What changed in this filing

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Item 1A. Risk Factors

2022-12-16 compared with 2021-12-16 · 287 added, 259 removed, 321 unchanged (63% of the section changed)

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Risks Relating to Our Business, Liquidity and Operations

The ongoing COVID-19 pandemic and measures

intended to prevent its spread have had, and may continue to have, a material and adverse effect on our business and results of operations.

The COVID-19 pandemic and measures intended

to prevent its spread have had, and may continue to have, a material and adverse effect on our business and results of operations.

Global health concerns relating

to the COVID-19 pandemic and related government actions taken to reduce the spread of the virus have been weighing on the macroeconomic

environment, and the pandemic has significantly increased economic uncertainty and reduced economic activity.

Small businesses, which

represent a large portion of our design customers, have been impacted particularly hard.

The pandemic has resulted in government authorities

and businesses implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter

in place or total lock-down orders, school closures, and business limitations and shutdowns.

Such measures have contributed significantly

to increased unemployment and negatively impacted consumer and business spending.

Business shutdowns have disrupted our supply chain and

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

The pandemic has caused us

to modify our business practices to help minimize the risk of the virus to our employees, our customers, and the communities in which

we participate, which could negatively impact our business.

We continue to permit employees to work remotely, which subjects the Company

to increased cybersecurity risks and may reduce workplace efficiency.

As the availability of vaccines increased and COVID-19 case rates

diminished, we gradually re-opened our offices.

We continue to employ additional safety measures in our offices, including enhanced cleaning

and sanitation, mask wearing, suspending international business travel for our employees and limiting domestic business travel, limiting

external guests visiting our offices, and holding most meetings and events virtually.

Local conditions may require us to move back under

more restrictive guidelines, which could include mandatory remote work and additional safety measures.

Given the continually evolving

situation, including new variants, there is no certainty that the measures we have taken will be sufficient to mitigate the risks posed

by the virus.

The full extent to which

the COVID-19 pandemic will continue to impact our business, results of operations, and financial condition remains uncertain and will

depend on developments that remain uncertain and difficult to predict, including, but not limited to, the duration and spread of the pandemic,

its severity, the actions to contain the virus or treat its impact, the availability, distribution and efficacy of vaccines, and acceptance

by the population to get the vaccine and how quickly and to what extent normal economic and operating conditions resume.

Even after the

COVID-19 pandemic has subsided, we may experience material and adverse impacts to our business as a result of the virus’s global

economic impact, including the availability of credit, bankruptcies or insolvencies of customers, and recession or economic downturn.

Any of the issues discussed

above could have a material adverse effect on our business if this continues for an extended period of time.

to the COVID-19 pandemic and related government actions taken to reduce the spread of the virus have weighed on the macroeconomic environment,

and the pandemic has significantly increased economic uncertainty and reduced economic activity in the past.

Small businesses, which represent

a large portion of our design customers, were impacted particularly hard.

The pandemic resulted in government authorities and businesses

implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place or total

lockdown orders, school closures, and business limitations and shutdowns.

Such measures contributed significantly to increased unemployment

and negatively impacted consumer and business spending.

Business shutdowns disrupted our supply chain and the manufacture or shipment

of our products and delayed the rollout of our retail distribution products.

While many of the foregoing developments have largely subsided

since the pandemic’s peak, there can be no assurances that a subsequent wave will not occur in the future or that a new, potentially

more contagious or dangerous variant will not arise.

Various regions throughout China

have been subject to government mandated Covid lockdowns.

While these lockdowns have not had a material impact on our ability to

source product, there is no assurance that future actions will not affect our supply chain.

The timing and extent of these lockdowns,

as well as the potential impact on our business, are largely unknown and difficult to predict.

Disruption of our key suppliers could

have a material impact on our ability to source product and the related cost of these products.

Even after the COVID-19 pandemic

has completely subsided, we may experience material and adverse impacts to our business as a result of the virus’s global economic

impact, including the availability of credit, bankruptcies or insolvencies of customers, and recession or economic downturn.

and other countries, stimulus packages, rising inflation and demand and other developments during and in the wake of the pandemic

have created an inflationary market environment, and in response the Federal Reserve and foreign entities have imposed significant interest

rate increases which have resulted in the increased likelihood of a recession in the short-term.

Any of the issues discussed above

could have a material adverse effect on our business if this continues for an extended period of time.

If we incur significant declines

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In Fiscal 2022, we generated

an operating loss of approximately $765,000 and had net cash used in operating activities of approximately $528,000.

We can provide no

assurance that we will not continue to experience operating losses.

In addition to our $1,300,000 commercial line of credit (the “Line

of Credit”), none of which has been utilized as of the date of this report, Forward China holds a $1,600,000 note which is due December

Forward China, which is owned by our Chief Executive Officer and Chairman of the Board, has previously agreed to extend this

note numerous times to assist the Company with its liquidity resources.

We cannot provide you with any assurance that Forward China will

continue to grant us extensions on this note.

If we cannot generate sufficient revenues to operate profitably, we may be forced to cease,

limit or suspend operations, or we may be required to raise capital to maintain or grow our operations.

There is no assurance that we

will be able to raise such capital and if so on terms that are not onerous and dilutive to the Company and its shareholders.

believe that our existing cash resources are sufficient to support our growth strategy, there can be no assurances that our growth strategy

will be successful or that we will earn a return on these investments.

an operating loss of approximately $1,240,000.

We can provide no assurance that we will not continue to experience operating losses.

addition to our $1,300,000 commercial line of credit (the “Line of Credit”), none of which has been utilized as of the date

of this report, Forward China holds a $1,400,000 note which is due December 31, 2024.

Forward China, which is owned by our Chief Executive

Officer and Chairman of the Board, has previously agreed to extend this note numerous times to assist the Company with its liquidity.

We cannot provide you with any assurance that Forward China will continue to grant us extensions on this note.

If we cannot generate sufficient

revenues to operate profitably, we may be forced to cease, limit or suspend operations, or we may be required to raise capital or incur

additional debt to maintain or grow our operations.

There is no assurance that we will be able to raise such capital and if so on terms

that are not onerous and dilutive to the Company and its shareholders.

While we believe that our existing cash resources are sufficient

to support our growth strategy, there can be no assurances that our growth strategy will be successful or that we will earn a return on

these investments.

Our OEM distribution business remains highly

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Revenues from diabetic products

accounted for 86% of our OEM distribution net revenues in Fiscal 2021.

As a result, our financial condition and results of operations

are subject to higher risk from the loss of a major diabetic products customer or changes in their business practices.

For example, in

2018 a new diabetes monitoring product was brought to the market which does not use a carrying case.

If our customers use new solutions

in their diabetes product lines that do not use carrying cases, our business would be materially and adversely affected.

accounted for 85% of our OEM distribution revenues in Fiscal 2022, and OEM distribution revenue accounted for approximately 43% of our

overall revenue in Fiscal 2022.

As a result, our financial condition and results of operations are subject to higher risk from the loss

of a major diabetic products customer or changes in their business practices.

For example, in 2018 a new diabetes monitoring product was

brought to the market which does not use a carrying case.

If our customers use new solutions in their diabetes product lines that do not

use carrying cases, our business would be materially and adversely affected.

The loss of any of, or a material reduction

in orders from, our largest customers would materially and adversely affect our results of operations and financial condition.

Our OEM distribution

business is and has been characterized by a high degree of customer concentration.

Our four largest distribution customers accounted

for 85% and 83% of OEM distribution net revenues in Fiscal 2021 and Fiscal 2020, respectively.

Although we continue our efforts to

diversify our business, we cannot provide any assurance that we will be successful.

The loss of any of these customers would have a

material adverse effect on our financial condition, liquidity and results of operations.

If any one or more of our OEM distribution

customers elect to reduce or discontinue inclusion of cases “in box”, our results of operations and financial condition would

be materially and adversely affected.

The predominant

percentage of our OEM distribution revenues is derived from sales of case accessories to our OEM customers who package our cases

“in box” with their electronics.

During recent years, there have been numerous federal legislative and administrative

actions that have affected government programs, including adjustments that have reduced or increased payments to healthcare

providers and patients.

Any measures to restrict healthcare spending could result in decreased sales of our products.

If one or more

of our distribution customers reduce or discontinue the practice of including carry case accessories “in box” or if our

customers experience reduced demand for their products as a result of political changes, we may incur a significant decline in our

revenues and our results of operations and financial condition would be materially and adversely affected.

Each of our distribution and

design businesses can at times be concentrated with certain larger customers.

Our largest design customer accounted for 10.6% of our consolidated

net revenue in Fiscal 2022.

Further, two distribution customers accounted for 23.0% of our consolidated net revenue in Fiscal 2022 and

three distribution customers represented 36.8% of our consolidated net revenue in Fiscal 2021.

Although our customer concentration changes

from year to year, and we continue our efforts to diversify our business, we cannot provide any assurance that we will be successful.

The loss of any of these customers would have a material adverse effect on our financial condition, liquidity and results of operations.

If any one or more of our OEM distribution customers

elect to reduce or discontinue inclusion of cases “in box”, our results of operations and financial condition would be materially

and adversely affected.

The predominant percentage of

our OEM distribution revenues is derived from sales of case accessories to our OEM customers who package our cases “in box”

with their electronics.

During recent years, there have been numerous federal legislative and administrative actions that have affected

government programs, including adjustments that have reduced or increased payments to healthcare providers and patients.

to restrict healthcare spending could result in decreased sales of our products.

If one or more of our distribution customers reduce or

discontinue the practice of including carry case accessories “in box” or if our customers experience reduced demand for their

products as a result of political changes, we may incur a significant decline in our revenues and our results of operations and financial

condition would be materially and adversely affected.

Rising threats of international tariffs, including

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As of the date of this report, the Company had not been directly affected by any

tariffs previously implemented by former President Trump on the medical technology industry.

However, we do not know if the new administration

will implement any.

If any such tariffs or any restrictions are imposed on products that we import to our customers, we would be required

to raise our prices, which may result in the loss of customers and harm our business.

Additionally, some of our non-diabetic distribution

customers and customers in the design and development business have been affected by these tariffs, specifically those who manufacture

electronic products.

This may cause these customers to reduce the amount of discretionary spending they use on outsource product design

and engineering services supplied by our design segment.

tariffs previously implemented by former President Trump on the medical technology industry which remain in place pending the Biden Administration’s

continued review of the tariffs.

However, we do not know if the Biden administration will implement any new tariffs or alter current tariffs.

If any such tariffs or any restrictions are imposed on products that we import for our customers, we would be required to raise our prices,

which may result in the loss of customers and harm our business.

Additionally, some of our non-diabetic distribution customers and customers

in the design and development business have been affected by these tariffs, specifically those who manufacture electronic products.

may cause these customers to reduce the amount of discretionary spending they use on outsource product design and engineering services

supplied by our design segment.

Changes in political conditions

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Such an impact could adversely affect our revenues and cash flows.

We continue to encounter pressure from our

largest OEM distribution customers to maintain or even decrease prices, or to supply lower priced carry solutions, and expect such pressure

The effects of such price constraints on our business may be exacerbated by inflationary pressures that affect our costs of

In an effort to reduce the impact of this potential disruption, we continue to explore low-cost opportunities from non-China manufacturers.

We can provide no assurance that we will obtain alternate sources or that our mitigation efforts will prevent any such disruptions.

We continue to encounter pressure from our largest

customers to maintain or even decrease prices, or to provide lower priced solutions, and expect such pressure to persist.

of such price constraints on our business may be exacerbated by inflationary pressures that affect our costs of supply and labor.

During Fiscal 2022, we continued

to experience significant pricing pressure from our largest OEM distribution customers to reduce the prices we charge them.

unable to extract comparable concessions from our suppliers on prices they charge us, our product sales margins erode.

In addition, competitors

may reduce their average selling prices faster than we are able to reduce costs, which can also accelerate the rate of decline of our

selling prices.

to experience significant pricing pressure from many customers, including some of our largest customers, to reduce the prices we charge

When we are unable to extract comparable concessions from our suppliers on prices they charge us, our product sales margins erode.

The recent inflationary environment in the U.S.

and globally has caused production costs to increase in Fiscal 2022.

Similarly, due to

continued trends of high demand and low supply in the labor market which have persisted despite Federal Reserve interest rate increases,

the cost of labor has risen in both our design and distribution businesses.

These developments have a material adverse impact on our margins

and our ability to achieve or maintain profitability.

In addition, competitors may reduce their average selling prices faster than we

are able to reduce costs, which can also accelerate the rate of decline of our selling prices.

In addition to margin compression

from customers in general, we are encountering increased pricing from our Chinese suppliers who are reacting to inflationary increases

in materials and labor costs incurred by them.

from customers in general, we are encountering increased costs from our Chinese suppliers who are reacting to inflationary increases in

materials and labor costs incurred by them.

In addition, prices that our Chinese vendors charge to us may reflect appreciation of the

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tend to reduce gross profit if we are unable to raise our prices.

Any decrease in demand for our products, coupled with pressure from

the market and our customers to decrease our prices, would materially adversely affect our business, financial condition, and results

of operations.

Any decrease in demand for our products or services, coupled with pressure

from the market and our customers to decrease our prices, would have a material adverse effect on our business, financial condition, and

results of operations.

Increasingly, our OEM distribution customers

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are unable to extend our agreement with Forward China which expires in October 2023, we could suffer irreparable harm resulting in substantial

harm to the distribution business.

Our OEM distribution business has benefited

from customers deciding to outsource their carry and protective solutions assembly needs to us.

If our OEM distribution customers choose

to provide these services in-house or select other providers, our OEM distribution business could suffer.

Our future OEM distribution

revenue growth partially depends on new outsourcing opportunities from our OEM distribution customers.

Current and prospective customers

continuously evaluate our performance against other providers.

They also evaluate the potential benefits of manufacturing their products

To the extent that outsourcing opportunities are not available either due to these customers deciding to produce these products

themselves or to use other providers, our financial results and future growth could be materially adversely affected.

damage to the distribution business.

Our business has benefited from customers deciding

to outsource their carry and protective solutions assembly needs, as well as product development and design functions, to us.

If our customers

choose to provide these services in-house or select other providers, our business could suffer.

Our future revenue growth partially

depends on new outsourcing opportunities from our current and prospective customers.

Current and prospective customers continuously evaluate

our performance against other providers.

They also evaluate the potential benefits of developing, designing, manufacturing and transporting

their products themselves.

To the extent that outsourcing opportunities are not available either due to these customers deciding to develop,

design, produce or transport these products themselves or to use other providers, our financial results and future growth could be materially

adversely affected.

If we are unable to provide our customers with

high-quality products and service or if we are unable to deliver our products and/or service to our distribution customers in a timely

manner, our business, financial condition, and results of operations may be materially adversely affected.

In order to maintain our

existing customer base and obtain business from new customers, we must demonstrate our ability to produce our products and services at

the level of quality, responsiveness, timeliness, and cost that our customers require.

If our products or services are provided at what

customers believe are of a substandard quality, if they are not delivered on time, if we are not responsive to our customers’ demands

or cannot meet their needs, our reputation as a reliable supplier of our products and a sophisticated product designer and developer would

likely be damaged.

If we are unable to meet anticipated product and service standards, we may be unable to obtain new or keep our existing

distribution customers, and this would have a material adverse effect on our business, financial condition, and results of operations.

high-quality products and services or if we are unable to deliver our products and/or services to our customers in a timely manner, our

business, financial condition, and results of operations may be materially adversely affected.

In order to maintain our existing

customer base and obtain business from new customers, we must demonstrate our ability to develop, design and produce products and services

at the level of quality, responsiveness, timeliness, and cost that our customers require.

If our products or services are provided at

what customers believe are of a substandard quality, if they are not delivered on time, if we are not responsive to our customers’

demands or cannot meet their needs, our reputation as a reliable supplier of high-quality products and a sophisticated product designer

and developer would likely be damaged.

If we are unable to meet anticipated product and service standards imposed by contractual arrangements,

customer expectations, industry practices, regulatory requirements and competitive forces, we may be unable to obtain new or keep our

existing customers, and this would have a material adverse effect on our business, financial condition, and results of operations.

If our design teams fail to complete a project

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requested by our clients, industrial accidents, environmental hazards, and labor disruptions.

To the extent these events occur, the total

costs of the project could exceed our estimates, and we could experience reduced profits or, in some cases, incur a loss on a project,

which may reduce or eliminate our overall profitability on that project.

Further, any defects or errors, or failures to meet our clients’

expectations, could result in claims for damages against us.

Failure to meet performance standards or complete performance on a timely

basis could also adversely affect our reputation.

Furthermore, our entrance into fixed price

arrangements mean that if the costs of supplies, labor and other resources rise due to shortages, heightened demand, inflation or other

factors, our margin for a given project will decline.

To the extent these events occur, the total costs of the project could exceed our

estimates, and we could experience reduced profits or, in some cases, incur a loss on a project, which may reduce or eliminate our overall

profitability on that project or in general.

Further, any defects or errors, or failures to meet our clients’ expectations, could

result in claims for damages against us.

Failure to meet performance standards or complete performance on a timely basis could also adversely

affect our reputation.

Our results of operations could suffer if we

are not able to maintain adequate utilization of our workforce.

The cost of providing our

design services, including the extent to which we utilize our workforce, affects our profitability.

The cost of providing our design

services, including the extent to which we utilize our workforce, affects our profitability.

The rate at which we utilize our workforce

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impact on our business and reputation.

Such misconduct could include the failure to comply with government procurement regulations, regulations

regarding the protection of classified information, regulations prohibiting bribery and other foreign corrupt practices, regulations

regarding the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, regulations pertaining

to the internal controls over financial reporting, environmental laws, and any other applicable laws or regulations.

For example, as

previously noted, the FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries

Such misconduct could include the failure to comply with various procurement regulations, regulations

regarding the protection of confidential information, regulations prohibiting bribery and other foreign corrupt practices, regulations

regarding the pricing of labor and other costs in contracts, regulations on lobbying or similar activities, regulations pertaining to

the internal controls over financial reporting, environmental laws, and any other applicable laws or regulations.

For example, the Foreign

Corrupt Practices Act, or FCPA, and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries

from making improper payments to non-U.S.

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Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines

and penalties and suspension or debarment from contracting, any or all of which could harm our reputation,

reduce our revenue and profits, and subject us to criminal and civil enforcement actions.

If we fail to maintain an effective system

of internal controls over financial reporting, we may not be able to accurately report our financial results.

As a result, current and

potential stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our stock.

Effective internal controls

over financial reporting are necessary for us to provide reliable financial reports.

and penalties and suspension or debarment from contracting, any or all of which could harm our reputation, reduce our revenue and profits,

and subject us to criminal and civil enforcement actions.

If we fail to maintain an effective system of

internal controls over financial reporting, we may not be able to accurately report our financial results.

As a result, current and potential

stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our stock.

Effective internal controls over

financial reporting are necessary for us to provide reliable financial reports.

If we cannot maintain effective controls and reliable

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risks of fluctuations in the values of foreign currencies relative to the U.S.

Our results of operations

are expressed in U.S.

Our results of operations are

expressed in U.S.

When the U.S.

dollar appreciates or depreciates in value against a currency in which all or a significant

portion of revenues or other accounts receivable are denominated, such as the euro, our results of operations can be adversely affected

or benefited, respectively.

The degree of impact is proportional to the amount of foreign currency expense or revenue, as the case may

be, and the fluctuations in exchange rates over the period in which the effect is measured on our financial statements.

In addition, such

currency fluctuations may affect the comparability of our results of operations between financial periods.

dollar appreciates or depreciates in value against a currency in which all or a significant portion

of revenues or other accounts receivable are denominated, such as the Euro, our results of operations can be adversely affected or benefited,

respectively.

The degree of impact is proportional to the amount of foreign currency expense or revenue, as the case may be, and the fluctuations

in exchange rates over the period in which the effect is measured on our financial statements.

In addition, such currency fluctuations

may affect the comparability of our results of operations between financial periods.

Future revenues are difficult to predict and

are likely to show significant variability as a consequence of customer concentration.

Because our revenues are

highly concentrated in a few large customers, and because the volumes of these customers’ order flows to us can fluctuate markedly

in a short period of time, our quarterly revenues, and consequently our results of operations, may be highly variable and subject to significant

are likely to show significant variability as a consequence of customer concentration and operating in multiple segments.

Because our revenues can at times

be concentrated in a few large customers, and because the volumes of these customers’ order flows to us can fluctuate markedly in

a short period of time, our quarterly revenues, and consequently our results of operations, may be highly variable and subject to significant

changes over a relatively short period of time.

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a pandemic or any other reason) causing discretionary budgets to decline or may from-time-to-time choose to do their development work

All of these factors tend to lead to a high degree of variability in our quarterly revenue levels.

Significant, rapid shifts

in our operating results may occur if and when one or more of these customers increases or decreases the size(s) of, or eliminates, their

orders or engagement from us by amounts that are material to our business.

Our gross margins, and therefore our profitability,

vary considerably by customer and by product, and if the revenue contribution from one or more distribution customers or products changes

materially, relative to total revenues, our gross profit percentage may fluctuate.

Our gross profit margins

on the distribution products we sell can vary widely depending on the product type, customer, and order size.

Because of the broad variability

in price ranges and product types, we anticipate that gross margins, and accordingly their impact on operating income or loss, may fluctuate

depending on the relative revenue contribution from each customer or product.

If our gross margins decrease, our results of operations

will be adversely affected.

Product manufacture is often outsourced by

our distribution customers to contract manufacturing firms in China and in these cases it is the contract manufacturer to which we must

look for payment.

Further, in our design and development business customers may decline to use us for future work after a project is completed,

which may be due to lack of continued need for our services after their product has been developed, produced and marketed or because they

are dissatisfied with our pricing or performance.

All of these factors tend to lead to a high degree of variability in our quarterly revenue

Significant, rapid shifts in our operating results may occur if and when one or more of these customers increases or decreases

the size(s) of, or eliminates, their orders or engagement from us by amounts that are material to our business.

Our gross margins, and therefore our potential

profitability, vary considerably by customer and by product and service offering, and if the revenue contribution from one or more customers

or products or project changes materially, relative to total revenues, our gross profit percentage may fluctuate.

Our gross profit margins on the

products and services we sell can vary widely depending on the product or project type, customer, and contract or order size.

of the broad variability in price ranges and product and project types, we anticipate that gross margins, and accordingly their impact

on operating income or loss, may fluctuate depending on the relative revenue contribution from each customer or product.

Similarly, because

we offer a wide range of products and services which often vary with each customer and project, we face challenges in maintaining and

enhancing operational efficiencies.

For example, because of the range of products and services we offer and our general lack of specializations

within our fields relative to some of our competitors, we may not enjoy the advantages offered by more focused or streamlined operations,

such as economies of scale or improved production capabilities from our labor, facilities, and procedures with the passage of time.

our gross margins decrease, our results of operations will be adversely affected.

Product manufacture is often outsourced by our

distribution customers to contract manufacturing firms in China and in these cases, it is the contract manufacturer to which we must look

Contract manufacturing firms

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business will be harmed.

Our shipments of distribution products may

become subject to delays or cancellation due to work stoppages or slowdowns, piracy, damage to port facilities, and congestion due to

inadequacy of port terminal equipment and other causes.

To the extent that there

are disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of destination as a result of labor

Our shipments of products may become subject

to delays or cancellation due to work stoppages or slowdowns, piracy, damage to port facilities, and congestion due to inadequacy of port

terminal equipment and other causes.

To the extent that there are

disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of destination as a result of labor

disputes, work-rules related slowdowns, tariff or World Trade Organization-related disputes, piracy, physical damage to port terminal

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will be delayed.

For example, in March 2021, a container ship carrying some of our products was stuck in the Suez Canal for six days.

Although this accident did not have a material adverse effect on our business, there is no assurance that, if it happened again, that

it would not.

In any such case, our customers may cancel or change the terms of its purchase order, resulting in a cancellation or delay

of payments to us.

A closure or partial closure of port facilities or other causes of delays in the loading, importation, offloading or

movement of our products to the shipping destination agreed to with our customer could result in increased expenses, as we try to avoid

For example, in March 2021, a container ship carrying some of our products ran aground in the Suez Canal and was immobilized

for six days.

Although this accident did not have a material adverse effect on our business, there is no assurance that, if it happened

again, that it would not.

In any such case, our customers may cancel or change the terms of its purchase order, resulting in a cancellation

or delay of payments to us.

A closure or partial closure of port facilities or other causes of delays in the loading, importation, offloading

or movement of our products to the shipping destination agreed to with our customer could result in increased expenses, as we try to avoid

such delays, delayed shipments or cancelled orders, or all of the above.

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an adverse effect on our financial condition and results of operations.

Issues with our products may lead to product

liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental

authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage,

any of which could have a significant adverse effect on our financial condition.

We may experience issues

with products that we source or develop that may lead to product liability, personal injury or property damage claims, recalls, withdrawals,

replacements of products, or regulatory actions by governmental authorities.

Any of these activities could result in increased governmental

scrutiny, harm to our reputation, reduced demand by consumers for products, decreased willingness by retailer customers to purchase our

products, absence or increased cost of insurance, or additional safety and testing requirements.

Such results could divert development

and management resources, adversely affect our business operations, decrease sales, increase legal fees and other costs, and put us at

a competitive disadvantage compared to other companies not affected by similar issues with products, any of which could have a significant

adverse effect on our financial condition and results of operations.

Although the Company does provide only limited warranties and carries

product liability insurance, we can provide no assurance that customers will not seek damages beyond what we warranty or beyond our insurance

Although we have not had significant claims for damages or losses from the products we distribute, any uninsured claim, if successful

and of significant magnitude, could have a material adverse effect on our business, prospects, results of operations or financial condition.

The carrying solutions distribution business

is highly competitive and does not pose significant barriers to entry.

There are many competitors

in the sale of carry solutions products to our customers including OEMs, and competition is intense.

Issues with our products or services may lead

to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions

by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive

disadvantage, any of which could have a significant adverse effect on our financial condition.

We may experience issues with

products that we source or develop, or with the services we render, that may lead to product liability, personal injury or property damage

claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities.

Any of these activities could

result in increased governmental scrutiny, harm to our reputation, reduced demand by consumers for products or services, decreased willingness

by retailer customers to purchase our products or procure our services, absence or increased cost of insurance, or additional safety and

testing requirements.

Such results could divert development and management resources, adversely affect our business operations, decrease

sales, increase legal fees and other costs, and put us at a competitive disadvantage compared to other companies not affected by similar

issues with products and services, any of which could have a significant adverse effect on our financial condition and results of operations.

Although the Company carries product liability insurance and works with its customers to satisfy product quality concerns (the cost of

such efforts are typically covered by our sourcing agent, Forward China) we can provide no assurance that customers will not seek damages

beyond what we warranty or beyond our insurance coverage.

Although we have not had significant claims for damages or losses from the products

we distribute in our distribution business or assist in the development, design or production of in our design business, any uninsured

claim, if successful and of significant magnitude, could have a material adverse effect on our business, prospects, results of operations

or financial condition.

The product distribution and design businesses

are highly competitive and do not pose significant barriers to entry.

There are many competitors in

the sale of carry solutions products to our customers including OEMs, and competition is intense.

Since little or no significant proprietary

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customers, thereby adversely affecting our net revenues, results of operations, and financial condition.

Further, with respect to our

design business, while management believes there are a limited number of customers offering the broad range of design and development

services we do, there are numerous design and engineering companies that compete with us in specific industries and/or with specific targeted

skills or competitive advantages, and some prospective customers might prefer a competitor that focuses in a specialty area in which they

operate or target over an offering such as ours that is not limited to any specific industry or product type.

Many of our competitors are larger,

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not effectively able to compete, our results of operations will be adversely affected.

If we fail to retain our key personnel, we

may not be able to achieve our anticipated level of growth and our business could suffer.

If we fail to retain our key personnel, we may

not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part,

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results of operations and financial condition.

In addition to our products, potential adverse developments involving intellectual property

described above may occur with respect to customers’ products incorporating our products or services that we render.

If we experience system interruptions, it may

cause us to lose customers and may harm our business.

Our inability to maintain

and improve our information technology systems and infrastructure may result in system interruptions.

Our inability to maintain and

improve our information technology systems and infrastructure may result in system interruptions.

System interruptions and slow delivery

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services to our customers on our website, which could result in our losing customers and revenue.

We lease space for our data

center for power, security, connectivity and other services.

We lease space for our data center

for power, security, connectivity and other services.

We also rely on third-party providers for bandwidth.

We do not control these

vendors and it would take significant time and effort to replace them.

We have experienced, and may experience in the future, website

disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors

and capacity constraints.

Our systems are vulnerable

to damage or interruption from terrorist attacks, floods, fires, power loss, telecommunications failures, hurricanes, computer viruses,

computer denial of service attacks or other attempts to harm our systems.

Any such damage or interruption would adversely affect our results

of operations.

Because our networks and IT systems may be

vulnerable to unauthorized persons hacking our systems, it could disrupt our operations and result in the theft of our proprietary information.

We do not control these vendors

and it would take significant time and effort to replace them.

We have experienced, and may experience in the future, website disruptions,

outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity

Our systems are vulnerable to

damage or interruption from terrorist attacks, floods, fires, power loss, telecommunications failures, hurricanes, computer viruses, computer

denial of service attacks or other attempts to harm our systems.

Any such damage or interruption would adversely affect our results of

Because our networks and IT systems may be vulnerable

to unauthorized persons hacking our systems, it could disrupt our operations and result in the theft of our proprietary information.

A party who is able to breach

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technical, and undetected errors, if any, could adversely affect our business.

Our design business may use

software that is highly technical and complex.

Our software has contained, and may now or in the future contain, undetected errors, bugs,

flaws, corrupted data or vulnerabilities.

Our design business may use software

that is highly technical and complex.

Our software has contained, and may now or in the future contain, undetected errors, bugs, flaws,

corrupted data or vulnerabilities.

Some errors in our software code may only be discovered after the code has been released.

errors, bugs, flaws or corrupted data could result in damage to our reputation, loss of users, or loss of revenue, any of which could

adversely affect our business and financial results.

bugs, flaws or corrupted data could result in damage to our reputation, loss of users, or loss of revenue, any of which could adversely

affect our business and financial results.

We maintain cash balances in our bank accounts

that exceed the FDIC insurance limitation.

We maintain our cash assets

at commercial banks in the U.S.

We maintain our cash assets at

commercial banks in the U.S.

in amounts in excess of the Federal Deposit Insurance Corporation insurance limit of $250,000 and in Europe

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our shareholders for approval and which influence may be alleged to conflict with our interests and the interests of our other shareholders.

Terence Wise, our Chairman

and Chief Executive Officer, is a significant shareholder who beneficially owns approximately 17% of the outstanding shares of our common

stock as of September 30, 2021.

Terence Wise, our Chairman and

Chief Executive Officer, is a significant shareholder who beneficially owns approximately 18% of the outstanding shares of our common

stock as of December 9, 2022.

Wise has substantial influence over the outcome of all matters submitted to our shareholders for approval,

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Announcements by us, or our competitors, of significant contracts, acquisitions, commercial relationships, joint ventures or capital commitments;

Other forces outside of our control such as inflation, Federal Reserve interest rate increases and the recessionary environment it could bring, geopolitical turmoil such as the recent Ukraine war, and other developments that could adversely impact the U.S.

and global economies and erode investor sentiment.

In the past, following periods

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material adverse consequences, including:

a limited availability of market quotations for our common stock;

reduced liquidity with respect to our common stock;

a determination that our shares of common stock are a “penny stock” which will require broker-dealers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

a limited amount of news and analyst coverage for our company;

· a limited availability of market quotations for

our common stock;

· reduced liquidity with respect to our common

· a determination that our shares of common stock

are a “penny stock” which will require broker-dealers trading in our common stock to adhere to more stringent rules, possibly

resulting in a reduced level of trading activity in the secondary trading market for our common stock;

· a limited amount of news and analyst coverage

for our company;

· a limited ability to issue additional securities or obtain additional financing in the future.

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it could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.

From time to time, we may

receive inquiries from regulators regarding our compliance with laws and other matters.

In 2019, we incurred significant expenses responding

to an SEC investigation into potential insider trading by certain insiders of the Company.

Although that investigation has concluded,

responding to, or defending other such actions would cause us to continue to incur substantial expenses and divert our management’s

Violation of existing or

future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect

our financial condition and results of operations.

From time to time, we may receive

inquiries from regulators regarding our compliance with laws and other matters.

In 2019, we incurred significant expenses responding to

an SEC investigation into potential insider trading by certain insiders of the Company.

Although that investigation has concluded, responding

to, or defending other such actions would cause us to continue to incur substantial expenses and divert our management’s attention.

Violation of existing or future

regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our

financial condition and results of operations.

In addition, it is possible that future orders issued by, or enforcement actions initiated

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which means that investors may not be able to realize the value of their shares except through a sale.

We do not anticipate that

we will declare or pay a cash dividend.

We do not anticipate that we

will declare or pay a cash dividend.

We expect to retain future earnings, if any, for our business and do not anticipate paying dividends

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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