What changed in this filing

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Item 1A. Risk Factors

2024-11-08 compared with 2024-05-10 · 98 added, 105 removed, 722 unchanged (22% of the section changed)

14 unchanged sentences

• our reliance on a limited number of contract manufacturers to manufacture our products, and potential quality or product supply problems for our products if we are unable to secure sufficient components for our products or there is a shortage of manufacturing capacity;

• our reliance on a limited number of suppliers and our inability to predict shortages in components, such as the global shortage in chipsets, or other supply disruptions as a result of, including, without limitation, the military conflict between Russia and Ukraine, the escalating tensions between China and Taiwan, or our failure to identify or qualify alternative suppliers;

• our reliance on a limited number of suppliers and our inability to predict shortages in components or other supply disruptions as a result of, including, without limitation, the military conflict between Russia and Ukraine, the escalating tensions between China and Taiwan, or our failure to identify or qualify alternative suppliers;

• disruption to the manufacturing or shipping of our products due to natural disasters, labor shortages or operational reductions from outbreaks of diseases or other public health events, the military conflict between Russia and Ukraine, the escalating tensions between China and Taiwan, or similar disruptions in the countries or regions in which our contract manufacturers or logistics contractors are located;

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• lower than expected returns and exposure to increased operational risks from our investments in business lines, products, services, technologies, joint ventures and other strategic transactions;

• our enterprise and service provider technologies;

• the ineffective management of product introductions, product transitions and marketing or our inability to remain competitive and stimulate customer demand for our products;

• our inability to anticipate consumer preferences and develop desirable consumer products and solutions, or to execute our strategy for our consumer products or develop our sales channels;

• our inability to anticipate consumer preferences and develop desirable products and solutions, or to execute our strategy for our products or develop our sales channels;

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

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• the risks of using open source software in our products;

• our use of artificial intelligence technologies which may present business, compliance, and reputational risks:

• our debt levels and the impact our debt levels may have on our ability to raise capital or otherwise finance our business;

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• our reliance on third-party software and services for certain aspects of our operations, including, without limitation, our financial reporting functions;

• uncertainty surrounding the elimination of LIBOR and the transition to SOFR;

• our reliance on our founder and chief executive officer, who owns a majority of our common stock;

• volatility in the price of our common stock due to volatility in our results of operations or our failure to pay cash dividends or to repurchase shares of our common stock pursuant to our repurchase programs;

• volatility in the price of our common stock due to volatility in our results of operations or our failure to pay cash dividends or to repurchase shares of our common stock;

• the reliance of our products on unlicensed radio frequency spectrum, and the increasing reliance of consumer and other products on the same spectrum or from the introduction of regulation of such spectrum;

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This information has been generally difficult to obtain in a timely manner, and we cannot always be certain that the information is reliable.

If we over forecast demand, we may build excess inventory, increase vendor deposits and we may not be able to decrease our expenses in time to offset any shortfall in revenues, which could harm our ability to achieve or sustain expected results of operations.

If we over forecast demand, we may build excess inventory, increase vendor deposits and we may not be able to decrease our expenses in time to offset any shortfall in revenues and we may be required to record write-downs for excess or obsolete inventory, which could harm our ability to achieve or sustain expected results of operations.

If we under forecast demand, our ability to fulfill sales orders will be compromised and sales to distributors may be deferred or lost altogether, which may impair our distributor relationships, would reduce our revenues and could harm our ability to achieve or sustain expected results of operations.

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This increases the risk that we may manufacture too many or not enough products in any given period.

This risk may be further exacerbated by supply chain constraints on the global supply of components, particularly the chipsets, that we use to manufacture our products, as well as longer shipping lead times and delays .

This risk may be further exacerbated by supply chain constraints on the global supply of components that we use to manufacture our products, as well as longer shipping lead times and delays.

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

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.

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 serve (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.

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

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

Decisions to build inventory for new products or to increase or maintain higher inventory levels and vendor deposit levels are typically based upon uncertain forecasts or other

assumptions and may expose us to a greater risk of carrying excess or obsolete inventory.

Because the markets in which the Company competes are volatile, competitive and subject to rapid technology changes, price changes, shortages and other disruptions, if the assumptions on which we base these decisions turn out to be incorrect, our financial performance could suffer and we could be required to write-off the value of excess products or components inventory, increase vendor deposits or not fully utilize firm purchase commitments.

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

Given the complexity, we occasionally have experienced, and could experience in the future, lower than expected yields on new or enhanced products and delays in completing the development and introduction of new products and enhancements to existing products.

In addition, new products may have lower selling prices or higher costs than existing products, which could negatively impact our results of operations.

In addition, new products may have lower selling prices or higher costs than existing products and may be more prone to technical problems, which could negatively impact our results of operations.

Our ability to compete successfully will depend in large measure on our ability to maintain a technically skilled development and engineering staff, to successfully innovate, and to adapt to technological changes and advances in the industry.

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The markets in which we compete are highly competitive.

The networking, enterprise WLAN, routing, switching, video surveillance, wireless backhaul, machine-to-machine communications

and consumer markets in which we primarily compete are highly competitive and are influenced by competitive factors including:

The networking, enterprise WLAN, routing, switching, video surveillance, door access, VoIP, wireless backhaul, machine-to-machine communications and consumer markets in which we primarily compete are highly competitive and are influenced by competitive factors including:

• our ability to rapidly develop and introduce new high-performance integrated solutions;

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Our products may contain defects and bugs when they are introduced, or as new versions are released.

We have focused, and intend to focus in the future, on getting our new products to market quickly.

Due to our rapid product introductions, defects and bugs that may be contained in our products may not yet have manifested.

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If any of these problems are not found until after we have commenced commercial production and distribution of a new product, we may be required to incur additional development costs, repair or replacement costs, and other costs relating to regulatory proceedings, product recalls and litigation, which could harm our reputation and results of operations.

Undetected defects or bugs may lead to negative online Internet reviews of our products, which are increasingly becoming a significant factor in the success of our new product launches, especially for our consumer products.

Undetected defects or bugs may lead to negative online Internet reviews of our products, which are increasingly becoming a significant factor in the success of our new product launches.

If we are unable to quickly respond to negative reviews, including end user reviews posted on various prominent online retailers, our ability to sell these products will be harmed.

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If we experience greater returns from retailers or end customers, or greater warranty claims, in excess of our reserves, our business, revenue and results of operations could be harmed.

Security vulnerabilities in our products, services and systems, in our distribution channel, or supply chain could lead to reduced revenues and claims against us.

Security vulnerabilities in our or our service providers' products, services and systems, in our distribution channel, or supply chain could lead to reduced revenues and claims against us.

The quality and performance of some of our products and services may depend upon their ability to withstand cyber-attacks.

Third parties may develop and deploy viruses, worms and other malicious software programs, some of which may be designed to attack our products, systems, or networks.

Because we use our products in our own operations, any security vulnerabilities in our products could be disruptive to our business and harm our reputation.

Some of our products and services also involve the storage and transmission of users’ and customers’ proprietary information which may be the target of cyber-attacks.

Hardware and software that we produce or procure from third parties also may contain defects in manufacture or design, including bugs and other problems, which could compromise their ability to withstand cyber-attacks.

In addition, customers not deploying security updates in a timely manner or deciding not to upgrade products, services or solutions could result in claims of liability against us, damage our reputation or otherwise materially harm our business.

Additionally, our sales to end customers through our webstores have increased, which may expose us to liabilities associated with the online collection of customer data, including credit card information, and the costs we may incur to mitigate such risks.

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Third parties may have the technology or knowledge to breach the security of customer transaction data.

Although we have security measures related to our systems and the privacy of our end customers, we cannot guarantee these measures

will effectively prevent others from obtaining unauthorized access to our information and our customers’ information.

Any person who circumvents our security measures could destroy or steal valuable information and/or disrupt our operations.

Any security breach could also expose us to risks of data loss, litigation and liability, and could seriously disrupt operations and harm our reputation, any of which could adversely affect our financial condition and results of operations.

Although we and our service providers have security measures related to our systems and the privacy of our end customers, we cannot guarantee these measures will effectively prevent others from obtaining unauthorized access to our information and our customers’ information.

Any person who circumvents our security measures could destroy or steal valuable information and/or disrupt our

Any security breach could also expose us and our service providers to risks of data loss, litigation and liability, and could seriously disrupt operations and harm our reputation, any of which could adversely affect our financial condition and results of operations.

In addition, state and federal laws and regulations are increasingly enacted to protect consumers against identity theft.

These laws and regulations will likely increase the costs of doing business and if we fail to implement appropriate security measures, or to detect and provide prompt notice of unauthorized access as required by some of these laws and regulations, we could be subject to potential claims for damages and other remedies, which could adversely affect our business and results of operations.

These laws and regulations will likely increase the costs of doing business and if we or our service providers fail to implement appropriate security measures, or to detect and provide prompt notice of unauthorized access as required by some of these laws and regulations, we could be subject to potential claims for damages and other remedies, which could adversely affect our business and results of operations.

For additional information regarding the impact of privacy regulations applicable to our business, see “—Risks Related to Regulatory, Legal and Tax Matters — Our failure to comply with U.S.

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For example, in January 2021, we became aware that certain of our information technology systems hosted by a third-party cloud provider were improperly accessed and certain of our source code and the credentials used to access the information technology systems themselves had been compromised.

We received a threat to publicly release these materials unless we made a payment, which we have not done.

We received a threat to publicly release these materials unless we made a payment, which we did not do and the party responsible was ultimately prosecuted.

As a result, it is possible that the source code and other information could be publicly disclosed or made available to our competitors.

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We have taken, and will continue to take, steps to remediate access controls to our information technology systems.

The costs to us to eliminate or alleviate security vulnerabilities can be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions, as well as potential liability to the company.

The risk that these types of events could seriously harm our business is likely to increase as we expand the web-based products and services that we offer.

The costs to us to eliminate or alleviate security vulnerabilities in our products, services and system can be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions, as well as potential liability to the company.

The risk that these types of events could seriously harm our business is likely to increase as we expand the products and services that we offer.

We may be unable to anticipate or fail to adequately mitigate against increasingly sophisticated methods to engage in illegal or fraudulent activities against us.

Despite any defensive measures we take to manage threats to our business, our risk and exposure to these matters remain heightened because of, among other things, the evolving nature of such threats in light of advances in computer capabilities, new discoveries in the field of cryptography, new and sophisticated methods used by criminals including phishing, social engineering or other illicit acts, the increasing use of our webstores by customers, or other events or developments that we may be unable to anticipate or fail to adequately mitigate.

Despite any defensive measures we take to manage threats to our business, our risk and exposure to these matters remain heightened because of, among other things, the evolving nature of such threats in light of advances in computer capabilities and artificial intelligence, new discoveries in the field of cryptography, new and sophisticated methods used by criminals including phishing, social engineering or other illicit acts, the increasing use of our webstores by customers, or other events or developments that we may be unable to anticipate or fail to adequately mitigate.

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.

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Shortages of components 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 and Vietnam, to manufacture our products.

We retain contract manufacturers, located primarily in Vietnam and China, 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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The ability and willingness of our contract manufacturers to perform is largely outside our control.

Additionally, from time to time, unexpected events, such as the COVID-19 pandemic, have had, and may have in the future, adverse effects on the ability of our contract manufacturers to fulfill their obligations to us due to, among other things, work stoppages or slowdowns due to facility closures or other social distancing mitigation efforts, and, more recently, the inability of our contract manufacturers to procure adequate supplies of the components to manufacture our products, particularly chipsets.

Additionally, from time to time, unexpected events, such as health crises or pandemics, have had, and may have in the future, adverse effects on the ability of our contract manufacturers to fulfill their obligations to us due to, among other things, work stoppages or slowdowns due to facility closures or other social distancing mitigation efforts, and the inability of our contract manufacturers to procure adequate supplies of the components to manufacture our products.

A shortage of adequate component supply or manufacturing capacity could increase our costs by requiring us to use alternative contract manufacturers or component suppliers, which may not be available to us on acceptable terms, if at all.

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These increases in manufacturing costs or delays in manufacturing could have a material adverse impact on our business and results of operations.

For additional discussion of the risks associated with supply chain issues or supplies of components, including chipsets, see the risk factor below captioned “We rely upon a limited number of suppliers.

For additional discussion of the risks associated with supply chain issues or supplies of components, see the risk factor below captioned “We rely upon a limited number of suppliers.

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.”

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

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

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.

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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, including, without limitation, due to increasing demand for electronics and reductions in supply as a result of unforeseen events such as COVID-19, geopolitical conditions (including China-Taiwan relations) or commercial disputes with the suppliers, 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 increasing demand for electronics and reductions in supply as a result of unforeseen events such as health crises or pandemics, geopolitical conditions (including China-Taiwan relations) or commercial disputes with the suppliers, 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 and reduce our gross margin and profitability if we are unable to pass these price increases through to our customers.

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 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.

For example, we currently rely upon some chipset suppliers, such as Qualcomm 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, particularly chipsets.

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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, public health problems, military conflicts and geopolitical tensions, 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 and Vietnam.

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 Vietnam and China.

Our principal executive offices are located in New York, New York and we have operations in Ukraine, Taiwan and their surrounding countries.

The risks of earthquakes, extreme storms and other natural disasters (including as a result of climate change), military conflicts or geopolitical tensions in these geographic areas are significant.

In addition, global climate change may result in significant natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storm, sea-level rise and flooding.

In addition, global climate change may result in significant natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storm, sea-level rise, changing precipitation and flooding.

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.

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

Additionally, the United Kingdom ceased to be a member of the European Union on January 31, 2020, commonly referred to as “Brexit”.

Although 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 full effects of Brexit will depend on agreements the United Kingdom may make and rules and regulations it may issue concerning trading among the United Kingdom and the European Union.

Given the lack of comparable precedent, it is unclear what economic, financial, trade and legal implications the withdrawal of the United Kingdom from the European Union will have generally and how such withdrawal will affect us.

The consequences of Brexit have brought legal uncertainty and increased complexity which could continue as national laws and regulations in the United Kingdom differ from the European Union laws and regulations and additional requirements come into effect in the United Kingdom and the European Union relating to testing, authorization, labeling and other requirements that may impact our ability to import, export and otherwise distribute our products, services, and solutions.

Brexit could cause disruptions in the markets that we serve.

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

We have been investing and expect to continue to invest in growth areas and in our enterprise and service provider technologies, and if the return on these investments is lower or develops more slowly than we expect, our results of operations may be harmed.

We have and we may continue to invest and dedicate resources into new growth areas, such as consumer products, while also focusing on our enterprise and service provider technologies.

We have been investing and expect to continue to invest in growth areas in our enterprise and service provider technologies, and if the return on these investments is lower or develops more slowly than we expect, our results of operations may be harmed.

We have and we may continue to invest and dedicate resources into new growth areas, such as expansion in our enterprise and service provider technologies and subscription services.

However, the return on our investments may be lower, or may develop more slowly, than we expect.

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 competitive 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 existing 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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In addition, the introduction or announcement of new products or product enhancements may shorten the life cycle of our existing products or reduce demand for our current products, thereby offsetting any benefits of successful product introductions and potentially lead to challenges in managing inventory of existing products.

Failure to complete product transitions effectively or in a timely manner

could harm our brand and lead to, among other things, lower revenue, excess prior generation product inventory, or a deficit of new product inventory and reduced profitability.

In connection with introduction of new products, and our consumer products, in particular, we may spend significant amount on advertising and other marketing campaigns, such as television, print advertising, social media and others, as well as increased promotional activities, to build brand awareness and acquire new users.

While we seek to structure our advertising campaigns in the manner that we believe is most likely to encourage people to use our products and services, we may fail to identify advertising opportunities that satisfy our anticipated return on advertising spend, accurately predict customer acquisition, or fully understand or estimate the conditions and behaviors that drive customer behavior.

There can be no assurance that our advertising and other marketing efforts will result in increased sales of our consumer products.

If we are unable to anticipate consumer preferences and successfully develop desirable consumer products and solutions, we might not be able to maintain or increase revenue and profitability.

Our success in the consumer product market depends on our ability to identify and originate product trends as well as to anticipate, gauge and react to changing consumer demands in a timely manner.

All of our consumer products are subject to changing consumer preferences that cannot be predicted with certainty and lead times for our products may make it more difficult for us to respond rapidly to new or changing product or consumer preferences.

If we are unable to introduce appealing new consumer products or novel technologies in a timely manner, or our new consumer products or technologies are not accepted or adopted by consumers, our competitors may increase their market share, which could hurt our competitive position in the consumer product market.

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, 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.

We might not be able to, or determine that it is not in our interests to, raise prices to compensate for any additional costs.

Our strategy for our consumer products depends upon effectively maintaining and further developing our sales channels, including developing and supporting our retail sales channel and distributors.

We depend upon effective sales channels to reach the consumers who are the ultimate purchasers of our consumer products.

In the United States, we primarily sell our consumer products through a mix of retail channels, including our webstores, e-commerce, big box, mid-market and specialty retailers, and we reach certain U.S.

markets and international markets through distributors.

With some of our consumer products, we depend on retailers to provide adequate and attractive space for our products in their stores.

We further depend on our retailers to employ, educate and motivate their sales personnel to effectively sell our consumer products.

If our retailers do not adequately display our products, choose to reduce the space for our products in their stores or locate them in less than premium positioning, choose not to carry some or all of our consumer products or promote competitors’ products over ours, or do not effectively explain to customers the advantages of our consumer products, our sales could decrease and our business could be harmed.

Similarly, our business could be adversely affected if any of our large retail customers were to experience financial difficulties, or change the focus of their businesses in a way that de-emphasized the sale of our products.

Failure to complete product transitions effectively or in a timely manner could harm our brand and lead to, among other things, lower revenue, excess prior generation product inventory, or a deficit of new product inventory and reduced profitability.

In connection with introduction of new products, we may spend significant amount on advertising and other marketing campaigns, such as television, print advertising, social media and others, as well as increased promotional activities, to build brand awareness and acquire new users.

Our strategy for our products depends upon effectively maintaining and further developing our sales channels, including developing and supporting our retail sales channel and distributors.

We depend upon effective sales channels to reach the customers who are the ultimate purchasers of our products.

We sell our products through a mix of retail channels, including our webstores, distributors, e-commerce, big box, mid-market and specialty retailers.

With some of our products, we depend on third party retailers to provide adequate and attractive placement for our products in their stores, both physical and online.

We further depend on these retailers to employ, educate and motivate their sales personnel to effectively sell our products.

If our retailers do not adequately display our products, choose to reduce the space for our products in their stores or locate them in less than premium positioning, choose not to carry some or all of our products or promote competitors’ products over ours, or do not effectively explain to customers the advantages of our products, our sales could decrease and our business could be harmed.

Similarly, our business could be adversely affected if any of our distributors and other retail partners were to experience financial difficulties, or change the focus of their businesses in a way that de-emphasized the sale of our products.

Our distributors generally offer products from several different manufacturers.

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Our actual or perceived failure to adopt or achieve any ESG-related initiatives, goals, or commitments that we make could negatively impact our reputation or otherwise materially harm our business.

If we are unable to anticipate customer preferences and successfully develop desirable products and solutions, we might not be able to maintain or increase revenue and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate, gauge and react to changing customer demands in a timely manner.

All of our products are subject to changing preferences that cannot be predicted with certainty and lead times for our products may make it more difficult for us to respond rapidly to new or changing product or consumer preferences.

If we are unable to introduce appealing new consumer products or novel technologies in a timely manner, or our new

products or technologies are not accepted or adopted by customers, our competitors may increase their market share, which could hurt our competitive position.

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

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

We might not be able to, or determine that it is not in our interests to, raise prices to compensate for any additional costs.

Risks Related to Our International Operations

Our business is susceptible to risks associated with operations outside of the United States.

We have operations in China, the Czech Republic, Lithuania, Poland, Latvia, Ukraine, India, Taiwan, Vietnam and elsewhere, with our operations in Taiwan, in particular, increasingly important to our overall business.

We have operations in China, the Czech Republic, Lithuania, Poland, Latvia, Ukraine, India, Taiwan, Vietnam and elsewhere, with our operations in Taiwan and Vietnam, in particular, increasingly important to our overall business.

We also sell to distributors in numerous countries throughout the world.

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• fluctuations in currency exchange rates;

• impact of inflation on local economies;

• import and export license requirements, tariffs, economic sanctions, contractual limitations and other trade barriers;

• increasing labor costs, especially in China and Vietnam;

• increasing labor costs, especially in Vietnam and China;

• difficulties in managing the geographically remote personnel;

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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;

• business disruptions created by health crises, pandemics 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 cannot be certain that the investment and additional resources required to establish, acquire or integrate operations in other countries will produce anticipated levels of revenues or profitability.

Our third-party logistics and warehousing providers in China, Vietnam and elsewhere may fail to safeguard and accurately manage and report our inventory.

We use third-party logistics and warehousing providers located in China, Vietnam and other countries to fulfill a portion of our worldwide sales.

Our third-party logistics and warehousing providers in Vietnam and China and elsewhere may fail to safeguard and accurately manage and report our inventory.

We use third-party logistics and warehousing providers located in Vietnam, China and other countries to fulfill a portion of our worldwide sales.

We also rely on our third-party logistics and warehousing providers to safeguard and manage and report on the status of our products at their warehouse and in transit.

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Accordingly, our product development, supply chain operation and overall business, financial condition and results of operations and the market price of our shares may be affected by changes in governmental policies, taxation, inflation or interest rates in mainland China and Taiwan and by social instability and diplomatic developments in or affecting mainland China and Taiwan, which are outside of our control.

Relations between mainland China and Taiwan and other factors affecting military, political or economic conditions in mainland China and Taiwan, including responses by governments worldwide to the geopolitical tension or conflict between mainland China and Taiwan, could materially and adversely affect our business, financial condition and results of operations.

Taiwan, could materially and adversely affect our business, financial condition and results of operations.

In addition, both China and Taiwan are leading manufacturers of the world’s semiconductor supply.

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• our limited experience in operating manufacturing facilities.

Since these activities are currently conducted in China and Vietnam 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.

Since these activities are currently conducted in Vietnam, Taiwan and 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.

Additionally, changes in the local political, social and economic environment could adversely affect our ability and plans to develop our own manufacturing capacity.

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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 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.

Changes in U.S.

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The foreign policies of governments may be volatile and may result in rapid changes to import and export requirements, customs classifications, tariffs, trade sanctions and embargoes or other retaliatory trade measures that may cause us to raise prices, prevent us from offering products or providing services to particular entities or markets, may cause us to make changes to our operations, or create delays and inefficiencies in our supply chain.

For example, political unrest and uncertainties in the Middle East, Eastern Europe and Asia Pacific, including the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan, may lead to disruptions in commerce in those regions, which would in turn impact our sales to those regions.

For example, political unrest and uncertainties in the Middle East, Eastern Europe

and Asia Pacific, including the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan, may lead to disruptions in commerce in those regions, which would in turn impact our sales to those regions.

Furthermore, if the U.S.

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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 contract manufacturers may not respect our intellectual property, and may produce products that compete with ours.

Our contract manufacturers operate primarily in China and Vietnam, where the prosecution of intellectual property infringement and trade secret theft is more difficult than in the United States.

Our contract manufacturers operate primarily in Vietnam and China, where the prosecution of intellectual property infringement and trade secret theft is more difficult than in the United States.

In the past, our contract manufacturers, their affiliates, their other customers or their suppliers have attempted to participate in efforts to misappropriate our intellectual property and trade secrets to manufacture our products for themselves or others without our knowledge.

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Particularly if the quality of counterfeit products is poor, damage could be done to our brand.

Counterfeit sales, to the extent they replace otherwise legitimate sales, could also adversely affect our operating results.

Combating counterfeiting is difficult and expensive, and may not be successful, especially in countries that have a relatively weak legal regime for the protection of intellectual property.

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That could significantly diminish the value of some of our products and negatively affect our business.

We are incorporating artificial intelligence technologies into our products, services and processes.

These technologies may present business, compliance, and reputational risks.

Recent technological advances in artificial intelligence (AI) and machine-learning technology both present opportunities and pose risks to us.

If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer.

At the same time, use of AI has recently become the source of significant media attention and political debate.

The introduction of these technologies, particularly generative AI, into internal processes, new and existing offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.

In addition, our personnel could, unbeknownst to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities.

The use of artificial intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.

We also face risks of competitive disadvantage if our competitors more effectively use AI to create new or enhanced products or services that we are unable to compete against.

Risks Related to Our Management and Structure

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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.

If our introduction of a new product is not successful, or if we are not able to achieve the revenues or margins we expect, our results of operations may be harmed and we may not recover our product development and marketing expenditures.

If our introduction of a new product is not successful, or if we are not able to achieve the revenues or margins that we expect, our results of operations may be harmed and we may not recover our product development and marketing expenditures.

We may also be required to add a traditional direct sales force and customer support personnel to market and support new or existing products, which would cause us to experience substantially lower product margins or increase our operating expenses.

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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 March 31, 2024, our balance outstanding under the Amended Credit Agreement for our Term Facilities and Revolving Facility (each as defined herein), was $662.5 million and $215.0 million, respectively.

As of September 30, 2024, our balance outstanding under the Amended Credit Agreement for our Term Facilities and Revolving Facility (each as defined herein), was $412.5 million and $140.0 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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These transactions involve numerous risks, including:

• difficulties in integrating and managing the operations, technologies and products of the companies we acquire, particularly in light of our lean organizational structure;

• difficulties or delays in integrating and managing the operations, systems, technologies, personnel and products of the companies we acquire, particularly in light of our lean organizational structure;

• diversion of our management’s attention from normal daily operation of our business;

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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.

Uncertainty surrounding the elimination of LIBOR and the transition to SOFR may adversely affect our financial condition, operating results and cash flows.

On July 30, 2023, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, ended its US dollar LIBOR bank panel and the overnight and 12-month US dollar LIBOR settings have permanently ceased.

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

financial institutions, has chosen to replace U.S.

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

Treasury securities, called SOFR.

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

The terms of our Amended Credit Agreement provide for the use of SOFR, and such rate could be higher and more volatile than LIBOR 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 had remained.

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

Further, the same costs and risks that led to the unavailability of LIBOR may make one or more of the alternative rate methods impossible or impracticable to determine.

Any of these consequences could materially and adversely affect our financing costs, and as a result, our financial condition, operating results and cash flows.

Compliance with conflict mineral disclosure requirements necessitates additional compliance cost and may create reputational challenges.

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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 May 10, 2024, Mr.

As of November 8, 2024, Mr.

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

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In the event Mr.

Pera pledges shares

of common stock as collateral for margin or other loans, Mr.

Pera pledges shares of common stock as collateral for margin or other loans, Mr.

Pera may need to sell shares of our common stock to meet applicable repayment requirements.

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Pera has also indicated that he intends to continue to own at least a majority of our outstanding shares of common stock.

Not paying cash dividends to our stockholders, or repurchasing shares of our common stock pursuant to our previously announced stock repurchase program, could cause the market price for our common stock to decline.

Not paying cash dividends to our stockholders, or repurchasing shares of our common stock could cause the market price for our common stock to decline.

Our payment of cash dividends is subject to, among other things, declaration by the Board of Directors of the Company, our financial position and results of operations, available cash and cash flow, capital requirements, our obligations, contingent liabilities, applicable corporate legal requirements, and other factors.

If the Company fails to meet expectations related to dividends, its stock price may decline, which could have a material adverse impact on investor confidence and employee retention.

These and other factors may also affect the continuation of, or activity under, our previously announced stock repurchase program.

Failure to pay cash dividends could cause the market price of our common stock to decline.

The discontinuance of, or lack of activity under, our previously announced stock repurchase program could also result in a lower market price of our common stock.

These and other factors may also affect our ability to repurchase shares of our common stock.

Failure to pay cash dividends could cause the market price of our

common stock to decline.

Failure to repurchase shares of our common stock could also result in a lower market price of our common stock.

Fluctuations in our results of operations could cause the market price of our common stock to decline.

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• shifts in our fulfillment practices including increasing inventory levels as part of efforts to decrease our delivery lead times;

• failure of our suppliers to provide chips or other components;

• failure of our suppliers to provide components;

• failure of our contract manufacturers and suppliers to meet our demand;

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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 products may be subject to general seasonal spending trends associated with holidays.

Risks Related to Regulatory, Legal and Tax Matters

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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, the Personal Information Security Specification went into effect in October 2020, which has broad but uncertain applications and imposes a number of new privacy and data security obligations.

More recently, the Personal Information

Security Specification went into effect in October 2020, which has broad but uncertain applications and imposes a number of new privacy and data security obligations.

China is also implementing new legislation on the protection of privacy and personal data, including a Personal Information Protection Law and a Data Security Law, each of which went into effect in September 2021 and may impose new obligations on us.

Additionally, California enacted the California Consumer Privacy Act (the “CCPA”) that, among other things, requires covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information.

Additionally, California enacted the California Consumer Privacy Act, as amended (the “CCPA”) that, among other things, requires covered companies to provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information.

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.

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In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.

For example, states such as Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Tennessee, Texas, Virginia, and Utah have enacted their own data privacy laws.

For example, states such as Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Tennessee, Texas, Virginia, and Utah have enacted their own data privacy laws.

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

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To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

As events continue to

evolve our estimates may change materially in future periods.

As events continue to evolve our estimates may change materially in future periods.

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.

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Further, in 2022, the U.S.

government enacted the Inflation Reduction Act, which made a number of changes, including adding a 1% excise tax on stock buybacks by publicly-traded corporations and a 15% corporate minimum tax for companies with higher than $1 billion of certain adjusted financial statement income.

government enacted the Inflation Reduction Act, which

made a number of changes, including adding a 1% excise tax on stock buybacks by publicly-traded corporations and a 15% corporate minimum tax for companies with higher than $1 billion of certain adjusted financial statement income.

As a result of the 1% excise tax, the cost to us of making repurchases will increase.

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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-Q

Item 1A. Risk Factors