What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-12-21 compared with 2022-12-16 · 290 added, 272 removed, 336 unchanged (63% of the section changed)

10 unchanged sentences

Risks Relating to Our Business, Liquidity and 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 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

in customer orders, increased aging of accounts receivable or other negative consequences due to COVID-19, the extent of which remains

highly uncertain, it will have a material adverse effect on our business, financial condition and results of operations.

During Fiscal 2022, we generated an operating

loss and negative cash flow from operations.

The COVID-19 pandemic, or any other future

pandemic, has had, and may continue to have, a material and adverse effect on our business and results of operations.

On May 11, 2023, the U.S.

Department of Health and Human Services declared the end of the Public Health Emergency for COVID-19;

however, the effects of COVID-19

continue to linger throughout the global economy and our businesses.

Though the severity of COVID-19 has subsided, new variants or any

other future pandemic could interrupt business, cause renewed labor and supply chain disruptions, and negatively impact the global and

US economy, which could materially and adversely impact our business.

During the height of COVID-19 our supply chain experienced significant

disruptions which, together with other factors such as the increase in global consumer demand and the global shipping container shortage,

resulted in longer delivery times and higher importation costs for most of our products.

While our supply chain appears to generally be

stable at this time, should a resurgence of COVID-19 occur, our supply chain could again be negatively impacted;

for example, the factories

that manufacture our products could be required by government authorities to temporarily cease operations or might be limited in their

production capacity.

If governments take protective actions in response to a resurgence of COVID-19 or the outbreak of a new pandemic,

it may have a material adverse impact on our business, financial condition and operating results for the reasons described above.

During Fiscal 2023, we generated a net loss.

We cannot assure you that we will regain profitability in the future.

In Fiscal 2023, we generated

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.

a net loss of approximately $3,737,000.

While we generated income from continuing operations, we can provide no assurance that we will

not experience operating losses in the future.

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 $1,100,000 note which is due December 31, 2024.

Additionally,

we owe Forward China $8,246,000 in accounts payable.

See Note 14 to the consolidated financial statements for a discussion on these payables.

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

times to assist the Company with its liquidity.

We cannot provide 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 business, there can be no assurances that we will be successful.

Our OEM distribution business remains highly

2 unchanged sentences

decline in revenues from any such large customer, our business would be materially and adversely affected.

Revenues from diabetic products

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.

In Fiscal 2023, revenues

from diabetic products accounted for 84% of our OEM distribution revenues and OEM distribution revenue accounted for 38% of our consolidated

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.

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”

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

In Fiscal 2023, our largest design

customer accounted for 27.9% of our consolidated net revenue and one OEM distribution customer accounted for 11.2% of our

consolidated net revenue.

In Fiscal 2022, our largest design customer accounted for 11.8% of our consolidated net revenue and two

OEM distribution customers represented 25.5% of our consolidated net revenue.

Recently, two of our employees left the Company to

become full-time employees of our largest design customer.

If this continues, it may result in the customer sending us less

business which will adversely affect our revenues.

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.

6 unchanged sentences

condition would be materially and adversely affected.

Rising threats of international tariffs, including

tariffs applied to goods between the U.S.

Rising threats of international tariffs,

including tariffs applied to goods between the U.S.

and China, may materially and adversely affect our business.

10 unchanged sentences

in the future to certain of each other’s exports.

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

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

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.

In May 2022 the U.S.

Trade Representative (the “USTR”) announced a statutory four-year review

of the tariffs against China.

The USTR also announced in May 2022 that it reinstated or extended various eligible tariff exclusions on

certain products from China through December 2023.

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.

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.

Changes in political conditions

6 unchanged sentences

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

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.

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.

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

During Fiscal 2023, we continued

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.

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

we charge them.

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

In Fiscal 2023, due to increased pricing pressure, we did not renew our contract with one major OEM distribution customer, which

expired in March 2023.

The recent inflationary environment in the U.S.

and globally has caused production costs to increase in Fiscal

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.

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

26 unchanged sentences

Officer and largest shareholder is the owner of Forward China, our exclusive sourcing agent in the Asia Pacific region.

We have entered

into a Buying Agency and Supply Agreement with Forward China whereby Forward China will act as the Company’s exclusive agent to

arrange for sourcing, manufacturing and exporting the Company’s distribution products.

Historically, Forward China has relied on

a limited number of suppliers to supply the component parts and pieces necessary for the production of our carry and protective solutions

As a result, our ability to effectively push back against rising material costs may diminish, although historically Forward

China has absorbed these costs.

In addition, any inability to obtain supplies from a single or limited number of suppliers may result

in difficulty obtaining the supplies necessary for our business and may restrict our ability to produce our carry and protective solutions

Where practical, we intend to establish alternative sources through Forward China to mitigate the risk that the failure of any

single supplier will adversely affect our business.

Nevertheless, either a prolonged inability to obtain certain components or the failure

of one of our suppliers to do so could impair our ability to ship products and generate revenues, which could adversely affect our operating

results and damage our customer relationships.

We have a Buying

Agency and Supply Agreement with Forward China under which Forward China will act as the Company’s exclusive agent to arrange for

sourcing, manufacturing and exporting the Company’s distribution products.

Historically, Forward China has relied on a limited number

of suppliers to supply the component parts and pieces necessary for the production of our carry and protective solutions products.

a result, our ability to effectively push back against rising material costs may diminish.

In addition, any inability to obtain supplies

from a single or limited number of suppliers may result in difficulty obtaining the supplies necessary for our business and may restrict

our ability to produce our carry and protective solutions products.

Where practical, we intend to establish alternative sources through

Forward China to mitigate the risk that the failure of any single supplier will adversely affect our business.

Nevertheless, either a

prolonged inability to obtain certain components or the failure of one of our suppliers to do so could impair our ability to ship products

and generate revenues, which could adversely affect our operating results and damage our customer relationships.

In addition, we depend significantly

7 unchanged sentences

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 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’

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 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

32 unchanged sentences

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.

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 rate at which we utilize our workforce

9 unchanged sentences

If we under-utilize our workforce, our profit margin and profitability

could suffer.

would suffer.

Employee or agent misconduct, or our failure

22 unchanged sentences

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 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

7 unchanged sentences

investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.

Our results of operations are subject to the

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 subject to

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

Future revenues are difficult to predict and

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

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 and operating in more than one segment.

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.

17 unchanged sentences

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.

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

1 unchanged sentence

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

we offer a wide range of 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.

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.

Contract manufacturing firms

12 unchanged sentences

adversely affected.

Our dependence on foreign manufacturers creates

quality control and other risks to our business.

From time to time, we may experience certain quality control, on-time delivery, cost,

or other issues that may jeopardize customer relationships.

Our dependence on foreign manufacturers

creates quality control and other risks to our business.

From time to time, we may experience certain quality control, on-time delivery,

cost, or other issues that may jeopardize customer relationships.

Our reliance on foreign suppliers,

7 unchanged sentences

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

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

13 unchanged sentences

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

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

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.

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.

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

8 unchanged sentences

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,

better capitalized and more diversified than we are and may be better able to withstand a downturn in the general economy or in the product

areas in which we specialize.

Many of our competitors are

larger, better capitalized and more diversified than we are and may be better able to withstand a downturn in the general economy or in

the product areas in which we specialize.

Potential customers may prefer the pricing terms offered by competitors.

These competitors may also have

less sales concentration than we do and be better able to withstand the loss of a key customer or diminution in its orders.

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.

These competitors may

also have less sales concentration than we do and be better able to withstand the loss of a key customer or diminution in its orders.

If we are 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.

Our future depends, in part,

24 unchanged sentences

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.

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.

System interruptions and slow delivery

1 unchanged sentence

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

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.

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

A party who is able to breach

8 unchanged sentences

our financial performance and operating results.

Our design business uses software that is highly

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 uses software that is

highly 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.

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

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.

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.

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

1 unchanged sentence

In the event of a failure at a commercial bank where we maintain our

deposits or uninsured losses on money market or other cash equivalents in which we maintain cash balances, we may incur a loss to the

extent such loss exceeds the insurance limitation, which could have a material adverse effect upon our financial conditions and our results

of operations.

Our Chairman and Chief Executive Officer is

a significant shareholder, which makes it possible for him to have significant influence over the outcome of all matters submitted to

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 18% of the outstanding shares of our common

deposits or money market or other cash, we may incur a loss to the extent such loss exceeds the insurance limitation, which could have

a material adverse effect upon our financial conditions and our results of operations.

Our Chairman and Chief Executive Officer

is a significant shareholder, which makes it possible for him to have significant influence over the outcome of all matters submitted

to 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 18% of the outstanding shares of our common

stock as of December 9, 2023.

32 unchanged sentences

be used to benefit our business.

Failure to meet the continued listing requirements

of Nasdaq, could result in delisting of our common stock, which in its turn would negatively affect the price of our common stock and

limit investors’ ability to trade in our common stock.

Our common stock trades on

Because we are currently non-compliant with

Nasdaq’s minimum bid price requirement, it could result in delisting of our common stock, negatively affect the price of our common

stock and limit investors’ ability to trade in our common stock.

Our common stock is listed

Nasdaq rules impose certain continued listing requirements, including the minimum $1 bid price, corporate governance standards

and number of public stockholders.

At December 9, 2022, our closing price was $1.25.

If we fail to meet these continued listing requirements,

Nasdaq may take steps to delist our common stock.

If our common stock is delisted from The Nasdaq Capital Market, we could face significant

material adverse consequences, including:

· 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.

On July 31, 2023, we were notified by Nasdaq that we are not compliant with its closing bid price requirement

because the closing bid price of our common stock was below $1.00 per share for 30 consecutive trading days.

We have until January

29, 2024 (the “Deadline Date”) to become compliant.

We have since remained non-compliant with the closing bid price

requirement as our stock price has remained below $1.00 since we received the notice.

We are assessing all options to regain compliance.

At our annual stockholders’ meeting, which is customarily held in February, we have the option to ask our stockholders to approve

a reverse stock split in an amount that would satisfy Nasdaq listing requirements.

In addition to the risk described below that we do

not receive stockholder approval, reverse splits are often perceived negatively and announcements of or implementation of a reverse split

may cause the market price of our common stock to decline.

If we continue to fail to

meet these continued listing requirements through the Deadline Date and are unable to get an extension to regain compliance, Nasdaq may

delist our common stock.

Reverse splits require approval by stockholders who hold a majority of our voting power.

Because many of our

shares are held in street name and brokers do not necessarily vote unvoted shares, we may not receive approval of a reverse split.

Additionally,

a reverse stock split typically has the effect of reducing the number of holders of shares in “round lots,” meaning those

holding 100 or more shares.

Another requirement for being listed on Nasdaq is that the Company have a minimum of 300 round lot holders,

so if our stock price falls too low, a reverse split may not be sufficient to solve our Nasdaq non-compliance based on the minimum round

lot requirement.

If our common stock is delisted, we could face significant 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, including being unable

to solicit buyers for our common stock;

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

a limited ability to raise capital in the future.

If we become subject to a regulatory investigation,

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 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.

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.

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

1 unchanged sentence

adverse to our business.

We do not expect to pay dividends in the future,

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 expect to pay dividends in the

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

5 unchanged sentences

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