What changed in this filing

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Item 1A. Risk Factors

2024-12-27 compared with 2023-12-21 · 241 added, 198 removed, 428 unchanged (51% of the section changed)

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Risks Relating to Our Business, Liquidity and Operations

We have experienced recurring losses and

our ability to continue as a going concern is in doubt.

We incurred net losses

of approximately $1,951,000 and $3,737,000 in Fiscal 2024 and 2023, respectively.

We expect to generate losses for the foreseeable future.

We will need to generate increased revenues to achieve profitability in the future.

Despite our efforts, we may not achieve profitability

in the future or sustain profitability for a prolonged period of time.

In December 2024, our largest design customer notified

us of its plan to discontinue their insulin patch program on which we were providing design services.

In Fiscal 2024, this design

customer was responsible for 25.2% of our revenues.

While we plan to mitigate the impact of this lost revenue with cost reduction

efforts, seeking continued flexibility on payments to Forward China and exploring additional sources of financing, these efforts may not

be sufficient to meet our liquidity needs through December 31, 2025.

Accordingly, our independent

registered public accounting firm stated in their report on our annual financial statements for the fiscal year ended September 30, 2024,

that these conditions raise substantial doubt about our ability to continue as a going concern.

If we are unable to continue as a going

concern, our shareholders will likely lose all of their investment in the Company.

The COVID-19 pandemic, or any other future

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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.

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.

our supply chain appears to generally be stable at this time, should a resurgence of COVID-19, or a similar pandemic, occurs, 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 2024, we generated a net loss.

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

In Fiscal 2023, we generated

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.

In Fiscal 2024, we generated a net loss of approximately $1,951,000.

While we generated income from continuing operations in Fiscal 2023, we can provide no assurance that we will not experience operating

losses in the future.

Forward China holds a $600,000 note which is due on June 30, 2025.

Additionally, we owe Forward China approximately

$7,226,000 in accounts payable.

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

amounts that we are required to pay over any 12-month period.

Forward China, which is owned by our Chief Executive Officer and Chairman

of the Board, has previously agreed to extend the note on numerous occasions 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.

Our OEM distribution business remains highly

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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.

Many new diabetes monitoring products brought to the market in recent years

do not use a carrying case.

If consumer demand continues to increase for 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.

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.

Each of our distribution

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

In Fiscal 2024, our largest design customer accounted

for 25.2% of our consolidated net revenue and one OEM distribution customer accounted for 13.0% of our consolidated net revenue.

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 December 2024, our largest design customer notified the Company of its plan to discontinue their

insulin patch program, on which the Company was working.

We expect this to cause a material decrease in our revenues beginning with the

second quarter of fiscal 2025.

We are currently working on cost reduction efforts to mitigate the reduction in revenue.

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

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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.

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.

tariffs previously implemented by former President Trump on the medical technology industry which currently remain in place.

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

In September 2024, the USTR completed its statutory four-year review and announced tariff increases on imports from China on various

Further, we do not know if the administration that takes office in 2025 will implement any new tariffs or alter current tariffs.

If any tariffs or 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 non-medical electronic

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

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expired in March 2023.

If pricing pressures continue and we are unable to find comparable concessions from our suppliers, we may be unable

to renew future contracts with our customers.

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.

and globally has caused production costs

to increase in Fiscal 2023 and in Fiscal 2024.

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

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materials and labor costs incurred by them.

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

Chinese currency against the U.S.

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

the Chinese currency against the U.S.

dollar, which can be passed through to us in the form of higher U.S.

dollar prices.

This in turn will

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

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.

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

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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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.

Agency and Supply Agreement with Forward China under which Forward China acts 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.

As 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

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as a result of financial or other difficulties or for any other reason, or if our relationship with Forward China was to suffer or we

are unable to extend our agreement with Forward China which expires in October 2024, we could suffer irreparable harm resulting in substantial

damage to the distribution business.

are unable to maintain our agreement with Forward China, which is currently in effect until April 30, 2025, but may be terminated prior

to that with 30 days’ notice, we could suffer irreparable harm resulting in substantial damage to the distribution business.

Our business has benefited from customers

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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

arrangements means 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.

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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.

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

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

Future revenues are difficult to predict

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product offerings.

As demand for the consumer product relating to the in-box program matures and decreases, we may be forced to accept

As demand for the consumer products relating to the in-box program matures and decreases, we may be forced to accept

significant price and/or volume reductions in customer orders for our carry solutions, which will adversely affect revenues.

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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

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 levels.

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

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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.

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

Contract manufacturing firms

are performing manufacturing, assembly, and product packaging functions, including the bundling of our product accessories with the OEM

distribution customer's product.

As a consequence of this business practice, we often sell our carry solutions products directly to the

contract manufacturing firm.

perform manufacturing, assembly, and product packaging functions, including the bundling of our product accessories with the OEM distribution

customer’s product.

As a consequence of this business practice, we often sell our carry solutions products directly to the contract manufacturing

This is particularly significant in the case of diabetic product sales to certain customers.

In these cases,

we invoice the contract manufacturing firm and not the OEM distribution customer.

Therefore, it is the contract manufacturing firm to

which we must look for payment in such cases and not our OEM distribution customer.

If we fail to receive payment from the contract manufacturer,

our ability to be paid for products already delivered would be limited.

In such event, our results of operations and cash flows will be

adversely affected.

In these cases, we invoice the contract

manufacturing firm and not the OEM distribution customer.

Therefore, it is the contract manufacturing firm to which we must look for payment

in such cases and not our OEM distribution customer.

If we fail to receive payment from the contract manufacturer, our ability to be paid

for products already delivered would be limited.

In such event, our results of operations and cash flows will be adversely affected.

Our dependence on foreign manufacturers

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will be delayed.

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.

Depending on the severity of such consequences, this may have

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

For example, in Fiscal 2024, we experienced shipping delays resulting from cargo ship piracy in the Red Sea, and in March

2021, a container ship carrying some of our products ran aground in the Suez Canal and was immobilized for six days.

Although these events

did not have a material adverse effect on our business, there is no assurance that, if they happened again, that they would not.

such case, our customers may cancel or change the terms of their purchase orders, resulting in a cancellation or delay of payments to

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.

Depending on the severity of such consequences, this may have an adverse effect on

our financial condition and results of operations.

Issues with our products or services may

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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.

willingness by 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

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our Chief Executive Officer, who would be difficult to replace.

Our design and development business is highly labor intensive and, therefore,

our ability to attract and retain professional and technical staff is an important factor in our future success.

The market for qualified

engineers is competitive and, from time to time, it may be difficult to attract and retain qualified individuals with the required expertise

within the timeframe demanded by our clients.

The loss of the services of any of our key personnel and the process to replace any key

personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives.

Further, as part of the Company’s ongoing efforts to reduce expenses,

we recently reduced the salaries of three of our executive officers.

While the salary reductions were agreed to by the executives, it

is possible that the decrease in salary may cause either or both officers to look for employment elsewhere.

Our design and development

business is highly labor intensive and, therefore, our ability to attract and retain professional and technical staff is an important

factor in our future success.

The market for qualified engineers is competitive and, from time to time, it may be difficult to attract

and retain qualified individuals with the required expertise within the timeframe demanded by our clients.

The loss of the services of

any of our key personnel and the process to replace any key personnel would involve significant time and expense and may significantly

delay or prevent the achievement of our business objectives.

If a third party asserts that we are infringing

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times, unreliable service levels, prolonged or frequent service outages, or insufficient capacity may prevent us from efficiently providing

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 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.

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

Our IT infrastructure including

power, security, connectivity and other services is housed within our office space in which we lease.

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

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stock as of December 9, 2024.

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

including the election of our directors and other corporate actions.

This influence may be alleged to conflict with our interests and

the interests of our other shareholders.

Wise would beneficially own significantly more shares without a 19.9% blocker (shareholder approval

cap) under our Series A-1 Convertible Preferred Stock.

Wise has substantial influence over the outcome of all matters submitted to

our shareholders for approval, including the election of our directors and other corporate actions.

This influence may be alleged to conflict

with our interests and the interests of our other shareholders.

In addition, such influence by Mr.

Wise could have the effect of discouraging potential business

partners or create actual or perceived governance instabilities that could adversely affect the price of our common stock.

Wise could have the effect of discouraging

potential business partners or create actual or perceived governance instabilities that could adversely affect the price of our common

Risks Related to Our Common Stock

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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.

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 wars in Ukraine and Israel, and other developments that could adversely impact the U.S.

and global economies and erode investor sentiment.

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be used to benefit our business.

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.

Failure to meet the continued listing standards

of Nasdaq could result on the delisting of 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.

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.

As part of being listed on Nasdaq, we are required to meet certain continued listing requirements.

On July 31, 2023, the Company

received a notice from Nasdaq that the Company had failed to comply with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price

Rule”) by failing to maintain a minimum bid price of at least $1.00 per share of common stock for 30 consecutive business days.

The Company was given a 180-day grace period to regain compliance, but the Company failed to regain compliance within the grace period.

The Company then timely requested a hearing before an independent Nasdaq Hearings Panel.

The hearing occurred on April 9, 2024.

Further, on February 22, 2024,

the Company received a notice from Nasdaq that the Company’s stockholders’ equity did not comply with the applicable Nasdaq

Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”), requiring listed companies to maintain a stockholders’

equity of at least $2,500,000, as reported in the Company’s Form 10-Q for the fiscal period ended December 31, 2023.

was instructed to present its views with respect to its failure to meet the requirements of the Stockholders’ Equity Rule at the

April 9, 2024, hearing before the Nasdaq Hearings Panel.

a result of the reverse stock split effected in June 2024 and the entrance into the Accounts Payable Conversion Agreements with Forward

China (described in Note 14 to the consolidated financial statements), the Company regained compliance with the Minimum Bid Price Rule

and Stockholders’ Equity Rule i n July 2024 and was formally notified by Nasdaq that such requirements were met.

24, 2025, the Company is subject to a Nasdaq “Panel Monitor” which provides for in the event the Company fails to satisfy

the Stockholders’ Equity Rule during the monitoring period, the Company will be required to request a hearing before the Panel in

order to maintain its listing rather than taking the interim step of submitting a compliance plan for the Nasdaq Listing Qualifications

Staff’s review or receiving any otherwise applicable grace period.

We can provide no assurance that if the Company fails to satisfy

the Stockholders’ Equity Rule during this period that the Company will be able to maintain its Nasdaq listing.

If our stock price declines

below $1.00 for more than 30 consecutive business days, and thereby fails to satisfy the Minimum Bid Price Rule, we may ask shareholders

to approve another reverse stock split.

Reverse stock 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 for

another 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 cure noncompliance based on the

minimum round lot requirement.

we fail to meet continued listing requirements in the future and are unable to get an extension to regain compliance, Nasdaq may delist

our common stock.

If our common stock is delisted, we could face significant material adverse consequences, including:

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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

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

Violation of existing or

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for our shareholders to realize the creation of value in our common stock will likely be through a sale of those shares.

UNRESOLVED STAFF COMMENTS

Not Applicable.

We have incurred, and may in the future incur, impairment charges

related to our goodwill, which could have a material adverse effect on our business, results of operations and financial condition.

As of September 30, 2024,

we had goodwill of $1,559,000.

The carrying value of goodwill may be reduced if we determine that goodwill is impaired.

We test goodwill

for impairment in the fourth quarter of each year, or more frequently if indicators of an impairment exist, to determine whether it is

more likely than not that the fair value of a reporting unit is less than its carrying value.

We have had to impair our goodwill in the

past, and in Fiscal 2024, we recorded a goodwill impairment charge of $200,000.

The testing of goodwill for impairment requires us to

make significant estimates about future performance and cash flows, as well as other assumptions.

These estimates can be affected by numerous

factors, including potential changes in economic, industry or market conditions;

changes in business operations;

changes in competition

or changes in the price of our ordinary shares and market capitalization and other relevant events and factors affecting the fair value

of the reporting unit.

Changes in these factors, or changes in actual performance compared with estimates of our future performance, may

affect the fair value of goodwill and could result in an impairment charge.

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