Risk Factors Update Summary

• Net loss decreased by $1,828,000. Adjusted net loss decreased by $1,828,000, impacting financial position.
• Total Current Assets increased significantly from $1,273,720 to $13,360,839.
• The company received a de-listing letter in April 2023 and must cure the deficiency prior to April 9, 2024, to regain compliance with the continued listing requirements. Failure to meet Nasdaq's listing maintenance standards could lead to delisting.
• Remaining performance obligations increased significantly from $5,577,000 to $435,000, a decrease of $5,142,000.
• Preferred stock shares authorized increased from 25,000,000 to 200,000,000.
• Added details on "us-gaap_CostOfRevenue" with a balance type change from credit to debit.
• If securities are delisted, liquidity may reduce, trading could move to OTC markets, impacting the ability to sell securities.
• Revised "us-gaap_IncreaseDecreaseInInventories" details, enhancing inventory management insights.
• Revised "us-gaap_InventoryWriteDown" details, enhancing transparency in inventory valuation.
• Added details on operating lease right-of-use asset and lease liability for 2023: Operating lease right-of-use asset increased from $462,874 to $565,877. Lease liability increased from $495,086 to $582,838.
• Shareholders' equity decreased from $14,895 to $12,261 million, a significant drop of $2,634 million.
• Addition of new details related to stock issuance and equity impact, including shares issued and stockholders' equity changes.
• Addition of detailed accounting policy for credit loss estimation on financial instruments measured at amortized cost basis.
• Increase in Accounts Payable from $183,359 to $311,162 and Total Payables to $624,724.
• Addition of new sections and paragraphs in the Accounting Standards Codification, impacting Topic 946 and Topic 210.
• The Company incurred $101,316 in 2023 as compensation expense related to vested RSUs, a significant increase from $18,736 in 2022.
• Cash and cash equivalents decreased by $6,129,000. Cash and cash equivalents decreased significantly, affecting liquidity.
• Issued 169,530 new shares during the period due to the conversion of convertible securities.
• Increase in reported income tax expense from $1,154,000 to $611,000 might impact profitability.
• Addition of details related to Weighted Average Number of Diluted Shares Outstanding. This change might impact diluted EPS calculations significantly.
• Updated references in Section S99, Paragraph 1A, Subparagraph (SX 210.13-01(a)(4)(iii)(A)) with new URIs.
• Addition of new details related to "ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" and "ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice."
• Contract assets increased by $224,414 in 2023 due to revenue recognition on three contracts.
• Section 50, Paragraph 1 changed to Paragraph 7, impacting disclosures related to liabilities. This change affects reporting accuracy.
• Changes in accounting standards codification: Topic 210, SubTopic 10, Section S99, Paragraph 1 to Topic 450, SubTopic 20, Section S99, Paragraph 1. This change is significant as it involves a shift in accounting standards.
• A demand for arbitration was filed, seeking $1,049,280 in damages, with a counterclaim. This may impact financials significantly.
• Addition of new details related to equity-based award plans, including Weighted Average Fair Value and Expected Term.
• Intangible assets decreased from $77,346 to $38,558, with a change in Goodwill from $631,064 to $0.
• Expanded insider trading policy to include trading restrictions on any company with material non-public information.
• Significant increase in the Number of Options, Outstanding Beginning from 95,007 to 158,174.
• The Company redeemed 1,650 shares of Series B Preferred Stock for $2,015,984, including $1,980,000 principal and $35,984 accrued dividends.
• The Company experienced significant delays in equipment receipt leading to revenue recognition delays.
• Increase in reported income tax benefit from $858,000 to $1,230,000. This may impact financial performance significantly.
• The Company issued 136,032 shares of common stock in 2023, up from 119,136 shares in 2022.
• Added details on "us-gaap_IncreaseDecreaseInAccountsReceivable" and "us-gaap_IncreaseDecreaseInContractWithCustomerAsset." These changes enhance financial reporting clarity.
• The Company paid $18,273 and $9,884 in commissions under the manufacturer representative agreement during 2023 and 2022, respectively.
• Added "us-gaap_IncreaseDecreaseInPrepaidExpensesOther" details, enhancing prepaid expenses tracking.
• Net deferred tax assets rose from $6,732,000 to $7,590,000. This indicates improved financial position.
• Inventory disclosure changes: Finished goods inventory increased from $270,555 to $366,844. Raw materials inventory decreased from $148,608 to $122,258. Net inventory decreased from $348,411 to $296,404.
• Change in Total Balance values from $16 to $25 and from $26 to $25. This change affects the financial position.
• Net operating loss carryforwards increased from $6,820,000 to $7,590,000, a significant change.
• 170,382 warrants were exercised, with a weighted average exercise price of $0.01.
• Introduction of "Weighted average grant-date fair value of nonvested award price at which grantees can acquire shares reserved for issuance under the stock share-based payment arrangement."
• Working capital decreased by $2,000. Working capital decreased, impacting financial stability and operations.
• Increase in depreciation and intangible asset amortization expense from $29,655 to $32,442.
• Changes in the number of shares authorized, issued, and outstanding for common stock and preferred stock.
• Rise in Accrued Payroll Liabilities from $189,829 to $465,094, impacting total liabilities.
• The conflict involving Ukraine and Russia is having a general impact on operations.
• Common stock shares issued increased from 8,076,372 to 8,212,737.
• Total share-based compensation expense rose from $187 million to $314 million.
• Additional paid-in capital increased from $49,173 to $49,451 million, showing a rise of $278 million.
• Changes in Section S99, Paragraph 1B, Subparagraph (SX 210.13-02(a)(4)(i)) with new references.
• Inclusion of methodology for estimating allowance for credit loss and recognizing writeoff of uncollectible amounts.
• Inclusion of new information on the Number of Shares Available for Grant during the period.
• New information on "us-gaap_EarningsPerShareBasic" and "us-gaap_EarningsPerShareDiluted" definitions.
• Inclusion of "us-gaap_MarketingAndAdvertisingExpense" details in Topic 235 - SubTopic 10. This enhances reporting accuracy.
• Modification in the definition of "Payments for commissions": The definition now includes the amount of cash paid for commissions during the current period. This change clarifies the scope of the term.
• Added details on Rule 10b5-1 trading plans, requiring written plans specifying trade amount, date, and price.
• Section 50, Paragraph 3 changed to Paragraph 1A, affecting disclosures about liabilities and stockholders' equity.
• Deferred revenue decreased from $4,338,570 to $499,800.
• Deferred revenue decreased from $4,338,570 in 2022 to $499,800 in 2023, a significant drop.
• Shareholders may face challenges selling securities if delisted, subject to penny stock rules.
• Reduction in authorized preferred stock shares from 150,000,000 to 25,000,000. Significant change in capital structure.
• Revision in Section S99, Paragraph 1A, Subparagraph (SX 210.13-01(a)(4)(iv)) with updated Publisher.
• Compensation expense related to vested RSUs increased to $101,316 in 2023 from $18,736 in 2022.
• Detailed financial information changes for the 12 months ended Dec. 31, 2022, compared to 2023.
• Updated "us-gaap_InterestPaidNet" details from 2009 to 2003, improving financial data consistency.
• Change in common stock issued for other expenses from $67,000 to $442.
• The company is involved in a legal dispute with potential damages of $1,049,280, which it denies and counterclaims.
• Prohibited short-term trading of company securities to maintain focus on long-term business objectives.
• Updated "us-gaap_IncreaseDecreaseInInterestPayableNet" details from 2009 to 2003, improving accuracy.
• Deferred tax assets increased from $6,820,000 to $7,590,000, showing a positive trend.
• Lease cost details for 2023: Operating cash outflow for operating lease decreased from $124,897 to $111,204. Total minimum lease payments decreased from $257,961 to $235,409.
• Total liabilities and shareholders' equity decreased from $21,026 to $13,772 million, a decrease of $7,254 million.
• Addition of "us-gaap_GainLossOnTerminationOfLease" and "us-gaap_GrossProfit" details.
• Weighted Average Exercise Price, Granted increased from $4.80 to $5.99.
• Net proceeds from sale of common stock rose to $21,711,000.
• Introduction of details on the Intrinsic Value of outstanding awards under share-based payment arrangements.
• Weighted average life of outstanding warrants decreased from 49 to 37 months.
• Decrease in Written-off Intangible Assets from $0 to $8, affecting asset valuation.
• Operating lease right-of-use asset decreased from $565,877 to $356,109.
• Issued 136,365 shares of common stock in settlement of restricted stock units, impacting outstanding shares.
• Disclosure of determination process for past due status and nonaccrual status of financial instruments.
• Inclusion of "Number of options outstanding, including both vested and non-vested equity-based payment instruments, excluding stock options."
• Adjustment in the definition of "Proceeds from deposits": The definition now specifies the amount of deposits held by the entity for a related party. This change provides more clarity on the nature of transactions.
• Deferred tax assets rose from $6,732,000 to $7,590,000, indicating improved financial position.
• The Company issued 119,032 shares of common stock in settlement of restricted stock units to directors.
• Section 50, Paragraph 25 changed to Paragraph 3, impacting disclosures related to liabilities and stockholders' equity.
• Addition of new details for "us-gaap_IncomeTaxExpenseBenefit" in Topic 942 - SubTopic 220. This change enhances tax reporting accuracy.
• Operating lease right-of-use asset decreased from $462,874 in 2022 to $356,109 in 2023.
• Decrease in Net Loss from $5,497,175 to $2,911,551. This change indicates an improvement in financial performance.
• The Company paid $18,273 and $9,884 in commissions under an agreement in 2023.
• Provision for doubtful accounts decreased from $2,056 to $54,708.
• Changes in lease term descriptions: Operating lease term reduced from 4 years 1 month 6 days to 3 years. Remaining lease term reduced from 4 years to 3 years.
• Change in "Commitments and Contingencies Disclosure": Damages sought value increased to $1,049,280. This change indicates a potential financial risk or liability.
• Inventory net decreased from $348,411 in 2022 to $296,404 in 2023, a decrease of $52,007.
• Allowance for doubtful accounts decreased from $127,233 to $125,177. This slight decrease may affect cash flow.
• Introduction of "us-gaap_InterestIncomeExpenseNet" details in Topic 220 - SubTopic 10. This adds clarity to interest income/expenses.
• Number of Options, Granted rose from 53,960 to 65,508.
• The company reduced operating costs and expenses to manage challenges, focusing on core strategies.
• Share-based compensation costs increased from $314,081 in 2022 to $324,405 in 2023.
• The Company had an accrued warranty reserve of $191,338 and $180,457 in 2023.
• Increase in Fair Value of vested stock options granted to employees from $1 to $176. This change affects equity compensation.
• Changes in "us-gaap_IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" with added details.
• Total Current Liabilities increased from $1,251,248 to $5,754,033.
• Changed "us-gaap_IncreaseDecreaseInOperatingLeaseLiability" details, improving lease liability reporting.
• Changes in "Weighted average grant-date fair value of nonvested award price at which option holders acquired shares when converting their stock options into shares."
• The Company issued 3,366 shares of common stock to two independent directors under the 2021 Equity Incentive Plan.
• 192,982 warrants were called to purchase common stock.
• Restricted stock units issued increased from 119,032 to 136,365.
• Remaining performance obligations increased to $5,577,000 in 2023 from $435,000 in 2022.
• Weighted Average Remaining Contractual Term, Granted increased to 9 years.
• Updates to "us-gaap_EarningsPerShareBasic" and "us-gaap_EarningsPerShareDiluted" definitions.
• Revision in "Debt Instrument Interest Rate Stated Percentage": The definition now includes the interest rate stated on the debt instrument. This change enhances transparency regarding interest rates.
• Share-based compensation expense decreased from $314,081 in 2022 to $187,614 in 2023, a decrease of $126,467.
• Proceeds of $24,000,000 were received from the issuance of warrants.
• Revenue recognized increased from $2,318,935 to $3,911,083. This significant rise impacts revenue growth.
• Increase in provision for excess and obsolete inventory from $121,791 to $20,472.
• The Company issued 138,489 non-qualified stock options under the 2021 Equity Incentive Plan to employees.
• Added details on lease payments: Lease payments for 2023 decreased from $128,643 to $132,503. Lease payments thereafter increased from $11,654 to $11,756. Total minimum lease payments decreased from $534 to $409.
• Temporary equity redemption value increased to $3,960,000.
• The Company incurred $76,487 and $319,987 on product development in 2023 and 2022, respectively.
• Bookings decreased by $5,241,000, impacting backlog and recognized revenue.
• Product development expenses decreased to $76,487 in 2023 from $319,987 in 2022.
• Noncurrent Liabilities decreased from $4,406,269 to $1,510,875.
• Non-qualified stock options granted increased from 138,489 to 145,177, affecting potential future dilution.
• Change in Balance at Dec. 31, 2023, from $49,173,836 to $49,451,419. This change reflects an increase in total balance.
• Addition of "Number of options vested" and "Weighted average grant-date fair value of options vested."
• Share-based compensation cost decreased from $314,081 to $83,625. This reduction may affect employee incentives.
• Number of shares vested in period rose to 532.
• 761,670 shares were issued during the period, with a weighted average exercise price of $0.01.
• Addition of "Commitments and Contingencies Disclosure Abstract": This new abstract provides an overview of commitments and contingencies, enhancing disclosure completeness.
• Outstanding warrants increased from 7,623,772 to 7,623,772 shares, with an exercise price of $5.14.
• Total share-based compensation expense included in consolidated statement of operations increased.
• Shareholders' Equity increased from $7,953,974 to $8,076,372, with Additional Paid-in Capital increasing from $25,211,017 to $49,451,419.
• The accrued warranty reserve amount increased to $191,338 in 2023 from $180,457 in 2022.
• Outstanding warrants increased from 227,719 in 2022 to 7,623,772 in 2023, a significant increase.
• Amortization of operating lease ROU asset expense changed from $106,765 to $103,003.
• Introduction of "Intrinsic value of granted share-based compensation arrangement by share-based payment award options."
• Operating loss increased by $3,745,771, primarily due to a decrease in revenue.
• The Company issued 136,365 shares of common stock in settlement of restricted stock units to three directors.
• Cashless exercise of prefunded warrants shares increased from 122,398 to 101,316. This change impacts equity dilution.
• Inclusion of "us-gaap_GainLossOnTerminationOfLease" and "us-gaap_GrossProfit" definitions.
• Changes in lease liability payments: Lease liability payments due after year three decreased from $495,086 to $386,086. Lease liability payments due after year four decreased from $351 to $351.
• Net cash used in operating activities decreased from $6,129,063 to $3,189,543.
• The Company reduced the number of authorized shares of preferred stock from 150,000,000 to 25,000,000.
• Added details on operating lease liability: Operating lease liability decreased from $495,086 to $386,086. Operating lease liability payments due after year three decreased from $495,086 to $386,086.
• Number of shares issued in settlement of legal dispute increased to 6,572,808.
• 5,811,138 warrants were called to purchase common stock.
• Concentration risk percentage for Customer One decreased from 37.00% to 27.00%. This may reduce dependency risk.
• Addition of details related to adjustments to additional paid-in capital for various share-based compensation arrangements.
• Weighted Average Exercise Price, Outstanding Ending increased from $9.44 to $10.02.
• Inclusion of "Aggregate intrinsic value outstanding, beginning balance" and "Aggregate intrinsic value outstanding, ending balance."
• Addition of "us-gaap_IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" details.
• Compensation expense related to vested options decreased from $149,081 in 2022 to $86,298 in 2023.