What changed in this filing

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Item 1A. Risk Factors

2020-08-21 compared with 2019-08-21 · 120 added, 80 removed, 606 unchanged (25% of the section changed)

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These risks and uncertainties are not the only ones we face.

If any event related to these known or unknown risks or uncertainties actually occurs, our business prospects, results of operation, and financial condition could be materially adversely affected.

If any event related to these known or unknown risks or uncertainties actually occurs, our business prospects, operating results, and financial condition could be materially adversely affected.

Risks Related to Our Business and Industry

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We do not employ a traditional direct sales force.

Sales to our distributors have accounted for nearly all of our revenues.

Sales to our distributors have accounted for the majority of our revenues.

Our distributors do not make long term purchase commitments to us, and do not typically provide us with information about market demand for our products.

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The markets we serve can be especially volatile, and weakness in orders could harm our future results of operations.

regulatory uncertainty), could have a material adverse effect on our business, results of operations, and financial condition.

Weakness in orders, directly or indirectly, from the markets we serve, including as a result of any slowdown in capital expenditures by the markets we service (which may be more prevalent during a global economic downturn, or periods of economic, political or regulatory uncertainty), could have a material adverse effect on our business, results of operations, liquidity and financial condition.

Such slowdowns may continue or recur in future periods.

Orders from the markets we serve could decline for many reasons other than the competitiveness of our products and services within their respective markets.

These conditions have harmed our business and results of operations in the past, and some of these or other conditions in the markets we serve could affect our business and results of operations in any future period of such slowdowns

We are subject to risks associated with our distributors’ inventory management practices.

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The Company must order components for its products and build inventory, both of finished products and components, in advance of new product announcements and shipments.

With the use of third party logistics and warehousing providers, we may also decide to increase or maintain higher levels of inventory of finished products or components.

Decisions to build inventory for new products or to increase or maintain higher inventory levels are typically based upon uncertain forecasts or other assumptions and may expose us to a greater risk of carrying excess or obsolete inventory.

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Although we have a large number of distributors in numerous countries who sell our products, a limited number of these distributors represent a significant portion of our sales.

One or more of our major distributors may suffer from a decline in their financial condition, decrease in demand from their customers, or a decline in other aspects of their business which could impair their ability to purchase and resell our products.

One or more of our major distributors may suffer from a decline in their financial

condition, decrease in demand from their customers, or a decline in other aspects of their business which could impair their ability to purchase and resell our products.

Any distributor may also cease doing business with us at any time with little or no notice.

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Our ability to keep pace in these markets depends upon our ability to enhance our current products, and continue to develop and introduce new products rapidly and at competitive prices.

ability to manage the risks associated with new product production ramp-up, the effective management of our inventory and manufacturing schedule and the risk that new products may have defects or other deficiencies in the early stages of introduction.

The success of new product introductions or updates on existing products depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, our ability to manage the risks associated with new product production ramp-up, the effective management of our inventory and manufacturing schedule and the risk that new products may have defects or other deficiencies in the early stages of introduction.

The development of our products is complex and costly, and we typically have several products in development at the same time.

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• our ability to allow centralized management of the solutions;

• our ability to provide quality product support.

• our ability to provide product support.

New entrants seeking to gain market share by introducing new technology and new products may also make it more difficult for us to sell our products, and could create increased pricing pressure.

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We expect competition to continuously intensify as other established and new companies introduce new products in the same markets that we serve or intend to enter, as these markets consolidate.

Our business, results of operations and financial condition will suffer if we do not maintain our competitiveness.

Our business, results of operations, liquidity and financial condition will suffer if we do not maintain our competitiveness.

A number of our current or potential competitors have longer operating histories, greater brand recognition, larger customer bases and significantly greater resources than we do.

As we move into new markets for different types of products, our brand may not be as well-known as the incumbents’ brands in those markets.

Potential customers may prefer to purchase from their existing suppliers or well-known brands rather than a new supplier, regardless of product performance or features.

Potential customers may prefer to purchase from their existing suppliers or well-known brands rather than a new

supplier, regardless of product performance or features.

We expect increased competition from other established and emerging companies if our market continues to develop and expand.

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In June 2015, we determined that we were the victim of criminal fraud known to law enforcement authorities as business e-mail compromise fraud which involved employee impersonation and fraudulent requests targeting our finance department.

The fraud resulted in transfers of funds aggregating $46.7 million held by a Company subsidiary incorporated in Hong Kong to other overseas accounts held by third parties.

The fraud resulted in transfers of

funds aggregating $46.7 million held by a Company subsidiary incorporated in Hong Kong to other overseas accounts held by third parties.

To date, the Company has recovered $16.7 million.

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No additional recoveries were made since fiscal year ended 2016.

The Company is continuing to pursue the recovery of the remaining $30.0 million and is cooperating with U.S.

federal and numerous overseas law enforcement authorities who are actively pursuing a multi-agency criminal investigation.

The Company is continuing to pursue the recovery of the remaining $30.0 million and is cooperating with numerous overseas law enforcement authorities who are actively pursuing a multi-agency criminal investigation.

However, any additional recoveries are likely remote and therefore cannot be assured.

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Supply chain issues or a shortage of adequate component supply or manufacturing capacity could increase our costs or delay our ability to fulfill future orders and could have a material adverse impact on our business and results of operations.

We retain contract manufacturers, located primarily in China, V ietnam and Taiwan , to manufacture our products.

We retain contract manufacturers, located primarily in China and V ietnam , to manufacture our products.

Any significant change in our relationship with these manufacturers could have a material adverse effect on our business, results of operations and financial condition.

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We do not control our contract manufacturers or suppliers, including their labor, environmental or other practices.

Environmental regulations or changes in the supply, demand or available sources of natural resources may affect the availability and cost of goods and services necessary to run our business.

Environmental regulations or changes in the supply, demand or available sources of natural resources may affect the availability and cost of goods

and services necessary to run our business.

Non-compliance or deliberate violations of labor, environmental or other laws by our contract manufacturer or suppliers, or a failure of these parties to follow ethical business practices, could lead to negative publicity and harm our reputation or brand.

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• labor strikes or shortages;

including shortages in labor as a result of, or to mitigate, the spread of COVID-19

• financial problems of either contract manufacturers or component suppliers;

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We purchase components, directly or through our contract manufacturers, from third parties that are necessary for the manufacture of our products.

Shortages in the supply of components or other supply disruptions may not be predicted in time to design-in different components or qualify other suppliers.

Shortages in the supply of components or other supply disruptions, including, without limitation, due to reductions in supply as a result of COVID-19, may not be predicted in time to design-in different components or qualify other suppliers.

Shortages or supply disruptions may also increase the prices of components due to market conditions.

While many components are generally available from a variety of sources, we and our contract manufacturers currently depend on a single or limited number of suppliers for several components for our products.

For example, we currently rely upon Qualcomm Atheros as a single-source supplier of certain components for some of our products, and a disruption in the supply of those components would significantly disrupt our business.

For example, we currently rely upon some chipset suppliers, such as Qualcomm Atheros and Broadcom, as single-source suppliers of certain components for some of our products, and a disruption in the supply of those components would significantly disrupt our business.

We and our contract manufacturers generally rely on short-term purchase orders rather than long-term contracts with the suppliers of components for our products.

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There is no assurance that the supply of such components will not be delayed or constrained.

Our contract manufacturers, logistics centers and certain administrative and research and development operations, as well as our customers and suppliers, are located in areas likely to be subject to natural disasters and public health problems, which could adversely affect our business, results of operations and financial condition.

The manufacturing or shipping of our products at one or more facilities may be disrupted because our manufacturing and logistics contractors are primarily located in southern China.

Our principal executive offices are located in New York, New York.

The risks of earthquakes, extreme storms and other natural disasters in these geographic areas are significant.

Any disruption resulting from these events could cause significant delays in product development or shipments of our products until we are able to shift our development, manufacturing or logistics centers from the affected contractor to another vendor, or shift the affected administrative or research and development activities to another location.

Our business may be materially adversely affected by public health problems, particularly in China.

For example, in the last decade, China has suffered health crises related to the outbreak of avian influenza, severe acute respiratory syndrome and COVID-19.

Public health problems may result in quarantines, business closures, unavailability of key personnel, domestic and international transportation restrictions, import and export complications, and otherwise cause shortages in the supply of components or cause other disruptions within our supply chain.

Public health problems currently cause and may continue to cause disruptions, delays, shortages, and increased costs within our supply chain, and distribution channels.

In addition, public health problems may require us to take precautionary measures to minimize the risk to our employees, including requiring our employees to work remotely and suspending non-essential travel, which could negatively affect our business.

As a result of the transition to a remote working environment, we may experience disruptions or inefficiencies in our ability to operate our business.

The continuation of these remote working measures also introduces additional operational risk, including increased cybersecurity risk.

These cybersecurity risks include greater phishing, social engineering, malware, and other cybersecurity attacks, greater risk of a security breach resulting in the unauthorized release, destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, all of which could expose us to risks of data or

financial loss, litigation and liability and could seriously disrupt our operations, which could materially and adversely affect our business, financial condition or results of operations.

Public health problems may expose us to unanticipated liability or require us to change our business practices in a manner materially adverse to our business, results of operations and financial condition.

In addition, the outbreak of communicable diseases could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of many countries which may affect the demand for our products and services and our ability to obtain financing for our business.

The extent to which public health problems will impact our business, results of operations and financial conditions will depend on developments that are highly uncertain and cannot be predicted.

Such developments may include the geographic spread of the public health problems, the severity of the public health problems, the duration of the outbreak and the type and duration of actions that may be taken by various governmental authorities in response to the outbreak and the impact on the U.S.

and the global economy.

An outbreak of public health problems, or the perception that such an outbreak could occur, and the measures taken by the government of countries affected, could adversely affect our business, results of operations, liquidity and financial condition.

A general global economic downturn may negatively affect our customers and their ability to purchase our products.

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The global macroeconomic environment has been challenging and inconsistent caused by instability in the global credit markets, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world, including the June 2016 referendum by the United Kingdom in which voters approved an exit from the European Union, commonly referred to as “Brexit”.

As a result of the referendum, the British government formally initiated the process for withdrawal in March 2017, and, following agreed extensions between the European Council and the United Kingdom on March 22, 2019 and April 11, 2019, "Brexit" is scheduled to become effective on October 31, 2019, although may become effective as of an earlier date under specified circumstances.

The terms of any withdrawal and the United Kingdom’s future relationship with the European Union cannot be predicted with any certainty.

Although it is unknown what those final terms will be or if there will be a no-deal Brexit, the Brexit has created global economic uncertainty and could cause disruptions in the markets that we serve.

As a result of the referendum, the British government formally initiated the process for withdrawal in March 2017, and, following agreed extensions between the European Council and the United Kingdom on March 22, 2019, April 11, 2019 and October 28, 2019, “Brexit” became effective on January 31, 2020 under the terms of a Withdrawal Agreement that was ratified by the U.K.

Parliament, and the European Parliament in Brussels, in late January 2020.

Under the Withdrawal Agreement, a “transition period” will come into force for eleven months, from February 1, 2020 until December 31, 2020.

Although the Withdrawal Agreement ensures that a “no-deal” or “cliff-edge” Brexit was avoided on January 31, 2020, there is no certainty that a similar effect will be avoided at the end of 2020.

This could continue to cause disruptions in the markets that we serve.

Additionally, we may be adversely affected by the Brexit in ways we do not currently anticipate.

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If global economic conditions are volatile or if economic conditions deteriorate, consumers may delay or reduce purchases of our consumer products resulting in consumer demand for our products that may not reach our sales targets.

For example, the Brexit caused significant short term volatility in global stock markets as well as currency exchange rate

fluctuations, resulting in further strengthening of the U.S.

For example, the Brexit caused significant short-term volatility in global stock markets as well as currency exchange rate fluctuations, resulting in further strengthening of the U.S.

Our sensitivity to economic cycles and any related fluctuation in consumer demand could adversely affect our business, financial condition and results of operations.

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If we do not achieve the benefits anticipated from these investments (including if our selection of areas for investment does not play out as we expect), or if the achievement of these benefits is delayed, our results of operations may be adversely affected.

Additionally, as we invest and dedicate resources into new growth areas, there is no assurance that we may succeed at maintaining our competitors position in enterprise and service provider technologies.

Additionally, as we invest and dedicate resources into new growth areas, there is no assurance that we may succeed at maintaining our competitive position in enterprise and service provider technologies.

To remain competitive and stimulate customer demand, we must effectively manage product introductions, product transitions and marketing.

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It is also possible that competitors could introduce new products and services that negatively impact consumer preference in the type of consumer products that we supply, which could result in decreased sales of our product and a loss in market share.

We may not be able to achieve an acceptable return, if any, on our research and development efforts, and our business may be adversely affected.

We may not be able to achieve an acceptable return, if any, on our research and development efforts, and our business, results of operations, liquidity and financial condition may be adversely affected.

As we continually seek to enhance our consumer products, we will incur additional costs to incorporate new or revised features.

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Accordingly, we are at risk that these distributors may give higher priority to selling other companies’ products.

We have limited number of distributors in certain regions, and if we were to lose the services of a distributor, we might need to find another distributor in that area and there can be no assurance of our ability to do so in a timely manner or on favorable terms.

ability to do so in a timely manner or on favorable terms.

Additionally, as a result of the COVID-19 pandemic, certain of our distributors have been forced to temporarily suspend or otherwise reduce operations, which may adversely impact sales of our products.

Further, our distributors build inventory in anticipation of future sales, and if such sales do not occur as rapidly as they anticipate, our distributors will decrease the size of their future product orders.

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Any reduction in sales by our current distributors, loss of key distributors or decrease in revenue from our distributors could adversely affect our revenue, results of operations and financial condition.

We may experience risks in our investments due to changes in the market, which could adversely affect the value or liquidity of our investments .

We maintain a portfolio of marketable securities in a variety of instruments, which may include, but not limited to, money market funds, corporate bonds, U.S.

agency bonds and commercial papers.

These investments are subject to general credit, liquidity, market, and interest rate risks.

As a result, we may experience a reduction in value or loss of liquidity of our investments.

These market risks associated with our investment portfolio may have a negative adverse effect on our business, results of operations, and financial condition.

Risks Related to Our International Operations

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• limited protection and enforcement regimes for intellectual property rights in some countries;

• business disruptions created by health crises and outbreaks of communicable diseases, especially in China, such as the outbreak of COVID-19;

• increased financial accounting and reporting burdens and complexity;

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We invested in developing our own manufacturing capacity to support our product development and prototyping.

To the extent that we may invest in and expand or relocate these manufacturing capabilities, and increasingly rely upon such activities, we will face increased risks associated with:

To the extent that

we may invest in and expand or relocate these manufacturing capabilities, and increasingly rely upon such activities, we will face increased risks associated with:

• bearing the fixed costs of these activities;

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• our limited experience in operating manufacturing facilities.

Since these activities would be conducted in China and other foreign countries, some of these risks may be more significant due to the less predictable legal and political environment.

Since these activities are currently conducted in China and could be expanded to other foreign countries, some of these risks may be more significant due to the less predictable legal and political environment.

Our business may be negatively affected by political events and foreign policy responses.

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Changes in commodity prices may also cause political uncertainty and increase currency volatility that can affect economic activity.

Policies and statements by the current White House administration has created uncertainty with how trade might be affected between the U.S.

Policies and statements by the current White House administration have created uncertainty with how trade might be affected between the U.S.

and the rest of the world, and China, in particular.

For example, in June 2018, the Office of the United States Trade Representative announced new proposed tariffs for certain products imported into the U.S.

As of September 24, 2018, these tariffs were implemented with an initial rate of 10% impacting a portion of our products.

On May 10, 2019, the Office of the U.S.

Trade Representative increased tariffs on certain imported goods from China to 25%.

On May 13, 2019, the U.S.

Trade Representative released a list of Chinese-origin products with an annual trade value of approximately $ 300 billion on which the U.S.

proposed to impose Section 301 tariffs of up to 25%, which covered almost all remaining imports from China that are not already subject to Section 301 tariffs.

On June 29, 2019 President Trump announced that trade negotiations with China are resuming and the proposed Section 301 tariffs on $300 billion worth of Chinese goods, first announced on May 13, 2019, were place on hold.

On August 13, 2019, it was announced the Section 301 tariffs on $300 billion would go into effect in two parts.

"List 4A" on September 1, 2019 at 10% and "List 4B" on December 15, 2019 at 10%.

The progress and continuation of the negotiations continues to be uncertain and a further escalation of the trade war remains a possibility.

The vast majority of our products that are imported into the U.S.

from China are currently subject to tariffs that range between 15% and 25%.

On January 22, 2020, the United States of Trade Representative announced it will reduce Section 301 List 4A additional tariffs from 15% to 7.5% and that List 4B tariffs would not go into effect.

These tariffs have already affected our operating results and margins.

The progress and continuation of trade negotiations between the U.S.

and China continues to be uncertain and a further escalation of the trade war remains a possibility.

These tariffs have, and will continue to have, an adverse effect on our results of operations and margins.

We can provide no assurance regarding the magnitude, scope or duration of the imposed tariffs or the magnitude, scope or duration from any relief in increases to such tariffs, as well as the potential for additional tariffs or trade barriers by the U.S., China or other countries, nor that any strategies we may implement to mitigate the impact of such tariffs or other trade actions will be successful.

We can provide no assu rance regarding the magnitude, scope or duration of the imposed tariffs or the magnitude, scope or duration from any relief in increases to such tariffs, as well as the potential for additional tariffs or trade barriers by the U.S., China or other countries, nor that any strategies we may implement to mitigate the impact of such tariffs or other trade actions will be successful.

Changes in U.S.

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If we fail to do so, we could incur unexpected costs or delays in product development.

Our contract manufacturers, logistics centers and certain administrative and research and development operations are located in areas likely to be subject to natural disasters.

The manufacturing or shipping of our products at one or more facilities may be disrupted because our manufacturing and logistics contractors are primarily located in southern China.

Our principal executive offices are located in New York, New York.

The risks of earthquakes, extreme storms and other natural disasters in these geographic areas are significant.

Risks Related to Intellectual Property

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Our inability or failure to effectively protect our intellectual property could reduce the value of our technology and could impair our ability to compete.

Any inability or failure by us to

meaningfully protect our intellectual property could result in competitors offering products that incorporate our most technologically advanced features.

Any inability or failure by us to meaningfully protect our intellectual property could result in competitors offering products that incorporate our most technologically advanced features.

We have initiated and may continue to initiate legal proceedings to enforce our intellectual property rights.

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Our future success also depends on our ability to attract, retain and motivate skilled personnel.

Competition for personnel exists in the industries in which we participate, particularly for persons with specialized experience in areas such as antenna design and radio

frequency equipment.

Competition for personnel exists in the industries in which we participate, particularly for persons with specialized experience in areas such as antenna design and radio frequency equipment.

If we are unable to attract and retain the necessary personnel our business, results of operations and financial condition could be materially adversely affected.

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We receive a substantial majority of our revenues from the sale of outdoor wireless networking equipment and enterprise WLAN.

As we expand into other products and services, such as video surveillance equipment, wireless backhaul, consumer electronics, and machine-to-machine communications, we may not be able to compete effectively with existing market participants and may not be able to realize a positive return on the investment we have made in these products or services.

As we expand into other products and services, such as video surveillance equipment, voice communication equipment, security access equipment, wireless backhaul, consumer electronics, and machine-to-machine communications, we may not be able to compete effectively with existing market participants and may not be able to realize a positive return on the investment we have made in these products or services.

Entering these markets may result in increased product development costs, and our new products may have extended time to market relative to our current products.

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Our operating expenses are increasing as we make expenditures to enhance and expand our operations.

Over the past several years, we have increased our expenditure on infrastructure to support our anticipated growth and as a result of our being a public company.

Over the past several years, we have increased our expenditure on infrastructure to support our anticipated growth.

We are continuing to make significant investments in information systems, hiring more administrative personnel, using more professional services and expanding our operations outside the United States.

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We rely on third party service providers, such as G-Suite, Google Cloud and Amazon Web Services, to provide distributed computing infrastructure platforms for business operations, or what is commonly referred to as a “cloud” computing service.

Any transition of the cloud services currently provided by these service providers to another cloud provider would be difficult to

implement and will cause us to incur significant time and expense.

Any transition of the cloud services currently provided by these service providers to another cloud provider would be difficult to implement and will cause us to incur significant time and expense.

If our existing cloud service providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business would be seriously harmed.

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Our debt levels could adversely affect our ability to raise additional capital to pay dividends, repurchase our shares of common stock and fund our operations or limit our ability to react to changes in our industry or the economy.

As of June 30, 2019, our balance outstanding under our Term Facility and Revolving Facility, under the Second Amended & Restated Credit Agreement, was $462.5 million and $35.0 million, respectively.

As of June 30, 2020, our balance outstanding under the Credit Agreement for our Term Facility and Revolving Facility, was $475.0 million and $180.0 million, respectively.

In the future we may need to raise additional capital to finance our payment of dividends or repurchase shares of our common stock and fund our growth and operational goals.

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• limiting our ability to make strategic acquisitions or causing us to make non-strategic divestitures;

• limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

• limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements,

acquisitions and general corporate or other purposes;

• limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to competitors who are less highly leveraged or have access to more capital.

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Because these investments are inherently risky, no assurance can be given that such investments will be successful and will not adversely affect our reputation, business prospects, results of operation and financial condition.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is calculated.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

dollar LIBOR with a newly created index, calculated by reference to short-term repurchase agreements backed by U.S.

Treasury securities, called the Secured Overnight Financing Rate (“SOFR”).

The first publication of SOFR was released by the Federal Reserve Bank of New York in April 2018.

Whether SOFR will become a widely accepted benchmark in place of LIBOR, however, remains in question.

As such, the future of LIBOR and potential alternatives thereto are uncertain at this time.

If LIBOR is discontinued, the terms of our Credit Agreement provide for the use of an alternative rate.

Such an event would not affect our ability to borrow or maintain already outstanding borrowings, but the alternative rate could be higher and more volatile than LIBOR prior to its discontinuance.

Accordingly, the potential effects of the foregoing on our cost of capital cannot yet be determined.

Risks Related to Our Common Stock

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Pera, our founder, Chairman, and Chief Executive Officer, is able to exercise voting rights with respect to a majority of the voting power of our outstanding stock and therefore has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets.

This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support.

This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of

our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support.

This concentrated control could also discourage certain potential investors from acquiring our common stock and might harm the trading price of our stock.

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In addition, our business may be subject to seasonality, although our recent growth rates and timing of product introductions may have historically masked our seasonal changes in demand.

For example, our consumer products may be subject to general seasonal spending trends associated with holidays.

For example, our consumer products may be subject to general seasonal

spending trends associated with holidays.

Risks Related to Regulatory, Legal and Tax Matters

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Our failure or inability to obtain required import or export approval for our products could harm our international and domestic sales and adversely affect our revenue.

New regulations or changes in existing regulations related to our products may result in unanticipated burdens, costs and liabilities.

Products that involve electromagnetic emissions are subject to regulation in the United States and the other countries in which we do business.

In the United States, various federal agencies including the Center for Devices and Radiological Health of the Food and Drug Administration, the Federal Communications Commission, the Occupational Safety and Health Administration and various state agencies have promulgated regulations that concern the use of electromagnetic emissions standards.

Member countries of the EU and other countries have enacted similar standards concerning electrical safety and electromagnetic compatibility and emissions standards.

If any of our products becomes subject to new regulations or if any of our products becomes specifically regulated by additional government entities, compliance with such regulations could become more burdensome, and we may be unable to ship our products or they may cost substantially more to produce, which would reduce our revenues and increase our cost of revenues.

Existing and new regulations, changes in existing regulations, or the enforcement of any regulations related to our products may result in unanticipated burdens, costs and liabilities and could materially and adversely affect our financial condition, results of operations, and our brand.

Our products are subject to governmental regulations in a variety of jurisdictions.

In order to achieve and maintain market acceptance, our products must continue to comply with these regulations as well as a significant number of industry standards.

For example, our wireless communication products operate through the transmission of radio signals, and radio emissions are subject to regulation in the United States and in other countries in which we do business.

Member countries of the European Union and other countries have enacted similar standards concerning electrical safety and electromagnetic compatibility and emissions, and chemical substances and use standards.

As these regulations and standards evolve, and if new regulations or standards are implemented, we will be required to modify our products or develop and support new versions of our products, and our compliance with these regulations and standards may become more burdensome.

The failure of our products to comply, or delays in compliance, with the various existing and evolving industry regulations and standards could prevent or delay introduction of our products, which could harm our business.

End customer uncertainty regarding future policies may also affect demand for communications products, including our products.

If existing laws or regulations regarding the use of our products or services are enforced in a manner not previously contemplated by us, our channel partners or our end customers, it could expose us or them to liability and could have a material adverse effect on our financial condition, results of operations, and our brand.

Moreover, channel partners or end customers may require us, or we may otherwise deem it necessary or advisable, to alter our products to address actual or anticipated changes in the regulatory environment.

Our inability to alter our products to address these requirements and any regulatory changes may have a material adverse effect on our financial condition, results of operations, and our brand.

Further, the enforcement of laws and regulations may force us to withdraw one or more of our products from sale in certain jurisdictions or to recall one or more of our products in certain jurisdictions.

We may incur costs and expenses relating to a withdrawal from a particular market or a recall of one or more of our products.

The process of identifying products that have been widely distributed for withdrawals and recalls may be lengthy and require significant resources and we may incur significant replacement costs, damage claims and harm to our reputation.

expect to continue to be the subject of investigations, inquiries, data requests, actions, orders, and audits by government authorities and regulators in the United States, the European Union, and around the world.

Orders issued by, or inquiries or enforcement actions initiated by, government or regulatory authorities could cause us to incur substantial costs, expose us to unanticipated liability or penalties or require us to change our business practices in a manner materially adverse to our financial condition, results of operations, and our brand.

Our failure to comply with U.S.

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The CSL is the first Chinese law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny.

More recently, California enacted the California Consumer Privacy Act (the “CCPA”) that will, among other things, require covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information, when it goes into effect on January 1, 2020.

California legislators have announced the intent to modify the CCPA, and, as a result, we cannot yet predict the impact of the CCPA on our business or operations.

The CCPA took effect on January 1, 2020 with the privacy provisions enforceable by the California Attorney General as of July 1, 2020, and the regulations becoming enforceable as of August 1, 2020.

Given the recent implementation of the regulations, we cannot yet predict the impact of the CCPA on our business or operations.

The costs of compliance with, and other burdens imposed by, the GDPR, CSL and CCPA may limit the use and adoption of our products and services and could have an adverse impact on our business, results of operations and financial condition.

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Our business could be further harmed if currently unlicensed RF spectrum becomes subject to licensing in the United States or elsewhere.

Network operators and service providers that use our products may be unable to obtain licenses for RF spectrum at

reasonable prices or at all.

Network operators and service providers that use our products may be unable to obtain licenses for RF spectrum at reasonable prices or at all.

Even if the unlicensed spectrum remains unlicensed, existing and new government regulations may require we make changes in our products.

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In addition, projections of any evaluation of effectiveness of internal control over financial reporting in future periods are subject to the risk that the control may become inadequate because of changes in conditions or a deterioration in the degree of compliance with the policies or procedures.

We have in the past and may in the future fail to maintain adequate internal controls.

in the past and may in the future fail to maintain adequate internal controls.

For example, as reported in the Annual Reports on Form 10-K for the years ended June 30, 2015 and 2016, management of the Company determined that the Company did not maintain an effective control environment, which contributed to three material weaknesses in internal control over financial reporting.

As described in more detail in our Annual Report on Form 10-K for year ended June 30, 2017, under Item 9A.

“Controls and Procedures”, the Company has completed the remediation efforts of such material weakness, completed testing of the controls to address such material weaknesses and concluded that the previously reported material weaknesses in internal controls over financial

reporting have been satisfactorily remediated as of June 30, 2017.

“Controls and Procedures”, the Company completed the remediation efforts of such material weakness, completed testing of the controls to address such material weaknesses and concluded that the previously reported material weaknesses in internal controls over financial reporting have been satisfactorily remediated as of June 30, 2017.

Any such failure (including any failure to implement new or improved controls, difficulties in the execution of such implementation or deterioration of our current control practices) may result in an inability to prevent fraud, or cause us to fail to meet our reporting obligations.

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We regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations to determine the adequacy of our provision for income taxes.

Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our business results of operations and financial condition.

believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our business results of operations and financial condition.

Changes in applicable tax regulations could negatively affect our financial results.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”).

The 2017 Tax Act significantly changes the taxation of U.S.-based multinational corporations, by, among other things, reducing the U.S.

corporate income tax rate, changing rules regarding the use and carrying of net operating losses, adopting elements of a territorial tax system, assessing a one-time transition tax under revised Section 965 of the Internal Revenue Code on earnings of certain foreign subsidiaries that were previously tax deferred (the "Transition Tax"), imposing a new minimum tax if deductible payments to foreign affiliates exceed a certain threshold, and creating new taxes on certain foreign-sourced earnings.

The changes included in the 2017 Tax Act are broad and complex.

The 2017 Tax Act is also unclear in some respects and has required and will continue to require interpretations and implementing regulations from the U.S.

Treasury and Internal Revenue Service, as well as state tax authorities, and the legislation could be subject to potential amendments and technical corrections, any of which could lessen or increase certain adverse impacts of the legislation.

The final transition impacts of the 2017 Tax Act may differ from the estimates provided elsewhere in this report, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes related interpretations in response to the 2017 Tax Act, or any updates or changes to estimates we have utilized to calculate the transition impacts.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs (the “2017 Tax Act”).

A significant portion of our earnings are earned by our subsidiaries outside the U.S.

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Furthermore, changes to the taxation of undistributed foreign earnings could change our future intentions regarding reinvestment of such earnings.

Although the accounting for the impact of the 2017 Tax Act was completed as of December 22, 2018, we are continuing to evaluate the overall impact of the 2017 Tax Act on our operations and U.S.

federal income tax position.

Although the accounting for the impact of the 2017 Tax Act was completed as of December 22, 2018, we are continuing to monitor ongoing changes and ruling updates to the 2017 Tax Act.

There can be no assurance that further changes in the 2017 Tax Act will not materially and adversely affect our effective tax rate, tax payments, financial condition and results of operations.

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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