FiEE, Inc. 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31 MINIM, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 F-4 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7- F-25 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stockholders and the Board of Directors Minim, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Minim, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows, for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations and will need additional funding within the next twelve months. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition As described in Note 2 to the financial statements, the Company recognizes revenue when a customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods and services. The Company offers customers the ability to purchase their hardware products along with Software-as-a-Service (“SaaS”) offerings as a bundled arrangement. The Company must determine which promises are distinct performance obligations and allocate the revenue to the performance obligations that are considered distinct based upon their relative Stand-alone Selling Price (SSP). Revenue allocated to hardware is recognized at a point in time upon delivery and revenue allocated to the SaaS is recognized over time over the estimated life of the customer, provided all other revenue recognition criteria are met. We identified the identification of distinct performance obligations and the allocation of arrangement consideration as a critical audit matter because of the significant judgments made by the Company in determining revenue recognition. Auditing management’s judgments regarding the identification of performance obligations and the allocation of arrangement consideration involved a high degree of auditor judgment and increased effort. Our audit procedures related to the identification of distinct performance obligations and the allocation of arrangement consideration included the following, among others: ● We evaluated management’s significant accounting policies related to these customer agreements for reasonableness. ● We obtained and read a sample of revenue contracts and evaluated the completeness of the performance obligations identified by management, and performed an evaluation of whether these performance obligations were distinct and capable of being distinct. ● We tested the reasonableness of the allocation of the transaction price to each performance obligation by comparing management’s allocation to the historical pricing for each performance obligations when they are sold separately. ● For each sample of revenue contracts with multiple performance obligations, we also tested the allocation of the transaction price to each performance obligation based upon the SSP. /s/ RSM US LLP We have served as the Company’s auditor since 2021. Boston, Massachusetts March 31, 2023 F- 2 MINIM, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2022 and 2021 2022 2021 ASSETS Current assets Cash and cash equivalents $ 530,110 $ 12,570,445 Restricted cash 500,000 500,000 Accounts receivable, net of allowance for doubtful accounts of $ 138,331 and $ 236,819 as of December 31, 2022 and, 2021, respectively 2,758,406 4,880,663 Inventories, net 25,415,206 33,891,287 Prepaid expenses and other current assets 360,735 587,885 Total current assets 29,564,457 52,430,280 Equipment, net 636,973 762,818 Operating lease right-of-use assets 173,480 241,626 Goodwill — 58,872 Intangible assets, net 73,301 262,698 Other assets 511,795 544,738 Total assets $ 30,960,006 $ 54,301,032 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Bank credit line $ 4,758,663 $ 5,065,074 Accounts payable 2,837,191 12,458,246 Current maturities of bridge loan agreement 1,000,000 — Current maturities of long-term debt — 34,237 Current maturities of operating lease liabilities 150,968 143,486 Accrued expenses 4,440,724 5,279,917 Deferred revenue, current 633,542 291,296 Total current liabilities 13,821,088 23,272,256 Operating lease liabilities, less current maturities 22,512 98,811 Deferred revenue, noncurrent 771,738 443,452 Total Liabilities 14,615,338 23,814,519 Commitments and Contingencies (Note 8) - - Stockholders’ equity Preferred Stock, Authorized: 2,000,000 shares at $ 0.01 par value; 0 shares issued and outstanding — — Common Stock: Authorized: 60,000,000 shares at December 31, 2022 and 2021, at $ 0.01 par value; issued and outstanding: 46,949,240 shares and 45,885,043 shares at December 31, 2022 and 2021, respectively 469,492 458,850 Additional paid-in capital 90,710,030 89,313,273 Accumulated deficit ( 74,834,854 ) ( 59,285,610 ) Total stockholders’ equity 16,344,668 30,486,513 Total liabilities and stockholders’ equity $ 30,960,006 $ 54,301,032 The accompanying notes are an integral part of these consolidated financial statements. F- 3 MINIM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2022 and 2021 2022 2021 Net sales $ 50,622,143 $ 55,422,526 Cost of goods sold 38,695,605 36,504,874 Gross profit 11,926,538 18,917,652 Operating expenses: Selling and marketing 15,022,638 13,747,959 General and administrative 6,124,034 4,889,702 Research and development 5,824,906 6,164,362 Sale of Trademark, net – ( 3,955,626 ) Total operating expenses 26,971,578 20,846,397 Operating loss ( 15,045,040 ) ( 1,928,745 ) Other income (expense): Interest income 457 44,169 Interest expense ( 394,615 ) ( 270,407 ) Gain on forgiveness of debt (Note 7) — 20,000 Other, net 2,302 89 Total other income (expense) ( 391,856 ) ( 206,149 ) Loss before income taxes ( 15,436,896 ) ( 2,134,894 ) Income tax provision 112,348 63,773 Net loss $ ( 15,549,244 ) $ ( 2,198,667 ) Basic and diluted net loss per share $ ( 0.34 ) $ ( 0.06 ) Weighted average common and common equivalent shares: Basic and diluted 46,399,137 39,761,121 The accompanying notes are an integral part of these consolidated financial statements. F- 4 MINIM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2022 and 2021 Shares Amount Capital Deficit Total Common Stock Additional Paid-in Accumulated Shares Amount Capital Deficit Total Balance at December 31, 2020 35,074,922 $ 350,749 $ 64,526,664 $ ( 57,086,943 ) $ 7,790,470 Net loss — — — ( 2,198,667 ) ( 2,198,667 ) Stock option exercises 810,121 8,101 1,159,623 — 1,167,724 Public offering equity, net of issuance costs 10,000,000 100,000 22,630,049 — 22,730,049 Stock-based compensation — — 996,937 — 996,937 Balance at December 31, 2021 45,885,043 458,850 89,313,273 ( 59,285,610 ) 30,486,513 Net loss — — — ( 15,549,244 ) ( 15,549,244 ) Stock option exercises 430,915 4,308 232,496 236,804 Common stock issued for vested restricted units 633,282 6,334 ( 6,334 ) — — Stock-Based Compensation 1,170,595 1,170,595 Balance at December 31, 2022 46,949,240 $ 469,492 $ 90,710,030 $ ( 74,834,854 ) $ 16,344,668 The accompanying notes are an integral part of these consolidated financial statements. F- 5 MINIM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022 and 2021 2022 2021 Cash flows used in operating activities: Net loss $ ( 15,549,244 ) $ ( 2,198,667 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 837,228 957,490 Amortization of right-of-use assets 172,060 145,143 Amortization of debt issuance costs 71,401 41,586 Amortization of sales contract costs 75,514 32,343 Stock-based compensation 1,170,595 996,937 Goodwill impairment charge 58,872 — Intangible asset impairment charge 67,415 — Provision for (recovery of) accounts receivable allowances ( 98,489 ) 63,217 Provision for inventory reserves 1,785,566 643,671 Non-cash loan forgiveness — ( 20,000 ) Changes in operating assets and liabilities: Accounts receivable 2,220,746 4,259,454 Inventories 6,690,515 ( 18,030,117 ) Prepaid expenses and other current assets 227,150 ( 188,766 ) Other assets 63,044 ( 92,161 ) Accounts payable ( 9,621,054 ) 862,453 Accrued expenses ( 839,265 ) ( 2,261,266 ) Deferred revenue 670,532 661,826 Operating lease liabilities ( 172,659 ) ( 145,410 ) Net cash used in operating activities ( 12,170,073 ) ( 14,272,267 ) Cash flows from investing activities: Purchases of equipment ( 276,665 ) ( 593,120 ) Certification costs incurred and capitalized ( 418,352 ) ( 88,708 ) Net cash used in investing activities ( 695,017 ) ( 681,828 ) Cash flows from financing activities: Net proceeds from the bank credit line ( 377,811 ) 5,166,289 Proceeds from bridge loan agreement 1,000,000 – Repayment of the Rosenthal bank credit line — ( 2,442,246 ) Costs associated with bank credit line — ( 142,801 ) Repayment of government loan ( 34,237 ) ( 26,232 ) Proceeds from stock option exercises 236,803 1,167,724 Proceeds from public offering, net of offering costs — 22,730,049 Net cash provided by financing activities 824,755 26,452,783 Net change in cash, cash equivalents, and restricted cash ( 12,040,335 ) 11,498,688 Cash, cash equivalents, and restricted cash - Beginning 13,070,445 1,571,757 Cash, cash equivalents, and restricted cash - Ending $ 1,030,110 $ 13,070,445 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 394,615 $ 270,407 Income taxes $ 88,348 $ 63,773 Cash is reported on the consolidated statements of cash flows as follows: Cash and cash equivalents $ 530,110 $ 12,570,445 Restricted cash 500,000 500,000 Total cash, cash equivalents, and restricted cash $ 1,030,110 $ 13,070,445 The accompanying notes are an integral part of these consolidated financial statements. F- 6 MINIM, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION Minim, Inc. and its wholly owned subsidiaries, Cadence Connectivity, Inc., MTRLC LLC, and Minim Asia Private Limited, are herein collectively referred to as “Minim” or the “Company”. The Company delivers intelligent networking products that reliably and securely connect homes and offices around the world. We are the exclusive global license holder to the Motorola brand for home networking hardware. The Company designs and manufactures products including cable modems, cable modem/routers, mobile broadband modems, wireless routers, Multimedia over Coax (“MoCA”) adapters and mesh home networking devices. Our AI-driven cloud software platform and applications make network management and security simple for home and business users, as well as the service providers that assist them— leading to higher customer satisfaction and decreased support burden. On January 21, 2022, Zoom Connectivity, Inc. filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change its legal corporate name from “Zoom Connectivity, Inc.” to “Cadence Connectivity, Inc.”, effective as of January 21, 2022. Going Concern The Company’s consolidated financial statements as of December 31, 2022 were prepared under the assumption that the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, as of December 31, 2022, substantial doubt exists about the Company’s ability to continue as a going concern. The Company has incurred recurring losses and negative cash flows from operations, and our ability to continue as a going concern will depend on our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce or contain expenditures and increase revenues. The Company’s debt financing arrangements through the SVB Loan Agreement and Bridge Loan Agreement expire on January 15, 2024, and we will need to refinance both agreements prior to the expiration date. As of December 31, 2022, the Company had cash and cash equivalents of $ 530 thousand and during the year ended December 31, 2022, the Company recorded a net loss of $ 15.5 million. The Company will require additional liquidity to continue operations beyond the next 12 months. The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include but are not limited to equity offerings, debt financings, and cost reductions. However, given a variety of external factors including the impact of the recent economic downturn in the U.S. and global financial markets, the Company may be unable to access further equity or debt financing when needed. The Company may engage in cost-cutting measures in an attempt to extend its cash resources. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all. The Company believes that it can be successful in obtaining debt refinancing; however, no assurance can be provided that it will be able to do so. The Company’s consolidated financial statements as of December 31, 2022, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. If the Company is unable to raise additional capital and is therefore unable to continue as a going concern, it may have to liquidate its assets and may receive less than the value at which those assets are carried on its consolidated financial statements, and it is likely that investors will lose all or part of their investment. Liquidity The Company’s operations have historically been financed through the issuance of common stock and borrowings. Since inception, the Company has incurred significant losses and negative cash flows from operations. During the year ended December 31, 2022, the Company incurred a net loss of $ 15.5 million and used cash in operations of $ 12.2 million. As of December 31, 2022, the Company had an accumulated deficit of $ 74.8 million and cash and cash equivalents of $ 530 thousand and restricted cash of $ 500 thousand. The SVB Loan Agreement and Bridge Loan expire on January 15, 2024, and the Company will have to refinance both debt arrangements prior to the expiration date. In the first quarter of 2023, the Company has implemented cost reduction plans to align its cost structure to its sales and increase its liquidity. The Company will continue to monitor its cost in relation to its sales and adjust its cost structure accordingly. Management of the Company believes it will not have sufficient resources to continue as a going concern through at least one year from the issuance of these financial statements. Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). All significant intercompany balances and transactions have been eliminated in the consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. These judgments, estimates and assumptions made by the Company include, but are not limited to revenue recognition, the allowance for doubtful accounts (collectability); contract liabilities (sales returns); valuation allowance for deferred income tax assets; write-downs of inventory for slow-moving and obsolete items and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results may differ from those estimates under different assumptions or conditions and the differences may be material. Foreign Currencies The Company’s reporting currency is the U.S. dollar. The Company generates a portion of its revenues in markets outside North America principally in transactions denominated in foreign currencies, which exposes the Company to risks of foreign currency fluctuations. Foreign currency transaction gains (losses) are included in the consolidated statements of operations under other income (expense). (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash, Cash Equivalents and Restricted Cash As of December 31, 2022 and 2021, the restricted cash balance of $ 500 thousand, respectively, relates to letters of credit to support a bond on tariffs. The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2022 and 2021, the Company’s cash equivalents were held in institutions in the U.S. and include deposits in higher-interest bank accounts which were unrestricted as to withdrawal or use. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, restricted cash and accounts receivable. Substantially all the Company’s cash and cash equivalents and restricted cash are held at one financial institution, Silicon Valley Bank, which was placed into receivership by the FDIC on March 9, 2023. On March 10, 2023, the Silicon Valley Bank depositor accounts and loan facilities, including the Company’s bank accounts and line of credit, were transferred to Silicon Valley Bridge Bank. Through Silicon Valley Bridge Bank, the Company’s bank balances are fully insured by the FDIC and the line of credit facility remains operational, allowing the Company to draw from it as required. The Company has not experienced any credit losses on its cash and cash equivalents and restricted cash through December 31, 2022 and has not experienced any credit losses as of the date of filing this Form 10-K F- 7 For the year ended December 31, 2022, two customers accounted for 10% or greater individually, and 87 % in the aggregate of the Company’s total net sales. For the year ended December 31, 2021, two customers accounted for 10% or greater individually, and 92 % in the aggregate of the Company’s total net sales. Accounts receivable are unsecured and the Company does not require collateral; however, the Company does assess the collectability of accounts receivable based on a number of factors, including past transaction history with, and the creditworthiness of, the customer. Accordingly, the Company is exposed to credit risk associated with accounts receivable. At December 31, 2022, two customers with an accounts receivable balance of 10% or greater individually accounted for a combined 75 % of the Company’s accounts receivable. At December 31, 2021, four customers with an accounts receivable balance of 10% or greater individually accounted for a combined 86 % of the Company’s accounts receivable. To reduce risk, the Company closely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are not limited to, engaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the marketplace. As a result, the Company believes that its accounts receivable credit risk exposure is limited. The Company depends on many third-party suppliers for key components contained in its product offerings. For some of these components, the Company may only use a single source supplier, in part due to the lack of alternative sources of supply. During 2022 and 2021, the Company had two and one suppliers that provided 93 % and 97 %, respectively, of the Company’s purchased inventory. Accounts Receivable, Net Accounts receivable are recorded at invoice value, net of any allowance for doubtful accounts. Estimates of the allowance for doubtful accounts are determined based on existing contractual payment terms, historical payment patterns of customers and individual customer circumstances. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the failure or inability of its customers to make required payments. In determining the allowance for doubtful accounts, the Company considers the probability of recoverability of its accounts receivable based on past experience, taking into account current collection trends as well as general economic factors. Credit risks are assessed based on historical write-offs, net of recoveries, as well as analysis of the aged accounts receivables balances with allowances generally increasing as the receivables age. Inventories Inventories are stated at the lower of cost, or net realizable value. Cost is determined using the weighted average cost method, which approximates actual costs as determined on a first-in, first-out basis. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based on the Company’s estimate of demand for its products, potential obsolescence of technology, product life cycles and whether pricing trends or forecasts indicate that the carrying value of inventory exceeds its estimated selling price. These factors are impacted by market and economic conditions, technology changes and new product introductions and require significant estimates that may include elements that are uncertain. Actual demand may differ from forecasted demand and may have a material effect on gross profit. If inventory is written down, a new cost basis is established that cannot be increased in future periods. The carrying value of inventories is reduced for any difference between cost and net realizable value of inventories that is determined to be obsolete or unmarketable, based upon assumptions about future demand and market conditions. Equipment, net Equipment is stated at cost, net of accumulated depreciation. Depreciation is generally computed using the straight-line method based on the estimated useful lives of the assets, which is generally three to five years. Maintenance and repairs are charged to expense as incurred. Significant improvements that substantially enhance the useful life of an asset are capitalized and depreciated. When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the balance sheet and any resulting gain or loss is reflected in the Company’s statements of operations in the period realized. Goodwill The Company records goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired. The Company’s estimates of fair value are based upon assumptions believed to be reasonable at the time, but such estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. Goodwill is not amortized but rather is tested for impairment annually in the fourth quarter or more frequently, if facts and circumstances warrant a review. Circumstances that could trigger an impairment test include, but are not limited to, a significant adverse change in the business climate or legal factors, an adverse action or assessment by a regulator, or unanticipated competition. The Company has determined that there is a single reporting unit for the purpose of conducting the goodwill impairment assessment. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, we first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If after assessing the totality of events or circumstances, we determine that it is more likely than not (i.e. greater than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount, then the quantitative test is required. The quantitative goodwill impairment test requires us to estimate and compare the fair value of the reporting unit, determined using an income approach and a market approach, with its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss up to the amount of goodwill. Application of the goodwill impairment test requires judgments, including identification of the reporting units, assigning goodwill to reporting units, a qualitative assessment to determine whether there are any impairment indicators, and determining the fair value of each reporting unit which often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. There is no assurance that the actual future earnings or cash flows of the reporting unit will not decline significantly from the projections used in the impairment analysis. As part of the Company’s annual impairment test, which determined that the carrying amount of its single reporting unit exceeded its fair value, the Company recorded a goodwill impairment charge of $ 59 thousand for the year ended December 31, 2022. Intangible Assets and Long-Lived Assets Intangible assets are comprised of developed technology (ERP system), purchased technology (web domain), and customer relationships acquired through business combinations. All of the Company’s intangible assets are amortized using the straight-line method over their estimated useful life. The Company capitalizes certain implementation costs related to its cloud-based enterprise resourcing planning (“ERP”) system. Costs incurred during the application development stage are capitalized. Costs incurred in the preliminary stages of development are expensed as incurred. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will result in additional functionality. Capitalized implementation costs are amortized on a straight-line basis over its estimated useful life, however there were no capitalized costs incurred during the years ended December 31, 2022 and 2021, respectively. F- 8 The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If an impairment is indicated, the asset is written down to its estimated fair value. The cash flow estimates used to identify the potential impairment reflect our best estimates using appropriate assumptions and projections at that time. In evaluating potential impairment of these assets, we specifically consider whether any indicators of impairment are present, including, but not limited to: ● whether there has been a significant adverse change in the business climate that affects the value of an asset: ● whether there has been a significant change in the extent or way an asset is used; and ● whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life. For the year ended December 31, 2022, the Company recorded an impairment charge of $ 67 thousand related to its customer relationships, which is associated with the Company’s ISP business that is being discontinued. The Company’s other intangible assets and long-lived assets were determined to not be impaired as of December 31, 2022. Leases The Company determines if an arrangement is a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable. As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when the Company is reasonably certain it will exercise such options. Lease costs for the Company’s operating leases are recognized on a straight-line basis over the reasonably assured lease term. Variable lease payments include lease operating expenses. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is included in general and administrative expenses on the consolidated statements of operations. The Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets and, as a result, accounts for any lease and non-lease components as a single lease component. The Company has also elected to not apply the recognition requirement to any leases within its existing classes of assets with a term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Other Assets Other assets are stated at cost, less accumulated amortization, and primarily include certain certification costs and long-term insurance policies. Certain certification costs incurred that are necessary to market and sell products are capitalized and reported as “other assets” in the accompanying consolidated balance sheets when the costs are measurable, significant, and relating to products that are projected to generate revenue beyond twelve months. These costs are amortized over an 18- month period, beginning when the related products are available to be sold. As of December 31, 2022 and 2021, the balance outstanding for certifications costs, net of accumulated amortization, was $ 402 thousand and $ 297 thousand, respectively. The long-term insurance policies are amortized over the term of the coverage period. As of December 31, 2022 and 2021, the balance outstanding for long-term insurance policies, net of accumulated amortization, was $ 71 thousand and $ 142 thousand, respectively. F- 9 Income Taxes We compute deferred income taxes based on the differences between the financial statement and tax basis of assets and liabilities using enacted rates in effect in the years in which the differences are expected to reverse. We establish a valuation allowance to offset temporary deductible differences, net operating loss carryforwards and tax credits when it is more likely than not that the deferred tax assets will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. The evaluation of an uncertain tax position is based on factors that include, but are not limited to, changes in the tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, and changes in facts or circumstances related to a tax position. Any changes to these estimates, based on the actual results obtained and/or a change in assumptions, could impact our tax provision in future periods. Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as a provision for income tax in the consolidated statements of operations. Loss Per Common Share Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the purposes of this calculation, stock options are considered common stock equivalents in periods in which they have a dilutive effect. Stock options that are antidilutive are excluded from the calculation. Net loss per share for the year ended December 31, 2022 and 2021, respectively, are as follows: SCHEDULE OF NET INCOME (LOSS) PER SHARE 2022 2021 Years ended December 31, 2022 2021 Numerator: Net loss $ ( 15,549,244 ) $ ( 2,198,667 ) Denominator: Weighted average common shares - basic 46,399,137 39,761,121 Effect of dilutive common share equivalents - - Weighted average common shares - dilutive 46,399,137 39,761,121 Basic and diluted net loss per share $ ( 0.34 ) $ ( 0.06 ) Diluted loss per common share for the years ended December 31, 2022 and 2021 excludes the effects of 907,945 and 799,456 common share equivalents, respectively, since such inclusion would be anti-dilutive. The common share equivalents consist of shares of common stock issuable upon exercise of outstanding stock options. Revenue Recognition The Company primarily sells hardware products to its customers. The hardware products include cable modems and gateways, mobile broadband modems, wireless routers, MoCA adapters and mesh home networking devices. The Company derives its net sales primarily from the sales of hardware products to computer peripherals retailers, computer product distributors, OEMs, and direct to consumers and other channel partners via the Internet. The Company accounts for point-of-sale taxes on a net basis. The Company also sells and earns revenues from Software as a Service (“SaaS”), including services that enables and secures a better-connected home with the AI-driven smart home WiFi management and security platform. Customers do not have the contractual right or ability to take possession of the hosted software. The Company has concluded that transfer of control of its hardware products transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Revenues from sales of hardware products are recognized at a point in time upon transfer of control. F- 10 The SaaS agreements are offered over a defined contract period, generally one year, and are sold to Internet service providers, who then promote the services to their subscribers. These services are available as an on-demand application over the defined term. The agreements include service offerings, which deliver applications and technologies via cloud-based deployment models that the Company develops functionality for, provides unspecified updates and enhancements for, and hosts, manages, provides upgrade and support for the customers’ access by entering into solution agreements for a stated period. The monthly fees charged to the customers are based on the number of subscribers utilizing the services each month, and the revenue recognized generally corresponds to the monthly billing amounts as the services are delivered. Multiple Performance Obligations The Company has hardware products that include SaaS services as a bundled product. The Company accounts for these sales in accordance with the multiple performance obligation guidance of ASC Topic 606. For multiple performance obligation contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria of being distinct, the Company considers a number of factors, such as degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. SaaS included with certain hardware products is considered distinct from the hardware, and therefore the hardware and SaaS offerings are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate obligations on a relative standalone selling price basis (“SSP”). SSP’s are generally determined based on the prices charged to customers when the performance obligation is sold separately or using an adjusted market assessment. The estimated SSP of the hardware and SaaS offerings are directly observable from the sales of those products and SaaS based on a range of prices. Revenue is recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware products bundled with SaaS offerings are recognized at the time control of the product transfers to the customer. The transaction price allocated to the SaaS offering is recognized ratably beginning when the customer is expected to activate their account and over a three-year period that the Company has estimated based on the expected replacement of the hardware. Other considerations of ASC 606 include the following: ● Returned Goods - analyses of actual returned products are compared to the product return estimates and historically have resulted in immaterial differences. The Company has concluded that the current process of estimating the return reserve represents a fair measure to adjust revenue. Returned goods are a form of variable consideration and under ASC Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The sales returns accrual was $ 982 thousand and $ 1.6 million at December 31, 2022 and 2021, respectively. ● Warranties - the Company does not offer its customers a separate warranty for purchase. Therefore, there is no separate performance obligation. The Company accrues for assurance-type warranties, which do not include any additional distinct services other than the assurance that the goods comply with agreed-upon specifications. The warranty reserve was not material at December 31, 2022 and December 31, 2021. ● Price protection - if the Company reduces the price on any products sold to the customer, the Company will guarantee an account credit for the price difference for all quantities of that product that the customer still holds. Price protection is variable and under ASC Topic 606 is estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The price protection accrual was not material at December 31, 2022 and December 31, 2021. ● Volume Rebates and Promotion Programs - volume rebates are variable dependent upon the volume of goods sold-through the Company’s customers to end-users and under ASC Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The rebate and promotion accrual was no t material at December 31, 2022, and $ 175 thousand at December 31, 2021, respectively. F- 11 Contract Balances Accounts receivable is recorded when the Company has an unconditional right to the consideration. When the timing of the Company’s delivery of goods or services is different from the timing of payments made by customers, the Company recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance). When a customer prepays, that payment is reflected as deferred revenue until the performance obligation is satisfied. Contract assets consist of unbilled receivables (see Note 5). The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of cable modems and gateway, and the majority of the Company’s customers are retailers and distributors. Stock-Based Compensation Expense Stock-based compensation expense relates to stock options with a service condition and restricted stock units (RSUs). Stock-based compensation expense for the Company’s stock-based awards is based on their grant date fair value. Service-based options initially granted to an optionee generally vest at a rate of 25 % on the first anniversary of the original vesting date, with the balance vesting monthly over the remaining three years. The fair value of stock options with a service condition on the grant date is estimated using the Black-Scholes option-pricing model. The fair value of these awards is recognized as compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest and forfeitures are recognized as they occur. The Black-Scholes model considers several variables and assumptions in estimating the fair value of service-based stock options. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and expected stock price volatility over the expected term. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. RSUs initially granted to an optionee generally vest at a rate of 25 % on the first anniversary of the original vesting date, with the balance vesting quarterly over the remaining three years. The fair value of RSUs is based on the market price of the Company’s common stock on the date of grant. Advertising Costs Advertising costs are expensed as incurred and reported in selling expense in the accompanying consolidated statements of operations, and include costs of advertising, production, trade shows, and other activities designed to enhance demand for the Company’s products. The Company reported advertising costs of approximately $ 4.0 million and $ 2.8 million in 2022 and 2021, respectively. Shipping and Freight Costs The Company records the expense associated with customer-delivery shipping and freight costs in selling and marketing expense. The Company reported shipping and freight costs of $ 452 thousand and $ 334 thousand in 2022 and 2021, respectively. Segment The Company operates as a single operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating financial performance. The Company’s primary operation is in the United States, and it has derived substantially all of its revenue from sales to customers in the U.S. The Company has operated a manufacturing facility in Mexico since 2014. The Company has long-lived tangible assets as well as two operating leases located in Mexico. F- 12 Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which is intended to improve consistent application and simplify the accounting for income taxes. This ASU removes certain exceptions to the general principals in Topic 740 and clarifies and amends existing guidance. The Company adopted the new standard effective January 1, 2021. The adoption had no impact on the Company’s financial condition, results of operations, or cash flows. Recently Issued Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments Credit Losses — Measurement of Credit Losses on Financial Instruments. ” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable. This ASU is effective for the Company for reporting periods beginning after December 15, 2022. The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated financial statements. There have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations and cash flows . (3) PUBLIC OFFERINGS AND PRIVATE PLACEMENTS On July 28, 2021, the Company entered into an underwriting agreement with B. Riley Securities, Inc., as representative (the “Representative”) of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell an aggregate of 10,000,000 shares of the Company’s Common Stock, to the Underwriters (the “Public Offering”). The shares of Common Stock were sold to the public at an offering price of $ 2.50 per share and were purchased by the Underwriters from the Company at a price of $ 2.32715 per share. On August 2, 2021, the Company received $ 22.7 million in aggregate net proceeds after deducting Underwriters’ discounts, commissions, and other offering expenses after issuing 10,000,000 shares of the Company’s Common Stock through the Public Offering. (4) SALE OF ZOOM® TRADEMARK On August 12, 2021, the Company entered into an agreement with Zoom Video Communications, Inc. to sell, and sold, all of the Company’s right, title and interest in the ZOOM® trademark for cash consideration in the amount of $ 4.0 million, net of legal costs incurred of $ 44 thousand. The Company did not have a carrying basis in the trademark that was subject to the agreement and recorded income of approximately $ 4.0 million, which is recorded in income from continuing operations pursuant to ASC 360-10, Impairment or Disposal of Long-Lived Assets. Under the terms on the agreement, the Company was allowed to use and sell the product under the ZOOM® trademark until February 11, 2022. F- 13 (5) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS Revenue is recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware products bundled with SaaS offerings are recognized at the time control of the product transfers to the customer. The transaction price allocated to the SaaS offering is recognized ratably beginning when the customer is expected to activate their account and over a three-year period that the Company has estimated based on the expected replacement of the hardware. Transaction Price Allocated to the Remaining Performance Obligations The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for shipment, and that are not yet invoiced. As of December 31, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations related to SaaS performance obligations that are unsatisfied or partially unsatisfied was $ 1.4 million, which is recorded as deferred revenue on the Company’s consolidated balance sheets. Of that amount, $ 634 thousand will be recognized as revenue during the year ended December 31, 2023, and $ 772 thousand thereafter. Contract costs The Company recognizes the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales commissions meet the requirements to be capitalized, and the Company amortizes these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. These costs include sales commissions on software maintenance contracts with a contract period of one year or less as sales commissions on contract renewals are commensurate with those paid on the initial contract. Contract Balances The Company records accounts receivable when it has an unconditional right to the consideration. Contract liabilities consist of deferred revenue, which represents payments received in advance of revenue recognition related to SaaS agreements and for prepayments for products or services yet to be delivered. Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer. The following table reflects the contract balances as of the year ended: SCHEDULE OF CONTRACT BALANCES 2022 2021 December 31, 2022 2021 Accounts receivable $ 2,758,406 $ 4,880,663 Deferred revenue - current $ 633,542 $ 291,296 Deferred revenue - noncurrent $ 771,738 $ 443,452 During the year ended December 31, 2022, the change in deferred revenue was as follows: SCHEDULE OF CHANGE IN CONTRACT BALANCES Balance at December 31, 2021 $ 734,748 Billings 1,120,627 Revenue recognized ( 450,095 ) Balance at December 31, 2022 $ 1,405,280 F- 14 Disaggregation of Revenue The following table sets forth our revenues by distribution channel: SCHEDULE OF DISAGGREGATION OF REVENUE BY DISTRIBUTION CHANNEL 2022 2021 Years ended December 31, 2022 2021 Retailers $ 48,728,624 $ 53,409,848 Distributors 654,428 1,869,170 Other 1,239,091 143,508 Revenues $ 50,622,143 $ 55,422,526 The following table sets forth our revenues by product: 2022 2021 Years ended December 31, 2022 2021 Cable Modems & gateways $ 48,433,757 $ 53,751,499 Other networking products 1,276,849 1,145,670 Software as a Service 911,537 525,357 Revenues $ 50,622,143 $ 55,422,526 (6) BALANCE SHEET COMPONENTS Inventories Inventories, net consists of the following: SCHEDULE OF INVENTORIES 2022 2021 December 31, 2022 2021 Materials $ 397,133 $ 684,386 Work in process 5,842,251 3,919,503 Finished goods 19,175,822 29,287,398 Total $ 25,415,206 $ 33,891,287 Finished goods includes consigned inventory held by our customers of $ 4.2 million and $ 4.5 million at December 31, 2022 and 2021, respectively. There was no in-transit inventory in the finished good balance at December 31, 2022, however the December 31, 2021 balance included $ 6.3 million. The Company reviews inventory for obsolete and slow-moving products each quarter and makes provisions based on its estimate of the probability that the material will not be consumed or that it will be sold below cost. The inventory reserves were $ 2.5 million and $ 800 thousand for the years ended December 31, 2022, and 2021, respectively. Equipment Equipment, net consists of the following: SCHEDULE OF EQUIPMENT December 31, Estimated Useful 2022 2021 lives in years Computer hardware and software $ 497,913 $ 447,092 3 Machinery and equipment 725,568 682,980 5 Molds, tools and dies 1,187,541 997,313 5 Office furniture and fixtures 78,728 85,699 5 2,489,750 2,213,084 Accumulated depreciation ( 1,852,777 ) ( 1,450,266 ) $ 636,973 $ 762,818 Depreciation expense was $ 403 thousand and $ 255 thousand for the years ended December 31, 2022 and 2021, respectively. F- 15 Goodwill In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers. Cadence Connectivity recorded $ 58 thousand of goodwill related to this acquisition in its historical accounts of December 2018. As of December 31, 2022, the Company determined that the goodwill was impaired after the annual impairment test indicated that the carrying amount of the Company’s single reporting unit exceeded the estimated fair value and accordingly recorded a $ 59 thousand impairment charge to general and administrative expense in the statement of operations. As of December 31, 2021, the Company had no impairment. Intangible Assets In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers. Cadence Connectivity recorded $ 122 thousand of customer relationships related to this acquisition in its historical accounts of December 2018. As of December 31, 2022, the Company determined that the intangible asset of customer relationships was impaired as result of the Company’s discontinuation of the ISP business to which these customers are associated and accordingly recorded a $ 67 thousand impairment, net of accumulated amortization, to sales and marketing expense in the statement of operations. As of December 31, 2021, the Company had no impairment. Intangible assets consisted of the following at December 31, 2022 and 2021: SCHEDULE OF INTANGIBLE ASSETS Estimated As of December 31, 2022 As of December 31, 2021 Useful Gross Gross Life Carrying Accumulated Carrying Accumulated (in years) Amount Amortization Net Amount Amortization Net Customized internal use software 2.5 $ 230,106 $ ( 207,399 ) $ 22,707 $ 230,106 $ ( 115,306 ) $ 114,800 Customer relationships 9.0 – – – 122,435 ( 42,477 ) 79,958 Acquired web domain 5.0 86,732 ( 36,138 ) 50,594 86,732 ( 18,792 ) 67,940 $ 316,838 $ ( 243,537 ) $ 73,301 $ 439,273 $ ( 176,575 ) $ 262,698 Amortization expense was $ 122 thousand and $ 125 thousand in the years ended December 31, 2022 and 2021, respectively. F- 16 The estimated annual amortization expense for each of the three succeeding years and thereafter is as follows: SCHEDULE OF ANNUAL AMORTIZATION EXPENSES Years ended December 31, 2023 $ 40,054 2024 17,346 2025 15,901 Total $ 73,301 Accrued expenses Accrued expenses consists of the following: SCHEDULE OF ACCRUED EXPENSES 2022 2021 December 31, 2022 2021 Inventory purchases $ 24,901 $ 287,571 Payroll and related benefits 430,358 210,495 Professional fees 290,588 229,597 Royalty costs 1,650,000 1,588,025 Sales allowances 1,226,856 1,958,050 Sales and use tax 113,200 50,916 Other 704,821 955,263 Total accrued other expenses $ 4,440,724 $ 5,279,917 (7) BANK CREDIT LINE AND GOVERNMENT LOANS Bank Credit Line On March 12, 2021, the Company terminated its Financing Agreement and entered into a loan and security agreement with Silicon Valley Bank (the “SVB Loan Agreement”). On November 1, 2021, the Company entered into the first amendment to the SVB Loan Agreement (the “First Amendment”). The SVB Loan Agreement, as amended, provides for a revolving facility up to a principal amount of $ 25.0 million. The borrowing base equals the sum of (a) 85.0 percent of eligible customer receivables, plus (b) the least of (i) 60 percent of the value of eligible inventory (valued at cost), (ii) 85% of the net orderly liquidation value of inventory, and (iii) $6.2 million in each, as determined by SVB from the Company’s most recent borrowing base statement; provided that SVB has the right to decrease the foregoing percentages in its good faith business judgement to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the collateral or its value . The SVB Loan Agreement is secured by substantially all of the Company’s assets but excludes the Company’s intellectual property. Loans under the credit facility bear interest at a rate per annum equal to (i) at all times when a streamline period is in effect, the greater of (a) one-half of one percent (0.50%) above the Prime Rate or (b) three and three-quarters of one percent (3.75%) and (ii) at all times when a streamline period is not effect, the greater of (a) one percent (1.0%) above the Prime Rate and (b) four and one-quarter of one percent (4.25%) . On December 12, 2022, the Company entered into its second Amendment to the SVB Loan Agreement (the “Second Amendment”). The Second Amendment (i) reduced the aggregate amount available under the revolving credit line from $ 25 million to $ 10 million, (ii) extends maturity to January 15, 2024, and (iii) provides a waiver for an existing default under the SVB Loan Agreement by virtue of the Company having entered into a Bridge Loan and Security Agreement dated as of November 23, 2022 by and among Borrower and Slingshot Capital, LLC, under which Borrower incurred certain Indebtedness and granted a Lien to Slingshot Capital. F- 17 The Company incurred $ 143 thousand in origination costs in connection with entering into the SVB Loan Agreement. These origination costs were recorded as a debt discount and are being expensed over the remaining term of the facility. Interest expense was $ 71 thousand and $ 70 thousand for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company had $ 4.8 million outstanding, net of origination costs of $ 30 thousand, under the SVB Loan Agreement, and this credit line had availability of $ 38 thousand. The interest rate on the bank credit lines was 8.50 % as of December 31, 2022. On March 10, 2023, Silicon Valley Bank went into receivership with the Federal Deposit Insurance Corporation (FDIC) and is now the Silicon Valley Bridge Bank. The SVB Loan Agreement has been transferred to Silicon Valley Bridge Bank, and the revolving facility remains accessible to the Company. On March 27, 2023, the SVB Loan Agreement was transferred to First-Citizens Bank & Trust Company (“First-Citizens”) upon First-Citizens entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank. Covenants The SVB Loan Agreement includes a minimum interest expense per month of $ 20 thousand. The First Amendment required the Company to maintain certain levels of minimum adjusted EBITDA, which were tested on the last day of each calendar quarter and measured for the trailing 3-month period ending on the last day of each quarter. The Second Amendment removed the minimum EBITDA covenants. In addition, pursuant to the SVB Loan Agreement, the Company cannot pay any dividends without the prior written consent of SVB. Bridge Loan On November 30, 2022 (the “Effective Date”), the Company and Slingshot Capital, LLC (“Slingshot Capital”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”) pursuant to which Slingshot Capital agreed to make available a bridge loan in the principal amount up of up to $ 1,500,000 . In conjunction with the Bridge Loan Agreement, the Company executed a bridge term note (the “Bridge Term Note”) in favor of Slingshot Capital. The Company has drawn down $ 1,000,000 under the Bridge Loan Agreement. Subject to Slingshot Capital’s sole discretion, the other $ 500,000 may be drawn by the Company. Principal amounts borrowed under the Bridge Loan Agreement bear interest for the period from the Effective Date until February 28, 2023 of 8.00 % per annum. Unpaid principal after February 28, 2023 bear an interest of 14.00 % per annum until paid in full. In the event of default, all outstanding principal and interest shall bear interest at an annual rate of 18 %. In connection with the Bridge Loan Agreement, the Company, Slingshot Capital, and Silicon Valley Bank (the “Senior Lender”) executed a subordination agreement (the “Subordination Agreement”) on November 30, 2022. The Loan Agreement is subordinated to the outstanding indebtedness and obligations under the Company’s senior credit facility. Subject to the Senior Lender’s written consent, the Company shall grant Slingshot Capital a second-priority security interest in all of the Company’s collateral, which shall be subordinated to any and all security interests granted to the Senior Lender and at all times shall be limited to the same collateral granted to the Senior Lender under the senior credit facility. Principal and interest are not due and payable until the maturity date, which is January 15, 2024, unless the Company’s senior credit facility with the Senior Lender is paid in full in cash on an earlier date. The Company reimbursed Slingshot Capital $ 20,000 for its reasonable and documented expenses and fees related to the negotiations, documentation, and execution of the Bridge Loan Agreement, Subordination Agreement, and Bridge Term Note. Slingshot Capital is owned by the Company’s Chairperson of the Board and a Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively. Government Loans The Company participated in the Coronavirus Aid, Relief, and Economic Security Act and received an aggregate $ 1,128,000 in unsecured loans under the Small Business Administration Paycheck Protection Program, at a fixed rate of 1 % per annum. Under the terms of the loans, the Company received forgiveness of an aggregate $ 20,000 and $ 1,048,000 in 2021 and 2020, respectively. The Company repaid $ 34,000 and $ 26,000 in 2022 and 2021, respectively. As of December 31, 2022, the Company had no outstanding balances under the loans. F- 18 (8) Leases LEASES The Company performs most of the final assembly, testing, packaging, warehousing and distribution at two production and warehouse facilities, totalling approximately 24,000 square feet, in Tijuana, Mexico. In November 2021, the Company entered into operating lease agreements extending each lease through November 30, 2023. Lease payments total approximately $ 9 thousand per month. Rent expense was $ 110 thousand and $ 105 thousand for the years ended December 31, 2022 and 2021, respectively. In May 2020, the Company signed a two -year lease agreement for 3,218 square feet of office space at 275 Turnpike Executive Park in Canton, MA. The agreement includes a one-time option to cancel the second year of lease with three months advance notice . The location is currently utilized by the Company’s research and development group. Rent expense was $ 54 thousand and $ 53 thousand for the year ended December 31, 2022, and 2021, respectively. On December 1, 2021, the Company executed an amendment to extend the lease from June 2022 to May 2024 with monthly payments of approximately $ 5 thousand. The Company leases the facility that comprises its headquarters at 848 Elm Street in Manchester, NH. The facility lease agreement was effective from August 1, 2019 to July 31, 2021 and was renewed for a one year extension until July 31, 2022. On July 18, 2022, the lease agreement was amended to a month-to-month lease arrangement and may be terminated by either party with a 60-day notice. The facility lease agreement provides for the lease of 2,656 square feet of office space. Rent expense was $ 33 thousand and $ 30 thousand for the years ended December 31, 2022 and 2021, respectively. The components of lease costs were as follows: SCHEDULE OF COMPONENTS OF LEASE COSTS 2022 2021 Years ended December 31, 2022 2021 Operating lease costs $ 181,361 $ 152,293 Short-term lease costs 29,740 35,604 Total lease costs $ 211,101 $ 187,897 The weighted-average remaining lease term and discount rate were as follows: SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE Years ended December 31, 2022 2021 Operating leases: Weighted average remaining lease term (years) 1.1 1.7 Weighted average discount rate 4.2 % 4.0 % F- 19 Supplemental cash flow information and non-cash activity related to our operating leases are as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES 2022 2021 Years ended December 31, 2022 2021 Operating cash flow information: Amounts included in measurement of lease liabilities $ 172,730 $ 145,410 Non-cash activities: ROU asset obtained in exchange for lease liability $ 103,914 $ 299,821 The maturity of the Company’s operating lease liabilities as of December 31, 2022 were as follows: SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES Years ended December 31, 2023 $ 155,379 2024 22,794 Total lease payments $ 178,173 Less: imputed interest ( 4,693 ) Present value of operating lease liabilities $ 173,480 Operating lease liabilities, current $ 150,968 Operating lease liabilities, noncurrent $ 22,512 ( 9) COMMITMENTS AND CONTINGENCIES (a) Contingencies The Company is a party to various lawsuits and administrative proceedings arising in the ordinary course of business. The Company evaluates such lawsuits and proceedings on a case-by-case basis, and its policy is to vigorously contest any such claims which it believes are without merit. The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If either or both of the criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of the loss or range of losses, that the amount is not material, or that an estimate of the loss cannot be made. The Company expenses its legal fees as incurred. In the ordinary course of their business, the Company and its subsidiaries are subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with their business. Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of these matters could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows. Management believes that the Company has adequate legal defences with respect to the legal proceedings to which it is a defendant or respondent and that the outcome of these pending proceedings is not likely to have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, the Company is unable to predict the outcome of these matters. F- 20 (b) Commitments The Company is party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC for the manufacture, sale and marketing of consumer cable modem products, consumer routers, WiFi range extenders, MoCa adapters, cellular sensors, home powerline network adapters, and access points worldwide through a wide range of authorized sales channels. The license agreement has a term ending December 31, 2025. In connection with the license agreement, the Company has committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products. Additionally, the Company is required to make quarterly royalty payments equal to a certain percentage of the preceding quarter’s net sales with minimum annual royalty payments as follows: SCHEDULE OF MINIMUM ANNUAL ROYALTY PAYMENTS Years ended December 31, 2023 $ 6,850,000 2024 7,100,000 2025 7,100,000 Total $ 21,050,000 Royalty expense under the License Agreement amounted to $ 6,600,000 and $ 6,350,000 for the years ended December 31, 2022 and 2021, respectively, and is reported in selling and marketing expense on the accompanying consolidated statements of operations. (10) STOCKHOLDERS’ EQUITY In July 2021, the Company’s shareholders voted to increase the number of authorized shares of capital stock to 62,000,000 shares, consisting of 60,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock (see Note 1). Preferred Stock The Company is authorized to issue 2,000,000 shares of preferred stock at $ 0.01 par value per share. As of December 31, 2022 and 2021, no shares of preferred stock was outstanding. The Board of Directors may determine the rights, preferences, privileges, qualifications, limitations and restrictions granted or imposed upon any series of preferred stock. Common Stock The Company is authorized to issue 60,000,000 shares of common stock at $ 0.01 par value per share. As of December 31, 2022 and 2021, the Company had 46,949,240 and 45,885,043 , respectively, shares of common stock outstanding. Equity Compensation Plans In July 2019, the Company terminated the 2009 Stock Option Plan and the 2009 Directors Option Plan (collectively, the “Prior Plans”) and adopted the 2019 Stock Option Plan (the “2019 Stock Options Plan”) and the 2019 Directors Option Plan (the “2019 Directors Option Plan”) (collectively, the “2019 Plans”, and together with the Prior Plans, the “Plans”). The purpose of the 2019 Plans is to provide certain incentive and non-statutory stock options to employees, directors and certain non-employees. As a result, the Company may not grant any additional awards under the Prior Plans. The Prior Plans will continue to govern outstanding stock options previously granted thereunder. The Company has initially reserved 4,000,000 shares and 1,000,000 shares of common stock for issuance of awards under the 2019 Stock Option Plans and the 2019 Directors Option Plan, respectively. The 2019 Plans authorize grants to purchase shares of authorized but unissued common stock. Stock options can be granted with an exercise price no less than or equal to the stock’s fair market value at the date of grant. All awards have 10-year terms. The 2019 Plans permit incentive stock options, or ISOs and non-qualified stock options, or NSOs. If the stock options are granted to a 10 % stockholder, then the exercise price per share may not be less than 110 % of the fair market value per share of the Company’s common stock on the grant date. The board of directors sets the fair value and exercise price for the underlying shares at the grant date. On November 9, 2021, the Company’s Board of Directors approved of the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan (collectively, the “2021 Equity Plans”) and terminated the 2019 Plans. The purpose of the 2021 Equity Plans is to provide certain incentive and non-statutory stock options, restricted stock, restricted stock units, and stock appreciation rights to employees, directors, and certain non-employees. As a result, the Company may not grant any additional awards under the 2019 Plans. The Prior Plans and the 2019 Plans will continue to govern outstanding stock options previously granted thereunder. The Company has initially reserved 3,000,000 shares and 1,250,000 shares of common stock for issuance of awards under the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan, respectively. On June 9, 2022, the 2021 Equity Plans were approved by the Company’s shareholders. F- 21 Stock Option Activity Stock option activity under Stock Option Plans was as follows: SUMMARY OF STOCK OPTION ACTIVITY Weighted Weighted average average remaining Aggregate Outstanding exercise contractual Intrinsic Options price term Value Outstanding at December 31, 2020 3,098,163 $ 1.16 3.00 $ 2.43 Granted 716,258 3.48 — — Exercised ( 814,005 ) 1.45 — — Forfeited ( 635,842 ) 2.28 — — Outstanding at December 31, 2021 2,364,574 $ 1.47 2.80 $ 0.42 Granted – — — — Exercised ( 430,815 ) 0.55 — — Forfeited ( 960,591 ) 1.47 — — Outstanding at December 31, 2022 973,168 $ 1.87 2.20 $ — Exercisable at December 31, 2022 697,884 $ 1.57 1.90 $ — There were no options granted during 2022 under the stock option plan. The weighted average grant date fair value of options granted was $ 2.00 per share during the year ended December 31, 2021. The total intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was $ 140 thousand and $ 1.3 million, respectively. The intrinsic value is the difference between the estimated fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option. The total fair value of options that vested during the years ended December 31, 2022 and 2021 was $ 710 thousand and $ 1.0 million, respectively. As of December 31, 2022, the total unrecognized stock-based compensation expense related to the stock options was $ 536 thousand, which will be recognized over a weighted-average period of approximately 2.1 years. Stock-based Valuation Assumptions The following ranges of assumptions were used to value options with service-based vesting granted to employees: SCHEDULE OF STOCK BASED VALUATION ASSUMPTIONS Years ended December 31, 2022 2021 Expected term (in years) - 4.04 Expected volatility - 42.8 % - 75.8 % Risk-free interest rate - 0.3 % - 1.2 % Dividend yield - 0 % * During 2022 there were no stock options granted Restricted Stock Units During 2022, the Company granted 851,992 RSUs with a total fair value of $ 523 thousand under the 2021 Equity Plans. As of December 31, 2022, there were 633,282 RSUs vested with a fair value of $ 203 thousand. The Company recorded $ 692 thousand in stock-based compensation expense for the year ended December 31, 2022. As of December 31, 2022, the total unrecognized stock-based compensation expense was $ 739 thousand, which will be recognized over a weighted-average period of approximately 3.1 years. A summary of plan activity for the 2021 Equity Plans is as follows: SCHEDULE OF RESTRICTED STOCK UNITS Weighted Average Units Grant Date Fair value Unvested at December 31, 2020 - * $ - * Granted 1,223,893 1.24 Vested – – Forfeited – – Unvested at December 31, 2021 1,223,893 $ 1.24 Granted 851,992 0.62 Vested ( 633,282 ) 0.84 Forfeited ( 329,726 ) 1.39 Unvested at December 31, 2022 1,112,877 $ 0.95 * There was no RSU plan prior to 2021 F- 22 Stock-based Compensation Expense The following table sets forth stock-based compensation expense included in the Company’s consolidated statements of operations: SCHEDULE OF STOCK BASED COMPENSATION EXPENSE 2022 2021 Years ended December 31, 2022 2021 Cost of goods sold $ 79,498 $ 81,983 Sales and marketing 201,373 342,337 General and administrative 456,970 184,490 Research and development 432,754 388,127 Total stock-based compensation expense $ 1,170,595 $ 996,937 (11) INCOME TAXES Income tax expense consists of: SCHEDULE OF INCOME TAXES Current Deferred Total Year Ended December 31, 2021: U.S. Federal $ — $ — $ — State and local 32,069 — 32,069 Foreign 31,704 — 31,704 $ 63,773 $ — $ 63,773 Year Ended December 31, 2022: U.S. Federal $ — $ — $ — State and local 59,846 — 59,846 Foreign 52,502 — 52,502 $ 112,348 $ — $ 112,348 F- 23 The principal components of deferred tax assets, net, were as follows at December 31: SCHEDULE OF DEFERRED TAX ASSETS 2022 2021 Deferred income tax assets: Capitalized research and development $ 1,234,710 $ — Inventories 889,821 566,403 Accounts receivable 357,920 484,728 Accrued expenses 266,665 45,522 Net operating loss and tax credit carry forwards 14,742,578 15,195,123 Plant and equipment 39,311 60,059 Stock compensation 120,661 65,014 Other – interest expense 187,990 74,931 Total deferred income tax assets 17,839,656 16,491,780 Valuation allowance ( 17,839,656 ) ( 16,491,780 ) Net deferred tax assets $ — $ — As of December 31, 2022, the Company had Federal net operating loss carry forwards of approximately $ 60.6 million which are available to offset future taxable income. They are due to expire in varying amounts from 2023 to 2040. Federal net operating losses occurring after December 31, 2017, of approximated $ 22.1 million may be carried forward indefinitely. As of December 31, 2022, the Company had state net operating loss carry forwards of approximately $ 29.8 million which are available to offset future taxable income. They are due to expire in varying amounts from 2033 through 2040. A valuation allowance has been established for the full amount of net deferred income tax assets as management has concluded that it is more-likely than-not that the benefits from such assets will not be realized. The total valuation allowance increased by $ 1.3 million from December 31, 2021 to December 31, 2022. The Federal and state NOLs may be subject to certain limitations under Section 382 of the Internal Revenue Code, which could significantly restrict the Company’s ability to use the NOLs to offset taxable income in subsequent years. As result of changes made by the Tax Cuts and Jobs Act of 2017, that became effective as of January 1, 2022, the company is now required to capitalize for tax purposes certain research and development expenses and amortize domestic expenses over a 5 year period and foreign expenses over a 15 year period, resulting in a deferred tax asset for the capitalized amounts as reflected in the above table. The following is a reconciliation of the statutory Federal income tax rate to the actual effective income tax rate for continuing operations: SCHEDULE OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE 2022 2021 Federal tax (benefit) rate 21 % 20 % Increase (decrease) in taxes resulting from: State income taxes 1 ( 2 ) Change in valuation allowance ( 9 ) ( 5 ) Expiration of NOLs ( 13 ) — Expiration of stock options ( 1 ) ( 14 ) Permanent differences ( 1 ) ( 4 ) Changes in Federal and state rates 1 3 Effective income tax rate ( 1 )% ( 2 )% The Company reviews annually the guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold. At December 31, 2022 and 2021, the Company did not have any material uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2022 and 2021. The Company files income tax returns in the U.S., India, and Mexico. Tax years subsequent to 2016 remain subject to examination for both U.S. Federal and state tax reporting purposes. Tax years subsequent to 2015 remain subject to examination for Mexico tax reporting purposes. The foreign income tax reported represents tax on operations for the Company that is located in a special economic zone in Mexico. Other than the Mexico facility, the Company has an India operation and has no other operations in a foreign location. The India operation had no tax obligations as of December 31, 2022. (12) RETIREMENT PLAN The Company sponsors a 401(k) retirement savings plan for employees. On February 1, 2021, the Cadence Connectivity 401(k) Plan merged into the Minim 401(k) Plan. Effective January 1, 2022, the Company increased the Company match to an amount not to exceed 3 % of an employee’s contribution. Employees could contribute to the 401(k) up to 100 % of their wages with a maximum of $ 20,500 for 2022. Under the Economic Growth and Tax Relief Reconciliation Act, employees who are age 50 or older could contribute an additional $ 6,500 per year for a maximum of $ 27,000 for 2022. Contributions by the employees are invested in one or more funds at the direction of the employee; however, employee contributions cannot be invested in Company stock. Contributions by the Company are made in accordance with the investment elections made by each participant for his or her deferral contributions. The matching contribution is applied to the employee accounts after each payroll. In the year ended December 31, 2021, the Company matched 25 % of an employee’s contribution, up to a maximum of $ 350 per employee per year. The Company matching contributions charged to expense were $ 179 thousand and $ 23 thousand in the years ended December 31, 2022, and 2021, respectively. F- 24 (13) RELATED PARTY TRANSACTIONS The Company leases office space located at 848 Elm Street, Manchester, NH. The landlord is an affiliate entity owned by Mr. Hitchcock. The two-year facility lease agreement was effective from August 1, 2019, to July 31, 2021 and was extended to July 31, 2022. On July 18, 2022, the lease agreement was amended to a month-to-month lease arrangement and may be terminated by either party with a 60-day notice. The facility lease agreement provides for 2,656 square feet. For the twelve-months period ended December 31, 2022 and 2021, the rent expense was $ 33 thousand and $ 30 thousand, respectively. On November 30, 2022, the Company and Slingshot Capital, LLC (“Slingshot Capital”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”) pursuant to which Slingshot Capital agreed to make available a bridge loan in the principal amount up of up to $ 1,500,000 . The Company has drawn down $ 1,000,000 under the Bridge Loan Agreement. Subject to Slingshot Capital’s sole discretion, the other $ 500,000 may be drawn by the Company. Slingshot Capital is owned by the Company’s Chairperson of the Board and a Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively. (14) SUBSEQUENT EVENTS The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The Company evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure, except as described below. Silicon Valley Bank (“SVB”) was closed on March 10, 2023, by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of SVB to Silicon Valley Bridge Bank, N.A. (Bridge), a newly formed bridge bank that will be operated by the FDIC as it markets the institution to potential bidders. On March 12, 2023, the Department of the Treasury, Federal Reserve, and FDIC (collectively, the Agencies) announced that they were invoking the Systemic Risk Exception to the Federal Deposit Insurance Act to permit the FDIC to take action to fully protect all depositors of SVB, regardless of their deposit insurance coverage. In addition, the Agencies also announced that SVB depositors would have access to all their money starting March 13, 2023, with the revolving facility still accessible to the Company. As of March 10, 2023, the Company had approximately $ 1 million of cash and restricted cash on deposit with SVB, which represents approximately 100% of the Company’s total cash and cash equivalents as of December 31, 2022. The Company also had an outstanding line-of-credit facility with SVB with a maximum borrowing limit of $ 10.0 million, of which approximately $ 4.8 million was drawn as of December 31, 2022. Immediately prior to SVB’s closure on March 10, 2023, the Company had drawn $ 4.4 million and $ 4 thousand was available under the credit facility. As a result, the Company is working to identify replacement lenders for this credit facility, which may be at less favorable terms, including higher interest rates and costs and more stringent financial and operating covenants due to investor concerns regarding the U.S. financial system. These factors may make it more challenging for the Company to acquire financing on acceptable terms or at all. Reverse Stock Split On March 30, 2023, the Board of Directors of Minim, Inc. approved a 1-for-25 reverse split of the Company’s common stock to be effected through an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”). The Amendment will not effect the number of shares of authorized common stock. The reverse stock split was subject to shareholder approval at a Special Shareholders Meeting (the “Special Meeting”), which took place on March 28, 2023. A majority of shareholders voted in favor of the reverse stock split. The Company’s definitive proxy statement relating to the Special Meeting filed on March 14, 2023, includes additional details regarding the Amendment. The reverse stock split is expected to begin on a split-adjusted basis in April 2023 as the Company works with Regulatory authorities to proceed. All of the Company’s historical shares and per share information related to issued and outstanding common stock and outstanding equity awards exercisable into common stock in these consolidated financial statements will be adjusted, on a retroactive basis, to reflect the reverse stock split in quarter ending March 31, 2023. The following unaudited pro forma selected financial information reflects the impact of the reverse stock split had the effective date of the reverse stock been as of December 31, 2022. The pro forma results have been prepared for comparative purposes only and are not intended to be a projection of future operating results. SCHEDULE OF PRO FORMA FINANCIAL INFORMATION As reported for the year ended December 31, 2022 Effect of the Reverse Stock Split as of December 31, 2022 (Pro Forma, Unaudited) Authorized shares of common stock 60,000,000 60,000,000 Common stock issued and outstanding 46,949,240 1,877,970 Basic and diluted net loss per share $ ( 0.34 ) $ ( 8.38 ) Weighted average shares common and common equivalent shares Basic and diluted 46,399,137 1,855,965 F- 25 ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None