Iteris, Inc. (ITI) 2023年年度報告「AMEX」.pdf

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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K_(Mark One)ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF1934For the fiscal year ended March31,2023ORoTRANSITION REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGEACT OF1934For the

2、transition period from toCommission file number001-08762ITERIS,INC.(Exact Name of Registrant as Specified in Its Charter)Delaware95-2588496(State or Other Jurisdiction of Incorporation or Organization)(I.R.S.Employer Identification No.)1250 S.Capital of Texas Hwy.,Building 1,Suite 330,Austin,Texas78

3、746(Address of Principal Executive Offices)(Zip Code)Registrants Telephone Number,Including Area Code:(512)716-0808Securities registered pursuant to Section12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on whichregisteredCommon Stock,$0.10 parvalueITIThe Nasdaq Stock Marke

4、t LLCSecurities registered pursuant to Section12(g)of the Act.NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule405 of the Securities Act of 1933,as amended(the SecuritiesAct).Yeso No Indicate by check mark if the registrant is not required to file report

5、s pursuant to Section13 or Section15(d)of the Securities Exchange Act of 1934,asamended(the Exchange Act).Yeso NoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section13 or 15(d)of the Exchange Act during the preceding12months(or for such shorter period

6、 that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past90days.Yes NooIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 ofRegulationS-T(232

7、.405 of this chapter)during the preceding 12months(or for such shorter period that the registrant was required to submit such files).Yes NooIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemergin

8、g growth company.See definitions of large accelerated filer,accelerated filer,smaller reporting company and emerging growth company inRule12b-2 of the Exchange Act.:Large accelerated fileroAccelerated filerNon-accelerated filero Smaller reporting companyEmerging growth companyoIf an emerging growth

9、company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark whether the registrant has filed a report on and at

10、testation to its managements assessment of the effectiveness of its internal controlover financial reporting under Section404(b)of the Sarbanes-Oxley Act(15U.S.C.7262(b)by the registered public accounting firm that prepared orissued its audit report.If securities are registered pursuant to Section 1

11、2(b)of the Exchange Act,indicate by check mark whether the financial statements of the registrant includedin the filing reflect the correction of an error to previously issued financial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recover

12、y analysis of incentive-based compensation receivedby any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).oIndicate by check mark whether the registrant is a shell company(as defined in Exchange Act Rule12b-2).Yeso NoThe aggregate market value of th

13、e registrants common stock held by nonaffiliates of the registrant as of September30,2022 was approximately$123,850,913.For the purposes of this calculation,shares owned by officers,directors and 10%stockholders known to the registrant have been deemed tobe owned by affiliates.This determination of

14、affiliate status is not necessarily a conclusive determination for other purposes.As of June26,2023,therewere 42,569,363 shares of our common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPartIII of this report incorporates by reference certain information from the registrants definitive prox

15、y statement for the 2023 Annual Meeting ofStockholders,which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by thisAnnual Report on Form 10-K.Table of ContentsITERIS,INC.ANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED MA

16、RCH 31,2023TABLE OF CONTENTSPART IITEM 1.BUSINESS4ITEM 1A.RISK FACTORS11ITEM 1B.UNRESOLVED STAFF COMMENTS23ITEM 2.PROPERTIES24ITEM 3.LEGAL PROCEEDINGS24ITEM 4.MINE SAFETY DISCLOSURES24PART IIITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASESOF EQUITY SECURIT

17、IES25ITEM 6.RESERVED25ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS25ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK35ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA36ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTIN

18、G AND FINANCIAL DISCLOSURE66ITEM 9A.CONTROLS AND PROCEDURES66ITEM 9B.OTHER INFORMATION68ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS69PART IIIITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE69ITEM 11.EXECUTIVE COMPENSATION69ITEM 12.SECURITY OWNERSHIP OF CE

19、RTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS69ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTOR INDEPENDENCE69ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES69PART IVITEM 15.EXHIBITS,FINANCIAL STATEMENT SCHEDULES70Unless otherwise indicated in this report,th

20、e Company,we,us and our refer to Iteris,Inc.BlueARGUS,CheckPoint,ClearData,ClearFleet,ClearGuide,ClearMobility,ClearRoute,CVIEWplus,Inspect,Iteris,PedTrax,SmartCycle,SmartCycle Bike Indicator,SmartSpan,Spectra,TrafficCarma,TrafficCast,UCRLink,Vantage,Vantage Apex,Vantage Fusion,Vantage Next,VantageP

21、egasus,VantageRadius,VantageLive!,Vantage Vector,Velocity,and VersiCam are among,but not all of,the trademarks of Iteris,Inc.Any othertrademarks or trade names mentioned herein are the property of their respective owners.2Table of ContentsCautionary StatementThis report,including the following discu

22、ssion and analysis,contains forward-looking statements(within the meaning of the Private SecuritiesLitigation Reform Act of 1995)that are based on our current expectations,estimates and projections about our business and our industry,and reflectmanagements beliefs and certain assumptions made by us

23、based upon information available to us as of the date of this report.When used in this report andthe information incorporated herein by reference,the words“expect,”“believe,”“intend,”“plan,”“should,”“will,”“may,”might,“anticipate,”“estimate,”“could,”“should,”and similar expressions or variations of

24、these words are intended to identify forward-looking statements.These forward-looking statements include,but are not limited to,statements regarding our anticipated growth,sales,revenue,expenses,profitability,capital needs,backlog,manufacturing capabilities,and the market acceptance of our products

25、and services,competition,the impact of any current or future litigation,the impact of recent accounting pronouncements,the impacts of ongoing and new supply chain constraints,the status of our facilities and productdevelopment,reliance on key personnel,general economic conditions,including rising in

26、terest rates and federal government deadlock over the debtceiling,future responses to and effects of COVID-19,and other characterizations of future events or circumstances are forward-looking statements.Youshould not place undue reliance on these forward-looking statements that speak only as of the

27、date hereof.These statements are not guarantees of futureperformance and are subject to certain risks and uncertainties that could cause our actual results to differ materially and adversely from those projected.We encourage you to carefully read this report on Form 10-K in its entirety,including th

28、e various disclosures made by us which describe certain factorswhich could affect our business,such as those set forth in the“Risk Factors”of Part 1A of this report,before deciding to invest in our Company or tomaintain or increase your investment.We undertake no obligation to revise or update publi

29、cly any forward-looking statement for any reason,including toreflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.3Table of ContentsPART IITEM 1.BUSINESSOverviewIteris,Inc.(referred to collectively in this report as Iteris,the Company,we,our,and

30、us)is a provider of smart mobility infrastructure solutions.Our cloud-enabled solutions help public transportation agencies,municipalities,commercial entities and other transportation infrastructure providersmonitor,visualize,and optimize mobility infrastructure to make mobility safe,efficient and s

31、ustainable for everyone.As a pioneer in intelligent transportation systems(ITS)technology,our intellectual property,advanced detection sensors,mobility and traffic data,software-as-a-service(SaaS)offerings,mobility consulting services,and cloud-enabled managed services represent a comprehensive rang

32、e of smartmobility infrastructure management solutions that we distribute to customers throughout the United States(U.S.)and internationally.We believe our products,solutions and services increase vehicle and pedestrian safety and decrease congestion within our communities,while alsoreducing environ

33、mental impact,including vehicle carbon emissions.We continue to make significant investments to leverage our existing technologies and further enhance our advanced detection sensors,mobilityintelligence software,mobility data sets,mobility consulting services,and cloud-enabled managed services.As we

34、 are always mindful of capital allocation,we apply significant effort to evaluate and prioritize these investments.Likewise,we are always exploring strategic alternatives intended to optimize thevalue of our Company.Iteris was incorporated in Delaware in 1987 and has operated in its current form sin

35、ce 2004.Our principal executive offices are located at 1250 S Capital ofTexas Hwy,Bldg.1,Suite 330,Austin TX 78746,and our telephone number at that location is(512)716-0808.Our website address is .Theinclusion of our website address in this report does not include or incorporate by reference into th

36、is report any information on,or accessible through,ourwebsite.Our annual reports on Form10-K,quarterly reports on Form10-Q and current reports on Form8-K,together with amendments to these reports,are available on the Investor Relations section of our website,free of charge,as soon as reasonably prac

37、ticable after such material is electronically filedwith,or furnished to,the U.S.Securities and Exchange Commission(SEC).Recent DevelopmentsCOVID-19 UpdateThe COVID-19 pandemic(the Pandemic)materially adversely impacted global economic conditions.As COVID-19 has entered an endemic stage,COVID-19 may

38、continue to have an unpredictable and unprecedented impact on the global economy,including possible additional supply chaindisruptions,workplace dislocations,economic contraction,and negative pressure on customer budgets and customer sentiment.Given the uncertainties surrounding the impacts of COVID

39、-19 on the Companys future financial condition and results of operations,we have and maycontinue to identify and execute various actions to preserve our liquidity,manage cash flow and strengthen our financial flexibility.Such actions include,but are not limited to,reducing our discretionary spending

40、,reducing capital expenditures,and implementing restructuring activities(see Note 3,Restructuring Activities,to the Financial Statements for more information).Our products require specialized parts which have become more difficult to source.In some cases,we have had to purchase such parts from third

41、-partybrokers at substantially higher prices.Additionally,to mitigate the impact of component shortages,we have increased inventory levels for parts in shortsupply.In the event demand does not materialize,we would need to hold excess inventory for several quarters.Alternatively,we may be unable to s

42、ourcesufficient components at any price,even from third-party brokers,to meet customer demand,resulting in high levels of backlog that we are unable to ship.The Companys tactics to mitigate the current global supply chain issues included re-designing certain circuit boards to accommodate computer ch

43、ips thatare more readily available in the market at more reasonable prices,and by accumulating inventory in the first two quarters of the fiscal year endedMarch31,2023(Fiscal 2023).We have placed non-cancellable inventory orders for certain products in advance of our normal lead times to securenorma

44、l and incremental future supply and capacity and may need to continue to do so in the future.Due to the supply chain environment,the Company increased inventory by approximately$2.9 million as part of the Companys supply chain strategy forFiscal 2023.The cash flow used in operating activities of our

45、 continuing operations was approximately$4.5 million during the twelve months endedMarch31,2023.Cash used during Fiscal 2023 was primarily due to two factors.First,the planned increase in inventory during the first half of Fiscal 2023and the continued re-design of certain4Table of Contentscircuit bo

46、ards as part of the Companys supply chain strategy to help assure the Company has enough product to satisfy customer demand.Second,the netoperating loss as a result of higher inventory component costs related to the global supply chain constraints.The increase in inventory purchases and inparticular

47、 components purchased in the secondary markets was curtailed in the second half of Fiscal 2023,and the Company currently does not expect tocontinue to accumulate inventory,in the same magnitude,in future periods.However,if the Company encounters additional supply chain constraints againin the future

48、,it may need to further adjust its operations to have sufficient liquidity.On March 27,2020,the Coronavirus Aid,Relief and Economic Security Act(CARES Act)was signed into law in the United States.The CARES Actprovides relief to U.S.corporations through financial assistance programs and modifications

49、 to certain income tax provisions.The Company applied certainbeneficial provisions of the CARES Act,including the payroll tax deferral and the alternative minimum tax acceleration.As of March31,2023,theCompany had repaid all amounts deferred under the CARES Act(see Note 5,Income Taxes,to the Financi

50、al Statements for more information).COVID-19 has had an impact on the Companys human capital.While our Santa Ana product and commercial operations facility remained openthroughout the Pandemic,many of our employees worked remotely during the past three years.With the recent easing of COVID-19 relate

51、d restrictionsimposed by local and state authorities,a larger portion of our workforce has returned to our various facilities while others continue to work remotely.TheCompanys information technology infrastructure has proven sufficiently flexible to minimize disruptions in required duties and respo

52、nsibilities.Webelieve we have the infrastructure to efficiently work remotely during COVID-19s current endemic stage and well into the future.The Company assessed the impacts of COVID-19 on the estimates and assumptions used in preparing our financial statements.The estimates andassumptions used in

53、our assessments were based on managements judgment and may be subject to change as new events occur and additional informationis obtained.In particular,there is significant uncertainty about the duration and extent of the impact of COVID-19,which has entered an endemic stage,and its resulting impact

54、 on global economic conditions.If economic conditions caused by COVID-19 do not recover as currently estimated bymanagement,the Companys financial condition,cash flows and results of operations may be materially impacted.The Company will continue to assessthe effect of COVID-19 on its operations and

55、 the actions implemented to combat the virus throughout the world.As a result,our assessment of the impactof COVID-19 may change.Acquisition of the Assets of TrafficCast International,Inc.On December 6,2020,the Company entered into an Asset Purchase Agreement(the“TrafficCast Purchase Agreement”)with

56、 TrafficCast International,Inc.(“TrafficCast”),a privately held company headquartered in Madison,Wisconsin that provides travel information technology,applications and content tocustomers throughout North America in the media,mobile technology,automotive and public sectors.Under the TrafficCast Purc

57、hase Agreement,theCompany agreed to purchase from TrafficCast substantially all of its assets,composed of its travel information technology,applications and content(the“TrafficCast Business”)and assume certain specified liabilities of the TrafficCast Business.On May 6,2022,approximately$0.9 million

58、was paid to settle the balance of a security hold back agreed to as part of the acquisition,net of approximately$0.1 million of post-closing adjustments.As of March31,2023,the achievement levels of the revenue targets with respect to the earnout were resolved andthe balance remaining of approximatel

59、y$0.6 million was accrued in accordance with the terms of the agreement.This item is included in accrued liabilitieson the balance sheets.Simultaneous with closing the transaction,the parties entered into certain ancillary agreements that provided Iteris with ongoing access to mapping andmonitoring

60、services that the TrafficCast Business used to support its real-time and predictive travel data and associated content until termination of theseagreements on December 6,2022.Restructuring ActivitiesTo help offset recent increases in supply chain costs,on May 12,2022,the Board of Directors of Iteris

61、,Inc.approved additional restructuring activities tobetter position the Company for increased profitability and growth.The Company incurred$0.7million of employee separation costs in relation to theseactivities,which were included in restructuring charges on the statement of operations(see Note 3,Re

62、structuring Activities,to the Financial Statements formore information).Products and ServicesIteris provides comprehensive smart mobility infrastructure solutions for public-sector and private-sector customers primarily located in North America.These solutions include traveler information systems,tr

63、ansportation performance measurement software,traffic analytics software,transportationoperations software,transportation-related data sets,advanced sensing devices,managed services,traffic engineering services,and mobility consultingservices.Software Solutions5Table of ContentsIteris offers our pub

64、lic-sector and private-sector customers a portfolio of industry-leading smart mobility infrastructure software solutions.These softwaresolutions include ClearGuide,ClearRoute,commercial vehicle operations,TrafficCarma,VantageLive!and BlueARGUS as described below.ClearGuide,which is provided on a sof

65、tware-as-a-service basis(SaaS),is a state-of-the-art mobility intelligence and transportation performancemeasures solution.It utilizes a wide range of data resources and analytical techniques to determine current and future traffic patterns to enable theeffective performance analysis and management

66、of traffic infrastructure resources at various levels highway,arterial(i.e.,corridor),orintersection.At times,we refer to intersection performance analytics as signal performance measurement(SPM).ClearGuide users can measurehow a transportation network is performing and identify potential areas of i

67、mprovement.These applications are also capable of providing userswith predictive traffic analytics,and easy-to-use visualization and animation features based on historical traffic conditions.ClearRoute delivers contextual,real-time,actionable mobility intelligence and traveler information services o

68、n a platform-as-a-service basis.ClearRoute provides multimodal,multilingual,traveler information via mobile apps,websites,email and text alerts,and Interactive VoiceResponse(IVR).The ClearRoute solution benefits from a powerful,flexible and streamlined infrastructure to help reduce congestion andimp

69、rove safety and mobility for transportation networks across the country,and facilitates frictionless interoperability,flexible provisioning,androbust management of customer focused data.Commercial vehicle operations and vehicle safety compliance applications,which are provided on a SaaS basis includ

70、e various applicationsbranded as ClearFleet,CVIEWplus,CheckPoint,UCRLink,and Inspect.Collectively,these software applications support state-based commercialvehicles operations by storing and distributing intrastate and interstate commercial vehicle information for local,state,and federal agency road

71、sideand enforcement operations.TrafficCarma,which is easily white labeled,is the first mobile application focused on the 120 million U.S.daily commuters and their journeys toand from work,train stations,airports,sporting events and other destinations.TrafficCarma provides advice on known route choic

72、es,not turn-by-turn navigation.It is personalized for peoples daily commutes and the roads they drive most.Verified crowdsourced content is combined withroad speed data,public agency reports,camera imaging and other metrics and delivers users information relevant to their commute and otherpersonal r

73、outes.VantageLive!is a SaaS solution that allows users to collect,process and analyze advanced intersection data from our Vantage sensors,as well as toview and understand intersection activity.BlueARGUS is a SaaS solution that collects,analyzes,and visualizes various information related to travel ti

74、mes,speeds,and origin-destinationfrom our BlueTOAD Spectra sensors and connected vehicle information from our BlueTOAD Spectra RSU sensors.Mobility Data SetsClearData is the enhanced mobility data output of the Iteris ClearMobility Cloud,a suite of data integration and analytics engines that aggrega

75、tes andvalidates both proprietary and diversely sourced data inputs,including incidents,construction and connected vehicle GPS probes.Following processing andquality assurance,ClearData reflects real-time road conditions and is delivered to public-sector and private-sector customers via subscription

76、-based directdata feeds or application programming interfaces(APIs),or through ClearGuide,our mobility intelligence and transportation performance measuressoftware solution.The complex,dynamic nature of roadway traffic cannot be explained by any single data source.ClearData resolves data conflictsth

77、rough proprietary computerized algorithms and selective quality control from experienced traffic analysts.Advanced SensorsIteris offers advanced intersection detection and other fixed traffic sensors that collectively comprise our two sensor families Vantage and BlueTOAD.Increasingly,we bundle commu

78、nications systems and traffic data collection applications(e.g.,VantageLive!and BlueARGUS)with our sensor products.The Vantage family of sensors uses advanced image processing technology,radar technology and other techniques to observe multi-modal traffic(e.g.,vehicle,bicycle,and pedestrian),transla

79、te these observations into structured data,and apply6Table of Contentssophisticated,proprietary algorithms to this structured data to optimize traffic signal performance in real-time.Certain Vantage sensors apply machinelearning techniques for enhanced object classification.In addition to detecting

80、the presence of objects,our Vantage systems record vehicle count,speed andother traffic information used in traffic management systems.Thus,our Vantage systems give traffic managers the tools to mitigate roadway congestion byvisualizing and analyzing traffic patterns,allowing them to modify traffic

81、signal timing to improve traffic flow.Our various software componentscomplement our Vantage detection systems by providing integrated platforms to manage and view detection assets remotely over a network connection,aswell as mobile application for viewing anywhere.The Vantage family of sensors inclu

82、des Vantage Apex,Vantage Fusion,Vantage Next,VantagePegasus,VantageRadius,Vantage Vector,Velocity,SmartCycle,SmartCycle Bike Indicator,SmartSpan,VersiCam,PedTrax,and P-Series products.Vantage Fusion is a connected-vehicle(CV)focused detection product that tracks and reports vehicles and pedestrians

83、in and aroundintersections.This product helps the industry bridge the currently fledgling CV market to an eventually CV-dominant world by providing non-CVvehicle locations(and details)to the CV network.This product is developed in partnership with Continental AG,a global automotive partsmanufacturer

84、 and leading CV equipment provider.Vantage Apex is the industrys first full 1080p high-definition(HD)video and 4D/HD radar hybrid sensor with integrated artificial intelligence(AI)algorithms.Vantage Apex provides precise and detailed detection,tracking and classification of traffic.Vantage Next uses

85、 a powerful processor that enables future functional growth while maintaining proven Iteris video detection performance andreliability.The architecture supports expanding ITS applications and easily integrates with existing technologies and is anticipated to integratewith future technologies.Vantage

86、 Vector is a hybrid video and radar detection sensor with a wide range of capabilities,including stop bar and advanced zone detection,which enable advanced safety and adaptive control applications.SmartCycle capability,which can effectively differentiate between bicycles and other vehicles with a si

87、ngle video detection camera,is availablewith all of our Vantage systems.SmartCycle enables more efficient signalized intersections,improved traffic throughput and increased bicyclistsafety.Agencies using bicycle timing benefit from bicycle-specific virtual detection zones that can be placed anywhere

88、 within the approachingtraffic lanes,eliminating the need for separate bicycle-only detection systems.SmartCycle Bike Indicator,which leverages the SmartCycle bicycle detection algorithm,is a device that mounts onto traffic signals andilluminates when cyclists waiting at an intersection have been de

89、tected,allowing cyclists to avoid interacting with vehicle traffic to push pole-mounted buttons.PedTrax capability,which is also available with all of our Vantage systems,provides bi-directional pedestrian counting and speed tracking withinthe crosswalk to help improve signal timing efficiency,as we

90、ll as providing an additional data stream to existing vehicle and bicycle counts.VersiCam,an integrated camera and processor video detection system,is a cost-efficient video detection system for smaller intersections thatrequire only a few detection points.The BlueTOAD product family combines unique

91、 MAC Address capture with the latest CV technologies.The combination of these two technologiesprovides customers with a market leading sensor along with a comprehensive data set that enables advanced analytics through our SaaS offerings.TheBlueTOAD family of sensors includes BlueTOAD Spectra and Blu

92、eTOAD Spectra RSU,both of which we bundle with a Cloud-based software applicationbranded as BlueARGUS.BlueTOAD Spectra is a complete system for identifying the travel times of vehicles using advanced Bluetooth re-identification techniques.Thisprovides traffic flow information for vehicle travel as w

93、ell as Origin-Destination information.BlueTOAD Spectra RSU is a full-featured connected vehicle and travel time information system.In addition to travel times and vehicle speeds itcommunicates vital safety and mobility information via both DSRC and C-V2X from infrastructure to vehicles and other use

94、rs.7Table of ContentsIn select territories,the Company also sells certain complementary original equipment manufacturer(OEM)products for the traffic intersection market,which include,among other things,traffic signal controllers and traffic signal equipment cabinets.We believe that future growth dom

95、estically and internationally for our Vantage family of products will be dependent,in part,on the continued replacementof adoption of traditional in-pavement loop technology with above-ground video and radar detection technologies to manage traffic.Managed ServicesIteris Managed Services include tra

96、ffic management centers(TMC)design,staffing,and operations services to public agencies,whether they need tocreate a new TMC or migrate an existing TMC network to a virtual environment.Iteris partners with agencies to augment their internal capability andprovide the foundation and expertise required

97、to successfully implement virtual TMCs to support goals such as capital or recurring cost savings,operationfrom any location,and staff security and flexibility.Additionally,Iteris cloud-enabled managed services combine SaaS,smart sensors and consulting expertise to proactively address the challenges

98、 ofmonitoring and maintaining intersections,arterial roads and highways along with their related in-field technology.These services include congestion andasset management areas of focus,combining innovative traffic optimization with hardware inventory and maintenance.With Iteris Managed Services,pub

99、lic transportation agencies,real estate developers,construction firms,and event operators are provided the opportunity tosave time and money while better keeping road users safe and ensuring that traffic flows efficiently.Traffic Engineering and Mobility ConsultingOur traffic engineering and mobilit

100、y consulting services include planning,design,development and implementation of software and hardware-based ITSthat integrate sensors,video surveillance,computers and advanced communications equipment to enable public agencies to monitor,control and directtraffic flow,assist in the quick dispatch of

101、 emergency crews,and distribute real-time information about traffic conditions.Our services also includeplanning,design,implementation,operation and management of surface transportation infrastructure systems.We perform analysis and study goodsmovement,provide travel demand forecasting and systems e

102、ngineering,and identify mitigation measures to reduce traffic congestion.ClearMobility PlatformWith the companys introduction of the ClearMobility Platform,we aligned our entire portfolio of solutions under a common branding structure.Webelieve this alignment will drive internal synergies,increase o

103、ur cross-sell rate,enhance sales productivity,and increase market awareness of our entiresolutions portfolio.Additionally,we launched the ClearMobility Cloud that enables seamless interoperation among our solutions via a common mobilitydata management engine,API framework,and microservices ecosystem

104、 that provides standardized data ingestion,cleansing,and analytics,as well asauthentication and policy-based security for each component of the ClearMobility Platform.ClearMobility Cloud is both horizontally scalable and third-party extensible.Because we are now aligning,harmonizing,and optimizing o

105、ur portfolio of individual solutions to a common platform,the Companys chief operatingdecision maker(“CODM”)evaluates financial and operational performance holistically.As such,beginning in the fiscal year ended March 31,2022(Fiscal 2022)and throughout Fiscal 2023,we reported as a single operating s

106、egment.Market ConditionsCurrently,over 90%of our revenue is attributable to public-sector customers.Therefore,most of our revenue is dependent upon state and local governmentfunding,and to a lesser extent federal governmental funding.In some cases,this funding is appropriated annually through the re

107、spective legislative process.In other cases,various dedicated funding mechanisms exist to support transportation infrastructure and related projects,including,but not limited todedicated sales and gas tax measures,vehicle and permit fees,and other alternative dedicated funding sources.Additionally,s

108、ome of our activities may befunded through bond measures.8Table of ContentsWe believe that overall demand for our solutions will continue to be dependent at least in part on the federal and local governments use of funds,and as inthe past,our business may be,at times,adversely affected by government

109、al budgetary issues.The Infrastructure Investment and Jobs Act(IIJA)becameeffective on November 15,2021.The IIJA will contribute$1.2 trillion to fund physical infrastructure and public works,adding$550 billion to existinglevels of transportation-specific funding.With that funding pool,areas of direc

110、t relevance to Iteris include$110 billion for roads,bridges and majorprojects,$39 billion for public transit,and$11 billion for transportation safety.However,delays in the appropriation of annual funding and current debatesrelated to the federal debt ceiling may cause some uncertainty regarding the

111、availability of transportation funds in federal,state and local budgets.Sales and MarketingWe market and sell our software,mobility data,managed services,traffic engineering,and mobility consulting services to government agencies pursuant tonegotiated contracts that involve competitive bidding and s

112、pecific qualification requirements.Most of our contracts are with federal,state and localmunicipal customers,and generally provide for cancellation or renegotiation at the option of the customer upon reasonable notice and fees paid formodification.We generally use selected members of our traffic eng

113、ineering,mobility consulting,data science and product management teams on a regionalbasis to serve in sales and business development functions.Our traffic engineering and mobility consulting service contracts generally involve long leadtimes and require extensive specification development,evaluation

114、 and price negotiations.We sell our Vantage and BlueTOAD product families along with their related software bundles through both direct and indirect sales channels.Where wesell direct,we use a combination of our own sales personnel and outside sales organizations to sell,oversee installations,and su

115、pport our products.Ourindirect sales channel comprises a network of independent distributors in the U.S.and select international locations,which sell integrated systems andrelated products to the traffic management market.Our independent distributors are trained in and primarily responsible for the

116、sales,installation,set-upand support of our products.They maintain an inventory of demonstration traffic products from various manufacturers,who sell directly to governmentagencies and installation contractors.These distributors often have long-term arrangements with local government agencies in the

117、ir respective territories forthe supply of various products for the construction and renovation of traffic intersections,as they are generally well-known suppliers of various high-quality ITS products to the traffic management market.We periodically hold technical training classes for our distributo

118、rs and end-users,and we maintain afull-time staff of customer support technicians throughout the U.S.to provide technical assistance when needed.When appropriate,we modify or makechanges to our distributor network to accommodate the needs of the market and our customer base.With the acquisition of t

119、he TrafficCast Business on December 7,2020,we now sell traffic and mobility data and software through a direct sales model tocommercial enterprises,such as media companies involved in providing real-time traffic data and traffic incident data to insurance companies,automotiveOEMs and the traveling p

120、ublic.We have historically had a diverse customer base.For Fiscal 2023 and Fiscal 2022,no individual customer represented greater than 10%of our totalrevenues.As of March31,2023 and 2022,no individual customer accounted for more than 10%of our total trade accounts receivable.Manufacturing and Materi

121、alsWe use contract manufacturers to build subassemblies that are used in our products.Additionally,we procure certain components for our products fromqualified suppliers,both in the U.S.and internationally,and generally use multi-sourcing strategies when technically and economically feasible to miti

122、gatesupply risk.These subassemblies and components are typically delivered to our Santa Ana,California facility where they go through final assembly andtesting prior to shipment to our customers.Our key suppliers include Veris Manufacturing and MoboTrex,Inc.Our assembly and test activities areconduc

123、ted in approximately 12,000 square feet of space at our Santa Ana,California facility.Production volume at our subcontractors typically is basedupon bi-annual forecasts that we generally adjust on a monthly basis to control inventory levels.Our production facility maintains a Quality ManagementSyste

124、m that is currently certified as conforming to all requirements of the International Organization for Standardization(ISO)9001:2015 internationalstandard.Customer Support and ServicesWe provide warranty service and support for our products,as well as follow-up service and support for which we charge

125、 separately.Such service revenuewas not a material portion of our total revenues for Fiscal 2023 and Fiscal 2022.We believe customer support is a key competitive factor for our Company.Backlog9Table of ContentsOur total backlog of unfulfilled firm orders was approximately$114.2million at March31,202

126、3.We typically expect to recognize revenue in the range ofapproximately two-thirds to three-quarters of our backlog as of the end of a fiscal year in the subsequent fiscal year.At March31,2022,we had backlog ofapproximately$99.9million.The 14%increase in backlog in the current fiscal year was genera

127、lly attributable to overall strong demand for our productsand services,as well as the timing of the receipt of some large contracts.Backlog is an operational measure representing future unearned revenue amounts believed to be firm and earned under existing agreements,but it does notrepresent the tot

128、al contract award if a firm purchase order or task order has not yet been issued under the contract.Backlog is not included in deferredrevenue on our balance sheets.Backlog does not include contract awards for which definitive contracts have not been executed.We believe backlog is auseful metric for

129、 investors,given its relevance to total orders.The timing and realization of our backlog is subject to the inherent uncertainties of doing business with federal,state and local governments,particularly inview of budgetary constraints,cut-backs and other delays or reallocations of funding that these

130、entities typically face.In addition,pursuant to thecustomary terms of our agreements with government contractors and other customers,our customers can generally cancel or reschedule orders with little orno penalties.Lead times for the release of purchase orders often can be affected by a variety of

131、factors including the scheduling and forecasting practices ofour individual customers,as well as availability of installation labor and ancillary parts related to installation which we do not manufacture or supply.These factors can affect the timing of the conversion of our backlog into revenues.For

132、 these reasons,among others,our backlog at a particular date maynot be indicative of the timing of our future revenues.Product DevelopmentOur product development activities are mostly conducted at our facilities in Santa Ana,California,and Madison,Wisconsin as well as using additionalemployee and pa

133、rtner resources across North America.Our research and development costs and expenses were approximately$8.3million for Fiscal 2023and$7.4million for Fiscal 2022.We expect to continue to pursue various product development programs and incur research and development expendituresin future periods.We be

134、lieve our engineering and product development capabilities are a competitive strength.We strive to continuously develop new products,technologies,features and functionalities to meet the needs of our ever-changing markets,as well as to enhance,improve upon,and refine our existing product lines.Wepla

135、n to continue to invest in the development of further enhancement and functionality of our ClearMobility Platform.CompetitionGenerally,we face significant competition in each of our target markets.Increased competition may result in price reductions,reduced gross margins andloss of market share,any

136、of which could have a material adverse effect on our business,financial condition and results of operations.The markets in which we operate are highly fragmented and subject to evolving national and regional quality,operations and safety standards.Ourcompetitors vary in number,scope and breadth of t

137、he products and services they offer.Our competitors providing managed services and consulting includea mix of local,regional and international engineering services firms.Our competitors in software products(e.g.,performance measurement andmanagement,advanced traveler information systems,and our comm

138、ercial vehicle operations and vehicle safety compliance platforms)include universityaffiliated software organizations,venture backed software companies,as well as other multi-disciplinary hardware and software corporations.In the market for our detection products,we compete with manufacturers and di

139、stributors of other above-ground video camera and radar detection systemsand manufacturers and distributors of other non-intrusive detection devices(e.g.,microwave,infrared,radar,ultrasonic and magnetic detectors),as well asmanufacturers and installers of in-pavement inductive loop products,which ha

140、ve historically been,and currently continue to be,the predominant vehicledetection system in this market.Additionally,products such as BlueTOAD and VantagePegasus compete against various competitors in the travel-time anddata communications markets,respectively.In general,the markets for the product

141、s and services we offer are highly competitive and are characterized by rapidly changing technology and evolvingstandards.Many of our current and prospective competitors have longer operating histories,greater name recognition,access to larger customer bases,andsignificantly greater financial,techni

142、cal,manufacturing,distribution and marketing resources than we do.As a result,they may be able to adapt morequickly to new or emerging standards or technologies,or to devote greater resources to the promotion and sale of their products.It is also possible that newcompetitors or alliances among compe

143、titors could emerge and rapidly acquire significant market share.We believe that our ability to compete effectively inour target markets will depend on a number of factors,including the success and timing of our10Table of Contentsnew product development,the compatibility of our products with a broad

144、 range of computing systems,product quality and performance,reliability,functionality,price and service,and technical support.Our failure to provide services and develop and market products that compete successfully withthose of other suppliers and consultants in our target markets could have a mate

145、rial adverse effect on our business,financial condition and results ofoperations.Intellectual Property and Proprietary RightsOur ability to compete effectively depends in part on our ability to develop and maintain the proprietary aspects of our technology.Our policy is to obtainappropriate propriet

146、ary rights of protection for any potentially significant new technology acquired or developed by us.We currently have a total of 31issued U.S.patents,including:(i)17 relating to our advanced sensor technologies,(ii)8 relating to our engineering and consulting services technologiesand(iii)6 related t

147、o our purchase of the TrafficCast Business.We have a total of 2 pending patent applications in the U.S.We currently have 5 issuedforeign patents and 2 foreign patent applications related to our purchase of the TrafficCast Business.The expiration dates of our patents range from 2026 to2040.We intend

148、to pursue additional patent protection to the extent we believe it would be beneficial and cost-effective.In addition to patent laws,we rely on copyright and trade secret laws to protect our proprietary rights.We attempt to protect our trade secrets and otherproprietary information through agreement

149、s with customers and suppliers,proprietary information agreements with our employees and consultants,andother similar measures.We do not have any material licenses or trademarks other than those relating to product names.We cannot be certain that we will besuccessful in protecting our proprietary ri

150、ghts.While we believe our patents,patent applications,software and other proprietary know-how have value,rapidly evolving technology makes our future success dependent largely upon our ability to successfully achieve continuing innovation.As a provider of traffic engineering services,hardware produc

151、ts,software and other various solutions for the traffic industry,the Company is,and may inthe future from time to time,be involved in litigation in the normal course of business related to our intellectual property rights and the intellectual propertyrights of others.While the Company cannot accurat

152、ely predict the outcome of any such litigation,the Company is not a party to any litigation or other legalproceedings related to its intellectual property or the intellectual property of others,the outcome of which,in managements opinion,individually or in theaggregate,would have a material effect o

153、n the Companys results of operations,financial position or cash flows.An adverse outcome in such litigation orsimilar proceedings could subject us to significant liabilities to third parties,require disputed rights to be licensed from others or require us to ceasemarketing or using certain products,

154、any of which could have a material adverse effect on our business,financial condition and results of operations.Inaddition,the cost of addressing any intellectual property litigation claim,both in legal fees and expenses,as well as from the diversion of managementsresources,regardless of whether the

155、 claim is valid,could be significant and could have a material adverse effect on our business,financial condition andresults of operations.EmployeesAs of March31,2023,we employed 450 full-time employees and 17 part-time employees,for a total of 467 employees.None of our employees arerepresented by a

156、 labor union,and we have never experienced a work stoppage.We believe our relations with our employees are good.Government RegulationOur manufacturing operations are subject to various federal,state and local laws and regulations,including those restricting the discharge of materials intothe environ

157、ment.We are not involved in any pending or,to our knowledge,threatened governmental proceedings,which would require curtailment of ouroperations because of such laws and regulations.We continue to expend funds in connection with our compliance with applicable environmentalregulations.These expenditu

158、res have not been significant in the past,and we do not expect any significant expenditure in the near future.Currently,compliance with foreign laws has not had a material impact on our business;however,as we expand internationally,foreign laws and regulations couldhave a material impact on our busi

159、ness in the future.ITEM 1A.RISK FACTORSOur business is subject to a number of risks,some of which are discussed below.Other risks are presented elsewhere in this report and in the informationincorporated by reference into this report.You should consider the following risks carefully in addition to t

160、he other information contained in this report andour other filings with the SEC,including our subsequent quarterly reports on Form10-Q and current reports on Form 8-K,before deciding to buy,sell orhold our common stock.The risks and uncertainties described below are not the only ones facing our comp

161、any.Additional risks and uncertainties not11Table of Contentspresently known to us or that we currently deem immaterial may also affect our business operations.If any of these risks actually occurs,our business,financial condition,or results of operations could be seriously harmed.In that event,the

162、market price for our common stock could decline and you maylose all or part of your investment.Risk Related to Our BusinessBecause we depend on government contracts and subcontracts,we face additional risks related to contracting with federal,state and local governments,including budgetary issues an

163、d fixed price contracts,that could adversely impact our future revenues and profitability.A significant portion of our revenues is derived from contracts with governmental agencies,either as a general contractor,subcontractor or supplier.Weanticipate that revenue from government contracts will conti

164、nue to remain a significant portion of our revenues.Government business is,in general,subjectto special risks and challenges,including:delays in funding and uncertainty regarding the allocation of funds to state and local agencies from the U.S.federal government,and delays orreductions in other stat

165、e and local funding dedicated for transportation and ITS projects;other government budgetary constraints,including reaching the current federal debt ceiling;cut-backs,delays or reallocation of governmentfunding,including without limitation,changes in the administration and repeal of government purch

166、asing programs;long purchase cycles or approval processes;competitive bidding and qualification requirements,as well as our ability to replace large contracts once they have been completed;changes in government policies and political agendas;maintenance of relationships with key government entities

167、from whom a substantial portion of our revenue is derived;milestone deliverable requirements and liquidated damage and/or contract termination provisions for failure to meet contract milestonerequirements;performance bond requirements;adverse weather conditions or other natural or health disasters o

168、r developments,such as COVID-19,and evacuations and flooding due tohurricanes,can result in our inability to perform work in affected areas;andinternational relations and international conflicts such as the war in Ukraine,or other military operations that could cause the temporary orpermanent divers

169、ion of government funding from transportation or other infrastructure projects.Governmental budgets and plans are subject to change without warning.Certain risks of selling to governmental entities include dependence onappropriations and administrative allocation of funds,changes in governmental pro

170、curement legislation and regulations and other policies that may reflectpolitical developments or agendas,significant changes in contract scheduling,intense competition for government business and termination of purchasedecisions for the convenience of the governmental entity.Substantial delays in p

171、urchase decisions by governmental entities and rescheduling orcancellation in purchase decisions by governmental entities,and the current constraints on government budgets at the federal,state and local level,and theongoing uncertainty as to the timing and accessibility to government funding could c

172、ause our revenues and income to drop substantially or to fluctuatesignificantly between fiscal periods.In addition,a number of our government contracts are fixed price contracts.As a result,we may not be able to recover any cost overruns we may incur.These fixed price contracts require us to estimat

173、e the total project cost based on preliminary projections of the projects requirements.The financial viabilityof any given project depends in large part on our ability to estimate these costs accurately and complete the project on a timely basis.In the event our costson these projects exceed the fix

174、ed contractual amount,we will be required to bear the excess costs.Such additional costs could adversely affect ourfinancial condition and results of operations.Moreover,certain of our government contracts are subject to termination or renegotiation at the convenienceof the government,which could re

175、sult in a large decline in our revenues in any given period.Our inability to12Table of Contentsaddress any of the foregoing concerns or the loss or renegotiation of any material government contract could seriously harm our business,financialcondition and results of operations.Our profitability could

176、 be adversely affected if we are not able to maintain adequate utilization of our engineering and consulting workforce.The cost of providing our engineering and mobility consulting services,including the extent to which we utilize our workforce,affects our profitability.Therate at which we utilize o

177、ur workforce is affected by a number of factors,including:our ability to transition employees from completed projects to new assignments and to hire and assimilate new employees;our ability to forecast demand for our services and thereby maintain an appropriate headcount in our various regions and r

178、elated professionaldisciplines;the timing of new contract awards,the commencement of work under an awarded contract or the completion of large contracts;the availability of project funding or other project budget issues;our need to devote time and resources to training,business development,professio

179、nal development and other non-chargeable activities;andour ability to match the skill sets of our employees to the needs of the marketplace.An inability to properly and fully utilize our engineering and consulting workforce would reduce our profitability and could have an adverse effect on ourresult

180、s of operations.Our management information systems and databases have been and could in the future be disrupted by data protection breaches,system securityfailures,cyber threats or by the failure of,or lack of access to,our internal operations,such as our enterprise resource planning(ERP)system,orse

181、rvices provided to our customers.These disruptions could negatively impact our sales,increase our expenses,significantly harm our reputationand/or adversely affect our stock price.Experienced users and computer programmers may be able to penetrate,or hack,our network security and create system disru

182、ptions,cause shutdownsand compromise or misappropriate our confidential information or that of our employees and third parties.Computer programmers and hackers also maybe able to develop and deploy viruses,worms,and other malicious software programs that attack our internal network,any of our system

183、s,service offeringsor otherwise exploit any security vulnerabilities of our network,systems or service offerings.In addition,sophisticated services,hardware and operatingsystem software and applications that we procure from third parties may contain defects in design or manufacture,including bugs an

184、d other problems thatcould unexpectedly interfere with the operation of a system.We could incur expenses addressing problems created by cyber or other security problems,bugs,viruses,worms malicious software programs and security vulnerabilities,and our efforts to address these problems may not be su

185、ccessful.We must,and do,take precautions to secure customer information and prevent unauthorized access to our databases and systems containing confidential information.Any data security event,such as a breach,data loss or information security lapses,whether resulting in the compromise of personal i

186、nformation or theimproper use or disclosure of confidential,sensitive or classified information,could result in interruptions,cessation of service(s),claims,remediationcosts,regulatory sanctions against us,loss of current and future contracts,adverse effects to results of operations and financial co

187、ndition,serious harm toour reputation and/or adverse effects to our stock price.We operate our ERP system and other key business systems on SaaS platforms,and we use thesesystems for reporting,planning,sales,audit,inventory control,loss prevention,purchase order management and business intelligence.

188、Accordingly,wedepend on these systems,and the third-party providers of these services,for a number of aspects of our operations.If these service providers or thesesystems fail,or if we are unable to continue to have access to these systems on commercially reasonable terms,or at all,operations could

189、be severelydisrupted until an equivalent system(s)could be identified,licensed or developed,and integrated into our operations.This disruption could have a materialadverse effect on our business.We carry insurance,including cyber insurance,commensurate with our size and the nature of our operations,

190、although thereis no certainty that such insurance will in all cases be sufficient to fully reimburse us for all losses incurred in connection with the occurrence of any ofthese system security risks,data protection breaches,cyber-attacks or other events.If unauthorized access is obtained to our cust

191、omers personal and/or proprietary data in connection with our web-based and mobile applicationsolutions and services,we may suffer various negative impacts,including a loss of customer and13Table of Contentsmarket confidence,loss of customer loyalty,and significant liability to our customers and to

192、individuals or businesses whose information was beingstored.Protecting data of our customers is critical to our business,and if there is unauthorized access,we may incur significant costs or liabilities.In addition,weare required to comply with government contracting requirements and make investment

193、s in our systems to protect that data.If we are unable to do so,ourcustomers may lose confidence in us,which would harm our sales,and we may incur significant expenses or liabilities.Acquisitions of companies or technologies may require us to undertake significant capital infusions and could result

194、in disruptions of our business anddiversion of resources and management attention.We completed the acquisition of TrafficCast in December 2020 and we plan to continue to explore acquiring additional complementary businesses,products,services,and technologies.Acquisitions may require significant capi

195、tal infusions which could be in the form of debt,equity,or both,and,ingeneral,acquisitions also involve a number of special risks,including:potential disruption of our ongoing business and the diversion of our resources and managements attention;the failure to retain or integrate key acquired person

196、nel;the challenge of assimilating diverse business cultures,and the difficulties in integrating the operations,technologies and information systemof the acquired companies;increased costs to improve managerial,operational,financial and administrative systems and to eliminate duplicative services;the

197、 incurrence of unforeseen obligations or liabilities;potential impairment of relationships with employees or customers as a result of changes in management;increased interest expense or increased share or equity dilution;andamortization of acquired intangible assets,as well as unanticipated accounti

198、ng charges.Our competitors are also soliciting potential acquisition candidates,which could both increase the price of any acquisition targets and decrease the numberof attractive companies available for acquisition.Acquisitions may also materially and adversely affect our operating results due to l

199、arge write-offs,contingent liabilities,substantial depreciation,deferred compensation charges or intangible asset amortization,or other adverse tax or accountingconsequences.We cannot assure you that we will be able to identify or consummate any additional acquisitions,successfully integrate any acq

200、uisitions orrealize the benefits and opportunities anticipated from any acquisition.Acquisitions,investments and divestitures could result in operating difficulties,dilution,and other consequences that may adversely affect our businessand results of operations.Acquisitions,investments and divestitur

201、es are important elements of our overall corporate strategy and use of capital,and these transactions could bematerial to our financial condition and results of operations.We expect to continue to evaluate and enter into discussions regarding potential strategictransactions.These strategic transacti

202、ons could create unforeseen operating difficulties and expenditures.We face risks that include,among other things:the strategic benefits and opportunities from any planned or completed acquisition or divestiture by the Company may not be realized or maytake longer to realize than expected;strategic

203、benefits and opportunities related to past and ongoing restructuring actions may not be realized or may take longer to realize thanexpected;our ability to realize the expected financial benefits of an acquisition,divestiture or other strategic transaction may not be realized or may takelonger to rea

204、lize than expected;cost reductions may not occur as expected;management time and focus may be diverted from operating our business to challenges related to acquisitions and other strategic transactions;14Table of Contentscultural challenges may arise associated with integrating employees from the ac

205、quired company into our organization,and retention ofemployees from the businesses we acquire;andwe may fail to successfully further develop the acquired business or technology.Our failure to address the risks and other issues in connection with our past or future acquisitions and other strategic tr

206、ansactions could cause us to notrealize their anticipated benefits and opportunities,incur unanticipated liabilities,experience increased costs,and harm our business generally.We participate in the software development market,which may be subject to various technical and commercial challenges.We inv

207、est in software development and have in the past and may in the future experience development and technical challenges.Our business and resultsof operations could also be seriously harmed by any significant delays in our software development activities.Despite testing and quality control,wecannot be

208、 certain that errors will not be found in our software after its release.Any faults or errors in our existing products or in any new products maycause delays in product introduction and shipments,require design modifications,or harm customer relationships or our reputation,any of which couldadversel

209、y affect our business and competitive position.In addition,software companies are subject to litigation concerning intellectual property disputes,which could be costly and distract our management.During the twelve months ended March 31,2022,due to delays in the completion of a softwaredevelopment co

210、ntract with a customer,the Company recorded an estimated loss on a contract of approximately$3.4million.The terms of the contract havesince been amended to a time and materials structure and no further additional contract losses are expected for this contract.No further subsequent loss onthis contra

211、ct was recorded through the year ended March31,2023 based on our assessment.The estimates and assumptions used in these assessments werebased upon managements judgment and may be subject to change as new events occur and additional information is obtained.If the future estimated coststo fulfill a co

212、ntract exceed the expected consideration from the customer,the Companys financial condition,cash flows,and results of operations may beadversely and materially impacted.If we do not keep pace with rapid technological changes and evolving industry standards,we will not be able to remain competitive,a

213、nd the demand forour products will likely decline.Our markets are in general characterized by the following factors:rapid technological advances;downward price pressures in our target markets as technologies mature;changes in customer requirements;additional qualification requirements related to new

214、 products or components;frequent new product introductions and enhancements;obsolescence of certain parts and components from time to time that may require re-engineering of certain portions of our product orproducts;inventory issues related to transition to new or enhanced models;andevolving indust

215、ry standards and changes in the regulatory environment.Our future success will depend upon our ability to anticipate and adapt to changes in technology and industry standards,and to effectively develop,introduce,market and gain broad acceptance of new products and product enhancements incorporating

216、the latest technological advancements.If we are unable to develop and introduce new products and product enhancements in a cost-effective and timely manner,or are unable to achievemarket acceptance of our new products,our operating results could be adversely affected.We believe our revenue growth an

217、d future operating results will depend on our ability to complete development of new products and productenhancements,introduce these products and product enhancements in a timely,cost-effective manner,achieve broad market acceptance of these productsand product enhancements,and reduce our productio

218、n costs.During the past few fiscal years we have introduced,and we expect we will continue tointroduce,both new and enhanced products.We cannot guarantee the success of these products,and we may not be able to introduce any new products orany enhancements to our existing products on a timely basis,o

219、r at all.In addition,the introduction of any new products could adversely affect the sales ofcertain of our existing products.15Table of ContentsWe believe that we must continue to make substantial investments to support ongoing research and development in order to develop new or enhancedproducts an

220、d software to remain competitive.We need to continue to prepare updates for existing products and develop and introduce new products thatincorporate the latest technological advancements in outdoor image processing hardware,camera technologies,software and analysis in response toevolving customer re

221、quirements.In addition,we are continuing to migrate some of our products to a new platform.We cannot assure you that we will beable to adequately manage product transitions.Our business and results of operations could be adversely affected if we do not anticipate or respondadequately to technologica

222、l developments or changing customer requirements or if we cannot adequately manage inventory requirements typically relatedto new product transitions and introductions.We cannot assure you that any such investments in research and development will lead to any correspondingincrease in revenue.We may

223、need to raise additional capital in the future,which may not be available on terms acceptable to us,or at all.We have historically experienced volatility in our earnings and cash flows from operations from year to year.Should the financial results of our businessdecline,we may need or choose to rais

224、e additional capital to fund our operations,to repay indebtedness,pursue acquisitions or expand our operations.Suchadditional capital may be raised through bank borrowings,or other debt or equity financings.We cannot assure you that any additional capital will beavailable on a timely basis,on accept

225、able terms,or at all,and such additional financing may result in further dilution to our stockholders.Our capital requirements will depend on many factors,including,but not limited to:market acceptance of our products and product enhancements,and the overall level of sales of our products;our abilit

226、y to control costs and achieve profitability;the supply of key components for our products;our ability to increase revenue and net income;increased research and development expenses and sales and marketing expenses;our need to respond to technological advancements and our competitors introductions o

227、f new products or technologies;capital improvements to new and existing facilities and enhancements to our infrastructure and systems;any acquisitions of businesses,technologies,product lines,or possible strategic transactions or dispositions;our relationships with customers and suppliers;government

228、 budgets,political agendas and other funding issues,including potential delays in government contract awards or commencementof work for a project;our ability to successfully secure credit arrangements with banks or other lenders and/or negotiate equity arrangements subject to the state ofthe financi

229、al markets in general;andgeneral economic conditions,including the effects of economic slowdowns and international conflicts.If our capital requirements are materially different from those currently planned,we may need additional capital sooner than anticipated.If additional fundsare raised through

230、the issuance of equity or convertible debt securities,the percentage ownership of our stockholders will be reduced and such securitiesmay have rights,preferences and privileges senior to our common stock.Additional equity or debt financing may not be available on favorable terms,on atimely basis,or

231、at all.If adequate funds are not available or are not available on acceptable terms when needed,we may be unable to continue ouroperations as planned,develop or enhance our products,expand our sales and marketing programs,take advantage of future opportunities or respond tocompetitive pressures.The

232、markets in which we operate are highly competitive with many companies more established than we are.Our competitors tend to vary across the various product categories in which we participate.The engineering and consulting market is highly fragmented and is subject to evolving national and regional q

233、uality and safety standards.Our competitorsvary in size,number,scope and breadth of the products and services they offer,and include large multi-national engineering firms and smaller local orregional firms.16Table of ContentsOur sensors line of business competes with existing,well-established compa

234、nies and technologies,both domestically and abroad.Only a portion of thetraffic intersection market has adopted advanced above-ground detection technologies,and our future success will depend in part upon gaining broadermarket acceptance for such technologies.Certain technological barriers to entry

235、make it difficult for new competitors to enter the market with competingvideo or other technologies;however,we are aware of new market entrants from time to time.Increased competition could result in loss of market share,price reductions and reduced gross margins,any of which could seriously harm ou

236、r business,financial condition and results of operations.Many of our competitors have greater name recognition and greater financial,technological,marketing and customer service resources than we do.Thismay allow our competitors to respond more quickly to new or emerging technologies and changes in

237、customer requirements.It may also allow them todevote greater resources to the development,promotion,sale and support of their products and services than we can.Consolidations of end users,distributors and manufacturers in our target markets exacerbate this problem.As a result of the foregoing facto

238、rs,we may not be able to compete effectivelyin our target markets and competitive pressures could adversely affect our business,financial condition and results of operations.Our failure to successfully secure new contracts and renew existing contracts could reduce our revenues and profitability.Our

239、business depends on our ability to successfully bid on new contracts and renew existing contracts with private and public sector customers.Wecontinually bid on new contracts and negotiate contract renewals on expiring contracts.Contract proposals and negotiations are complex and frequentlyinvolve a

240、lengthy bidding and selection process,which are affected by a number of factors,such as market conditions,financing arrangements and requiredgovernmental approvals.As a condition to contract award,customers typically require us to provide a surety bond or letter of credit to protect the clientshould

241、 we fail to perform under the terms of the contract.Government entities are also taking more time between contract award and approval tocommence work under the contract,which delays our ability to recognize revenues under the contract.If negative market conditions materialize,or if wefail to secure

242、adequate financing arrangements or the required governmental approval or fail to meet other required conditions,we may not be able topursue,obtain or perform particular projects,which could reduce or eliminate our profitability.We may be unable to attract and retain key personnel,including senior ma

243、nagement,which could seriously harm our business.Due to the specialized nature of our business and the current tight labor market,we are highly dependent on the continued service of our executive officersand other key management,engineering and technical personnel.We believe that our success will de

244、pend on the continued employment of a highlyqualified and experienced senior management team to retain existing business and generate new business.The loss of any of our officers,or any of ourother executives or key members of management could adversely affect our business,financial condition,or res

245、ults of operations(e.g.,loss of customers orloss of new business opportunities).Our success will also depend in large part upon our ability to continue to attract,retain and motivate qualifiedengineering and other highly skilled technical personnel.Particularly in highly specialized areas,it has bec

246、ome more difficult to retain employees and meetall of our needs for employees in a timely manner,which may adversely affect our growth in the current fiscal year and in future years.This situation isexacerbated by pressure from agency customers to contain our costs,while salaries for employees are o

247、n the rise.Although we intend to continue to devotesignificant resources to recruit,train and retain qualified skilled personnel,we may not be able to attract and retain such employees,which could impair ourability to perform our contractual obligations,meet our customers needs,win new business,and

248、adversely affect our future results.Likewise,the futuresuccess of our consulting services will depend on our ability to hire additional qualified engineers,planners and technical personnel.Competition forqualified employees,particularly development engineers and software developers,is intense and ha

249、s become more so over time.We may not be able tocontinue to attract and retain sufficient numbers of such highly skilled employees.Our inability to attract and retain additional key employees or the loss ofone or more of our current key employees could adversely affect our business,financial conditi

250、on and results of operations.COVID-19 could continue to have an adverse effect on our business.COVID-19 has affected and may continue to adversely impact our financial condition and results of operations.Although COVID-19 has entered anendemic stage,it may continue to have an unpredictable and unpre

251、cedented impact on the global economy including possible additional supply chaindisruptions,workplace dislocations,economic contraction,and negative pressure on some customer budgets and customer sentiment.All of these factorshave had or could result in future material negative impacts on our abilit

252、y to ensure a consistent supply chain for manufacturing of our hardware products,and maintain the effectiveness and productivity of our operations.Given the uncertainties surrounding the impacts of COVID-19 on the Companys future financial condition and results of operations,we have and maycontinue

253、to identify and execute various actions to preserve our liquidity,manage cash flow and17Table of Contentsstrengthen our financial flexibility.Such actions include,but are not limited to,reducing our discretionary spending,reducing capital expenditures,andimplementing restructuring activities(see Not

254、e 3,Restructuring Activities,to the Financial Statements for more information).Our products require specialized parts which have become more difficult to source.In some cases,we have had to purchase such parts from third-partybrokers at substantially higher prices.Additionally,to mitigate the impact

255、 of component shortages,we increased inventory levels for parts in short supply.In the event demand does not materialize,we would need to hold excess inventory for several quarters.Alternatively,we may be unable to source sufficientcomponents at any price,even from third-party brokers,to meet custom

256、er demand,resulting in high levels of backlog that we are unable to ship.TheCompanys tactics to mitigate the current global supply chain issues included re-designing certain circuit boards to accommodate computer chips that aremore readily available in the market at more reasonable prices,and by acc

257、umulating inventory in the first two quarters for the Fiscal 2023.We have placednon-cancellable inventory orders for certain products in advance of our normal lead times to secure normal and incremental future supply and capacity andmay need to continue to do so in the future.The Company cannot pred

258、ict the duration or direction of current trends or their sustained impact.As COVID-19 has entered an endemic stage,theCompany will continue to assess the effects on its operations.While the spread of COVID-19 has slowed and certain challenges have been abated,uncertainty remains about the duration a

259、nd extent of the impact of COVID-19 and its resulting impact on global economic conditions.If economicconditions caused by COVID-19 persists or do not recover as currently estimated by management,the Companys financial condition,cash flows andresults of operations may be materially impacted.Industry

260、 consolidation may lead to increased competition and may harm our operating results.There is a continuing trend toward industry consolidation in our markets.We expect this trend to continue as companies attempt to strengthen or hold theirmarket positions in an evolving industry and as companies are

261、acquired or are unable to continue operations.For example,some of our current andpotential competitors for transportation infrastructure solutions have made acquisitions,or announced new strategic alliances,designed to position themwith the ability to provide end-to-end technology solutions for the

262、transportation industry.Companies that are strategic alliance partners in some areas ofour business may acquire or form alliances with our competitors,thereby reducing their business with us.We believe that industry consolidation may resultin stronger competitors that are better able to compete as s

263、ole-source vendors for public transportation agencies,municipalities,and commercial entities.This could lead to more variability in our operating results and could have a material adverse effect on our business,operating results,and financialcondition.The ongoing war between Russia and Ukraine could

264、 adversely affect our business,financial condition and results of operations.On February 24,2022,Russian military forces launched a military attack on Ukraine and sustained conflict and disruption in the region is likely.Althoughthe length,impact and outcome of the ongoing war in Ukraine is highly u

265、npredictable,this conflict could lead to significant market and other disruptions,including significant volatility in commodity prices and supply of energy resources,instability in financial markets,supply chain interruptions,political andsocial instability,changes in government agency budgets and f

266、unding preferences as well as increase in cyberattacks and cyber and corporate espionage.Todate we have not experienced any material interruptions in our infrastructure,supplies,technology systems or networks needed to support our operations.We are actively monitoring the situation in Ukraine and as

267、sessing its impact on our business.The extent and duration of the war and resulting marketdisruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.Anysuch disruptions may also magnify the impact of other risks

268、 described in this Annual Report on Form 10-K.The availability of data we purchase and use in certain of our Mobility Data Sets may become more limited due to changes in strategy or financialhealth of data suppliers,and adversely affect performance of our products or the cost of data purchased.A rec

269、ent announcement of Wejo Group Limited to appoint an administrator due to insolvency,and the change in strategy of Otonomo Technologies Ltd.after being acquired,both reduced the number of suppliers selling data to us for use in some of our Mobility Data sets.Although similar data can bepurchased fro

270、m other sources,future changes in data sources or availability could adversely affect the quality of our Mobility Data Sets and/or the cost topurchase data.Legal and Regulatory RisksWe may not be able to adequately protect or enforce our intellectual property rights,which could harm our competitive

271、position.18Table of ContentsIf we are not able to adequately protect or enforce the proprietary aspects of our technology,competitors may be able to access our proprietary technologyand our business,financial condition and results of operations may be seriously harmed.We currently attempt to protect

272、 our technology through acombination of patent,copyright,trademark and trade secret laws,employee and third-party nondisclosure agreements and similar means.Despite ourefforts,other parties may attempt to disclose,obtain or illegally use our technologies or systems.Our competitors may also be able t

273、o independentlydevelop products that are substantially equivalent or superior to our products or design around our patents.In addition,the laws of some foreign countriesdo not protect our proprietary rights as fully as do the laws of the U.S.As a result,we may not be able to protect our proprietary

274、rights adequately in theU.S.or internationally.Litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others.Litigation may also be necessary to defend against claims of infringement or invalidity by o

275、thers.We have in the past,currently,and may in the future,besubject to litigation regarding our intellectual property rights and the intellectual property rights of others.An adverse outcome in litigation or any similarproceedings could subject us to significant liabilities to third parties,require

276、us to license disputed rights from others or require us to cease marketing orusing certain products,product features,or technologies.In addition,in the event of an adverse outcome in litigation or any similar proceedings we mayfind ourselves at a competitive disadvantage to others who need not incur

277、 the substantial expense,time,and effort required to market or use certainproducts,product features,or technologies.We may not be able to obtain any licenses on terms acceptable to us,or at all.We also may have to indemnifycertain customers or strategic partners if it is determined that we have infr

278、inged upon or misappropriated another partys intellectual property.Ourcontinued expansion into software development activities may subject us to increased possibility of litigation.Any of the foregoing could adversely affectour business,financial condition and results of operations.In addition,the c

279、ost of addressing any intellectual property litigation claim,including legal feesand expenses,and the diversion of managements attention and resources,regardless of whether the claim is valid,could be significant and could seriouslyharm our business,financial condition and results of operations.We m

280、ay continue to be subject to traffic-related litigation.The traffic industry in general is subject to frequent litigation claims due to the nature of personal injuries that can result from traffic accidents.As aprovider of traffic engineering services,products and solutions,we are,and could from tim

281、e to time in the future continue to be,subject to litigation fortraffic related accidents,even if our products or services did not cause the particular accident.While we generally carry insurance against these types ofclaims,some claims may not be covered by insurance or the damages resulting from s

282、uch litigation could exceed our insurance coverage limits.In theevent that we are required to pay significant damages as a result of one or more lawsuits that are not covered by insurance or exceed our coverage limits,itcould materially harm our business,financial condition or cash flows.Even defend

283、ing against unsuccessful claims could cause us to incur significantexpenses and result in a diversion of managements attention.Financial and Market RisksWe may not be able to consistently achieve profitability on a quarterly or annual basis in the future.We had a GAAP net loss of approximately$14.9m

284、illion in Fiscal 2023,net loss of$7.1million in Fiscal 2022,and we cannot assure you that we will beprofitable in the future.Our ability to operate at a profit in future periods could be impacted by governmental budgetary constraints,government andpolitical agendas,economic instability,supply chain

285、constraints and other items that are not in our control.Furthermore,we rely on operating profits tofund investments in sales and marketing and research and development initiatives.We cannot assure you that our financial performance will sustain asufficient level to completely support those investmen

286、ts.Most of our expenses are fixed in advance.As such,we generally are unable to reduce ourexpenses significantly in the short-term to compensate for any unexpected delay or decrease in anticipated revenues or increases in planned investments.If we experience declining or flat revenues and we fail to

287、 manage such declines effectively,we may be unable to execute our business plan and mayexperience future weaknesses in our operating results.Based on our business objectives,and in order to achieve future growth,we will need to continue to add additional qualified personnel,and invest inadditional r

288、esearch and development and sales and marketing activities,which could lead to increases in our expenses and future declines in our operatingresults.In addition,our past expansion has placed,and future expansion is expected to place,a significant strain on our managerial,administrative,operational,f

289、inancial and other resources.If we are unable to manage these activities or any revenue declines successfully,our growth,our business,ourfinancial condition and our results of operations could be adversely affected.19Table of ContentsOur use of estimates in conjunction with the input method of measu

290、ring progress to completion of performance obligations for our engineering andconsulting services revenues could result in a reduction or reversal of previously recorded revenues and profits.A portion of our engineering and consulting services revenues are measured and recognized over time using the

291、 input method of measuring progress tocompletion.Our use of this accounting method results in recognition of revenues and profits proportionally over the life of a contract,based generally onthe proportion of costs incurred to date to total costs expected to be incurred for the entire project.The ef

292、fects of revisions to estimated costs and resultingrevenues recognized are recorded when the amounts are known or can be reasonably estimated based on updated information.Such revisions could occurin any period and their effects could be material.Although we have historically made reasonably reliabl

293、e estimates of the progress towards completion oflong-term engineering,program management,construction management or construction contracts,the uncertainties inherent in the estimating process makeit possible for actual costs to vary materially from estimates which may result in reductions or revers

294、als of previously recorded revenues and profits.If our internal controls over financial reporting do not comply with the requirements of the Sarbanes-Oxley Act,our business and stock price could beadversely affected.Section404 of the Sarbanes-Oxley Act of 2002 currently requires us to evaluate the e

295、ffectiveness of our internal controls over financial reporting at the endof each fiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in all annual reports.Weare required to obtain our auditors attestation pursuant to Section404

296、(b)of the Sarbanes-Oxley Act.Going forward,we may not be able to complete thework required for such attestation on a timely basis and,even if we timely complete such requirements,our independent registered public accounting firmmay still conclude that our internal controls over financial reporting a

297、re not effective.A control system,no matter how well designed and operated,can provide only reasonable,not absolute,assurance that the control systems objectives willbe met.Further,the design of a control system must reflect the fact that there are resource constraints,and the benefits of controls m

298、ust be consideredrelative to their costs.Because of the inherent limitations in all control systems,no evaluation of controls can provide absolute assurance that all controlissues and instances of fraud,if any,within Iteris have been or will be detected.These inherent limitations include the realiti

299、es that technology,decision-making and other processes can be faulty and that breakdowns can occur because of simple errors or mistakes.Controls also can possibly be circumventedby the individual acts of some persons,by collusion of two or more people,or by management override of the controls.The de

300、sign of any system ofcontrols is based in part on certain assumptions about the likelihood of future events,and we cannot assure you that any design will succeed in achieving itsstated goals under all potential future conditions.Over time,our controls may become inadequate because of changes in cond

301、itions or deterioration in thedegree of compliance with policies or procedures.Because of the inherent limitations in a cost-effective control system,misstatements due to error or fraudmay occur and not be detected.If we are not able to maintain effective internal controls over financial reporting,w

302、e may lose the confidence of investorsand analysts and our stock price could decline.Our quarterly operating results fluctuate as a result of many factors.Therefore,we may fail to meet or exceed the expectations of securities analystsand investors,which could cause our stock price to decline.Our qua

303、rterly revenues and operating results have fluctuated and are likely to continue to vary from quarter to quarter due to a number of factors,many ofwhich are not within our control.Factors that could affect our revenues and operating results include,among others,the following:delays in government con

304、tracts and funding from time to time and budgetary constraints at the federal,state and local levels;our customers or our ability to access stimulus funding,funding from the federal transportation bills or other government funding;declines in new home and commercial real estate construction and rela

305、ted road and other infrastructure construction;changes in our pricing policies and the pricing policies of our suppliers and competitors,pricing concessions on volume sales,as well asincreased price competition in general;the long lead times associated with government contracts;20Table of Contentsth

306、e size,timing,rescheduling or cancellation of significant vendor and customer orders;our ability to control costs,including costs associated with strategic alternatives;the mix of our products and services sold in a quarter,which has varied and is expected to continue to vary from time to time;our a

307、bility to develop,introduce,patent,market and gain market acceptance of new products,applications and product enhancements in atimely manner,or at all;market acceptance of the products incorporating our technologies and products;the introduction of new products by competitors;the availability and co

308、st of components used in the manufacture of our products;our success in expanding and implementing our sales and marketing programs;the effects of technological changes in our target markets;the amount of our backlog at any given time;timing of backlog fulfillment;the nature of our government contra

309、cts;decrease in revenues derived from key or significant customers;deferrals of customer orders in anticipation of new products,applications or product enhancements;interruptions or other significant disruption in our supply chain which may negatively impact our ability to ship products and/or the c

310、ost ofour products;risks and uncertainties associated with our international business;market condition changes such as industry consolidations that could slow down our ability to procure new business;general economic and political conditions;our ability to raise additional capital;pandemic and epide

311、mic events,such as COVID-19,which may have a continuing impact on our future operating results;international conflicts and acts of terrorism;andother factors beyond our control,including but not limited to,natural disasters.Due to all of the factors listed above as well as other unforeseen factors,o

312、ur future operating results could be below the expectations of securities analystsor investors.If that happens,the trading price of our common stock could decline.As a result of these quarterly variations,you should not rely on quarter-to-quarter comparisons of our operating results as an indication

313、 of our future performance.21Table of ContentsSupply shortages or production gaps could materially and adversely impact our sales and financial results.We have experienced,and may from time to time in the future continue to experience parts shortages,end of life events,sharp increases in component c

314、ostsand unforeseen quality control issues by our suppliers that may impact our ability to meet demand for our products.COVID-19 has increased theoccurrence of such shortages and increased costs for materials.We have historically used and continue to use single suppliers for certain significantcompon

315、ents in our products;however,in light of the current supply chain shortage we have begun to use other suppliers to meet our demand,and we havehad to reengineer products from time to time to address discontinued,obsolete or unavailable components.Our products are also included with other trafficinter

316、section products that also could experience supply issues for their products,which in turn could result in delays in orders for our products.Should anysuch supply delay or disruption occur,or should a key supplier discontinue operations,our future sales and costs may be materially and adversely affe

317、cted.Additionally,we rely heavily on select contract manufacturers to produce many of our products and do not have any long-term contracts to guaranteesupply of such products.Although we believe our contract manufacturers have sufficient capacity to meet our production schedules for the foreseeablef

318、uture and we believe we could find alternative contract manufacturing sources for many of our products,if necessary,we could experience a productiongap should for any reason our contract manufacturers become unable to meet our production requirements and the cost of our products could increase,adver

319、sely affecting our margins.Further,foreign imports of components in our products subject the Company to risks of changes in,or the imposition ofnew,export/import requirements,tariffs,work stoppages,delays in shipment,product cost increases due to component shortages,public health issues,suchas COVID

320、-19,that could lead to temporary closures of facilities or shipping ports,and other economic uncertainties affecting trade between the U.S.andother countries where we source components for our products.Any such actions could increase the cost to us of such products and cause increases in theprices a

321、t which we sell such products,which could adversely affect the financial performance of our business.Similarly,these actions could result in costincreases or supply chain delays that impact third party products(e.g.,steel poles)which could lead our customers to delay or cancel planned purchases ofou

322、r products.Our international business operations may be threatened by many factors that are outside of our control.While we historically have had limited international sales,revenues and operational experience,we have been expanding our distribution capabilities forour products internationally,parti

323、cularly in Europe and in South America.We plan to continue to expand our international efforts,but we cannot assure youthat we will be successful in such efforts.International operations subject us to various inherent risks including,among others:political,social and economic instability,as well as

324、international conflicts and acts of terrorism;bonding requirements for certain international projects;longer accounts receivable payment cycles;import and export license requirements and restrictions of the U.S.,as well as requirements and restrictions in the other countries in which weoperate;curre

325、ncy fluctuations and restrictions,and our ability to repatriate currency from certain foreign regions;unexpected changes in regulatory requirements,tariffs and other trade barriers or restrictions;required compliance with existing and new foreign regulatory requirements and laws,more restrictive lab

326、or laws and obligations,includingbut not limited to the U.S.Foreign Corrupt Practices Act;difficulties in managing and staffing international operations;potentially adverse tax consequences;reduced protection for intellectual property rights in some countries;andpandemic and epidemic events,such as

327、COVID-19,and related government responses,including travel restrictions,quarantines and stay-at-home orders.Substantially all of our international product sales are denominated in U.S.dollars.As a result,an increase in the relative value of the U.S.dollar couldmake our products more expensive and po

328、tentially less price competitive in international markets.We do not currently engage in any transactions as ahedge against risks of loss due to foreign currency fluctuations.Any of the factors mentioned above may adversely affect our future international revenues and,consequently,affect our business

329、,financial condition andoperating results.Additionally,as we pursue the expansion of our international business,22Table of Contentscertain fixed and other overhead costs could outpace our revenues,thus adversely affecting our results of operations.We may likewise face localcompetitors in certain int

330、ernational markets who are more established,have greater economies of scale and stronger customer relationships.Furthermore,as we increase our international sales,our total revenues may also be affected to a greater extent by seasonal fluctuations resulting from lower sales thattypically occur durin

331、g the summer months in Europe and certain other parts of the world.The trading price of our common stock is highly volatile.The trading price of our common stock has been subject to wide fluctuations in the past.From March31,2020 through March31,2023,our common stockhas traded at prices as low as$2.

332、40 per share and as high as$7.81 per share.The market price of our common stock could continue to fluctuate in thefuture in response to various factors,including,but not limited to:quarterly variations in operating results;our ability to control costs,improve cash flow and sustain profitability;stat

333、ements made by third parties or speculation regarding our strategic alternatives;our ability to raise additional capital;shortages announced by suppliers;announcements of technological innovations or new products or applications by our competitors,customers or us;transitions to new products or product enhancements;acquisitions of businesses,products or technologies,or other strategic transactions