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Item 1A. Risk Factors

2024-04-15 compared with 2023-05-16 · 473 added, 388 removed, 73 unchanged (92% of the section changed)

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stock may decline, perhaps significantly, and you could lose all or a part of your investment.

risks below can be characterized into four groups:

Risks related to disruptive

global events such as a widespread public health crisis, the outbreak of an international conflict, a terrorist event or a banking

crisis, such as Covid-19 and the war in Ukraine, and responses to such events;

risks below can be characterized into three groups:

Risks related to our business,

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indebtedness;

Risks related to our common

financial statements contained in this Report, as well as the description of our business contained herein, unless otherwise indicated,

principally reflect the status of our business and the result of operations as of December 31, 2022.

Related to Global Events

Disruptive national and international events,

such as the outbreak of a public health crisis, an international conflict, a terrorist event, a banking crisis, the possibility of default

by the United States on its obligations due to its debt ceiling or the actuality of such an event, and the response of the United States,

other countries and the public to such events, and the resulting macroeconomic disruption to the financial markets and the businesses

of our customers and suppliers, could have a negative impact on our results of operation and financial condition.

The outbreak of the Covid-19

pandemic, the invasion of Ukraine by the Russian Federation and the measures adopted by various governments and agencies, as well as the

decision by many individuals and businesses to voluntarily shut down or self-quarantine and work from home in response to the outbreak

of Covid-19 had serious adverse impacts on domestic and foreign economies, the financial markets and our ability, as well as the ability

of some of our customers and suppliers, to operate in the ordinary course.

While we continued to operate substantially in the normal course

of business since the outbreak of Covid-19, we were forced to adjust our sales and marketing practices due to difficulties encountered

in contacting our customers to maintain existing programs and win new orders and did not receive new contracts during 2021 and 2022 at

a rate consistent with historical levels.

Although business has substantially returned to pre-Covid-19 operating levels and our ability

to win new orders appears to be returning to historical levels, there is no assurance that there will not be another event, such as a

public health crisis, an international conflict, a terrorist event, a banking crisis or the possibility of a default by the United States

on its obligations due to its debt ceiling or the actuality of such an event, which will have a material adverse impact on our industry,

operations or financial condition.

Moreover, although our industry appears to be operating in the normal course, employees of certain

customers continue to work from home impacting our ability to communicate with them and the future economic impact of changes in business

practices which resulted from Covid-19 or which might result from a future event, cannot be predicted with certainty.

Covid-19 caused

significant disruption to the commercial travel and aerospace industries.

Although air travel has increased, it may take several years

for overall economic conditions to return to normal, particularly in the aerospace industry, for air travel and the resulting demand for

new and refurbished aircraft to return to normal.

If conditions do not improve, or if they worsen, it could make it difficult for us to

access debt and equity capital on attractive terms, or at all, and impact our ability to fund business activities and repay debt on a

timely basis.

invasion of Ukraine, continued tensions between the US and the European Union with China and Russia, may alter countries’

willingness to rely on others as the source of certain products and material.

Historically, prime contractors and OEMs in the United States A &

D industry have relied upon suppliers outside the United States for products and raw materials, including suppliers in Russia and China.

Supply chain disruptions resulting from China’s initial response to Covid-19, Russia’s invasion of Ukraine and the economic

disruption resulting from retaliatory measures, continued tensions between the US and other countries, may cause many companies in the

A&D industry and the governments of the countries in which they are located, including the United States, to rethink these strategies

and seek or mandate that such companies obtain more reliable sources of supply.

To the extent they do so, it could disrupt the markets

for raw materials and supplies, our ability and the ability of our suppliers to obtain raw materials and supplies and the market for the

skilled laborers we need to manufacture our products.

cannot forecast with any certainty whether such disruptions, restrictions imposed by various governments in response thereto and resulting

changes in business practices, may materially impact our ability and the ability of our suppliers to obtain necessary raw material, our

business and our consolidated financial position, results of operations, and cash flows.

reading the remaining risk factors set forth below, in each case, consider the additional uncertainties caused by the potential for disruptive

global events such as a widespread public health crisis, the outbreak of an international conflict, terrorist event or banking crisis

and continued rivalries between various countries.

Risks related to our status

as a public company and our common stock.

Related to Our Business

may need additional financing .

We may need to obtain additional

financing to fund acquisitions of capital items necessary for our growth and to upgrade equipment to remain competitive.

need to obtain the agreement of holders of portions of our debt to extend or otherwise refinance such debt.

We may need to offer these

holders increases in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity

Future financings or refinancings may involve the issuance of debt, equity and/or securities convertible into or exercisable

or exchangeable for our equity securities.

Additional funding may not be available to us on reasonable terms, if at all.

If we are able

to consummate such financings or re-financings, the trading price of our common stock could be adversely affected and the terms of such

financings may adversely affect the interests of our existing stockholders.

Any failure to obtain additional working capital when required

would have a material adverse effect on our business and financial condition and may result in a decline in our stock price.

Any issuances

of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable

for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.

reduction in government spending on defense could materially adversely impact our revenues, results of operations and financial condition.

large percentage of our revenue is derived from products for US military aviation.

There are risks associated with programs that are

subject to appropriation by Congress, which could be potential targets for reductions in funding.

Reductions in United States Government

spending on defense or future changes in the mix of defense products required by United States Government agencies could limit demand

for our products and may have a materially adverse effect on our operating results and financial condition.

For the past several years,

our operations have been impacted by volatility in government procurement cycles and spending patterns.

There can be no assurance that

our financial condition and results of operations will not be materially adversely impacted by future volatility in defense spending

or a change in the mix of products purchased by defense departments in the United States or other countries, or the perception on the

part of our customers that such changes are about to occur.

depend on revenues from a few significant relationships.

Any loss, cancellation, reduction, or interruption in these relationships could

may need additional financing to fund investments in new or upgraded property or equipment .

may require additional financing to fund investments in new or upgraded property or equipment, in order to remain competitive.

If we do, we may also need to obtain the agreement of holders of portions of our debt to extend or otherwise refinance such debt.

order to gain consent, we may need to offer these holders increases in the rates of interest they receive or otherwise compensate them

through payments of cash or issuances of our equity securities.

Such additional financing or refinancing may involve the issuance of

debt, equity and/or securities convertible into or exercisable or exchangeable for our equity securities and may not be available to

us on reasonable terms, if at all.

If we are unable to consummate such additional financing or re-financing, the trading price of our

common stock could be adversely affected, and the terms of such financing may adversely affect the interests of our existing stockholders.

Any failure to fund working capital when required would have a material adverse effect on our business and financial condition and may

result in a decline in our stock price.

Any issuances of our common stock, preferred stock, or securities such as warrants or notes that

are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest

of our existing stockholders.

reduction in budgeted or actual U.S.

government spending for defense or changes in the mix of defense products could materially adversely

impact our business strategy, revenues, operating results and financial condition.

ultimate end-user for most of our products is the U.S.

Government, with significant use on military aircraft.

In certain instances, our

products may be exported to allied foreign governments by the U.S.

Although we expect to generate net sales from all of our

key aerospace and defense platforms and programs for many years, they are subject to significant risk.

Congressional appropriation and

presidential approval are required for funding leaving our platforms and programs vulnerable to potential budget reductions at any point.

For instance, a decrease in U.S.

government defense spending or a strategy shift to rocket and drone platforms instead of large military

aircraft platforms, could curtail demand for our landing gear parts and other components we provide which would likely have a materially

adverse effect on our business strategy, revenues, operating results and financial condition.

operations have historically been subject to the fluctuations in government procurement cycles and spending patterns by our customers.

There can be no assurance that our financial condition and future results of operations will not be materially adversely impacted by

volatility in defense spending or changes in the mix of product favored by the U.S.

Government or other nations, or the perception among

our customers regarding the likelihood of such shifts.

we have cultivated long-standing relationships with many of our customers, the aerospace and defense industry is characterized by a smaller

number of large and well-known prime customers.

We depend on revenues from these relationships and any loss, cancellation, reduction,

or interruption in these relationships could harm our business.

products are purchased by a relatively small number of large aerospace and defense customers who incorporate them into larger products

for ultimate end-use by the U.S.

Government, international governments, and commercial global airlines.

Consequently, we have a high

degree of sales concentration among specific customers making it challenging to diversify our customer base.

In fiscal years 2023 and

2022, four and three customers, respectively, accounted for approximately 64.2% and 76.5% of net sales, respectively.

future success relies heavily on nurturing expanding and effectively managing these relationships.

Nevertheless, we cannot assure retention

of these customers or their continuing to purchasing at previous levels.

The loss of any key customers, a decline or interruption in

sales to them, or our inability to establish relationships with new customers, could significantly impact our business.

depend on revenues from components for a few aircraft programs and platforms and the cancellation or reduction of funding of them will

harm our business.

derive most of our revenues from a small number of customers.

Four customers represented approximately 77% and three customers represented

75% of total sales for the years ended December 31, 2022 and 2021, respectively.

The markets in which we sell our products are dominated

by a relatively small number of customers which have contracts with United States governmental agencies, thereby limiting the number

of potential customers.

Our success depends on our ability to develop and manage relationships with significant customers.

be sure that we will be able to retain our largest customers or that we will be able to attract additional customers, or that our customers

will continue to buy our products in the same amounts as in prior years.

The loss of one or more of our largest customers, any reduction

or interruption in sales to these customers, our inability to successfully develop relationships with additional customers or future

price concessions that we may have to make, could significantly harm our business.

depend on revenues from components for a few aircraft platforms and the cancellation or reduction of either production or use of these

aircraft platforms could harm our business.

derive a significant portion of our revenues from components for a few aircraft platforms, specifically the Sikorsky BlackHawk helicopter,

the Northrop Grumman E-2 Hawkeye naval aircraft, the F-18 Hornet and the Pratt & Whitney Geared TurboFan Jet engine.

in demand for our products as a result of either a reduction in the production of new aircraft or a reduction in the use of existing

aircraft in the fleet (reducing after-market demand) would have a material adverse effect on our operating results and financial condition.

competition in our markets may lead to a reduction in our revenues and market share.

defense and aerospace component manufacturing market is highly competitive and we expect that competition will increase and perhaps intensify.

In particular, we anticipate that manufacturers which have historically operated predominately in the commercial sector may seek to increase

the revenue derived in the defense aerospace market to utilize excess capacity.

Many competitors have significantly greater technical,

derive a significant portion of our net sales from supplying components for select aircraft programs and platforms, such as the F-18

Hornet, the E-2D Hawkeye, the UH-60 Black Hawk Helicopter, Pratt & Whitney Geared Turbo-Fan Engine, the CH-53 Helicopter, the F-35

Lightning II (also known as the Joint Strike Fighter) and the F-15 Eagle Tactical Fighter.

A decrease in demand for our products, stemming

from reduced aircraft production or diminished aircraft utilization, would adversely affect our future operating results and financial

in outsourcing strategies and intense competition in our markets may lead to a reduction in our revenues and market share.

defense and aerospace component manufacturing market is highly competitive.

Competition has been increasing and is expected to intensify

Our large aerospace and defense prime customers, Tier One suppliers and many of our competitors have significantly greater technical,

manufacturing, financial and marketing resources than we do.

We may not be able to compete successfully against either current or future

Increased competition could result in reduced revenue, lower margins or loss of market share, any of which could significantly

harm our business, our operating results and financial condition.

may lose sales if we fail to timely meet the needs of any of our customers.

customers incorporate our products into larger aircraft assemblies or completed aircraft.

They rely upon us to deliver products meeting

their specifications on a timely basis to ensure smooth operation of their assembly lines.

If a customer were to conclude that it could

not rely upon us for timely delivery of quality products, it could look to dual source a product or rely upon another party altogether.

A customer could reach such a conclusion even if our failure to timely deliver product was the result of events beyond our control, such

as the failure of the customer to place an order for a long lead time product on a timely basis or supply us with agreed upon raw materials

for processing.

Any decision by a customer to rely upon an alternate supplier for some or all of its needs could significantly harm our

business, our operating results and our financial condition.

may lose sales if our suppliers fail to meet our needs or shipments of raw materials are not timely made.

we procure most of our raw materials, parts and components from multiple sources and rely upon a number of subcontractors to perform

detailed services, or believe that these materials, components and services are readily available from numerous sources, certain materials,

components and services are available only from a sole or limited number of sources and often need to be sourced by our customer.

we believe that substitute supplies, components or assemblies and subcontractors could be obtained, use of substitutes would require

development of new suppliers or would require us to re-engineer our products, or both, which could delay shipment of our products and

could have a materially adverse effect on our operating results and financial condition.

Any delays in the shipment of raw materials

or the performance of subcontracted services could significantly harm our business, our operating results and our financial condition.

reduction in our revenues could have a disproportionate effect on our gross profit as a percentage of sales.

Our operations have a large

percentage of fixed factory overhead relative to our overall expenses.

As a result, our gross profit as a percentage of sales is highly

linked with sales volume.

Any reduction in our sales volume causes us to absorb the fixed overhead costs over a smaller base of sales,

likely causing our profit margin to decrease.

Any reduction in our profit margin adversely impacts our reported performance and would

have a material adverse impact on results of operation and consolidated financial position.

In the future, our defense and aerospace customers could make changes in

their supply chain strategies that could adversely impact us.

For instance, they could decide to in-source manufacturing, stop purchasing

pursuant to existing LTA agreements or seek other sources at any time.

If they seek other suppliers, we may not be able to compete successfully

against either current or future competitors (including commercial manufacturers that wish to diversify their revenues and expand into

the defense supply chain).

Increased competition could result in reduced revenue, lower margins or loss of market share, any of which

could significantly harm our business, our operating results and financial condition.

may lose sales if we fail to timely meet the specifications and requirements of our customers.

of our customers incorporate our products into larger products such as aircraft assemblies or completed aircraft.

They rely upon us to

deliver products pursuant to existing LTA agreements that include detailed specifications and requirements.

If a customer were to conclude

that it could not rely upon us for any reason, it could look to dual source a product or rely upon another party altogether.

be informed of a change in sourcing decisions with limited notice or not at all.

Any decision by a customer to rely upon an alternate

supplier for some or all of its needs could significantly harm our business, our operating results and our financial condition.

may lose sales if our suppliers fail to meet our needs or ship raw materials to us on timely.

We must deliver our products timely with high

quality to ensure smooth operation of our customer production lines.

In order to do so, we attempt to procure our raw materials, parts

and components as well as subcontracted services from various sources and utilize multiple subcontractors.

However, certain materials,

components and services are exclusively available from a sole or limited number of suppliers and we are reliant upon them.

Additionally,

material sourced from overseas are susceptible to supply chain disruptions stemming from global events and political decisions.

we believe that, in many cases, alternative supplies, components, assemblies, or subcontractors could be secured, sourcing substitutes

may necessitate the development of new suppliers or require product re-engineering and qualification, potentially leading to shipment

Any interruptions in raw material shipments or subcontracted service performance could significantly harm our business, our operating

results and our financial condition.

may not be able to improve our gross margin and a reduction in future sales levels could have a disproportionate effect on our gross

profit as a percentage of our net sales.

state-of-the-art manufacturing facilities currently has a large percentage of fixed factory overhead relative to our overall expenses.

Consequently, our gross profit as a percentage of new sales is highly linked with sales volume.

If we do not increase our sales volume,

it will be difficult to materially improve our gross profit margin.

Although we have plans to improve operating efficiencies at our current

sales levels, we may not be able to do so.

Further, any reduction in future sales volume would likely causes us to absorb the fixed overhead

costs over a smaller base of sales, causing our gross profit as a percentage of sales to decline from current levels.

Any reduction in

our profit margin adversely impacts our reported performance and would have a material adverse impact on results of operation and our

financial position.

are risks associated with the bidding processes in which we compete.

obtain many contracts through a competitive bidding process.

We must devote substantial time and resources to prepare bids and proposals

and may not have contracts awarded to us.

Even if we win contracts, there can be no assurance that the prices that we have bid will be

sufficient to allow us to generate a profit from any particular contract.

There are significant costs involved with producing a small

number of initial units of any new product and it may not be possible to recoup such costs on later production runs.

to fixed contract pricing, increasing contract costs expose us to reduced profitability and the potential loss of future business.

obtain many LTA and other contracts through a competitive bidding process.

We must devote substantial time and resources to prepare bids

and proposals and may not have contracts awarded to us.

Even if we win contracts, there can be no assurance that the prices that we have

bid will be sufficient to allow us to generate a profit from any particular contract.

There are significant costs involved with producing

a small number of initial units of any new product and it may not be possible to recoup such costs on later production runs.

to fixed contract pricing, increasing contract costs expose us to reduced profitability and the potential loss of business.

cost estimation process requires significant judgment and expertise.

Reasons for cost growth may include unavailability and productivity

Reasons for cost growth include unavailability and productivity

of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect

of any delays in performance, availability and timing of funding from the customer, natural disasters, and the inability to recover any

claims included in the estimates to complete.

A significant change in cost estimates on one or more programs could have a material effect

on our consolidated financial position or results of operations.

of delays in performance, availability and timing of funding from the customer, natural disasters, supply chain disruptions and the inability

to recover any claims for added services necessary to complete production.

A significant change in costs from those on which we based

our estimates on one or more programs could have a material effect on our consolidated financial position or results of operations.

prices of raw materials we use are volatile.

prices of raw materials used in our manufacturing processes are volatile.

Our contracts generally allow us to increase our prices due

to increases in the price of raw materials.

Many contracts, however, require that we absorb all or a portion of the increase in expense

resulting from inflation before passing the increase on to the customer.

If the prices of raw materials rise, we may not be able to pass

along all of such increases to our customers and this could have an adverse impact on our consolidated financial position and results

of operations.

It is possible that some of the raw materials we use might become subject to new or increased tariffs.

Significant increases

in the prices of raw materials could adversely impact our customers’ demand for certain products which could lead to a reduction

in our revenues and have a material adverse impact on our revenues and on our consolidated financial position and results of operations.

Some LTA agreement with customers allow us to increase our

prices due to increases in the price of raw materials.

However, these LTA agreements generally require that we first absorb all or a

portion of the price increases before being able to pass on the increase the customer.

For some LTA agreements, we are at full risk for

future price agreements.

If the prices of raw materials rise, we may not be able to pass along all of such increases to our customers

and this could have an adverse impact on our financial position and results of operations.

It is possible that some of the raw materials

we use might become subject to new or increased tariffs.

Significant increases in the prices of raw materials could adversely impact

our customers’ demand for certain products which could lead to a reduction in our revenues and have a material adverse impact on

our revenues and on our financial position and results of operations.

of the products we produce have long lead times.

Some of the products we produce require months to produce and we sometimes

produce products in excess of the number ordered intending to sell the excess as spares when orders arise.

As a result, our inventory

turns slowly and ties up our working capital.

Our inventory represented approximately 60% of our assets as of December 31, 2022.

Any requirement

to write down the value of our inventory due to obsolescence, excess and slow moving, or a drop in the price of materials could have a

material adverse effect on our consolidated financial position, results of operations and could result in a breach of the financial covenants

in our Loan Facility with Webster Bank (“Webster”).

of the products we produce require months to produce and we sometimes produce products in excess of the number ordered intending to sell

the excess as spares when orders arise.

As a result, our inventory turns slowly and ties up our working capital.

Our inventory represented

approximately 59% of our assets as of December 31, 2023.

Any requirement to write down the value of our inventory due to obsolescence,

excess and slow moving, or a drop in the price of materials could have a material adverse effect on our consolidated financial position

and results of operations.

do not own the intellectual property rights to products we produce.

all the parts and subassemblies we produce are built to customer specifications and the customer owns the intellectual property, if any,

related to the product.

Consequently, if a customer desires to use another manufacturer to fabricate its part or subassembly, it would

be free to do so, which could have a material adverse effect on our business, our operating results and financial condition.

we develop our internal processes, nearly all the parts and subassemblies we produce are built to customer specifications and the customer

owns the intellectual property, if any, related to the product.

Consequently, if a customer desires to use another manufacturer to fabricate

its part or subassembly, it would be free to do so, which could have a material adverse effect on our business, our operating results

and financial condition.

are risks associated with new programs.

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our expenses effectively, our business, results of operations and financial condition may be adversely affected.

are risks associated with offering new services.

reduce our dependence on subcontractors we may offer new services to our customers, such as painting and finishing products we manufacture.

There are risks associated with offering new services and even if such services are performed timely and correctly, it is likely that

our margins will be low in the initial phases when volume is low.

are risks associated with offering new services to our customers.

From time-to-time in order to reduce our dependence

on subcontractors or increase our gross margins we offer new services to our customers, such as painting and finishing products we already

manufacture for them.

There are risks associated with offering these services and even if performed timely and correctly, it is likely

that our margins for these new services will be relatively low, or even negative, in the initial phases when volume is low.

be successful in achieving positive gross margins for these new services or be able to ultimately meet our customer requirements.

are unsuccessful, it could hurt our relationship with our customers.

and retaining executive talent and other key personnel is an essential element of our future success.

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existing executive officers and other key management and technical personnel.

Experienced management and technical, marketing and support

personnel in the defense and aerospace industries are in demand and competition for their talents is intense.

Our failure to attract

executive talent, or retain our existing executive officers and key personnel, could have a material adverse effect on our business,

financial condition and results of operations.

We are a relatively small company and experienced management

and technical, marketing and support personnel in the defense and aerospace industries are in demand and competition for their talents

Our failure to attract or retain executive, key management and technical personnel, could have a material adverse effect

on our business, financial condition and results of operations.

are subject to intense competition for the skilled machinists necessary to manufacture our products.

are subject to intense competition for the services of skilled machinists necessary to manufacture our products and those of other companies

in the A & D industry.

Since the outbreak of COVID-19, the competition for skilled employees has intensified.

Moreover, certain large

employers in our industry in the Northeast are currently seeking to hire a large number of skilled technicians.

We are currently seeking

to hire machinists for our Long Island and Connecticut manufacturing facilities to expand our business.

The demand for these individuals

may increase as other manufacturers seek to bring to the United States manufacturing processes currently outsourced overseas.

United States economy undergoes a period of inflation, our labor costs may increase which could have a material adverse effect on our

business, financial condition and results of operations.

in the aerospace and defense industry.

In recent years, the competition for skilled employees has intensified and we have experienced

wage inflation.

We have strategically located our operations in the U.S.

and many companies are expanding their domestic production.

As such, there is currently a shortage of skilled workers in the U.S.

In order to maintain and increase production levels, we must hire

new employees and machinists for our two state-of-the art manufacturing facilities and we may not be able to do so or the costs to hire

and/or train them may significantly exceed our budget.

economy continues to experience inflation, our labor costs may further

increase which could have a material adverse effect on our business, financial condition and results of operations.

are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expense in the

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or in our facilities without regard to whether we knew of, or caused, the release of such substances.

Furthermore, we are required to

provide a place of employment that is free from recognized and preventable hazards that are likely to cause serious physical harm to

employees, provide notice to employees regarding the presence of hazardous chemicals and to train employees in the use of such substances.

Our operations require the use of chemicals and other materials for painting and cleaning that are classified under applicable laws as

hazardous chemicals and substances.

If we are found to be in violation of any of these rules, regulations or permits, we may be subject

to fines, remediation expenses and the obligation to change our business practice, any of which could result in substantial costs that

would adversely impact our business operations and financial condition.

are also required to provide a place of employment that is free from recognized and preventable hazards that are likely to cause serious

physical harm to employees, provide notice to employees regarding the presence of hazardous chemicals and to train employees in the use

of such substances.

Our operations require the use of chemicals and other materials for painting and cleaning that are classified under

applicable laws as hazardous chemicals and substances.

If we are found to be in violation of any of these rules, regulations or permits,

we may be subject to fines, remediation expenses and the obligation to change our business practice, any of which could result in substantial

costs that would adversely impact our business operations and financial condition.

may be subject to fines and disqualification for non-compliance with Federal Aviation Administration regulations.

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We have never been subject to such fines or disqualification.

security attacks, internal system or service failures may adversely impact our business and operations.

system or service disruptions, including those caused by projects to improve our information technology systems, if not anticipated and

appropriately mitigated, could disrupt our business and impair our ability to effectively provide products and related services to our

customers and could have a material adverse effect on our business.

We could also be subject to systems failures, including network,

software or hardware failures, whether caused by us, third-party service providers, intruders or hackers, computer viruses, natural disasters,

power shortages or terrorist attacks.

Cyber security threats are evolving and include, but are not limited to, malicious software, unauthorized

attempts to gain access to sensitive, confidential or otherwise protected information related to us or our products, customers or suppliers,

or other acts that could lead to disruptions in our business.

Any such failures could cause loss of data and interruptions or delays

in our business, cause us to incur remediation costs or require us to pay ransom to a hacker which takes over our systems, or subject

us to claims and damage our reputation.

In addition, the failure or disruption of our communications or utilities could cause us to interrupt

or suspend our operations or otherwise adversely affect our business.

Although we utilize various procedures and controls to monitor

and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient.

and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational

failure or disruption which would adversely affect our business, results of operations and financial condition.

Moreover, expenditures

incurred in implementing cyber security and other procedures and controls could adversely affect our results of operations and financial

acts and acts of war may seriously harm our business, results of operations and financial condition.

States and global responses to actual or potential military conflicts such as Russia’s invasion of Ukraine, terrorism, perceived

nuclear, biological and chemical threats and other global political crises increase uncertainties with respect to the U.S.

business and financial markets.

Several factors associated, directly or indirectly, with actual or potential military conflicts, terrorism,

perceived nuclear, biological and chemical and cyber threats, and other global political crises and responses thereto, may adversely

affect the mix of products purchased by defense departments in the United States or other countries to platforms not serviced by us.

A shift in defense budgets to product lines we do not produce could have a material adverse effect on our business, financial condition

and results of operations.

security attacks, internal system or service failures, and any unauthorized access to our customer data will have an adverse effect on

our business and reputation.

Most of our products are used by large aerospace

and prime contractors who ultimately provide them to the U.S.

Government, foreign governments and commercial airlines.

As such, in most

cases, we are required to maintain confidential and proprietary information on our information systems.

Hackers, whether they be individuals,

entities or hostile enemies, may attempt to penetrate our network or those of our third-party hosting and storage providers, to gain access

to confidential and proprietary data.

If any of this data is hacked or leaked, obtained by others or destroyed without authorization,

it could harm our reputation, we could be exposed to civil and criminal liability, which will materially impact our financial results

and financial condition.

Any system or service disruptions caused by hackers or even those caused by projects to improve our information

technology capabilities, if not mitigated, could significantly disrupt our production assembly could have an immediate material adverse

effect on our business.

We could also be subject to systems failures, including network, software or hardware failures, whether caused

by us or third-party service providers, computer viruses, natural disasters or power shortages.

hackers gain access to sensitive, confidential or otherwise protected information, they may attempt to force us to pay a ransom before

stopping their attack.

Any hacker penetration could cause loss of data and interruptions or delays in our business, cause us to incur

remediation costs or subject us to claims and damage our reputation.

In addition, the failure or disruption of our communications or

utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business.

Although we utilize various

procedures and controls to monitor and mitigate the risk of these threats and have increased recent investment to improve our cyber-security

posture, there can be no assurance that these procedures and controls or new investments will be sufficient.

Our property and business

interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure

or disruption which would adversely affect our business, results of operations and financial condition.

Moreover, expenditures incurred

in implementing cyber security and other procedures and controls could adversely affect our results of operations and financial condition.

are subject to an extensive and highly-evolving regulatory landscape, and requirements imposed by our customers to secure our communications,

and any adverse changes to, or our failure to comply with, any laws and regulations or requirements of our clients could adversely affect

our brand, reputation, business, operating results, and financial condition.

subject to extensive laws, rules and regulations directed to those who conduct business over the internet, in addition to security requirements

imposed by our clients, including those governing privacy, data governance, data protection and cybersecurity.

Many LTAs that we sign

with our customers also require us to comply with strict vendor clauses including replications of specific sections of the FAR.

legal and regulatory regimes, including the laws, rules, and regulations thereunder, may be modified, interpreted, and applied in an

inconsistent manner.

To the extent we have not complied with such laws, rules, and regulations, or requirements imposed by our LTAs,

we could be subject to significant fines, limitations the products and services we provide, reputational harm, and other regulatory consequences,

each of which may be significant and could adversely affect our business, operating results, and financial condition.

disruptive national or international events, such as potential future public health crises, ongoing or new conflicts, domestic or foreign

terrorist activities, banking crises, and responses from the U.S.

Government, other nations, and the public to such occurrences, could

significantly disrupt the operations of us or our suppliers and impede our ability to procure, receive, or replenish inventory (including

raw materials).

These disruptions may also present challenges in communication and lead to sudden and unexpected shifts in product demand

by our customers.

Furthermore, global financial markets could experience disruptions, affecting our business and our ability to secure

future financing, including accessing debt or equity.

The occurrence of any of these events could result in lost sales and otherwise

adversely affect our business, operating results, and financial condition.

between nations (such as the ongoing Russia-Ukraine conflict), or between nations and terrorist organizations (such as the ongoing conflict

between terrorist groups and Israel), as well as terrorist attacks, natural disasters (such as hurricanes, fires, floods and earthquakes),

unusually adverse weather conditions, pandemic outbreaks or a banking crisis could adversely affect our operations and financial performance.

If any of these events affect us or our suppliers, it could result in an inability on our part to manufacture products and/or result

in lost sales, materially affecting our operations and financial performance.

Additionally,

such events could disrupt travel, making it a challenge to communicate with our customers, as evidenced during the coronavirus pandemic.

Moreover, they could lead to increases in fuel or other energy prices, fuel shortages, temporary labor shortages, temporary or long-term

disruptions in delivery of products from our suppliers and disruption to our information systems, any of which could have an adverse

impact on our business, operating results and financial condition.

Disruptive events could make it difficult for us to access debt and

equity capital on attractive terms, or at all, and impact our ability to service or refinance our debt, fund business activities, and

repay debt on a timely basis.

invasion of Ukraine, the conflict in the Middle East, continued tensions between the US and the European Union with China and Russia,

and tension between the US and the European Union with respect to funding Ukraine’s war effort, may alter countries’ willingness

to rely on others as the source of certain products and material.

Historically,

prime contractors and the entire U.S.

aerospace and defense supply chain have relied upon parts, components, and raw materials from foreign

suppliers including those located in Russia and China.

Geo-political tensions have increased during the past several years and we expect

them to continue.

Supply chain disruptions resulting from escalating political tensions and the economic disruption resulting from retaliatory

measures between any countries could result in production delays and cancellations of programs.

Additionally,

any material changes to the current aerospace and defense supplier structure resulting from geo-political tensions or otherwise could

disrupt the markets for raw materials and supplies and our ability and the ability of our suppliers to obtain raw materials, may be significantly

We cannot forecast with any certainty whether such disruptions, restrictions imposed by various governments in response thereto

and resulting changes in business practices, may materially impact our ability and the ability of our suppliers to obtain necessary raw

material, our business and our consolidated financial position, results of operations, and cash flows.

Related to Our Indebtedness

indebtedness may have a material adverse effect on our operations.

have substantial indebtedness under our loan facility with Webster (“Loan Facility”).

As of December 31, 2022, we had

approximately $18,748,000 of indebtedness outstanding under the Loan Facility.

All of our indebtedness under the Loan Facility is secured

by substantially all of our assets.

also have approximately $6,162,000 of indebtedness outstanding in the form of subordinated notes payable on July 1, 2026.

are held by related parties, specifically Michael N.

Taglich (our Chairman) and Robert F.

Taglich (a Director), and their affiliates.

with a principal value of approximately $2,732,000 carry an interest rate of 6% per annum and are convertible into approximately 182,000

shares of common stock at a conversion price of $15.00 per share.

Notes with a principal value of approximately $2,080,000 carry an interest

rate of 7% per annum and are convertible into approximately 224,000 shares of common stock at a conversion price of $9.30 per share.

If we are unable to pay amounts due under our Loan Facility or the

subordinated notes when due, our operations may be materially and adversely affected.

We may need to offer the holders of this debt increases

in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity securities.

financings or re-financings may involve the issuance of debt, equity and/or securities convertible into or exercisable or exchangeable

for our equity securities.

If we are able to consummate such financings or re-financings, the terms of such financings may adversely affect

the trading price of our common stock and the interests of our existing stockholders.

Any failure to obtain additional working capital

As of December 31, 2023, we have total indebtedness

of approximately $23,311,000, large portions of which must be redeemed or refinanced prior to December 30, 2025 and July 1, 2026.

not be able to achieve favorable financing terms in the future or consummate any refinancing of our existing loans prior to their respective

maturity dates.

Failure to do so would materially impact our business and our stock price.

of December 31, 2023, we had approximately $15,849,000 of indebtedness outstanding pursuant to a loan facility that matures on December

30, 2025 with Webster Bank (“Current Credit Facility”).

The average interest rate on this indebtedness during fiscal 2023

This indebtedness is secured by a lien on substantially all our assets.

Additionally, we have approximately $6,162,000 of subordinated notes

payables (“Related Party Notes”) that mature on July 1, 2026 and which are held by two directors Michael N.

Taglich and Robert

Taglich, and their affiliates.

The Related Party Notes payable carry an interest rate ranging between 7% and 12% per year.

In addition to $884,000 of finance lease obligations

and a $22,000 vehicle loan, we also had $393,000 of borrowings for solar energy systems pursuant to a financing agreement (“Solar

Facility”) with CT Green Bank.

The Solar Facility requires borrowings for completed projects to be repaid over a 20-year level payment

If we are unable to pay our indebtedness when

due, our operations may be materially and adversely affected.

We must pay or refinance large portions of this indebtedness prior to December

30, 2025, and July 1, 2026.

During fiscal 2024, we initiated steps to refinance this debt.

Refinancing may require us to pay higher interest

rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or

new securities convertible into or exercisable or exchangeable for our common stock which may adversely affect the trading price of our

common stock and the interests of our existing stockholders.

Any failure to refinance our existing debt or obtain additional working capital

when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price.

1 unchanged sentence

exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.

leverage may adversely affect our ability to finance future operations and capital needs, may limit our ability to pursue business opportunities

and may make our results of operations more susceptible to adverse economic conditions.

interest rate associated with portions of our current debt may increase.

Under the terms of the Webster Facility, amounts due to Webster bear

interest at a per annum rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time

to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as

may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial

bank, less sixty-five hundredths (-0.65%) of one percent per annum.

Consequently, the rate of interest we paid under the Facility did

not increase despite the initial increases in the target rates set by the Federal Reserve, though the more recent increases have resulted

increases in the interest rate we pay under the Webster Facility.

The weighted average interest rate paid during the year-ended December

31, 2022 was 4.50%.

Given current interest rates, the interest rate we pay under the Webster Facility will increase as the Federal Reserve

continues to increase its target rate of interest.

In addition, under the terms of the Webster Facility we are required to maintain a

defined Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each fiscal quarter.

If we were to fail to meet such covenant, Webster

would have the right to increase the rate of interest payable on amounts outstanding under the Facility.

The Company was in compliance

with the covenant at December 31, 2022.

The Company was in default of its covenant to provide its audited financial statements to Webster

bank within ninety (90) days of its fiscal year end.

The Company has subsequently received a waiver from the bank for this default.

increase in the rate of interest payable under the Webster Facility would increase our interest expense and have a material adverse impact

on our on our consolidated financial position and results of operations.

indebtedness may limit our ability to pay dividends in the future.

We currently do not pay dividends

and the terms of our Loan Facility require that we maintain certain financial covenants.

In the future should we decide to pay dividends,

we would need to seek covenant changes or a waiver under our Loan Facility.

There can be no assurance our lenders would agree to covenant

changes or waivers acceptable to us or at all.

In addition, we may in the future incur indebtedness or otherwise become subject to agreements

whose terms restrict our ability to pay dividends in the future.

Even if our lender would agree to allow us to pay a dividend, our Board

of Directors may choose to use the amount which could be paid as a dividend to reduce our outstanding indebtedness.

Related to our common stock

price of our common stock can fluctuate.

financial markets have been impacted in various ways by the reactions to the outbreak of the COVID-19 pandemic and government stimulus

programs adopted in response to the pandemic, and Russia’s invasion of Ukraine and government responses thereto.

The price of our

common stock has and is expected to continue to be volatile.

We cannot forecast with any certainty whether and to what degree the disruption

caused by the COVID-19 pandemic, Russia’s invasion of Ukraine and reactions thereto will continue to adversely impact financial

markets and the impact to our common stock.

Likewise, we cannot state with certainty the degree to which financial markets were supported

by government stimulus programs and whether such support will continue as governments elect not to adopt similar measures in the future.

ownership of our common stock is highly concentrated, and your interests may conflict with the interests of our existing stockholders.

of our directors, Michael N.

Taglich and Robert F.

Taglich, and their affiliates own a significant number of shares of our outstanding

common stock as well as a significant amount of debt convertible into our common stock, which together with their position as directors

of our Company, give them significant influence over the outcome of corporate actions, including those requiring stockholder approval

and the terms on which we complete transactions with their affiliates.

The interests of these directors may be different from the interests

of other stockholders on these and other matters.

This concentration of ownership could also have the effect of delaying or preventing

a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could reduce

the price of our common stock.

can provide no assurance that our common stock will continue to meet NYSE American listing requirements.

If we fail to comply with the

continuing listing standards of the NYSE American, our common stock could be delisted.

we fail to satisfy the continued listing requirements of the NYSE American, the NYSE American may take steps to delist our common stock.

The delisting of our common stock would likely have a negative effect on the price of our common stock and would impair your ability

to sell or purchase common stock when you wish to do so.

current or future leverage may adversely affect our ability to finance future operations and capital needs, may limit our ability to

pursue business opportunities and may make our results of operations more susceptible to adverse economic conditions.

Ultimately, we

may not be able to successfully refinance our indebtedness and if we cannot, we would become insolvent.

weighted average interest rate we paid in 2023 on borrowings outstanding on the Current Credit Facility was 7.55% and this interest rate

may increase in the future.

weighted average interest rate paid during the year-ended December 31, 2023 on borrowings outstanding on the Current Credit Facility

was 7.55% as compared to 4.50% for the year-ended December 31, 2022, the increase primarily the result of the increase in the target

rates set by the Federal Reserve.

Under the terms of our Current Credit Facility, amounts due bear interest at a per annum rate equal

to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates”

table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information)

as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one

percent per annum.

Consequently, we may be susceptible to future increased rates if the Federal Reserve chooses to increase its target

rate of interest.

We may not be able to comply with the covenants

of the Current Credit Facility and our debt could be called.

Under the terms of the Current Credit Facility,

we are required to maintain certain business and financial covenants including a Fixed Charge Coverage Ratio (as defined) that is determined

at the end of each fiscal quarter.

This ratio is a financial metric that we use to measure our ability to cover fixed charges such as

interest and leases expenses as divided by EBITDA (as defined in the Current Credit Facility) which represents net income (or loss) before

interest, taxes, depreciation, and amortization.

For the year ended December 31, 2023, we achieved a Fixed Charge Coverage Ratio of 1.31x

as compared to the required ratio of 0.95x and were in full compliance with all other covenants.

As of March 31, 2024, we were not in

compliance with the required ratio of 1.10x.

We are currently in discussions with our lender to obtain waivers, but may not be able to

During our first and third quarters of fiscal

2023, primarily because of the unexpected and dramatic increase in interest rates and the failure to receive certain raw materials from

a supplier, we were unable to comply with the Fixed Charge Coverage Ratio.

In 2023, our lender provided waivers for these quarters and

provided for more relaxed Fixed Charge Coverage ratios for future periods, including the 0.95x as of December 31, 2023.

Even if we obtain a waiver for the failure to

meet the fixed charge coverage ratio as of March 31, 2024, if we do not achieve our fiscal 2024 plan and successfully execute our business

strategy, we may not be able to comply with future quarterly covenant requirements.

If we fail to do so and/or are unable to obtain future

waivers, we may have to pay increased interest rates or may be required to immediately pay any outstanding debt.

An increase in the interest

rate would likely have a material adverse impact on our consolidated financial position and results of operations.

If we were required

to make immediate repayment, we may not be able to obtain financing to do so and would become insolvent.

currently do not pay dividends and the terms of our Current Credit Facility limit our ability to pay dividends.

currently do not pay dividends and have no foreseeable plans to do so.

Additionally, the terms and covenants of our Current Credit Facility

do not currently allow us to.

In the future should we decide to pay dividends, we would need to seek covenant changes or a waiver under

our Current Credit Facility.

There can be no assurance our lenders would agree to covenant changes or grant a waiver.

In addition, we

may in the future incur additional indebtedness or otherwise become subject to agreements whose terms restrict our ability to pay dividends

in the future.

Related to our status as a public company and our common stock

is only a limited public market for our common stock.

common stock is listed on the NYSE American.

However, there is only a limited number of our shares available in the public float and

the market capitalization of the shares in our public float is relatively small.

The trading volume for our common stock has been limited

and a more active public market for our common stock may not develop or be sustained over time.

The lack of a robust market may impair

a stockholder’s ability to sell shares of our common stock.

In the absence of a more active trading market, any attempt to sell

our shares could result in a decrease in the price of our stock.

Specifically, you may not be able to resell your shares of common stock

at or above the price you paid for such shares or at all.

our common stock is listed on the NYSE American, there is only a limited number of our shares available in the public float and the related

market capitalization of such float is relatively small.

The trading volume for our common stock has been limited and a more active public

market for our common stock may not develop or be sustained over time.

The lack of a robust market may impair a stockholder’s ability

to sell shares of our common stock.

In the absence of a more active trading market, any attempt to sell our shares could result in a

decrease in the price of our stock.

Specifically, our shareholders may not be able to resell their shares of common stock at or above

the price paid for such shares or at all.

sales of our common stock in the public market, or the perception that such sales could occur, could negatively impact the price of our

common stock.

As a result, you may not be able to sell your shares of our common stock in short time periods, or possibly at all, and

the price per share of our common stock may fluctuate significantly.

As a result, our shareholders may not be able to sell your shares of our common stock in short time periods, or possibly

at all, and the price per share of our common stock may fluctuate significantly.

ownership of our common stock is highly concentrated amongst related parties, and their interests may conflict with the interests of

other stockholders.

Two of our directors, Michael N.

Taglich and Robert

Taglich, and their affiliates own a significant portion of our outstanding shares of common stock.

They also hold $6,162,000 of Related

Party Notes, some of which are convertible into our common stock.

Although the Related Party Notes are subordinate to the $15,849,000

of debt outstanding pursuant to the Current Credit Facility, we may require additional concessions from the holders of the Related Party

Notes when we seek to refinance the Current Credit Facility.

These related parties have significant influence over the outcome of corporate

actions, including those requiring stockholder approval.

The interests of these related parties may be different from the interests of

other stockholders on these and other matters.

Additionally, this concentration of ownership could also have the effect of delaying or

preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn

could reduce the price of our common stock.

market price of our common stock is likely to be highly volatile, which could result in substantial losses to investors.

The market price of our common stock has historically been volatile

and is likely to continue to be volatile.

The market price of our common stock could fluctuate widely due to factors relating to our operations

as well as those beyond our control.

Because our common stock is thinly traded, the trading price may be volatile due to factors concerning

our operations, such as variations in our operating results, failure to meet the covenants under the Current Credit Facility, news regarding

the loss of a major customer or termination or a reduction in funding for a program we are on, the loss of management personnel, the outcome

or perception of the potential outcome of any litigation, general industry conditions and significant industry developments.

the market price of our common stock may be affected by factors unrelated to our operations, such as general economic factors, government

budgeting decisions affecting our industry and developments in the financial markets and availability of credit.

national and international events and the response of the United States, other countries and the public to such events, and the resulting

macroeconomic disruption to the financial markets could lead to increased volume and price volatility for publicly traded securities

which could adversely impact the price of our common stock.

national and international events, such as the outbreak of a public health crisis, conflicts between nations or between nations and terrorist

organizations, terrorists acts, natural disasters, a banking crisis, the possibility of default by the U.S.

Government on its obligations

due to its debt ceiling or the actuality of such an event, and the response of the U.S.

Government, other countries and the public to

such events, and the resulting macroeconomic disruption to the financial markets could lead to increased volume and price volatility

for publicly traded securities which could adversely impact the price of our common stock.

We can provide no assurance that our common

stock will continue to be listed on the NYSE American.

If we fail to meet the continued listing standards of the NYSE American, our

common stock could be delisted.

The delisting of our common stock could impair your ability to purchase shares of our common stock or

sell your common stock when you wish to do so which could have a negative effect on the price of our common stock.

If we fail to satisfy the continued listing requirements of the NYSE

American, it may take steps to delist our common stock.

There are measures that can be taken to remain in compliance with certain of the

listing requirements of NYSE American which often require the undertaking of a reverse stock split, selling common stock at prices below

what the Board of Directors may believe is its true value or completing a merger to acquire a new business.

There are other exchanges

and trading platforms on which we could choose to list our common stock.

Our Board periodically examines the costs and benefits of listing

our common stock on the NYSE American with the costs and benefits that would result from an alternative trading platform.

Board were to choose to seek another platform for the trading of our common stock, this could entail suspending our obligation to file

periodic reports with the SEC and using other means to make information publicly available to shareholders and potential buyers of our

common stock.

There can be no assurance that any cost savings and other benefits we might achieve from trading on another platform

would outweigh any negative impact to the trading market and price of our common stock that would result from delisting from the NYSE

we fail to meet the expectations of securities analysts or investors, our stock price could decline significantly.

quarterly and annual operating results fluctuate significantly due to a variety of factors, some of which are outside our control.

we believe period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indications

of future performance.

Some of the factors that could cause quarterly or annual operating results to fluctuate include conditions inherent

in government contracting and our business such as the timing of cost and expense recognition for contracts, the United States Government

contracting and budget cycles, introduction of new government regulations and standards, contract closeouts, variations in manufacturing

efficiencies, our ability to obtain components and subassemblies from contract manufacturers and suppliers, general economic conditions

and economic conditions specific to the defense market and disruptions caused by global events such as COVID-19 and Russia’s invasion

Because we base our operating expenses on anticipated revenue trends and a high percentage of our expenses are fixed in the

short term, any delay in generating or recognizing forecasted revenues could significantly harm our business.

in quarterly results or announcements of extraordinary events such as an award of a new contract, acquisitions or litigation, may cause

earnings to fall below the expectations of securities analysts and investors.

In this event, the trading price of our common stock could

significantly decline.

These fluctuations, as well as general economic and market conditions, may adversely affect the future market

price of our common stock, as well as our overall operating results.

Consequently, our share price may experience significant volatility

and may not necessarily reflect the value of our expected performance.

Our quarterly and annual operating results fluctuate

significantly due to a variety of factors, some of which are outside our control.

Accordingly, we believe period-to-period comparisons

should not be relied upon as indications of future performance.

Some of the factors that could cause quarterly or annual operating results

to fluctuate include conditions inherent in government contracting and our business such as the timing of cost and expense recognition

for contracts, the U.S.

Government contracting and budget cycles, introduction of new government regulations and standards, contract closeouts,

variations in manufacturing efficiencies, our ability to obtain components and subassemblies from contract manufacturers and suppliers,

general economic conditions and economic conditions specific to the defense market and disruptions caused by global events such as COVID-19

and Russia’s invasion of Ukraine.

Because we base our operating expenses on anticipated revenue trends and a high percentage of

our expenses are fixed in the short term, any delay in generating or recognizing forecasted revenues could significantly harm our business.

Fluctuations in quarterly results may cause earnings

to fall below the expectations of securities analysts and investors.

In this event, the trading price of our common stock could significantly

These fluctuations, as well as general economic and market conditions, may adversely affect the future market price of our common

stock, as well as our overall operating results.

Consequently, our share price may experience significant volatility and may not necessarily

reflect the value of our expected performance.

financings or acquisitions may adversely affect the market price of our common stock.

3 unchanged sentences

in the price of common stock.

incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance

requirements, including establishing and maintaining internal controls over financial reporting, and we may be exposed to potential risks

if we are unable to comply with these requirements.

a public company, we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules

implemented by the Securities and Exchange Commission and applicable market regulators.

These rules impose various requirements on public

companies, including requiring certain corporate governance practices.

Our management and other personnel will need to devote a substantial

amount of time to these requirements.

Moreover, these rules and regulations will increase our legal and financial compliance costs and

will make some activities more time-consuming and costlier.

Sarbanes-Oxley Act, among other things, requires that we maintain effective internal controls for financial reporting and disclosure

controls and procedures.

In particular, we must perform system and process evaluations and testing of our internal controls over financial

reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section

404 of the Sarbanes-Oxley Act.

Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant

management efforts.

Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material

In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate

in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial

statements and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

we are unable to effectively maintain a system of internal control over financial reporting, we may not be able to accurately or timely

report our financial results and our stock price could be adversely affected.

management determined that as of December 31, 2022, our disclosure controls and procedures and internal control over financial reporting

were not effective due to certain material weaknesses in our internal control over financial reporting related to our review controls

related to the preparation of our income tax provision, appropriate segregation of duties with respect to and validation of data produced

by certain portions of our financial IT systems and the establishment of appropriate inventory reserves.

Any failure to maintain our

controls or operation of these controls, could harm our operations, decrease the reliability of our financial reporting, and cause us

to fail to meet our financial reporting obligations, which could adversely affect our business and reduce our stock price.

UNRESOLVED STAFF COMMENTS

We incur significant costs as a result of

operating as a public company, and our management is required to devote substantial effort to compliance requirements, including establishing

and maintaining internal controls over financial reporting, and we may be exposed to potential risks if we are unable to comply with these

requirements.

Costs to comply may increase in the future.

As a public company,

we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the

Securities and Exchange Commission and applicable market regulators.

These rules impose various requirements on public companies, including

requiring certain corporate governance practices.

Our management and other personnel will need to devote a substantial amount of time

to these requirements.

Moreover, if new rules or regulations are adopted in future periods, they will likely increase our compliance

costs and will make some activities more time-consuming and costlier.

The Sarbanes-Oxley

Act, among other things, requires that we maintain effective internal controls for financial reporting and disclosure controls and procedures.

In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow

management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley

Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts.

Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses.

event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner,

the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and

we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

If we are unable

to effectively maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our

financial results and our stock price could be adversely affected.

Our management determined that as of December

31, 2023, our disclosure controls and procedures and internal control over financial reporting were not effective due to a material weakness

regarding appropriate segregation of duties with respect to and validation of data produced by certain modules of our financial IT systems.

We first determined this weakness in fiscal 2022.

Although new controls have been implemented during fiscal 2023, they were put in place

late in the year which did not allow sufficient time for testing of the effectiveness of such controls.

We expect to conclude our testing

of effectiveness in fiscal 2024 but we may find that fiscal 2023 remediations were not effective and have to incur additional costs to

adopt new controls.

A significant increase in costs in 2024 or any failure to maintain our controls or operation of these controls, could

harm our operations, decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations,

which could adversely affect our business and reduce our stock price.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors