−Removed: The risk factors set forth under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 are hereby supplemented and amended with the following additional risk factors:
−Removed: Risks Related to Our Recent Financing and Asset Sale Obligations
−Removed: Our recent issuance of convertible notes and designation of preferred stock may result in significant dilution to existing stockholders and could adversely affect our financial condition.
−Removed: On June 20, 2025, we issued $3.0 million in convertible notes to First Finance Ltd., which are mandatorily convertible into Class B Convertible Preferred Stock, further convertible into common stock at $6.008 per share (subject to adjustments).
−Removed: This, combined with First Finance Ltd.'s option to purchase up to an additional $2.0 million of Class B Convertible Preferred Stock, could lead to substantial dilution of existing stockholders' ownership and voting power upon conversion.
−Removed: We are obligated to pursue an Asset Sale, which may not be completed on favorable terms or at all, potentially leading to adverse consequences for our business and stockholders.
−Removed: Under the terms of our recent financing, we must use reasonable best efforts to complete a sale of all or substantially all of our current assets and operations within 180 days of issuing the Class A Redeemable Preferred Stock.
−Removed: If we fail to consummate an Asset Sale, we may face liquidity constraints, as the convertible notes and preferred stock include provisions for mandatory redemption or conversion that could strain our resources.
−Removed: Moreover, the process of pursuing an Asset Sale may disrupt operations, divert management attention, and result in the loss of key customers, suppliers, or employees, further impacting our financial performance.
−Removed: Our dependence on third-party financing terms introduces risks related to control and governance changes.
−Removed: The appointment of two directors nominated by First Finance Ltd.
−Removed: on June 20, 2025, expands our Board and may influence strategic decisions, including the Asset Sale.
−Removed: The financing terms, including restricted use of proceeds and potential warrant repurchases, limit our operational flexibility and expose us to risks if we cannot comply with covenants or if First Finance Ltd.
−Removed: exercises its rights in ways adverse to other stakeholders.
−Removed: The reduction in force we implemented may impair our ability to maintain operations and comply with obligations.
−Removed: On June 20, 2025, we reduced our workforce significantly as part of scaling operations for the Asset Sale pursuit.
−Removed: This RIF could lead to decreased morale, loss of institutional knowledge, and challenges in continuing essential functions such as sales, customer support, and public reporting, potentially resulting in regulatory non-compliance, revenue declines, or increased costs to rebuild capabilities if the Asset Sale is not completed.
−Removed: The special stock dividend of Class A Redeemable Preferred Stock may not result in value to stockholders if the Asset Sale is not completed, or if completed on unfavorable terms, potentially leading to no or minimal redemption proceeds and increased complexity in our capital structure.
−Removed: Concentration of Ownership and Control
−Removed: Concentration of ownership by significant stockholders could adversely affect our operations and stockholder value.
−Removed: As disclosed in a Schedule 13D/A filed on July 1, 2025, First Finance Ltd.
−Removed: beneficially owns approximately 32.4% of our common stock on an as converted basis (including rights to acquire up to an additional $2 million of shares of our Class B Convertible Preferred Stock (the “Additional Financing Right”)), with rights to nominate two directors.
−Removed: In addition, assuming full exercise by First Finance Ltd.
−Removed: of its Additional Financing Right, Edward D.
−Removed: Bagley beneficially owns approximately 32.5% of our issued and outstanding shares of common stock.
−Removed: Bagley’s daughter, Lisa Higley, is a member of our board of directors.
−Removed: Each of First Finance and Mr.
−Removed: Bagley will be able to significantly influence over corporate actions, including the Asset Sale, board composition, and other matters requiring stockholder approval, potentially in ways that conflict with the interests of other stockholders or lead to delays in strategic initiatives.
−Removed: In addition, the concentration of ownership in First Finance Ltd.
−Removed: Bagley may discourage third parties from seeking to acquire control of us, which may adversely affect the market price of our common stock
−Removed: For more information on these events, see Notes [7, 8, 12, 13] to the Condensed Consolidated Financial Statements and 'Liquidity and Capital Resources' in MD&A.
+Added: The risk factors set forth under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and Part II, Item 1A of our Current Report on Form 10-Q for the quarter ended June 30, 2025 are hereby supplemented and amended with the following additional risk factor:
+Added: Risks Related to Our Reduced Operations Following Completion of the Asset Disposition to Biamp Systems
+Added: Under the terms of the Certificate of Designation for our Class A Redeemable Preferred Stock, the net proceeds of the Asset Disposition to Biamp Systems can only be used to redeem the Class A Redeemable Preferred Stock and are not available for ongoing operations, other than permitted transaction costs, which could constrain liquidity and accelerate the need for additional financing.
+Added: (See Note 3 and MD&A — Liquidity .)
+Added: We will continue to offer product support and warranty services to our customers while we pursue a Strategic Transaction in the fourth quarter of 2025.
+Added: Warranty claim rates and repair costs are uncertain.
+Added: If actual claim volume, parts availability, labor rates, and logistics costs exceed estimates, our failure to obtain additional financing would have a material adverse effect on our business and results of operations.
+Added: Risks Related to Our Pursuit of Strategic Transactions
+Added: As a publicly traded company, we are susceptible to potential creditor or stockholder claims relating to any Strategic Transactions that we may consummate, including the recently completed Asset Disposition to Biamp Systems.
+Added: Any such legal challengers could delay the completion of any possible Strategic Transactions and reduce the amount of consideration available to the Company’s stockholders in connection with any such transactions and have a material adverse effect on our business and results of operations.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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