What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-09-21 compared with 2022-09-28 · 209 added, 242 removed, 179 unchanged (72% of the section changed)

29 unchanged sentences

filed three new patents on advanced technology related to lithium-ion battery packs.

The technology behind these pending patents are

The technology behind these pending patents is

battery life by optimizing the charging cycle,

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following table summarizes the new orders, shipments, and backlog activities for the last six (6) fiscal quarters:

Quarter Ended

Fiscal Quarter Ended

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

March 31, 2023

June 30, 2023

represents the amount of anticipated revenues we may recognize in the future from existing contractual orders with customers that are

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that outstanding customer orders will be fulfilled as expected and that our backlog will result in future revenues.

of September 12, 2022, our order backlog was approximately $29.4 million.

to the growth in orders for our energy storage solutions and accessories, coupled with supply chain disruptions due to COVID-19 delaying

our ability to fulfill such orders, we have experienced an increase in our backlog of open orders during Fiscal 2022.

Chain Issues and Higher Procurement Costs

to COVID-19 pandemic, supply chain disruptions continue, notably with delivery delays at the ports of Los Angeles and Long Beach.

addition, the price of steel and certain other electrical components used in our products have seen dramatic increases, along with increased

shipping costs.

It is impossible to predict how long the current disruptions to the cost and availability of raw materials and component

parts will last.

We implemented price increases on certain new product orders in October 2021 and April 2022 to offset rising global

costs of raw materials and component parts.

In addition, we increased our inventory of raw materials and component parts to $16.3 million

as of June 30, 2022 to mitigate supply chain disruptions and support timely deliveries.

However, there can be no assurance that our price

increases, inventory levels or any future steps we take will be sufficient to offset the rising procurement costs and manage sourcing

of raw materials and component parts effectively.

address some of these negative consequences and to support the future growth of our business, we have implemented a number of new strategic

support our high growth business and strategy, our first priority over the coming quarters is achieving “profitability,”

specifically, cash flow breakeven.

Accordingly, we have strategic initiatives underway in two areas:

margin improvements

lower cost, more reliable, and secondary suppliers of key components including cells, steel, electronics, circuit boards and other

key components.

manage our suppliers to avoid supply chain disruptions and related risks.

new designs, including a simplified “platform” that reduces part count, lowers cost, improves manufacturability and serviceability.

on ensuring profitability of all product lines including managing mix of products.

more competitive carriers to reduce shipping costs.

Lean Manufacturing process to enhance capacity utilization, efficiency, quality.

comprehensive “cost of quality” initiative to ensure effective and robust processes.

“automated cell module assembly” to assemble purchased “individual” battery cells into a “module”

for the battery pack.

This will enable lower inventory from simplified SKU count and lower costs.

September 8, 2023, our order backlog was approximately $27.2 million.

of the disruptions from the COVID-19 pandemic over the past several years have largely abated.

During the pandemic, we, like others

in the industry, experienced supply chain challenges such as delays of purchased components and the shortage of components.

We have addressed these supply chain challenges with improved vendor selection, and improved supply chain internal practices.

However, we have experienced shipment delays of battery packs for some forklift models that have experienced production delays.

have seen recent improvements in shipment timing.

The price increases during the pandemic for steel and domestic freight have

lessened but still remain higher than pre-pandemic.

Price recovery of increased pandemic-related costs have now begun to be realized

in shipments during the latter part of Fiscal 2023.

However, there can be no assurance that our price increases, inventory levels or

any future steps we take will be sufficient to offset the rising procurement costs and manage sourcing of raw materials and

component parts effectively.

Lead times for forklifts and GSE Equipment have been extended for certain model lines of major OEMs.

These extended

lead times have resulted in some shipment deferrals and delays in receiving anticipated orders.

Not all product lines are impacted but

the impact has required additional selling efforts to maintain our sales trajectory.

expansion to accelerate gross margin

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can be no assurance that these initiatives and efforts will be successful.

Prod uct Update

the second half of the Fiscal 2022, we introduced new product designs to respond to customer requests and to allow for greater operational

efficiencies for us.

Some of the improvements included higher capacities for extra-long and demanding shifts, easier servicing, cost

efficiencies, and other features to solve a variety of existing performance challenges of customer operations.

We intend to continue

to develop and to introduce new product designs for margin enhancement, part commonality and improved serviceability.

March 2022, we int roduced three (3) new products:

lithium-ion battery pack, a 36-volt option for 3-wheel forklifts;

L36 addresses the 3-wheel forklift market.

According to our OEM partners the 3-wheel forklift offerings are some of their best selling

We are now strategically placed to fully address this market.

lithium-ion battery pack for Automated Guided Vehicles (AGV) and Autonomous Mobile Robots (AMR);

improved robustness and environmental protections mean it is no longer just a solar battery, but is now being sold into tugs and

other types of industrial equipment, expanding our product offerings.

lithium-ion battery pack providing twice the capacity (210Ah) for Walkie Pallet Jacks for heavy duty

S24-210Ah is a new high-capacity variant of our ‘slim’ walkie battery and addresses some of the toughest walkie applications

in the market, giving exceptional runtime and fast recharge times when paired with an external high-powered charger.

of 2023 Financing Activities

Direct Offering

September 22, 2021, we entered into a securities purchase agreement (the “Purchase Agreement”) with several institutional

and accredited investors (the “Purchasers”), pursuant to which we sold in a registered direct offering an aggregate of 2,142,860

shares of or Common Stock (the “Shares”) and warrants to purchase up to 1,071,430 shares of our common stock (the “Warrants”),

at a combined purchase price of $7.00 per share and related Warrant.

The aggregate gross proceeds of the Registered Offering were approximately

$15 million, before deducting placement agent fees and offering expenses (the “Registered Offering”).

Co., LLC (“HCW” or the “Placement Agent”) acted as our exclusive Placement Agent in connection with the Registered

Offering and was paid a cash fee equal to 6.0% of the gross proceeds of the Registered Offering.

The net proceeds from the Registered

Offering, after deducting Placement Agent fees and other offering expenses, were approximately $13.7 million.

The Registered Offering

closed on September 27, 2021.

At-The-Market

October 16, 2020, we filed a shelf registration on Form S-3 for up to $50 million to support our ability to raise capital to support

our business growth.

In connection with the shelf registration statement, in December 2020, we entered into a Sales Agreement with H.C.

Wainwright & Co., LLC enabling us to sell shares of our common stock in an “At-The-Market” offering from time to time.

On May 27, 2021 we filed an amendment to the prospectus supplement dated December 21, 2020 allowing us to sell up to $20 million of shares

under the At-The-Market offering program (“ATM Offering”).

In Fiscal 2021 we sold an aggregate of 978,782 shares of common

stock at an average price of $12.93 per share for gross proceeds of approximately $12.7 million in the ATM Offering, prior to deducting

commissions and other offering related expenses.

In Fiscal 2022, we sold an additional 190,782 shares of common stock at average price

of $8.70 per share for gross proceeds of approximately $1.7 million in the ATM Offering, prior to deducting commissions and other offering

related expenses.

As of June 30, 2022, approximately $5.7 million remained available under the ATM Offering for future sales of our common

Revolving Line of Credit

June 23, 2022, we entered into a Second Amendment to Loan and Security Agreement (“Second Amendment”) with Silicon Valley

Bank (“SVB”), which amended certain terms of the Loan and Security Agreement dated November 9, 2020, as amended on October

29, 2021 (together with the Second Amendment, the “Agreement”), including but not limited to, (i) to increase the amount

of the revolving line of credit from $6.0 million to $8.0 million (the “SVB Credit Facility”), (ii) to change the financial

covenants of the Company from tangible net worth to adjusted EBITDA (as defined in the Second Amendment) on a trailing six (6) month

basis and liquidity ratio certified as of the end of each month pursuant to the calculations set forth therein, and (iii) to allow for

the assignment and transfer by SVB of all of its obligations, rights and benefits under the Agreement and Loan Documents (as defined

in the Agreement and except for the Warrants).

have used the SVB Credit Facility from-time-to-time.

As of June 30, 2022, the outstanding balance of the revolving line of credit was

approximately $4.9 million, with approximately $3.1 million of the SVB Credit Facility remained available for future draws through November

7, 2022, unless the credit facility is renewed and its term is extended prior to its expiration.

Line of Credit

May 11, 2022, we entered into a subordinated Credit Facility Agreement with Cleveland Capital, L.P., a Delaware limited partnership (“Cleveland”),

Herndon Plant Oakley, Ltd., (“HPO”), and other lenders (together with Cleveland and HPO, the “Lenders”) which

provided us with a short-term line of credit (the “LOC”) of not less than $3,000,000 and not more than $5,000,000, the proceeds

of which are to be used by us for working capital purposes.

Each Lender severally agreed to make loans (each such loan, an “Advance”)

up to such Lender’s Commitment Amount (“Commitment Amount”) to the Company from time to time, until the December 31,

2022 (the “Due Date”).

Pursuant to the LOC and Form of Promissory Note, Advances made by any Lender, while outstanding, will

bear an interest rate of 15.0% per annum in favor of each respective Lender.

due under the LOC, if any, is due and payable on (i) the “Due Date in cash or shares of common stock of the Company (the “Common

Stock”) at the sole election of the Company, unless extended, or (ii) on occurrence of an event of Default (as defined in the Form

of Promissory Note).

The Due Date may be extended (i) at the sole election of the Company for one (1) additional year from the Due Date

upon the payment of a commitment fee equal to two percent (2%) of the Commitment Amount to the Lender within thirty (30) days prior to

the original Due Date, or (ii) by the Lender in writing.

In addition, each Lender subordinated their respective right to payment under

the LOC to SVB’s indebtedness under the SVB Credit Facility.

As of June 30, 2022, the Lenders’ commitment was for an aggregate

amount of $4,000,000, with no outstanding balance under the LOC.

connection with entry into the LOC, we paid each Lender a one-time committee fee in cash equal to 3.5% of such Lender’s Commitment

Amount for an aggregate amount of $140,000.

In addition, in consideration of the Lenders’ commitment to provide the Advances to

the Company, we issued each Lender warrants to purchase the number of shares of common stock equal to the product of (i) 160,000 shares

of common stock multiplied by (ii) the ratio represented by each Lender’s Commitment Amount divided by the $5,000,000 (the “Warrants”).

Subject to certain ownership limitations, the Warrants became exercisable immediately from the date of issuance, and expire on the five

(5) year anniversary of the date of issuance and subject to adjustments, has an exercise price of $2.53 per share.

Pursuant to a selling

agreement, dated as of May 11, 2022, we retained HPO as our placement agent in connection with the Credit Facility.

As compensation for

services rendered in conjunction with the Credit Facility, we paid HPO a finder fee equal to three percent (3%) of the Commitment Amount

from each such Lender placed by HPO in cash.

On October 16, 2020, we filed a shelf registration on Form S-3 for up to

$50 million to support our ability to raise capital to support our business growth.

In connection with the shelf registration statement,

in December 2020, we entered into a Sales Agreement with H.C.

Wainwright & Co., LLC enabling us to sell shares of our common stock

in an “At-The-Market” offering from time to time.

On May 27, 2021, we filed an amendment to the prospectus supplement dated

December 21, 2020, allowing us to sell up to $20 million of shares under the At-The-Market offering program (“ATM Offering”).

In Fiscal 2021 we sold an aggregate of 978,782 shares of common stock at an average price of $12.93 per share for gross proceeds of approximately

$12.7 million in the ATM Offering, prior to deducting commissions and other offering related expenses.

In Fiscal 2022, we sold an additional

190,782 shares of common stock at average price of $8.70 per share for gross proceeds of approximately $1.7 million in the ATM Offering,

prior to deducting commissions and other offering related expenses.

In Fiscal 2023, we sold an additional 355,309 shares of common stock

at average price of $4.54 per share for gross proceeds of approximately $1.6 million in the ATM Offering, prior to deducting commissions

and other offering related expenses.

As of June 30, 2023, approximately $4.1 million remained available under the ATM Offering for future

sales of our common stock.

Gibraltar Credit Facility

On July 28, 2023, we entered into

a certain Loan and Security Agreement (the “Agreement”) with Gibraltar Business Capital, LLC, a Delaware limited liability

company (“GBC”).

The Agreement provides us with a senior secured revolving loan facility (the “GBC Credit Facility”)

for up to $15 million (the “Revolving Loan Commitment”).

The revolving amount available under the GBC Credit Facility is equal

to the lesser of the Revolving Loan Commitment and the borrowing base amount (as defined in the Agreement).

The GBC Credit Facility is

evidenced by a revolving note, which matures on July 28, 2025 (the “Maturity Date”), unless extended, modified or renewed

(the “Revolving Note”).

Provided that there is no event of default, the Maturity Date can automatically be extended for one

(1) year period upon payment of a renewal fee for each such extension in the amount of three-quarters of one percent (0.75%) of the Revolving

Loan Commitment, which fee will be due and payable on or before the applicable Maturity Date.

In addition, subject to conditions and terms

set forth in the Agreement, the we may request an increase in the Revolving Loan Commitment from time to time upon not less than 30 days’

notice to GBC which increase may be made at the sole discretion of GBC, as long as:

(a) the requested increase is in a minimum amount

of $1.0 million, and (b) the total increases do not exceed $5.0 million and no more than five (5) increases are made.

Outstanding principal

under the GBC Credit Facility accrues interest at Secured Overnight Financing Rate (“SOFR”, as defined in the Agreement) plus five and one half of one percent (5.50%) per

annum with such interest payment is due monthly on the last day of the month.

In the event of default, the amounts due under the Agreement

bears interest at a rate per annum equal to three percent (3.0%) above the rate that is otherwise applicable to such amounts.

GBC a non-refundable closing fee for the GBC Credit Facility of $112,500 upon the execution of the Agreement.

In addition, the

Company is required to pay a monthly unused line fee equal to one-half of one percent (0.50%) per annum on the difference between the

Revolving Loan Commitment and the average outstanding principal balance of the revolving loan(s) for such month.

The obligations under

the GBC Credit Facility may be prepaid in whole or in part at any time upon an exit fee of (a) two percent (2.00%) of the Revolving Loan

Commitment if the obligations are paid in full during the first year after the closing date, or (b) one percent (1.00%) of the Revolving

Loan Commitment if the obligations are paid in full one year after the closing date, provided, that, the

exit fee will be waived if such prepayment occurs in connection with the refinancing of the obligations with Bank of America, N.A., as

Termination of Silicon Valley

In connection with the entry into the Agreement (as described above) and the

repayment in full of the principal amount outstanding under SVB Credit Facility together with total accrued and unpaid interest and related

fees with a portion of the funds from the GBC Credit Facility on July 28, 2023, we terminated the Loan and Security Agreement, dated as

of November 9, 2020, as amended , by and among SVB and

and Related Information

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receivable are carried at their estimated collectible amounts.

The Company has not experienced collections issues related to its accounts

receivable and has not recorded an allowance for doubtful accounts during the years ended June 30, 2022 and 2021.

The Company has not experienced issues related to the collection of

its accounts receivable and has not recorded an allowance for doubtful accounts during the fiscal years ended June 30, 2023 and

consist primarily of battery management systems and the related subcomponents and are stated at the lower of cost (first-in, first-out)

2 unchanged sentences

levels are in excess of anticipated demand at market value based on consideration of historical sales and product development plans.

The Company has no adjustment related to obsolete inventory during the years ended June 30, 2022 and 2021.

The Company recorded an adjustment related to obsolete inventory in the amount of approximately $354,000 and $111,000 during the year

ended June 30, 2023 and 2022, respectively.

Company recognizes revenue in accordance to the Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts

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Our customers do have a right to return product, but our returns have historically been minimal.

Company evaluates its exposure to product warranty obligations based on historical experience.

Our products, primarily lift equipment

packs, are warrantied for five years unless modified by a separate agreement.

As of June 30, 2022 and 2021, the Company carried warranty

liability of approximately $1,012,000 and $895,000, respectively, which is included in accrued expenses on the Company’s consolidated

balance sheets.

The Company evaluates its exposure

to product warranty obligations based on historical experience.

Our products, primarily lift equipment packs, are warrantied for five

years unless modified by a separate agreement.

As of June 30, 2023 and 2022, the Company carried warranty liability of approximately $1,600,000

and $1,012,000, respectively, which is included in accrued expenses on the Company’s consolidated balance sheets.

to the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

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of Operations

of Results of Operations of the Years ended June 30, 2022 and 2021

of Results of Operations of the Fiscal Years Ended June 30, 2023 and 2022

following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this

Annual Report.

following table represents our statement of operations for the years ended June 30, 2022 (“Fiscal 2022”) and June 30, 2021

following table represents our statement of operations for the fiscal years ended June 30, 2023 (“Fiscal 2023”) and June

30, 2022 (“Fiscal 2022”).

Ended June 30,

and administrative

and development

Year Ended June 30,

% of Revenues

Cost of sales

Operating expenses:

(15,357,000 )

Selling and administrative

Research and development

Total operating expenses

Operating loss

(15,357,000 )

income (expense):

Other income (expense):

Interest expense

$ (6,741,000 )

8 unchanged sentences

with our proprietary battery management system that can be coupled with our telemetry based “SkyBMS” product offering.

sell our products through a number of different channels including OEMs, lift equipment dealers and battery distributors as well as directly

sell our products through several different channels including OEMs, lift equipment dealers and battery distributors as well as directly

to end users, primarily in North America.

3 unchanged sentences

for Fiscal 2023 increased $24,004,000 or 57%, to $66,337,000, compared to $42,333,000 for Fiscal 2022.

The increase in revenues was due

to sales of energy storage solutions with higher average selling prices and a higher volume of

The increase in revenues included both greater sales to existing customers as well as initial sales to new customers.

increase in revenues was due to sales of energy storage solutions with higher average selling prices and a higher volume of units sold,

driven by significant increases in GSE sales.

The increase in revenues included both greater sales to existing and new Material Handling

customers as well as an increase in GSE sales.

Additionally, we further diversified our sales channels, and saw considerable volume and

price improvement in GSE sales as domestic airlines resumed operations with a reinvigorated focus on sustainably scaling their own operations

with our environmentally friendly and cost-effective solutions.

of sales for Fiscal 2023 increased $14,203,000 or 41%, to $49,237,000, compared to $35,034,000 for Fiscal 2022.

increase in cost of sales was directly associated with higher sales of energy storage solutions, as well as increased costs of steel,

electronic parts, and common off the shelf parts chiefly as a result of the supply chain interruptions.

Cost of sales as a percentage

of revenues for Fiscal 2022 was 83%, an increase of 5 percentage points over 78% for the Fiscal 2021.

increase in cost of sales was directly associated with higher sales of energy storage solutions, partially offset by lower average cost

of sales per unit achieved during the current year as a result of our gross margin improvement initiatives, including design enhancements

to lower cost, improve serviceability, simplify bill of materials and supply chain initiatives to improve inventory turns and create

part commonality across multiple product line.

Cost of sales as a percentage of revenues for Fiscal 2023 was 74%, a decrease of

9 percentage points, compared to 83% for the Fiscal 2022.

profit for Fiscal 2023 increased $9,801,000 or 134%, to $17,100,000, compared to $7,299,000 for the Fiscal 2022.

gross profit margin (gross profit as a percent of revenues) decreased to 17% for Fiscal 2022 compared to 22% for Fiscal 2021.

Gross profit was negatively impacted by higher costs for steel, electronic parts, and common off

the shelf parts during Fiscal 2022, partially offset by higher revenues associated with increased sales of energy storage solutions.

gross profit margin (gross profit expressed as a percentage of revenues) increased to 26% for Fiscal 2023 compared to 17% for

Gross profit improved by 9 percentage points as a result of a higher volume of

units sold with a higher selling price and lower cost of sales as a result of the gross margin improvement initiatives as noted

and Administrative

and administrative expenses for Fiscal 2023 increased $2,105,000 or 14%, to $17,620,000, compared to $15,515,000 for Fiscal 2022.

increase was primarily attributable to increases in personnel expenses related to new hires and temporary labor of approximately $1,400,000,

outbound shipping costs of $248,000, insurance premiums of $440,000, marketing expenses of $273,000, depreciation expense of $301,000,

travel expenses of $153,000, facility related expenses of $131,000, bad debt expense of $76,000, and total other administrative operating

expenses of $218,000, partially offset by decreases in stock-based compensation of $49,000 and accounting and legal expenses of $226,000.

increase was primarily attributable to increases in personnel expenses related to new hires and temporary labor, severance expenses incurred,

and recruiting costs, and increases in depreciation expense, outbound shipping costs, insurance premiums, travel expenses, marketing

expenses, and facilities related costs, partially offset by decreases in commissions, bad debt expenses, consulting fees, public relations

expenses, and stock-based compensation.

and Development

and development expenses for Fiscal 2022 increased $472,000 or 7%, to $7,141,000, compared to $6,669,000 for Fiscal 2021.

Such expenses

consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting, and other expenses

associated with revisions to existing product designs and new product development.

The increase in research and development expenses

was primarily due to expenses related to development of new products and UL certifications of approximately

$233,000, higher personnel expenses related to new hires and temporary labor of $204,000, travel expenses of $15,000, and facility related

expenses of $58,000, partially offset by a decrease in stock-based compensation of $33,000.

income for Fiscal 2021 represented the forgiveness of the entire PPP Loan of approximately $1,297,000 in principal, together with all

accrued interest of approximately $10,000.

The Small Business Administration notified us that our loan and accrued interest had been

forgiven on February 9, 2021.

expense for Fiscal 2022 decreased $370,000 or 59%, to $252,000, compared to $622,000 for Fiscal 2021.

Interest expense was primarily

related to our outstanding lines of credit and convertible promissory note.

Also included in interest expense during Fiscal 2021 was

additional interest expense of approximately $174,000 representing the amortization of debt discount related to Cleveland Loan that was

paid off during Fiscal 2021.

loss during Fiscal 2022 increased $2,816,000 or 22%, to $15,609,000 compared to $12,793,000 for Fiscal 2021.

higher net loss for Fiscal 2022 was primarily attributable to increased operating expenses, and decreased other income, partially offset

by an increase in gross profit and a decrease in interest expense.

and development expenses for Fiscal 2023 decreased $2,251,000 or 32%, to $4,890,000, compared to $7,141,000 for Fiscal 2022.

expenses consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting, and other

expenses associated with revisions to existing product designs and new product development.

The decrease in research and development

expenses was primarily due to lower staff related expenses and expenses related to development of new products.

expense for Fiscal 2023 increased $1,087,000 or 431%, to $1,339,000, compared to $252,000 for Fiscal 2022.

increase in interest expense was due to higher average balances outstanding of our SVB Credit

Facility and higher interest rates, as well as recording of approximately $482,000 of debt issuance costs amortization

related to our existing lines of credit.

loss during Fiscal 2023 decreased $8,868,000 or 57%, to $6,741,000 compared to $15,609,000 for Fiscal 2022.

lower net loss for Fiscal 2023 was primarily attributable to increased gross profit, partially offset by increased operating

expenses and higher interest expense.

EBITDA is a non-GAAP financial measure.

9 unchanged sentences

the operating performance of our company and our management team.

Adjusted EBITDA is a non-GAAP financial measure, it should not be construed as a substitute for Net income (loss) (as determined in accordance

with GAAP) for the purpose of analyzing our operating performance or financial position.

Adjusted EBITDA is a non-GAAP financial measure, it should not be construed as superior to or a substitute for Net income (loss) (as

determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position.

reconciliation of our Adjusted EBITDA to Net loss is included in the table below:

Ended June 30,

$ (15,609,000 )

Years Ended June 30,

$ (6,741,000 )

tax provision

and amortization

$ (15,609,000 )

Interest, net

Income tax provision

Depreciation and amortization

(14,782,000 )

Stock-based compensation

Adjusted EBITDA

$ (3,705,000 )

1 unchanged sentence

and Capital Resources

of June 30, 2022, we had a cash balance of $485,000 and an accumulated deficit of $81,814,000.

For the year ended June 30, 2022, we had

negative cash flow of $23.9 million.

As of June 30, 2023, we

had a cash balance of $2.4 million and an accumulated deficit of $88.6 million.

For the year ended June 30, 2023, we had negative

cash from operations of $3.6 million.

Historically our business has not generated sufficient cash to fund our operations.

However, based

ability to recognize revenue from our existing backlog we anticipate increased revenues along with the planned improvements in our gross

margin over the next twelve (12) months.

Our planned gross margin improvement tasks include, but is not limited to, a plan to drive bill

of material costs down while increasing price of our products for new orders.

have received new orders in fiscal year ended June 30, 2022, of approximately $65 million and believe through conversations with our

customers that our anticipation of continued new order increases is probable.

believe that our existing cash, together with $3.2 million that currently remains available under our $8.0 million revolving line of

credit with Silicon Valley Bank (“SVB Credit Facility”), and $4.0 million available

under the subordinated line of credit (“Subordinated LOC”) as of September 12, 2022, will be sufficient to meet our anticipated

capital resources to fund planned operations for the next twelve (12) months.

based on our existing backlog and customer orders, we anticipate increased revenues, together with the planned improvements in our gross

margin, will move us closer to profitability.

Our planned gross margin improvement tasks include, but are not limited to, a plan to drive

bill of material costs down while increasing price of our products for new orders.

We have received new orders in Fiscal 2023, of approximately $59.9 million and believe through conversations with our customers that our anticipation of

continued increase of new orders is reasonable.

We believe that our existing cash, together with $4.0 million that currently

remains available under our $15.0 million revolving line of credit with Gibraltar Business Capital

(“GBC Credit Facility”), and $4.0 million available under the subordinated line of credit (“Subordinated LOC”)

as of September 8 , 2023, will be sufficient to meet our anticipated capital resources to fund planned operations for the next twelve

See “Future Liquidity Needs” below.

Ended June 30,

cash used in operating activities

Year Ended June 30,

Net cash used in operating activities

$ (3,574,000 )

$ (23,893,000 )

cash used in investing activities

cash provided by financing activities

change in cash

Net cash used in investing activities

Net cash provided by financing activities

Net change in cash

$ (4,228,000 )

cash used in operating activities was $23,893,000 for Fiscal 2022, compared to net cash used in operating activities of $18,358,000 for

The primary usages of cash for the Fiscal 2022 were the net loss of $15,609,000 and

increases in accounts receivable, inventory, and other assets, and decreases in accounts payable, accrued expenses and office lease payable,

that were partially offset by increases in customer deposits, deferred revenue and non-cash operating costs.

Net cash used in operating activities was $3,574,000 for Fiscal 2023, compared

to net cash used in operating activities of $23,893,000 for Fiscal 2022.

The primary usages of cash

for the Fiscal 2021 were the net loss of $12,793,000, increases in accounts receivable, inventory, and other assets, and decreases in

customer deposits, amount due to factoring facility, accrued interest, and office lease payable, that were partially offset by increases

in accounts payable, accrued expenses, deferred revenue, and non-cash operating costs.

cash used in investing activities for Fiscal 2022 was $797,000 and consisted primarily of the costs of internally developed software,

purchase of furniture and office equipment, and warehouse equipment.

cash used in investing activities for Fiscal 2021 was $1,102,000 and consisted primarily of the costs of internally developed software,

and purchases of furniture and office equipment, computer software, and warehouse equipment.

for the Fiscal 2023 were the net loss of $6,741,000 and increases in inventory, office lease payable, customer deposits, and other assets,

that were partially offset by non-cash operating costs, and increases in accounts payable and accrued expenses.

The primary usages of

cash for the Fiscal 2022 were the net loss of $15,609,000, increases in accounts receivable, inventory, and other assets, and decreases

in accounts payable, accrued expenses and office lease payable, that were partially offset by increases in customer deposits, deferred

revenue and non-cash operating costs.

Net cash used in investing activities for Fiscal 2023 was $1,024,000 and

consisted primarily of the costs of purchase of furniture and office equipment, warehouse equipment and other related costs.

Net cash used in investing activities for Fiscal 2022 was $797,000 and

consisted primarily of the costs of purchases of furniture and office equipment, computer software, warehouse equipment and other related

Net cash provided by financing activities was $6,492,000 for Fiscal 2023, which primarily consisted of $5,023,000

in net borrowings under the SVB Credit Facility, and $1,556,000 in net proceeds from sales of common stock under our

ATM offering.

cash provided by financing activities was $20,462,000 for Fiscal 2022, and primarily consisted of $13,971,000 in net proceeds from the

issuance of common stock in the registered offering completed in September 2021, $4,889,000 in net borrowings under the SVB Credit Facility,

issuance of common stock in a registered offering completed in September 2021, $4,889,000 in net borrowings under the SVB Credit Facility,

and $1,602,000 in net proceeds from sales of common stock under our ATM Offering.

cash provided by financing activities was $23,447,000 for the Fiscal 2021, and primarily consisted of $10,698,000 in net proceeds from

issuances of common stock in the public offering completed in August 2020, $3,200,000 from a private placement completed in July 2021,

$12,102,000 in net proceeds from sales of common stock under our ATM Offering, and $55,000 proceeds from stock option and warrant exercises,

which were partially offset by $2,580,000 in payments of outstanding related party borrowings, and $28,000 in payment of financing lease

Liquidity Needs

have evaluated our expected cash requirements over the next twelve (12) months, which include, but are not limited to, investments in

additional sales and marketing and research and development, capital expenditures, and working capital requirements.

We believe that

our existing cash and additional funding available under our SVB Credit Facility, combined with funds available to us under our Subordinated

LOC of up to $4.0 million will be sufficient to meet our anticipated capital resources to fund planned operations for the next twelve

As of September 12, 2022, $3.2 million remained available under the SVB Credit Facility and $4.0 million was available for

future draws under the Subordinated LOC.

In addition, to support our operations and anticipated growth, we intend to continue our efforts

to secure additional capital from a variety of current and new sources including, but not limited to, sales of our equity securities.

We also continue to execute our cost reduction, sourcing, pricing recovery initiatives in efforts to increase our gross margins and improve

cash flow from operations.

management believes that our existing cash and the additional funding sources currently available to us under the lines of credit are

sufficient to fund planned operations, our ability to draw funds from the line of credit are subject to certain restrictions and covenants.

If we are unable to meet the conditions provided in the loan documents, the funds will not be available to us.

In addition, should there

be any delays in the receipts of key component parts, due in part to supply change disruptions, our ability to fulfil the backlog of

sales orders will be negatively impacted resulting in lower availability of cash resources from operations.

In that event, we may be

required to raise additional funds by issuing equity or convertible debt securities.

If such funds are not available when required, management

will be required to curtail investments in additional sales and marketing and product development, which may have a material adverse

effect on future cash flows and results of operations.

In addition, any,

unforeseen factors in the general economy beyond management’s control could potentially have negative impact on the planned gross

margin improvement plan.

have evaluated our expected cash requirements over the next twelve (12) months, which include, but are not limited to, investments

in additional sales and marketing and research and development, capital expenditures, and working capital requirements.

September 8, 2023, we believe that our existing cash of $1.8 million, cash from our future operations, funding available under our

$15.0 million GBC Credit Facility, under which $4.0 million is currently available, funds available under our Subordinated LOC of up

to $4.0 million, along with the forecasted improvement in the gross margin will enable us to fund our planned operations for at

least the next twelve (12) months.

As of September 8, 2023, $4.1 million remained available under our existing ATM Offering that

may be utilized subject to the volume of trading of our shares, the price of our stock, market conditions, and effectiveness of the

registration statement.

In addition, to support our operations and anticipated growth, we intend to continue to explore alternatives

to secure additional capital from a variety of current and new sources including, but not limited to, sales of our equity

We also continue to execute our cost reduction, sourcing, and pricing recovery initiatives in efforts to increase our

gross margin and improve cash flow from operations.

Although management believes that our existing cash and the additional

funding sources currently available to us under the lines of credit are sufficient to fund planned operations for the next twelve (12)

months, this is dependent our ability to successfully maintain and draw on our credit facilities.

Our ability to draw funds from the GBC

Credit Facility are subject to certain restrictions and covenants.

In addition, should there be any delays in the receipts of key component

parts, due in part to supply chain disruptions, our ability to fulfill the backlog of sales orders will be negatively impacted resulting

in lower availability of cash resources from operations.

In that event, we may be required to raise additional funds by issuing equity

or convertible debt securities.

If such funds are not available when required, management will be required to curtail investments in additional

sales and marketing and product development, which may have a material adverse effect on future cash flows and results of operations.

In addition, any unforeseen factors in the general economy beyond management’s control could potentially have negative impact on

the planned gross margin improvement plan.

the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis

9 unchanged sentences

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What changed 10-K

Item 7. Management’s Discussion and Analysis