Liquidity Considerations

The accompanying financial statements and notes have been prepared assuming the Company will continue as a going concern. For the three months ended September 30, 2023, the Company generated negative cash flows from operations of $3.1 million and as of September 30, 2023, the Company had an accumulated deficit of $90.7 million. Management has evaluated the Company’s expected cash requirements over the next twelve (12) months, including investments in additional sales and marketing and research and development, capital expenditures, and working capital requirements. Management believes the Company’s existing cash and funding available under the Gibraltar Business Capital, LLC, a Delaware limited liability company (“GBC”) senior secured revolving loan facility for up to $15.0 million (the “GBC Credit Facility”) and funding available under the new subordinated line of credit for $2.0 million with Cleveland Capital, L.P. (“Cleveland”) (the “2023 Subordinated LOC”), along with the forecasted gross margin will be sufficient to fund planned operations for the next twelve (12) months.

Historically, the Company has not generated sufficient cash to fund its operations. Based on the Company’s existing backlog and customer orders, management anticipates increased revenues, together with the improvements in its gross margin will move it closer to profitability. The Company has made reaching profitability a top priority and has focused on improving its gross margins. Initiatives past and present includes improvement to sourcing, design cost reductions and management of profitable product offerings. The Company has received new orders in the twelve-month period ended September 30, 2023 of approximately $58.3 million.

As of November 2, 2023, the Company had a cash balance of $1.4 million, $2.9 million remained available under the $15.0 million GBC Credit Facility and $2.0 million was available for future draws under the 2023 Subordinated LOC. The Company continues to execute on a cost reduction plan, to expand sources of supplies and component parts, and to implement pricing recovery initiatives to increase gross margins and improve cash flow from operations. Unforeseen factors in the general economy beyond management’s control could potentially have negative impact on the planned gross margin improvement plan.