The Company is exposed to credit risk and fluctuations in the values of its investment portfolio. The Company’s investments can be negatively affected by changes in liquidity, credit deterioration, financial results, market and
economic conditions, political risk, sovereign risk, interest rate fluctuations or other factors. As a result, the value and liquidity of
the Company’s cash, cash equivalents, and marketable and non-marketable securities may fluctuate substantially. Therefore,
although the Company has not realized any significant losses on its cash, cash equivalents, and marketable and non-marketable
securities, future fluctuations in their value could result in significant losses and could have a material adverse impact on the
Company’s results of operations and financial condition.
The Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen. The Company distributes its products and certain of its services through third-party cellular network carriers, wholesalers,
retailers and resellers. The Company also sells its products and services directly to small and mid-sized businesses and
education, enterprise and government customers. A substantial majority of the Company’s outstanding trade receivables are not
covered by collateral, third-party bank support or financing arrangements, or credit insurance, and a significant portion of the
Company’s trade receivables can be concentrated within cellular network carriers or other resellers. The Company’s exposure to
credit and collectibility risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks
may be limited. The Company also has unsecured vendor non-trade receivables resulting from purchases of components by
outsourcing partners and other vendors that manufacture subassemblies or assemble final products for the Company. In
addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory
components. As of September 24, 2022, the Company’s vendor non-trade receivables and prepayments related to long-term
supply agreements were concentrated among a few individual vendors located primarily in Asia. While the Company has
procedures to monitor and limit exposure to credit risk on its trade and vendor non-trade receivables, as well as long-term
prepayments, there can be no assurance such procedures will effectively limit its credit risk and avoid losses.
