Risk Factors Update Summary

• Net losses increased from $5.2 million in 2021 to $11.4 million in 2022.
• Accumulated deficit increased from $257 million in 2021 to $258 million in 2022.
• The company identified two material weaknesses in internal control over financial reporting, one related to complex transactions and the other to the calculation of diluted earnings per share. This could result in misstatements of financial statements.
• Cash decreased from $5 million in 2021 to $4 million in 2022.
• The company has commenced a remediation plan to address the material weaknesses in internal control over financial reporting, but cannot estimate when the remediation will be completed or assure full remediation.
• Outstanding indebtedness decreased from $2.1 million to $1 million in 2022.
• The company experienced turnover in key management positions, which may harm their ability to implement their business strategy and remain competitive.
• Borrowing availability increased from $2.1 million to $3.8 million in 2022.
• The company relies on government funding, and delays or reductions in appropriations could negatively impact sales and financial position.
• Net cash used in operating activities decreased from $7.4 million in 2021 to $3.5 million in 2022.
• The company faces risks related to intellectual property, including contractual damages and loss of business.
• Gross profit in 2022 was positively impacted by the sale of previously written off displays, resulting in a gross profit of $1.3 million.
• The company's sales to non-U.S. customers expose them to currency and political risk, and longer receivable periods in some countries may lengthen accounts receivable cycles.
• Changes in accounting principles or interpretations could have a significant effect on reported financial results.