What changed in this filing

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Item 1A. Risk Factors

2020-08-20 compared with 2020-07-07 · 62 added, 24 removed, 1 unchanged (99% of the section changed)

Except as described below, as of the date of this report, there have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

The Companys business, results of operations and financial condition may be adversely affected by pandemic infectious diseases, particularly the recent novel coronavirus strain known as COVID-19.

Pandemic infectious diseases, such as the current COVID-19 strain, may adversely impact the Companys business, consolidated results of operations and financial condition.

The global spread of COVID-19 has created significant volatility and uncertainty and economic disruption.

The extent to which COVID-19 impacts the Companys business, operations and financial results will depend on numerous evolving factors that the Company may not be able to accurately predict, including:

the duration and scope of the pandemic;

governmental, business and individuals actions that have been and continue to be taken in response to the pandemic;

the impact of the pandemic on economic activity and actions taken in response;

the effect on the Companys customers and customer demand for the Companys services, products and solutions;

the Companys ability to sell and provide its services and solutions, including as a result of travel restrictions and people working from home;

the ability of the Companys customers to pay for the Companys services and solutions;

and any closures of the Companys offices and the offices and facilities of the Companys customers.

COVID-19, as well as measures taken by governmental authorities to limit the spread of this virus, may interfere with the ability of the Companys employees, suppliers, and other business providers to carry out their assigned tasks or supply materials or services at ordinary levels of performance relative to the requirements of the Companys business, which may cause the Company to materially curtail certain of its business operations.

Any of these events could materially adversely affect the Companys business, financial condition, results of operations and/or stock price.

The loss of one of our largest customers, or a significant reduction in the revenue we generate from these customers, could materially adversely affect our revenue, profitability and results of operations.

Revenue from our largest customers have historically accounted for a significant amount of our business.

For instance, during the first quarter of 2020, 73% of NBCs revenue was with three customers, which comprised approximately 72% of our total consolidated revenue for such quarter.

During the first quarter of 2020, approximately 19% of our revenue was derived from the delivery of services, for which we have contracts, and approximately 80% was derived from the sale of products.

Generally, our agreements with our customers for services allow them to terminate service with a limited notification period, while product sales agreements do not include any minimum or continuing obligations to purchase our products.

We cannot assure you that our largest customers will not terminate services or cease purchasing our products in favor of other service and/or product providers, significantly reduce orders, or seek price reductions in the future.

Any such event could have a material adverse effect on our revenue, profitability and results of operations.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURES

Except as described below, as of the date of this report, there

have been no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K for the year ended December 31,

2019, as amended, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Our stockholders may experience significant dilution.

We have a significant number of warrants and options to purchase

our common stock outstanding, the exercise of which would be dilutive to stockholders.

In certain instances, the exercise price

or the exercise prices and number of shares are subject to

adjustment if we issue or sell shares of our common stock or equity-based instruments at a price per share less than the exercise

price then in effect.

In such case, both the issuance and the adjustment would be dilutive to stockholders.

more fully described in the section titled “2019 Capital Raise”

under Note 12 to the Condensed Consolidated

Financial Statements in this Form 10-Q, on May 31, 2019 we received gross proceeds of $3 million by issuing three million shares

of our common stock and three million warrants to purchase shares of our common stock in a registered direct offering for $1.00

per 2019 Unit.

The 2019 Warrants had an exercise price of $1.30 per share at issuance and are exercisable for five years from

the date of issuance.

The number of shares issuable pursuant to the warrants granted under the 2019 Warrants, as well as the exercise

price of those warrants, is subject to adjustment as a result of certain future equity issuances of securities by the Company

at a price below the then-effective exercise price of the 2019 Warrants.

As a result of such subsequent issuances of securities

by the Company during the fourth quarter of 2019, the exercise price of the 2019 Warrants had decreased to $0.45 per share and

the number of shares subject to the 2019 Warrants had increased to 8,666,666 shares of common stock as of December 31, 2019.

May 2020, we issued securities at a price lower than the $0.45 per share above.

As a result, the exercise price of the 2019 Warrants

decreased to $0.40 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock.

As of June 30, 2020, there were 7,453,888 of these warrants outstanding.

The subscription agreement between the Company and Hershey Strategic Capital, LP and Shore Ventures III, LP (the “Investor”)

provides that the Company could be required to issue to the Investor additional warrants to purchase shares of common stock in the event

that, during the 90 day period ending on September 1, 2020, the Company has not extended the maturity dates of the promissory notes that

are due on or about January 31, 2021.

As more fully described in the section titled “Legal”

under Note 11 to the Condensed Consolidated Financial Statements in this Form 10-Q, Michael Feinsod recently resigned as our Executive Chairman, claiming that his resignation was for “Good Reason”

terms of his employment agreement.

If it is ultimately determined that his resignation was, in fact, for “Good Reason”, rather

than a voluntary act absent “Good Reason”, it could enable certain potential claims for entitlements under his employment

agreement, as well as for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options

in the future.

Having reviewed the matter, however, we do not believe that Mr.

Feinsod’s resignation was for “Good Reason”.

Accordingly, we believe that Mr.

Feinsod’s resignation was voluntary, and that any such potential claims, if asserted, would be

without foundation.

Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future

claims made by Mr.

Feinsod alleging a “Good Reason”

In addition to the dilutive effects

described above, the perceived risk of dilution as a result of the significant number of outstanding warrants may cause our common

stockholders to be more inclined to sell their shares, which would contribute to a downward movement in the price of our common

The fact that our stockholders, warrant holders and option holders can sell substantial amounts of our common stock in the

public market, whether or not sales have occurred or are occurring, as well as the existence of full-ratchet anti-dilution provisions

in a substantial number of our outstanding warrants could make it more difficult for us to raise additional funds through the sale

of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, or at all .

We may from time to time finance our future operations or acquisitions

through the issuance of equity securities, which securities may also have rights and preferences senior to the rights and preferences

of our common stock.

We may also grant options to purchase shares of our common stock to our directors, employees and consultants,

the exercise of which would also result in dilution to our stockholders.

SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

UPON SENIOR SECURITIES

SAFETY DISCLOSURES

Not applicable.

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-Q

Item 1A. Risk Factors