What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-03-31 · 672 added, 770 removed, 779 unchanged (65% of the section changed)

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have incurred net losses since inception.

In addition, in recent years, we shifted our business strategy to transition to smart products

and technologies;

accordingly, our revenue has decreased since 2018 as we sell through our existing inventory of discontinued products

to facilitate our business transition.

As a result of these recent changes to our business strategy, our ability to forecast our future

operating results is limited and subject to a number of uncertainties, including our ability to plan for and model our future growth.

It is difficult to predict our future revenues and appropriate budget for our expenses, and we may have limited insight into trends

that may emerge and affect our business.

Rather than relying on historical information, financial or otherwise, to evaluate us, you should

evaluate us in light of your assessment of the growth potential of our business and the expenses, delays, uncertainties and complications

typically encountered by businesses in the early stage of their product development and launch, many of which will be beyond our control.

We are subject to the substantial risk of failure facing businesses seeking to develop and commercialize new products and technologies,

as well as the following risks, among others:

In addition, in recent years, we have shifted our business strategy to transition developing

and manufacturing smart products and technologies and further evolved our strategy by acquiring an online retailer and e-commerce provider

specializing in home lighting, ceiling fans, and other home furnishings during 2023.

As a result of these recent changes to our business

strategy, our ability to forecast our future operating results is limited and subject to a number of uncertainties, including our ability

to plan for and model our future growth.

It is difficult to predict our future revenues and appropriate budget for our expenses, and

we may have limited insight into trends that may emerge and affect our business.

Rather than relying on historical information, financial

or otherwise, to evaluate us, you should evaluate us in light of your assessment of the growth potential of our business and the expenses,

delays, uncertainties and complications typically encountered by businesses in the early stage of their product development and launch,

many of which will be beyond our control.

We are subject to the substantial risk of failure facing businesses seeking to develop and

commercialize new products and technologies, as well as integrating additional operations, as well as the following risks, among others:

unanticipated

problems, delays and expenses relating to the development and implementation of our business

plans, such as potential manufacturing delays resulting from, among other things, difficulties

finding suppliers, shipping disruptions and delays resulting in late deliveries of necessary

supplies and materials, chip shortages, increases in expected costs due to inflationary pressures

and material shortages, or delays resulting from a need or desire to obtain additional UL,

cUL or CE certifications for new product configurations;

● operational

difficulties;

problems, delays and expenses relating to (i) the development and implementation of our business plans, such as potential manufacturing

delays resulting from, among other things, difficulties finding suppliers, shipping disruptions and delays resulting in late deliveries

of necessary supplies and materials, chip shortages, increases in expected costs due to inflationary pressures and material shortages,

or delays resulting from a need or desire to obtain additional certifications for new product configurations, or (ii) our e-commerce

operations, such as the potential for reduced discretionary consumer spending, shipping disruptions or delays, or our products not

meeting consumer expectations;

difficulties, including continuing to integrate our retail operations with our Sky Technologies product and technologies operations;

of sufficient capital;

● competition

from more advanced enterprises, including our need to gain brand awareness and attract customers,

areas where our competitors may have an advantage;

from more advanced enterprises, including our need to gain brand awareness and attract customers, areas where our competitors may

have an advantage;

revenue generation.

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achieve our strategic initiatives, grow our business and streamline our operations at a profitable level.

have incurred substantial losses in the past and reported net losses from operations of approximately $26.6 million and $5.2 million

during 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of approximately $106.1 million.

have incurred substantial losses in the past and reported net losses from operations of approximately $37.4 million and $26.6

million during 2023 and 2022, respectively.

As of December 31, 2023, we had an accumulated deficit of approximately $145.4

cannot assure you that we can achieve or sustain profitability in the future.

For us to operate our business profitably, we

need to successfully launch and market our new products and technologies, grow our sales, maintain cost control discipline while balancing

development of our enhanced “all-in-one” Smart Sky Platform and potential long-term revenue growth, continue our efforts

to reduce product cost, drive operating efficiencies and develop and execute our key strategic initiatives.

Our planned expense levels

are, and will continue to be, based in part on our expectations, which are difficult to forecast accurately based on our stage of development

and factors outside of our control.

Developing and marketing our products and technologies is costly, and we anticipate our costs will

increase in the future as we continue to invest in our research and development efforts and make additional expenditures to develop and

For us to operate our business profitably, we need to successfully

launch and market our new products and technologies, grow our sales, including our retail operations, maintain cost control discipline

while balancing development of our enhanced “all-in-one” Smart Sky Platform, costs relating to our retail operations and

potential long-term revenue growth, continue our efforts to reduce product cost, drive operating efficiencies and develop and execute

our key strategic initiatives.

Our planned expense levels are, and will continue to be, based in part on our expectations, which are

difficult to forecast accurately based on our stage of development, our recently acquired retail business, and factors outside of our

Developing and marketing our products and technologies is costly, and we anticipate our costs will increase in the future as

we continue to invest in our research and development efforts, expand our operations, and make additional expenditures to develop and

market our products and technologies, including new features, integrations, capabilities, and enhancements.

Our expenditures may not result

in improved business results or profitability over the long term, and our expenses may be greater than we anticipate, including due to,

among other things, an increase in legal risk from the use of our products and technologies due to evolving laws, regulations or standards,

an inability to timely and cost-effectively introduce successful smart products and other products and technologies, a security incident

or our failure, for any reason, to continue to capitalize on growth opportunities.

In addition, we may be unable to adjust spending in

a timely manner to compensate for any unexpected developments.

There is a risk that our strategy to operate profitably may not be as

successful as we envision or occur as quickly as we expect.

We may not achieve our business objectives, and the failure to achieve such

goals would have an adverse impact on us.

To the extent that our revenues do not increase commensurate with our costs, our business,

operating results and financial condition will be materially and adversely affected.

anticipate that we will require additional financing in the near-term, and if our operations do not achieve, or we experience an unanticipated

delay in achieving, our intended level and pace of profitability, we will continue to need additional funding, which may not be available

on favorable terms, or at all, and could require us to sell certain assets or discontinue or curtail our operations.

expect to derive much of our revenue from a portfolio of related products and technologies;

if we cannot successfully launch our products

or further develop them to include additional features, or our products and technologies fail to satisfy customer demands or achieve

widespread market acceptance, our business, operating results, financial condition, and growth prospects would be adversely affected.

expect to derive much of our revenue from smart products incorporating our “plug and play” technologies.

Our ability to launch

our smart products and obtain market acceptance of, and grow market demand for, our products and technologies is critical to our success.

We may not be able to launch or manufacture our products and technologies in a timely manner, within budget or in a manner that gains

market acceptance.

The failure to successfully produce an all-in-one Smart Sky Platform would result in the loss of a substantial amount

of investment dollars.

Furthermore, developing our enhanced Smart Sky Platform takes management’s time and attention away from

other opportunities.

A failure to successfully develop and market our Smart Sky Platform could result in a material adverse impact on

our business.

Our expenditures may not

result in improved business results or profitability over the long term, and our expenses may be greater than we anticipate, including

due to, among other things, an increase in legal risk from the use of our products and technologies due to evolving laws, regulations

or standards and from our expansion into retail operations, an inability to timely and cost-effectively introduce and sell successful

smart products and other products and technologies, a security incident or our failure, for any reason, to capitalize on growth opportunities.

In addition, we may be unable to adjust spending in a timely manner to compensate for any unexpected developments.

There is a risk that

our strategy to operate profitably may not be as successful as we envision or occur as quickly as we expect.

We may not achieve our business

objectives, and the failure to achieve such goals would have an adverse impact on us.

To the extent that our revenues do not increase

commensurate with our costs, our business, operating results, and financial condition will be materially and adversely affected.

will require additional financing in the near-term, and if our operations do not achieve, or we experience an unanticipated delay in

achieving, our intended level and pace of profitability, we will continue to need additional funding, which may not be available on favorable

terms, or at all, and could require us to sell certain assets or discontinue or curtail our operations.

cannot ascertain that there are no substantial doubt about our ability to continue as a going concern.

We will not be able to achieve

our objectives and will not be able to continue our operations if we cannot adequately fund our operations.

is substantial doubt that the Company can continue as an ongoing business for the next 12 months.

If we are unable to continue as a going

concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly

lower than the values reflected in our financial statements.

In addition, the inclusion of an explanatory paragraph regarding substantial

doubt about our ability to continue as a going concern and our lack of sufficient liquidity resources may materially adversely affect

our share price and our ability to raise new capital or to enter into critical contractual relations with third parties.

assurance that we will be able to adequately fund our operations in the future.

expect to derive a substantial portion of our future revenue from a portfolio of related products and technologies;

if we cannot successfully

launch our products or further develop them to include additional features, or our products and technologies fail to satisfy customer

demands or achieve widespread market acceptance, our business, operating results, financial condition, and growth prospects would be

adversely affected.

expect to derive a substantial portion of our future revenue from smart products incorporating our “plug and play” technologies.

Our ability to launch our smart products and obtain market acceptance of, and grow market demand for, our products and technologies is

critical to our success.

We may not be able to launch or manufacture our products and technologies in a timely manner, within budget

or in a manner that gains market acceptance.

The failure to successfully produce and market an all-in-one Smart Sky Platform would result

in the loss of a substantial amount of investment dollars.

Furthermore, developing and marketing our enhanced Smart Sky Platform takes

management’s time and attention away from other opportunities.

A failure to successfully develop and market our Smart Sky Platform

could result in a material adverse impact on our business.

addition, we have no experience in manufacturing our smart products.

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service and sell our products and technologies successfully.

if we can bring our smart products and technologies to market on our projected timeline and on budget, there can be no assurance

that consumers will embrace our smart products and technologies in significant numbers.

Our success depends on attracting many potential customers to purchase our products and, in the future, the associated services we intend to provide to our customers.

began accepting preorders in late 2022.

Preorders are not commitments to purchase our products and are subject to cancellation by customers.

If our existing preorder and prospective customers do not perceive our products to be of sufficiently high value and quality, cost competitive

and appealing in aesthetics or performance, we may not be able to retain our current preorder customers or attract new customers, and

our business, prospects, financial condition, results of operations, and cash flows would suffer as a result.

In addition, we may incur

significantly higher and more sustained advertising and promotional expenditures than we have previously incurred to attract customers.

Until the time that the smart products are commercially available for purchase and we are able to scale up our marketing function to

support sales, there will be significant uncertainty as to customer demand for our smart products and technologies and the sales that

we will be able to achieve.

Further, demand for our products and technologies will be affected by a number of factors, many of which

are beyond our control, such as our ability to obtain market acceptance;

if we can bring our smart products and technologies to market as planned and on budget, there can be no assurance that consumers will

embrace our smart products and technologies in significant numbers.

Our success depends on attracting many potential customers to purchase

our products and, in the future, the associated services we intend to provide to our customers.

While we have accepted preorders for

certain products, preorders are not commitments to purchase our products and are subject to cancellation by customers.

If our existing

preorder and prospective customers do not perceive our products to be of sufficiently high value and quality, cost competitive and appealing

in aesthetics or performance, we may not be able to retain our current preorder customers or attract new customers, and our business,

prospects, financial condition, results of operations, and cash flows would suffer as a result.

In addition, we may incur significantly

higher and more sustained advertising and promotional expenditures than we have previously incurred to attract customers.

Until the time

that the smart products are commercially available for purchase and we are able to scale up our marketing function to support sales,

there will be significant uncertainty as to customer demand for our smart products and technologies and the sales that we will be able

Further, demand for our products and technologies will be affected by a number of factors, many of which are beyond our control,

such as our ability to obtain market acceptance;

declines in consumer discretionary spending;

the development

and acceptance of new features, integrations and capabilities for our products and technologies;

the timing of development and release

of competing new products and technologies;

the development and acceptance of new features,

integrations and capabilities for our products and technologies;

the timing of development and release of competing new products and

technologies;

consumer preferences;

the perception of ease of use, reliability and security of our products

and technologies;

price or product changes by us or our competitors;

the perception of ease of use, reliability and security of our products and technologies;

product changes by us or our competitors;

technological changes and developments within the markets we serve;

developments in data privacy regulations;

developments in data privacy

growth, contraction and rapid evolution of our market;

and general economic conditions and

and general economic conditions and trends.

we are unable to successfully release our smart products and technologies, enhance their capabilities, meet demands of our customers

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and financial condition could be harmed.

Changes in preferences of users may have a disproportionately greater impact on us than if we

offered a wider variety of products.

In addition, competitors may develop or acquire their own products or technologies, and people may

continue to rely on traditional products and technologies or existing smart home products, which would reduce or eliminate the demand

for our products.

In addition, competitors may develop or acquire their own products or technologies, and people

may continue to rely on traditional products and technologies or existing smart home products, which would reduce or eliminate the demand

for our smart products.

If demand declines for any of these or other reasons, our business could be adversely affected.

economic conditions and the effect of economic pressures and other business factors on discretionary consumer spending and consumer preferences

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

Uncertainties

in global economic conditions that are beyond our control could materially adversely affect our business, results of operations, financial

condition, and stock price.

These adverse economic conditions include inflation, slower growth or recession, new or increased tariffs

and other changes to fiscal and monetary policy, higher interest rates, high unemployment, decreased consumer confidence in the economy,

armed hostilities, such as the ongoing military conflict between Russia and Ukraine and the Israel-Hamas war, foreign currency exchange

rate fluctuations, conditions affecting the retail environment for products we sell, and other matters that influence consumer spending

and preferences.

In addition, consumer confidence and spending can be materially adversely affected in response to financial market volatility,

negative financial news, conditions in the real estate and mortgage markets, including home equity loans and consumer credit, changes

in net worth based on market changes and uncertainty, energy shortages and cost increases, labor and healthcare costs, government actions

and general uncertainty regarding the overall future economic environment.

may view a substantial portion of the products we offer as discretionary items rather than necessities.

As a result, our operating results

are sensitive to changes in macroeconomic conditions that impact consumer spending, including discretionary spending.

Declines in consumer

spending have resulted in, and could in the future result in, decreased demand for our products and services, which has adversely affected

the results of our operations in the past and may do so in the future.

invest significantly in research and development, and to the extent our research and development investments are not directed efficiently

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and technologies and facilitate their broad use.

Our ability to conduct research and development activities as planned may also be negatively

impacted if we return to a remote work environment as a result of the COVID-19 pandemic or other factors.

Moreover, research and development

projects can be technically challenging and expensive.

As a result of the nature of research and development cycles, there will be delays

between the time we incur expenses associated with research and development activities and the time we are able to offer compelling enhancements

to our products and technologies and generate revenue, if any, from those activities.

research and development efforts remain subject to all of the risks associated with the development of new products and technologies

based on emerging and innovative technologies, including, for example, unexpected technical problems or the possible insufficiency of

funds for completing development.

If we expend a significant number of resources on research and development efforts that do not lead

to the successful introduction of new products, functionality or improvements that are competitive in our current or future markets,

our business and results of operations will suffer.

If technical problems or delays arise, further improvements in our products and technologies

and the introduction of future products or technologies could be adversely impacted, we could incur significant additional expenses,

and the business may fail.

Research and development projects can be technically challenging and expensive.

result of the nature of research and development cycles, there will be delays between the time we incur expenses associated with research

and development activities and the time we are able to offer compelling enhancements to our products and technologies and generate revenue,

if any, from those activities.

research and development efforts remain subject to all the risks associated with the development of new products and technologies based

on emerging and innovative technologies, including, for example, unexpected technical problems or the possible insufficiency of funds

for completing development.

If we expend a significant number of resources on research and development efforts that do not lead to the

successful introduction of new products, functionality or improvements that are competitive in our current or future markets, our business

and results of operations will suffer.

If technical problems or delays arise, further improvements in our products and technologies and

the introduction of future products or technologies could be adversely impacted, we could incur significant additional expenses, and

the Sky Technologies platform business may fail.

we are unable to introduce new features or services successfully or make enhancements to our products and technologies or fail to integrate

our products and technologies with a variety of third-party technologies, our business and results of operations could be adversely affected.

ability to attract customers and increase revenue depends in part on our ability to enhance and improve our products and technologies

and to introduce new features and services.

To grow our business and remain competitive, we must continue to enhance our products and

technologies with features that reflect the constantly evolving nature of technology and our customers’ evolving needs.

of new products, technologies, enhancements and developments depends on several factors, including, but not limited to:

our anticipation

of market changes and demands for product features, adequate quality testing, integration of our products and technologies with existing

technologies and applications and updates to integrate new technologies and applications, sufficient customer demand, cost effectiveness

in our product development efforts and the proliferation of new technologies that are able to deliver competitive products, technologies

and services at lower prices, more efficiently, more conveniently or more securely.

ability to attract customers and increase revenue from our products and technologies depends in part on our ability to enhance and improve

such products and technologies and to introduce new features and services.

To grow our business and remain competitive, we must continue

to enhance our products and technologies with features that reflect the constantly evolving nature of technology and our customers’

evolving needs.

The success of new products, technologies, enhancements and developments depends on several factors, including, but not

our anticipation of market changes and demands for product features, adequate quality testing, integration of our products

and technologies with existing technologies and applications and updates to integrate new technologies and applications, sufficient customer

demand, cost effectiveness in our product development efforts and the proliferation of new technologies that are able to deliver competitive

products, technologies and services at lower prices, more efficiently, more conveniently or more securely.

addition, because we intend for our smart products to operate with a variety of systems, applications, data and devices, we will need

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the growth of mobile devices and personal voice assistants, cloud services and artificial intelligence, the number of supporting platforms

has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners to produce products and technologies compatible with these platforms and enable access to and use of these platforms with our

products and technologies.

Our products strategy includes the sale of smart products and technologies controlled by a mobile application

and designed for use with third-party platforms or software, such as iPhone, Android phones, Google Assistant and Amazon Alexa.

mobile application is compatible with, and has been granted full access by, each of the foregoing platforms.

Our ability to market such

products and technologies will rely on our access to the platforms of third parties, some of which may be our competitors.

Platform owners

that are competitors may limit or decline access to their platforms, and in any case have a competitive advantage in designing products

and technologies for their own platforms and may produce products and technologies that work better, or are perceived to work better,

than our products and technologies in connection with those platforms.

As we expand the number of platforms and software applications

with which our products and technologies are compatible, we may not be successful in fully integrating the capabilities of those platforms

has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners

to produce products and technologies compatible with these platforms and enable access to and use of these platforms with our products

and technologies.

Our products strategy includes the sale of smart products and technologies controlled by a mobile application and designed

for use with third-party platforms or software, such as iPhone, Android phones, Google Assistant and Amazon Alexa.

The SkyHome mobile

application is compatible with, and has been granted full access by, each of the foregoing platforms.

Our ability to market such products

and technologies will rely on our access to the platforms of third parties, some of which may be our competitors.

Platform owners that

are competitors may limit or decline access to their platforms, and in any case have a competitive advantage in designing products and

technologies for their own platforms and may produce products and technologies that work better, or are perceived to work better, than

our products and technologies in connection with those platforms.

As we expand the number of platforms and software applications with

which our products and technologies are compatible, we may not be successful in fully integrating the capabilities of those platforms

or software applications and/or we may not be successful in establishing strong relationships with the new platform or software owners,

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and successfully manage our operations and effectively and timely develop and implement our strategic business initiatives.

success depends on our ability to design products and technologies popular with customers and consumers, effectively market our products

and technologies, effectively manufacture our products, and successfully manage our operations, as well as our ability to develop and

execute our strategic business initiatives.

Our ability to successfully accomplish these objectives will depend upon a number of factors,

including the following:

success depends on our ability to design and market products and technologies popular with customers and consumers, effectively manufacture

our products, and successfully manage our operations, including our retail business, as well as our ability to develop and execute our

strategic business initiatives.

Our ability to successfully accomplish these objectives will depend upon a number of factors, including

the following:

with strategic distribution partners with established retail and wholesale relationships;

continued development of our business;

continued development of our business, both producing and marketing our smart products and technologies and operating our retail

hiring, training and retention of competent personnel;

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availability of adequate financing;

● competitive

economic and business conditions.

addition, our ability to achieve our desired revenue and profitability goals depends on how effectively and timely we execute on our

key strategic initiatives, including development of an enhanced Smart Sky Platform, and develop and implement new strategic business

key strategic initiatives, including development and production of an enhanced Smart Sky Platform and integration of our retail operations,

and develop and implement new strategic business initiatives.

Our current key strategic initiatives include the following:

● successfully

launching our smart products and technologies;

and marketing our products and technologies to both industry and retail customers, such as

real estate developers and individuals who desire safer lighting fixtures and smart home

capabilities;

and marketing our products and technologies to both industry and retail customers, such as real estate developers and individuals

who desire safer lighting fixtures and smart home capabilities;

our product innovation;

our products and technologies to support IoT applications, including integrations with third-party

applications;

our distribution sales channels.

also may identify and pursue strategic acquisition candidates that would help support these initiatives, including the Acquisition, which

is expected to provide us with direct distribution sales channels.

our products and technologies to support IoT applications, including integrations with third-party applications;

our distribution sales channels, including our retail websites;

and operating our retail websites.

also may identify and pursue strategic acquisition candidates that would help support these initiatives, such as the 2023 acquisition

of Belami, operates a collection of online stores carrying a variety of home décor items, including lighting, and is expected

to provide us with direct distribution sales channels for our smart products and technologies.

and implementing various strategic business initiatives requires us to incur additional expenses and capital expenditures and also requires

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business and operating results would be adversely affected.

we evolve our business strategy to focus on our smart products and technologies, our results of operations, financial condition and cash

flows may be materially adversely affected.

we evolve our business strategy to focus on our smart products and technologies and retail websites, our results of operations, financial

condition and cash flows may be materially adversely affected.

future growth and profitability are tied in part to our ability to successfully bring to market new and innovative smart products and

technologies.

We have evolved our business strategy to focus on producing smart products and technologies using our “plug and play”

technologies.

This expansion of our products and technologies also includes pursuing projects to develop recurring revenue streams, such

technologies, as well as to profitably operate our retail websites.

We are currently focused on producing smart products and technologies

using our “plug and play” technologies, which also includes pursuing projects to develop recurring revenue streams, such

as subscription services.

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the near term.

We may also be unable to launch or manufacture our products and technologies or develop recurring revenue streams, such

as anticipated subscription services, in a timely manner, which would further negatively impact our ability to become profitable.

as we continue to explore, develop and refine our smart products and technologies, we expect that market preferences will continue to

evolve, and, accordingly, our products and technologies may not generate sufficient interest by end-user customers, and we may be unable

to compete effectively with existing or new competitors, generate significant revenues or achieve or maintain acceptable levels of profitability.

We cannot provide any assurance that the operation of our retail websites will offset such reduced profitability.

also be unable to launch or manufacture our products and technologies or develop recurring revenue streams, such as anticipated subscription

services, in a timely manner, which would further negatively impact our ability to become profitable.

Moreover, as we continue to explore,

develop and refine our smart products and technologies, we expect that market preferences will continue to evolve, and, accordingly,

our products and technologies may not generate sufficient interest by end-user customers, and we may be unable to compete effectively

with existing or new competitors, generate significant revenues or achieve or maintain acceptable levels of profitability.

Additionally,

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our credibility as a provider of smart home solutions could be questioned, and our prospects for future revenue growth and profitability

may never materialize.

from such products and technologies may never materialize.

we fail to successfully launch our smart products and technologies or manage and maintain our evolving business strategy, our future

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We are currently generating revenue

partially from sales of our discontinued inventory;

we expect to have additional sources of revenues from the e-commerce platform that

will be acquired as part of the pending Acquisition.

We expect that the release of our new smart products and technologies will require

working capital to finish product development and manufacturing, and support market release and provide technical customer support upon

its commercial release.

primarily from the e-commerce platform that we acquired in 2023.

We expect that the release of our new smart products and technologies

will require working capital to finish product development and manufacturing, and to support market release and provide technical customer

support upon its commercial release.

the future, we will need to seek additional equity or debt financing to provide for our working capital needs.

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Obtaining additional financing contains risks, including:

equity financing may not be available to us on satisfactory terms, and any equity we are

able to issue could lead to dilution for current stockholders and have rights, preferences

and privileges senior to our common stock;

or other debt instruments may have terms and/or conditions, such as interest rates, restrictive

covenants and control or revocation provisions, that are not acceptable to management or

our board of directors;

equity financing may not be available to us on satisfactory terms, and any equity we are able to issue could lead to dilution for

current stockholders and have rights, preferences and privileges senior to our common stock;

or other debt instruments may have terms and/or conditions, such as interest rates, restrictive covenants and control or revocation

provisions, that are not acceptable to management or our board of directors (the “board” or “board of directors”);

financing increases expenses, and we must repay the debt regardless of our operating results;

ability to obtain additional capital may be adversely impacted by factors beyond our control,

such as the market demand for our securities, the state of financial markets generally and

other relevant factors, including potential worsening global economic conditions resulting

from increasing inflation and interest rates, ongoing supply chain disruptions and shortages,

labor shortages and geopolitical conditions, and any disruptions to, or volatility in, the

credit and financial markets in the United States and worldwide that arise from any economic

downturn or recession.

of December 31, 2022, we had approximately $6.7 million in cash and cash equivalents and $7.4 million in investments,

available-for-sale.

As we develop our revenue base, we have raised additional funds through the sale of our common stock and

warrants and issuance of debt, including receiving approximately $20.5 million in net proceeds from our initial public offering

completed in February 2022 and a private placement subordinated secured convertible promissory notes in an aggregate principal

amount of $10.35 million in February and March 2023.

We believe that our sources of liquidity and capital will be sufficient to

finance our continued operations for at least the next 12 months.

For additional information regarding our financing arrangements,

see the “Liquidity and Capital Resources” heading in the “Management’s Discussion and Analysis”

section of this Form 10-K.

ability to obtain additional capital may be adversely impacted by factors beyond our control, such as the market demand for our securities,

the state of financial markets generally and other relevant factors, including high inflation and interest rates, ongoing supply

chain disruptions and shortages, labor shortages and geopolitical conditions, any disruptions to, or volatility in, the credit and

financial markets in the United States and worldwide, and a potential economic downturn or recession.

of December 31, 2023, we had approximately $22.4 million in cash and cash equivalents, including restricted cash.

As we develop our

revenue base, we have raised additional funds through the sale of our common stock and warrants and issuance of debt, including

receiving approximately $20.5 million in net proceeds from our initial public offering completed in February 2022 and aggregate net

proceeds from private placements of subordinated secured convertible promissory notes and at the market offerings (sometimes

referred as “ATM”) of our common stock during 2023 of $19.6 million during 2023.

For additional

information regarding our financing arrangements, see the “Liquidity and Capital Resources” heading in the

“Management’s Discussion and Analysis” section of this Form 10-K.

we fail to obtain required additional financing to sustain our business before we are able to produce levels of revenue to meet our financial

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In addition, to the extent that

we are unable to pay our obligations under our secured promissory notes with Nielsen & Bainbridge, LLC (“NBG”), the holders

of certain outstanding convertible promissory notes, and the U.S.

Small Business Administration (the “SBA”), or any other

outstanding secured debt, the creditor could proceed against any or all of the collateral securing our indebtedness to it.

also have received loan proceeds under the Paycheck Protection Program (the “PPP”), a substantial portion of which has been

The SBA may audit our loan forgiveness applications and further examine our eligibility for forgiveness, including the facts

and circumstances existing at the time the loans were made.

We can provide no assurances that any loan forgiven will not require repayment

following an audit by the SBA.

success of our business depends on the market acceptance of products with our proprietary technology and our ability to respond to rapidly

changing technology and customer demands.

future success depends on the market acceptance of our proprietary safe and smart products and technologies.

If we are unable to convince

current and potential customers of the advantages of our products and technologies, or we are unable to adapt to technological advances,

anticipate customer demands and develop new capabilities for our products and technologies, then our ability to market and sell our products

and technologies will be limited.

If the market for our products and technologies does not develop, if we are unable to adapt new or

enhanced products and technologies to emerging industry standards, or if the market does not accept our products and technologies, then

our ability to grow our business could be limited.

In addition, we may experience technical or other difficulties that could delay or

prevent the development, introduction or marketing of our products and technologies.

are subject to risks related to health epidemics and pandemics, including the ongoing COVID-19 pandemic, which could adversely affect

our business, prospects, financial condition, and results of operations.

face various risks related to public health issues, including epidemics, pandemics, and other outbreaks, such as the lingering effects

of the COVID-19 pandemic.

The effects and potential effects of the COVID-19 pandemic, including, but not limited to, its impact on general

economic conditions, trade and financing markets, changes in customer behavior and continuity in business operations, creates significant

In addition, the COVID-19 pandemic may cause an increase in costs resulting from our efforts to mitigate the effects The

extent to which the COVID-19 pandemic may continue to affect our business will depend on continued developments, including the duration

of the pandemic and the extent of any further resurgences in cases across the United States or shutdowns of manufacturing facilities

in China, the emergence of new variants, some of which have been, and may be in the future, more transmissible or virulent than the initial

strain, the timing, availability and acceptance of effective medical treatments and vaccines, the impact on capital and financial markets

and the related impact on consumer confidence and spending, all of which are uncertain and cannot be predicted.

Even if the COVID-19

pandemic subsides, we may continue to suffer an adverse impact on our business due to the global economic effect of the pandemic, including

any economic recession that has occurred or may occur in the future.

Additionally, many of the risk factors disclosed in this Form 10-K

have been, and we anticipate will continue to be further, heightened or exacerbated by the impact of the COVID-19 pandemic.

we are unable to pay our obligations under our outstanding secured debt, the applicable creditor could proceed against any or all the

collateral securing our indebtedness to it.

marketing efforts to help grow our retail business may not be effective, and failure to effectively develop and expand our sales and

marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our e-commerce channel.

the online market for home goods does not continue to gain acceptance, a sizable portion of our business may suffer.

Our success will

depend, in part, on our ability to attract consumers who have historically purchased home goods through traditional retailers.

we may have to incur significantly higher and more sustained advertising and promotional expenditures to attract additional online consumers

to our sites and convert them into purchasing customers online.

Specific factors that could impact consumers’ willingness to purchase

home goods from us online include concerns about buying products without a physical storefront, face-to-face interaction with sales personnel

and the inability to physically handle, examine and compare products;

delivery time associated with online orders;

actual or perceived

lack of security of online transactions and concerns regarding the privacy or protection of personal information;

delayed shipments or

shipments of incorrect or damaged products;

inconvenience associated with returning or exchanging items purchased online;

functionality and features of our sites;

and our reputation and brand strength.

In addition, if we do not have a clear and relevant promotional

calendar to engage our customers, especially in the current macroeconomic environment, our customers may purchase fewer goods from us,

or we may have to increase our promotional activities.

If the shopping experience we provide does not appeal to consumers or meet the

expectations of existing customers, we may not acquire new customers at sustainable rates, acquired customers may not become repeat customers

and existing customers’ buying patterns and levels may decrease.

In addition, we may experience surges in online traffic and orders

associated with promotional activities and seasonal trends, which could cause fluctuations in our results of operations from quarter

operate in a highly competitive industry, and if we are unable to compete successfully, our business may be adversely affected.

products and technologies face strong competition from manufacturers and distributors of lighting and ceiling fan manufacturers, and,

with respect to our smart products and technologies, from manufacturers and distributors of products addressing certain smart technologies,

features or markets for the home and office worldwide.

To remain competitive, we need to invest in research and development

and marketing.

Many of our competitors have stronger capitalization than we do, strong existing customer relationships and more extensive

engineering, manufacturing, sales, and marketing capabilities.

Competitors’ products and technologies may be more effective, more

effectively marketed or sold or have lower prices or superior performance features than our products and technologies.

Competitors could

focus their substantial resources on developing competing products and technologies that may be potentially more attractive to customers

than our products and technologies or offer competitive products and technologies at reduced prices to improve their competitive

We may also face competition from other products with existing technologies and from other smart home devices, and consumers

may prefer individual device solutions that provide more narrowly targeted functionality instead of a more comprehensive integrated smart

home solution.

Any of these competitive factors could make it more difficult for us to attract and retain customers, require us to lower

our prices to remain competitive or reduce our revenue and profitability, any of which could have a material adverse effect

on our results of operations and financial condition.

We may not have available sufficient financial or other resources to continue to

make the investments necessary to maintain our competitive position.

our products and technologies and our e-commerce platform operate in competitive industries.

Our products and technologies face strong

competition from manufacturers and distributors of lighting and ceiling fan manufacturers, and, with respect to our smart products and

technologies, from manufacturers and distributors of products addressing certain smart technologies, features or markets for the home

and office worldwide.

To remain competitive, we need to invest in research and development and marketing.

Many of our competitors have

stronger capitalization than we do, strong existing customer relationships and more extensive engineering, manufacturing, sales, and

marketing capabilities.

Competitors’ products and technologies may be more effective, more effectively marketed or sold or have

lower prices or superior performance features than our products and technologies.

Competitors could focus their substantial resources

on developing competing products and technologies that may be potentially more attractive to customers than our products and technologies

or offer competitive products and technologies at reduced prices to improve their competitive positions.

We may also face competition

from other products with existing technologies and from other smart home devices, and consumers may prefer individual device solutions

that provide more narrowly targeted functionality instead of a more comprehensive integrated smart home solution.

In addition, our e-commerce

channel faces competition from other online retailers, as well as traditional retailers, many of which have larger platforms and greater

resources than us, and some of which sell a wider array of products, which could attract a wider array of customers.

Any of these competitive

factors could make it more difficult for us to attract and retain customers, require us to lower our prices to remain competitive or

reduce our revenue and profitability, any of which could have a material adverse effect on our results of operations and financial condition.

We may not have available sufficient financial or other resources to continue to make the investments necessary to maintain our competitive

depend on third parties to provide integrated circuit chip sets and other critical components for use in our products.

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electronics and mobile phone markets have experienced chronic shortages of components during periods of exceptionally high demand.

and geopolitical conditions have also negatively impacted the availability of certain electronic components.

While we experienced shortages

in obtaining necessary integrated circuit chips to be used in our products, we have been able to find additional suppliers for such components

and we believe we have obtained enough to manufacture our products by the anticipated launch date.

Going forward, we believe

we can obtain more chips as needed within a reasonable time and may be able to replace difficult to acquire components with different

products or modify our design if necessary.

If we do not properly anticipate the need for or procure critical components, we may pay

higher prices for those components, our gross margins may decrease and we may be unable to meet the demands of our customers, which could

reduce our competitiveness, cause a decline in our market share and have a material adverse effect on our results of operations.

conditions have also negatively impacted the availability of certain electronic components.

While we experienced shortages in obtaining

necessary integrated circuit chips to be used in our products, we have been able to find additional suppliers for such components.

forward, we believe we can obtain more chips as needed within a reasonable time and may be able to replace difficult to acquire components

with different products or modify our design if necessary.

If we do not properly anticipate the need for or procure critical components,

we may pay higher prices for those components, our gross margins may decrease and we may be unable to meet the demands of our customers,

which could reduce our competitiveness, cause a decline in our market share and have a material adverse effect on our results of operations.

rely on a limited number of third-party manufacturers to produce our products.

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to make such products and components.

For instance, outbreaks of COVID-19 in China have led to manufacturing lockdowns and slowdowns

in the past and may continue to do so going forward, which may impact us.

may also need to hire and train a significant number of employees to engage in full-scale commercial manufacturing operations.

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Additionally,

a significant portion of our strategy will rely upon our ability to successfully rationalize and improve the efficiency of our operations.

In particular, our strategy relies on our ability to reduce our production costs in order to remain competitive.

As there is no historical

basis for estimating the demand for our smart products and technologies, or our ability to develop, manufacture and deliver our smart

products, we may be unable to accurately estimate our inventory and production requirements, which would affect our ability to successfully

implement cost reduction measures.

If we overestimate our requirements, we may have excess inventory, which would increase our costs.

If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt the manufacture of the smart

products and result in delays in shipments and revenues.

a significant portion of our product strategy will rely upon our ability to successfully rationalize and improve the efficiency of our

In particular, our product strategy relies on our ability to reduce our production costs in order to remain competitive.

As there is no historical basis for estimating the demand for our smart products and technologies, or our ability to develop, manufacture

and deliver our smart products, we may be unable to accurately estimate our inventory and production requirements, which would affect

our ability to successfully implement cost reduction measures.

If we overestimate our requirements, we may have excess inventory, which

would increase our costs.

If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt the

manufacture of the smart products and result in delays in shipments and revenues.

We may also rely on a limited number of suppliers;

during the years ended December

31, 2022 and 2021, we had two major vendors that accounted for 100% of cost of sales.

For additional information regarding our suppliers,

Business – Third-Party Manufacturing and Suppliers.” In addition, lead times for materials and components

may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time.

If we are unable to successfully implement cost reduction measures, if these efforts do not generate the level of cost savings that we

expect going forward or result in higher-than-expected costs, or if we fail to order sufficient quantities of components in a timely

manner, our business, financial condition, results of operations or cash flows could be materially adversely affected.

during 2023, we had less than 10 major vendors that accounted for a majority of our cost of sales.

For additional

information regarding our suppliers, see “Item 1.

Business – Third-Party Manufacturing and Suppliers.” In addition,

lead times for materials and components may vary significantly and depend on factors such as the specific supplier, contract terms and

demand for each component at a given time.

If we are unable to successfully implement cost reduction measures, if these efforts do not

generate the level of cost savings that we expect going forward or result in higher-than-expected costs, or if we fail to order sufficient quantities of

components in a timely manner, our business, financial condition, results of operations or cash flows could be materially adversely affected.

third-party manufacturers and many of our suppliers are located in China, which exposes us to additional risks.

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significant disruption in our product supply chain and operations and delays in product shipments.

For example, the continued impact

of the COVID-19 pandemic and related quarantines and work and travel restrictions in China have led to manufacturing lockdowns and slowdowns

and could disrupt production and impair our ability to manufacture and launch our products and technologies on our anticipated timelines.

goods that we import are sourced from third-party suppliers in China.

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Although none of our Chinese suppliers

are in the XUAR, we do not currently have full visibility to the entirety of each supplier’s separate supply chains to

be able to ensure that the raw materials or other inputs they use to manufacture their goods are not produced in XUAR.

of the UFLPA, products and materials we import into the U.S.

could be held by the CBP based on a suspicion that inputs used in such materials

originated from the XUAR or that they may have been produced by Chinese suppliers accused of participating in forced labor, pending our

providing satisfactory evidence to the contrary.

Among other consequences, such an outcome could result in negative publicity that harms

our brand and reputation and could result in a delay or complete inability to import such materials, which could result in inventory

shortages and greater supply chain compliance costs.

are in the XUAR, we do not currently have full visibility to the entirety of each supplier’s separate supply chains to be able

to ensure that the raw materials or other inputs they use to manufacture their goods are not produced in XUAR.

As a result of the UFLPA,

products and materials we import into the U.S.

could be held by the CBP based on a suspicion that inputs used in such materials originated

from the XUAR or that they may have been produced by Chinese suppliers accused of participating in forced labor, pending our providing

satisfactory evidence to the contrary.

Among other consequences, such an outcome could result in negative publicity that harms our brand

and reputation and could result in a delay or complete inability to import such materials, which could result in inventory shortages

and greater supply chain compliance costs.

risks may include, but are not limited to, the potential impact of fluctuations in foreign currency exchange rates, the increased global

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part of our business strategy.

For instance, in February 2023, we entered into the Stock Purchase Agreement to acquire Belami.

not complete these transactions in a timely manner, on a cost-effective basis, or at all, and if such transactions are completed, we

may not realize the expected benefits.

If we are successful in completing an acquisition, the products and technologies that are acquired

may not be successful or may require significantly greater resources and investments than originally anticipated.

We may not be able

to integrate acquisitions successfully into our existing business and could incur or assume significant debt and unknown or contingent

for example, we agreed to assume Belami’s loan agreement with PNC Bank, National Association, consisting of a $2.0

million unused revolving line of credit and a term loan of approximately $2.5 million.

In addition, we may experience diversion of our

management’s attention from our existing business and initiatives in pursuing such a strategic transaction and could also experience

negative effects on our reported results of operations from acquisition or disposition-related charges, amortization of expenses related

to intangibles and charges for impairment of long-term assets.

addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time

expenses and acquire intangible assets that could result in significant future amortization expense;

for instance, in February and

March 2023, we entered into the Private Placements, pursuant to which we issued convertible notes and warrants, and we agreed to

issue common stock as consideration for the Acquisition.

Moreover, we may not be able to locate suitable acquisition opportunities,

and this inability could impair our ability to grow or obtain access to technologies or products that may be important to the

development of our business.

We may also be subject to transaction-related litigation in connection with proposed acquisitions.

of the foregoing may materially harm our business, financial condition, results of operations, stock price and prospects.

cannot provide any assurance that the Acquisition will successfully be completed or, if completed, that we will be able to realize the

expected benefits of the Acquisition.

can be no assurance that the proposed Acquisition of Belami will occur.

Consummation of the Acquisition is subject to certain customary

conditions, and there can be no assurance that the conditions to closing will be satisfied at all or satisfied on the proposed terms

and schedules as contemplated by the parties.

Satisfaction of the closing conditions may delay the consummation of the Acquisition, and

if certain closing conditions are not satisfied prior to the end date specified in the Stock Purchase Agreement, the parties will not

be obligated to complete the Acquisition.

If the Acquisition is not completed

for any reason, we will have incurred substantial expenses.

We have incurred substantial legal and accounting fees that are payable by

us whether the Acquisition is completed, and our management has devoted considerable time and effort in connection with the pending

In particular, the Stock Purchase Agreement contains specified termination rights for each of the parties;

among other things,

the Company is obligated to pay the Sellers a $1.0 million termination fee if the Stock Purchase Agreement is terminated under certain

circumstances.

A failed acquisition could materially adversely affect our business, operating results or financial condition.

the trading price of our securities could be adversely affected to the extent that the current price reflects an assumption that the

Acquisition will be completed.

addition, our success following the announcement of the Acquisition depends in part upon our and Belami’s ability to maintain our

respective business relationships.

Uncertainty about the effect of the Acquisition on customers, suppliers, employees, and other constituencies

may have a material adverse effect on us and Belami.

In connection with the pendency of the Acquisition, some persons with whom we have

a business relationship may delay business decisions or decide to seek to terminate or modify their relationships with us or Belami,

which could negatively affect our revenues, earnings and cash flows, as well as the market price of our common stock, regardless of whether

the Acquisition is completed.

Such risks may be exacerbated by delays or other adverse developments with respect to the completion of

the Acquisition.

the Acquisition is successfully completed, we may not realize the expected benefits of the Acquisition.

We and Belami have operated and,

until completion of the Acquisition, will continue to operate, independently, and there can be no assurances that our businesses can

be combined in a manner that allows for the achievement of substantial benefits.

Any integration process may require significant time

and resources, and we may not be able to manage the process successfully as our ability to acquire and integrate larger or more complex

companies, products or technologies in a successful manner is unproven.

If we are not able to successfully integrate Belami’s businesses

with ours or pursue our customer and product strategy successfully, the anticipated benefits of the Acquisition may not be realized fully

or may take longer than expected to be realized.

Further, it is possible that there could be a loss of our and/or Belami’s key

employees and customers, disruption of either company’s or both companies’ ongoing businesses or unexpected issues, higher

than expected costs and an overall post-completion process that takes longer than originally anticipated.

Specifically, the following

issues, among others, must be addressed in combining Belami’s operations with ours to realize the anticipated benefits

of the Acquisition so the combined company performs as the parties hope:

the companies’ corporate functions;

Belami’s business with our business in a manner that permits us to achieve the synergies

anticipated to result from the Acquisition, the failure of which would result in the anticipated

benefits of the Acquisition not being realized in the timeframe currently anticipated or

● maintaining

existing agreements with customers, distributors, providers, talent, and vendors and avoiding

delays in entering into new agreements with prospective customers, distributors, providers,

talent and vendors;

● determining

whether and how to address possible differences in corporate cultures and management philosophies;

● integrating

the companies’ administrative and information technology infrastructure;

and forecasting the financial impact of the Acquisition transaction, including accounting

addition, at times, the attention of certain members of our management and resources may be focused on completion of the Acquisition

and integration planning of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt our

ongoing business and the business of the combined company.

may incur significant, non-recurring costs in connection with the Acquisition and integrating the operations of the Company and Belami,

including costs to maintain employee morale and to retain key employees.

Management cannot ensure that the elimination of duplicative

costs or the realization of other efficiencies will offset the transaction and integration costs in the long term or at all.

Belami may have liabilities that were not discovered during our due diligence investigations.

Any such liabilities, individually or in

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

may depend upon a limited number of customers in any given period to generate a substantial portion of our revenue.

industry does not lend to long-term customer contracts, and our dependence on individual key customers can vary from period to period

as a result of consumer demands, among other variables.

As a result, we may experience more customer concentration in any given future

The loss of, or substantial reduction in sales to, any of our significant customers could have a material adverse effect on our

results of operations in any given future period.

business may become substantially dependent on contracts that are awarded through competitive bidding processes.

may obtain a significant portion of our revenues pursuant to contracts that are subject to competitive bidding, including contracts with

municipal authorities.

Competition for, and negotiation and award of, contracts present varied risks, including, but not limited to:

of substantial time and resources by management for the preparation of bids and proposals

with no assurance that a contract will be awarded to us;

requirement to certify as to compliance with numerous laws (for example, socio-economic,

small business and domestic preference) for which a false or incorrect certification can

lead to civil and criminal penalties;

For instance, we acquired Belami in 2023.

We may not complete these transactions in a timely manner, on

a cost-effective basis, or at all, and if such transactions are completed, we may not realize the expected benefits.

If we are successful

in completing an acquisition, the products and technologies that are acquired may not be successful or may require significantly greater

resources and investments than originally anticipated.

We may not be able to integrate acquisitions successfully into our existing business

and could incur or assume significant debt and unknown or contingent liabilities.

In addition, we may experience diversion of our management’s

attention from our existing business and initiatives in pursuing such a strategic transaction and could also experience negative effects

on our reported results of operations from acquisition or disposition-related charges, amortization of expenses related to intangibles

and charges for impairment of long-term assets.

addition, if we undertake acquisitions, we may issue dilutive securities, assume, or incur debt obligations, incur large one-time expenses

and acquire intangible assets that could result in significant future amortization expense;

for instance, in connection with the acquisition

of Belami, during 2023, we sold convertible notes and warrants and issued common stock as consideration for the Belami acquisition.

we may not be able to locate suitable acquisition opportunities, and this inability could impair our ability to grow or obtain access

to technologies or products that may be important to the development of our business.

We may also be subject to transaction-related litigation

in connection with proposed acquisitions.

Any of the foregoing may materially harm our business, financial condition, results of operations,

stock price and prospects.

products business may become substantially dependent on contracts that are awarded through competitive bidding processes.

may obtain a significant portion of our products revenues pursuant to contracts that are subject to competitive bidding, including contracts

with municipal authorities.

Competition for, and negotiation and award of, contracts present varied risks, including, but not limited

of substantial time and resources by management for the preparation of bids and proposals with no assurance that a contract will

be awarded to us;

requirement to certify as to compliance with numerous laws (for example, socio-economic, small business and domestic preference)

for which a false or incorrect certification can lead to civil and criminal penalties;

need to estimate accurately the resources and cost structure required to service a contract;

expenses and delays that we might suffer if our competitors protest a contract awarded to

us, including the potential that the contract may be terminated and a new bid competition

may be conducted.

expenses and delays that we might suffer if our competitors protest a contract awarded to us, including the potential that the contract

may be terminated and a new bid competition may be conducted.

we are unable to win contracts awarded through the competitive bidding process, we may not be able to operate in the market for products

and services that are provided under those contracts for several years.

If we are unable to consistently win new contract awards

over any extended period, or if we fail to anticipate all of the costs and resources that will be required to secure and perform such

contract awards, our growth strategy and our business, financial condition and results of operations could be materially and adversely

If we are unable to consistently win new contract awards over

any extended period, or if we fail to anticipate all of the costs and resources that will be required to secure and perform such contract

awards, our growth strategy and our business, financial condition and results of operations could be materially and adversely affected.

we fail to develop our brand, our business may suffer.

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customer adoption of our products and technologies.

sell, or will sell, products and technologies to companies in industries that tend to be extremely cyclical;

downturns in those industries

would adversely affect our results of operations.

growth and profitability of our business will depend on sales to industries that are subject to cyclical downturns, such as the construction

and housing industries.

Slowdowns in these industries may adversely affect our sales, which in turn would adversely affect our revenues

and results of operations.

inability to protect our intellectual property, or our involvement in damaging and disruptive intellectual property litigation, could

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rely on our trademarks, trade names, and brand names to distinguish us and our products and services from our competitors.

our trademarks may conflict with the trademarks of other companies.

Failure to obtain trademark registrations could limit our

ability to protect our trademarks and impede our sales and marketing efforts.

Further, competitors may infringe on our trademarks, and

we may not have adequate resources to enforce our trademarks.

trademarks may conflict with the trademarks of other companies.

Failure to obtain trademark registrations could limit our ability to

protect our trademarks and impede our sales and marketing efforts.

Further, competitors may infringe on our trademarks, and we may not

have adequate resources to enforce our trademarks.

addition, third parties may bring infringement and other claims that could be time-consuming and expensive to defend.

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of our business relies on patent and trademark and other intellectual property protection.

Although most of the challenges to our intellectual

property would likely come from other businesses, governments may also challenge intellectual property protections.

To the extent intellectual

property we rely upon is successfully challenged, invalidated or circumvented, or to the extent it does not allow us to compete effectively,

our business will suffer.

To the extent that countries do not enforce our intellectual property rights or to the extent that countries

require compulsory licensing of our intellectual property, our future revenues and operating income will be reduced.

loss of our license arrangements with GE could negatively affect our results of operations.

currently have two U.S.

and global agreements with GE, whereby we may use the GE brand logo on some of our products and GE’s licensing

team may license some of our products to both U.S.

and global manufacturers.

The loss or termination of our arrangements with GE could,

among other things:

limit our ability to secure additional customers and thereby could have a material adverse effect on our profitability

and financial condition;

negatively impact our manufacturing capabilities, as our products are produced by third-party manufacturers,

mainly in the People’s Republic of China, under the strict guidance of GE, and the loss of GE’s supervision might adversely

affect our relationship with the third-party manufacturers and/or require us to increase our quality control staff in China to assume

the guidance role administered by GE, if we are to maintain a similarly high level of quality for our products;

cause us to materially

revise our marketing plans for new and existing products, which could delay product introductions and have a negative impact on our revenue;

and impact relationships with third-party suppliers of electronics and/or services currently or planned to be incorporated in our products

and technologies, which could delay or forestall such collaborations and, as a result, negatively impact our products and technologies

and potential revenue from such products and technologies.

Although most of the challenges to the intellectual

property we rely upon would likely come from other businesses, governments may also challenge intellectual property protections.

extent intellectual property we rely upon is successfully challenged, invalidated or circumvented, or to the extent it does not allow

us to compete effectively, our business will suffer.

To the extent that countries do not enforce our intellectual property rights or

to the extent that countries require compulsory licensing of intellectual property upon which we rely, our future revenues and operating

income will be reduced.

are, or in the future may be, subject to substantial regulation related to quality and safety standards applicable to our products and

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condition or results of operations.

are subject to regulation related to quality and safety standards, including safety certification and evaluation to specific safety standards

depending on the product type, region and country.

Products certified by a NRTL, such as UL, Intertek Testing Lab (ETL) or Canadian Standards

(CSA), bear a certification mark signifying that the product complies with the requirements of the product safety standard.

are used for evaluation of USA products, CSA Standards for Canada and IEC (International Electrotechnical Commission) Standards for European

products are subject to regulation related to quality and safety standards, including safety certification and evaluation to specific

safety standards depending on the product type, region and country.

Products certified by a NRTL, such as UL, Intertek Testing Lab (ETL)

or Canadian Standards (CSA), bear a certification mark signifying that the product complies with the requirements of the product safety

UL Standards are used for evaluation of U.S.

products, CSA Standards for Canada and IEC (International Electrotechnical Commission)

Standards for European countries.

We use UL as our main third-party NRTL safety laboratory.

While we have received a variety of safety certifications on our

products, including UL, United Laboratories for Canada (cUL), Conformité Européenne (CE) and International Electrotechnical

Commission for Electrical Equipment (IECEE) Certification Body (CB) scheme, we may need or desire to obtain additional certifications

for new product configurations, which will increase the time and costs to complete our product launches and which we may be unable to

obtain within a reasonable time, or at all.

In addition, certain electronic products require FCC certification, and we have obtained

FCC certification on applicable products to ensure electromagnetic interference compliance.

Compliance with applicable regulatory requirements

is subject to continual review and is monitored through periodic inspections and other review and reporting mechanisms.

Although we believe

that our broad knowledge and experience with electrical codes and safety standards have facilitated certification approvals, we cannot

provide any assurance that we will be able to obtain any such certifications for our new products or that, if certification standards

are amended, we will be able to maintain such certifications for our existing products.

While we have received a variety of safety

certifications on our products, including UL, Underwriters Laboratories of Canada (cUL), Conformité Européenne (CE) and

International Electrotechnical Commission for Electrical Equipment Certification Body (the IECEE CB scheme), we may need or desire to

obtain additional certifications for new product configurations, which will increase the time and costs to complete our product launches

and which we may be unable to obtain within a reasonable time, or at all.

In addition, certain electronic products require FCC certification,

and we have obtained FCC certification on applicable products to ensure electromagnetic interference compliance.

Compliance with applicable

regulatory requirements is subject to continual review and is monitored through periodic inspections and other review and reporting mechanisms.

Although we believe that our broad knowledge and experience with electrical codes and safety standards have facilitated certification

approvals, we cannot provide any assurance that we will be able to obtain any such certifications for our new products or that, if certification

standards are amended, we will be able to maintain such certifications for our existing products.

we endeavor to take all the steps necessary to comply with applicable laws and regulations, there can be no assurance that we can maintain

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to successfully commercialize new products or otherwise achieve revenue growth.

could face significant liabilities in connection with our products, technologies and business operations, which, if incurred beyond any

insurance limits, would adversely affect our business and financial condition.

could face significant liabilities in connection with our products, technologies, and business operations, which, if incurred beyond

any insurance limits, would adversely affect our business and financial condition.

are subject to a variety of potential liabilities connected to our product and technology development and business operations, such as

potential liabilities related to environmental risks.

As a business that markets products for use by consumers and institutions, we may

become liable for any damage caused by our products, whether used in the manner intended or not.

Any such claim of liability, whether

meritorious or not, could be time-consuming and/or result in costly litigation.

Although we have obtained insurance against certain of

these risks, no assurance can be given that such insurance will be adequate to cover related liabilities or will be available in the

future or, if available, that premiums will be commercially justifiable.

If we were to incur any substantial liability and related damages

were not covered by our insurance or exceeded policy limits, or if we were to incur such liability at a time when we are not able to

obtain liability insurance, our business, financial conditions, and results of operations could be materially adversely affected.

potential liabilities related to environmental risks and our e-commerce sales.

As a business that markets products for use by consumers

and institutions, we may become liable for any damage caused by our products, whether used in the manner intended or not.

Any such claim

of liability, whether meritorious or not, could be time-consuming and/or result in costly litigation.

Although we have obtained insurance

against certain of these risks, no assurance can be given that such insurance will be adequate to cover related liabilities or will be

available in the future or, if available, that premiums will be commercially justifiable.

If we were to incur any substantial liability

and related damages were not covered by our insurance or exceeded policy limits, or if we were to incur such liability at a time when

we are not able to obtain liability insurance, our business, financial conditions, and results of operations could be materially adversely

may be subject to legal claims against us or claims by us that could have a significant impact on our resulting financial performance.

any given time, we may be subject to litigation or claims related to our products and technologies, intellectual property, customers,

employees, stockholders, distributors and sales of our assets, among other things, the disposition of which may have an adverse effect

upon our business, financial condition or results of operations.

any given time, we may be subject to litigation or claims related to our products and technologies, e-commerce sales, intellectual property,

customers, employees, stockholders, distributors and sales of our assets, among other things, the disposition of which may have an adverse

effect upon our business, financial condition or results of operations.

The outcome of litigation is difficult to assess or quantify.

can result in the payment of substantial damages by defendants.

If we are required to pay substantial damages and expenses as a result

of these or other types of lawsuits, our business and results of operations would be adversely affected.

Regardless of whether any claims

against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations.

We may not have adequate resources in the event of a successful claim against us, and insurance may not be available in sufficient amounts

or at all to cover any liabilities with respect to these or other matters.

A judgment or other liability in excess of our insurance coverage

for any claims could adversely affect our business and the results of our operations.

have limited product distribution experience and we expect to rely on third parties, who may not successfully sell our products and technologies.

Lawsuits can result in the payment of substantial damages by defendants.

If we are required to pay substantial damages and expenses as

a result of these or other types of lawsuits, our business and results of operations would be adversely affected.

Regardless of whether

any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our

We may not have adequate resources in the event of a successful claim against us, and insurance may not be available in sufficient

amounts or at all to cover any liabilities with respect to these or other matters.

A judgment or other liability in excess of our insurance

coverage for any claims could adversely affect our business and the results of our operations.

have limited product distribution experience for our Sky Technologies products and we expect to rely on third parties, who may not successfully

sell our products and technologies.

ability to increase our customer base, achieve broader market acceptance of our products and technologies, grow our revenue and achieve

and sustain profitability will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations

and activities.

We have limited product distribution experience and currently rely, and plan to rely primarily, on product distribution

arrangements with third parties.

As a result, our future revenues from sales of our products and technologies, if any, will depend on

the success of the efforts of these third parties.

We may also license our technology to certain third parties for commercialization

of certain applications.

We expect to enter into additional distribution agreements and/or licensing agreements in the future, and we

may not be able to enter into these agreements on terms that are favorable to us, if at all.

In addition, we may have limited or no control

over the distribution activities of these third parties.

These third parties could sell competing products and technologies and may devote

insufficient sales efforts to our products and technologies.

We are also subject to the risks of distributors and resellers encountering

financial difficulties, which could impede their effectiveness and also expose us to financial risk, for example, if they are unable

to pay for their purchases, or ongoing disruptions in business, such as from natural disasters or the effects of the COVID-19 pandemic.

and activities, both for our Sky Technologies products and products distributed through our e-commerce websites.

We have limited product

distribution experience for our Sky Technologies products and currently rely, and plan to rely primarily, on product distribution arrangements

with third parties.

We also rely on product distribution arrangements for sales of products sold on our e-commerce websites.

our future revenues will depend on the success of the efforts of these third parties.

We may also license our technology to certain third

parties for commercialization of certain applications relating to our Sky Technologies products.

We expect to enter into additional distribution

agreements and/or licensing agreements in the future, and we may not be able to enter into these agreements on terms that are favorable

to us, if at all.

In addition, we may have limited or no control over the distribution activities of these third parties.

parties could sell competing products and technologies and may devote insufficient sales efforts to our products and technologies.

are also subject to the risks of distributors and resellers encountering financial difficulties, which could impede their effectiveness

and also expose us to financial risk, for example, if they are unable to pay for their purchases, or ongoing disruptions in business,

such as from natural disasters.

will rely on third parties maintaining open marketplaces to distribute our mobile application.

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do not meet certain certification and compliance standards.

not legally required to do so, we strive to obtain certifications for substantially all our products, both in the United States, and,

where appropriate, in jurisdictions outside the United States.

For instance, we may seek certification of our products from UL, United

Laboratories for Canada (cUL) and Conformité Européenne (CE).

Although we believe that our broad knowledge and experience

with electrical codes and safety standards have facilitated certification approvals, we cannot ensure that we will be able to obtain

any such certifications for our new products and technologies or that, if certification standards are amended, we will be able to maintain

such certifications for our existing products.

not legally required to do so, we strive to obtain certifications for substantially all our Sky Technologies products, both in the United

States, and, where appropriate, in jurisdictions outside the United States.

For instance, we may seek certification of our products from

UL, United Laboratories for Canada (cUL) and Conformité Européenne (CE).

Although we believe that our broad knowledge and

experience with electrical codes and safety standards have facilitated certification approvals, we cannot ensure that we will be able

to obtain any such certifications for our new products and technologies or that, if certification standards are amended, we will be able

to maintain such certifications for our existing products.

Moreover, although we are not aware of any effort to amend any existing certification

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and results of operations.

to tax laws or exposure to additional tax liabilities may have a negative impact on our operating results.

Changes to tax laws or exposure to additional

tax liabilities may have a negative impact on our operating results.

developments in U.S.

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future period net income may be adversely impacted by litigation costs, settlements, penalties and interest assessments.

on August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law.

Among other things, the IRA includes a new

corporate alternative minimum tax of 15% for certain large companies and a 1% excise tax on corporate stock repurchases applicable to

repurchases after December 31, 2022.

We are in the process of evaluating the potential impacts of the IRA.

While we do not currently

expect the IRA to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible that the

IRA could have a material adverse effect on our tax liability.

state and local tax authorities may assert that the Company has a nexus with such states or localities and may seek to impose state

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penalties, and interest.

The assertion of such taxes against the Company for past sales, or any requirement that the Company collect sales

taxes on future sales, could have a material adverse effect on its business, cash tax liabilities, results of operations and financial

The assertion of such taxes against the Company for past sales, or any requirement that the Company collect

sales taxes on future sales, could have a material adverse effect on its business, cash tax liabilities, results of operations and financial

ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

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other factors can affect our profitability and financial condition, including:

in, or interpretations of, laws and regulations, including changes in accounting standards

and taxation requirements;

in, or interpretations of, laws and regulations, including changes in accounting standards and taxation requirements;

in the rate of inflation, interest rates and the performance of investments held by us;

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in business, economic and political conditions, including:

war, political instability, terrorist

attacks in the U.S.

and other parts of the world, the threat of future terrorist activity

war, political instability, terrorist attacks in the U.S.

and other parts

of the world, the threat of future terrorist activity in the U.S.

and other parts of the world and related military action;

natural disasters;

public health crises, including epidemics and pandemics, such as the ongoing COVID-19 pandemic;

the cost and availability of insurance due to any of the foregoing events or other unforeseen

public health crises;

the cost and availability of insurance due to any of the foregoing events or other unforeseen events;

labor disputes, strikes, slow-downs or other forms of labor or union activity;

pressure from third-party interest groups;

in our business and investments and changes in the relative and absolute contribution of

each to earnings and cash flow resulting from evolving business strategies, changing product

mix, changes in tax rates and opportunities existing now or in the future;

● difficulties

related to our information technology systems, any of which could adversely affect business

operations, including any significant breakdown, invasion, destruction, or interruption of

these systems;

and pressure from third-party interest groups;

in our business and investments and changes in the relative and absolute contribution of each to earnings and cash flow resulting

from evolving business strategies, changing product mix, changes in tax rates and opportunities existing now or in the future;

related to our information technology systems, any of which could adversely affect business operations, including any significant

breakdown, invasion, destruction, or interruption of these systems;

in credit markets impacting our ability to obtain financing for our business operations;

difficulties, any of which could preclude or delay commercialization of products or technologies

or adversely affect profitability, including claims asserting statutory or regulatory violations,

adverse litigation decisions and issues regarding compliance with any governmental consent

difficulties, any of which could preclude or delay commercialization of products or technologies or adversely affect profitability,

including claims asserting statutory or regulatory violations, adverse litigation decisions and issues regarding compliance with

any governmental consent decree.

Related to Our Operations

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In addition, the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley

Act”), as well as rules adopted by the SEC and The Nasdaq Stock Market LLC (“Nasdaq”) to implement provisions of the

Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective

disclosure and financial controls and changes in corporate governance practices.

Further, in July 2010, the Dodd-Frank Wall Street Reform

and Consumer Protection Act (the “Dodd-Frank Act”), was enacted.

There are significant corporate governance and executive

compensation related provisions in the Dodd-Frank Act that required the SEC to adopt additional rules and regulations in these areas,

such as “say on pay” and proxy access.

Stockholder activism, the current political and economic environment and the high

levels of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may

lead to additional compliance costs and impact the way we operate our business in ways we cannot currently anticipate.

Act”), as well as rules adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements

on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in

corporate governance practices.

Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank

Act”), was enacted.

There are significant corporate governance and executive compensation related provisions in the Dodd-Frank

Act that required the SEC to adopt additional rules and regulations in these areas, such as “say on pay” and proxy access.

Stockholder activism, the current political and economic environment and the high levels of government intervention and regulatory reform

may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the way

we operate our business in ways we cannot currently anticipate.

rules and regulations applicable to public companies substantially increase our legal and financial compliance costs and make some activities

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and legislative pressure related to public companies’ ESG practices continues to grow;

for example, the SEC has proposed rules

regarding climate-related disclosures and included in its regulatory agenda potential rulemaking on corporate diversity.

there exists certain “anti-ESG” sentiment among some individuals and governments, and several states have enacted or proposed

“anti-ESG” policies or legislation, which may conflict with other laws and regulations.

Compliance with ESG-related rules

and regulations could increase compliance burdens and associated regulatory costs, as well as enhance the risk of claims and regulatory

actions, which could adversely impact our reputation and our efforts to raise capital, including as a result of public regulatory sanctions.

for example, the SEC has adopted rules requiring

climate-related disclosures and included in its regulatory agenda potential rulemaking on corporate diversity.

Furthermore, there exists

certain “anti-ESG” sentiment among some individuals and governments, and several states have enacted or proposed “anti-ESG”

policies or legislation, which may conflict with other laws and regulations.

Compliance with ESG-related rules and regulations could

increase compliance burdens and associated regulatory costs, as well as enhance the risk of claims and regulatory actions, which could

adversely impact our reputation and our efforts to raise capital, including as a result of public regulatory sanctions.

future success depends on our ability to retain key employees and to attract, retain and motivate qualified personnel.

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by management on the effectiveness of our internal control over financial reporting.

In addition, should we no longer qualify as

non-accelerated filer, our independent registered public accounting firm will be required to report on the effectiveness of our

internal control over financial reporting.

We are also required to design our disclosure controls and procedures to reasonably

assure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed,

summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated

and communicated to management as appropriate to allow timely decisions regarding required disclosure.

In addition, should we no longer qualify as non-accelerated

filer, our independent registered public accounting firm will be required to report on the effectiveness of our internal control over

financial reporting.

We are also required to design our disclosure controls and procedures to reasonably assure that information required

to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods

specified in the rules and forms of the SEC and that such information is accumulated and communicated to management as appropriate to

allow timely decisions regarding required disclosure.

may identify control deficiencies of varying degrees of severity under applicable SEC and PCAOB rules and regulations that remain unremedied.

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market and economic conditions may have serious adverse consequences on our business, financial condition, and stock price.

financial markets have recently experienced, because of, among other factors, the COVID-19 pandemic, geopolitical conditions, increasing

inflation and interest rates, currency exchange rates, labor shortages and supply chain disruptions and constraints, and have in the

past experienced, extreme volatility and disruptions, declines in consumer confidence, declines in economic growth, increases in unemployment

rates and uncertainty about economic stability.

There can be no assurance that further deterioration in credit and financial markets

and confidence in economic conditions will not occur.

In addition, inflationary factors, such as increases in interest rates, government

regulations, supply and overhead costs and transportation costs, may adversely affect our operating results, and we may not be able to

offset increased costs with increased sales price per unit, particularly as we work toward commercial manufacturing of our products.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may

experience some effect in the foreseeable future (especially if inflation rates continue to rise) due to supply chain constraints, consequences

associated with government regulations, and ongoing and potential geopolitical conflicts, employee availability and wage increases.

general business strategy and ability to raise capital may be adversely affected by any economic downturn or recession, volatile business

environment or continued unpredictable and unstable market conditions.

Deterioration in the equity and credit markets may make any necessary

debt or equity financing more difficult, more costly and more dilutive.

Failure to secure any necessary financing in a timely manner

and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require

us to delay or abandon our strategic plans.

In addition, there is a risk that one or more of our current service providers and other

partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule

and on budget.

financial markets have recently experienced, because of, among other factors, geopolitical conditions, increasing inflation and interest

rates, currency exchange rates, labor shortages and supply chain disruptions and constraints, and have in the past experienced, extreme

volatility and disruptions, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty

about economic stability.

There can be no assurance that further deterioration in credit and financial markets and confidence in economic

conditions will not occur.

In addition, inflationary factors, such as increases in interest rates, government regulations, supply and

overhead costs and transportation costs, may adversely affect our operating results, and we may not be able to offset increased costs

with increased sales price per unit, particularly as we work toward commercial manufacturing of our products.

Our general business strategy

and ability to raise capital may be adversely affected by any economic downturn or recession, volatile business environment or continued

unpredictable and unstable market conditions.

Deterioration in the equity and credit markets may make any necessary debt or equity financing

more difficult, more costly, and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could

have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon

our strategic plans.

In addition, there is a risk that one or more of our current service providers and other partners could go out of

business, including as a result of difficult economic conditions, which could directly affect our ability to attain our operating goals

on schedule and on budget.

addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market

prices of equity securities of many companies, including in connection with the ongoing COVID-19 pandemic, which has resulted in decreased

or volatile stock prices for many companies, notwithstanding the lack of a fundamental change in their underlying business models or

These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.

and industry factors, including potentially worsening economic conditions and other adverse effects or developments relating to the ongoing

COVID-19 pandemic, geopolitical conditions and other political, regulatory and market conditions, may negatively affect the market price

of shares of our common stock, regardless of our actual operating performance.

of December 31, 2022, our cash and cash equivalents were approximately $6.7 million, and we held approximately $7.4 million of investments,

available-for-sale.

While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of

our cash equivalents or investments since December 31, 2022, no assurance can be given that further deterioration of the global credit

and financial markets would not negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives.

For instance, in March 2023, the FDIC took control and was appointed receiver of Silicon Valley Bank and New York Signature Bank.

the Company does not have any direct exposure to these banks if other banks and financial institutions enter receivership or become insolvent

in the future in response to financial conditions affecting the banking system and financial markets, our operations may be negatively

impacted, including any inability on our part, or on our customers’ parts, to access cash, cash equivalents or investments.

our stock price has declined, and may decline in the future, as a result of the volatility of the stock market and any general economic

addition, any failure by the U.S.

federal government to increase the debt ceiling or any government shutdown could adversely affect the

and global economy and our liquidity, financial condition, and earnings.

debt ceiling and budget deficit concerns have increased

the possibility of credit-rating downgrades and economic slowdowns, or a recession in the United States or globally.

government hit its borrowing limit, or debt ceiling, on January 19, 2023.

If the government fails to increase the debt limit, the U.S.

government’s sovereign credit rating may be downgraded and the U.S.

government could default on its debts, which could adversely

affect the U.S.

and global financial markets and economic conditions.

Absent quantitative easing by the Federal Reserve, these developments

could cause interest rates and borrowing costs to further increase, which may negatively impact our ability to access the debt markets

on favorable terms.

In addition, disagreement over the federal budget has previously caused the U.S.

federal government to shut down

for periods of time.

If appropriations are delayed or a government shutdown was to occur and was to continue for an extended period of

time, we could be at risk of program or contract cancellations and other disruptions and non-payment.

Continued adverse political and

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

prices of equity securities of many companies, which has resulted in decreased or volatile stock prices for many companies, notwithstanding

the lack of a fundamental change in their underlying business models or prospects.

These fluctuations have often been unrelated or disproportionate

to the operating performance of those companies.

Broad market and industry factors, including potentially worsening economic conditions

and other adverse effects or developments relating to geopolitical conditions and other political, regulatory and market conditions,

may negatively affect the market price of shares of our common stock, regardless of our actual operating performance.

of December 31, 2023, our cash and cash equivalents were approximately $22.4 million, including restricted cash.

While we are not aware of any downgrades, material

losses, or other significant deterioration in the fair value of our cash equivalents or investments since December 31, 2023, no assurance

can be given that further deterioration of the global credit and financial markets would not negatively impact our current portfolio

of cash equivalents or our ability to meet our financing objectives.

For instance, in March 2023, the FDIC took control and was appointed

receiver of Silicon Valley Bank and New York Signature Bank.

While the Company did not have any direct exposure to these banks, if other

banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the

banking system and financial markets, our operations may be negatively impacted, including any inability on our part, or on our customers’

parts, to access cash, cash equivalents or investments.

Furthermore, our stock price has declined, and may decline in the future, as

a result of the volatility of the stock market and any general economic downturn.

in Israel, including Israel-Hamas war, may adversely affect our operations, which could negatively impact our revenues and cash flows.

a number of our individuals working on the development of our product offerings located in Israel, our business and operations are directly

affected by economic, political, geopolitical, and military conditions affecting Israel.

October 2023, Israel declared war against Hamas.

The intensity and duration of Israel’s current war against Hamas is difficult

to predict, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy

In addition, clashes between Israel and Hezbollah in Lebanon have increased.

These conflicts, as well as actions that could

be taken in the future by NATO, the United States, the United Kingdom, the European Union or Israel’s neighboring states and other

countries, have created global security concerns that may result in a greater or lasting regional conflict.

To date, our operations have

not been adversely affected by this situation.

However, the individuals working on developing and improving our product offerings are

not only within the range of rockets from the Gaza Strip, but also within the range of rockets that can be fired from Lebanon, Syria

or elsewhere in the Middle East.

If hostile action or hostilities otherwise disrupt our Israeli operations, our ability to improve timely

our product offerings could be materially and adversely affected.

In addition, several hundred thousand Israeli reservists were drafted

to perform immediate military service.

If individuals working on improving our product offerings are called for service in the current

war with Hamas, we expect such persons would be absent for an extended period.

As a result, our operations may be disrupted by such absences,

which could materially and adversely affect our business and results of operations.

In addition, shifting economic and political conditions

in the United States and in other countries may result in changes in how the United States and other countries conduct business and other

relations with Israel, which may have an adverse impact on our Israeli operations and our business.

internal computer systems, or those of our third-party manufacturers or other contractors or consultants, may fail or suffer security

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exposure, and our reputation, results of operations, financial condition and cash flows could be materially adversely affected.

efficient operation of our business is dependent on our information technology systems, some of which may need enhancement,

updating and replacement.

We rely on these systems generally to manage day-to-day operations, manage relationships with our customers

and maintain our research and development data and our financial and accounting records.

Despite our implementation of security measures,

our internal computer systems, and those of our third-party manufacturers, information technology suppliers and other contractors and

consultants are vulnerable to damage from computer viruses, cyberattacks and other unauthorized access, natural disasters, terrorism,

war and telecommunication and electrical failures.

The failure of our information technology systems, our inability to successfully maintain,

enhance and/or replace our information technology systems as needed, or any compromise of the integrity or security of the data we generate

from our information technology systems could have a material adverse effect on our results of operations, disrupt our business and product

and technology development and make us unable, or severely limit our ability, to respond to customer demands.

Any interruption of our

information technology systems could result in decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction

and potential lawsuits, any of which could have a material adverse effect on our results of operations, financial condition, and cash

efficient operation of our business is dependent on our information technology systems, some of which may need enhancement, updating

and replacement.

We rely on these systems generally to manage day-to-day operations, manage relationships with our customers and

maintain our research and development data and our financial and accounting records.

Despite our implementation of security

measures, our internal computer systems, and those of our third-party manufacturers, information technology suppliers and other

contractors, vendors and consultants upon which we rely, experience from time to time, and are vulnerable to damage from computer

viruses, criminal cyberattacks, security incidents due to employee or service provider error, insider attacks, natural disasters,

terrorism, war, telecommunication and electrical failures, phishing or denial-of-service attacks, ransomware or other malware,

social engineering, malfeasance, other unauthorized physical or electronic access, or other vulnerabilities.

The failure of our

information technology systems, our inability to successfully maintain, enhance and/or replace our information technology systems as

needed, or any compromise of the integrity or security of the data we generate from our information technology systems could have a

material adverse effect on our results of operations, disrupt our business and product and technology development and make us

unable, or severely limit our ability, to respond to customer demands.

Any interruption of our information technology systems could

result in decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits,

any of which could have a material adverse effect on our results of operations, financial condition, and cash flows.

information technology systems involve the storage of our confidential information and trade secrets, as well as our customers’

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could have an adverse effect upon our business.

While we take steps to prevent unauthorized access to our corporate systems, because

the techniques used to obtain unauthorized access, disable, or sabotage systems change frequently or may be designed to remain dormant

until a triggering event, we may be unable to anticipate these techniques or implement adequate preventative measures.

Further, the risk

of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments,

and cyber terrorists, has generally increased as cyberattacks have become more prevalent and harder to detect and fight against.

hardware, software or applications we procure from third parties may contain defects in design or manufacture or other problems that

could unexpectedly compromise network and data security.

Any breach or failure of our information technology systems could result in

decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which

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

While we take steps to prevent unauthorized access to our corporate systems, the techniques

used by criminals to obtain unauthorized access to sensitive data continue to evolve and become more sophisticated change frequently

and often are not recognized until launched against a target;

accordingly, we may be unable to anticipate these techniques or implement

adequate preventative measures, and future cyberattacks could go undetected and persist for an extended period of time.

to the extent artificial intelligence capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities

and craft increasingly sophisticated cybersecurity attacks, and vulnerabilities may be introduced from the use of artificial intelligence

by us, our financial services providers and other vendors and third-party providers.

Further, the risk of a security breach or disruption,

particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally

increased as cyberattacks have become more prevalent and harder to detect and fight against.

In addition, hardware, software or applications

we procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise network

and data security.

Any breach or failure of our information technology systems could result in decreased revenue, increased expenses,

increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse effect on

our results of operations, financial condition and cash flows.

consultants, vendors and others to whom we entrust confidential data, and on whom we rely to provide products and services, face similar

threats and growing requirements.

We depend on such parties to implement adequate controls and safeguards to protect against and report

cyber incidents.

If such parties fail to deter, detect, or report cyber incidents in a timely manner, we may suffer from financial and

other harm, including to our information, operations, performance, employees, and reputation.

we are unable to prevent or mitigate the impact of security or data privacy breaches, we could be exposed to litigation and governmental

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Services (“AWS”).

Customers of our cloud-based solutions need to be able to access our platform at any time, without interruption

or degradation of performance, and, in some cases, we need to provide them with service-level commitments with respect to uptime.

cloud-based solutions depend on protecting the virtual cloud infrastructure hosted by third-party hosting services by maintaining its

configuration, architecture, features and interconnection specifications, as well as the information stored in these virtual data centers,

which is transmitted by third-party internet service providers.

Any limitation on the capacity of our third-party hosting services could

impede our ability to onboard new customers or expand the usage of our existing customers, which could adversely affect our business,

financial condition, revenues, results of operations or cash flows.

In addition, any incident affecting our third-party hosting services’

infrastructure that may be caused by cyberattacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications

failures, terrorist or other attacks, regional epidemics, or global pandemics such as COVID-19 and other similar events beyond our control

could negatively affect our cloud-based solutions.

A prolonged service disruption affecting our cloud-based solution for any of the foregoing

reasons would negatively impact our ability to serve our customers and could damage our reputation with current and potential customers,

expose us to liability, cause us to lose customers or otherwise harm our business.

We may also incur significant costs for using alternative

equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party hosting services we use.

Customers of our cloud-based solutions need to be able to access our platform at any time, without

interruption or degradation of performance, and, in some cases, we need to provide them with service-level commitments with respect

Our cloud-based solutions depend on protecting the virtual cloud infrastructure hosted by third-party hosting services by

maintaining its configuration, architecture, features and interconnection specifications, as well as the information stored in these

virtual data centers, which is transmitted by third-party internet service providers.

Any limitation on the capacity of our

third-party hosting services could impede our ability to onboard new customers or expand the usage of our existing customers, which

could adversely affect our business, financial condition, revenues, results of operations or cash flows.

In addition, any incident

affecting our third-party hosting services’ infrastructure that may be caused by cyberattacks, natural disasters, such as

fires, floods, severe storms, or earthquakes, power loss, telecommunications failures, terrorist or other attacks, public health

crises and other similar events beyond our control could negatively affect our cloud-based solutions.

A prolonged service disruption

affecting our cloud-based solution for any of the foregoing reasons would negatively impact our ability to serve our customers and

could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers or otherwise

harm our business.

We may also incur significant costs for using alternative equipment or taking other actions in preparation for,

or in reaction to, events that damage the third-party hosting services we use.

provides the cloud computing infrastructure that we use to host our platform, manage data, mobile application and many of the internal

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decrease and we could be exposed to a risk of loss, litigation and regulatory proceedings.

scrutiny of privacy, data collection, use of data and data protection is intensifying globally, and the personal information and other

data we collect, store, process and use is increasingly subject to legislation and regulations in numerous jurisdictions around the world,

especially in Europe.

These laws often develop in ways we cannot predict and may materially increase our cost of doing business, particularly

as we expand the nature and types of products and technologies we offer.

For example, the General Data Protection Regulation (the “GDPR”),

which came into effect in the European Union in May 2018 and superseded prior European Union data protection legislation, imposes more

stringent data protection requirements and provides for greater penalties for noncompliance.

data protection legislation is also becoming increasingly common in the United States at both the federal and state level.

in June 2018, the State of California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which went into effect

on January 1, 2020.

The CCPA requires companies that process information on California residents to make new disclosures to consumers

about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides

a new cause of action for data breaches.

In November 2020, California voters passed the California Privacy Rights and Enforcement Act

of 2020, which generally becomes effective in 2023 and amended and expanded the CCPA with additional data privacy compliance requirements

and established a regulatory agency dedicated to enforcing these requirements.

Additionally, the Federal Trade Commission and many state

attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination

and security of data.

The burdens imposed by the CCPA and other similar laws that may be enacted at the federal and state level may require

us to modify our data processing practices and policies and/or to incur substantial expenditures in order to comply.

also incur costs in order to comply with cybersecurity or data privacy regulations or with requirements imposed by business

Data privacy and cybersecurity laws in the United States and internationally are constantly changing, and the

implementation of these laws has become more complex.

These laws often develop in ways we cannot predict and may materially increase

our cost of doing business, particularly as we expand the nature and types of products and technologies we offer.

These laws may

impose stringent data protection requirements and provide for penalties for noncompliance.

To comply with current or newly enacted

laws, we may be subject to increased costs as a result of continually evaluating and modifying our policies and processes and

adapting to new requirements that are or become applicable to us.

For instance, many jurisdictions have enacted laws requiring

companies to notify individuals of data security breaches involving their personal data.

These mandatory disclosures regarding a

security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of

our data security measures.

our compliance efforts, we may fail to achieve compliance with applicable privacy or data protection laws and regulations as they evolve,

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and foreign countries.

disasters, geopolitical events, and other highly disruptive events, such as the COVID-19 pandemic, could materially and adversely affect

our business, financial condition and results of operations.

disasters, geopolitical events, and other highly disruptive events could materially and adversely affect our business, financial condition

and results of operations.

disasters and other extreme weather events, the nature, frequency and severity of which may be negatively impacted by climate change,

public health crises, such as epidemics and pandemics (including the COVID-19 pandemic), geopolitical conditions, acts or threats of

war or terrorism, international conflicts, power outages, fires, explosions, equipment failures, sabotage, political instability and

the actions taken by governments could cause damage to or disrupt our business operations, or those of our manufacturers or our customers,

and could create economic instability.

Disruptions to our information technology infrastructure from system failures, shutdowns, power

outages, telecommunication or utility failures, and other events, including disruptions at third party information technology and other

service providers, could also interfere with or disrupt our operations.

Although it is not possible to predict such events or their consequences,

these events could increase our costs, result in physical damage to or destruction or disruption of properties used in connection with

the manufacture of our products, the lack of an adequate workforce in part or all of our operations, supply chain disruptions and data,

utility and communications disruptions.

In addition, these events could indirectly result in increases in the costs of our insurance

if they result in significant loss of property or other insurable damage.

Furthermore, the insurance we maintain may not be adequate

to cover our losses resulting from any business interruption, including those resulting from a natural disaster or other severe weather

event, and recurring extreme weather events or other adverse events could reduce the availability or increase the cost of insurance.

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

public health crises, geopolitical conditions, acts or threats of war or terrorism, international conflicts, such as the Russia-Ukraine

war and Israel-Hamas war, power outages, fires, explosions, equipment failures, sabotage, political instability and the actions taken

by governments could cause damage to or disrupt our business operations, or those of our manufacturers or our customers, and could create

economic instability.

Disruptions to our information technology infrastructure from system failures, shutdowns, power outages, telecommunication

or utility failures, and other events, including disruptions at third party information technology and other service providers, could

also interfere with or disrupt our operations.

Although it is not possible to predict such events or their consequences, these events

could increase our costs, result in physical damage to or destruction or disruption of properties used in connection with the manufacture

of our products, the lack of an adequate workforce in part or all of our operations, supply chain disruptions and data, utility and communications

In addition, these events could indirectly result in increases in the costs of our insurance if they result in significant

loss of property or other insurable damage.

Furthermore, the insurance we maintain may not be adequate to cover our losses resulting

from any business interruption, including those resulting from a natural disaster or other severe weather event, and recurring extreme

weather events or other adverse events could reduce the availability or increase the cost of insurance.

Any of these developments could

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

may be exposed to certain regulatory and financial risks related to climate change.

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of governments or governmental bodies have introduced or are contemplating regulatory changes in response to climate change.

of new legislation or regulation in the U.S.

and other jurisdictions in which we operate may result in new or additional requirements,

fees or restrictions on certain activities for us our manufacturers, our suppliers or our customers.

Compliance with these climate change

initiatives may also result in additional costs to us, including, among other things, increased production costs, additional taxes, and

reduced emission allowances or additional restrictions on production or operations, as well as increased indirect costs resulting from

our manufacturers, suppliers or customers that get passed on to us.

Any adopted future climate change regulations could also negatively

impact our ability to compete with companies situated in areas not subject to such limitations.

We may not be able to recover the cost

of compliance with new or more stringent laws and regulations, which could adversely affect our results of operations, cash flow or financial

the SEC recently adopted new disclosure requirements relating to climate change.

In addition, California recently passed a series of

climate disclosure bills, which may lead to other states proposing climate-related regulations that require additional climate-related

The outcome of new legislation or regulation in the U.S.

and other jurisdictions in which we operate may result in new or

additional requirements, fees, or restrictions on certain activities for us our manufacturers, our suppliers, or our customers.

with these climate change initiatives may also result in additional costs to us, including, among other things, increased production

costs, additional taxes, and reduced emission allowances or additional restrictions on production or operations, as well as increased

indirect costs resulting from our manufacturers, suppliers or customers that get passed on to us.

Any adopted future climate change regulations

could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.

We may not be able

to recover the cost of compliance with new or more stringent laws and regulations, which could adversely affect our results of operations,

cash flow or financial condition.

Related to Our Common Stock

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of companies.

The market price for our common stock may be influenced by many factors, including, in addition to the factors

discussed in this “Risk Factors” section and elsewhere in this Form 10-K, the following:

The market price for our common stock may be influenced by many factors, including, in addition to the factors discussed

in this “Risk Factors” section and elsewhere in this Form 10-K, the following:

ability to successfully launch, and gain market acceptance of, our smart products and technologies;

● developments

or disputes concerning patent applications, issued patents or other proprietary rights;

recruitment or departure of key personnel;

level of expenses related to our research and development, marketing efforts, strategic initiatives

or other areas;

level of expenses related to our research and development, marketing efforts, strategic initiatives, or other areas;

or anticipated changes in governmental regulation, including taxation and tariff policies;

or anticipated changes in estimates as to financial results or recommendations by securities

or anticipated changes in estimates as to financial results or recommendations by securities analysts;

in our financial results or those of companies that are perceived to be similar to us;

conditions in the lighting and smart home sectors;

in the financial markets in general or changes in general economic conditions, including

government efforts to mitigate any economic downturn or recession resulting from ongoing

economic conditions, including the impact of the COVID-19 pandemic and other geopolitical

and unforeseen market forces and trading strategies, such as the massive short squeeze rally

caused by retail investors and social media activity affecting companies such as GameStop

other factors described in this “Risk Factors” section.

conditions in the lighting, home décor and smart home sectors;

in the financial markets in general or changes in general economic conditions;

and unforeseen market forces and trading strategies.

addition, due to one or more of the foregoing factors in one or more future quarters, our results of operations may fall below the expectations

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from our business, which could significantly harm our profitability and reputation.

conversion of outstanding convertible notes or Series A Convertible Preferred Stock, no par value (“Series A Preferred Stock”)

or exercise of outstanding warrants into shares of common stock could materially dilute our stockholders.

of March 29, 2023, we had $1.3 million and $10.35 million aggregate principal amount of convertible notes outstanding, convertible into

shares of our common stock at $15.00 and $3.00 per share, respectively, 880,400 shares of Series A Preferred Stock outstanding and warrants

to purchase 2,063,522 shares of our common stock outstanding at an exercise price ranging from $3.00 to $12.00 per share.

The conversion

price of the notes or exercise price of the warrants may be less than the market price of our common stock at the time of conversion

or exercise and may be subject to future adjustment due to certain events, including our issuance of common stock or common stock equivalents

at an effective price per share lower than the conversion rate or exercise rate then in effect.

If the entire principal amount of all

the outstanding convertible notes is converted into shares of common stock, we would be required to issue an aggregate of no less than

approximately 3,536,669 shares of common stock.

If all the outstanding warrants are exercised for shares of common stock, we would be

required to issue an aggregate of 2,063,522 shares of common stock.

If all of the Series A Preferred Stock outstanding are converted

into shares of common stock, we would be required to issue an aggregate of 880,400 shares of common stock.

If we issue any or all these

shares, the ownership of our stockholders will be diluted.

conversion of outstanding convertible notes or exercise of outstanding warrants into shares of common stock could materially dilute our

stockholders.

of March 21, 2024, we had $1.1 million and $10.35 million aggregate principal amount of convertible notes outstanding, convertible

into shares of our common stock at $15.00 and $2,70 per share, respectively, and warrants to purchase 2,063,522 shares of our common

stock outstanding at an exercise price ranging from $2,70 to $18.00 per share.

The conversion price of the notes or exercise price

of the warrants may be less than the market price of our common stock at the time of conversion or exercise and may be subject to

future adjustment due to certain events, including our issuance of common stock or common stock equivalents at an effective price

per share lower than the conversion rate or exercise rate then in effect.

If the entire principal amount of all the outstanding

convertible notes is converted into shares of common stock, we would be required to issue an aggregate of no less than approximately

3,916,671 shares of common stock.

If all the outstanding warrants are exercised for shares of common stock, we would be required to

issue an aggregate of 2,063,522 shares of common stock.

If we issue any or all of these shares, the ownership of our stockholders

will be diluted.

securities analysts do not publish research or reports about our business, or if they publish negative evaluations of our stock, the

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in turn could cause our stock price to decline.

executive officers, directors, principal stockholders and their affiliates exercise significant influence over us, which will limit your

ability to influence corporate matters and could delay or prevent a change in corporate control.

executive officers, directors, principal stockholders, and their affiliates exercise significant influence over us, which will limit

your ability to influence corporate matters and could delay or prevent a change in corporate control.

executive officers, directors, 5% holders and their affiliates beneficially own, in the aggregate, approximately 39% of our outstanding

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a merger, consolidation, takeover or other business combination involving us;

● discouraging

a potential acquirer from making a tender offer or otherwise attempting to obtain control

a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

of a substantial number of shares of our common stock in the public market by our stockholders could cause our share price to fall.

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stock price may be more volatile.

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

over inflation, increasing interest rates, energy costs, geopolitical issues, the U.S.

and economic conditions may negatively impact on our business, financial condition and share price.

over inflation, high interest rates, energy costs, geopolitical issues, the U.S.

mortgage market and a declining real estate market,

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have never declared or paid cash dividends on our common stock.

Holders of our Series A Preferred Stock receive interest payments quarterly,

at a rate of 6% per year, and rank senior with respect to interest on junior securities, dividends, distributions, or liquidation preference.

We currently anticipate that we will retain all of our future earnings, if any, to support operations and to finance the growth and development

of our business.

As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable

We currently anticipate that we will retain all of our future earnings,

if any, to support operations and to finance the growth and development of our business.

As a result, capital appreciation, if any, of

our common stock will be the sole source of gain for our stockholders in the foreseeable future.

Anti-takeover

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which could have anti-takeover effects.

These provisions include, without limitation, the authority of our board of directors to issue

additional shares of preferred stock and, to the extent there is any undesignated preferred stock, to fix the relative rights and preferences

of the preferred stock without the need for any stockholder vote or approval;

the requirement of a majority stockholder vote to remove

directors from office or, if for cause, by a majority of the board of directors;

and limitations on who may call special meetings of

stockholders.

UNRESOLVED STAFF COMMENTS

These provisions include, without limitation, the authority of our board of directors to designate

and issue shares of preferred stock, including to fix the relative rights and preferences of the preferred stock without the need for

any stockholder vote or approval;

the requirement of a majority stockholder vote to remove directors from office or, if for cause, by

a majority of the board of directors;

and limitations on who may call special meetings of stockholders.

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