meet our short- and longer-term IC needs and/or without experiencing increases in the prices we pay for these components.

If we are not able to find these alternative sources of ICs or are not able to purchase sufficient quantities of ICs from our current and alternative suppliers, we may not be able to produce sufficient quantities of products to meet our customers' demands.

From time to time, we may obtain components from a single source due to technology, availability, price, quality or other considerations.

New products that we introduce may utilize custom components obtained initially from only one source until we have determined whether there is a need for additional suppliers.

Replacing a single-source supplier could delay production of some products as replacement suppliers may be subject to capacity constraints or other output limitations.

For some components, alternative sources may not exist or may be unable to produce the quantities necessary to satisfy our requirements.

The loss of, deterioration of our relationship with, or limits in allocation by, a single-source supplier, could adversely affect our business and financial performance.

Difficulty in Ordering Integrated Circuits and Increases in Commodities and Freight Costs Have Adversely Affected and Will Continue to Adversely Affect Our Business.

We continue experiencing difficulty in ordering ICs for future use and that difficulty is expected to continue.

While we have identified other sources of ICs and are taking other production and inventory control steps in order to mitigate the effects caused by this shortage, we cannot guarantee that the alternative sources will meet our short- and longer-term IC needs and/or without experiencing increases in the prices we pay for these components.

If we are not able to purchase sufficient quantities of ICs from our current and alternative suppliers, we may not be able to produce sufficient quantities of products to meet our customers' demands.

This, in turn, may affect our ability to meet our quarterly revenue targets and otherwise adversely affect our business.

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If those customers are not able to obtain sufficient quantities of ICs for their products, their demand for our products may decrease.

Also, we are beginning to experience increases in commodities and freight costs which could adversely affect our margins.

Further, we may incur additional freight costs to meet the delivery demands of our customers.

Also, we are continuing to experience increases in commodities and freight costs which have and may continue to adversely affect our margins.

At the same time, in order to secure components for our products or services, we have and may continue to make advance payments to suppliers and/or enter into non-cancelable commitments with suppliers.

We have and may continue to strategically purchase ICs and other key components in advance of demand to take advantage of favorable pricing or to address concerns about future availability.

If we fail to anticipate customer demand properly or if customer changes its demand significantly, a temporary "oversupply" could result in excess or obsolete components.

Transportation Costs and Impact of Oil Prices

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Additionally, tariffs and other export fees may be incurred to ship products from foreign manufacturers to the customer.

The inability to predict swings in

demand or delays in production may increase the cost of freight which may have a material adverse effect on our product margins.

In addition, we have an exposure to oil prices in two forms.

These increases in costs and tariffs may have a material adverse effect on our product margins.

We also have an exposure to oil prices in two forms.

The first is in the prices of oil-based materials in our products, which are primarily the plastics and other components that we include in our finished products.

The second is in the cost of delivery and freight, which would be passed on by the carriers that we use in the form of higher rates.

Rising oil prices may have an adverse effect on cost of sales and operating expenses.

In fact, we have already seen oil price increases immediately after the invasion by Russia into Ukraine.

Rising oil prices may have an adverse effect on cost of sales and operating expenses, and Russia's invasion of Ukraine may continue to create uncertainty in oil prices.

Disruptions Caused by Labor Disputes or Organized Labor Activities Could Materially Harm our Business and Reputation

Currently, approximately 1,400 of our Brazil and Mexico employees are represented by labor unions.

Disputes with the current labor unions or new union organizing activities could lead to production slowdowns or stoppages and make it difficult or impossible for us to meet scheduled delivery times for product shipments to some of our customers, which could result in a loss of business and material damage to our reputation.

Disputes with the current labor unions or new union organizing activities could lead to production slowdowns or stoppages and make it difficult for us to meet scheduled delivery times for product shipments to some of our customers, which could result in a loss of business and material damage to our reputation.

In addition, union activity and compliance with international labor standards could result in higher labor costs, which could have a material adverse effect on our financial position and results of operations.

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We can give no assurance that we will enter into new or renewal leases, or that, if entered into, the new lease terms will be similar to the existing terms or that the terms of any such new or renewal leases will not have a significant and material adverse effect on our operating results, financial condition and cash flows.

Competition within the wireless control industry is based primarily on product availability, price, speed of delivery, ability to tailor specific solutions to customer needs, quality, and depth of product lines.

Competition within the industries we serve is based primarily on product availability, price, speed of delivery, ability to tailor specific solutions to customer needs, quality, and depth of product lines.

Our competition is fragmented across our products, and, accordingly, we do not compete with any one company across all product lines.

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Our ability to remain competitive in this industry depends in part on our ability to successfully identify new product opportunities, develop and introduce new products and enhancements on a timely and cost-effective basis, as well as our ability to successfully identify and enter into strategic alliances with entities doing business within the industries we serve.

Competition in any of these areas may reduce our sales and adversely affect our earnings or cash flow by resulting in decreased sales volumes, reduced prices and increased costs of manufacturing, distributing and selling our products.

Competition in any of these areas may reduce our sales and adversely affect our earnings or cash flow resulting from decreased sales volumes, reduced prices and increased costs of manufacturing, distributing and selling our products.

There can be no assurance that our product offerings will be, and/or will remain, competitive or that strategic alliances, if any, will achieve the type, extent, and amount of success or business that we expect them to achieve.

The sales of our products and technology may not occur or grow in the manner we expect, and thus we may not recoup costs incurred in the R&D of these products as quickly as we expect, if at all.

The sales of our products and technology may not occur or grow in the manner we expect, and thus we may not recoup costs incurred in the R&D as quickly as we expect, if at all.

Some customers may elect to engage a second source to manufacture the same product, and there is no guarantee that these customers will maintain the volume that was initially allocated to us throughout the product life cycle.

The home security and automation industry is highly fragmented and subject to significant competition and pricing pressures.

In particular, the monitored security industry providers have highly recognized brands which may drive increased awareness of their security/automation offerings rather than ours, have access to greater capital and resources than us, and may spend significantly more on advertising, marketing and promotional resources which could have a material adverse effect on our ability to drive awareness and demand for our products and services.

In particular, the monitored security industry providers have highly recognized brands which may drive increased awareness of their security/automation offerings rather than ours, have access to greater capital and resources than us, and may spend significantly more on advertising, marketing and promotional activities which could have a material adverse effect on our ability to drive awareness and demand for our products and services.

In addition, video service providers have expanded into the monitored security industry and are bundling their existing offerings with monitored security services.

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Change in Competition and Pricing

Even with having our own factories, we will continue to rely on third-party manufacturers to build a portion of our universal wireless control products.

Even with having our own factories, we will continue to rely on third-party manufacturers to build a portion of our products.

Price is always an issue in winning and retaining business.

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We have historically made strategic acquisitions of businesses in industries adjacent to our core business and will likely acquire additional businesses in the future as part of our long-term growth strategy.

The success of future acquisitions depends in large

part on our ability to integrate the operations and personnel of the acquired companies and manage challenges that may arise as a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets.

The success of future acquisitions depends in large part on our ability to integrate the operations and personnel of the acquired companies and manage challenges that may arise as a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets.

In the event we do not successfully integrate such future acquisitions into our existing operations so as to realize the expected return on our investment, our results of operations, cash flow or financial condition could be adversely affected.

Recruitment and Retention of Talent and Key Employees

In order to be successful, we must attract, hire, retain, train, motivate, and develop qualified executives, engineers, technical staff and other key employees.

Identifying, developing internally or hiring externally, training and retaining qualified executives, engineers and qualified sales representatives are critical to our future, and competition for experienced employees in the technology industry can be intense as employees' expectations of compensation, benefits and work flexibility continue to increase.

Equity-based compensation can be important to attracting and retaining qualified employees and lack of positive performance in our stock price may adversely affect our ability to attract or retain key employees.

In addition, workforce dynamics are constantly evolving in all regions, and we may not be able to manage changing workforce dynamics successfully.

Risks Related to Doing Business in the PRC

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Additionally, many of our contract manufacturers are located in the PRC.

Doing business in the PRC carries a number of risks including the following:

The Fluctuation of the Chinese Yuan Renminbi May Harm Your Investment.

Under Chinese monetary policy, the Chinese Yuan Renminbi is permitted to fluctuate within a managed band against a basket of certain foreign currencies and has resulted in increased volatility in the exchange rate the Chinese Yuan Renminbi against the U.S.

While the international reaction to the Chinese Yuan Renminbi revaluation has been positive, there remains international pressure on the PRC government to adopt an even more flexible currency policy, which may result in a further and more significant appreciation of the Chinese Yuan Renminbi against the U.S.

Dollar, which could lead to higher manufacturing costs for our products.

In addition to the other risks identified herein, doing business in the PRC carries a number of risks including the following:

The Fluctuation of the Chinese Yuan Renminbi May Adversely Impact Our Manufacturing Costs.

Any significant appreciation of the Chinese Yuan Renminbi against the U.S.

Dollar could lead to higher manufacturing costs for our products.

Availability of Adequate Workforce Levels

Presently, the vast majority of workers at our PRC factories are obtained from third-party employment agencies.

Presently, a portion of workers at our PRC factories are obtained from third-party employment agencies.

As the labor laws, social insurance and wage levels continue to grow and the workers become more sophisticated, our costs to employ these and other workers in the PRC may grow beyond that anticipated by management.

Some of our key customers have demanded that we reduce the percentage of workers sourced from third-party employment agencies, which may also lead to increased costs in recruitment, retention and compliance.

While we have already experienced increases in labor rates in the PRC, as the PRC market continues to open up and grow, we may experience an increase in competition for the same workers, resulting in either an inability to attract and retain an adequate number of qualified workers or an increase in our employment costs to obtain and retain these workers.

Changes in the Policies of the PRC Government May Have a Significant Impact Upon the Business We May Be Able to Conduct in the PRC and the Profitability of Such Business .

Changes in the Policies of the PRC Government May Have a Significant Impact Upon the Business We Conduct in the PRC and the Profitability of Such Business .

Our business operations may be adversely affected by the current and future political environment in the PRC.

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The PRC Laws and Regulations Governing Our Current Business Operations are Sometimes Vague and Uncertain.

Any Changes in Such PRC Laws and Regulations May Harm Our Business.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings.

We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

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The PRC's Legal and Judicial System May Not Adequately Protect Our Business and Operations and the Rights of Foreign Investors.

The PRC legal and judicial system may negatively impact foreign investors, with enforcement of existing laws inconsistent.

In addition, the promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors.

The PRC legal and judicial system may negatively impact foreign investors, with inconsistent enforcement of existing laws.

In addition, the promulgation of new laws, changes to existing laws and the preemption of local regulations by national laws may adversely affect foreign investors.

Risks Relating to Regulation and Legal

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and other jurisdictions in which we operate may result in new or additional requirements, additional charges to fund energy efficiency activities, and fees or restrictions on certain activities.

Compliance with these climate change initiatives may

also result in additional costs to us, including, among other things, increased production costs, additional taxes, reduced emission allowances or additional restrictions on production or operations.

Compliance with these climate change initiatives may also result in additional costs to us.

Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

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We may not be able to recover the cost of compliance with new or more stringent laws and regulations, which could adversely affect our results of operations, financial position or cash flows.

Ultimately, the impacts of climate change, whether involving physical risks or transition risks are expected to be widespread and unpredictable and may materially adversely affect our business and financial results.

Significant Developments From Potential Changes in U.S.

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We manufacture a substantial amount of our products in the PRC and are presently subject to these additional tariffs and will remain so until the tariff lists are altered.

These tariffs, and other governmental action relating to international trade agreements or policies, may adversely impact demand for our products, our costs, customers, suppliers and/or the U.S.

These tariffs, and other governmental action relating to international trade agreements or policies, may adversely impact

demand for our products, our costs, customers, suppliers and/or the U.S.

economy or certain sectors thereof and, as a result, adversely impact our business.

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economy, which in turn could adversely impact our business, financial condition and results of operations.

As a result of these tariffs and other governmental action, we moved production of many of our products destined for U.S.

As a result of these tariffs and other governmental action, we moved production of many of our products destined for the U.S.

to Mexico and a third-party manufacturing partner outside of the PRC.

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Efforts to withdraw from or substantially modify such agreements or the implementation of more restrictive trade policies such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flow and that of our customers, vendors and suppliers.

Additionally, the United Kingdom's exit from the European Union has caused and may continue to cause significant volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

The United Kingdom and the European Union entered into a free trade agreement that now governs the relationship between the United Kingdom and the European Union.

While the United Kingdom and the European Union can generally continue to trade with each other without the imposition of tariffs for imports and exports, there are new customs requirements that require additional documentation and data, and there are also new controls on the movement and reporting of goods.

Although we have not experienced any material disruption in our business as a result of the United Kingdom's exit from the European Union, we do not know the extent that this exit and the free trade agreement will ultimately have on the business and regulatory environment in the United Kingdom, the rest of the European Union or other countries, although it is possible there will be tighter controls and administrative requirements for imports and exports between the United Kingdom and the European Union or other countries, as well as increased regulatory complexities.

Any of these factors could adversely impact customer demand, our relationships with customers and suppliers and our results of operations.

Risks and Uncertainties Associated with Our Expansion Into and Our Operations Outside of the United States May Adversely Affect Our Results of Operations, Cash Flow, Liquidity or Financial Condition

Our international operations, and resulting revenues, continue to grow, making up a significant part of our current business and future strategic plans.

Our international operations continue to grow, making up a significant part of our current business and future strategic plans.

We presently operate factories in the PRC, Brazil and Mexico, engineering centers in India, Korea and Japan and rely on third-party manufacturers located in Asia.

In addition, we expect to commence manufacturing operations in Vietnam in the third quarter of 2022.

As a result, we are increasingly exposed to the challenges and risks of doing business outside the United States, which could reduce our revenues or profits, increase our costs, result in significant liabilities or sanctions, or otherwise disrupt our business.

In addition, we expect to commence manufacturing operations in Vietnam in the first half of 2023.

We are increasingly exposed to the challenges and risks of doing business outside the United States, which could reduce our revenues or profits, increase our costs, result in significant liabilities or sanctions, or otherwise disrupt our business.

These challenges include:

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(4) the difficulties involved in managing an organization doing business in many different countries;

(5) uncertainties as to the enforceability of contract and intellectual

property rights under local laws;

(5) uncertainties as to the enforceability of contract and intellectual property rights under local laws;

(6) rapid changes in government policy, political or civil unrest, acts of terrorism, or the threat of international boycotts or U.S.

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Significant judgment is required in evaluating and estimating our tax expense and liabilities.

In the ordinary course of our business, there are many transactions and calculations for which the ultimate tax determination is uncertain.

In the ordinary course of our business, there are many transactions and calculations which make the ultimate tax determination uncertain.

We are also currently subject to tax controversies in various jurisdictions, and these jurisdictions may assess additional tax liabilities against us.

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Foreign Corrupt Practices Act and anti-corruption laws and regulations of other countries applicable to our operations, such as the U.K.

Anti-corruption laws and regulations generally prohibit companies and their intermediaries from making improper payments to government officials or other persons in order to receive or retain business.

These laws also require us to maintain adequate internal controls and accurate books and records.

These laws require us to maintain adequate internal controls and accurate books and records.

We have properties and do business in many parts of the world where corruption is common, and our compliance with anti-corruption laws may potentially conflict with local customs and practices.

The compliance programs, internal controls and policies we maintain and enforce to promote compliance with applicable anti-bribery and anti-corruption laws may not prevent our associates, contractors or agents from acting in ways prohibited by these laws and regulations.

The compliance programs, internal controls and policies we maintain and enforce to promote compliance with these laws may not prevent our employees, contractors or agents from acting in ways prohibited by these laws and regulations.

We are also subject to trade sanctions administered by the U.S.

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government agencies, and authorities in other countries where we do business.

Our compliance programs and internal control policies and procedures may not prevent conduct that is prohibited under these rules.

Our Global Compliance Department, compliance programs, and internal control policies and procedures may not prevent conduct that is prohibited under these rules.

The United States or other countries may impose additional sanctions at any time against any country in which or with whom we do business.

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From time to time, our Company, our operations and the industries in which we operate are being reviewed or investigated by regulators, which may lead to enforcement actions or the assertion of private litigation claims and damages.

Our costs to comply with these laws and regulations may increase as these requirements become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flow or financial condition.

Our costs to respond to any investigation or to comply with these laws and regulations may increase as these requirements become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flow or financial condition.

Although we believe that we have adopted appropriate risk management and compliance programs to mitigate these risks, the global and diverse nature of our operations means that compliance risks will continue to exist.

Investigations, examinations and other proceedings, the nature and outcome of which cannot be predicted, will likely arise from time to time.

These investigations, examinations and other proceedings may subject us to significant liability and require us to make significant

accruals or pay significant settlements, fines and penalties, which may have a material adverse effect on our results of operations, cash flows or financial condition.

These investigations, examinations and other proceedings may subject us to significant liability and require us to pay significant settlements, fines and penalties, which may have a material adverse effect on our results of operations, cash flows or financial condition.

Patents, Trademarks, and Copyrights

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Because of the rapid innovation of products and technologies that is characteristic of our industry, there can be no assurance that rights granted under any patent will provide competitive advantages to us or will be adequate to safeguard and maintain our proprietary rights.

We further believe that while our business is not materially dependent upon any single patent, trade secret, trademark, trade name, copyright, or know-how, we do have "families" of patents that are interrelated, which if patents within these "families" are determined to be invalid or unenforceable, could have a detrimental effect on our business.

We further believe that while our business is not materially dependent upon any single patent, trade secret, trademark, trade name, copyright, or know-how, we do have "families" of patents that are interrelated, which if determined to be invalid or unenforceable, could have a detrimental effect on our business.

Despite our efforts to protect such intellectual property and other proprietary information from unauthorized use or disclosure, third parties may attempt to disclose, obtain or use our intellectual property and information without our authorization.

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Unauthorized use of our intellectual property by third parties, the failure of foreign countries to have laws to protect our intellectual property rights, or an inability to effectively enforce such rights in foreign countries could have an adverse effect on our business.

In addition, as is typical in our business, third parties may challenge the validity of our patents.

In addition, as is typical in our business, third parties (including non-practicing entities ("NPEs")) may challenge the validity of our patents.

In the event that such challenges prove successful, the value of our patents may decline which, in turn, could have an adverse effect on our business.

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however, there can be no guarantee that such licenses may be obtained on such terms or at all.

Because of technological changes in the wireless and home control industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of our products and business methods may unknowingly infringe upon the patents of others.

Because of technological changes in the

wireless and home control industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of our products and business methods may unknowingly infringe upon the patents of others.

Potential for Litigation

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As a result, we may face significant costs and liabilities in complying with these laws and any future laws and regulations or enforcement policies that may have a material adverse effect upon our operating results, financial condition, and cash flows.

In addition, our operations, supply chain and our products are expected to become increasingly subject to federal, state, local and foreign laws, regulations, and international treaties relating to climate change, such as climate disclosure, carbon pricing or product energy efficiency requirements, requiring us to comply or potentially face market-access limitations or other sanctions including fines.

We strive to continually improve the energy and carbon efficiency of our operations, supply chain and product portfolio and deliver more cost-effective and lower carbon technology solutions to our customers.

Regulations Related to the Use of Conflict-Free Minerals May Increase Our Costs and Expenses, and an Inability to Certify that Our Products are Conflict-Free May Adversely Affect Customer Relationships

The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve the transparency and accountability of the use by public companies in their products of minerals mined in certain countries and to prevent the

sourcing of such "conflict" minerals.

As a result, the SEC enacted new annual disclosure and reporting requirements for public companies that use these minerals in their products, which apply to us.

Under the final rules, we are required to conduct due diligence to determine the source of any conflict minerals used in our products and to make annual disclosures in filings with the SEC.

As a result, the SEC enacted annual disclosure and reporting requirements for public companies to conduct due diligence to determine the source of any conflict minerals used in our products and to make annual disclosures in filings with the SEC.

Because our supply chain is broad-based and complex, we may not be able to easily verify the origins for all minerals used in our products.

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Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which may place us at a competitive disadvantage, and our reputation may be harmed.

The Prominence and Evolution on Disclosures related to ESG Matters May Expose Us to Certain Performance and Reputational Risks

We have established certain ESG goals and reporting of ESG data.

Our failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance, and growth, and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities.

Standards for tracking and reporting ESG matters continue to evolve.

Methodologies for reporting ESG data may be updated and previously reported ESG data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.

Our processes and controls for reporting ESG matters relating to our operations and supply chain are evolving along with various standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time.

If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, service provider or employer could be negatively impacted.

Risks Relating to Finance

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Actual events or results may be unfavorable to management's projections, which may have a material adverse effect on our projected operating results, financial condition and cash flows.

Additionally, we have goodwill and intangible assets recorded on our consolidated balance sheet.

We periodically evaluate the recoverability of the carrying value of our goodwill and intangible assets whenever events or changes in circumstances indicate that such value may not be recoverable.

Additionally, we have long-lived and intangible assets, including goodwill, recorded on our consolidated balance sheet.

We assess these assets for impairment whenever events or changes in circumstances indicate that the fair value may be below its carrying value.

Factors considered important that may trigger said assessment include, among others, a significant adverse change in legal factors or in business climate, a decline in macroeconomic conditions, a significant decline in our financial performance or a significant decline in the price of our common stock for a sustained period of time.

Impairment assessment involves judgment as to assumptions regarding future sales and cash flows and the impact of market conditions on those assumptions.

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Potential Fluctuations in Quarterly Results

We may from time to time increase our operating expenses to fund greater levels of R&D, sales and marketing activities, development of new distribution channels, improvements in our operational and financial systems, moving manufacturing capabilities to other countries and development of our customer support capabilities, and to support our efforts to comply with various government regulations.

We may from time to time increase our operating expenses to fund greater levels of R&D, sales and marketing activities, development of new distribution channels, improvements in our operational and financial systems, moving manufacturing capabilities to other countries, and development of our customer support capabilities, In addition, legal expenses could increase from time to time as we enhance or increase our litigation efforts and/or to support our efforts to comply with or respond to various government regulations and investigations.

To the extent such expenses precede or are not subsequently followed by increased revenues, our business, operating results, financial condition and cash flows will be adversely affected.

In addition, we may experience significant fluctuations in future quarterly operating results that may be caused by many other factors, including demand for our products, introduction or enhancement of products by us and our competitors, the loss or acquisition of any significant customers, market acceptance of new products, price reductions by us or our competitors, mix of distribution channels through which our products are sold, product or supply constraints, level of product returns, mix of customers and products sold, component pricing, mix of international and domestic revenues, foreign currency exchange rate fluctuations and general economic conditions.

In addition, as a strategic response to changes in the competitive environment,

we may from time to time make certain pricing or marketing decisions or acquisitions that may have a material adverse effect on our business, results of operations or financial condition.

In addition, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing or marketing decisions or acquisitions that may have a material adverse effect on our business, results of operations or financial condition.

As a result, we believe period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as an indication of future performance.

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These reforms have resulted in plans to phase out and eventually replace LIBOR.

The Financial Conduct Authority, which regulates LIBOR, announced it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021 and cease publications of the remaining tenors immediately after June 30, 2023.

The Financial Conduct Authority, which regulates LIBOR, announced it would cease publications of the remaining tenors of LIBOR immediately after June 30, 2023.

On January 7, 2021, we executed an amendment to our Second Amended Credit Agreement which defines the Secured Overnight Financing Rate ("SOFR") as the replacement benchmark for LIBOR upon its phase out.

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Our Ability to Generate Cash Depends on Many Factors Beyond Our Control.

We Also Depend on the Business of Our Subsidiaries to Satisfy Our Cash Needs

Our historical financial results have been, and we anticipate that our future financial results will be, subject to fluctuations.

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We cannot assure you that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund our other liquidity needs and make planned capital expenditures.

The degree to which we are currently leveraged could have important consequences for shareholders.

The degree to which we are currently leveraged could have important consequences for stockholders.

For example, it could:

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As a result, our ability to generate sufficient cash flow for our needs is dependent on the earnings of our subsidiaries and the payment of those earnings to us in the form of dividends, loans or advances and through repayment of loans or advances from us.

Our subsidiaries are separate and distinct legal entities.

Our subsidiaries have no obligation to pay any amounts due on our debt or to provide us with funds to meet our cash flow needs, whether in the form of dividends, distributions, loans or other payments.

Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due on our debt or to provide us with funds to meet our cash flow needs.

In addition, any payment of dividends, loans or advances by our subsidiaries may be subject to statutory or contractual restrictions.

Payments to us by our

subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations.

Payments to us by our subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations.

Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization will be effectively subordinated to the claims of that subsidiary's creditors, including trade creditors.

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Further, changes in the laws of foreign jurisdictions in which we operate may adversely affect the ability of some of our foreign subsidiaries to repatriate funds to us.

In addition, we may fund a portion of our seasonal working capital needs and obtain funding for other general corporate purposes through short-term borrowings backed by our revolving credit facility.

If any of the banks in these credit and financing facilities are unable to perform on their commitments, which may adversely affect our ability to fund seasonal working capital needs and obtain funding for other general corporate purposes, our cash flow, liquidity or financial condition may be adversely impacted.

We may also fund a portion of our seasonal working capital needs and obtain funding for other general corporate purposes through short-term borrowings backed by our revolving credit facility.

If any of the banks in these credit and financing facilities are unable to perform on their commitments, our cash flow, liquidity or financial condition may be adversely impacted.

Although we currently have available credit facilities to fund our current operating needs, we cannot be certain that we will be able to replace our existing credit facilities or refinance our existing or future debt when necessary.

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The Price of Our Common Stock is Volatile and May Decline Regardless of Our Operating Performance

Historically, we have had large fluctuations in the price of our common stock, and such fluctuations may continue.

• the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC and announcements relating to product and technology development, relationships with new and existing customers, litigation and other legal proceedings in which we are involved and intellectual property impacting us or our business;

Historically, we have had large fluctuations in the price of our common stock, and such fluctuations may continue, including a significant decline in our stock price.

The trading market for our common stock has historically been at low volumes and our market price is volatile and may fluctuate significantly in response to a number of factors, most of which we cannot control, including the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC and announcements relating to product and technology development, relationships with new and existing customers, litigation and other legal proceedings in which we are involved and intellectual property impacting us or our business;

announcements concerning strategic transactions, such as spin-offs, joint ventures and acquisitions or divestitures;

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changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

the inclusion or removal of our common stock from any indices;

investor perceptions as to the likelihood of achievement of near-term goals;

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changes in operating performance and stock market valuations of other technology or content providing companies generally;

• market conditions or trends in our industry or the economy as a whole.

and market conditions or trends in our industry or the economy as a whole.

Stockholders of other companies have instituted securities class action litigation against such companies after periods of price volatility in such companies' stock.

If we were to become involved in such securities litigation, we may incur substantial costs and the attention of management may be diverted from our business.

In addition, our officers and directors periodically sell shares of our common stock which they own, many times pursuant to trading plans established under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Sales of shares by our officers and directors may not be indicative of their respective opinions of our performance at the time of sale or of our potential future performance.

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We have several institutional stockholders that own significant blocks of our common stock.

If one or more of these stockholders were to sell large portions of their holdings in a relatively short time, for liquidity or other reasons, the prevailing market price of our common stock may be negatively affected.

If one or more of these stockholders were to sell large portions of their holdings in a relatively short time, the prevailing market price of our common stock may be negatively affected.

Further, due to our historically low trading volumes, such large stockholders may not be able to sell the number of shares they wish to sell and/or in the time frame in which they wish to sell.

Moreover, while such large stockholders are attempting to sell their shares, other stockholders may not be able to sell their shares at the price and time that such other stockholders desire due to the low trading volumes of our stock.

Additionally, in

March 2016, we issued common stock purchase warrants to Comcast to purchase up to 725,000 shares of our common stock at a price of $54.55 per share.

The right to exercise the warrants was subject to vesting over three successive two-year periods (the third two-year period commenced on January 1, 2020 and ended on December 31, 2021) based on the level of purchases of goods and services from us by Comcast and its affiliates, as defined in the warrants, and Comcast is vested in 275,000 of the warrants as of the end of the periods.

To the extent that Comcast exercises the warrants and sells any of the shares of common stock issuable upon exercise, or the perception that such sales may occur, could adversely affect the market price and/or trading volume of our common stock.

Approved Stock Repurchase Programs May Not Result in a Positive Return of Capital to Stockholders

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Because we conduct our business on a global platform, our business is sensitive to global and regional business and economic conditions.

Such conditions in the United States and worldwide may impact our business due to weak economic conditions, changes in energy prices and currency values, political instability, heightened travel security measures, travel advisories, disruptions in travel, and concerns over disease, violence, war, or terrorism may reduce the demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us, each of which could adversely affect our results of operations, cash flow, liquidity or financial condition.

Adverse changes in global, national, regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), and geopolitical conditions (such as the Russian invasion of Ukraine, tension across the Taiwan Strait and tension between the United States and the PRC, and the ramifications of those and other events) impact our activities.

Such conditions in the United States and worldwide may impact our business due to weak economic conditions, changes in energy prices and currency values, political instability, heightened travel security measures, advisories, or disruptions, and concerns over disease, violence, war, or terrorism may reduce the demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us, each of which could adversely affect our results of operations, cash flow, liquidity or financial condition.

Higher inflation rates, interest rates, tax rates and unemployment rates, higher labor and healthcare costs, recessions, changing governmental policies, laws and regulations, and other economic factors could also adversely affect demand for some of our products and our results of operations, cash flow, liquidity or financial condition and that of our customers, vendors and suppliers.

Global economic uncertainty continues to exist, particularly in light of the ongoing COVID-19 pandemic.

Global economic uncertainty continues to exist.

The continuation or worsening of the global economic downturn may adversely impact our net sales, the collection of accounts receivable, funding for working capital needs, expected cash flow generation from current and acquired businesses, and our investments, which may adversely impact our results of operations, cash flow, liquidity or financial condition.

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Certain of our components are available only from a single source or limited sources.

If certain key suppliers were to become capacity constrained or insolvent as a result of an economic downturn, it may result in a reduction or interruption in supplies or a significant increase in the price of supplies and adversely impact our

financial results.

In addition, credit constraints at key suppliers may result in accelerated payment of accounts payable by us, impacting our cash flow.

Risks Relating to Natural or Man-Made Disasters, Contagious Disease, Violence, or War May Cause Increases in the Cost of Raw Materials and Energy which May Adversely Affect Our Earnings or Cash Flow

Risks Relating to Natural or Man-Made Disasters, Contagious Disease, Climate Change, Violence, or War May Cause Increases in the Cost of Raw Materials, Production, and Energy which May Adversely Affect Our Earnings or Cash Flow

Our ability, including manufacturing or distribution capabilities, and that of our suppliers, business partners and contract manufacturers, to make, move and sell products is critical to our success.

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Actual or threatened war, terrorist activity, political unrest, civil or geopolitical strife, and other acts of violence could have a similar effect.

As with the effects we have already experienced from the COVID-19 pandemic, any one or more of these events, including the recent actions taken by Russia against Ukraine, could disrupt sales volumes, raw material and fuel supplies and increase our costs, reduce our ability to manufacture and supply our products, and/or increase our operating costs, all of which could adversely affect our earnings or cash flows and profits.

Although raw materials and energy supplies (including oil and natural gas) are generally available from various sources in sufficient quantities, unexpected shortages and increases in the cost of raw materials and energy, or any deterioration in our relationships with or the financial viability of our suppliers, may have an adverse effect on our earnings or cash flow in the event we are unable to offset higher costs in a timely manner by sufficiently decreasing our operating costs or raising the prices of our products.

As with the effects we have already experienced from the COVID-19 pandemic, any one or more of these events, including the actions taken by Russia against Ukraine, could disrupt sales volumes, raw material and fuel supplies and increase our costs, reduce our ability to manufacture and supply our products, and/or increase our operating costs, all of which could adversely affect our earnings or cash flows and profits.

There are also inherent climate-related risks wherever our business is conducted.

Changes in market dynamics, stakeholder expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure globally, all have the potential to disrupt our business and operations.

Such events could result in increases in our costs and expenses and harm our future revenue, cash flows and financial positions.

relationships with or the financial viability of our suppliers, may have an adverse effect on our earnings or cash flow in the event we are unable to offset higher costs in a timely manner by sufficiently decreasing our operating costs or raising the prices of our products.

In recent years, some raw material and energy prices have increased, particularly silicon and plastic packaging.

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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