What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-22 · 217 added, 132 removed, 146 unchanged (71% of the section changed)

43 unchanged sentences

The products are sold directly to distributors and retail

products are sold throughout North America, Europe and Australia primarily through major mass merchandisers and warehouse

clubs, on-line retailers and to a lesser extent department stores, lifestyle merchants, direct mail catalogs and showrooms, music and

record stores, and specialty stores.

products are sold throughout North America, Europe and Australia primarily through major mass merchandisers and warehouse clubs, on-line

retailers and to a lesser extent department stores, lifestyle merchants, direct mail catalogs and showrooms, music and record stores,

and specialty stores.

Representative

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quarter, combined, accounted for approximately 81% and 86% of net sales in fiscal 2022 and 2021, respectively.

of the date of this report, Digital Power Lending, LLC (“Digital Power Lending ”)

of the date of this report, Ault Lending, LLC (“Ault Lending ”)

beneficially owns and BitNile Holdings, Inc.

1 unchanged sentence

Ault, III (“Ault,” and collectively

with Digital Power Lending and BitNile Holdings, “BitNile”) may be deemed to beneficially own an aggregate of 1,683,000 shares

of our common stock or approximately 54.4% of our outstanding shares.

Digital Power Lending is a wholly owned subsidiary of BitNile Holdings.

with Ault Lending and BitNile Holdings, “BitNile”) may be deemed to beneficially own an aggregate of 1,787,200 shares of

our common stock or approximately 57.4% of our outstanding shares.

Ault Lending is a wholly owned subsidiary of BitNile Holdings.

Ault is the Executive Chairman of BitNile Holdings.

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stockholder, and evaluated and nominated by the Company’s Nominating and Corporate Governance Committee.

and Security Agreement with Fifth Third Bank, National Association

October 14, 2022 the Company entered into a Credit and Security Agreement (the “Credit Agreement”) with Fifth Third Bank,

National Association, as Lender (“Fifth Third”) replacing the Company’s credit facilities with

Crestmark Bank and Iron Horse Credit that were terminated by the Company on October 13, 2022 .

Credit Agreement provides for a three-year secured revolving credit facility in an aggregate principal amount of up to $15,000,000 decreased

to $7,500,000 during the period of January 1 through July 31 of each year.

The Credit Agreement matures on October 14, 2025.

January 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus

15 unchanged sentences

materials or components required to manufacture our products and adversely affect our operations.

as consumer demand improved and economic activity increased, we have experienced supply chain challenges, including increased lead times,

port closures in China and delays in Los Angeles, global container shortages, as well as inflation of logistics and labor costs due to

availability constraints and high demand.

We expect these inflationary trends to continue throughout the remainder of the fiscal year.

We may also experience logistical issues with when we receive inventory and the timing of customer demand which could result in potential

reductions in profit margins and/or the need for additional inventory reserves.

Fiscal 2022, as consumer demand improved and economic activity increased, we experienced supply chain challenges, including increased

lead times, port closures in China and delays in Los Angeles, global container shortages, as well as inflation of logistics and labor

costs due to availability constraints and high demand.

We expect these inflationary trends to continue throughout the remainder of the

We may also experience logistical issues with when we receive inventory and the timing of customer demand which could result

in potential reductions in profit margins and/or the need for additional inventory reserves.

Due to these supply chain challenges, during

the fourth quarter of Fiscal 2022, we experienced late delivery of inventory that missed the holiday season 2021.

We note that this trend

was widespread throughout the consumer products and retail categories causing a significant stockpile of consumer product inventory throughout

retail channels.

As a result of this excess inventory stockpile, we might be expected to discount our inventory or help participate in

the funding of marking down our customers’ inventory which could result in reductions in profit margins and/or the need for additional

inventory reserves.

extent of the COVID-19 pandemic’s effect on our operational and financial performance in the future will depend on future developments,

6 unchanged sentences

in our 2022 Annual Report on Form 10-K.

INFLATION AND UNFAVORABLE ECONOMIC CONDITIONS COULD NEGATIVELY AFFECT OUR OPERATIONS AND RESULTS.

global or regional economic conditions may be triggered by numerous developments beyond our control, including inflation, geopolitical

events, health crises such as the COVID-19 pandemic, and other events that trigger economic volatility on a global or regional basis.

INFLATION, RISING INTEREST RATES, AND UNFAVORABLE ECONOMIC CONDITIONS COULD NEGATIVELY AFFECT OUR OPERATIONS AND RESULTS.

global or regional economic conditions may be triggered by numerous developments beyond our control, including inflation, rising interest

rates, geopolitical events, health crises such as the COVID-19 pandemic, and other events that trigger economic volatility on a global

or regional basis.

Those types of unfavorable economic conditions could adversely affect our business and financial results.

In particular, a significant

deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels, inflationary pressures

or disruptions to credit and capital markets, could lead to decreased consumer confidence and consumer spending more generally, thus

reducing consumer demand for our products.

For example, in 2021 and continuing into 2022, the United States has experienced a rapid increase

in inflation levels of over 9%, which is now at a 40-year historic high.

While we have experienced a significant decrease in container

costs for inbound containers due to decreased demand in general, we are continuing to see increases in drayage costs due to cost of fuel

increases as well as significant charges from the Port of Los Angeles such as “port congestion fees” and other surcharges

due to inflation.

The cost of labor, employee benefits, pallets and warehouse supplies and other logistics related costs continue to

increase at record rates.

Such heightened inflationary levels may negatively impact consumer disposable income and discretionary spending

and, in turn, reduce consumer demand for our products and increase our costs.

In particular,

a significant deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels, inflationary

pressures or disruptions to credit and capital markets, could lead to decreased consumer confidence and consumer spending more generally,

thus reducing consumer demand for our products.

For example, in 2021 and continuing into 2022, the United States has experienced a rapid

increase in inflation levels of over 9%, which is now at a 40-year historic high.

While we have experienced a significant decrease in

container costs for inbound containers due to decreased demand in general, we are continuing to see increases in drayage costs due to

cost of fuel increases as well as significant charges from the Port of Los Angeles such as “port congestion fees” and other

surcharges due to inflation.

The cost of labor, employee benefits, pallets and warehouse supplies and other logistics related costs continue

to increase at record rates.

Such heightened inflationary levels and higher consumer credit borrowing rates may negatively impact consumer

disposable income and discretionary spending and, in turn, reduce consumer demand for our products and increase our costs.

OF OPERATIONS

following table sets forth, for the periods indicated, certain items related to our consolidated statements of income as a percentage

of net sales for the three months ended June 30, 2022 and 2021:

CONDENDSED CONSOLIDATED STATEMENTS OF OPERATIONS

For Three Months Ended

June 30, 2022

June 30, 2021

Cost of Goods Sold

of net sales for the three and six months ended September 30, 2022 and 2021:

Three Months Ended

the Six Months Ended

of Goods Sold

and administrative expenses

and amortization

Operating Expenses

Selling expenses

General and administrative expenses

Depreciation and amortization

Total Operating Expenses

Income (Loss) from Operations

Other (Expenses) Income

Gain from Paycheck Protection Plan loan forgiveness

Gain - related party

Interest expense

Finance costs

Total Other (Expenses) Income, net

Loss Before Income Tax Benefit

Income Tax Benefit

ENDED JUNE 30, 2022 COMPARED TO THE QUARTER ENDED JUNE 30, 2021

sales for the three months ended June 30, 2022 increased to approximately $11,692,000 from approximately $6,066,000 an increase of approximately

$5,626,000 as compared to the three months ended June 30, 2021.

The increase in net sales was primarily due to an initial spring product

set in one major customer’s consumer electronics department which contributed approximately $3,140,000 of the increase with the

remaining increase primarily due to another major customer that opted to receive product via direct import and accelerated their delivery

profit for the three months ended June 30, 2022 increased to approximately $3,181,000 from approximately $1,578,000 an increase of approximately

$1,603,000 as compared to the three months ended June 30, 2021.

The increase in net sales contributed approximately $1,463,000 with the

remaining increase due to improvement of gross profit margin of approximately $140,000.

profit margin for the three months ended June 30, 2022 was 27.2% compared to 26.0% for the three months ended June 30, 2021.

reason for the increase in gross profit margin was due to the favorable product mix for one major customer’s initial product set

as indicated in net sales above which included several new products in their product assortment that yield higher margins.

the three months ended June 30, 2022, total operating expenses increased to approximately $3,034,000 compared to approximately $2,068,000

during the three months ended June 30, 2021.

This represents an increase in total operating expenses of approximately $966,000 from the

three months ended June 30, 2021.

The increase in operating expenses is primarily due to an increase in general and administrative expenses

of approximately $949,000.

There was an increase in pallet expenses, warehouse supplies and expense and temporary labor at our California

facility of approximately $262,000 due to an increase in third party logistics business, a one-time project associated with the initial

product set in a major customer’s consumer electronics department (see NET SALES), as well as price increases due to inflation

and supply chain shortages.

There was an increase in legal, professional, investor relations and stock exchange listing fees of approximately

$222,000 primarily related to the public offering and Nasdaq up-listing in May 2022 (see NOTE 12 -PUBLIC OFFERING AND NASDAQ UPLISTING).

from Operations

(Expenses) Income

- related party

from extinguishment of PPP loan forgiveness

from settlement of accounts payable

Other (Expenses) Income, net

Before Income Tax Provision

Tax Provision

ENDED SEPTEMBER 30, 2022 COMPARED TO THE QUARTER ENDED SEPTEMBER 30, 2021

sales for the three months ended September 30, 2022 decreased to approximately $17,113,000 from approximately $17,369,000, a decrease

of approximately $256,000 as compared to the three months ended September 30, 2021.

While the net sales for the three months ended September

30, 2022 remained relatively flat compared to the same period in the prior year there was a significant increase in net sales to two

of our largest customers and a similar reduction in two other major customers who ended the prior holiday season with excess inventory

and reduced current year purchases.

profit for the three months ended September 30, 2022 increased to approximately $3,964,000 from approximately $3,327,000 an increase

of approximately $637,000 as compared to the three months ended September 30, 2021 primarily due to an increase in gross profit margin.

profit margin for the three months ended September 30, 2022 was 23.2% compared to 19.2% for the three months ended September 30, 2021.

There was a reduction in component costs in one major customer’s promotional item that contributed approximately 1.8 margin points

of the increase with the remaining margin increase primarily due to a decrease in landed product cost due to a significant decrease in

inbound container costs and price increases to customers.

the three months ended September 30, 2022, total operating expenses increased to approximately $3,379,000 compared to approximately $2,577,000

during the three months ended September 30, 2021.

This represents an increase in total operating expenses of approximately $802,000 from

the three months ended September 30, 2021 primarily due to an increase in general and administrative expenses of approximately $640,000

and an increase in selling expenses of approximately $166,000.

expenses increased to approximately $900,000 during the three months ended September 30, 2022 compared to approximately $734,000 during

the three months ended September 30, 2021, an increase of approximately $166,000.

There was an increase in commission and royalty expense

of approximately $76,000, an increase of approximately $49,000 in discretionary marketing expense with the remaining increase related

to freight costs.

and administrative expenses increased to approximately $2,417,000 during the three months ended September 30, 2022 compared to approximately

$1,777,000 during the three months ended September 30, 2021, an increase of approximately $640,000.

There was an increase in one-time

legal, professional, investor relations and stock transfer costs of approximately $303,000 primarily related to the public offering,

Nasdaq up-listing, change in control matters, regulatory filings and preparation costs relating to the Credit Agreement with Fifth Third.

There was an increase in compensation of approximately $239,000 primarily due to compensation for new members of the board of directors,

and officers’ incentive bonuses.

There was an increase in bad debt reserve expense of approximately $151,000 related to required

reserves commensurate with the increase in net sales and accounts receivable.

The remaining increase was primarily due to one-time ERP

system projects, increases in costs due to inflation and increases selling and administrative variable expenses commensurate with the

increase in net sales.

and officers’ and employee incentive compensation as well as merit increases.

There was an increase in pallet expenses, warehouse

supplies and expense and temporary labor at our California facility of approximately $98,000 due to inflation related cost increases

in pallets, temporary labor and supplies.

FROM OPERATIONS

was income from operations of approximately $147,000 for the three months ended June 30, 2022 compared to a loss from operations of approximately

$490,000 for the three months ended June 30, 2021.

The increase in income from operations of approximately $637,000 was primarily due

to the increase in gross profit offset by the increase in operating expenses as explained above.

was income from operations of approximately $585,000 for the three months ended September 30, 2022 compared to income from operations

of approximately $750,000 for the three months ended September 30, 2021.

The decrease in income from operations of approximately $165,000

was primarily due to the increase in gross profit offset by the increase in operating expenses as explained above.

(EXPENSES) INCOME

expenses increased by approximately $511,000 to approximately $168,000 in other expenses for the three months ended June 30, 2022 compared

to approximately $343,000 in other income, net for the three months ended June 30, 2021.

During the three months ended June 30, 2022,

there was an increase in interest expense of approximately $60,000 as the Company had outstanding borrowings of $2,500,000 on the IHC

inventory financing facility during the three months ended June 30, 2022 compared to borrowings of approximately $365,000 outstanding

borrowings during the three months ended June 30, 2021.

During the three months ended June 30, 2021 there was a one-time gain from the

forgiveness of the Payroll Protection Plan loan of approximately $448,000.

the three months ended June 30, 2022 and 2021, the Company recognized an income tax benefit of approximately $5,000 and $28,000, respectively,

due to management’s best estimate of the Company’s full year effective tax rate of approximately 24.1% and 19.1%, respectively.

the three months ended June 30, 2022 there was a net loss of approximately $16,000 compared to a net loss of approximately $119,000 for

the three months ended June 30, 2021.

The decrease in the net loss was primarily due to the same reasons discussed in Income from Operations,

Other (Expenses) and Income Taxes.

AND CAPITAL RESOURCES

of June 30, 2022, the Company had cash on hand of approximately $2,278,000 as compared to cash on hand of approximately $1,383,000 on

June 30, 2021.

We had working capital of approximately $12,006,000 as of June 30, 2022.

Net cash used in operating activities was approximately

$4,149,000 for the three months ended June 30, 2022.

During the three months ended June 30, 2022 there was an increase in accounts receivable

of approximately $7,002,000 due to an increase in sales to two major customers as explained in net sales above.

This increase in net

cash used in operating activities was offset by an increase in in accounts payable and accrued expenses of approximately $1,839,000 primarily

due to payment of prior season’s inventory that arrived late due to global logistics issues.

There was a decrease in inventory

of approximately $1,205,000 primarily due to a decrease in-transit inventory from March 31, 2022 as new product for the initial spring

product set at one major customer was shipped during the three months ended June 30, 2022.

cash provided by operating activities was approximately $794,000 for the three months ended June 30, 2021.

expenses increased by approximately $302,000 to approximately $186,000 in other expenses for the three months ended September 30, 2022

compared to approximately $116,000 in other income, net for the three months ended September 30, 2021.

During the three months ended

June 30, 2021 there was a decrease in amounts due from Crestmark Bank of approximately $4,214,000 as cash collected in excess of amounts

due on accounts receivable financing was transferred to operating cash.

There was an increase in accounts payable of approximately $3,813,000

primarily related to the purchase of inventory for the upcoming peak season.

These increases to cash provided by operating expenses were

offset by an increase in accounts receivable of approximately $3,251,000 due to the increase in sales to two major customers and an increase

in inventories of approximately $2,880,000 due to an earlier build-up of inventory for the upcoming peak season due to global logistics

issues and risks.

cash used in investing activities for the three months ended June 30, 2022 was approximately $22,000 as compared to approximately $56,000

used in investing activities for the same period ended a year ago and consisted primarily of purchases of molds and tooling for new products.

cash provided by financing activities for the three months ended June 30, 2022 was approximately $4,159,000 compared to cash provided

September 30, 2022, there was an increase in interest expense of approximately $76,000 as the Company had outstanding borrowings of $2,500,000

on the IHC inventory financing facility during the three months ended September 30, 2022 compared to borrowings of approximately $365,000

outstanding during the three months ended September 30, 2021.

During the three months ended September 30, 2021 there was a gain from

the settlement of accounts payable with one of our factories of $236,000.

the three months ended September 30, 2022 and 2021, the Company recognized an income tax provision of approximately $102,000 and

$174,000, respectively, due to management’s best estimate of the Company’s full year effective U.S.

federal tax rate of

approximately 21.2% and 20.1%, respectively.

MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 2021

sales for the six months ended September 30, 2022 increased to approximately $28,806,000 from $23,435,000 an increase of approximately

$5,371,000 as compared to the same period ended September 30, 2021.

There was an increase in net sales of approximately $6,100,000 primarily

due to a top-five customer that opted to receive product via direct import, accelerated their delivery schedule and increased their assortment

of product offerings.

This increase in net sales was offset by a decrease in net sales of approximately $2,316,000 to two major customers

who ended the prior holiday season with excess inventory and reduced current year purchases.

The remaining variance was primarily due

to an increase in net sales due to new product set in one major customer’s consumer electronics department.

profit for the six months ended September 30, 2022 increased to approximately $7,144,000 from approximately $4,905,000 an increase of

approximately $2,339,000 as compared to the same period in the prior year.

The increase in net sales as indicated in Net Sales contributed

approximately $1,123,000 to the increase in gross profit.

The remaining increase was primarily due to an increase in gross profit margin

of approximately 3.9 points on products sold.

profit margin for the six months ended September 30, 2022 was 24.8% compared to 20.9% for the six months ended September 30, 2021.

There was a reduction in component costs in one major customer’s promotional item that contributed approximately 1.6

margin points of the increase with the remaining margin increase primarily due to a decrease in landed product cost due to a

significant decrease in inbound container costs and price increases to customers.

the six months ended September 30, 2022, total operating expenses increased to approximately $6,413,000 compared to approximately $4,645,000

during the six months ended September 30, 2021.

This represents an increase in total operating expenses of approximately $1,768,000 from

the six months ended September 30, 2021 primarily due to an increase in general and administrative expenses of approximately $1,590,000

and an increase in selling expenses of approximately $194,000.

expenses increased to approximately $1,505,000 during the six months ended September 30, 2022 compared to approximately $1,311,000 during

the six months ended September 30, 2021, an increase of approximately $194,000.

There was an increase in commission expense of approximately

$104,000 commensurate with the increase in net sales and an increase of approximately $77,000 in discretionary marketing expense with

the remaining increase related to other variable selling expenses.

and administrative expenses increased to approximately $4,788,000 during the six months ended September 30, 2022 compared to approximately

$3,198,000 during the six months ended September 30, 2021, an increase of approximately $1,590,000.

There was an increase in legal, professional,

investor relations and stock transfer costs of approximately $443,000 primarily related to the public offering, Nasdaq up-listing, change

in control issues, regulatory filings and preparation costs relating to the Credit Agreement with Fifth Third.

There was an increase

in compensation of approximately $394,000 primarily due to compensation for new members of the board of directors, and officers’

and employee incentive compensation, new hires as well as merit increases.

There was an increase in pallet expenses, warehouse supplies

and expense and temporary labor at our California facility of approximately $376,000 due to inflation related cost increases..

were increases of approximately $102,000 related to a firmware upgrade of one of our products, an increase in travel expenses of approximately

$87,000, expenses associated with ERP system projects of approximately $79,000 with the remaining increase due to other general variable

expenses that have increased due to inflation.

FROM OPERATIONS

was income from operations of approximately $731,000 for the six months ended September 30, 2022 compared to income from operations of

approximately $260,000 for the six months ended September 30, 2021.

The increase in income from operations of approximately $471,000

was primarily due to the increase in gross profit offset by an increase in operating expenses as explained above.

(EXPENSES) INCOME

expenses increased by approximately $813,000 to approximately $354,000 in other expense for the six months ended September 30, 2022 compared

to approximately $459,000 in other income, net for the same period ended September 30, 2021.

During the six months ended September 30,

2022, there was an increase in interest expense of approximately $136,000 as the Company had outstanding borrowings of $2,500,000 on

the IHC inventory financing facility during the three months ended September 30, 2022 compared to borrowings of approximately $2,000,000

outstanding during the six months ended September 30, 2021.

Interest rates on the Crestmark Credit Facility increased commensurate with

federal interest rate hikes.

During the six months ended September 30, 2021 there was a gain from the forgiveness of the Payroll Protection

Plan loan of approximately $448,000 and a gain from the settlement of accounts payable with one of our factories of $236,000.

the six months ended September 30, 2022 and 2021 the Company recorded an income tax provision of approximately $97,000 and an income

tax provision of approximately $146,000, respectively, due to management’s best estimate of the Company’s full year effective

federal tax rate of approximately 21.2% and 20.1%, respectively.

AND CAPITAL RESOURCES

of September 30, 2022, the Company had cash on hand of approximately $2,979,000 as compared to cash on hand of approximately $3,338,000

on September 30, 2021.

We had working capital of approximately $12,709,000 as of September 30, 2022.

Net cash used in operating activities

was approximately $3,580,000 for the six months ended September 30, 2022.

During the six months ended September 30, 2022 there was an

increase in accounts receivable of approximately $8,011,000 due to a seasonal increase in net sales and a seasonal increase in inventories

of approximately $1,767,000.

There was an increase in cash due from Crestmark Bank of approximately $976,000 held in anticipation of

the imminent closing of the new Credit Agreement with Fifth Third Bank.

These decreases in net cash used in operating activities were

offset by an increase in accounts payable and accrued expenses of approximately $5,554,000 due to seasonal purchases of product for the

There was a seasonal increase in reserves for sales returns of approximately $701,000.

cash used in operating activities was approximately $576,000 for the six months ended September 30, 2021.

There was an increase in accounts

receivable of approximately $9,410,000 due to a seasonal increase in sales and a seasonal increase in inventories of approximately $13,722,000

due to in-transit and receipt of inventory for peak season.

These increases in net cashed used in operating activities were offset by

an increase in in accounts payable of approximately $16,409,000 due to seasonal purchases of product for the peak season.

decrease in amounts due from Crestmark Bank of approximately $4,557,000 as cash collected in excess of amounts due on the revolving credit

during the first quarter was used to pay for the seasonal increase in inventory.

There was a seasonal increase in reserve for sales returns

of approximately $904,000.

cash used in investing activities for the six months ended September 30, 2022 was approximately $88,000 as compared to approximately

$78,000 used in investing activities for the same period ended a year ago and consisted primarily of purchases of molds and tooling for

new products.

cash provided by financing activities for the six months ended September 30, 2022 was approximately $4,321,000 compared to cash provided

by financing activities of approximately $3,595,000 for the same period ended of the prior year.

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two paragraphs.

In addition, during the three-months ended June 30, 2022, we received proceeds of approximately $816,000 from the exercise

of pre-funded and common stock warrants.

In addition, during the six-months ended September 30, 2022, we received proceeds of approximately $1,034,000 from the

exercise of pre-funded and common stock warrants.

All proceeds were used for working capital.

11 unchanged sentences

and began trading on the Nasdaq Capital Market on May 24, 2022.

cash provided by financing activities for the six months ended September 30, 2021 was approximately $3,595,000.

We borrowed approximately

$1,977,000 from our Crestmark Facility and IHC Facility for working capital.

In August 2021, the Company received net proceeds of approximately

$1,838,000 from the execution of private placement and stock redemption agreements.

These financing activities were offset by a payment

of $150,000 on the subordinated note payable, payment of deferred finance charges associated with the closing of the Crestmark and IHC

Facilities of approximately $38,000 with the remaining difference used to pay scheduled installments on installment notes and finance

currently have an Intercreditor Revolving Credit Facility with Crestmark Bank for a $10.0 million facility (decreasing to $5.0 million

5 unchanged sentences

to a termination fee if terminated by the Company prior to the twelve-month renewal date.

of this filing, we have borrowed approximately $2,500,000 on the IHC Facility, which is the maximum loan amount allowed on eligible inventory

and no borrowings on our Crestmark Facility which will make available up to $10.0 million of eligible accounts receivable as the next

twelve months progress as long as the loan is in place.

As of this filing the Company has approximately $3,000,000 currently available

from these two credit facilities based on eligible inventory with IHC and eligible accounts receivable with Crestmark.

October 14, 2022 the Company entered into the Credit Agreement with Fifth Third, as Lender replacing the Company’s credit facilities

with Crestmark Bank and Iron Horse Credit that were

terminated by the Company on October 13, 2022 .

The Credit Agreement provides for a three-year secured

revolving credit facility in an aggregate principal amount of up to $15,000,000 decreased to $7,500,000 during the period of January

1 through July 31 of each year.

The Credit Agreement matures on October 14, 2025.

of the date of this filing, there are no amounts due on the new Credit Agreement and we have approximately $4,000,000 currently available

from this credit facility based on eligible accounts receivable and inventory.

believe that our cash on hand, working capital (net of cash), cash expected to be generated from our operating forecast, along with the

7 unchanged sentences

believes that its assumptions are reasonable and appropriate, actual results may be materially different than estimated.

accounting estimates and assumptions have not materially changed from those identified in the Company’s 2022 Annual Report.

and assumptions have not materially changed from those identified in the Company’s 2022 Annual Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis