What changed in this filing

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Item 1A. Risk Factors

2024-09-05 compared with 2023-10-13 · 83 added, 81 removed, 380 unchanged (30% of the section changed)

18 unchanged sentences

This customer has made purchase

commitments to us through a supply agreement to purchase surgical handpieces through calendar 2025.

We provide this customer with a device

used primarily in elective surgeries and although this customer has not requested a reduction or delay to their planned shipments, if

the COVID-19 pandemic were to again materially adversely impact the United States and other markets where our products are sold, coupled

with any new recommended deferrals of elective procedures by governments and other authorities, we would expect to see a decline in demand

from our principal customer.

The loss of 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.

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

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

However, if further

However, if similar

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

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of our investments was approximately $5.8 million.

Of that amount $6.2 million relates to an investment in Monogram Orthopaedics Inc.

(“Monogram”) described more fully in Note 5 to the consolidated financial statements contained elsewhere in this report.

investment in Monogram is also the subject of the restatement of our previous financial statements described in Note 2 to the consolidated

financial statements contained elsewhere in this report.

Our initial investment in Monogram was an $800,000 loan which we made primarily

in exchange for exclusive development and supply rights.

At that time, we believed that this long-term strategic investment would likely

take several years to cultivate, which it has.

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, which could cause us to record a significant unrealized loss in the future.

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.

Our operations are dependent upon our key personnel.

If such personnel were to leave unexpectedly, we may not be able to execute our business plan.

Our future performance depends

in significant part upon the continued service of our key technical and senior management personnel.

Because we have a relatively small

number of employees when compared to other companies in the same industry, our dependence on maintaining our relationship with key employees

is particularly significant.

We are also dependent on our ability to attract and retain high quality personnel, particularly in the areas

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.

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

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

We may also 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

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

Our operations are dependent upon our key personnel.

If such personnel were to leave unexpectedly, we may not be able to execute our business plan.

Our future performance depends

in significant part upon the continued service of our key technical and senior management personnel.

Because we have a relatively small

number of employees when compared to other companies in the same industry, our dependence on maintaining our relationship with key employees

is particularly significant.

We are also dependent on our ability to attract and retain high quality personnel, particularly in the areas

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.

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

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we were unable to repay our debt or are otherwise in default under any provision governing our secured debt obligations, our lender could

proceed against us and against the collateral securing that debt.

proceed against us and against the collateral (consisting of substantially all of our assets) securing that debt.

We are subject to changes in and interpretations of financial accounting

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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 identified material weaknesses

in our internal control over financial reporting as of June 30, 2024, and June 30, 2023.

The material weaknesses as of June 30,

2024, related to our inventory accounting and the valuation of one of our Level 2 investments.

The material weakness as of June 30,

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

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

June 30, 2023, our management concluded that our internal control over financial reporting was not effective based on the framework

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.

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.

The material weakness discovered in conjunction with the preparation of our consolidated

financial statements for the fiscal year ended June 30, 2023, as described in Note 2 to the consolidated financial statements contained

elsewhere in this report, for example, has been time consuming and costly.

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.

Risks Related to COVID-19

The COVID-19 pandemic, or the perception

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

To date, COVID-19 has not had

a material adverse impact on our business or results of operations, but due to the uncertainties surrounding this pandemic, it may adversely

impact us in the future.

We have and may continue to experience disruptions in our supply chain and critical suppliers may delay or be

unable to deliver products we have ordered.

Additionally, our customers could reduce planned orders, request cancelations of existing

orders, and/or delay payment to us due to financial hardship they may experience as a result of this healthcare and resulting economic

Therefore, it is impossible to predict the future impact of the pandemic on our business, financial condition, and results of

The ability of our employees to work may

be significantly impacted by the COVID-19 crisis.

Substantially all of our

employees worked in the office during fiscal 2023.

The health of our workforce is of primary concern and we may need to enact further

precautionary measures to help minimize the risk of our employees being exposed to the coronavirus.

Further, our management team is focused

on mitigating the adverse effects of the COVID-19 pandemic, which has required and may continue to require a large investment of time

and resources across the entire Company, thereby diverting their attention from other priorities that existed prior to the outbreak of

the pandemic.

To date, several of our employees have had COVID-19, but all have made full recoveries and returned to work.

our employees test positive for COVID-19, or these conditions worsen, or last for an extended period of time, our ability to manage our

business may be impaired, and operational risks, cybersecurity risks, and other risks facing us even prior to the pandemic may be elevated.

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.

General Risks

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

UNRESOLVED STAFF COMMENTS

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