What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-12-16 compared with 2021-12-16 · 244 added, 232 removed, 111 unchanged (81% of the section changed)

Forward Industries, Inc.

(“Forward”, “we”, “our” or the “Company”), through its wholly-owned subsidiaries, Forward

Industries (IN), Inc.

(“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries

UK Limited (“Forward UK”), Intelligent Product Solutions, Inc.

“we”, “our” or the “Company”), through its wholly-owned subsidiaries, Forward Industries (IN), Inc.

(“Forward US”), Forward Industries (Switzerland) GmbH (“Forward Switzerland”), Forward Industries UK Limited (“Forward

UK”), Intelligent Product Solutions, Inc.

(“IPS”), and Kablooe, Inc.

is a fully integrated design, development and manufacturing solution provider for top tier medical and technology customers worldwide.

We have expanded our ability to design and develop solutions for our existing multinational client base and expand beyond the diabetic

product line into a variety of industries with a full spectrum of hardware and software product design and engineering services.

In addition to our existing design and distribution of carry and protective solutions, primarily for handheld electronic devices, we are

now a one-stop shop for design, development and manufacturing solutions serving a wide range of clients in the industrial, commercial

and consumer industries.

We are now able to introduce proprietary products to the market from concepts brought to us from a number of

different sources, both inside and outside the Company.

(“Kablooe”), is a global design, manufacturing,

sourcing and distribution group serving top tier medical and technology customers worldwide.

As a result of the continued expansion of

our design development capabilities through our wholly-owned subsidiaries, IPS and Kablooe, we are able to introduce proprietary products

to the market from concepts brought to us from a number of different sources, both inside and outside the Company.

The principal customer market

in our distribution line of business has been original equipment manufacturers (“OEMs”) or the contract manufacturing firms

of these OEM customers, that either package our products as accessories “in box” together with their branded product offerings

in our original equipment manufacturer (“OEM”) distribution business has been OEMs or the contract manufacturing firms of

these OEM customers, that either package our products as accessories “in box” together with their branded product offerings

or sell them through their retail distribution channels.

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and diagnostic kits and a variety of other portable electronic and non-electronic products such as sporting and recreational products,

bar code scanners, smartphones, GPS location devices, tablets and firearms.

Our OEM customers are located in the Asia-Pacific region,

which we refer to as the “APAC Region”, Europe, the Middle East, and Africa, which we refer to as the “EMEA Region”

and the geographic area encompassing North America, Central America and South America, which we refer to as the “Americas”.

In 2019, we invested in and

began to build out a retail distribution network responsible for getting various products into big box retailers for retail consumption.

This build out is a continuation of our strategy to be a one-stop shop for product development, manufacture and distribution solutions

and represents a significant achievement in completing the strategic process of taking a product from concept to the consumer.

of these products has been delayed by COVID-19 as discussed below.

Our retail customers are generally located in the Americas.

As we continued

to expand our retail distribution network in 2020 and 2021, we have been able to sell a variety of products through retailers such as

Best Buy, Wayfair, Walmart, Costco, and Amazon.

The manufacturer representative model allows us to engage and support a large sales team

and cover a larger territory with a variable cost model as these representatives work on commission only.

We do not manufacture any

of our products and source substantially all our products from independent suppliers in China through Forward Industries Asia-Pacific

Corporation, a British Virgin Islands corporation (“Forward China”).

Forward China is owned by the Company’s Chairman

and Chief Executive Officer.

The sale and distribution of products to OEM and retail customers is referred to in this report as our “distribution”

line of business.

We use the term “design” or “design and development” to describe the IPS and Kablooe engineering

services line of business.

bar code scanners, GPS location devices, tablets and firearms.

Our OEM customers are located in various regions worldwide.

Our retail distribution business,

which we began in 2019, sources and sells smart-enabled furniture, hot tubs and a variety of other products through various online retailer

websites to customers predominantly located in the U.S.

The rollout of many of these products was delayed by COVID-19 as discussed below.

As we expanded our retail distribution network, we have been able to sell a variety of products through retailers such as Best Buy, Wayfair,

Walmart, Costco, and Amazon.

The manufacturer representative model allows us to engage and support a large sales team and cover a larger

territory with a variable cost model as these representatives work on commission only.

We do not manufacture any of

our OEM or retail distribution products and source substantially all these products from independent suppliers in China through Forward

Industries Asia-Pacific Corporation, a British Virgin Islands corporation (“Forward China”).

Forward China is owned by our

Chairman and Chief Executive Officer.

Our design business provides

a full spectrum of hardware and software product design and engineering services to customers predominantly located in the U.S.

Our expertise

in various disciplines enables us to serve a wide variety of industries and provide clients with a single source solution for concepts,

industrial design, mechanical engineering, embedded software and systems architecture, mobile and enterprise application software, and

optical engineering.

The outbreak of the COVID-19

virus continues to impact our results of operations.

While the most significant impact was in Fiscal 2020, the virus continued to impact

our results of operations in Fiscal 2021.

The business shutdowns resulting from the pandemic disrupted our supply chain and the manufacture

or shipment of our products and delayed the rollout of our retail products.

Additionally, demand for our design and development services

was reduced or delayed as a result of the pandemic as certain customers reduced discretionary spending.

While revenues for Fiscal 2021

increased as compared to Fiscal 2020, they were lower than anticipated due in part to the impact of COVID-19 and the resulting economic

The impact of lower than anticipated revenue was further complicated by a significant increase in freight costs due to the

global shipping container shortage.

These challenges were partially offset by a reduction in certain selling and travel related expenses.

Many government restrictions

have been relaxed and the economy has continued to open in more jurisdictions.

However, the emergence of new and transmittable variants

of COVID-19 could lead to a possible resurgence of the virus, particularly in populations with low vaccination rates, and has resulted

in new restrictions in certain geographies and among certain businesses.

The long-term financial impact on our business cannot be reasonably

estimated at this time.

As a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods.

Refer to “Part I, Item 1A — Risk Factors” for a description of the material risks that we currently face in connection

with COVID-19.

Until the pandemic is fully

controlled, we expect business conditions to remain challenging.

In response to these challenges, we will continue to focus on those

factors that we can control:

closely managing and controlling our expenses;

aligning our design and development schedules with demand

in a proactive manner as there are changes in market conditions to minimize our cash operating costs;

pursuing further improvements in

the productivity and effectiveness of our development, selling and administrative activities and, where appropriate, taking advantage

of opportunities to enhance our business growth and strategy.

To help mitigate the impact of these challenging business conditions, we

implemented cost-cutting initiatives and reduced executive pay and Board of Directors compensation for the three months ended June 30,

See “Liquidity and Capital Resources” section of Part II, Item 7 “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” for further description of these cost-cutting measures.

virus had a significant impact on our business.

In Fiscal 2020, the business shutdowns resulting from the pandemic disrupted our supply

chain and the manufacture and shipment of our OEM products and delayed the rollout of our retail products.

Demand for our design and development

services was reduced or delayed because of the pandemic as certain customers reduced discretionary spending.

In Fiscal 2021, the economy

began to open across the world, and consumer demand grew much faster than manufacturers could satisfy, leading to extensive shipping delays,

a global shipping container shortage and higher ocean freight costs.

This continued to reduce the availability of many of our products

and increased their cost of importation.

The increase in consumer demand continued in Fiscal 2022, which dramatically increased demand

for ocean freight, particularly from the Asia-Pacific region.

Labor shortages at U.S.

ports and in ground transportation services caused

container ships to spend a significant amount of time waiting to be unloaded and to arrive at our warehouses, which caused an increase

in the demand for and cost of ground transportation.

These factors resulted in further cost increases and delayed consumer availability

for many of our products.

The impact of inflation in Fiscal 2022 caused an increase in the cost of acquiring and retaining employees in

our design business.

The effects of COVID-19 may further

impact our business in ways we cannot predict, and such impacts could be significant.

The current economic conditions may continue to

negatively impact our results of operations, cash flows and financial position in future periods as well as that of our customers, including

their ability to pay for our products and services and to choose to allocate their budgets to new or existing projects which may or may

not require our products and services.

The long-term financial impact on our business cannot be reasonably estimated at this time.

a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods.

Until the effects of the pandemic

have fully receded, we expect business conditions to remain challenging.

In response to these challenges, we will continue to focus

on those factors that we can control:

closely managing and controlling our expenses and inventory levels;

aligning our design and development

schedules with demand in a proactive manner to minimize our cash operating costs;

pursuing further improvements in the productivity and

effectiveness of our development, selling and administrative activities and, where appropriate, taking advantage of opportunities to enhance

our business growth and strategy.

Corporate History

Forward was incorporated

in 1961 as a manufacturer and distributer of advertising specialty and promotional products.

In 1989, we acquired Forward US, a manufacturer

of soft-sided carrying cases.

Forward was incorporated in 1961

as a manufacturer and distributer of advertising specialty and promotional products.

In 1989, we acquired Forward US, a manufacturer of

soft-sided carrying cases.

The carrying case business became our predominant business, and in September 1997, we sold the assets relating

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Forward Switzerland was significantly reduced and in recent years has primarily served our OEM customers in Europe.

In January 2018, Forward

acquired IPS, an engineering design company, and in August 2020, Forward acquired the assets of Kablooe Design, a medical and consumer

design and development company.

We believe that the design and engineering service capabilities of Kablooe will complement the IPS business

and further diversify the industries and customers with which we do business.

In January 2018, Forward acquired

IPS, an engineering design company, and in August 2020, Forward acquired the assets of Kablooe Design, a medical and consumer design and

development company.

We believe that the design and engineering service capabilities of Kablooe will complement the IPS business and further

diversify the industries and customers with which we do business.

Our OEM distribution customers

are located in the APAC Region, the EMEA Region and the Americas.

Our retail distribution customers are predominantly located in the Americas.

are located in all geographic regions worldwide.

Our retail distribution customers are predominantly located in the U.S.

Our design business provides

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Our design customers

are located primarily in the Americas.

are located primarily in the U.S.

Our products include carrying

cases and other accessories for medical monitoring and diagnostic kits and a variety of other portable electronic and non-electronic products

(such as sporting and recreational products, bar code scanners, smartphones, GPS location devices, tablets, and firearms).

In Fiscal 2020

and 2021, our products also include smart-enabled furniture and a variety of other products sold through our retail distribution network.

We do not manufacture any of our products and we source substantially all our products from independent suppliers in China through Forward

China, a related party (see Note 14 to the consolidated financial statements).

(such as sporting and recreational products, bar code scanners, GPS location devices, tablets, and firearms).

Our products also include

smart-enabled furniture, hot tubs and a variety of other products sold through our retail distribution network.

We do not manufacture

any of our products and we source substantially all our products from independent suppliers in China through Forward China, a related

party (see Note 13 to the consolidated financial statements).

Diabetic Products

We sell carrying cases for

blood glucose diagnostic kits (“Diabetic Products”) directly to OEM customers, or their contract manufacturers.

These electronic

monitoring kits are made for use by diabetics.

The diabetic products customer (or its contract manufacturer) packages our carry cases

“in box” as a custom accessory for the customer’s blood glucose testing and monitoring kits, or to a much lesser extent,

sells them through their retail distribution channels.

These kits typically include a small, electronic blood glucose monitor, testing

strips, lancets for drawing a drop of blood and our carrying case, customized with the manufacturer’s logo and designed to fit and

secure the glucose monitor, testing strips, and lancets in separate straps, pouches, and holders.

As the kits and technology change, our

carrying case designs change to accommodate the changes in size, shape and layout of the electronic monitoring device, strips and lancet.

We sell carrying cases for blood

glucose diagnostic kits directly to OEM customers, or their contract manufacturers.

These electronic monitoring kits are made for use

by diabetics.

The diabetic products customer (or its contract manufacturer) packages our carry cases “in box” as a custom

accessory for the customer’s blood glucose testing and monitoring kits, or to a much lesser extent, sells them through their retail

distribution channels.

These kits typically include a small, electronic blood glucose monitor, testing strips, lancets for drawing a drop

of blood and our carrying case, customized with the manufacturer’s logo and designed to fit and secure the glucose monitor, testing

strips, and lancets in separate straps, pouches, and holders.

As the kits and technology change, our carrying case designs change to accommodate

the changes in size, shape and layout of the electronic monitoring device, strips and lancet.

Other Products

We also sell carrying and

protective solutions to customers for a diverse array of other portable electronic and other products, including sporting and recreational

products, bar code scanners, smartphones, GPS and location devices, tablets, and firearms, on a made-to-order basis that are customized

to fit the products sold by our customers.

Our selling prices for these products also vary across a broad range, depending on the size

and nature of the product for which we design and sell the carry solution.

We also sell carrying and protective

solutions to customers for a diverse array of other portable electronic and other products, including sporting and recreational products,

bar code scanners, GPS location devices, tablets, and firearms, on a made-to-order basis that are customized to fit the products sold

by our customers.

Our selling prices for these products vary across a broad range, depending on the size and nature of the product for

which we design and sell the carry solution.

Retail Products

In Fiscal 2020, as a result

of the build out and growth of our retail distribution network, we began selling smart-enabled products, such as speakers and lamps that

In Fiscal 2020, as a result of

the build out and growth of our retail distribution network, we began selling smart-enabled products, such as speakers and lamps that

provide lighting and sound with Bluetooth® connectivity.

In Fiscal 2021, we expanded our retail product offerings to include additional

smart-enabled furniture, such as desks and side tables, as well as hot tubs and various other products.

In Fiscal 2021, we began expanding our retail product offerings to include

additional smart-enabled furniture, such as desks and side tables, as well as hot tubs and various other products that are sold through

retailer websites.

Our design business provides

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and computer-aided design files.

As a combined company, we are able to provide manufacturing sourcing and final product support and delivery

services for initial short-run, low volume products.

Product Development

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sale through its retail distribution channels.

In the retail division, we

work with various retailers to understand their product requirements and utilize our sourcing resources to obtain products.

Additionally,

we have a portfolio of retail products that we share with retailers to gauge the level of consumer interest.

Services offered for each

engagement vary from full development utilizing a wide range of in-house design and engineering functions, to targeted design and engineering

In the retail division, we work

with various retailers to understand their product requirements and specifications and consumer demand and utilize our sourcing resources

to obtain products that meet these needs.

Additionally, we have a portfolio of retail products that we share with retailers to gauge the

level of consumer interest.

We receive design and marketing services for some retail products from The Justwise Group Ltd., a company

owned by Terence Wise, our Chairman, Chief Executive Officer and largest shareholder.

Services offered in our design

business vary from full development utilizing a wide range of in-house design and engineering functions, to targeted design and engineering

support for clients with in-house development teams.

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Channels of Distribution

We primarily ship our OEM

distribution products directly to our customers (or their contract manufacturers), who package our accessory products “in box”

with their branded products.

Some of our customers also purchase certain of our products and offer them for sale as stand-alone accessories

to complement their product offerings.

We primarily ship our OEM distribution

products directly to our customers (or their contract manufacturers), who package our accessory products “in box” with their

branded products.

Some of our customers also purchase certain of our products and offer them for sale as stand-alone accessories to complement

their product offerings.

We primarily ship our retail

distribution products directly to customers from one of our distribution centers located in the U.S.

We may also ship certain retail products

directly to some larger retailers.

We continue to invest in and build out a distribution network for retail products as we expect this

part of our business to grow in the future.

The retail distribution network is responsible for placing products with major retailers for

consumption both in store and online.

distribution products directly to end customers from distribution centers located in the U.S.

We may also ship certain retail

products directly to some larger retailers.

We continue to evaluate our strategy for the retail distribution business in an effort to

increase profitability and match our product offerings with consumer demand.

Distribution Hubs for Customers

We have arrangements with

certain customers’ distribution hubs.

These arrangements obligate us to supply our products to our customers’ distribution

hubs where their products are manufactured, kitted, and/or warehoused pending sale, and where our products are packaged “in box”

with the distribution customers’ products.

The product quantities we are required to supply to each distribution hub are based on

the distribution customer’s purchase orders and forecasts.

We do not recognize revenue for product shipped to a customer’s

hub until we have been notified by our customer that our product has been withdrawn or used by the distribution hub.

Hub arrangements

have had the general effect of providing financing for our customers’ inventory purchases by extending the time between our placement

of orders to our suppliers in order to ship and supply the hubs and the time that we are able to recognize revenue.

The corollary effect

is an increase in our inventory levels.

Third-Party Warehouses

We also have arrangements

with third-party warehouses in the U.S.

to store, manage and ship our retail products.

We do not recognize revenue for retail products

shipped to any of these warehouses until the product has been shipped to the end-user customer.

We have arrangements with certain

customers’ distribution hubs.

These arrangements obligate us to supply our products to our customers’ distribution hubs where

their products are manufactured, kitted, and/or warehoused pending sale, and where our products are packaged “in box” with

the distribution customers’ products.

The product quantities we are required to supply to each distribution hub are based on the

distribution customer’s purchase orders and forecasts.

We do not recognize revenue for product shipped to a customer’s hub

until we have been notified by our customer that our product has been used by the distribution hub.

Hub arrangements have had the general

effect of providing financing for our customers’ inventory purchases by extending the time between our placement of orders to our

suppliers and the time that we are able to recognize revenue.

The corollary effect is an increase in our inventory levels.

Third-Party and Consignment Warehouses

We also have arrangements with

third-party warehouses and consignment warehouses of major retailers in the U.S.

and Canada to store, manage and ship our retail products.

We do not recognize revenue for retail products shipped to any of these warehouses until the product has been shipped to the end customer

and our performance obligation is complete.

Product Supply

Manufacturing

The manufacture of custom

carrying cases and other carry and protective solutions generally consists of die cutting fabrics and heat sealing, gluing, sewing, and

affixing logos to the cut-outs by means of silk screening, hot-stamping, embroidering or embossing.

The principal materials used in the

manufacture of our products are vinyl, nylon, leather, metal and plastic parts (for clips, buckles, loops, hinges and other hardware),

foam padding and cardboard, all of which are obtained from suppliers based on our specifications.

The manufacture of smart

furniture consists of laser cutting, punching, welding and powder coating the various parts and finished product, including lamination,

board cutting and drilling for certain products.

The main materials used include particle board, engineered wood composite, tempered glass

The manufacture of custom carrying

cases and other carry and protective solutions generally consists of die cutting fabrics and heat sealing, gluing, sewing, and affixing

logos to the cut-outs by means of silk screening, hot-stamping, embroidering or embossing.

The principal materials used in the manufacture

of our products are vinyl, nylon, leather, metal and plastic parts (for clips, buckles, loops, hinges and other hardware), foam padding

and cardboard, all of which are obtained from suppliers based on our specifications.

The manufacture of smart furniture

consists of laser cutting, punching, welding and powder coating the various parts and finished product, including lamination, board cutting

and drilling for certain products.

The main materials used include particle board, engineered wood composite, tempered glass and metal.

The manufacture of certain other retail products includes mold creation and assembly and uses various plastics and light components.

We do not believe that any

of the component materials or parts used in the manufacture of our products are supply constrained.

We believe that there are adequate

available alternative sources of supply for all of the materials used to manufacture, package, and ship our products.

We do not believe that any of

the component materials or parts used in the manufacture of our products are supply constrained.

We believe that there are adequate available

alternative sources of supply for all of the materials used to manufacture, package, and ship our products.

Dependence on Sourcing Agent

We have a Buying Agency and

Supply Agreement (the “Supply Agreement”) with Forward China.

The Supply Agreement provides that Forward China acts as our

exclusive buying agent for the products we sell.

We have a Buying Agency and Supply

Agreement (the “Supply Agreement”) with Forward China.

The Supply Agreement provides that Forward China acts as our exclusive

buying agent for the products we sell.

Forward China also arranges for sourcing, manufacture and exportation of such products.

We purchase products at Forward China’s cost and pay them a service fee calculated at $100,000 monthly plus 4% of “Adjusted

Gross Profit”, which is defined as the selling price less the cost from Forward China.

The Supply Agreement has been extended to

October 22, 2023.

Terence Wise, our Chairman, Chief Executive Officer and largest shareholder, is the owner of Forward China.

– Risk Factors” regarding our dependence on Forward China.

We procure substantially

all our distribution OEM and distribution products from independent suppliers in China through Forward China.

Depending on the product,

we may require several different suppliers to furnish component parts or pieces.

We place orders for particular products and do not have

minimum supply requirement agreements to guarantee a supply of finished product, nor have we made purchase commitments to purchase minimum

However, from time to time, we may order products in advance of receiving a customer purchase order, or in quantities in excess

of those forecasted to us by our customer, for which they are contractually obligated to us, in order to meet our customers’ anticipated

products at Forward China’s cost and pay them a monthly service fee calculated at $100,000 plus 4% of “Adjusted Gross Profit”,

which is defined as the selling price less the cost from Forward China.

The Supply Agreement has been extended to October 22, 2023.

Wise, our Chairman, Chief Executive Officer and largest shareholder, is the owner of Forward China.

See “Item 1A.

– Risk Factors”

regarding our dependence on Forward China.

We procure substantially all

our OEM and retail distribution products from independent suppliers in China through Forward China.

Depending on the product, we may require

several different suppliers to furnish component parts or pieces.

We place orders for particular products and do not have minimum supply

requirement agreements to guarantee a supply of finished product, nor have we made purchase commitments to purchase minimum amounts.

from time to time, we may order certain OEM products in advance of receiving a customer purchase order, or in quantities in excess of

those forecasted to us by our customer, for which they are contractually obligated to us, in order to meet our customers’ anticipated

delivery demands.

There are very few

suppliers required for the design segment of the business as it is a service-based business.

We do, however, purchase supplies and

equipment to develop prototypes required or “mock-ups” for design and development projects.

Design business suppliers

are predominantly based in the United States.

There are very few suppliers

required for the design segment of the business as it is a service-based business.

We do, however, purchase supplies and equipment to

develop prototypes or “mock-ups” for design and development projects.

Design business suppliers are predominantly based in

the United States.

Quality Assurance

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manager oversees the process to ensure that our distribution products manufactured in China meet our quality assurance standards.

He independently

verifies and supervises the inspection of products provided by independent contractors in China.

In July 2015, Forward China received

its ISO 9001:2008 quality certification, which was renewed and is valid until July 2024.

Our design business follows

general industry standard practices for review and corrective actions related to its design services.

There are no independent quality

assurance standards in place for its design and engineering work.

Customer specifications and scope of services are laid out in the project

contracts and we work closely with the customer to identify and correct any quality issues that arise.

quality assurance manager independently verifies and supervises the inspection of products provided by independent contractors in China.

In July 2015, Forward China received its ISO 9001:2008 quality certification, which was renewed and is valid until July 2024.

Our design business follows general

industry standard practices for review and corrective actions related to its design services.

There are no independent quality assurance

standards in place for its design and engineering work.

Customer specifications and scope of services are laid out in the project contracts

and we work closely with the customer to identify and correct any quality issues that arise.

Distribution Business

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is enhanced by Forward China’s local presence, quality control, shipment capabilities and expertise in sourcing.

Design and Engineering Business

The depth and breadth of

the services offered and industries served by our design segment are unique.

Our management team is aware that there are very few competitive

firms that have the full set of capabilities that our design segment has under one roof.

Design Business

The depth and breadth of services

offered and industries served by our design segment are unique.

Our management team is aware that there are very few competitive firms

that have the full set of capabilities that our design segment has under one roof.

There are, however, numerous design and engineering

companies that compete with us in specific industries and/or with specific targeted skills or competitive advantages.

companies that compete with us in specific industries and/or with specific targeted skills or have competitive advantages.

Human Capital/Employees

Our key human capital management

objectives are to attract, retain and develop the highest quality talent.

To support these objectives, our human resources programs are

· develop talent to prepare them for

critical roles and leadership positions for the future;

· reward and support employees through

competitive pay and benefits;

· enhance our culture through efforts

aimed at making the workplace more engaging and inclusive;

· acquire talent and facilitate internal

talent mobility to create a high-performing and diverse workforce.

None of our employees are

covered by a collective bargaining agreement.

As of November 30, 2021, we employed approximately 90 employees.

We hire consultants on

an as-needed basis.

As of November 30, 2022, we had approximately

100 employees, substantially all of whom work full-time, none of which are covered by a collective bargaining agreement.

We hire consultants

on an as-needed basis.

Human capital management is critical

to our ongoing business success, which requires investing in our people.

Our aim is to create a highly engaged and motivated workforce

where employees are inspired by leadership, engaged in purpose-driven, meaningful work and have opportunities for growth and development.

We are committed to creating and maintaining a work environment in which employees are treated with respect and dignity.

value our diverse employees and provide career and professional development opportunities that foster the success of our company.

An effective approach to human

capital management requires that we invest in talent, development, culture and employee engagement.

We aim to create an environment where

our employees are encouraged to make positive contributions and fulfill their potential.

We emphasize our core values of innovation, encouragement,

motivation, and curiosity with our employees to instill our culture and create an environment of growth and positivity.

Our Compensation Committee is

also actively involved in reviewing and approving executive compensation, and succession plans so that we have leadership in place with

the requisite skills and experience to deliver results the right way.

We offer fair, competitive compensation and benefits that support

our employees’ overall wellbeing.

In addition to health benefits, we contribute to employees’ 401(k) plans and offer student

tuition reimbursement (if certain requirements are met).

Impact of COVID-19

The health and well-being of

our employees is of utmost importance to us.

Starting in March 2020, the majority of our employees transitioned to a remote workforce.

Since that time, our employees have demonstrated resilience, wisdom, commitment, and compassion in working with our customers.

As conditions

improved, employees in the U.S.

were encouraged to return to their offices.

We encourage all employees to follow Centers for Disease Control

and Prevention and local guidelines and recommendations.

Regulation and Environmental Protection

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become more prevalent.

We have not been engaged

in any environmental litigation or incurred any material costs related to compliance with environmental or other regulations.

to time, we incur chemical and/or safety laboratory testing expenses in order to address customer requests regarding our product materials

or method of manufacture or regarding their packaging methods and standards.

We have not been engaged in any

environmental litigation or incurred any material costs related to compliance with environmental or other regulations.

From time to time,

we incur chemical and/or safety laboratory testing expenses in order to address customer requests regarding our product materials or method

of manufacture, or regarding their packaging methods and standards.

There are no specific regulatory

or environmental requirements imposed upon the design segment of our business.

As a paid service provider, customers are assisted in

securing regulatory certifications including UL (Underwriters Laboratories – a U.S.

based safety certification organization), FCC

(Federal Communications Commission – U.S.

As a paid service provider, customers are assisted in securing

regulatory certifications including UL (Underwriters Laboratories – a U.S.

based safety certification organization), FCC (Federal

Communications Commission – U.S.

governmental certification department for electronic goods), CE (Conformité Européenne

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pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), free of charge.

of the website are not incorporated into this filing.

of the website are not incorporated into this report.

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 1. Business