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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-08 · 176 added, 250 removed, 578 unchanged (42% of the section changed)

Risks Related to our Business and Industry

We have a history of operating losses,

and we may not be able to sustain profitability.

We have a history of operating losses, and

we may not be able to sustain profitability.

We were incorporated on December 4, 2012;

as of December 31, 2021, we had an accumulated deficit of $12,937,091.

If we are not successful in growing revenues and controlling costs,

we will not maintain profitable operations or positive cash flow, and even if we achieve profitability in the future, we may not be able

to sustain profitability in subsequent periods.

December 31, 2022, we had an accumulated deficit of $17,864,028.

If we are not successful in growing revenues and controlling

costs, we will not maintain profitable operations or positive cash flow, and even if we achieve profitability in the future, we may not

be able to sustain profitability in subsequent periods.

Because we have a limiting operating history

with positive revenues, you may not be able to accurately evaluate our operations.

We were incorporated on December 4, 2012 and have

had limited profitable operations to date.

We were incorporated on December 4, 2012, and

have had limited profitable operations to date.

Therefore, we have a limited profitable operating history upon which to evaluate the merits

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Due to superior functionality

and low price, we expect to capture this section of the market fairly easily.

Once our product and service matures, and the Company becomes

better known, we believe we could gain market share in the high-end market.

None of this will be possible if we fail to obtain the funding

and low price, we expect to capture this section of the market easily.

Once our product and service mature, and the Company becomes better

known, we believe we could gain market share in the high-end market.

None of this will be possible if we fail to obtain the funding we

There is no guarantee that additional funding can be obtained on favorable terms, if at all.

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to use regulatory actions to reduce the market opportunity for our products or to increase the market opportunity for their own products.

We outsource our product manufacturing and

are susceptible to problems in connection with procurement, decreasing quality, reliability and protectability.

We outsource our product manufacturing

and are susceptible to problems in connection with procurement, decreasing quality, reliability and protectability.

We assemble our Ubiquitor devices by using fully

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production rates.

Our business operations and financial performance

may be affected by the coronavirus pandemic.

The coronavirus pandemic has adversely affected

economies throughout the world.

With the continued spread of the coronavirus in the United States and other countries, it is unclear how

economic activity and workflow might be impacted on a worldwide basis generally or for our Company specifically.

If the pandemic continues

and/or conditions worsen, we may experience a disruption in our supply chain as well as a decline in sales activities and customer orders.

The impact of the coronavirus on our operations is uncertain at this time.

Given the rapidly changing situation related to this pandemic,

we believe it could have a material adverse effect on our business, financial conditions and results of operations.

During 2020, our subsidiary

AVX was negatively impacted by the COVID-19 pandemic.

AVX encountered delays in certain projects due to the government-imposed restrictions

affecting access to job sites as well as clients contracting the coronavirus.

We also had employees contract the virus, which negatively

impacted our research and development.

In 2021, we had delays in receiving the inventory necessary for Perfecular to fulfill sales orders

due to a shortage of shipment containers caused by the pandemic, which resulted in delays in completing our sales cycles.

We outsource the manufacturing of key elements

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and failure to obtain or maintain intellectual property or trade secret protection could adversely affect our competitive business position.

In the event that the third-party manufacturers of our proprietary products misappropriate our intellectual property, our business, prospects

and financial condition could be materially and adversely affected.

If the third-party manufacturers of our proprietary products misappropriate our intellectual property, our business, prospects and financial

condition could be materially and adversely affected.

Our business operations in China may negatively

affect the ability to protect our intellectual property and our financial position.

affect our ability to protect our intellectual property and our financial position.

On December 31, 2021, we set up a branch office

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unable to adequately protect our intellectual property rights, we may lose these rights and our business may suffer materially.

the complexities that arise from operating in a different tax jurisdiction inevitably lead to an increased exposure to international taxation.

the complexities that arise from operating in a different tax jurisdiction inevitably led to an increased exposure to international taxation.

Should review of our tax filings result in unfavorable adjustments, our operating results, cash flows, and financial position could be

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Our estimates of the size and future growth in

the market for our Ubiquitor device or our PLC technology is based on a number of internal studies, reports and estimates.

our internal estimates are based in large part on current feedback from clients using current generation technology and our belief is

that the use and implementation of our technologies in the United States and worldwide will be extensive.

While we believe we are using

effective tools in estimating the total market for Ubiquitor device or our PLC technology, these estimates may not be correct and the

conditions supporting our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.

actual demand for our products or competitive products, could differ materially from our projections if our assumptions are incorrect.

As a result, our estimates of the size and future growth in the market for the Ubiquitor device or our PLC technology may prove to be

If the demand is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our

the market for our Ubiquitor device or our PLC technology is based on several internal studies, reports and estimates.

In addition, our

internal estimates are based on current feedback from clients using current generation technology and our belief is that the use and implementation

of our technologies in the United States and worldwide will be extensive.

While we believe we are using effective tools in estimating

the total market for Ubiquitor device or our PLC technology, these estimates may not be correct and the conditions supporting our estimates

may change at any time, thereby reducing the predictive accuracy of these underlying factors.

The actual demand for our products or competitive

products, could differ materially from our projections if our assumptions are incorrect.

As a result, our estimates of the size and future

growth in the market for the Ubiquitor device or our PLC technology may prove to be incorrect.

If the demand is smaller than we have estimated,

it may impair our projected sales growth and have an adverse impact on our business.

If we are unable to properly forecast future

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Our production levels and inventory management are based

on demand estimates six to twelve months forward taking into account supply lead times, production capacity, timing of shipments, and

dealer inventory levels.

If we overestimate or underestimate demand for any of our products during a given season, we may not maintain

appropriate inventory levels, which could negatively impact our net sales or working capital, hinder our ability to meet customer demand,

or cause us to incur excess and obsolete inventory charges.

on demand estimates six to twelve months forward considering supply lead times, production capacity, timing of shipments, and dealer inventory

If we overestimate or underestimate demand for any of our products during a given season, we may not maintain appropriate inventory

levels, which could negatively impact our net sales or working capital, hinder our ability to meet customer demand, or cause us to incur

excess and obsolete inventory charges.

Demand for our Ubiquitor product may be

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Internal system or service failures, including

as a result of cyber or other security incidents, could disrupt business operations, result in the loss of critical and confidential information,

and adversely impact our reputation, our business, financial condition, results of operations and cash flows.

Our connected products potentially

expose our business to cybersecurity threats.

as a result of cyber or other security incidents, could disrupt business operations, result in the loss of critical and confidential

information, and adversely impact our reputation, our business, financial condition, results of operations and cash flows.

Our connected

products potentially expose our business to cybersecurity threats.

Some of our products connect to the internet and

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Our sensor segment is subject to risks associated

with operations that have a concentration of customers.

We only have one customer, Hydrofarm, who resells

our digital light meters and sensors.

There is no guarantee that this customer will remain solvent, and/or continue with the Company as

it has in the past.

Consequently, if we were to lose this customer, a material portion of our revenues in our sensor and digital light

meter segment would be lost.

with operations as we diversify away from a single dominant customer.

While in the past we were subject to volatility as

a result of having only one dominant customer, diversification away from a single customer also poses some risks associated with the migration,

While the company will possess more revenues streams, the migration away from a single steady customer poses risks as we begin to build

new relationships.

Along with new marketing efforts, we need to continue to cater to the needs of these new customers or the business

may fluctuate or vanish.

Our air filtration business segment could

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cost of filter media can experience price fluctuations.

Larger competitors can enter into selective supply arrangements with major suppliers

Larger competitors can enter selective supply arrangements with major suppliers

that reduce medium-to-long-term volatility in costs.

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Moreover, volatile economic conditions may impact the ability of our suppliers to make timely deliveries;

and in the event that a supplier fails to make a delivery, there is no guarantee that we will be able to timely locate an alternative

supplier of comparable quality at an acceptable price.

and if a supplier fails to make a delivery, there is no guarantee that we will be able to timely locate an alternative supplier of comparable

quality at an acceptable price.

Since the beginning of 2018, there has been increasing

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and foreign leaders regarding tariffs against

foreign imports of certain materials.

It is difficult to anticipate the impact on our business caused by the proposed tariffs or whether

the proposed changes in tariffs will materialize in the future.

Given the relatively fluid regulatory environment in China and the United

States, there could be additional tax, tariffs or other regulatory changes in the future.

Any such changes could directly and materially

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

imports of certain materials.

It is difficult to anticipate the impact on our business caused by the proposed tariffs or whether the proposed

changes in tariffs will materialize in the future.

Given the relatively fluid regulatory environment in China and the United States, there

could be additional tax, tariffs, or other regulatory changes in the future.

Any such changes could directly and materially adversely

impact our business, financial condition, and operating results.

Our failure to respond to rapid change in

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allow multiple users to access large amounts of information without the hassle of running wires to and from each IoT device.

wireless networks have technological limitations and there are a number of disadvantages that our Ubiquitor device may face when using

a wireless network.

wireless networks have technological limitations and there are several disadvantages that our Ubiquitor device may face when using a wireless

Wireless networks are typically expensive;

it can cost up to four times more to set up a wireless network than to

set up a wired network.

The range of a wireless network is limited, and a typical wireless router will only allow individuals located

within 150 to 300 feet to access the network.

Wireless networks are extremely susceptible to interference from radio signals, radiation

and other similar types of interference.

it can cost up to four times more to set up a wireless network than to set up a wired

The range of a wireless network is limited, and a typical wireless router will only allow individuals located within 150 to 300

feet to access the network.

Wireless networks are extremely susceptible to interference from radio signals, radiation, and other similar

types of interference.

Such interference may cause a wireless network to malfunction.

Wireless networks can be accessed

by any IoT device within range of the network’s signal so information transmitted through the network (including encrypted information)

may be intercepted by unauthorized users.

Wireless networks can be accessed by any IoT device

within range of the network’s signal so information transmitted through the network (including encrypted information) may be intercepted

by unauthorized users.

Wireless networks are typically slower than wired networks, sometimes even up to 10 times slower.

Walls and floors can seriously limit the range of your wireless network.

Since wireless networks have severe limitations, these limitations

may reduce the competitive advantage that the Ubiquitor provides in the marketplace which might prevent widespread adoption.

Walls and floors

can seriously limit the range of your wireless network.

Since wireless networks have severe limitations, these limitations may reduce

the competitive advantage that the Ubiquitor provides in the marketplace which might prevent widespread adoption.

Demand for our products is uncertain and

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advances, and low margins.

This, in turn, will depend on a number of factors, including:

This, in turn, will depend on several factors, including:

Our ability to generate significant sales and profit margin from the Ubiquitor device;

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The Ubiquitor device could fail to gain

traction in the marketplace for a number of reasons that would adversely impact our financial results and cause our investors to lose

traction in the marketplace for several reasons that would adversely impact our financial results and cause our investors to lose money.

Future rollout of the Ubiquitor entail numerous risks such as:

Any lack of market acceptance of the Ubiquitor;

Failure to maintain acceptable arrangements with product suppliers, particularly in light of lower than anticipated volumes;

Failure to maintain acceptable arrangements with product suppliers, particularly considering lower than anticipated volumes;

Manufacturing, technical, supplier, or quality-related delays, issues, or concerns, including the loss of any key supplier or failure of any key supplier to deliver high quality products on time;

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Risks that third parties may assert intellectual property claims against our products.

In order to compete successfully, we must accurately

forecast demand, closely monitor inventory levels, secure quality products, continuously drive down costs, meet aggressive product price

and performance targets, create market demand for our brand and hold sufficient, but not excess, inventory.

To compete successfully, we must accurately forecast

demand, closely monitor inventory levels, secure quality products, continuously drive down costs, meet aggressive product price and performance

targets, create market demand for our brand and hold sufficient, but not excess, inventory.

Our Ubiquitor device greatly depends on

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The Internet may ultimately prove not to be a viable commercial marketplace

for IoT applications for a number of reasons, including:

for IoT applications for several reasons, including:

unwillingness of consumers to shift to and use other such next-generation Internet-based, smartphone-assisted applications;

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adapt to using the smartphone readout as a substitute platform for sensor devices, causing our products to fail in the marketplace.

The vast majority of products on the small sensor

device market do not currently use smartphones to collect and analyze sensor data.

There is no guarantee that using smartphone technology

will cut production costs and be well received.

If our USIP using smartphone technology is not well received, there is a risk that device

manufacturers will develop new monitoring and operating components that are incompatible with our current platform instead of developing

the traditional sensors that are compatible with our technology.

Updating our platform to stay compatible with new components could increase

our costs unexpectedly.

Most products on the small sensor device market

do not currently use smartphones to collect and analyze sensor data.

There is no guarantee that using smartphone technology will cut production

costs and be well received.

If our USIP using smartphone technology is not well received, there is a risk that device manufacturers will

develop new monitoring and operating components that are incompatible with our current platform instead of developing the traditional

sensors that are compatible with our technology.

Updating our platform to stay compatible with new components could increase our costs

unexpectedly.

Using wireless transmission technologies

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deplete our assets.

Moreover, even if we are able to obtain adequate insurance, any claim against us could generate negative publicity,

which could impair our reputation and adversely affect the demand for our products, our ability to generate sales and our profitability.

For the products we sell through Hydrofarm, we also do not carry product liability insurance.

It is our management’s position that

these handheld battery-operated products do not carry substantial product liability risk and to the extent there are any product liability

risks, such risks are born by Hydrofarm, who does carry product liability insurance coverage for the products we provide to them and they

sell to their customers.

However, it is possible that we could face liability in a products liability lawsuit for manufacturing defects

or defective design since we design or manufacture the products sold by Hydrofarm.

Some of the agreements that we may enter into

with manufacturers or distributors of our products and components of our products may require us:

Moreover, even if we can obtain adequate insurance, any claim against us could generate negative publicity, which

could impair our reputation and adversely affect the demand for our products, our ability to generate sales and our profitability.

the products we sell through Hydrofarm, we also do not carry product liability insurance.

It is our management’s position that these

handheld battery-operated products do not carry substantial product liability risk and to the extent there are any product liability risks,

such risks are born by Hydrofarm, who does carry product liability insurance coverage for the products we provide to them, and they sell

to their customers.

However, it is possible that we could face liability in a products liability lawsuit for manufacturing defects or

defective design since we design or manufacture the products sold by Hydrofarm.

Some of the agreements that we may enter with

manufacturers or distributors of our products and components of our products may require us:

to obtain product liability insurance;

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our products and generate revenues.

Even if we are able to obtain and maintain product liability insurance, if a successful claim in excess

of our insurance coverage is made, then we may have to indemnify some or all of our manufacturers or distributors for their losses, which

Even if we can obtain and maintain product liability insurance, if a successful claim in excess of

our insurance coverage is made, then we may have to indemnify some or all of our manufacturers or distributors for their losses, which

could materially deplete our assets.

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acquisition targets or otherwise successfully implement a growth strategy reliant on mergers and acquisitions.

In order to expand our business, we hope to pursue

mergers and acquisitions to acquire new or complementary businesses, services or technologies.

We expect to continue evaluating potential

strategic acquisitions of businesses, services and technologies.

However, we may not be able to identify suitable candidates, negotiate

appropriate or favorable acquisition terms, obtain financing that may be needed to consummate such transactions or complete proposed acquisitions.

To expand our business, we hope to pursue mergers

and acquisitions to acquire new or complementary businesses, services or technologies.

We expect to continue evaluating potential strategic

acquisitions of businesses, services, and technologies.

However, we may not be able to identify suitable candidates, negotiate appropriate

or favorable acquisition terms, obtain financing that may be needed to consummate such transactions or complete proposed acquisitions.

Any such future mergers and acquisitions would be accompanied by the risks commonly encountered in acquisitions of companies, including,

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Desheng Wang, our

CEO, and Duncan Lee, our CFO, have public company experience.

CEO, and Irving Kau, our CFO, have public company experience.

Our CEO and CFO are ultimately responsible for complying with federal securities

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The burden is on the director to show entire fairness.

If, as a result of these conflicts, we may be

deprived of business opportunities or information, the execution of our business plan and our ability to effectively compete in the marketplace

If, because of these conflicts, we may be deprived

of business opportunities or information, the execution of our business plan and our ability to effectively compete in the marketplace

may be adversely affected.

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enforcement actions by the SEC, any one of which could adversely affect our business prospects.

We currently have identified significant

deficiencies in our internal control over financial reporting that, if not corrected, could result in material misstatements of our financial

In connection with the audit of our financial

statements as of and for the years ended December 31, 2021 and 2020, we identified significant deficiencies in our internal control over

financial reporting and a general understanding of U.S.

As such, there is a reasonable possibility that a misstatement of our financial

statements will not be prevented or detected on a timely basis.

As we have thus far not needed to comply with

Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act” or “SOX”), neither we nor

our independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance

with Section 404 of the Sarbanes-Oxley Act.

In light of the deficiency, we believe that it is possible that certain control deficiencies

may have been identified if such an evaluation had been performed.

We are working to remediate the deficiencies or

material weaknesses.

We have taken steps to enhance our internal control environment and plan to take additional steps to remediate the

material weaknesses.

For a discussion of our remediation plan, see “Management’s Report on Internal Control over Financial

Although we plan to complete this remediation

process as quickly as possible, we are unable, at this time to estimate how long it will take;

and our efforts may not be successful in

remediating the deficiencies or material weaknesses.

Our executive officers and directors collectively

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other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.

Management currently beneficially owns a majority

of our outstanding common stock.

Consequently, management has the ability to influence control of the operations of the Company and, acting

together, will have the ability to influence or control substantially all matters submitted to stockholders for approval, including:

Management currently beneficially owns most of

our outstanding common stock.

Consequently, management can influence control of the operations of the Company and, acting together, will

have the ability to influence or control substantially all matters submitted to stockholders for approval, including:

Election of our board of directors;

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Risks Related to the Ownership of our Common

Our shares may be affected by short selling

practices which may decrease the stock price.

The Company believes that certain individuals

and/or companies may have engaged in manipulative and/or suspected illegal trading practices that may artificially depress our share price.

There is great concern in today’s market environment regarding the potential targeting of publicly traded companies in a market

manipulation scheme involving illegal naked short selling of stock.

The Company finds such suspected manipulation completely unacceptable

as it distorts the value of the Company and negatively impacts shareholders who have invested their hard-earned money.

We are considering

engaging third party service providers to further investigate these practices by aggregating and analyzing repository data from reporting

entities, broker-dealers and shareholders enabling us to proactively track shareholder ownership, identify parties involved in suspicious,

aberrant, or unusual trading activity and deploy corrective action steps to help curtail such activity.

The SEC and other regulatory and self-regulatory

authorities have implemented various rules and taken certain actions, and may in the future adopt additional rules, and take other actions,

that may impact those engaging in short selling activity involving equity securities (including our common stock).

Such rules and actions

include Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc.

and the national securities

exchanges of a “Limit Up-Limit Down” program, the imposition of market-wide circuit breakers that halt trading of securities

for certain periods following specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank

Wall Street Reform and Consumer Protection Act of 2010.

Any governmental or regulatory action that restricts the ability of investors

to effect short sales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the

trading price and liquidity of our shares.

An increase of free trading shares of our

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stockholders could cause our stock price to decline.

If our existing stockholders sell substantial

shares of our common stock in the public market, then the market price of our common stock could decrease significantly.

The perception

in the public market that our stockholders might sell shares of common stock also could depress the market price of our common stock.

There are approximately 43,259,741 shares of our common stock outstanding, of which approximately 18,018,309 shares are currently freely

Certain existing holders of a majority of our

common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include

their shares in registration statements that we may file for ourselves or other shareholders.

If the sale of these shares are registered,

they will be freely tradable without restriction under the Securities Act.

In the event such registration rights are exercised and a large

number of shares of common stock are sold in the public market, such sales could reduce the trading price of our common stock.

If our existing stockholders sell substantial shares

of our common stock in the public market, then the market price of our common stock could decrease significantly.

The perception in the

public market that our stockholders might sell shares of common stock also could depress the market price of our common stock.

approximately 43,229,653 shares of our common stock outstanding as of March 22, 2023, of which approximately 17,946,923 shares are currently

freely tradable.

Certain existing holders of most of our common

stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their

shares in registration statements that we may file for ourselves or other shareholders.

If the sale of these shares are registered, they

will be freely tradable without restriction under the Securities Act.

In the event such registration rights are exercised and many shares

of common stock are sold in the public market, such sales could reduce the trading price of our common stock.

A decline in the price of shares of our common

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their common stock.

In the event that the shares of our common stock

were to be delisted from NASDAQ, we expect that it would be traded on the OTCQB or OTCQX marketplaces, which are unorganized, inter-dealer,

over-the-counter markets that provide significantly less liquidity than NASDAQ or other national securities exchanges.

Thus, a delisting

from NASDAQ may have a material adverse effect on the trading and price of our common stock.

If the shares of our common stock were to be delisted

from NASDAQ, we expect that it would be traded on the OTCQB or OTCQX marketplaces, which are unorganized, inter-dealer, over-the-counter

markets that provide significantly less liquidity than NASDAQ or other national securities exchanges.

Thus, a delisting from NASDAQ may

have a material adverse effect on the trading and price of our common stock.

If we are unable to maintain compliance

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post-acquisition growth effectively, our business could be adversely affected.

We anticipate that as a result of the significant

expansion of our operations and addition of operating subsidiaries, new personnel may be required in all areas of our operations in order

to continue to implement our post-acquisition business plan.

Our future operating results depend to a large extent on our ability to manage

this expansion and growth successfully.

For us to continue to manage such growth, we must put in place legal and accounting systems and

implement human resource management and other tools.

We anticipate that because of the significant

expansion of our operations and addition of operating subsidiaries, new personnel may be required in all areas of our operations to continue

to implement our post-acquisition business plan.

Our future operating results depend to a large extent on our ability to manage this expansion

and growth successfully.

For us to continue to manage such growth, we must put in place legal and accounting systems and implement human

resource management and other tools.

We have taken preliminary steps to put this structure in place.

However, there is

no assurance that we will be able to successfully manage this anticipated rapid growth.

A failure to manage our growth effectively could

materially and adversely affect our profitability.

However, there is no assurance that

we will be able to successfully manage this anticipated rapid growth.

A failure to manage our growth effectively could materially and

adversely affect our profitability.

Increasing competition within our industry

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business will depend upon the efforts of management of our subsidiary AVX.

Only one key member of management has remained

with AVX following the business combination, we can offer no assurance that we will be able to retain them or effectively recruit new

additional personnel.

The departure of any key members of AVX’s management team could make it more difficult to operate AVX.

to the extent that we will rely upon their management team to operate AVX, we will be subject to risks regarding their managerial competence.

Accordingly, we cannot assure you that our assessment of these individuals will prove to be correct and that they will have the skills,

abilities and qualifications we expect.

We can offer no assurance that we will be able

to retain or effectively recruit new additional personnel.

The departure of any key members of AVX’s management team could make

it more difficult to operate AVX.

Moreover, to the extent that we will rely upon their management team to operate AVX, we will be subject

to risks regarding their managerial competence.

Accordingly, we cannot assure you that our assessment of these individuals will prove

to be correct and that they will have the skills, abilities, and qualifications we expect.

If we are unable to integrate the Ubiquitor

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If we are unable to integrate the Ubiquitor device into smart home installations, we will not be able to achieve

the competitive price and performance we anticipate to achieve success in AVX’s future smart home installations.

Alternatively,

we may not be able to achieve a smart home installation at a cost-effective price that is sufficient to distinguish us from amongst the

competition in this market segment.

Risks Related to the COVID-19 Pandemic

The recent COVID-19 pandemic may adversely

affect our business, results of operations, financial condition, liquidity, and cash flow.

On March 11, 2020, the World Health Organization

declared COVID-19 a pandemic.

The pandemic has impacted and may further impact the United States and the broader economies of affected

countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange

rates and interest rates.

Due to the speed with which the situation is developing, the global breadth of its spread and the range of governmental

and community reactions thereto, there is uncertainty around its duration, ultimate impact and the timing of recovery.

Therefore, the

pandemic could lead to an extended disruption of economic activity and the impact on our consolidated results of operations, financial

position, and cash flows could be material.

As a result of the adverse impact that the COVID-19

pandemic is having on our economy and the economies of the countries in which we plan to do business, the pandemic has affected and may

continue to affect our operations, including our supply chain distribution systems, production levels and research and development activities.

In addition, any preventive or protective actions that governments implement or that we adopt in response to the COVID-19 pandemic, such

as travel restrictions, quarantines, and limited operations of governmental agencies, may interfere with the ability of our employees,

vendors, and suppliers to perform their respective responsibilities and obligations relative to the conduct of our business.

Additionally,

government regulations that have been imposed in response to the COVID-19 pandemic may cause delays in our freight processes, which would

result in higher shipping costs.

In addition, social distancing guidelines could have an adverse impact on our research and development

activities as our laboratories are not operating at full capacity.

The impact of the COVID-19 pandemic on the global

financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

the resulting global economic downturn has negatively impacted the ability of certain of our customers to make payments on a timely basis,

adversely impacting our cash flows from operations.

We do not yet know the full extent of the impact of the COVID-19 pandemic or its resulting

economic impact, which could have a material adverse effect on our liquidity, capital resources, operations, and business.

We are also monitoring the impact of COVID-19

on our talent recruitment and retention efforts.

If members of our management and other key personnel in critical functions across our

organization are unable to perform their duties or have limited availability due to COVID-19, we may not be able to execute on our business

strategy and/or our operations may be negatively impacted.

The loss or limited availability of the services of one or more of our executive

officers or other key personnel, or our inability to recruit and retain qualified executive officers or other key personnel in the future

could, at least temporarily, have a material adverse effect on our business, financial condition, and results of operations.

individuals are in high demand, and we may incur significant costs to attract them, particularly at the executive level.

We may face difficulty

in attracting and retaining key talent for a number of reasons, including delays in the recruiting and hiring process as a result of the

COVID-19 pandemic.

Our business, financial condition, and results

of operations could be materially adversely affected by unfavorable results in future employment litigation matters as a result of COVID-19.

Our employees may sue us due to possible exposure to COVID-19 while working at one of our facilities or sites.

In addition, employees

may challenge decisions to implement protective measures such as contact tracing on the basis of local privacy laws due to the increased

collection of employee medical information.

Litigation matters, regardless of their merits or their ultimate outcomes, are costly, divert

management’s attention and may materially adversely affect our reputation and demand for our products.

We cannot predict with certainty

the eventual outcome of litigation matters.

An adverse outcome of litigation or legal matters could result in us being responsible for

paying significant damages.

Any of these negative effects resulting from litigation

matters could materially adversely affect our business, financial condition or results of operations.

To the extent the COVID-19 pandemic

adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in

The extent to which COVID-19 impacts our results

will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning

the severity of COVID-19 and the actions taken to contain it or treat its impact.

the competitive price and performance we anticipate achieving success in AVX’s future smart home installations.

Alternatively, we

may not be able to achieve a smart home installation at a cost-effective price that is sufficient to distinguish us from amongst the competition

in this market segment.

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