What changed in this filing

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Item 1A. Risk Factors

2025-09-04 compared with 2024-09-05 · 168 added, 156 removed, 307 unchanged (51% of the section changed)

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This customer has made purchase

commitments to us through a supply agreement to purchase surgical handpieces through calendar 2025, but there can be no assurance that

this customer will extend purchase commitments to us beyond that date.

The loss of, or a material reduction in purchases from, this customer

or any of our significant customers would severely impact us, including having a material adverse effect on our business, financial condition,

cash flows, revenue, and results of operations.

A substantial portion of our business is

derived from our core business area that, if not serviced properly, may result in a material adverse impact upon our business, financial

condition, and results of operations.

commitments to us through a supply agreement to purchase surgical handpieces through calendar 2025, and has placed purchase orders for

deliveries in 2026, but there can be no assurance that this customer will extend purchase commitments to us beyond that date.

of, or a material reduction in purchases from, this customer or any of our other significant customers would severely impact us, including

having a material adverse effect on our business, financial condition, cash flows, revenue, and results of operations.

A substantial portion of our business is derived

from our core business area that, if not serviced properly, may result in a material adverse impact upon our business, financial condition,

and results of operations.

In fiscal 2025, we derived

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do not achieve market acceptance, our business, financial condition, and results of operations could be materially adversely affected.

Our customers may cancel or reduce their orders, change production quantities,

or delay production, any of which would reduce our sales and adversely affect our results of operations .

most of our customers purchase our products from us on a purchase order basis, they may cancel, change, or delay product purchase commitments

Our customers may cancel or reduce their orders, change production

quantities, or delay production, any of which would reduce our sales and adversely affect our results of operations .

of our customers purchase our products from us on a purchase order basis, they may cancel, change, or delay product purchase commitments

with little notice to us.

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may be delayed, reduced, or canceled.

The following factors, among others, affect our ability

to forecast accurately our sales and production capacity:

The following factors, among others, affect our

ability to forecast accurately our sales and production capacity:

Changes in the specific products or quantities our customers order;

Long lead times and advance financial commitments for components required to complete actual/anticipated customer orders.

In addition to reducing our sales,

delayed, reduced, or canceled purchase orders also may result in our inability to recover costs that we incur in anticipation of those

orders, such as costs associated with purchased raw materials and write-offs of obsolete inventory.

In recent years, we have launched several

new medical device products and our estimates of warranty claims are based largely on our previous history from similar legacy products.

If actual warranty claims exceed our estimates, it could have an adverse effect on our results of operations and financial condition.

In addition to reducing our

sales, delayed, reduced, or canceled purchase orders also may result in our inability to recover costs that we incur in anticipation of

those orders, such as costs associated with purchased raw materials and write-offs of obsolete inventory.

In recent years, we have launched several new

medical device products and our estimates of warranty claims are based largely on our previous history from similar legacy products.

actual warranty claims exceed our estimates, it could have an adverse effect on our results of operations and financial condition.

In recent years, we have completed

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of different sources, which could negatively impact our results of operations.

The markets for products

in the industries served by our customers are intensely competitive, and we face significant competition from a number of different sources.

The markets for products in

the industries served by our customers are intensely competitive, and we face significant competition from a number of different sources.

Several of our competitors have significantly greater name recognition, as well as substantially greater financial, technical, product

development and marketing resources, than us.

We compete in all of our

markets with other major surgical device and related companies.

As a provider of outsourced products and services, we also compete with

our customers’ own internal development groups.

Competitive pressures and other factors, such as new product or new technology introductions

by us, our customers’ internal development and manufacturing departments, or our competitors, may result in price or market share

erosion that could have a material adverse effect on our business, results of operations and financial condition.

Also, there can be no

assurance that our products and services will achieve broad market acceptance or will successfully compete with other products.

The industry in which we operate is subject to

significant technological change and any failure or delay in addressing such change could adversely affect our competitive position or

could make our current products obsolete.

We compete in all of our markets

with other major surgical device and related companies.

As a provider of outsourced products and services, we also compete with our customers’

own internal development groups.

Competitive pressures and other factors, such as new product or new technology introductions by us, our

customers’ internal development and manufacturing departments, or our competitors, may result in price or market share erosion that

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

Also, there can be no assurance that

our products and services will achieve or maintain broad market acceptance or will successfully compete with other products.

The industry in which we operate is subject

to significant technological change and any failure or delay in addressing such change could adversely affect our competitive position

or could make our current products obsolete.

The medical device market

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respond to technological changes or evolving industry standards.

New product development

requires significant research and development expenditures that we have historically funded through operations;

however, we may be unable

to do so in the future.

Any significant decrease in revenues or research funding could impair our ability to respond to technological

advances in the marketplace and to remain competitive.

If we are unable, for technological or other reasons, to develop and introduce

new products in a timely manner in response to changing market conditions or customer requirements, our business, results of operations,

and financial condition may be materially adversely affected.

Although we continue to target new markets for access, develop new products,

and update existing products, there can be no assurance that we will do so successfully or that, even if we are successful, such efforts

will be completed concurrently with or prior to the introduction of competing products.

Any such failure or delay could adversely affect

our competitive position or could make our current products obsolete.

New product development requires

significant research and development expenditures that we have historically funded through operations;

however, we may be unable to do

so in the future.

Any significant decrease in revenues or research funding could impair our ability to respond to technological advances

in the marketplace and to remain competitive.

If we are unable, for technological or other reasons, to develop and introduce new products

in a timely manner in response to changing market conditions or customer requirements, our business, results of operations, and financial

condition may be materially adversely affected.

Although we continue to target new markets for access, develop new products, and update

existing products, there can be no assurance that we will do so successfully or that, even if we are successful, such efforts will be

completed concurrently with or prior to the introduction of competing products.

Any such failure or delay could adversely affect our competitive

position or could make our current products obsolete.

We rely heavily on our proprietary technology,

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results of operations.

We are dependent on the

maintenance and protection of our proprietary technology and rely on patent filings, exclusive development and supply agreements, confidentiality

We are dependent on the maintenance

and protection of our proprietary technology and rely on patent filings, exclusive development and supply agreements, confidentiality

procedures and employee nondisclosure agreements to protect it.

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could result in a disruption of our operations.

While we have invested,

and continue to invest, in technology security initiatives and other measures to prevent security breaches and cyber incidents, as well

as disaster recovery plans, these initiatives and measures may not be entirely effective to insulate us from technology disruption that

could result in adverse effects on our results of operations and financial condition.

While we have invested, and

continue to invest, in technology security initiatives and other measures to prevent security breaches and cyber incidents, as well as

disaster recovery plans, these initiatives and measures may not be entirely effective to insulate us from technology disruption that could

result in adverse effects on our results of operations and financial condition.

To service our debt obligations, we will require

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to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations.

Our cash and cash equivalents may be exposed to

banking institution risk.

We hold our cash balances with

a single financial institution which institution is subject to risks, which may include failure or other circumstances that limit our

access to deposits or other banking services.

Our cash and cash equivalents may be exposed

to banking institution risk.

We hold our cash balances

with a single financial institution which institution is subject to risks, which may include failure or other circumstances that limit

our access to deposits or other banking services.

For example, in March 2023, Silicon Valley Bank (“SVB”) was unable to continue

their operations and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for SVB.

However, if similar

failures in financial institutions occur where we hold deposits, we could experience additional risk.

Any such loss or limitation on our

cash and cash equivalents would adversely affect our business.

In addition, in such circumstances

we might not be able to receive timely payment from customers.

We and they may maintain cash balances that are not insured or are in excess

of the FDIC’s insurance limit.

Any delay in ours or our customers’ ability to access funds could have a material adverse effect

on our operations.

If any parties with which we conduct business are unable to access funds pursuant to such instruments or lending arrangements

with such a financial institution, such parties’ ability to continue to fund their business and perform their obligations to us

could be adversely affected, which, in turn, could have a material adverse effect on our business, financial condition and results of

If similar failures

in financial institutions occur where we hold deposits, we could experience additional risk.

Any such loss or limitation on our cash and

cash equivalents would adversely affect our business.

In addition, if similar failures

affect institutions relied on by our customers, we might not be able to receive timely payment from customers.

We and they may maintain

cash balances that are not insured or are in excess of the FDIC’s insurance limit.

Any delay in ours or our customers’ ability

to access funds could have a material adverse effect on our operations.

If any parties with which we conduct business are unable to access

funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to continue

to fund their business and perform their obligations to us could be adversely affected, which, in turn, could have a material adverse

effect on our business, financial condition and results of operations.

We periodically invest surplus cash in marketable

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of our investments was approximately $6.9 million.

Of that amount $3.2 million relates to an investment in Monogram Technologies, Inc.,

formerly Monogram Orthopaedics Inc.

(“Monogram”), described more fully in Note 4 to the consolidated financial statements

contained elsewhere in this report.

While we intend to hold our investments, including our investment in Monogram, until such time as

we believe it is appropriate to sell them in accordance with our overall investment policy, we may have unexpected cash requirements that

could necessitate the sale of some or all of these investments for a loss.

Additionally, these investments are subject to changes in their

valuation, and are recorded at their estimated fair value at each measurement date, with unrealized gains and losses presented in other

income (expense) in our consolidated income statements, which can result in material upward or downward non-cash adjustments to our income

from quarter-to-quarter.

While we intend to hold our investments until such time as we believe it is appropriate

to sell them in accordance with our overall investment policy, we may have unexpected cash requirements that could necessitate the sale

of some or all of these investments for a loss.

Additionally, these investments are subject to changes in their valuation, and are recorded

at their estimated fair value at each measurement date, with unrealized gains and losses presented in other income (expense) in our consolidated

income statements, which can result in material upward or downward non-cash adjustments to our income from quarter-to-quarter.

Our operations are dependent upon our key personnel.

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of product development, operations management, marketing and finance.

A high level of employee

mobility and the aggressive recruiting of skilled personnel characterize the medical device industry.

There can be no assurance that our

current employees will continue to work for us.

Loss of services of key employees could have a material adverse effect on our business,

results of operations, and financial condition.

Furthermore, we may need to provide enhanced forms of incentive compensation to attract

and retain such key personnel, which could potentially dilute the holdings of other shareholders.

A high level of employee mobility

and the aggressive recruiting of skilled personnel characterize the medical device industry.

There can be no assurance that our current

employees will continue to work for us.

Loss of services of key employees could have a material adverse effect on our business, results

of operations, and financial condition.

Furthermore, we may need to provide enhanced forms of incentive compensation to attract and retain

such key personnel, which could potentially dilute the holdings of other shareholders.

We may not be able to successfully integrate our business acquisitions,

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Diversion of resources and management attention from our other operations.

If market conditions or

other factors require us to change our strategic direction, we may fail to realize the expected value from one or more of our acquisitions.

If market conditions or other

factors require us to change our strategic direction, we may fail to realize the expected value from one or more of our acquisitions.

Our failure to successfully integrate any future acquisitions or realize the expected value from past or future acquisitions could harm

our business, financial condition, and results of operations.

We have experienced losses in the past, and we cannot be certain that

we will sustain our current profitability;

we may need additional capital in the future to fund our businesses, which we may not be able

to obtain on acceptable terms.

We have experienced losses in the past, and we cannot be certain

that we will sustain our current profitability;

we may need additional capital in the future to fund our businesses, which we may not

be able to obtain on acceptable terms.

We have experienced operating

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including the material costs for our products and the demand for our products.

We currently anticipate that our

available capital resources, including our existing cash and cash equivalents and accounts receivable balances, will be sufficient to

meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.

However, if our available capital resources become insufficient, we may attempt to raise additional funds through public or private debt

or equity financings, if such financings become available on acceptable terms.

We cannot be certain that any additional financing we may

need will be available on terms acceptable to us, or at all.

If adequate funds are not available or are not available on acceptable terms,

we may not be able to take advantage of opportunities, develop new products, or otherwise respond to competitive pressures, and our operating

results and financial condition could be adversely affected.

Risks Related to Ownership of Our Common

We currently anticipate that

our available capital resources, including our existing cash and cash equivalents and accounts receivable balances, will be sufficient

to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next

However, if our available capital resources become insufficient, we may attempt to raise additional funds through public

or private debt or equity financings, if such financings become available on acceptable terms.

We cannot be certain that any additional

financing we may need will be available on terms acceptable to us, or at all.

If adequate funds are not available or are not available

on acceptable terms, we may not be able to take advantage of opportunities, develop new products, or otherwise respond to competitive

pressures, and our operating results and financial condition could be adversely affected.

Risks Related to Ownership of Our Common Stock

Two of our directors hold voting power with

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Regulatory & Compliance Risks

Our operations are subject to a number of

complex government regulations, the violation of which could have a material adverse effect on our business.

Our operations are subject to a number of complex

government regulations, the violation of which could have a material adverse effect on our business.

The manufacture and distribution

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of operations.

We continually face the

possibility of litigation as either a plaintiff or a defendant.

It is not reasonably possible to estimate the awards or damages, or the

range of awards or damages, if any, that we might incur in connection with such litigation.

Many of our products are

complex and technologically advanced.

Such products may, from time to time, be the subject of claims concerning product performance

and construction, including warranty and patent infringement claims.

While we are committed to investigating such concerns and correcting

them, there is no assurance that solutions will be found on a timely basis, if at all, to satisfy customer demands or to avoid potential

claims or litigation.

Also, due to the location of our facilities, as well as the nature of our business activities, there is a risk that

we could be subject to litigation related to environmental remediation claims.

We maintain insurance to protect against claims associated

with the manufacture and use of our products as well as environmental pollution, but there can be no assurance that our insurance coverage

will adequately cover any claim asserted against us.

We continually face the possibility

of litigation as either a plaintiff or a defendant.

It is not reasonably possible to estimate the awards or damages, or the range of awards

or damages, if any, that we might incur in connection with such litigation.

Many of our products are complex

and technologically advanced.

Such products may, from time to time, be the subject of claims concerning product performance and construction,

including warranty and patent infringement claims.

While we are committed to investigating such concerns and correcting them, there is

no assurance that solutions will be found on a timely basis, if at all, to satisfy customer demands or to avoid potential claims or litigation.

Also, due to the location of our facilities, as well as the nature of our business activities, there is a risk that we could be subject

to litigation related to environmental remediation claims.

We maintain insurance to protect against claims associated with the manufacture

and use of our products as well as environmental pollution, but there can be no assurance that our insurance coverage will adequately

cover any claim asserted against us.

The uncertainty associated

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incur additional debt;

or pay dividends to shareholders;

declare or pay dividends to shareholders;

create liens or use assets as security in other transactions;

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pursue strategic acquisitions;

in transactions with affiliates;

engage in transactions with affiliates;

sell or transfer assets.

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condition, cash flows, revenue, and results of operations.

We have identified material weaknesses in

our internal control over financial reporting.

Failure to achieve and maintain effective internal control over financial reporting could

materially and adversely affect our business, results of operations, financial condition, and stock price.

We have previously identified material weaknesses

in our internal control over financial reporting.

Failure to achieve and maintain effective internal control over financial reporting

could materially and adversely affect our business, results of operations, financial condition, and stock price.

We identified material weaknesses

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The material weakness as of June 30,

2023, related to the valuation of our Level 3 investment.

2023, related to the valuation of our Level 3 investments.

As a result of these material weaknesses, as of June 30, 2024, and

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in Internal Control-Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In fiscal 2024, we implemented

a remediation plan designed to address our June 30, 2023 material weakness, which was both time consuming and costly.

We are actively

engaged in implementing a remediation plan designed to address the June 30, 2024 material weaknesses.

However, as with the June 30,

2023 material weakness, our remediation efforts could be both time consuming and costly.

In addition, if our remedial measures are insufficient

to address the material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control are discovered

or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our

financial results.

Even if the June 30,

2024 material weaknesses are quickly remedied, or if we or our auditors discover one or more additional material weaknesses in our internal

controls, the market’s confidence in our financial statements could decline and our stock price may be harmed.

In addition, our

failure to maintain effective controls over financial reporting could subject us to sanctions or investigations by The Nasdaq Stock Market,

the SEC, or other regulatory authorities.

In fiscal 2025 and 2024, we

implemented remediation plans designed to address our June 30, 2024 and 2023, material weaknesses, which were both time consuming

In addition, if additional material weaknesses or significant deficiencies in our internal control are discovered or occur

in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial

If we or our auditors discover

one or more additional material weaknesses in our internal controls in the future, the market’s confidence in our financial statements

could decline and our stock price may be harmed.

In addition, our failure to maintain effective controls over financial reporting could

subject us to sanctions or investigations by The Nasdaq Stock Market, the SEC, or other regulatory authorities.

Our evaluation of internal controls and remediation

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Management can give no assurance that material

weaknesses in internal controls will not be discovered (see above, “ We have identified material weaknesses in our internal control

over financial reporting.

Failure to achieve and maintain effective internal control over financial reporting could materially and adversely

affect our business, results of operations, financial condition, and stock price.

We cannot be certain that a future material

weakness will not occur and that it will not be time consuming and costly to remediate and could further divert the attention of management.

The disclosure of a material weakness, even if quickly remedied, could reduce the market’s confidence in our financial statements

and harm our stock price, especially if a restatement of financial statements for past periods is required.

weaknesses in internal controls will not be discovered (see above, “ We have previously identified material weaknesses in our

internal control over financial reporting.

Failure to achieve and maintain effective internal control over financial reporting could materially

and adversely affect our business, results of operations, financial condition, and stock price.

We cannot be certain that

a future material weakness will not occur and that it will not be time consuming and costly to remediate and further divert the attention

of management.

The disclosure of a material weakness, even if quickly remedied, could reduce the market’s confidence in our financial

statements and harm our stock price, especially if a restatement of financial statements for past periods is required.

General Risks

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also may materially and adversely affect our business, financial condition, and results of operations.

Tariffs could have a negative effect on our

business, results of operations, financial condition, and liquidity.

Starting in the first calendar

quarter of 2025, the United States government announced its intention and/or actively took action to increase tariffs at various rates,

including on certain products imported from many countries and individualized higher tariffs on certain other countries.

Other countries

have announced reciprocal tariffs or other similar actions.

In some cases, these tariffs have since been followed by announcements of

limited exemptions and temporary pauses.

We are subject to risks relating to increased tariffs on U.S.

imports, and other changes affecting

imports, as we purchase raw materials and components from a complex supply chain which includes both direct and indirect purchases from

foreign countries.

The recent enactment of these tariffs, along with the unpredictability of the rates, poses a risk to our business operations

and may materially increase our costs and reduce our margins.

There continues to be significant uncertainty about the future relationship

between the U.S.

and other countries regarding such trade policies, treaties and tariffs.

As such, we can make no assurances about the

eventual impact on our operating results and business.

However, some of our suppliers have begun passing along tariff charges.

Our inability

to minimize the impact of tariffs on our raw material and components costs, pass through price increases to customers, or find alternative

sources for our raw materials and components, may have a material adverse impact on our business, financial condition, and results of

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