BDC

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How BDC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

74%

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Length

−15

words, now 6,183

New in FY2025

Business and Operational Risks Cyber security incidents have and could in the future interfere with our business and operations.
Computer hacking, malware, phishing, and spamming attacks against online networking platforms have become more prevalent, more recently enhanced by the use of artificial intelligence (“AI”) tools.
Volatility in global trade policies and practices could have direct and indirect impacts on our business.
Throughout 2025, the United States government issued orders increasing tariffs on imports from nearly every country in the world on certain products.
In some cases, this has led to negotiations of new trade deals and in others, it has resulted in reciprocal tariffs on U.S. exports.
These impacts could have a negative effect on our financial results, including our revenue, gross margins, and profitability.
We also face political risks in the U.S., including tax or regulatory risks or potential adverse impacts from legislative impasses, or significant legislative, regulatory or executive changes in fiscal or monetary policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export policies.
Approximately 42% of our sales are outside the U.S.
Our markets are characterized by the introduction of products with increasing technological capabilities, most notable currently is an expectation that AI capabilities will be deployed.
Our ability to remain competitive will be determined, in part, by our ability to successfully implement AI into our product offerings and back office processes.
We are increasingly incorporating AI and machine learning technologies into our products, services, and internal operations.
While we believe AI offers significant opportunities, its development and deployment involve inherent risks that could materially impact our business.
These risks include, but are not limited to (1) operational and performance risks related to the quality of data and sophistication of the algorithms; (2) the evolving legal and regulatory landscape; (3) ethical and reputational risk associated with biased or inaccurate results; (4) cybersecurity and data privacy risk; (5) intellectual property risk; (6) risks related to attracting and retaining AI talent; (7) dependence on third-party AI providers; and (8) speed and quality of adoption.
Any of these risks could materialize and have a material adverse effect on our business, financial condition, and results of operations.
Our reliance on legacy information technology systems and the challenges associated with their maintenance and upgrade could adversely affect our business, financial condition, and results of operations.
We rely on a variety of information technology (IT) systems and infrastructure to support our operations, including critical business processes, data management, and customer-facing applications.
Some of these systems are legacy technologies that have been in place for a significant period.
While we strive to maintain and update our IT infrastructure, our reliance on these legacy systems presents several risks, including performance and reliability issues, security vulnerabilities, integration challenges, increased maintenance costs, and compliance risks.
We may undertake significant IT infrastructure upgrade and modernization projects to address these challenges.
Such projects, however, involve substantial risks, including significant capital expenditure and resource allocation, disruption to operations, implementation and integration challenges, data loss or corruption, and failure to achieve anticipated benefits.
Any of these risks could materially and adversely affect our business, financial condition, and results of operations.
Furthermore, customers’ ability to invest in capital expenditures, such as our products, can be dependent on their realized profits from their sales of commodity products, such as occurs in the oil and gas markets.
Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax uncertainties, changes in tax laws and rates, such as the One Big Beautiful Bill Act, and the extent to which we are able to realize net operating loss and other carryforwards included in deferred tax assets and avoid potential adverse outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the future.
Our effective income tax rate is the result of the income tax laws in the various countries in which we do business.
If we are unable to attract and retain key employees, our business operations could be adversely affected.
The inability to attract employees with AI and digital skills, engineers with relevant skills, or the loss of key current employees could have an adverse effect on us.
Our largest distributor accounted for approximately 14% of our revenues in 2025 and our top eight distributors accounted for a total of 35% of o ur reven ues in 2025.
Perceived failure of our data solutions to provide expected results may result in negative publicity and harm our business and operating results.
Our customers use our data solutions in a wide variety of IT and OT systems and application environments in order to help reduce security vulnerabilities and demonstrate compliance.
Despite our efforts to make clear in our marketing materials and customer agreements the capabilities and limitations of these products, some customers may incorrectly view the deployment of such products in their IT or OT infrastructure as a guarantee that there will be no security incident or policy non-compliance event.
As a result, the occurrence of a high profile security incident, or a failure by one of our customers to pass a regulatory compliance IT or OT audit, could result in public and customer perception that our solutions are not effective and harm our business and operating results, even if the occurrence is unrelated to the use of such products or if the failure is the result of actions or inactions on the part of the customer.
Unanticipated complications in the free movement of goods in North America or Europe, an escalation of tariff activity anywhere in the world, or changes to existing free trade agreements, especially the United States-Mexico-Canada Agreement (USMCA), could materially impact our financial results.
Increasing expectations with respect to Sustainability matters by our various stakeholders and Sustainability regulation could adversely affect our business and operating results.
Moreover, standards and expectations for Sustainability matters continue to evolve and may be subject to varying interpretations, which may result in significant revisions to our goals or progress.

Gone since FY2024

Business and Operational Risks Volatility in global trade policies and practices could have direct and indirect impacts on our business.
In February 2025, the United States government issued orders increasing tariffs on imports from certain countries, including Canada, China and Mexico on certain products, including steel and aluminum, and has discussed increasing tariffs globally, which is likely to lead to reciprocal tariffs on U.S. exports to those countries.
Implementation of orders related to Canada and Mexico was initially deferred until March 2025.
These impacts could have a negative effect on our financial results, including our revenue and profitability.
Cyber security incidents have and could in the future interfere with our business and operations.
Computer hacking, malware, phishing, and spamming attacks against online networking platforms have become more prevalent.
Furthermore, we rely on our information systems and those of third parties that maintain proprietary company information about our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.
In addition, we may need to enhance our information systems to provide additional capabilities and functionality.
The implementation of new information systems and enhancements is frequently disruptive to the underlying business of an enterprise.
Any disruptions affecting our ability to accurately report our financial performance on a timely basis could adversely affect our business in a number of respects.
We also face political risks in the U.S., including tax or regulatory risks or potential adverse impacts from legislative impasses over, or significant legislative, regulatory or executive changes in fiscal or monetary policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export policies.
Approximately 43% of our sales are outside the U.S.
Furthermore, customers’ ability to invest in capital expenditures, such as our products, can depend upon proceeds from commodities, such as oil and gas markets.
Our markets are characterized by the introduction of products with increasing technological capabilities.
The presence of substitute products in the marketplace may reduce demand for our products and negatively impact our business.
Fiber optic and wireless systems are increasingly substitutable for copper-based cable systems.
Customers may shift demand to systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable.
We may not be able to offset the effects of a reduction in demand for our copper-based cable systems.
Similarly, in our non-cable businesses, customers could rapidly shift the methods by which they capture and transmit signals in ways that could lead to decreased demand for our current or future products.
These factors, either together or in isolation, may negatively impact revenue and profitability.
Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax uncertainties, changes in tax laws and rates, and the extent to which we are able to realize net operating loss and other carryforwards included in deferred tax assets and avoid potential adverse outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the future.
Our effective income tax rate is the result of the income tax rates in the various countries in which we do business.
The increased prevalence of cloud computing and other disruptive business models may negatively impact certain aspects of our business.
The nature in which many of our products are purchased or used is evolving with the increasing prevalence of cloud computing and other methods of off-premises computing and data storage.
This may negatively impact one or more of our businesses in a number of ways, including: • Consolidation of procurement power leading to the commoditization of IT products; • Reduction in the demand for infrastructure products previously used to support on-site data centers; • Lowering barriers to entry for certain markets, leading to new market entrants and enhanced competition; and • Preferences for software as a service billing and pricing models may reduce demand for non-cloud “packaged” software.
If we are unable to retain key employees, our business operations could be adversely affected.
The loss of key employees could have an adverse effect on us.
Our largest distributor accounted for app roximately 14% of our revenue in 2024 and our top eight distributors accounted for a total of 33% of o ur reven ue in 2024.
Perceived failure of our signal transmission solutions to provide expected results may result in negative publicity and harm our business and operating results.
Our customers use our signal transmission solutions in a wide variety of IT systems and application environments in order to help reduce security vulnerabilities and demonstrate compliance.
Despite our efforts to make clear in our marketing materials and customer agreements the capabilities and limitations of these products, some customers may incorrectly view the deployment of such products in their IT infrastructure as a guarantee that there will be no security incident or policy non-compliance event.
As a result, the occurrence of a high profile security incident, or a failure by one of our customers to pass a regulatory compliance IT audit, could result in public and customer perception that our solutions are not effective and harm our business and operating results, even if the occurrence is unrelated to the use of such products or if the failure is the result of actions or inactions on the part of the customer.
While the impact of the U.S. and Chinese tariff actions prior to 2025 have not been material to us, unanticipated complications in the free movement of goods in North America or Europe, an escalation of tariff activity anywhere in the world, or changes to existing free trade agreements, especially the United States-Mexico-Canada Agreement (USMCA), could materially impact our financial results.
Increasing expectations with respect to Environmental, Social and Governance (ESG) matters by our various stakeholders and ESG regulation could adversely affect our business and operating results.
Moreover, standards and expectations for ESG matters continue to evolve and may be subject to varying interpretations, which may result in significant revisions to our goals or progress.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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