What changed in this filing

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Item 1A. Risk Factors

2023-05-05 compared with 2023-02-03 · 35 added, 26 removed, 807 unchanged (7% of the section changed)

21 unchanged sentences

• general credit, liquidity, market, and interest rate risks to our investment securities;

• exposure to adverse developments affecting financial institutions at which we maintain deposits;

• exposure to increased economic and operational uncertainties from our international operations, including, without limitation, as a result of foreign policy and geopolitical developments, particularly those involving China and Russia, varying legal and regulatory regimes and the effects of foreign currency exchange rates;

200 unchanged sentences

If these sources fail to satisfy our supply requirements or we are unable to manage our supply requirements through other sources, it could disrupt our business or have a material adverse effect on our results of operations and financial condition.

We use components that are subject to price fluctuations, shortages or interruptions of supply, including chipsets that have been subject to ongoing significant shortages.

We use components that are subject to price fluctuations, shortages or interruptions of supply, such as chipsets.

The cost, quality and availability of these components are essential to the production and sale of all of our products and disruptions in our supply of these components could delay or disrupt the supply of our products and affect our business, results of operations and financial condition.

Since 2020, we experienced reduced availability of components used to manufacture our products, especially the chipsets, which has impacted, and we expect will continue to impact our ability and costs to manufacture our products.

Since 2020, we experienced reduced availability of components used to manufacture our products, especially the chipsets, which has impacted our ability and costs to manufacture our products.

These supply shortages have resulted in increased component delivery lead times and increased costs to obtain components, particularly chipsets, and resulted in delays in product production.

We do not stockpile sufficient components, particularly the chipsets, to cover the time it would take to re-engineer our products to replace the components used to manufacture or products.

While we are continuing to work closely with our suppliers and contract manufacturers to minimize the potential adverse impacts of the supply shortage, there are many companies seeking to purchase the limited supply of chipsets and other components, many of which have greater resources and larger market share than we have, which may limit the effectiveness of our efforts.

We expect that shortages of chipsets and other components will continue and may have an adverse impact on our ability to manufacture our products and meet demand for our products.

Should the shortage of chipsets and other components used to manufacture our products continue, there is no assurance that we will be able to obtain sufficient chipsets or other components on acceptable terms, if at all, which could delay or disrupt the supply of our products and affect our business, results of operations and financial condition.

We do not stockpile sufficient components, particularly the chipsets, to cover the time it would take to re-engineer our products to replace the components used to manufacture our products.

If there are shortages of chipsets or other components used to manufacture our products, while we expect to work closely with our suppliers and contract manufacturers to minimize the potential adverse impacts of such supply shortage, there are many companies seeking to purchase the same components, many of which have greater resources and larger market share than we have, which may limit the effectiveness of our efforts.

There is also no assurance that we will be able to obtain sufficient chipsets or other components on acceptable terms, if at all, which could delay or disrupt the supply of our products and affect our business, results of operations and financial condition.

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

9 unchanged sentences

When a component or product uses new technologies, capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased.

Many factors may affect the continued availability of these components at acceptable prices,

including if those suppliers decide to concentrate on the production of common components instead of components customized to meet our requirements.

Many factors may affect the continued availability of these components at acceptable prices, including if those suppliers decide to concentrate on the production of common components instead of components customized to meet our requirements.

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

26 unchanged sentences

A downturn or such other trends may decrease our revenues and increase our costs and may increase credit risk with our customers and impact our ability to collect account receivable and recognize revenue.

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”.

The United Kingdom ceased to be a member of the European Union on January 31, 2020.

An agreement governing the U.K.’s departure from the European Union, Brexit, was agreed to on December 24, 2020, but a “transition period” keeping most pre-departure arrangements in place ended on December 31, 2020.

Accordingly, although an agreement on post-Brexit trade and future European Union-United Kingdom relations (the European Union-United Kingdom Trade and Cooperation Agreement) was reached on December 24, 2020, and the formal ratification process was completed in April 2021, there continues to be uncertainty over some of the practical consequences of Brexit and as to its application, including as to the United Kingdom’s trading policies with the European Union and other countries as it issues new rules and regulations.

Accordingly, although an agreement on post-

Brexit trade and future European Union-United Kingdom relations (the European Union-United Kingdom Trade and Cooperation Agreement) was reached on December 24, 2020, and the formal ratification process was completed in April 2021, there continues to be uncertainty over some of the practical consequences of Brexit and as to its application, including as to the United Kingdom’s trading policies with the European Union and other countries as it issues new rules and regulations.

The most significant impact of the new trade agreement is new regulations regarding trade, tax, and employees, among others, in the United Kingdom that resulted in the creation of non-tariff barriers and have increased our shipping and regulatory costs and complexities for moving our products between the United Kingdom and the European Union.

28 unchanged sentences

We believe that we must continually develop and introduce new products, enhance our existing products, effectively stimulate customer demand for new and upgraded products, and successfully manage the transition to these new and upgraded products to maintain or increase our revenue.

The success of new product introductions depends on a number of factors including, but not limited to, timely and successful research and development, pricing, market and consumer acceptance, the effective forecasting and management of product demand, purchase commitments and inventory levels, the availability of products in appropriate quantities to meet anticipated demand, the management of manufacturing and supply costs, the management of risks associated with new product production ramp-up issues, and the risk that new products may have quality issues or other defects or bugs in the early stages of introduction.

management of product demand, purchase commitments and inventory levels, the availability of products in appropriate quantities to meet anticipated demand, the management of manufacturing and supply costs, the management of risks associated with new product production ramp-up issues, and the risk that new products may have quality issues or other defects or bugs in the early stages of introduction.

Therefore, we may not correctly determine in advance the ultimate effect of new product introductions and transitions.

27 unchanged sentences

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.

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.

We are also subject to the risks of our distributors encountering financial difficulties, which could impede their effectiveness and also expose us to financial risk if they are unable to pay for the products they purchase from us.

9 unchanged sentences

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

We maintain cash deposits in excess of federally insured limits.

Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks that exceed the FDIC insurance limits.

We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or similar agencies.

Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints.

For example, on March 10, 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC.

The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.

There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S.

or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.

Risks Related to Our International Operations

55 unchanged sentences

For example, if the U.S.

government withdraws or materially modifies existing or proposed trade agreements, places greater restriction on free trade generally or imposes increases on tariffs on goods imported into the U.S., particularly from China, our business, financial condition and results of operations could be adversely affected.

government withdraws or materially modifies existing or proposed trade agreements, places greater restriction on free trade generally or imposes increases on

tariffs on goods imported into the U.S., particularly from China, our business, financial condition and results of operations could be adversely affected.

In addition, negative sentiments towards the U.S.

38 unchanged sentences

Confidentiality agreements with our employees, licensees, independent contractors and others may not effectively prevent disclosure of our trade secrets, and may not provide an adequate remedy in the event of unauthorized use or disclosure of our trade secrets.

We may also fail or have failed to obtain such agreements from such persons due to administrative oversights or other reasons.

may also fail or have failed to obtain such agreements from such persons due to administrative oversights or other reasons.

Monitoring unauthorized use of our intellectual property is difficult and costly.

1 unchanged sentence

The steps we have taken may not prevent unauthorized use of our intellectual property.

We may fail to detect

infringements of, or take appropriate steps to enforce, our intellectual property rights.

We may fail to detect infringements of, or take appropriate steps to enforce, our intellectual property rights.

Our competitors might independently develop similar technology without infringing our intellectual property rights.

71 unchanged sentences

Pera or any of the other members of our management team and the inability to identify and hire a qualified replacement timely would adversely affect our business, results of operations and financial condition.

Our business model relies in part on leanly staffed, independent and efficient research and development teams.

model relies in part on leanly staffed, independent and efficient research and development teams.

Our research and development teams are organized around small groups or individual contributors for a given platform, and there is little overlap in knowledge and responsibilities.

In the event that we are unable to retain the services of any key contributors or are unable to identify and attract

additional contributors, we may be unable to bring our products or product improvements to market in a timely manner, if at all, due to disruption in our development activities.

In the event that we are unable to retain the services of any key contributors or are unable to identify and attract additional contributors, we may be unable to bring our products or product improvements to market in a timely manner, if at all, due to disruption in our development activities.

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

31 unchanged sentences

The availability of this service is essential to the management of our business.

As we expand our operations, we expect to utilize additional systems and service providers that may also be essential to managing our business.

As we expand our operations, we expect to utilize additional systems

and service providers that may also be essential to managing our business.

Although the systems and services that we require are typically available from a number of providers, it is time consuming and costly to qualify and implement these relationships.

6 unchanged sentences

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 December 31, 2022, our balance outstanding under the Third Amended and Restated Credit Agreement for our Term Facility and Revolving Facility (each as defined herein), was $456.3 million and $440.0 million, respectively.

As of March 31, 2023, our balance outstanding under the Third Amended and Restated Credit Agreement for our Term Facility and Revolving Facility (each as defined herein), was $450.0 million and $640.0 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.

27 unchanged sentences

We may be adversely affected by changes in LIBOR reporting practices or the index used to replace LIBOR.

Our Term Facility and Revolving Facility primarily use the London Interbank Offered Rate (“LIBOR”) to calculate interest due to our lenders.

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.

2 unchanged sentences

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”).

Treasury securities, called the SOFR.

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

As such, the future of LIBOR and potential alternative reference rates are uncertain at this time.

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

The terms of our Amended 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 and may result in interest obligations which are higher or lower or that do not otherwise correlate over time with the interest payments that would have been made on such debt if LIBOR remained in its current form.

15 unchanged sentences

Pera is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.

As of February 3, 2023, Mr.

As of May 5, 2023, Mr.

Pera beneficially owned 56,278,181 shares of our common stock.

202 unchanged sentences

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-Q

Item 1A. Risk Factors