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Item 1A. Risk Factors

2025-11-07 compared with 2025-05-09 · 87 added, 83 removed, 755 unchanged (18% of the section changed)

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, the risk factors set forth below.

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

Our business, operations and financial results are subject to various risks and uncertainties that could materially adversely affect our business, financial condition, results of operations and the trading price of our common stock.

This Quarterly Report on Form 10-Q also contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include the risk factors set forth below.

We operate in a competitive and rapidly changing environment and new risks emerge from time to time.

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.

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• volatility and competition in the markets we serve or our inability to compete effectively with our competitors;

• our reliance on a limited number of distributors for our products and the inability of our distributors to manage inventory of our products effectively, timely sell our products or estimate future demand for our products;

• our inventory decisions, including, without limitation, for new product introductions, are based on assumptions and forecasts, which, if inaccurate, may result in write-downs of inventory or components and increases of vendor deposits;

• our inability to keep pace with rapid technological and market changes or to maintain competitive prices for products;

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• our inability to anticipate or mitigate cyberattacks, security vulnerabilities or other fraudulent or illegal activity;

• our inability to manage our growth and expand our operations;

• our inability to maintain or enhance the strength of our brand;

• our inability to manage our growth and expand our operations;

• 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;

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• 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 products and solutions, or to execute our strategy for our products or develop our sales channels;

• our inability to anticipate customer 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 use of artificial intelligence ("AI") technologies which may present business, compliance, and reputational risks;

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

• 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;

• 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;

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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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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.

In addition, broadband equipment providers or system integrators may

also offer wireless broadband infrastructure equipment for free or as part of a bundled offering, which could force us to reduce our prices or change our selling model to remain competitive.

In addition, broadband equipment providers or system integrators may also offer wireless broadband infrastructure equipment for free or as part of a bundled offering, which could force us to reduce our prices or change our selling model to remain competitive.

If there is a shift in the market such that network operators and service providers begin to use closed network solutions that only operate with other equipment from the same vendor, we could experience a significant decline in sales because our products would not be interoperable.

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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.

Hardware and software that we produce or procure from third parties also may contain manufacturing or design defects, 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.

Even when we prioritize a security vulnerability, it could take time for us to develop a remedy and the remedy may ultimately be insufficient to fully fix the issue.

Security vulnerabilities can persist even after we have issued security updates if we have not identified and addressed the root cause of a particular vulnerability, if customers have not installed the most recent updates, if the attackers exploited the vulnerabilities before a security update is applied to install additional malware to further

compromise customers’ systems, or if a previously patched vulnerability is inadvertently reintroduced during future development.

Furthermore, the emergence and maturation of AI capabilities designed to circumvent controls, avoid detection and remove or obfuscate forensic evidence, and the utilization of these techniques by attackers, has led to new and more effective methods of cyber-attacks.

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.

Our sales to end customers through our webstores require the transmission of confidential information, including credit card information, securely

over public networks.

Our sales to end customers through our webstores require the transmission of confidential information, including credit card information, securely over public networks.

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

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Any such breach or unauthorized access could result in significant legal and financial exposure, costly and time-intensive notice requirements or other remediation efforts, damage to our reputation, and a loss of confidence in the security of our products and services.

Any such breach or unauthorized access could also lead customers to stop using our products and services, deter new customers from using our products and services, and otherwise negatively impact our ability to grow and operate our business.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

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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 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.

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 AI, 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.

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.

As of March 2021, the Company has recovered $18.6 million.

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Any additional recoveries are likely remote and therefore cannot be assured.

While we do not expect the fraud to have a material impact on our business, we have borne, and will continue to bear additional expenses in connection with the remediation and investigation of the fraud.

Any future illegal acts such as phishing, social engineering or other fraudulent conduct that go undetected may have significant negative impacts on our reputation, operating results and stock price.

Our business and prospects depend on the strength of our brand.

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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.

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.

We believe that our orders may not represent a material portion of our contract manufacturers’ total orders and, as a result, fulfilling our orders may not be a priority in the event our contract manufacturers are constrained in their capacity.

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Additionally, any or all of the following could either limit supply or increase costs, directly or indirectly, to us or our contract manufacturers:

• changes or uncertainty in tariffs, economic sanctions, and other trade barriers;

• labor strikes or shortages;

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• reservation of manufacturing capacity at our contract manufactures by other companies, inside or outside of our industry;

• changes or uncertainty in tariffs, economic sanctions, and other trade barriers;

• industry consolidation occurring within one or more component supplier markets, such as the semiconductor market.

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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.

In 2020 and through most of 2023, we experienced reduced availability of components used to manufacture our products, especially the chipsets, which 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.

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 have in the past and could in the future delay or disrupt the supply of our products and affect our business, results of operations and financial condition.

For example, in 2020 and through most of 2023, we experienced reduced availability of components used to manufacture our products, especially the chipsets, which impacted our ability and costs to manufacture our products.

These supply shortages 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 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.

If there are shortages of chipsets or other components used to manufacture our products, 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 to minimize the potential adverse impacts of such supply shortages.

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.

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 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, tariffs and other trade barriers, economic sanctions, 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.

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Our products, especially new products, sometimes utilize custom components available from only one or limited number of sources.

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

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.

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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.

These cybersecurity risks include greater phishing, social engineering, malware, ransomware 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.

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Rising inflation could have an adverse impact on our expenses.

Our costs are subject to fluctuations, including due to the costs of raw materials, labor, transportation and energy.

Our costs are subject to fluctuations, including due to the costs of raw materials, labor, tariffs, transportation and energy.

Therefore, our business results depend, in part, on our continued ability to manage these fluctuations through pricing actions, cost saving projects and sourcing decisions, while maintaining and improving margins and market share.

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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.

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 cust omer behavior.

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 cust omer behavior.

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.

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The achievement of any goals that we may announce may rely on the accuracy of our estimates and assumptions supporting those goals.

We could fail to achieve, or be perceived to fail to achieve, ESG-related initiatives, goals or commitments that we might set, and the timing, scope or nature of these initiatives, goals, or commitments, or for any revisions to them may not be acceptable to the Securities and Exchange Commission or other regulators or stakeholders, including our shareholders.

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.

We could fail to achieve, or be perceived to fail to achieve, ESG-related initiatives, goals or commitments that we might set, and the timing, scope or nature of these initiatives, goals, or commitments, or for any revisions to them may not be acceptable to the regulators or stakeholders, including our shareholders.

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.

At the same time, “anti-ESG” sentiment has recently gained momentum with a number of stakeholders, government entities, regulators and lawmakers.

The proposal or enactment of anti-ESG legislation, regulation, policies and enforcement priorities may result in increased scrutiny, reputational risk, lawsuits or market access restrictions.

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.

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

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 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 our internal processes, and 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 AI 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.

As we increase our investment in technology, software and systems to adopt AI into our internal processes, products and services, such investments may not increase productivity, result in more efficient operations or deliver better products, services and customer experiences.

Risks Related to Our International Operations

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

• tariffs, the threat of new or increased tariffs, and escalating trade tensions;

• changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws (including potential responses to the higher U.S.

• t ariffs, the threat of new or increased tariffs, and ongoing trade tensions and related uncertainty;

• c hanges in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws (including potential responses to the higher U.S.

tariffs on certain imported products implemented by the U.S.);

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Geopolitical uncertainties and events could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on us, our suppliers, logistics providers, manufacturing vendors and customers, including our distributors and other channel partners.

For example, escalating tensions between the U.S., China and other countries may result in changes in laws or regulations that will affect our ability and/or increase our costs to manufacture and sell our products.

In recent years, the U.S.

government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries.

For example, ongoing tensions between the U.S., China and other countries have resulted in, and may result in further, changes in laws or regulations that will affect our ability and/or increase our costs to manufacture and sell our products.

Recently, the U.S.

government has altered its approach to international trade policy and in some case renegotiated, or potentially terminated, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries.

The current U.S.

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Some foreign governments, including China, have instituted retaliatory tariffs on certain U.S.

Following the recent executive orders by the President of the United States, products we import from China into the U.S.

will be subjected to a range of tariffs from 27.5% to 170%.

In addition, certain products we import into the U.S.

from Vietnam and other countries are currently subject to 10% tariffs.

The current rates include temporary reductions and temporary product exclusions, and, for example, if the reduced rates and product exceptions in place for Vietnam were removed, the tariff rates for products we import into the U.S.

from Vietnam would increase to 46%.

These tariffs and related policy changes have significantly affected our business, financial condition and results of operations, and we may not be able to plan for alternative sources for our supply chain and manufacturing operations or effectively mitigate the adverse impacts from such measures .

While the U.S.

administration has negotiated tariff rates with several countries, the negotiation with many countries is ongoing.

Due to the numerous executive orders, the overall determination of duties on imports has become complex.

The tariffs and related policy changes have significantly affected our business, financial condition and results of operations, and we may not be able to plan for alternative sources for our supply chain and manufacturing operations or effectively mitigate the adverse impacts from such measures.

Additional trade restrictions could be adopted with little to no advance notice, which could further increase the cost of our products, disrupt our supply chain, reduce the demand for our products, and impair our ability to effectively operate and compete in the countries where we do business.

We are closely monitoring this evolving situation but there can be no assurance that we will be able to mitigate the impacts of any trade measures, which could be material to our operating results or harm our competitive position.

Moreover, the imposition of tariffs is dependent upon the classification of items under the Harmonized Tariff System (“HTS”), the value determination of the item and the country of origin of the item.

The imposition of tariffs is dependent upon the classification of items under the Harmonized Tariff System (“HTS”), the value determination of the item and the country of origin of the item.

Determination of the HTS, the value and the origin of the item is a technical matter that can be subjective in nature.

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as a result of such changes, could also adversely affect our business.

For example, negative sentiments towards the U.S.

For example, negative sentiments towards the

among non-U.S.

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• our limited experience in operating manufacturing facilities.

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.

Since these activities are currently conducted in Taiwan 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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The legal regimes relating to the recognition and enforcement of intellectual property rights in China, Russia and South America are particularly limited.

Legal proceedings to enforce our intellectual property in these jurisdictions may progress slowly, during which time infringement may continue largely unimpeded.

Legal proceedings to enforce our intellectual property in these jurisdictions may progress slowly, during which time infringement may

continue largely unimpeded.

Countries that have relatively inefficient intellectual property protection and enforcement regimes represent a significant portion of the demand for our products.

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In addition, patent holding companies and other third-party non-practicing entities that focus on extracting royalties and settlements by enforcing patent rights may target our component suppliers, manufacturers, us, our distributors, members of our sales channels, our network operators and service providers, or other purchasers of our products.

These companies typically have little or no product revenues and therefore our patents may provide little or no deterrence against such companies filing patent infringement lawsuits against our component suppliers, manufacturers, us, our distributors, members of our sales channels, network operators and service providers, or other purchasers of our products.

These companies typically have little or no product revenues and therefore our patents may

provide little or no deterrence against such companies filing patent infringement lawsuits against our component suppliers, manufacturers, us, our distributors, members of our sales channels, network operators and service providers, or other purchasers of our products.

In addition to liability for monetary damages against us or, in certain circumstances, against end users of our products, we may be prohibited from developing, commercializing or continuing to provide certain of our products unless we obtain licenses from the holders of the patents or other intellectual property rights.

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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.

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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Our profitability may decline as we expand into new product areas.

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

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

As we expand into other products and services, such as video surveillance equipment, voice communication equipment, security access equipment, wireless backhaul, consumer electronics, and Software-as-a-Services, 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.

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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.

Our reliance on such third parties exposes us to cybersecurity risks and vulnerabilities if such third parties or their partners are targeted by cyber-attack or other sources of compromise.

Additionally, our existing cloud service providers have broad discretion to change and interpret its terms of service and other policies with respect to us, and they may take actions beyond our control that could harm our business.

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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, 2025, our balance outstanding under the Amended Credit Agreement for our Term Facilities (as defined herein), was $340.0 million.

There was no outstanding balance on the Revolving Facility (as defined herein) as of March 31, 2025.

As of September 30, 2025, our balance outstanding under the Amended Credit Agreement for our Term Loan Facility (as defined herein), was $133.8 million.

There was no outstanding balance on the Revolving Facility (as defined herein) as of September 30, 2025.

The Facilities mature in March 2026, before which time we intend to enter into a new borrowing facility.

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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Our Chief Executive Officer owns a majority of our common stock.

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.

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 common 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.

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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 9, 2025, Mr.

As of November 7, 2025, Mr.

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

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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 our ability to repurchase shares of our common stock.

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.

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

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.

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

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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, Maryland, Minnesota, 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, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, 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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However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand, results of operations and financial condition.

Any failure or perceived failure by us or third-party service-providers to comply with our privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement

actions, litigation, additional reporting requirements and/or oversight, bans or restrictions on processing personal data, orders to destroy or not use personal data, loss of customers, interruptions or stoppages in our business operations, inability to process personal data or operate in certain jurisdictions, limited ability to develop or commercialize our products and services, expenditure of time and resources to defend against claims or inquiries, changes to our business model or operation, or negative publicity, and could have an adverse effect on our brand, results of operations and financial condition.

Governments are continuing to focus on privacy, cybersecurity, data protection and data security and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way that is material to our business.

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Our customers and the users of our products may expect us to indemnify them against claims for intellectual property infringement, defective products and other losses.

Our customers, users and other parties may expect us to indemnify them for losses incurred in connection with our products, including as a result of intellectual property infringement, defective products, and security vulnerabilities, even if our agreements with them do

not require us to provide this indemnification.

In some instances, we may decide to defend and indemnify them, irrespective of whether we believe that we have an obligation to do so.

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Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations, and prevent us from producing accurate and timely financial statements to manage our business.

If we fail to do so, our business could be negatively affected and our independent registered public accounting firm may be unable to attest to the fair presentation of our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

If we fail to do so, our business could be negatively affected and our independent registered public accounting firm may be unable to attest to the fair presentation of our consolidated financial statements included in our Annual Reports on Form 10-K in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

If we cannot provide reliable financial reports and effectively prevent fraud, our reputation and results of operations could be harmed.

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The expense of defending and resolving such audits may be significant.

The amount of time to resolve such audits is also unpredictable and may divert management’s attention from our business operations.

The amount of time to resolve such audits is also unpredictable and

may divert management’s attention from our business operations.

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

Although we believe our interpretation of tax laws and tax estimates are reasonable, there can be no assurance that any final determination by taxing

authorities will not be materially different from 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.

Although we believe our interpretation of tax laws and tax estimates are reasonable, there can be no assurance that any final determination by taxing authorities will not be materially different from 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.

In the ordinary course of our business, there are many instances where the determination of tax implications is uncertain.

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The legislative bodies in many jurisdictions regularly consider proposed legislation that, if adopted, could affect our tax rate in such jurisdictions, and the carrying value of our deferred tax assets or our tax liabilities.

Multi-jurisdictional changes enacted in response to the guidelines provided by the Organization for Economic Cooperation and Development (“OECD”) to address base erosion and profit shifting (“BEPS”), including a Pillar Two framework that imposes a minimum tax rate of 15% for multinational enterprises, and additional amendments or guidance regarding comprehensive U.S.

Multi-jurisdictional changes enacted in response to the guidelines provided by the Organization for Economic Cooperation and Development (“OECD”) to address base erosion and profit shifting (“BEPS”), including a Pillar Two framework that imposes a minimum tax rate of 15% in each taxing jurisdiction for multinational enterprises, and additional amendments or guidance regarding comprehensive U.S.

tax reform, among other things, may change certain U.S.

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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 bil lion of certain adjusted financial statement income.

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

In July 2025, the U.S.

government enacted the One Big Beautiful Bill Act (the “OBBBA”).

The OBBBA extended or made permanent many of the corporate tax changes arising under the Tax Cuts and Jobs Act.

Changes in tax laws and regulations and interpretations of such laws and regulations, including taxation of earnings outside of the U.S., may materially and adversely affect our business, results of operations and financial condition.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Defaults upon Senior Securities

Mine Safety Disclosures

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