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Item 1A. Risk Factors

2026-04-15 compared with 2008-05-13 · 560 added, 102 removed, 6 unchanged (99% of the section changed)

In evaluating us as a company, careful consideration should be given to the following risk factors, in addition to the other information included in this Annual

Report on Form 10-K.

Each of these risk factors could adversely affect our business, operating results and/or financial condition, as well as adversely affect the value of an

investment in our common stock.

In addition to the following disclosures, please refer to the other information contained in this report, including the consolidated financial statements and the

related notes.

We operate in the highly competitive EMS (Electronic Manufacturing Services) industry.

We compete against many EMS companies.

The larger global competitors have more resources and greater economies of scale.

We also compete with OEM

in-house operations that are continually evaluating manufacturing products internally against the advantages of outsourcing.

We may also be at a competitive disadvantage with respect to

price when compared to manufacturers with excess capacity, lower cost structures and availability of lower cost labor.

evaluating our Company, careful consideration should be given to the following risk factors, in addition to the other information included

in this Annual Report on Form 10-K.

Each of these risk factors could adversely affect our business, operating results and/or financial

condition, as well as adversely affect the value of an investment in our common stock.

In addition to the following disclosures, please

refer to the other information contained in this report, including our consolidated financial statements and the related notes.

Related to our Business

large percentage of our net sales have been made to a small number of customers, and the loss of a major customer, if not replaced, would

adversely affect us.

customer accounted for at 32.2% of net sales for the year ended December 31, 2025, and 27.7% of net sales for the year ended December

The loss of a substantial portion of net sales to our largest customers could have a material adverse effect on us.

are dependent on suppliers for components and raw materials and may experience shortages, extended lead times, cost premiums and shipment

delays that would adversely affect our customers and us.

purchase raw materials, commodities and components for use in our production process.

Increased costs of these materials, including tariffs,

could have an adverse effect on our production costs if we are unable to pass along price increases or reduce the other cost of goods

produced through cost improvement initiatives.

Fuel and energy cost increases could also adversely affect our freight and operating costs.

Due to customer specifications and requirements, we are dependent on suppliers to provide critical electronic and other components and

materials for our operations that could result in shortages of some of the components needed for production.

Component shortages may

result in an inability to deliver products on time or at all, expedited freight, overtime premiums and increased component costs.

addition to the financial impact on operations from lost net sales and increased cost, there could potentially be harm to our customer

relationships.

To reduce the effects of supply chain disruption for our customers, we purchase and hold raw material and finished goods

inventory, which results in a reduction of cash available.

If we are unable to sell such inventory or sell such inventory within a reasonable

timeframe, it may adversely affect our operations, financial results and liquidity.

customers cancel orders, change order quantity, timing and product specifications that if not managed would have an adverse effect on

the timing of net sales and inventory carrying costs.

face, through the normal course of business, customer cancellations and rescheduled orders and are not always successful in recovering

the costs of such cancellations or rescheduling.

With every new product or substantial redesign of a product, we utilize our new product

introduction process.

Such process is intended to improve the manufacturability, compliance with customer specifications and quality

standards relating to the product but may result in delays in commencement of production impacting the timing of net sales.

excess and obsolete inventory losses as a result of customer order changes, cancellations, changes to the components required to produce

products, and contract termination could have an adverse effect on our operations, financial results and liquidity.

We record inventory

at the lower of cost or net realizable value in accordance with generally accepted accounting principles in the United States of America

GAAP”) for exposures related to the estimated impact from these possibilities.

To reduce the impact of canceled or

charged orders, our terms and conditions require customers to purchase excess inventory.

depend heavily on our people and may from time to time have difficulty attracting and retaining skilled employees and the cost of labor

may continue to increase.

The loss of key management or an ineffective transition of leadership could adversely affect our operations

and strategic direction.

operations depend upon the continued contributions of our key management, marketing, technical, financial, accounting, product development

engineers, salespeople and operations personnel.

We also believe that our continued success will depend upon our ability to attract,

retain and develop highly skilled managerial and technical resources and direct labor resources within our highly competitive industries.

Not being able to attract or retain these employees could have a material adverse effect on net sales and earnings.

In addition, the

cost of attracting and retaining direct and indirect labor may continue to increase, which will increase our operating costs and may

reduce our profitability.

senior leadership team possess significant industry knowledge, operational expertise, strategic vision and relationships with customers,

lenders, suppliers and other stakeholders that are important to the operation and growth of our business.

our Board of Directors, the Nominating and Corporate Governance Committee and the Compensation and Talent Committee periodically evaluate

succession planning for senior management positions, there can be no assurance that we will be able to effectively manage the transition

of responsibilities if one or more of these executives were to depart, retire, become unable to serve, or otherwise be replaced.

loss of any member of senior management could result in disruption to our operations, delays in executing our strategic plans, loss of

institutional knowledge, and uncertainty among employees, customers, suppliers or investors.

addition, the process of identifying, recruiting, hiring and integrating qualified executive leadership may be time-consuming and costly,

and we may not be able to attract and retain suitable candidates with the necessary experience and industry expertise on acceptable terms

or within an acceptable timeframe.

Any leadership transition that is not effectively managed could adversely affect our business, financial

condition, results of operations and cash flows.

engineering net sales depend on our ability to deliver quality value-added engineering services required by our customers.

markets for our engineering services are characterized by rapidly changing technology and evolving process development.

The continued

success of our business to generate engineering net sales will depend upon our ability to hire and retain qualified engineering personnel

and maintain and enhance our technological leadership.

Although we believe that we currently can provide the value-added engineering

services that are required by our customers, there is no certainty that we will develop the capabilities required by our customers in

The emergence of new technology, industry standards or customer requirements may render the engineering services we currently

provide obsolete or uncompetitive.

The acquisition and implementation of new engineering knowledge, technical skills and related equipment

may require significant expense that could adversely affect our operating results, as could our failure to anticipate and adapt to our

customers’ changing technological requirements.

operate in highly competitive industries, and we depend on continuing outsourcing by Original Equipment Manufacturers (“OEM”).

compete against many companies that engineer and manufacture complex electromedical and electromechanical medical device, medical imaging,

aerospace and defense, and industrial products.

The larger global competitors have more resources and greater economies of scale and

have more geographically diversified international operations.

We also compete with OEM operations that are continually evaluating manufacturing

products internally against the advantages of outsourcing or delaying their decision to outsource.

We may also be at a competitive disadvantage

with respect to price when compared to manufacturers with excess capacity, lower cost structures and availability of lower cost labor.

factors in our targeted markets are believed to be manufacturing capabilities, product and service pricing, quality, the ability to

meet delivery schedules, customer service, value-added engineering, technology solutions and geographic location.

We also expect

that our competitors will continue to improve the performance of their current products or services, to reduce their current

products or service sales prices and improve services that may be offered.

Any of these could cause a decline in net sales, loss of

market share, or lower profit margin.

customers may also change their geographic manufacturing preferences based on factors such as tariffs, supply chain resiliency initiatives,

geopolitical developments, regulatory requirements, or proximity to end markets.

If our manufacturing capabilities do not align with

these evolving preferences, we may lose existing programs, be unable to secure new business, or incur costs associated with transferring

production between facilities, which could adversely affect our net sales, operating results and cash flows.

availability of excess manufacturing capacity of our competitors also creates competitive pressure on price and winning new business.

We must continue to provide a quality product,

be responsive and flexible to customers' requirements, and deliver to customers' expectations.

Our lack of execution could have an adverse effect on our operations.

A large percentage of our sales have been made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us.

We have several customers that are responsible for a significant portion of our net sales.

General Electric Co.'s (G.E.) Medical and Transportation

Divisions together accounted for 17% of net sales for

the years ended December 31, 2007 and 2006.

Additionally, Northrop Grumman Corp.

accounted for 16% of net sales for the year ended December 31, 2007 and 10% of net sales for the year

ended December 31, 2006.

If there is a loss of one or more major customers or a significant decline in sales to our major customers it could have an adverse effect on our results from

We will continue to expand our customer base through our in-house sales efforts and target our acquisitions to reduce the dependence.

We are dependent on suppliers for electronic components and may experience shortages, cost premiums and shipment delays that would adversely affect our customers and us.

We purchase raw materials, commodities and components for use in our production.

Increased costs of these materials could have an adverse effect on our production

costs if we are unable to pass along price increases or reduce the other cost of goods produced through cost improvement initiatives.

Fuel and energy cost increases could also adversely affect our

freight and operating costs.

Due to customer specifications and requirements, we are dependent on suppliers to provide critical electronic components and materials for our operations that could result

in shortages of some of the electronic components needed for their production.

Component shortages may result in expedited freight, overtime premiums and increased component costs.

In addition to the

financial impact on operations from lost revenue and increased cost, there could potentially be harm to our customer relationships.

Our customers cancel orders, change order quantity, timing and specifications that if not managed would have an adverse affect on inventory carrying costs.

We do face through the normal course of business excess and obsolete inventory losses as a result of customer order changes, cancellations, product changes and

contract termination that could have an adverse effect on our operations.

We estimate and reserve for any known or potential impact from these possibilities.

The manufacture and sale of our products carries potential risk for product liability claims.

We represent and warrant the goods and services we deliver are free from defects in material and workmanship for one year (1) from ship date.

other guarantees or warranties, expressed or implied, of any nature whatsoever as to the goods including without limitation, warranties to

merchantability, fit for a particular purpose or non-infringement of patent or the like unless agreed upon in writing.

If a product liability claim results in our being liable and the

amount is in excess of our insurance coverage or there is no insurance coverage for the claim then it could have an adverse effect on our business and financial position.

We depend heavily on our people and may from time to time have difficulty attracting and retaining skilled employees.

Our operations depend upon the continued contributions of our key management, marketing, technical, financial, accounting, product development engineers, sales

people and operational personnel.

We also believe that our continued success will depend upon our ability to attract, retain and develop highly skilled managerial and technical resources within the

highly competition EMS industry.

Not being able to attract or retain these employees could have a material adverse effect on revenues and earnings.

Operating in foreign countries expose our operations to risks that could adversely affect our operating results.

We've operated a manufacturing facility in Mexico since 2002 and we may expand into other foreign countries in the future.

The benefits projected for our Mexico

operation have taken more time than expected to integrate into our marketing strategies.

Our operation there is subject to risks that could adversely impact our financial results, such as economic or

political volatility, employee turnover, staffing, managing personnel in diverse culture, labor instability, transportation delays, and foreign currency fluctuations.

Non-compliance with environmental laws may result in restrictions and could adversely affect operations.

Our operations are regulated under a number of federal, state, and foreign environmental and safety laws and regulations that govern the discharge of hazardous

materials into the air and water, as well as the handling, storage, and disposal of such materials.

These laws and regulations include the Clean Air Act;

We must continue to provide a quality product, be responsive and flexible to customers’ requirements, and deliver to customers’

expectations.

Our lack of execution could have an adverse effect on our results of operations and financial condition.

manufacture and sale of products carries potential risk for product liability claims and warranty claims .

generally are required to represent and warrant to our customers that the goods and services we deliver are free from defects in material

and workmanship generally for one year.

Certain customers require longer warranty periods.

If a product liability claim results in our

being liable, it could have a material adverse effect on our business, financial position and liquidity.

We have insurance coverage

for product liability claims, but there can be no assurances that the amount of coverage will be adequate or that insurance proceeds

will be available for a particular claim.

Our insurance may not cover claims for non-conformance or defective products that are not product

liability claims from customers.

Company is majority owned by one group of shareholders, and those shareholders may be able to take actions that do not reflect the will

or best interests of other shareholders.

and the Kunin family, collectively as a group, own a majority of our common stock.

As a result, our majority shareholder

group will have the ability to elect all of the members of our Board of Directors and thereby control our policies and operations, including

the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common

stock, the incurrence or modification of debt by us, amendments to our articles of incorporation, as amended and amended and restated

bylaws and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with interests of other

shareholders.

addition, the majority shareholder group may have an interest in pursuing transactions that, in its judgment, could enhance its investment,

even though such transactions might be inconsistent with your investment objectives.

a majority owned or controlled company, NASDAQ does not require the Company to comply with certain corporate governance rules including

that we are not required to have a majority of independent directors on the board, an independent compensation committee, or an independent

nominating and corporate governance committee.

The Company is required to have an audit committee comprised of independent directors.

Having fewer independent directors or fewer independent members of the Compensation and Talent Committee or the Nominating and Corporate

Governance Committee may result in increased influence of the majority ownership group over business operations.

in foreign countries exposes our operations to risks that could adversely affect our operating results.

operate manufacturing facilities in Mexico and China.

Our operations in those countries are subject to risks that could adversely impact

our financial results and costs, such as economic or political volatility, foreign legal and regulatory requirements, international trade

relations factors (such as tariffs, trade sanctions, duties, export controls and other trade restrictions), protection of our and our

customers’ intellectual property and proprietary technology in certain countries, potentially burdensome taxes, crime, employee

turnover, staffing, managing personnel in diverse culture, labor instability, transportation delays, and foreign currency fluctuations.

and regulatory requirements in Mexico and China are continually changing which may and has affected our ability to predict timing and/or

whether we will receive applicable tax refunds such as value-added tax (“VAT”) tax refunds.

The changing regulatory environment

may impact negatively the timing and recognition of such net sales and/or whether we ultimately collect cash from these net sales.

particular, our Mexico operations involve significant VAT refund receivables generated from purchasing activities.

The Mexican government

has periodically delayed VAT refund processing, and regulatory changes have made the timing and collectability of such refunds increasingly

difficult to predict.

We currently have exposure related to past due VAT receivables that remain outstanding beyond statutory processing

periods, and future delays or non-collection of these amounts could adversely affect our liquidity, working capital, and operating results.

face risks arising from the restructuring of our operations .

recent years, we have undertaken initiatives to restructure our business operations with the intention of improving utilization and realizing

cost savings.

These initiatives have included reducing the size of our workforce, reducing the number of facilities, and changing the

location of certain customer part production to different facilities in an effort to align our capacity and infrastructure with current

and anticipated customer demand.

The process of restructuring entails, among other activities, moving production between facilities,

transferring programs from higher cost geographies to lower cost geographies, closing facilities, reducing size of our workforce, realigning

our business processes and reorganizing our management.

Restructurings

could adversely affect us, including a slower than expected more costly transition of customers between facilities, a decrease in employee

morale, delays encountered in finalizing the scope of, and implementing, the restructurings, failure to achieve targeted cost savings,

and failure to meet operational targets and customer requirements due to the restructuring process.

These risks are further complicated

by our extensive international operations, which subject us to different legal and regulatory requirements that govern the extent and

speed of our ability to reduce our manufacturing capacity and workforce.

have and may be required to take additional restructuring charges in the future to align our operations and cost structures with global

economic conditions, market demands, cost competitiveness, and our geographic footprint as it relates to our customers’ production

requirements or following divestitures.

We may consolidate or divest certain manufacturing facilities or transfer certain of our operations

to other geographies.

If we are required to take additional restructuring charges in the future, our operating results, financial condition,

and cash flows could be adversely impacted.

Related to our Assets

are dependent on our information technology systems for order, inventory procurement and management, production management,

treasury, financial reporting, communications and other functions.

If our information systems fail or experience major interruptions

due to physical damage or loss of power or incur disruptions to our information systems, including security breaches, losses of data

or outages, cyberattacks and other security issues, it could adversely affect our operations and/or financial

rely on our information technology systems to effectively manage our operations, administration and financial functions.

systems, web sites, telecommunications, and data networks are vulnerable to damage or interruption from power loss, natural disasters

and other sources of physical damage or disruption to the equipment which maintains, stores and hosts our information technology systems.

We have taken steps to protect and create redundancies for the equipment that facilitates the use of our management information systems,

but these steps may not be adequate to ensure that our operations are not disrupted by events within and outside of our control.

also rely on information systems, some of which are managed by third parties, to store, process and transmit confidential information,

including financial reporting, inventory management, procurement, invoicing and electronic communications, belonging to our customers,

our suppliers, our employees and/or us.

We monitor and mitigate our exposure to cybersecurity issues and modify our systems when warranted

and we have implemented certain business continuity items, including, to the extent feasible, leveraging our multiple sites for redundancies,

as well as backup and restore methods inclusive of off-site, secure hosted and cloud based third-party providers.

Nevertheless, these

systems are vulnerable to, and at times have suffered from, among other things, damage from power loss or natural disasters, computer

system and network failures, loss of telecommunication services, physical and electronic loss of data, terrorist attacks, computer viruses,

cyberattacks and security breaches, ranging from uncoordinated individual attempts to gain unauthorized access to our information technology

systems to sophisticated and targeted measures.

These include data theft, malware, phishing, ransomware attacks, or other cybersecurity

threats or incidents.

The increased use of mobile technologies and the internet of things can heighten these and other operational risks.

If we, or the third parties who own and operate certain of our information systems, are unable to prevent such breaches, losses of data

and outages, our operations could be disrupted.

Also, the time and funds spent on monitoring and mitigating our exposure and responding

to breaches, including the training of employees, the purchase of protective technologies and the hiring of additional employees and

consultants to assist in these efforts could adversely affect our financial results.

The increasing sophistication of cyberattacks requires

us to continually evaluate the threat landscape and new technologies and processes intended to detect and prevent these attacks.

can be no assurance that the security measures and systems configurations we choose to implement will be sufficient to protect the data

Any theft or misuse of information resulting from a security breach could result in, among other things, loss of significant

and/or sensitive information, litigation by affected parties, financial obligations resulting from such theft or misuse, higher insurance

premiums, governmental investigations, negative reactions from current and potential future customers (including potential negative financial

ramifications under certain customer contract provisions) and negative publicity and any of these could adversely affect our financial

addition, we must comply with increasingly complex regulations intended to protect business and personal data in the U.S.

and globally.

In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal information among the Company

and its international subsidiaries.

Several jurisdictions have passed laws in this area, and additional jurisdictions are considering

imposing additional restrictions or have laws that are pending.

These laws continue to develop and may be inconsistent from jurisdiction

to jurisdiction.

Complying with emerging and changing requirements causes the Company to incur substantial costs and has required and

may in the future require the Company to change its business practices.

Compliance with these regulations can be costly and any failure

to comply could result in legal and reputational risks as well as penalties, fines and damages that could adversely affect our financial

are investing in new technologies which are inherently risky .

have made investments in R&D of new technologies that we believe if successful will strengthen our relationships with customers.

Our intent is that the Company own intellectual property arising from R&D activities.

To the extent that those investment efforts

are unsuccessful, our competitive position may be harmed, and we may not realize a return on our investments.

compete more successfully, we believe it is advantageous to maintain an effective R&D program to develop new products and manufacturing

processes that will benefit our customers.

Our R&D efforts are currently funded through investment of cash flow generated from operations,

and we incurred R&D expenses of 1,172 and $1,191 in the years ended December 31, 2025 and 2024, respectively.

We are focusing

our R&D efforts across several key areas, including development of fiber optic technologies for a wide range of applications like

active optical cables, expanded beam technology and physical contact cables.

growth strategy in general requires capital to support R&D, working capital, capital expenditures, new program launches and other

strategic initiatives.

If internally generated cash flow and available borrowings are not sufficient, and we are unable to obtain additional

financing on acceptable terms or at all, we may be required to delay, scale back or abandon R&D growth initiatives, which could adversely

affect our competitiveness, results of operations and long-term prospects.

do not expect all our R&D investments to be successful.

Some of our efforts to develop and market new products and technologies fail

or fall short of our expectations, or will not be well-received by customers, who may adopt competing technologies.

investments in new products and technologies are inherently risky and are a departure from historical business operations .

Company owned technology and products is different than our historical manufacturing business.

While we believe that this is an important

step to further cultivate relationships with customers and partners, the Company has not historically developed its own technologies

rather, it has historically developed and manufactured products designed by our customers.

of new products and technologies may expose us to potential product liability risks that are inherent in the design, manufacture and

marketing of those products.

As a result, we face an inherent risk of damage to our reputation if one or more of our products or technologies

are, or are alleged to be, defective.

Although we carry product liability insurance, we may be exposed to product liability and warranty

claims in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged

to result, in bodily injury and/or property damage.

Product liability, warranty and recall costs may have a material adverse effect on

our business, financial condition and results of operations.

we fail to comply with the covenants contained in our credit agreement, we may be unable to secure additional financing and repayment

obligations on our outstanding indebtedness may be accelerated.

credit agreement contains financial and operating covenants with which we must comply.

March 20, 2026, we entered into a new Credit and Security Agreement with Associated Bank, National Association, which provides for a

revolving credit facility of up to $15,000, subject to a borrowing base based on eligible accounts receivable and inventory, and a $2,200 term loan (the “Associated Facility”).

The Associated Facility includes a sublimit of $1,500

for letters of credit and is secured by substantially all of our assets in the United States of America, and the facility and term

loan each mature in March 2029.

Borrowings under the Associated Facility bear interest, at our option, at a defined base rate, or at

one-month or three-month Term Secured Overnight Financing Rate (“Term SOFR”), plus 2.00% in the case of revolving credit

borrowings and plus 2.25% in the case of the term loan.

Associated Facility contains customary affirmative and negative covenants that restrict or limit our ability to incur additional indebtedness,

create liens, make investments, sell assets, pay dividends or engage in certain transactions without lender consent.

This agreement also

requires us to comply with financial covenants, including maintaining a Fixed Charge Coverage Ratio of 1.10 to 1.00, which measures the

ratio of earnings before interest, tax, depreciation and amortization (“EBITDA”), as defined to exclude certain other non-cash

items, and less unfunded capital expenditures, to fixed charges such as interest as well as debt and capital lease principal payments.

ability to comply with these covenants depends in part on our ability to generate sufficient EBITDA and operating cash flow.

If our EBITDA

or cash flows declines due to any factor including as described in these risk factors, we may not remain in compliance with our financial

covenants under the Associated Facility.

we fail to comply with the covenants in the future and our lender does not agree to waive or amend such noncompliance, an event of default

Upon an event of default, the lender could terminate its commitments to lend, accelerate repayment of outstanding indebtedness,

require us to cash collateralize outstanding letters of credit, or exercise remedies against the collateral securing the facility.

of these actions could materially and adversely affect our liquidity, financial condition and ability to operate our business.

future growth depends on our ability to generate and sustain customer bookings.

future sales growth depends in significant part on our ability to secure customer bookings and program awards from existing and new customers.

Bookings may fluctuate significantly from period to period due to factors such as customer demand, product life cycles, changes in outsourcing

strategies by OEMs, competitive pricing pressures, economic conditions, program timing, and customer capital spending decisions.

significant portion of our bookings may relate to new programs that require engineering support, qualification processes, tooling, or

production ramp-up periods before generating meaningful sales.

As a result, bookings may not convert into sales within expected timeframes,

or at all, and delays in customer program launches or production schedules could adversely affect the timing of sales and operating results.

addition, our ability to sustain bookings growth depends on our ability to maintain strong customer relationships, demonstrate manufacturing

and engineering capabilities, remain price competitive, and successfully bid for new business opportunities.

If we fail to secure sufficient

new bookings or if customers delay, cancel, or reduce awarded programs, our future net sales, operating results, EBITDA and cash flows

could be adversely affected.

ability to generate positive EBITDA and operating cash flow may fluctuate and may be insufficient to support our operations, service

our debt obligations or satisfy financial covenant requirements.

ability to generate EBITDA and operating cash flow depends on numerous factors, many of which are outside of our control, including demand

from our customers, pricing pressures, supply chain disruptions, cost inflation, labor availability, and the timing of customer orders

and payments.

Our operations also require significant working capital investments, including purchases of raw materials and components,

managed inventory programs for customers, and extended inventory holdings to mitigate supply chain disruptions.

Additionally,

we may experience delays in collecting receivables, including value added tax refunds in Mexico, and may be required to fund inventory

purchases in advance of customer demand.

These factors may reduce operating cash flow and limit our ability to convert earnings into

operating cash flow.

we are unable to generate sufficient EBITDA or free cash flow, we may face challenges meeting our operating needs, funding capital expenditures,

investing in research and development, servicing our indebtedness or complying with the financial covenants in our credit facilities.

Any such circumstances could materially adversely affect our financial condition, liquidity and results of operations.

exposure to financially troubled customers, start-up businesses or suppliers may adversely affect our financial results.

provide manufacturing services to companies and industries that have in the past, and may in the future, experience financial difficulty.

Also, we provide services and products to new and high growth companies.

If our customers experience financial difficulty or lack of

funding for operations, we could have difficulty recovering amounts owed to us from these customers, or demand for our services or products

from these customers could decline.

Additionally, if our suppliers experience financial difficulty, we could have difficulty sourcing

supply necessary to fulfill production requirements and meet scheduled shipments.

If one or more of our customers were to become insolvent

or otherwise were unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition

could be adversely affected.

Such adverse effects could include one or more of the following:

an increase in expenses for expected accounts

receivable credit losses and inventory write-offs, a reduction in net sales, and an increase in our working capital requirements due

to higher inventory levels and in days our accounts receivables are outstanding.

in foreign currency translation rates could adversely impact our net sales and earnings.

in foreign currency exchange rates will impact our reported net sales and earnings.

Substantially all our net sales are transacted in

A majority of our manufacturing and cost structure is based in the United States and transacted in U.S.

exposures to local currencies for certain net sales in China denominated in Chinese Yuan, value added tax receivables denominated in

the Mexican Peso, as well as certain costs incurred at our facilities in China and Mexico that are denominated in their respective local

Significant fluctuations in foreign exchange rates between the U.S.

dollar and foreign currencies may adversely affect our

results of operations.

Mexico facility operates as a maquiladora, and its financial records are kept in Mexican Pesos.

As the functional currency of the maquiladora

Dollar, we translate the Mexican Pesos financial records into U.S.

Dollars and record a currency translation gain or loss

in the statement of operations.

These translation gains or losses may be material to the financial results of the Company.

For the years

ended December 31, 2025 and 2024, we recorded translation gain of $120 and a translation loss of $137, respectively, in our consolidated

statements of operations.

The majority of these gains and losses were related to the translation of value added tax receivables denominated

in Mexican Pesos into US dollars.

do not expect to pay dividends for the foreseeable future, and we may never pay dividends;

investors must rely on stock appreciation

for any return on investment in our common stock.

currently intend to retain any future earnings to support the development and expansion of our business and do not anticipate paying

cash dividends in the foreseeable future.

Our payment of any future dividends will be at the discretion of our Board of Directors after

taking into account various factors, including but not limited to, our financial condition, operating results, cash needs, growth plans,

and the terms of any credit agreements that we may be a party to at the time.

In addition, our ability to pay dividends on our common

stock may be limited by state law.

Accordingly, investors must rely on sales of their common stock after price appreciation, which may

never occur, as the only way to realize certain returns on their investment.

As a result, investors must rely on stock appreciation and

a liquid trading market for any return on investment in our common stock.

expect volatility in the price of our common stock, which may subject us to securities litigation.

market for our common stock may be characterized by significant price volatility when compared to other issuers, and we expect that our

share price will be more volatile than other issuers for the indefinite future.

In the past, plaintiffs have often initiated securities

class action litigation against companies following periods of volatility in the market price of their securities.

We may in the future

be the target of similar litigation.

Securities litigation could result in substantial costs and liabilities and could divert management’s

attention and resources.

we fail to maintain effective systems of internal control over financial reporting and disclosure controls and procedures, we may not

be able to accurately report our financial results or prevent fraud.

internal control over financial reporting and disclosure controls and procedures are necessary for us to provide reliable financial reports

and effectively prevent fraud and operate successfully as a public company.

Any failure to develop or maintain effective internal control

over financial reporting and disclosure controls and procedures could harm our reputation or operating results or cause us to fail to

meet our reporting obligations.

As we expand our business operations both within the United States and internationally, we will need

to maintain effective internal controls over financial reporting and disclosure controls and procedures.

services involve other inventory risk.

production services primarily provide that we purchase some, or all, of the required materials and components based on customer forecasts

Although, in general, our contracts with our customers obligate our customers to ultimately purchase inventory ordered to

support their forecasts or orders, we generally initially finance these purchases.

In addition, suppliers may require us to purchase

materials and components in minimum order quantities that may exceed customer requirements.

A customer’s cancellation, delay or

reduction of forecasts or orders can also result in excess inventory or additional expense to us.

Engineering changes by a customer or

a product’s end-of-life may result in obsolete materials or components.

While we attempt to cancel, return or otherwise mitigate

excess and obsolete inventory, as well as require customers to reimburse us for these items and/or price our services to address related

risks, we may not actually be reimbursed timely or in full, be able to collect on these obligations or adequately reflect such risks

in our pricing.

In addition to increasing inventory in certain instances to support new program ramps, we may also increase inventory

if we experience component shortages or longer lead-times for certain components in order to maintain a high level of customer service.

In such situations, we may procure components earlier, which leads to a short-term increase in inventory and may lead to increased excess

or obsolete inventory in the future.

Excess or obsolete inventory, the need to acquire increasing amounts of inventory due to shortages,

customer demand or otherwise, or other failures to manage our working capital, could adversely affect our operating results, including

our return on invested capital.

addition, we provide managed inventory programs for some of our customers under which we hold and manage finished goods or work-in-process

These managed inventory programs may result in higher inventory levels, further reduce our inventory turns and increase

our financial exposure with such customers.

In addition, our inventory is infrequently held at a customer’s facility or warehouse,

or elsewhere outside of our control, which may increase the risk of loss.

Even though our customers generally have contractual

obligations to purchase such inventories from us, we remain subject to customers’ credit risks as well as the risk of potential

customer default and the need to enforce those obligations.

of Our Long-Lived Assets Could Adversely Affect Our Results of Operations and Financial Condition.

evaluate long-lived assets, primarily property and equipment, whenever current events or changes in circumstances indicate that the carrying

amount of an asset or asset group may not be recoverable.

Recoverability for assets to be held and used is based on our projection of

the undiscounted future operating cash flows of the underlying assets.

To the extent such projections indicate that future undiscounted

cash flows are not sufficient to recover the carrying amounts of related assets, a charge might be required to reduce the carrying amount

to equal estimated fair value.

of December 31, 2025, the Company’s common stock was trading at a value less than the Company’s net equity value.

the Company evaluated future undiscounted cash flows and determined that no long-lived asset impairment was required as of December 31,

If the fair value of our other long-lived assets is less than their carrying value, we may be required to record a non-cash impairment

charge, which could be material.

Such charges could negatively impact our results of operations, potentially affect our compliance with

debt covenants, and reduce the perceived value of our Company.

There can be no assurance that future reviews of long-lived assets will

not result in impairment charges, particularly in periods of market or economic volatility.

economic conditions around the world could adversely affect demand for our products and services and the financial health of our customers.

for our products and services depends upon worldwide economic conditions, including but not limited to overall economic growth rates,

construction, tariffs, taxes, consumer spending and confidence, financing availability, employment rates, interest rates, inflation,

defense spending levels, global politics and conflict, and the profits, capital spending, and liquidity of industrial companies.

economic downturn or financial market turmoil may depress demand for our products and/or services in all major geographies and markets.

If customers are unable to purchase our products or services because of unavailable credit or unfavorable credit terms, depressed end-user

demand, or are simply unwilling to purchase our products or services, our net sales and earnings will be adversely affected.

are subject to the risk that our customers will have financial difficulties, which could harm their ability to satisfy their obligation

to pay accounts receivable.

Further, an economic downturn may affect our ability to satisfy the financial covenants in our financing

arrangements.

or disease outbreaks could adversely affect our operations, supply chains, financial condition and results of operations.

of epidemic, pandemic, or contagious diseases, such as, historically, the COVID-19 virus, Ebola virus, Middle East Respiratory Syndrome,

Severe Acute Respiratory Syndrome, or the H1N1 virus, could cause a disruption to our business.

Business disruptions could include temporary

closures of our facilities or the facilities of our suppliers, reduced demand from customers, unavailability or restricted availability

of our material portions of our workforce, raw materials or components necessary to manufacture our products, or disruptions or restrictions

on our ability to travel or to distribute our products.

Any disruption of our operations, our suppliers or our customers would likely

impact our net sales and operating results.

In addition, a significant outbreak of epidemic, pandemic, or contagious diseases in the

human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries,

resulting in an economic downturn that could affect demand for our products and services.

Any of these events could negatively impact

our net sales and have a material adverse effect on our business, financial condition, results of operations, or cash flows.

and Regulatory Risks

are subject to extensive government regulations and industry standards and the terms of complex contracts;

a failure to comply with current

and future regulations and standards, or the terms of our contractual arrangements, could have an adverse effect on our business, customer

relationships, reputation and profitability.

are subject to extensive government regulation and industry standards relating to the products we manufacture as well as how we conduct

our business, including regulations and standards relating to labor and employment practices, workplace health and safety, the environment,

sourcing and import/export practices, the market sectors we support, privacy and data protection, the regulations that apply to government

contracts, and many other facets of our operations.

The regulatory climate in the U.S.

and other countries has become increasingly complex

and fragmented, and regulatory activity has increased in recent periods.

Failure or noncompliance with such regulations or standards

could have an adverse effect on our reputation, customer relationships, profitability and results of operations.

In addition, we regularly

enter into a large number of complex contractual arrangements as well as operate pursuant to the terms of a significant number of ongoing

intricate contractual arrangements.

Our failure or our customers’ failure to comply with the terms of such arrangements could expose

us to claims or other demands and could have an adverse effect on our reputation, customer relationships, profitability and results of

may not meet regulatory quality standards applicable to our manufacturing and quality processes which could have an adverse effect on

our business .

are registered with the FDA and are subject to periodic inspection by the FDA for compliance with its Quality Management System Regulation/Medical

Device Good Manufacturing Practices requirements, which require manufacturers of medical devices to adhere to certain regulations, including

testing, quality control and documentation procedures.

our US facilities are ITAR compliant which is required for our manufacturing of defense related products.

Compliance with applicable

regulatory requirements is subject to continual review and is rigorously monitored through periodic inspections and product field monitoring.

If any inspection reveals noncompliance with these regulations, it could adversely affect our operations.

international operations are, and will continue to be, subject to risks relating to changes in foreign legal and regulatory requirements.

can be costly and time-consuming for the Company and our customers to obtain and maintain regulatory approvals and certifications to

operate in these markets.

Product approvals subject to regulations might not be granted for new medical devices on a timely basis, if

Proposed new regulations or changes to regulations could result in the need to incur significant additional costs to comply.

Failure of the Company or any of its customers operating in these markets to effectively respond to changes to applicable laws and regulations

or comply with existing and future laws and regulations may have a negative effect on the Company’s business, financial condition,

results of operations and cash flows.

with securities laws, tax laws, accounting policies and regulations, and subsequent changes, may be costly for us and adversely affect

our financial statements.

or changing laws, regulations, governmental orders or mandates, policy and standards relating to corporate governance and public disclosure,

including SEC and NASDAQ regulations, domestic or international tax legislation and the implementation of significant changes in U.S.

GAAP, present challenges due to complexities, assumptions and judgements required to implement.

We apply judgments based on our understanding,

interpretation and analysis of the relevant facts, circumstances, historical experience and valuations, as appropriate.

actual amounts could differ from those estimated at the time the financial statements are issued.

In addition, implementation may change

the financial accounting or reporting standards that govern the preparation of our financial statements or authoritative entities could

reverse their previous interpretations or positions on how various financial accounting or reporting standards should be applied.

changes may be difficult to predict and implement and could materially or otherwise impact how we prepare and report our estimates, uncertainties,

financial statements, operating results and financial condition.

Our efforts to comply with evolving laws, regulations, accounting policies

and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and management

time and attention from net sales-generating activities to compliance activities and may have an adverse effect on our financial statements,

including cash flows.

Anti-Corruption

and Trade Laws - We may incur costs and suffer damages if our employees, agents, or suppliers violate anti-bribery, anti-corruption or

trade laws and regulations.

and regulations related to bribery, corruption and trade, and enforcement thereof, are increasing in frequency, complexity and severity

on a global basis.

The continued geographic expansion of our business into China and Mexico increases our exposure to, and cost of complying

with, these laws and regulations.

If our internal controls and compliance program do not adequately prevent or deter our employees, agents,

suppliers and other third parties with whom we do business from violating anti-corruption laws, we may incur defense costs, fines, penalties,

reputational damage and business disruptions.

Non-compliance

with environmental laws may result in restrictions and could adversely affect operations.

operations are regulated under a number of federal, state, and foreign environmental and safety laws and regulations that govern the

discharge of hazardous materials into the air and water, as well as the handling, storage, and disposal of such materials.

and regulations include the Clean Air Act;

the Clean Water Act;

the Resource Conservation

and Recovery Act;

and the Comprehensive Environmental Response, Compensation, and Liability Act;

as well as analogous state and foreign laws.

Compliance with these environmental laws is a major

consideration for us due to our manufacturing processes and materials.

It is possible we may be subject to potential financial liability for costs associated with the investigation and remediation at

the Resource Conservation and Recovery Act;

and the Comprehensive Environmental

Response, Compensation, and Liability Act;

as well as similar federal, state and foreign laws.

Compliance with these environmental laws

is a major consideration for us due to our manufacturing processes and materials.

It is possible we may be subject to potential financial

liability for costs associated with the investigation and remediation at our sites;

this may have an adverse effect on operations.

We have not incurred significant costs related to compliance with environmental laws and regulations, and we believe that our operations

have not incurred significant costs related to compliance with environmental laws and regulations and we believe that our operations

comply with all applicable environmental laws.

Environmental

laws could also become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violation.

We operate in

environmentally sensitive locations and are subject to potentially conflicting and changing regulatory agendas of political, business, and environmental groups.

Changes or restrictions on discharge

laws could also become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with

We operate in environmentally sensitive locations and are subject to potentially conflicting and changing regulatory agendas

of political, business, and environmental groups.

Changes or restrictions on discharge limits;

emissions levels;

or material storage, handling, or disposal might require a high level of unplanned capital investment or relocation.

It is possible that environmental compliance costs and

penalties from new or existing regulations may harm our business, financial condition, and results of operations.

We may be subject to risks associated with our acquisitions, and the risks could adversely affect our operating results.

Our strategy is to grow our business organically and through acquisitions, alliances and joint venture arrangements.

We will continue to pursue and acquire

additional businesses in the EMS industry that fit our long-term objectives for growth and profitability.

The success of our acquisitions will depend on our ability to integrate the new

operations with the existing operations.

In February 2007, we purchased a printed circuit board operation in Garner, Iowa with the expectation that the results will be accretive to the overall

If we fail to comply with the covenants contained in our revolving credit facility we may be unable to secure additional financing and repayment obligations on our outstanding

indebtedness may be accelerated.

Our revolving credit facility and debt agreements contain financial and operating covenants with which we must comply.

As of December 31, 2007, we were in

compliance with each of these covenants.

However, among other factors, our continued compliance with these covenants is dependent on our financial results, which are subject to fluctuation as

described elsewhere in these risk factors.

If we fail to comply with the covenants in the future or if our lender does not agree to waive any future non-compliance, we may be unable to

borrow funds and any outstanding indebtedness could become immediately due and payable, which could materially harm our business.

Our business may be impacted by natural disasters.

Tornadoes, blizzards and other natural disasters could negatively impact our business and supply chain.

In countries that we rely on for operations and materials,

such as Mexico, China and Thailand,

potential natural disasters could disrupt our manufacturing operations;

reduce demand for our customers' products and increase supply chain costs.

UNRESOLVED STAFF COMMENTS

Not Applicable

or material storage,

handling, or disposal might require a high level of unplanned capital investment or relocation.

It is possible that environmental compliance

costs and penalties from new or existing regulations may harm our business, financial condition, and results of operations.

climate change and related regulations could negatively affect the Company.

in environmental and climate change laws or regulations, including laws relating to Green House Gas (“GHG”) emissions, could

lead to new or additional investment in the Company’s facilities and could increase environmental compliance expenditures.

in climate change concerns including GHG emissions, and the regulation of such concerns including climate-related disclosures, could

subject the Company to additional costs and restrictions, including increased energy and raw material costs and other compliance requirements

which could negatively impact the Company’s reputation, business, capital expenditures, results of operations and financial position.

disasters, such as tornadoes and earthquakes, and possible future changes in climate could negatively impact our business and supply

Our properties may be exposed to rare catastrophic weather events, such as severe storms and/or floods.

If the frequency of extreme

weather events increases due to climate change, our exposure to these events could increase.

we use hazardous materials in a manner that causes contamination or injury, we could be liable for resulting damages.

are subject to Federal, State, and local laws, rules and regulations governing the use, discharge, storage, handling, and disposal of

biological material, chemicals, and waste.

We cannot eliminate the risk of accidental contamination or injury to employees or third parties

from the use, storage, handling, or disposal of these materials.

In the event of contamination or injury, we could be held liable for

any resulting damages, remediation costs, and any related penalties or fines.

This liability could exceed our resources or any applicable

insurance coverage we may have.

The cost of compliance with these laws and regulations may become significant, and our failure to comply

may result in substantial fines or other consequences, and either could have a significant impact on our operating results.

we are not able to comply with Department of Defense cybersecurity requirements, our net sales from defense contractors could be reduced.

2019, the U.S.

Department of Defense announced the development of Cybersecurity Maturity Model Certification (“CMMC”) as

a framework to assess and enhance the cybersecurity posture of the Defense Industrial Base (“DIB”), particularly as it relates

to controlled unclassified information within the supply chain.

CMMC is designed to ensure that contractors providing services to the

Department of Defense have implemented cybersecurity controls and processes to adequately protect information that resides on DIB

systems and networks.

While we achieved CMMC level 2 certification in 2025, if we cannot maintain compliance with these regulations,

our agreements with defense contractors and the resulting net sales may be impacted negatively.

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/A

Item 1A. Risk Factors