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Item 1A. Risk Factors

2023-04-11 compared with 2022-03-31 · 492 added, 521 removed, 103 unchanged (91% of the section changed)

1 unchanged sentence

Before investing in our common stock you should carefully consider the following

risks, together with the financial and other information contained in this Annual Report on Form 10–K for the year ended

December 31, 2021 and our other periodic filings with the Securities and Exchange Commission.

Additional risks and uncertainties

that we are unaware of may become important factors that affect us.

If any of the following events occur, our business, financial

conditions and operating results may be materially and adversely affected.

In that event, the trading price of our common stock

may decline, and you could lose all or part of your investment.

Summary of Risk Factors

Below is a summary of the principal

factors that make an investment in our common stock speculative or risky.

This summary does not address all of the risks that we

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below

under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K

and our other filings with the SEC, before making an investment decision regarding our common stock.

● We are vulnerable to economic downturns in the commercial construction market, which may reduce

the demand for some of our products and adversely affect our sales, net income, cash flow or financial condition;

● The ongoing COVID-19 pandemic may adversely affect our business;

● Our operating results may vary significantly from quarter to quarter, which makes our operating

results difficult to predict and can cause our operating results in any particular period to be less than comparable quarters and

expectations from time to time;

● Our industry is highly competitive;

● We currently derive a significant portion of our revenues from two customers.

Loss of business from

either of these customers could have an adverse effect on our business, financial condition and operating results;

● Our remaining business units have historically generated operating losses and negative cash flows,

which may result in the usage of our cash;

● The departure or loss of key personnel could disrupt our business;

● Fluctuations in the price and supply of raw materials used to manufacture our products may reduce

● We may not be able to fully realize the revenue value reported in our backlog;

● We are subject to pricing pressure from our larger customers;

● Deterioration in the credit quality of several major customers could have a material adverse effect

on our operating results and financial condition;

● We rely on third parties for key elements of our business whose operations are outside our control;

● Supply chain and shipping disruptions may result in shipping delays, a significant increase in

shipping costs, and could increase product costs and result in lost sales and reputational damage, which may have a material adverse

effect on our business, operating results and financial condition;

● Our business may face cybersecurity risk generally associated with our information technology systems

which could materially affect our business, and our results of operations could be materially affected if our information technology

systems (or third-party systems we rely on) are interrupted, damaged by unforeseen events, or fail for any extended period of time;

● Our business requires skilled labor, and we may be unable to attract and retain qualified employees;

● Our business operations are dependent upon our ability to engage in successful collective bargaining

with our unionized workforce;

● Delaware law and our corporate charter and bylaws contain anti-takeover provisions that could delay

or discourage takeover attempts that stockholders may consider favorable;

● The trading volume of our common stock has recently increased to a level that is significantly

higher than our historical average.

If the trading volume of our common stock decreases, we will not be able to ensure investors

that an active market for our common stock will be sustained;

● Our stock price may be volatile, which could result in substantial losses for investors;

● Our risk management activities may leave us exposed to unidentified or unanticipated risks;

● Regulatory, environmental, monetary and other governmental policies could have a material adverse

effect on our profitability;

● Global, market and economic conditions may negatively impact our business, financial condition

and stock price;

● We face risks associated with litigation and claims, which could impact our financial results and

● Offers or availability for sale of a substantial number of shares of our common stock may cause

the price of our common stock to decline;

● We are subject to financial reporting and other requirements for which our accounting, internal

audit and other management systems and resources may not be adequately prepared;

● There are inherent limitations in all control systems, and misstatements due to error or fraud

may occur and not be detected;

● Any acquisitions that we have completed, or may complete in the future, may not perform as planned

and could disrupt our business and harm our financial condition and operations;

● The success of our business depends on achieving our strategic objectives, including dispositions;

● If we do not conduct an adequate due diligence investigation of a target

business that we acquire, we may be required subsequently to take write downs or write-offs, restructuring, and impairment or other charges

that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause

you to lose some or all of your investment;

● We may be unable to generate internal growth;

● In the event that we fail to satisfy any of the listing

requirements of the NASDAQ Capital Market, our common stock may be delisted, which could affect our market price and liquidity.

Relating to Our Business and Industry

risks, together with the financial and other information contained in this Annual Report on Form 10–K for the year ended December

31, 2022 and our other periodic filings with the Securities and Exchange Commission.

Additional risks and uncertainties that we are unaware

of may become important factors that affect us.

If any of the following events occur, our business, financial conditions and operating

results may be materially and adversely affected.

In that event, the trading price of our common stock may decline, and you could lose

all or part of your investment.

of Risk Factors

is a summary of the principal factors that make an investment in our common stock speculative or risky.

This summary does not address

all of the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face,

can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in

this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.

are vulnerable to economic downturns in the commercial construction market, which may reduce the demand for some of our products

and adversely affect our sales, net income, cash flow or financial condition;

large portion of our business involves sales of our products in connection with commercial and industrial construction.

to this sector are affected by the level of discretionary business spending.

During economic downturns in this sector, the level

of business discretionary spending may decrease.

This decrease in spending will likely reduce the demand for some of our products

and may adversely affect our sales, net income, cash flow or financial condition.

ongoing COVID-19 pandemic may adversely affect our business.

The ongoing global coronavirus pandemic

could have a negative impact on our revenues and operating results.

This pandemic could result in disruptions and damage to our

business, caused by both the negative impact to our ability to obtain cost effective raw materials, supplies and component parts

necessary to operate our business and the negative impact on our ability to operate our facility should the coronavirus spread

more broadly in the regions we are located, thereby creating an increased risk of exposure to our workforce which cannot operate

our facility remotely.

The full impact of the COVID-19 pandemic continues to evolve as the date of this report.

As such, it is

uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations.

During the year ended December 31, 2021, the Company experienced an impact to productivity as a result of implementing social distancing

guidelines and personal protective measures.

Notwithstanding, the Company has been able to operate substantially at capacity during

the COVID-19 pandemic.

Given the daily evolution of the COVID-19 pandemic and the global responses to contain its spread, we are

not able to estimate the full effects of the COVID-19 pandemic at this time, however, if the pandemic continues, it may continue

to have an adverse effect on the Company’s results of operations, financial condition, or liquidity.

Mitigation efforts will

not completely prevent our business from being adversely affected, and the longer the pandemic impacts supply and demand and the

more broadly the pandemic spreads, it is more likely that the impact on our business, revenues and operating results will become

increasingly negative.

addition, the continuation of the COVID-19 pandemic or a significant outbreak of other infectious diseases could result in a widespread

health crisis that could adversely affect the economies and financial markets worldwide, resulting in an economic downturn that

could impact our business, financial condition and results of operations.

operating results may vary significantly from quarter to quarter, which makes our operating results difficult to predict and can

cause our operating results in any particular period to be less than comparable quarters and expectations from time to time;

quarterly results may fluctuate significantly from quarter to quarter due to a variety of factors, many of which are outside our

control and have the potential to materially and adversely affect our results.

Factors that affect our operating results include

the following:

industry is highly competitive;

currently derive a significant portion of our revenues from one customer.

Loss of business from this customer could have an adverse

effect on our business, financial condition and operating results;

remaining business units have historically generated operating losses and negative cash flows, which may result in the usage of our

departure or loss of key personnel could disrupt our business;

in the price and supply of raw materials used to manufacture our products may reduce our profits;

may not be able to fully realize the revenue value reported in our backlog;

are subject to pricing pressure from our larger customers;

Deterioration

in the credit quality of several major customers could have a material adverse effect on our operating results and financial condition;

rely on third parties for key elements of our business whose operations are outside our control;

chain and shipping disruptions may result in shipping delays, a significant increase in shipping costs, and could increase product

costs and result in lost sales and reputational damage, which may have a material adverse effect on our business, operating results

and financial condition;

business may face cybersecurity risk generally associated with our information technology systems which could materially affect our

business, and our results of operations could be materially affected if our information technology systems (or third-party systems

we rely on) are interrupted, damaged by unforeseen events, or fail for any extended period of time;

business requires skilled labor, and we may be unable to attract and retain qualified employees;

business operations are dependent upon our ability to engage in successful collective bargaining with our unionized workforce;

The COVID-19 pandemic and its ongoing effects may adversely affect our

law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders

may consider favorable;

trading volume of our common stock has recently increased to a level that is significantly higher than our historical average.

the trading volume of our common stock decreases, we will not be able to ensure investors that an active market for our common stock

will be sustained;

stock price may be volatile, which could result in substantial losses for investors;

risk management activities may leave us exposed to unidentified or unanticipated risks;

environmental, monetary and other governmental policies could have a material adverse effect on our profitability;

market and economic conditions may negatively impact our business, financial condition and stock price;

face risks associated with litigation and claims, which could impact our financial results and condition;

or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline;

are subject to financial reporting and other requirements for which our accounting, internal audit and other management systems and

resources may not be adequately prepared;

are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected;

acquisitions that we have completed, or may complete in the future, may not perform as planned and could disrupt our business and

harm our financial condition and operations;

success of our business depends on achieving our strategic objectives, including dispositions;

we do not conduct an adequate due diligence investigation of a target business that we acquire, we may be required subsequently to

take write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our

financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment;

may be unable to generate internal growth;

the event that we fail to satisfy any of the listing requirements of the NASDAQ Capital Market, our common stock may be delisted,

which could affect our market price and liquidity.

Relating to Our Business and Industry

are vulnerable to economic downturns in the commercial construction market, which may reduce the demand for some of our products and

adversely affect our sales, net income, cash flow or financial condition.

large portion of our business involves sales of our products in connection with commercial and industrial construction.

this sector are affected by the level of discretionary business spending.

During economic downturns in this sector, the level of business

discretionary spending may decrease.

This decrease in spending will likely reduce the demand for some of our products and may adversely

affect our sales, net income, cash flow or financial condition.

operating results may vary significantly from quarter to quarter, which makes our operating results difficult to predict and can cause

our operating results in any particular period to be less than comparable quarters and expectations from time to time.

quarterly results may fluctuate significantly from quarter to quarter due to a variety of factors, many of which are outside our control

and have the potential to materially and adversely affect our results.

Factors that affect our operating results include the following:

size, timing and terms of sales and orders, especially large customer orders;

caused by customers delaying, deferring or canceling purchase orders or making smaller

purchases than expected;

caused by customers delaying, deferring or canceling purchase orders or making smaller purchases than expected;

timing and volume of work under new agreements;

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ability and willingness of customers to pay amounts owed to us;

timing of significant investments in the growth of our business, as the revenue and profit

we hope to generate from those expenses may lag behind the timing of expenditures;

timing of significant investments in the growth of our business, as the revenue and profit we hope to generate from those expenses

may lag behind the timing of expenditures;

related to the acquisition and integration of companies or assets;

economic trends, including changes in equipment spending or national or geopolitical

events such as economic crises, wars or incidents of terrorism;

economic trends, including changes in equipment spending or national or geopolitical events such as economic crises, wars or incidents

of terrorism;

accounting pronouncements and changes in accounting policies.

our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter

or for an entire year.

our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter or for

an entire year.

industry is highly competitive.

electrical equipment manufacturing industry is highly competitive.

Principal competitors in our markets in the T&D Solutions

segment include Crown Electric Engineering and Manufacturing, LLC, Industrial Electric Machinery, LLC, and RESA Power, LLC, Powell

Industries, Inc.

Many of these competitors, as well as other companies in the broader electrical equipment manufacturing and service

industry where we expect to compete, are significantly larger and have substantially greater resources than we do and are able

to achieve greater economies of scale and lower cost structures than us and may, therefore, be able to provide their products

and services to customers at lower prices than we are able to.

Moreover, our competitors could develop the expertise, experience

and resources to offer products that are superior in both price and quality to our products.

While we seek to compete by providing

more customized, highly-engineered products, there are few technical or other barriers to prevent much larger companies in our

industry from putting more emphasis on this same strategy.

Similarly, we cannot be certain that we will be able to market our

business effectively in the face of competition or to maintain or enhance our competitive position within our industry, maintain

Principal competitors in our markets in the T&D Solutions segment

include Crown Electric Engineering and Manufacturing, LLC, Industrial Electric Machinery, LLC, RESA Power, LLC, Eaton Corporation, Switchgear

Power Systems, LLC, Myers Power Products, Inc.

and Powell Industries, Inc.

Some of these competitors, as well as other companies in the

broader electrical equipment manufacturing and service industry where we expect to compete, are significantly larger and have substantially

greater resources than we do and are able to achieve greater economies of scale and lower cost structures than us and may, therefore,

be able to provide their products and services to customers at lower prices than we are able to.

Moreover, our competitors could develop

the expertise, experience and resources to offer products that are superior in both price and quality to our products.

While we seek

to compete by providing more customized, highly-engineered products, there are few technical or other barriers to prevent much larger

companies in our industry from putting more emphasis on this same strategy.

Similarly, we cannot be certain that we will be able to market

our business effectively in the face of competition or to maintain or enhance our competitive position within our industry, maintain

our customer base at current levels or increase our customer base.

Our inability to manage our business in light of the competitive

forces we face could have a material adverse effect on our results of operations.

We currently derive a significant

portion of our revenues from two customers.

Loss of business from either of these customers could have an adverse effect on our

business, financial condition and operating results.

We depend on two customers for a large portion of

our business, and any change in the level of orders from either of these customers could have a significant impact on our results of operations.

CleanSpark accounted for 22% of our total sales in the year ended December 31, 2021.

Additionally, approximately 19% of our sales in the

year ended December 31, 2021 were made to a large international container shipping company in Hawaii.

Loss of business from either of

these customers could have an adverse effect on our business, financial condition and operating results.

The majority of our sales to

CleanSpark were made pursuant to the Contract Manufacturing Agreement that was entered into as part of the Merger Agreement.

Manufacturing agreement expired during the third quarter of 2020.

In connection with the expiry of the Contract Manufacturing Agreement,

we entered into a Distribution Agreement with CleanSpark dated as of May 31, 2021, pursuant to which CleanSpark will serve as our exclusive

distributor of the Products within any geographic region in which CleanSpark conducts its business.

Our inability to manage our business in light of the competitive forces

we face could have a material adverse effect on our results of operations.

currently derive a significant portion of our revenues from one customer.

Material or significant loss of business from this customer

could have an adverse effect on our business, financial condition and operating results.

depend on one customer for a large portion of our business, and any change in the level of orders from this customer could have a significant

impact on our results of operations.

Enchanted Rock Electric, LLC accounted for 45% of our total sales in the year ended December 31,

Loss of business from this customer could have an adverse effect on our business, financial condition and operating results.

majority of our sales to Enchanted Rock Electric, LLC were made pursuant to contract terms and conditions for each project.

Business - Customers”.

remaining business units have historically generated operating losses and negative cash flows, which may result in the usage of

the completion of the Equity Transaction during the year ended December 31, 2019, we have two business units remaining (PCEP and

remaining business units have historically generated operating losses and negative cash flows, which may result in the usage of our cash.

We have two business units (PCEP and Titan), and

these two units have been unable to earn positive income and generate positive cash flow in their recent history.

$9.9 million of cash as of December 31, 2021, any such losses will negatively impact our cash balance.

With $10.3 million

of cash as of December 31, 2022, any such losses will negatively impact our cash balance.

departure or loss of key personnel could disrupt our business.

depend heavily on the continued efforts of Nathan J.

Mazurek, our principal executive officer, and on other senior officers who

are responsible for the day-to-day management of our operating subsidiaries.

In addition, we rely on our current electrical and

mechanical design engineers, many of whom are important to our operations and would be difficult to replace.

We cannot be certain

that any of these individuals will continue in their respective capacities for any particular period of time.

The departure or

loss of key personnel, or the inability to hire and retain qualified employees, could negatively impact our ability to manage

our business.

Mazurek, our principal executive officer, and on other senior officers who are responsible

for the day-to-day management of our operating subsidiaries.

In addition, we rely on our current electrical and mechanical design engineers,

many of whom are important to our operations and would be difficult to replace.

We cannot be certain that any of these individuals will

continue in their respective capacities for any particular period of time.

The departure or loss of key personnel, or the inability to

hire and retain qualified employees, could negatively impact our ability to manage our business.

in the price and supply of raw materials used to manufacture our products may reduce our profits.

raw material costs represented approximately 54% and 53% of our revenues for the years ended December 31, 2022 and 2021, respectively.

The principal raw materials purchased by us are copper, sensors, breakers, meters, relays, switches, fuses, protectors and circuit

The principal raw materials purchased by us are copper, sensors, breakers, meters, relays, switches, fuses, protectors and circuit breakers.

These raw materials and components are available from, and supplied by, numerous sources at competitive prices.

Unanticipated

increases in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability.

We cannot provide any assurances that we will not experience difficulties sourcing our raw materials in the future.

Unanticipated increases

in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability.

We cannot provide

any assurances that we will not experience difficulties sourcing our raw materials in the future.

may not be able to fully realize the revenue value reported in our backlog.

2 unchanged sentences

31, 2022, our order backlog was $37.2 million.

Orders included in our backlog are represented by customer purchase orders and

service contracts that we believe to be firm.

Backlog consists of customer orders that either (1) have not yet been started or

(2) are in progress and are not yet completed.

In the latter case, the revenue value reported in backlog is the remaining value

associated with work that has not yet been billed.

From time to time, customer orders are canceled that appeared to have a high

certainty of going forward at the time they were recorded as new business taken.

In the event of a customer order cancellation,

we may be reimbursed for certain costs but typically have no contractual right to the total revenue reflected in our backlog.

In addition to us being unable to recover certain direct costs, canceled customer orders may also result in additional unrecoverable

costs due to the resulting underutilization of our assets.

Orders included in our backlog are represented by customer purchase orders and service

contracts that we believe to be firm.

Backlog consists of customer orders that either (1) have not yet been started or (2) are in progress

and are not yet completed.

In the latter case, the revenue value reported in backlog is the remaining value associated with work that

has not yet been billed and recognized as revenue.

From time to time, customer orders are canceled that appeared to have a high certainty

of going forward at the time they were recorded as new business taken.

In the event of a customer order cancellation, we may be reimbursed

for certain costs but typically have no contractual right to the total revenue reflected in our backlog.

In addition to us being unable

to recover certain direct costs, canceled customer orders may also result in additional unrecoverable costs due to the resulting underutilization

of our assets.

are subject to pricing pressure from our larger customers.

face significant pricing pressures in all of our business segments from our larger customers.

Because of their purchasing size,

our larger customers can influence market participants to compete on price terms.

Such customers also use their buying power to

negotiate lower prices.

If we are not able to offset pricing reductions resulting from these pressures by improved operating efficiencies

and reduced expenditures, those price reductions may have an adverse impact on our financial results.

Because of their purchasing size, our larger

customers can influence market participants to compete on price terms.

Such customers also use their buying power to negotiate lower

If we are not able to offset pricing reductions resulting from these pressures by improved operating efficiencies and reduced

expenditures, those price reductions may have an adverse impact on our financial results.

Deterioration

in the credit quality of several major customers could have a material adverse effect on our operating results and financial condition.

A significant asset included in our working

capital is accounts receivable from customers.

If customers responsible for a significant amount of accounts receivable become

insolvent or are otherwise unable to pay for products and services, or become unwilling or unable to make payments in a timely

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

A significant deterioration in the economy could

have an adverse effect on these accounts receivable, which could result in longer payment cycles, increased collection costs and

defaults in excess of management’s expectations.

Deterioration in the credit quality of our major customers could have a

material adverse effect on our operating results and financial condition.

significant asset included in our working capital is accounts receivable from customers.

If customers responsible for a significant amount

of accounts receivable become insolvent or are otherwise unable to pay for products and services, or become unwilling or unable to make

payments in a timely manner, our operating results and financial condition could be adversely affected.

A significant deterioration in

the economy could have an adverse effect on these accounts receivable, which could result in longer payment cycles, increased collection

costs and defaults in excess of management’s expectations.

Deterioration in the credit quality of our major customers could have

a material adverse effect on our operating results and financial condition.

rely on third parties for key elements of our business whose operations are outside our control.

rely on arrangements with third-party shippers and carriers such as independent shipping companies for timely delivery of our

products to our customers.

As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond

our control, including labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs.

If the services

of any of these third parties become unsatisfactory, we may experience delays in meeting our customers’ product demands

and we may not be able to find a suitable replacement on a timely basis or on commercially reasonable terms.

Any failure to deliver

products to our customers in a timely and accurate manner may damage our reputation and could cause us to lose customers.

rely on arrangements with third-party shippers and carriers such as independent shipping companies for timely delivery of our products

to our customers.

As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond our control,

including labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs.

If the services of any of these third

parties become unsatisfactory, we may experience delays in meeting our customers’ product demands and we may not be able to find

a suitable replacement on a timely basis or on commercially reasonable terms.

Any failure to deliver products to our customers in a timely

and accurate manner may damage our reputation and could cause us to lose customers.

also utilize third-party distributors to sell, install and service certain of our products.

While we are selective in whom we

choose to represent us, it is difficult for us to ensure that our distributors consistently act in accordance with the standards

we set for them.

To the extent any of our end-customers have negative experiences with any of our distributors or manufacturer’s

representatives;

While we are selective in whom we choose

to represent us, it is difficult for us to ensure that our distributors consistently act in accordance with the standards we set for

To the extent any of our end-customers have negative experiences with any of our distributors or manufacturer’s representatives;

it could reflect poorly on us and damage our reputation, thereby negatively impacting our financial results.

Supply chain and shipping disruptions

may result in shipping delays, a significant increase in shipping costs, and could increase product costs and result in lost sales

and reputational damage, which may have a material adverse effect on our business, operating results and financial condition.

Our third-party

manufacturers and suppliers have experienced, and expect to continue to experience, supply chain disruption and shipping disruptions,

including disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of destination, as

a result of the COVID-19 pandemic, congestion in port terminal facilities, labor supply and shipping container shortages, inadequate

chain and shipping disruptions may result in shipping delays, a significant increase in shipping costs, and could increase product costs

and result in lost sales and reputational damage, which may have a material adverse effect on our business, operating results and financial

third-party manufacturers and suppliers have experienced, and expect to continue to experience, supply chain disruption and shipping

disruptions, including disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of destination,

as a result of the COVID-19 pandemic, congestion in port terminal facilities, labor supply and shipping container shortages, inadequate

equipment and persons to load, dock and offload container vessels and for other reasons.

These disruptions may impact our ability

to receive materials and products from our manufacturers and suppliers, to distribute our products to our customers in a cost-effective

and timely manner and to meet customer demand, all of which could have an adverse effect on our financial condition and results

of operations.

There can be no assurance that further unforeseen events impacting the supply chain will not have a material adverse

effect on us in the future.

Additionally, the impacts that supply chain disruptions have on our third-party manufacturers and suppliers

are not within our control.

It is not currently possible to predict how long it will take for these supply chain disruptions to

cease or ease.

Prolonged supply chain disruptions that may impact us or our manufacturers and suppliers could interrupt product

manufacturing, increase raw material and product lead times, increase raw material and product costs, impact our ability to meet

customer demand and result in lost sales and reputational damage, all of which could have a material adverse effect on our business,

financial condition and results of operations.

business may face cybersecurity risk generally associated with our information technology systems which could materially affect

our business, and our results of operations could be materially affected if our information technology systems (or third-party

systems we rely on) are interrupted, damaged by unforeseen events, or fail for any extended period of time.

rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store data to among

other things:

These disruptions may impact our ability to

receive materials and products from our manufacturers and suppliers, to distribute our products to our customers in a cost-effective

and timely manner and to meet customer demand, all of which could have an adverse effect on our financial condition and results of operations.

There can be no assurance that further unforeseen events impacting the supply chain will not have a material adverse effect on us in

Additionally, the impacts that supply chain disruptions have on our third-party manufacturers and suppliers are not within

It is not currently possible to predict how long it will take for these supply chain disruptions to cease or ease.

supply chain disruptions that may impact us or our manufacturers and suppliers could interrupt product manufacturing, increase raw material

and product lead times, increase raw material and product costs, impact our ability to meet customer demand and result in lost sales

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

business may face cybersecurity risk generally associated with our information technology systems which could materially affect our business,

and our results of operations could be materially affected if our information technology systems (or third-party systems we rely on)

are interrupted, damaged by unforeseen events, or fail for any extended period of time.

rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store data to among other

process and ship orders on a timely basis;

the accurate billing and collections from our customers.

risks have generally increased in recent years, and a cyberattack that bypasses our IS security systems causing an IS security

breach may lead to a material disruption of our business operations and/or the loss of business information resulting in a material

effect on our business.

addition, we develop products and provide services to our customers that are technology-based, and a cyberattack that bypasses

the IS security systems of our products or services causing a security breach and/or perceived security vulnerabilities in our

products or services could also cause significant reputational harm, and actual or perceived vulnerabilities may lead to claims

against us by our customers.

Perceived or actual security vulnerabilities in our products or services, or the perceived or actual

failure by us or our customers who use our products to comply with applicable legal requirements, may not only cause us significant

reputational harm, but may also lead to claims against us by our customers and involve fines and penalties, costs for remediation,

and settlement expenses.

IS utilize certain third-party service organizations that manage a portion of our information systems, and our business may be

materially affected if these third-party service organizations are subject to an IS security breach.

Risks associated with these

and other IS security breaches may include, among other things:

results could be materially affected due to theft, destruction, loss, misappropriation

or release of confidential data or intellectual property;

● operational

or business delays resulting from the disruption of information systems and subsequent

clean-up and mitigation activities;

may incur claims, fines and penalties, and costs for remediation, or substantial defense

and settlement expenses;

publicity resulting in reputation or brand damage with our customers, partners or industry

risks have generally increased in recent years, and a cyberattack that bypasses our IS security systems causing an IS security breach

may lead to a material disruption of our business operations and/or the loss of business information resulting in a material effect on

our business.

addition, we develop products and provide services to our customers that are technology-based, and a cyberattack that bypasses the IS

security systems of our products or services causing a security breach and/or perceived security vulnerabilities in our products or services

could also cause significant reputational harm, and actual or perceived vulnerabilities may lead to claims against us by our customers.

Perceived or actual security vulnerabilities in our products or services, or the perceived or actual failure by us or our customers who

use our products to comply with applicable legal requirements, may not only cause us significant reputational harm, but may also lead

to claims against us by our customers and involve fines and penalties, costs for remediation, and settlement expenses.

IS utilize certain third-party service organizations that manage a portion of our information systems, and our business may be materially

affected if these third-party service organizations are subject to an IS security breach.

Risks associated with these and other IS security

breaches may include, among other things:

results could be materially affected due to theft, destruction, loss, misappropriation or release of confidential data or intellectual

or business delays resulting from the disruption of information systems and subsequent clean-up and mitigation activities;

may incur claims, fines and penalties, and costs for remediation, or substantial defense and settlement expenses;

publicity resulting in reputation or brand damage with our customers, partners or industry peers.

have various insurance policies, covering risks in amounts that we consider adequate.

There can be no assurance that the insurance

coverage we maintain is sufficient or will be available in adequate amounts or at a reasonable cost.

Successful claims for misappropriation

or release of confidential or personal data brought against us in excess of available insurance or fines or other penalties assessed

or any claim that results in significant adverse publicity against us could have a material adverse effect on our business and

our reputation.

There can be no assurance that the insurance coverage

we maintain is sufficient or will be available in adequate amounts or at a reasonable cost.

Successful claims for misappropriation or

release of confidential or personal data brought against us in excess of available insurance or fines or other penalties assessed or

any claim that results in significant adverse publicity against us could have a material adverse effect on our business and our reputation.

business requires skilled labor, and we may be unable to attract and retain qualified employees.

ability to maintain our productivity and profitability will be limited by our ability to employ, train and retain skilled personnel

necessary to meet our requirements.

ability to maintain our productivity and profitability will be limited by our ability to employ, train and retain skilled personnel necessary

to meet our requirements.

We may experience shortages of qualified personnel.

We cannot be certain that we will be able

to maintain an adequate skilled labor force necessary to operate efficiently and to support our growth strategy or that our labor

expenses will not increase as a result of a shortage in the supply of skilled personnel.

Labor shortages, increased labor costs

or loss of our most skilled workers could impair our ability to deliver on time to our customers (thereby creating a risk that

we lose our customers to competition) and would inhibit our ability to maintain our business or grow our revenues, and may adversely

impact our profitability.

An overall tightening and increasingly

competitive labor market, notably in response to the COVID-19 pandemic, has been recently observed in the U.S.

A sustained labor

shortage or increased turnover rates within our employee base, caused by the COVID-19 pandemic or as a result of general macroeconomic

factors, could lead to increased costs, such as increased wage rates to attract and retain employees, and could negatively affect

our ability to efficiently operate our manufacturing facilities and overall business.

If we are unable to hire and retain employees

capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in labor availability, such

as overtime and third-party outsourcing, have unintended negative effects, our business could be adversely affected.

labor shortage, lack of skilled labor, increased turnover or labor inflation, caused by the COVID-19 pandemic or as a result of

general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash

We cannot be certain that we will be able to maintain an

adequate skilled labor force necessary to operate efficiently and to support our growth strategy or that our labor expenses will not

increase as a result of a shortage in the supply of skilled personnel.

Labor shortages, increased labor costs or loss of our most skilled

workers could impair our ability to deliver on time to our customers (thereby creating a risk that we lose our customers to competition)

and would inhibit our ability to maintain our business or grow our revenues, and may adversely impact our profitability.

overall tightening and increasingly competitive labor market, notably in response to the COVID-19 pandemic, has been recently

observed in the U.S.

A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs,

such as increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our

manufacturing facilities and overall business.

If we are unable to hire and retain employees capable of performing at a high-level,

or if mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing,

have unintended negative effects, our business could be adversely affected.

An overall labor shortage, lack of skilled labor,

increased turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity or

business operations are dependent upon our ability to engage in successful collective bargaining with our unionized workforce.

we are unable to renew our collective bargaining agreements, or if additional segments of our workforce become unionized, we may

be subject to work interruptions or stoppages.

Strikes or labor disputes with our employees may adversely affect our ability to

conduct our business.

we are unable to renew our collective bargaining agreements, or if additional segments of our workforce become unionized, we may be subject

to work interruptions or stoppages.

Strikes or labor disputes with our employees may adversely affect our ability to conduct our business.

The COVID-19 pandemic and its ongoing effects

may adversely affect our business.

The global coronavirus pandemic and its ongoing effects

could have a negative impact on our revenues and operating results.

This pandemic could result in disruptions and damage to our business,

caused by both the negative impact to our ability to obtain cost effective raw materials, supplies and component parts necessary to operate

our business and the negative impact on our ability to operate our facility should the coronavirus spread more broadly in the regions

we are located, thereby creating an increased risk of exposure to our workforce which cannot operate our facility remotely.

The full impact

of the COVID-19 pandemic and its ongoing effects continues to evolve as the date of this report.

As such, it continues to be uncertain

as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations.

year ended December 31, 2022, the Company was able to operate substantially at capacity during the COVID-19 pandemic.

Given the daily

evolution of the COVID-19 pandemic, its ongoing effects, and the global responses to the continuing crisis, we are not able to estimate

the full effects of the COVID-19 pandemic and its ongoing effects at this time, however, if the ongoing effects of the COVID-19 pandemic

continue or worsen, it may have an adverse effect on the Company’s results of operations, financial condition, or liquidity.

efforts will not completely prevent our business from being adversely affected, and the longer the pandemic impacts supply and demand

and the more broadly the pandemic spreads, it is more likely that the impact on our business, revenues and operating results will become

increasingly negative.

In addition, the continuation

of the COVID-19 pandemic or a significant outbreak of other infectious diseases could result in a widespread health crisis that could

adversely affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial

condition and results of operations.

Relating to Our Organization

law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that

stockholders may consider favorable.

board of directors is authorized to issue shares of preferred stock in one or more series and to fix the voting powers, preferences

and other rights and limitations of the preferred stock.

Accordingly, we may issue shares of preferred stock with a preference

over our common stock with respect to dividends or distributions on liquidation or dissolution, or that may otherwise adversely

affect the voting or other rights of the holders of common stock.

Issuances of preferred stock, depending upon the rights, preferences

and designations of the preferred stock, may have the effect of delaying, deterring or preventing a change of control, even if

that change of control might benefit our stockholders.

In addition, we are subject to Section 203 of the Delaware General Corporation

Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with

an “interested stockholder” for a period of three years after the date of the transaction in which the person became

an interested stockholder, unless (i) prior to the date of the transaction, the board of directors of the corporation approved

either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,

excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also

officers and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially

whether shares held subject to the plan will be tendered in a tender or exchange offer;

or (iii) on or subsequent to the date

of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders,

and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by

the interested stockholder.

law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders

may consider favorable.

board of directors is authorized to issue shares of preferred stock in one or more series and to fix the voting powers, preferences and

other rights and limitations of the preferred stock.

Accordingly, we may issue shares of preferred stock with a preference over our common

stock with respect to dividends or distributions on liquidation or dissolution, or that may otherwise adversely affect the voting or

other rights of the holders of common stock.

Issuances of preferred stock, depending upon the rights, preferences and designations of

the preferred stock, may have the effect of delaying, deterring or preventing a change of control, even if that change of control might

benefit our stockholders.

In addition, we are subject to Section 203 of the Delaware General Corporation Law.

Section 203 generally prohibits

a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for

a period of three years after the date of the transaction in which the person became an interested stockholder, unless (i) prior to the

date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which

resulted in the stockholder becoming an interested stockholder;

(ii) the interested stockholder owned at least 85% of the voting stock

of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding

(a) shares owned by persons who are directors and also officers and (b) shares owned by employee stock plans in which employee participants

do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer;

or (iii) on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual

or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting

stock which is not owned by the interested stockholder.

203 could delay or prohibit mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage

attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price

above the prevailing market price.

attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above

the prevailing market price.

have identified a material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain effective

internal control over financial reporting or effective disclosure controls, this could have a material adverse effect on our business .

discussed in Item 9A “Controls and Procedures”, we concluded there is a material weakness of our internal control over financial

A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting,

such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements

will not be prevented or detected on a timely basis by the company’s internal controls.

cannot assure you that we will be able to remediate our existing material weakness in a timely manner, if at all, or that in the future

additional material weaknesses will not exist, reoccur or otherwise be discovered, a risk that is significantly increased in light of

the complexity of our business.

If our efforts to remediate these material weaknesses, as described in Item 9A “Controls and Procedures”,

are not successful or if other deficiencies occur, our ability to accurately and timely report our financial position, results of operations,

cash flows or key operating metrics could be impaired, which could result in late filings of our annual and quarterly reports under the

Exchange Act, restatements of our consolidated financial statements or other corrective disclosures.

Additional impacts could include

a decline in our stock price, suspension of trading or delisting of our common stock by the Nasdaq Capital Market, or other material

adverse effects on our business, reputation, and results of operations, financial condition or liquidity.

Furthermore, if we continue

to have this existing material weakness, other material weaknesses or significant deficiencies in the future, it could create a perception

that our financial results do not fairly state our financial condition or results of operations.

Any of the foregoing could have an adverse

effect on the value of our stock.

Relating to our Common Stock

trading volume of our common stock has recently increased to a level that is significantly higher than our historical average.

If the trading volume of our common stock decreases, we will not be able to ensure investors that an active market for our common

stock will be sustained.

The trading volume of our common stock

spiked significantly in Fiscal 2021 and Fiscal 2020, and our common stock has continued to trade at higher volumes than our historical

trading volume of our common stock decreases, we will not be able to ensure investors that an active market for our common stock will

be sustained.

trading volume of our common stock spiked significantly in Fiscal 2022 and Fiscal 2021, and our common stock has continued to trade at

higher volumes than our historical average.

We do not know why the trading volume of our common stock has spiked significantly;

we believe, however, that the sharp

spike in the trading volume of our common stock is the result of a number of factors outside our control, including recent volatility

in the stock market, which continues to remain unpredictable.

There has been no recent change in our financial condition or results

of operations that is consistent with the increase in the trading volume of our common stock, and the recent spike in the trading

volume of our common stock may not be sustained.

the event of a rapid decrease in the trading volume of our common stock, there can be no assurance that an active trading market

in our common stock could be maintained, and any illiquidity resulting from such a decrease in the trading volume of our common

stock may result in the market price not accurately reflecting our relative value.

If our common stock were to be thinly traded,

even limited trading in our common stock could lead, as it has at times in the past, to dramatic fluctuations in share price,

and investors might not be able to liquidate their investment in us at all or at a price that reflects the value of the business.

however, that the sharp spike in the trading volume of our common stock is the result of a number of factors outside our control, including

recent volatility in the stock market, which continues to remain unpredictable.

There has been no recent change in our financial condition

or results of operations that is consistent with the increase in the trading volume of our common stock, and the recent spike in the

trading volume of our common stock may not be sustained.

the event of a rapid decrease in the trading volume of our common stock, there can be no assurance that an active trading market in our

common stock could be maintained, and any illiquidity resulting from such a decrease in the trading volume of our common stock may result

in the market price not accurately reflecting our relative value.

If our common stock were to be thinly traded, even limited trading

in our common stock could lead, as it has at times in the past, to dramatic fluctuations in share price, and investors might not be able

to liquidate their investment in us at all or at a price that reflects the value of the business.

stock price may be volatile, which could result in substantial losses for investors.

market price of our common stock is highly volatile and could fluctuate widely in response to various factors, many of which are

beyond our control, including the following:

market price of our common stock is highly volatile and could fluctuate widely in response to various factors, many of which are beyond

our control, including the following:

technological

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or departures of key personnel, including Nathan J.

Mazurek, our chairman, president

and chief executive officer;

Mazurek, our chairman, president and chief executive officer;

of our common stock, including management shares;

availability of freely-tradable “unrestricted” shares of our common stock

to satisfy purchase orders and demand;

availability of freely-tradable “unrestricted” shares of our common stock to satisfy purchase orders and demand;

ability to execute our business plan;

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and other external factors;

ability to manage the costs of maintaining adequate internal financial controls and procedures

in connection with the acquisition of additional businesses;

ability to manage the costs of maintaining adequate internal financial controls and procedures in connection with the acquisition

of additional businesses;

period-to-period

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of acquisitions.

addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated

to the operating performance of particular companies.

These market fluctuations may also significantly affect the market price

of our common stock.

addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the

operating performance of particular companies.

These market fluctuations may also significantly affect the market price of our common

risk management activities may leave us exposed to unidentified or unanticipated risks.

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We estimate our liabilities

for known claims and unpaid claims and expenses based on information available as well as projections for claims incurred but

not reported.

However, insurance liabilities are difficult to estimate due to various factors and we may be unable to effectively

anticipate or measure potential risks to our company.

If we suffer unexpected or uncovered losses, any of our insurance policies

or programs are terminated for any reason or are not effective in mitigating our risks, we may incur losses that are not covered

by our insurance policies or that exceed our accruals or that exceed our coverage limits and could adversely impact our consolidated

results of operations, cash flows and financial position.

for known claims and unpaid claims and expenses based on information available as well as projections for claims incurred but not reported.

However, insurance liabilities are difficult to estimate due to various factors and we may be unable to effectively anticipate or measure

potential risks to our company.

If we suffer unexpected or uncovered losses, any of our insurance policies or programs are terminated

for any reason or are not effective in mitigating our risks, we may incur losses that are not covered by our insurance policies or that

exceed our accruals or that exceed our coverage limits and could adversely impact our consolidated results of operations, cash flows

and financial position.

environmental, monetary and other governmental policies could have a material adverse effect on our profitability.

are subject to international, federal, provincial, state and local laws and regulations governing environmental matters, including

emissions to air, discharge to waters and the generation and handling of waste.

We are also subject to laws relating to occupational

health and safety.

The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is

no assurance that we will not incur material environmental or occupational health and safety liabilities in the future.

expectations of remediation expenses could be affected by, and potentially significant expenditures could be required to comply

with, environmental regulations and health and safety laws that may be adopted or imposed in the future.

Future remediation technology

advances could adversely impact expectations of remediation expenses.

We can give no assurance that any lawsuits or claims

brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

Types of potential

litigation cases include product liability, contract, employment-related, labor relations, personal injury or property damage,

intellectual property, stockholder claims and claims arising from any injury or damage to persons, property or the environment

from hazardous substances used, generated or disposed of in the conduct of our business.

Adverse outcomes in some or all of these

claims may result in significant monetary damages that could adversely affect our ability to conduct our business.

Global, market and economic conditions

may negatively impact our business, financial condition and stock price.

Concerns over inflation, geopolitical issues,

financial markets, capital and exchange controls, unstable global credit markets and financial conditions and the COVID-19

pandemic, have led to periods of significant economic instability, declines in consumer confidence and discretionary spending,

diminished expectations for the global economy and expectations of slower global economic growth going forward, and increased unemployment

Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and

continued unstable or unpredictable economic and market conditions.

are subject to international, federal, provincial, state and local laws and regulations governing environmental matters, including emissions

to air, discharge to waters and the generation and handling of waste.

We are also subject to laws relating to occupational health and

The operation of manufacturing plants involves a high level of susceptibility in these areas, and there is no assurance that

we will not incur material environmental or occupational health and safety liabilities in the future.

Moreover, expectations of remediation

expenses could be affected by, and potentially significant expenditures could be required to comply with, environmental regulations and

health and safety laws that may be adopted or imposed in the future.

Future remediation technology advances could adversely impact expectations

of remediation expenses.

We can give no assurance that any lawsuits or claims brought in the future will not have an adverse effect on

our financial condition, liquidity or operating results.

Types of potential litigation cases include product liability, contract, employment-related,

labor relations, personal injury or property damage, intellectual property, stockholder claims and claims arising from any injury or

damage to persons, property or the environment from hazardous substances used, generated or disposed of in the conduct of our business.

Adverse outcomes in some or all of these claims may result in significant monetary damages that could adversely affect our ability to

conduct our business.

market and economic conditions may negatively impact our business, financial condition and stock price.

over inflation, geopolitical issues, the U.S.

financial markets, capital and exchange controls, unstable global credit markets and financial

conditions and the COVID-19 pandemic, have led to periods of significant economic instability, declines in consumer confidence and discretionary

spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, and increased

unemployment rates.

Our general business strategy may be adversely affected by any such economic downturns, volatile business environments

and continued unstable or unpredictable economic and market conditions.

If these conditions continue to deteriorate or do not improve,

it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.

In addition, there

is a risk that one or more of our current or future service providers, manufacturers, suppliers, our third-party payors, and other

partners could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating

goals on schedule and on budget or meet our business and financial objectives.

In addition, we face several risks associated

with international business and are subject to global events beyond our control, including war, public health crises, such as pandemics

and epidemics, trade disputes, economic sanctions, trade wars and their collateral impacts and other international events.

of these changes could have a material adverse effect on our reputation, business, financial condition or results of operations.

There may be changes to our business if there is instability, disruption or destruction in a significant geographic region, regardless

of cause, including war, terrorism, riot, civil insurrection or social unrest;

and natural or man-made disasters, including famine,

flood, fire, earthquake, storm or disease.

In February 2022, armed conflict escalated between Russia and Ukraine.

The sanctions

announced by the U.S.

and other countries, following Russia’s invasion of Ukraine against Russia to date include restrictions

on selling or importing goods, services or technology in or from affected regions and travel bans and asset freezes impacting connected

individuals and political, military, business and financial organizations in Russia.

and other countries could impose

wider sanctions and take other actions should the conflict further escalate.

It is not possible to predict the broader consequences

of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects

on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition

and results of operations.

In addition, there is

a risk that one or more of our current or future service providers, manufacturers, suppliers, our third-party payors, and other partners

could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating goals on schedule

and on budget or meet our business and financial objectives.

In addition, we face several risks associated with international business and are subject to global events beyond our control, including

war, public health crises, such as pandemics and epidemics, trade disputes, economic sanctions, trade wars and their collateral impacts

and other international events.

Any of these changes could have a material adverse effect on our reputation, business, financial condition

or results of operations.

There may be changes to our business if there is instability, disruption or destruction in a significant geographic

region, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest;

and natural or man-made disasters, including

famine, flood, fire, earthquake, storm or disease.

In addition, the consequences of the ongoing conflict between Russia and Ukraine, including

related sanctions and countermeasures, and the effects of rising global inflation, are difficult to predict, and could adversely impact

geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely

affect our business and operations.

face risks associated with litigation and claims, which could impact our financial results and condition.

business, results of operations and financial condition could be affected by significant litigation or claims adverse to us.

of potential litigation cases include product liability, contract, employment-related, labor relations, personal injury or property

damage, intellectual property, trade secret or unfair competition claims, stockholder claims and claims arising from any injury

or damage to persons, property or the environment from hazardous substances used, generated or disposed of in the conduct of our

potential litigation cases include product liability, contract, employment-related, labor relations, personal injury or property damage,

intellectual property, trade secret or unfair competition claims, stockholder claims and claims arising from any injury or damage to

persons, property or the environment from hazardous substances used, generated or disposed of in the conduct of our business.

or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

of a significant number of shares of our common stock in the public market could harm the market price of our common stock and make

it more difficult for us to raise funds through future offerings of common stock.

Our stockholders and the holders of our

options and warrants may sell substantial amounts of our common stock in the public market.

The availability of these shares

of our common stock for resale in the public market has the potential to cause the supply of our common stock to exceed investor

demand, thereby decreasing the price of our common stock.

addition, the fact that our stockholders, option holders and warrant holders can sell substantial amounts of our common stock

in the public market, whether or not sales have occurred or are occurring, could make it more difficult for us to raise additional

financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or

are subject to financial reporting and other requirements for which our accounting, internal audit and other management systems

and resources may not be adequately prepared.

of a significant number of shares of our common stock in the public market could harm the market price of our common stock and make it

more difficult for us to raise funds through future offerings of common stock.

Our stockholders and the holders of our options and warrants

may sell substantial amounts of our common stock in the public market.

The availability of these shares of our common stock for resale

in the public market has the potential to cause the supply of our common stock to exceed investor demand, thereby decreasing the price

of our common stock.

addition, the fact that our stockholders, option holders and warrant holders can sell substantial amounts of our common stock in the

public market, whether or not sales have occurred or are occurring, could make it more difficult for us to raise additional financing

through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

are subject to financial reporting and other requirements for which our accounting, internal audit and other management systems and resources

may not be adequately prepared.

are subject to reporting and other obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),

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of the effectiveness of our internal controls over financial reporting.

These reporting and other obligations place significant

demands on our management, administrative, operational, internal audit and accounting resources.

Any failure to maintain effective

internal controls could have a material adverse effect on our business, operating results and stock price.

These reporting and other obligations place significant demands

on our management, administrative, operational, internal audit and accounting resources.

Any failure to maintain effective internal controls

could have a material adverse effect on our business, operating results and stock price.

addition, our internal controls will also include those of any company or business that we may acquire in the future.

companies or businesses are likely to have different standards, controls, contracts, procedures and policies, making it more difficult

to implement and harmonize company-wide financial, accounting, information and other systems.

As a result, our internal controls

may become more complex and we may require significantly more resources to ensure they remain effective.

Failure to implement

required new or improved controls, or difficulties encountered in their implementation, either in our existing business or in

businesses that we may acquire, could harm our operating results or cause us to fail to meet our reporting obligations.

Acquired companies

or businesses are likely to have different standards, controls, contracts, procedures and policies, making it more difficult to implement

and harmonize company-wide financial, accounting, information and other systems.

As a result, our internal controls may become more complex

and we may require significantly more resources to ensure they remain effective.

Failure to implement required new or improved controls,

or difficulties encountered in their implementation, either in our existing business or in businesses that we may acquire, could harm

our operating results or cause us to fail to meet our reporting obligations.

are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected.

ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 require us to identify material weaknesses

in internal control over financial reporting, which is a process to provide reasonable assurance regarding the reliability of

financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.

management, including our chief executive officer and chief financial officer, does not expect that our internal controls and

disclosure controls will prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide

only reasonable, not absolute, assurance that the objectives of the control system are met.

In addition, the design of a control

system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all

control issues and instances of fraud, if any, in our company have been detected.

These inherent limitations include the realities

that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.

Further, controls

can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events,

and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, a control may be inadequate because of changes in conditions, such as growth of the company or increased transaction

volume, or the degree of compliance with the policies or procedures may deteriorate.

Because of inherent limitations in a cost-effective

control system, misstatements due to error or fraud may occur and not be detected.

addition, discovery and disclosure of a material weakness, by definition, could have a material adverse impact on our financial

Such an occurrence could discourage certain customers or suppliers from doing business with us and adversely affect

ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 require us to identify material weaknesses in internal

control over financial reporting, which is a process to provide reasonable assurance regarding the reliability of financial reporting

for external purposes in accordance with accounting principles generally accepted in the United States.

Our management, including our

chief executive officer and chief financial officer, does not expect that our internal controls and disclosure controls will prevent

all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance

that the objectives of the control system are met.

In addition, the design of a control system must reflect the fact that there are resource

constraints and the benefit of controls must be relative to their costs.

Because of the inherent limitations in all control systems,

no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, in our company have

been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can

occur because of simple errors or mistakes.

Further, controls can be circumvented by individual acts of some persons, by collusion of

two or more persons, or by management override of the controls.

The design of any system of controls is also based in part upon certain

assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated

goals under all potential future conditions.

Over time, a control may be inadequate because of changes in conditions, such as growth

of the company or increased transaction volume, or the degree of compliance with the policies or procedures may deteriorate.

of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

In addition, discovery and disclosure of a material

weakness, by definition, could have a material adverse impact on our financial statements.

See “—Risks Relating to Our Organization--

We have identified a material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain

effective internal control over financial reporting or effective disclosure controls, this could have a material adverse effect on our

business .” Such an occurrence could discourage certain customers or suppliers from doing business with us and adversely affect

how our stock trades.

This could in turn negatively affect our ability to access equity markets for capital.

acquisitions that we have completed, or may complete in the future, may not perform as planned and could disrupt our business

and harm our financial condition and operations.

an effort to effectively compete in the specialty electrical equipment manufacturing and service businesses, where increasing

competition and industry consolidation prevail, we have sought to acquire complementary businesses in the past and will continue

to do so in the future.

acquisitions that we have completed, or may complete in the future, may not perform as planned and could disrupt our business and harm

our financial condition and operations.

an effort to effectively compete in the specialty electrical equipment manufacturing and service businesses, where increasing competition

and industry consolidation prevail, we have sought to acquire complementary businesses in the past and will continue to do so in the

In the event of any future acquisitions, we could:

additional securities that would dilute our current stockholders’ percentage ownership

or provide the purchasers of the additional securities with certain preferences over

those of common stockholders, such as dividend or liquidation preferences;

additional securities that would dilute our current stockholders’ percentage ownership or provide the purchasers of the additional

securities with certain preferences over those of common stockholders, such as dividend or liquidation preferences;

debt and assume liabilities;

large and immediate write-offs of intangible assets, accounts receivable or other assets.

events could result in significant expenses and decreased revenue, which could adversely affect the market price of our common

In addition, integrating acquired businesses and completing any future acquisitions involve numerous operational and

financial risks.

These risks include difficulty in assimilating acquired operations, diversion of management’s attention,

and the potential loss of key employees or customers of acquired operations.

Furthermore, companies acquired by us may not generate

financial results consistent with our management’s plans at the time of acquisition.

events could result in significant expenses and decreased revenue, which could adversely affect the market price of our common stock.

In addition, integrating acquired businesses and completing any future acquisitions involve numerous operational and financial risks.

These risks include difficulty in assimilating acquired operations, diversion of management’s attention, and the potential loss

of key employees or customers of acquired operations.

Furthermore, companies acquired by us may not generate financial results consistent

with our management’s plans at the time of acquisition.

success of our business depends on achieving our strategic objectives, including dispositions.

continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives.

decide to sell assets or a business, we may encounter difficulty in finding buyers or executing alternative exit strategies on

acceptable terms in a timely manner, which could delay the accomplishment of our strategic objectives.

Alternatively, we may dispose

of a business at a price or on terms that are less than we had anticipated, or with the exclusion of assets that must be divested

After reaching an agreement with a buyer for the disposition of a business, the transaction remains subject to the

satisfaction of pre-closing conditions, which may prevent us from completing the transaction.

Dispositions may also involve continued

financial involvement in the divested business, such as through continuing equity ownership, transition service agreements, guarantees,

indemnities or other current or contingent financial obligations.

Under these arrangements, performance by the divested businesses

or other conditions outside our control could affect our future financial results.

we do not conduct an adequate due diligence investigation of a target business that we acquire, we may be required subsequently

to take write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect

on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

When we decide

to sell assets or a business, we may encounter difficulty in finding buyers or executing alternative exit strategies on acceptable terms

in a timely manner, which could delay the accomplishment of our strategic objectives.

Alternatively, we may dispose of a business at

a price or on terms that are less than we had anticipated, or with the exclusion of assets that must be divested separately.

After reaching

an agreement with a buyer for the disposition of a business, the transaction remains subject to the satisfaction of pre-closing conditions,

which may prevent us from completing the transaction.

Dispositions may also involve continued financial involvement in the divested business,

such as through continuing equity ownership, transition service agreements, guarantees, indemnities or other current or contingent financial

Under these arrangements, performance by the divested businesses or other conditions outside our control could affect our

future financial results.

we do not conduct an adequate due diligence investigation of a target business that we acquire, we may be required subsequently to take

write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial

condition, results of operations and our stock price, which could cause you to lose some or all of your investment.

part of our acquisition strategy, we will need to conduct a due diligence investigation of one or more target businesses.

due diligence is time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved

in the due diligence process.

Intensive due

diligence is time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved in

the due diligence process.

We may have limited time to conduct such due diligence.

Even if we conduct extensive due diligence

on a target business that we acquire, we cannot assure you that this diligence will uncover all material issues relating to a

particular target business, or that factors outside of the target business and outside of our control will not later arise.

our diligence fails to identify issues specific to a target business or the environment in which the target business operates,

we may be forced to write-down or write-off assets, restructure our operations, or incur impairment or other charges that could

result in us reporting losses.

Even though these charges may be non-cash items and not have an immediate impact on our liquidity,

the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock.

addition, charges of this nature may cause us to violate net worth or other covenants that we may be subject to as a result of

assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.

Even if we conduct extensive due diligence on a target

business that we acquire, we cannot assure you that this diligence will uncover all material issues relating to a particular target business,

or that factors outside of the target business and outside of our control will not later arise.

If our diligence fails to identify issues

specific to a target business or the environment in which the target business operates, we may be forced to write-down or write-off assets,

restructure our operations, or incur impairment or other charges that could result in us reporting losses.

Even though these charges

may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute

to negative market perceptions about us or our common stock.

In addition, charges of this nature may cause us to violate net worth or

other covenants that we may be subject to as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining

post-combination debt financing.

may be unable to generate internal growth.

ability to generate internal growth will be affected by, among other factors, our ability to attract new customers, increases

or decreases in the number or size of orders received from existing customers, hiring and retaining skilled employees and increasing

volume utilizing our existing facilities.

Many of the factors affecting our ability to generate internal growth may be beyond

our control, and we cannot be certain that our strategies will be implemented with positive results or that we will be able to

generate cash flow sufficient to fund our operations and to support internal growth.

If we do not achieve internal growth, our

results of operations will suffer and we will likely not be able to expand our operations or grow our business.

the event that we fail to satisfy any of the listing requirements of the NASDAQ Capital Market, our common stock may be delisted,

which could affect our market price and liquidity.

ability to generate internal growth will be affected by, among other factors, our ability to attract new customers, increases or decreases

in the number or size of orders received from existing customers, hiring and retaining skilled employees and increasing volume utilizing

our existing facilities.

Many of the factors affecting our ability to generate internal growth may be beyond our control, and we cannot

be certain that our strategies will be implemented with positive results or that we will be able to generate cash flow sufficient to

fund our operations and to support internal growth.

If we do not achieve internal growth, our results of operations will suffer and we

will likely not be able to expand our operations or grow our business.

the event that we fail to satisfy any of the listing requirements of the NASDAQ Capital Market, our common stock may be delisted, which

could affect our market price and liquidity.

common stock is listed on the NASDAQ Capital Market.

In order to maintain the listing of Pioneer Power’s common stock on

NASDAQ, Pioneer Power’s common stock must comply with certain continued listing requirements, including having:

least two registered and active market makers, one of which may be a market maker entering

a stabilizing bid;

In order to maintain the listing of Pioneer Power’s common stock on NASDAQ,

Pioneer Power’s common stock must comply with certain continued listing requirements, including having:

least two registered and active market makers, one of which may be a market maker entering a stabilizing bid;

minimum bid price of at least $1.00 per share;

least 300 total holders (including both beneficial holders and holders of record, but

excluding any holder who is directly or indirectly an executive officer, director or

the beneficial holder of more than 10% of the total shares outstanding);

least 500,000 publicly held shares with a market value of at least $1.0 million (excluding

any shares held directly or indirectly by officers, directors or any person who is the

beneficial owner of more than 10% of the total shares outstanding).

least 300 total holders (including both beneficial holders and holders of record, but excluding any holder who is directly or indirectly

an executive officer, director or the beneficial holder of more than 10% of the total shares outstanding);

least 500,000 publicly held shares with a market value of at least $1.0 million (excluding any shares held directly or indirectly

by officers, directors or any person who is the beneficial owner of more than 10% of the total shares outstanding).

Power must also meet at least one of the following continued listing standards:

4 unchanged sentences

or in two of the three most recently completed fiscal years.

assurances can be given that Pioneer Power will continue to satisfy these requirements as some of these requirements are outside

of Pioneer Power’s direct control, such as the bid price of its common stock, the number of holders of its common stock

and the value of its publicly held shares.

If Pioneer Power is unable to meet these requirements, NASDAQ may take action to delist

Pioneer Power’s common stock.

In such a case, Pioneer Power may appeal NASDAQ’s determination to delist its common

stock, but such appeal may not be successful.

Pioneer Power’s common stock is delisted from NASDAQ, Pioneer Power expects that its common stock would begin trading on

the over-the-counter markets.

The delisting of Pioneer Power’s common stock could result in a reduction in its trading price

and would substantially limit the liquidity of Pioneer Power’s common stock.

In addition, delisting could materially adversely

impact Pioneer Power’s ability to raise capital or pursue strategic restructuring, refinancing or other transactions.

from NASDAQ could also have other negative results, including the potential loss of confidence by institutional investors.

assurances can be given that Pioneer Power will continue to satisfy these requirements as some of these requirements are outside of Pioneer

Power’s direct control, such as the bid price of its common stock, the number of holders of its common stock and the value of its

publicly held shares.

If Pioneer Power is unable to meet these requirements, NASDAQ may take action to delist Pioneer Power’s common

In such a case, Pioneer Power may appeal NASDAQ’s determination to delist its common stock, but such appeal may not be successful.

Pioneer Power’s common stock is delisted from NASDAQ, Pioneer Power expects that its common stock would begin trading on the over-the-counter

The delisting of Pioneer Power’s common stock could result in a reduction in its trading price and would substantially

limit the liquidity of Pioneer Power’s common stock.

In addition, delisting could materially adversely impact Pioneer Power’s

ability to raise capital or pursue strategic restructuring, refinancing or other transactions.

Delisting from NASDAQ could also have

other negative results, including the potential loss of confidence by institutional investors.

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