What changed in this filing

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Item 1A. Risk Factors

2024-04-16 compared with 2023-03-31 · 268 added, 175 removed, 353 unchanged (56% of the section changed)

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losses since inception and expect to incur additional losses in the foreseeable future.

We were formed on June 12, 2006 and

have reported annual net losses since inception.

For our fiscal years ended December 31, 2022 and December 31, 2021, we experienced net

losses of $19.7 million and $6.6 million, respectively, including cash and noncash expenses under generally accepted accounting principles).

Non-cash expenses including depreciation, amortization, non-cash compensation and contingent consideration included in the above losses

are $9.2 million and $1.3 million for fiscal years ended December 31, 2022 and December 31, 2021, respectively.

Further, as of December

31, 2022, we had an accumulated deficit of $77.3 million.

In addition, we expect to incur additional losses in the future, and there can

be no assurance that we will achieve profitability.

Our future viability, profitability and growth depend upon our ability to raise capital

and successfully operate and expand our operations.

We cannot assure that any of our efforts will prove successful or that we will not

continue to incur operating losses.

We were formed on June 12, 2006,

and have reported annual net losses since inception.

For our fiscal years ended December 31, 2023 and December 31, 2022, we experienced

net losses of $16.1 million and $19.7 million, respectively, including cash and non-cash expenses under generally accepted accounting

Non-cash expenses including depreciation, amortization, non-cash compensation and contingent consideration included in the

above losses are $4.3 million and $9.2 million for fiscal years ended December 31, 2023 and December 31, 2022, respectively.

as of December 31, 2023, we had an accumulated deficit of $93.4 million.

In addition, we expect to incur additional losses in the future,

and there can be no assurance that we will achieve profitability.

Our future viability, profitability and growth depend upon our ability

to raise capital and successfully operate and expand our operations.

We cannot ensure that any of our efforts will prove successful or

that we will not continue to incur operating losses.

We may need to raise

additional capital or financing to continue to execute and expand our business.

Our net proceeds from a public offering

in 2020 helped to fund our operations for recent years.

On September 2, 2022, we entered into a Common Stock Purchase Agreement with B.

Riley, under which the Company has the right, in its sole discretion, to sell to B.

Riley up to $30.0 million, or a maximum of 2.0 million

shares of the Company’s common stock at 97% of the volume weighted average price (“VWAP”) of the Company’s common

However, there is no guarantee that we can raise capital using this vehicle at terms that are acceptable to the Company if we need

to fund investment in our business or if it takes longer than expected to achieve positive cashflow.

We may be required to pursue sources

of additional capital through various means, including sale and leasing arrangements, and debt or equity financings.

If the amount of

capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital

needs, we may have to reduce our operations accordingly.

revenues are concentrated in a small number of customers and they may decrease significantly if we were to lose one of these customers .

We have a few large customers including the State of California’s Department of General Services and the City of New York that generated

16% and 6%, respectively, of revenues in 2022 and 38% and 2%, respectively, of revenues in 2021.

In addition, we were awarded several

federal contracts in 2022, that may not be repeated in the future.

The contract with the State of California can be used by a diverse

group of state and local agencies within the state or across the country for the purchase of our products.

The receipt of orders under

this contract has been irregular and can create fluctuation in our revenues.

In addition, there is no obligation for this customer to

purchase any additional units, or to renew the contract when it expires.

Our net proceeds from public offerings in

2020 and 2023 helped to fund our operations for recent years.

However, there is no guarantee that we can raise capital at terms that are

acceptable to the Company if we need to fund investment in our business or if it takes longer than expected to achieve positive cashflow.

We may be required to pursue sources of additional capital through various means, including sale and leasing arrangements, and debt financing.

If the amount of capital we can raise from financing activities, together with our revenues from operations, is not sufficient to satisfy

our capital needs, we may have to reduce our operations accordingly.

revenues are concentrated in a small number of customers and our revenue may decrease significantly if we were to lose one of these customers .

We have a few large customers including the U.S.

Army and the Department of Veterans Affairs that generated 38% and 16%, respectively,

of revenues in 2023.

The loss of or a significant decline in sales to any of these customers could

adversely affect our business, results of operations, and financial condition.

In addition, we were awarded several federal contracts

in 2022, that may not be repeated in the future.

The contract with the State of California can be used by a diverse group of state and

local agencies within the state or across the country for the purchase of our products.

The receipt of orders under this contract has

been irregular and can create fluctuation in our revenues.

In addition, there is no obligation for this customer to purchase any additional

units, or to renew the contract when it expires.

The State of California contract will expire on June 23, 2025.

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Our growth is highly dependent upon the adoption of electric

vehicles (“EV”), and we are subject to a risk of any reduced demand for EVs.

If the market for EVs does not gain broad market

acceptance or develops more slowly than we expect, our business, prospects, financial condition and operating results may be harmed.

market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition,

additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles

for EV original equipment manufacturers, and changing consumer demands and behaviors.

Factors that may influence the purchase and use

of alternative fuel vehicles, and specifically EVs, include:

vehicles (“EV”).

If the market for EVs does not gain broad market acceptance or develops more slowly than we expect, our business,

prospects, financial condition and operating results may be harmed.

The market for alternative fuel vehicles is relatively new, rapidly

evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and

industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing

consumer demands and behaviors.

Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include:

perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs;

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require significant management attention, disrupt our business, dilute stockholder value and harm our business, revenue and financial

As part of our business strategy,

we intend to make acquisitions to add complementary companies, products or technologies, such as our recent acquisition of All Cell.

acquisitions may not achieve our goals, and we may not realize benefits from acquisitions.

Any integration process will require significant

time and resources, and we may not be able to manage the process successfully.

If we fail to successfully integrate acquisitions, or the

personnel or technologies associated with those acquisitions, the business, revenue and financial results of the combined company could

We may not successfully evaluate or utilize the acquired assets and accurately forecast the financial impact of an acquisition,

including accounting charges.

We may also incur unanticipated liabilities that we assume as a result of acquiring companies.

to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition

or the value of our securities.

We would expect to finance any future acquisitions through a combination of additional issuances of equity,

corporate indebtedness or cash from operations.

The sale of equity to finance any such acquisitions could result in dilution to our stockholders.

The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that

would impede our ability to manage our operations.

In the future, we may not be able to find other suitable acquisition candidates, and

we may not be able to complete acquisitions on favorable terms, if at all.

Our acquisition strategy could require significant management

attention, disrupt our business and harm our business, revenue and financial results.

We are dependent on

a limited number of suppliers for our battery cells, and in the current market, there is a risk that these suppliers will not be able

to provide cells at prices and volumes acceptable to us, which could have an adverse effect on our business.

We source battery cells from

a few suppliers, but the demand for cells and for lithium has increased over the past year with the increase in electrification and the

growing demand for electric vehicles.

It is possible that our suppliers will not have adequate supply to cover our demand, or the price

of the cells will increase due to shortages, impacting our ability to ship units and/or cause the price of our products to increase.

we believe that we will be able to establish additional supplier relationships for our battery cells, we may be unable to do so in the

short term or at all at prices, quality or costs that are favorable to us.

As part of our business strategy, we intend to make acquisitions to add complementary companies, products or technologies,

such as our recent acquisitions of All Cell and Amiga.

Our acquisitions may not achieve our goals, and we may not realize benefits from

acquisitions.

Any integration process will require significant time and resources, and we may not be able to manage the process successfully.

If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, the business,

revenue and financial results of the combined company could be harmed.

We may not successfully evaluate or utilize the acquired assets

and accurately forecast the financial impact of an acquisition, including accounting charges.

We may also incur unanticipated liabilities

that we assume as a result of acquiring companies.

We may have to pay cash, incur debt or issue equity securities to pay for any such

acquisition, each of which could affect our financial condition or the value of our securities.

We would expect to finance any future

acquisitions through a one or a combination of equity, debt or cash from operations.

The sale of equity to finance any such acquisitions

could result in dilution to our stockholders.

The incurrence of indebtedness would result in increased fixed obligations and could also

include covenants or other restrictions that would impede our ability to manage our operations.

In the future, we may not be able to find

other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.

Our acquisition

strategy could require significant management attention, disrupt our business and harm our business, revenue and financial results.

We may fail to realize

all of the anticipated benefits of the acquisition of Amiga or those benefits may take longer to realize than expected and our business,

financial condition and results of operation could be materially and adversely affected.

We may also encounter significant difficulties

in integrating Amiga with Beam and its operations.

Our ability to realize the

anticipated benefits of the acquisition of Amiga will depend, in part, on our ability to integrate Amiga, which may be a complex, costly,

and time-consuming process.

We will be required to devote significant management attention and resources to integrate the business practices

and operations of the acquired business.

The integration process may disrupt our business and, if implemented ineffectively, could restrict

the realization of the full expected benefits.

In addition, the integration of the acquired business may result in material unanticipated

issues, expenses, liabilities, competitive responses, and diversion of management’s attention.

The failure to meet the challenges

involved in the integration process and to realize the anticipated benefits of the acquisition could cause an interruption of, or a loss

of momentum in, our operations and could materially and adversely affect our business, financial condition and results of operations.

Many of these factors will

be outside of our control and any one of them could result in increased costs, decreases in the amount of expected benefits and diversion

of management’s time and energy, which could adversely affect our business, financial condition and results of operations and result

in us becoming subject to litigation.

In addition, even if the acquisition were to be integrated successfully, the anticipated benefits

of the acquisition may not be realized within the anticipated time frame, or at all.

We may not be able to maintain the results of operations

or operating efficiency that we and the acquired business have achieved or might achieve separately.

Further, additional unanticipated

costs may be incurred in the integration process as a result of risks currently unknown to us.

All these factors could cause reductions

in our earnings per share, decrease or delay any accretive or other beneficial effect of the acquisition and negatively impact the price

of our common stock.

Amiga is a private Serbian

company that has not been subject to an audit by an accounting firm under U.S.

GAAP standards and has not previously been subject to the

Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC or other corporate governance requirements.

Amiga is a private

Serbian company.

Prior to our acquisition of Amiga, Amiga had not had its financial statements reviewed or audited by an accounting firm

GAAP standards and has not been subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or other corporate

governance requirements to which public reporting companies may be subject.

As a result, we are required to implement the appropriate

internal control processes and procedures over Amiga’s financial accounting and reporting.

We may incur significant legal, accounting,

and other expenses in efforts to ensure that Amiga meets these requirements.

Implementing the controls and procedures at Amiga that are

required to comply with the various applicable laws and regulations may place a significant burden on our management and internal resources.

The diversion of management’s attention and any difficulties encountered in such an implementation could adversely affect our business,

financial condition and operating results.

Our inability to successfully

integrate Amiga’s operations could adversely affect our operations;

potential need for additional financing.

Our acquisition

of Amiga requires our and Amiga’s significant attention and resources, which could reduce the likelihood of achievement of other

corporate goals.

Both we and Amiga have experienced significant operating losses.

As a result, we may need additional financing to help

fund our business and satisfy our obligations, which will require additional management time to address.

There is no assurance that we

will realize the benefits of the acquisition of Amiga that we hope will be achieved.

As a result of the acquisition

of Amiga, Beam expects to generate an increasing portion of its revenue internationally in the future and may become subject to various

additional risks relating to its international activities, which could adversely affect its business, operating results and financial

Beam has limited experience

operating internationally and engaging in international business involves a number of difficulties and risks, including:

the challenges associated with building local brand awareness, obtaining local key opinion leader support and clinical support, implementing reimbursement strategies and building local marketing and sales teams;

required compliance with foreign regulatory requirements and laws, including regulations and laws;

trade relations among the United States and those foreign countries in which Beam’s future customers, distributors, manufacturers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries;

difficulties and costs of staffing and managing foreign operations;

difficulties protecting, procuring or enforcing intellectual property rights internationally;

required compliance with anti-bribery laws, such as the U.S.

Foreign Corrupt Practices Act, data privacy requirements, labor laws and anti-competition regulations;

laws and business practices that may favor local companies;

longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

political and economic instability;

potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers.

In the event that Beam dedicates

significant resources to its international operations and is unable to manage these risks effectively, Beam’s business, operating

results and financial condition may be adversely affected.

We are subject to foreign

currency exchange rate and other related risks.

With the acquisition of Amiga, we are subject to foreign currency exchange rate

risk to the extent that our costs are denominated in currencies other than those in which we earn revenues.

In addition, since our financial

statements are denominated in U.S.

dollars, changes in foreign currency exchange rates, especially the Euro and the Serbian Dinar, between

dollar and other currencies will impact our results of operations, financial condition, and cash flows.

We also face risks arising

from the imposition of foreign exchange controls and currency devaluations.

Foreign exchange controls may limit our ability to convert

foreign currencies into U.S.

dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or

conducted within a country imposing control.

Currency devaluations result in a diminished value of funds denominated in the currency of

the country instituting the devaluation.

We face intense competition,

and many of our competitors have substantially greater resources than we do.

We are not aware of other companies that provide

a similar infrastructure product that we do, utilizing solar energy to power EV charging in a transportable product.

Some companies are beginning to offer similar

products that provide a similar infrastructure product that we do, utilizing solar energy to power EV charging in a transportable product,

but currently they do not provide all of the features and advantages that we offer, and which are patent protected.

However, we compete

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share and our business and results of operations would be adversely affected.

significant portion of our revenue is derived from our core product category.

We are dependent on revenues from our EV ARC™

product to be successful in the future.

While we now have energy storage products following our acquisition of AllCell Technologies,

in 2022 and we offer our Solar Tree product and we intend to bring our EV Standard™ product to market, no assurance can be given

that our EV ARC™ sales will continue to have market acceptance or that they will continue to grow in the future.

The loss or reduction

of sales of this product category could have a material adverse effect on our business, results of operations, financial condition, and

A significant portion

of our revenue is derived from our core product category.

We are dependent on revenues from our EV ARC™ product to be successful

in the future.

While we now have energy storage products following our acquisition of All Cell Technologies, Inc.

in 2022, and we offer

our Solar Tree product and we intend to bring our EV-Standard™ product to market, no assurance can be given that our EV ARC™

sales will continue to have market acceptance or that they will continue to grow in the future.

The loss or reduction of sales of this

product category could have a material adverse effect on our business, results of operations, financial condition, and liquidity.

The renewably energized

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In high demand locations,

the use of our products could exhaust their electricity supply on particular days, even with our storage batteries.

products create and store electricity during daylight hours.

While this process has generally been effective to meet daily EV charging

and energy storage demand, it is possible that heavy charging could cause a power draw exceeding the onboard electricity generation and

storage capacity.

In such instances, except for our grid-connected products, the EV charger would have to recharge through solar energy

replenishment or other direct outside charge before EV charging could resume.

the use of our products could exhaust its electricity supply on particular days, even with our storage batteries.

Our solar products

create and store electricity during daylight hours.

While this process has generally been effective to meet daily EV charging and energy

storage demand, it is possible that heavy charging could cause a power draw exceeding the onboard electricity generation and storage capacity.

In such instances, except for our grid-connected products, the EV charger would have to recharge through solar energy replenishment or

other direct outside charge before EV charging could resume.

Developments in alternative

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or if such property infringes on the rights of others, our business could be materially adversely affected.

The success of our business

depends on the continuing contributions of Desmond Wheatley and other key personnel who may terminate their employment with us at any

time, and we will need to hire additional qualified personnel.

We rely heavily on the services of Desmond Wheatley, our chairman

and chief executive officer, as well as other management personnel.

The Compensation Committee has structured a long-term compensation

plan to retain key employees, however, loss of the services of any such individuals would adversely impact our operations.

we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors.

Our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial,

engineering, technical and managerial personnel.

The success of

our business depends on the continuing contributions of Desmond Wheatley and other key personnel who may terminate their employment with

us at any time, and we will need to hire additional qualified personnel.

We rely heavily on the services of Desmond Wheatley,

our chairman and chief executive officer, as well as other management personnel.

The Compensation Committee has structured a long-term

compensation plan to retain key employees, however, loss of the services of any such individuals would adversely impact our operations.

In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of

our competitors.

Our future success will depend upon our ability to retain these key employees and our ability to attract and retain other

skilled financial, engineering, technical and managerial personnel.

If we are unable to

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have a material adverse effect on our operating results, financial condition, and business performance.

Cyber-attacks or

other breaches of information technology security could adversely impact our business and operations.

Cyber-attacks or other breaches

of network or information technology security may cause equipment failure or disruption to our operations.

Such attacks, which include

the use of malware, computer viruses and other means for disruption or unauthorized access, on companies have increased in frequency,

scope and potential harm in recent years.

While, to the best of our knowledge, we have not been subject to cyber-attacks or to other cyber

incidents which, individually or in the aggregate, have been material to our operations or financial conditions, the preventive actions

we take to reduce the risk of cyber incidents and protect our information technology and networks may be insufficient to repel a major

cyber-attack in the future.

To the extent that any disruption or security breach results in a loss or damage to our data or unauthorized

disclosure of confidential information, it could cause significant damage to our reputation, affect our relationship with our customers,

suppliers and employees, and lead to claims against us and ultimately harm our business.

Additionally, we may be required to incur significant

costs to protect against damage caused by these disruptions or security breaches in the future.

While we maintain specific cyber insurance

coverage, which may apply in the event of various breach scenarios, the amount of coverage may not be adequate in any case.

because cyber threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be covered under our

cyber insurance coverage.

We may face litigation

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As a manufacturer and seller of goods, we are exposed to the risk of litigation for a variety of reasons in addition

to reasons relating to intellectual property rights, product liability lawsuits, employee lawsuits, commercial contract disputes,

government enforcement actions, and other legal proceedings.

We cannot assure that future litigation in which we may become involved will

not have a material adverse effect on our financial condition, operating results, business performance, and business reputation.

to reasons relating to intellectual property rights, product liability lawsuits, employee lawsuits, commercial contract disputes, government

enforcement actions, and other legal proceedings.

We cannot assure that future litigation in which we may become involved will not have

a material adverse effect on our financial condition, operating results, business performance, and business reputation.

The costs incurred by

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reduction in demand, especially for our EV Standard™ product.

Our media branding and advertising

strategy may not be profitable.

We are able to equip our EV ARC™ and Solar Tree® platforms with digital advertising

screens with content that can be controlled directly, and in some cases, remotely.

We may also sell other forms of media across our product

platforms, such as naming rights or sponsorship deals, as well as traditional fixed media.

There is no assurance that the revenue model

crafted for this capability will be successful or profitable or will not result in operating losses or rejection by government regulators

or consumers.

Sponsors and advertisers for the service may not materialize or be willing to pay the rates sought by us or our customers.

Our business may be impacted

by the availability to our customers of rebates, tax credits and other financial incentives, the reduction, elimination or uncertainty

Our media branding and

advertising strategy may not be profitable.

We are able to equip our EV ARC™ and Solar Tree® platforms with digital

advertising screens with content that can be controlled directly, and in some cases, remotely.

We may also sell other forms of media across

our product platforms, such as naming rights or sponsorship deals, as well as traditional fixed media.

There is no assurance that the

revenue model crafted for this capability will be successful or profitable or will not result in operating losses or rejection by government

regulators or consumers.

Sponsors and advertisers for the service may not materialize or be willing to pay the rates sought by us or our

Our business may be

impacted by the availability to our customers of rebates, tax credits and other financial incentives, the reduction, elimination or uncertainty

of which would reduce the demand for our products.

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which would negatively impact our sales.

Our business strategy

may depend on the widespread adoption of solar power and EV charging technology.

The market for solar power products is emerging

and rapidly evolving, and its future success is uncertain.

If solar power technology proves unsuitable for widespread commercial deployment

or if demand for solar power products fails to develop sufficiently, we could be unable to generate enough revenues to achieve and sustain

profitability and positive cash flow.

The factors influencing the widespread adoption of solar power technology include but are not limited

cost-effectiveness and efficiency of solar power technologies as compared with conventional and non-solar alternative energy technologies;

performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels;

continued deregulation of the electric power industry and broader energy industry;

availability of governmental subsidies and incentives.

Compliance with new

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on acceptable terms or at all, or that we will be able to obtain attractive agreements with substitute venues.

Our cash and cash

equivalents could be adversely affected if the financial institutions at which we hold our cash and cash equivalents fail.

Our cash and cash equivalents

could be adversely affected if the financial institutions at which we hold our cash and cash equivalents fail.

We maintain substantially

all of our cash and cash equivalents in accounts with U.S.

banks and financial institutions, including Silicon Valley Bank ("SVB"),

and our deposits at these institutions exceed insured limits.

Market conditions can impact the viability of these institutions.

on March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit

Insurance Corporation (“FDIC”) as receiver.

The FDIC created a successor bridge bank, Silicon Valley Bridge Bank, N.A.

and all deposits of SVB were transferred to SVBB under a systemic risk exception approved by the Federal Reserve, the U.S.

Treasury Department,

and the FDIC.

While the Federal Reserve, the U.S.

Treasury Department, and the FDIC announced in a joint statement on March 12, 2023 that

all SVB deposits, including both insured and uninsured amounts, would be available in full to account holders, a similar failure of any

of the financial institutions where we maintain our cash and cash equivalents could impact our ability to access uninsured funds in a

timely manner or at all.

There is no guarantee that the Federal Reserve Board, the U.S.

Treasury Department and the FDIC will provide

access to uninsured funds in the future in the event of the closure of any other banks or financial institutions in a timely fashion or

Any inability to access or delay in accessing these funds could adversely affect our business, financial position, and liquidity.

banks and financial institutions, including Bank of America and Silicon Valley

Bank as a division of First Citizens Bank ("SVB"), and our deposits at these institutions exceed insured limits.

Market conditions

can impact the viability of these institutions.

For example, on March 10, 2023, SVB was closed by the California Department of Financial

Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.

The FDIC created

a successor bridge bank, Silicon Valley Bridge Bank, N.A.

(“SVBB”), and all deposits of SVB were transferred to SVBB under

a systemic risk exception approved by the Federal Reserve, the U.S.

Treasury Department, and the FDIC.

While the Federal Reserve, the

Treasury Department, and the FDIC announced in a joint statement on March 12, 2023 that all SVB deposits, including both insured

and uninsured amounts, would be available in full to account holders, a similar failure of any of the financial institutions where we

maintain our cash and cash equivalents could impact our ability to access uninsured funds in a timely manner or at all.

There is no guarantee

that the Federal Reserve Board, the U.S.

Treasury Department and the FDIC will provide access to uninsured funds in the future in the

event of the closure of any other banks or financial institutions in a timely fashion or at all.

Any inability to access or delay in accessing

these funds could adversely affect our business, financial position, and liquidity.

If we do not effectively diversify

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Risks Relating to our Organization and our Common Stock

Our failure to meet the

continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price

and liquidity of our common shares and our ability to access the capital markets.

Our common stock is listed on the Nasdaq

Capital Market.

Our failure to meet

the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market

price and liquidity of our common shares and our ability to access the capital markets.

Our common stock is listed on the

Nasdaq Capital Market.

If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements

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of the Sarbanes-Oxley Act.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and

are important to helping prevent financial fraud.

If we cannot provide reliable financial reports or prevent fraud, our business

and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of

our common stock could decline significantly.

We currently do not have effective

manufacturing or purchasing systems in place to track inventory and purchasing transactions or a perpetual inventory system.

performs manual processes during the year to track and control our inventory and purchases.

While these processes provide good results

in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact our

ability to submit timely reporting.

We are implementing new systems beginning in January 2023 with scheduled completion by the end of

Q2 to automate these functions which we believe will alleviate the material weakness in 2023.

However, we can give no assurance that such

measures will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results

will not arise in the future.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important

to helping prevent financial fraud.

If we cannot provide reliable financial reports or prevent fraud, our business and operating results

could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could

decline significantly.

We have not previously had

effective manufacturing or purchasing systems in place to track inventory and purchasing transactions or a perpetual inventory system.

The Company previously performed manual processes during the year to track and control our inventory and purchases.

While these processes

provide good results in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process

and could impact our ability to submit timely reporting.

We implemented a new accounting system in Q4 2023 which will automate these functions

which we believe will alleviate the material weakness in the future.

However, we can give no assurance that such measures will remediate the

material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future.

Our stock price may

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future at a time and price that we deem reasonable or appropriate.

UNRESOLVED STAFF COMMENTS.

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