What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-11-13 · 81 added, 99 removed, 262 unchanged (41% of the section changed)

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costs for their country.

cash and cash equivalents balance on June 30, 2023 was $0.3 million compared to $0.5 million on December 31, 2022.

On June 30, 2023,

cash and cash equivalents balance on March 31, 2023 was $0.8 million compared to $0.5 million on December 31, 2022.

On March 31, 2023,

we had $3.8 million of outstanding borrowings on our asset-based credit line with availability of $395 thousand and working capital of

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Company continues to experience losses, which in part is due to declining revenues.

In the three and six months ended June 30, 2023 and

2022, we generated net sales of $7.2 million and $12.9 million, respectively, and $17.9 million and $26.2 million, respectively.

In the three months ended March 31, 2023 and 2022,

we generated net sales of $10.8 million and $13.3 million, respectively.

reported in Form 8-K filed with the SEC on August 28, 2023, t he Company has continued to experience

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ended December 31, 2022.

For the six months ended June 30, 2023, there have been no significant changes in our critical accounting policies

and estimates.

For the three months ended March 31, 2023, there have been no significant changes in our critical accounting

policies and estimates.

of Operations

following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three and

six months ended June 30, 2023 and 2022 presented in absolute dollars and as a percentage of net sales, with dollars and percentage change

period over period:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three months

ended March 31, 2023 and 2022 presented in absolute dollars and as a percentage of net sales, with dollars and percentage change period

Three Months ended March 31,

Cost of goods sold

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Total other expense

Total other income (expense)

Loss before income taxes

of the three months ended June 30, 2023 to the three months ended June 30, 2022

following table sets forth our revenues by product and the changes in revenues for the three and six months ended June 30, 2023, as compared

to the three months ended June 30, 2022:

Income tax provision

of the three months ended March 31, 2023 to the three months ended March 31, 2022

following table sets forth our revenues by product and the changes in revenues for the three months ended March 31, 2023, as compared

to the three months ended March 31, 2022:

Three Months Ended

Six Months Ended

March 31, 2023

March 31, 2022

(In thousands, except percentage data)

Cable modems & gateways

Other network products

majority of the Company’s revenues by geographic area are earned in North America for the three and six months ended June 30, 2023

total net sales decreased year-over-year by $5.7 million or 44.1% in the three months ended June 30, 2023 and by $8.2 million or 31.4%

in the six months ended June 30, 2023.

The decrease in net sales is directly attributable to decreased sales of Motorola branded cable

modems and gateways.

Other networking products

majority of the Company’s revenues by geographic area are earned in North America for the three months ended March 31, 2023 and

total net sales decreased year-over-year by $2.5 million or 19%.

The decrease in net sales is directly attributable to decreased sales

of Motorola branded cable modems and gateways.

In both 2023 and 2022, we primarily generated our sales by selling cable modems and gateways.

Sales related to SaaS

offerings decreased by $72 thousand or 49.3% in the three months ended June 30, 2023 and decreased by $130 thousand or 44.8% during the

six months ended June 30, 2023.

The decrease in the other category of $270 thousand and $451 thousand in the three and six months ended

2023 compared to 2022 is primarily due to a reduction in DSL products and MoCA products due to a refocus on new product introductions.

Generally, our lower sales outside North America reflect the fact that cable modems are sold successfully through retailers in the U.S.

Sales related to SaaS offerings were $86 thousand and $144 in the three months ended March 31, 2023 and 2022, respectively.

in other category of $180 thousand in 2023 compared to 2022 is primarily due to a reduction in DSL and MoCA products due to a refocus

on new product introductions.

Generally, our lower sales outside North America reflect the fact that cable modems are sold successfully

through retailers in the U.S.

but not in most countries outside the U.S., due primarily to variations in government regulations.

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following table presents net sales and gross margin, for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

profit and gross margin decreased in the three months ended June 30, 2023, compared to the three months ended in the prior fiscal year

Three Months ended March 31,

profit and gross margin decreased in the three months ended March 31, 2023, compared to the three months ended in the prior fiscal year

period, primarily due to insufficient sales levels necessary to cover fixed costs and certain variable costs.

the remainder of fiscal 2023, we expect gross margin to be subject to similar variabilities experienced in the first half of 2023 and

We experienced meaningful increases in costs of freight, materials, and components for

our products.

Although freight and certain component costs have reduced, we will not realize improvements to margins until we are able

to work through inventory obtained when freight and component costs were elevated.

We may continue to experience disruptions from the

pandemic, with manufacturing partners being affected by factory uptime and scarcity of materials and components.

These disruptions could

increase the length of time taken between order to production and transportation of inventory.

the remainder of fiscal 2023, we expect gross margin to be subject to similar variabilities experienced in the first quarter of 2023

We experienced meaningful increases in costs of freight, materials, and components

for our products.

Although freight and certain component costs have reduced, we will not realize improvements to margins until we are

able to work through inventory obtained when freight and component costs were elevated.

We may continue to experience disruptions from

the pandemic, with manufacturing partners being affected by factory uptime and scarcity of materials and components.

These disruptions

could increase the length of time taken between order to production and transportation of inventory.

If such disruptions become widespread,

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The following table presents sales and marketing expenses, for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

Three Months ended March 31,

Selling and marketing

and marketing expenses decreased in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily

due to decreases in personnel expenses of $261 thousand and professional fees of $92 thousand, partially offset by increases in Motorola

royalty fees of $63 thousand and marketing program campaigns of $23 thousand.

Selling and marketing expenses decreased in the six months

ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to a decrease in personnel expenses of $454 thousand,

professional fees of $73 thousand, software license fees of $32 thousand, partially offset by increases in Motorola royalty fees of $125

thousand, marketing program campaigns of $94 thousand, and allowances for bad debt of $72 thousand.

and marketing expenses were flat in the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily

due to reductions in personnel expenses by $193 thousand and subscription fees of $54 thousand, which were offset by increases in allowance

for bad debt of $72 thousand, Motorola royalty fees of $63 thousand, and $148 thousand in marketing campaigns and other sales support

the remainder of fiscal 2023, we expect our selling and marketing expenses as a percentage of net sales in fiscal 2023 to be similar

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The following table presents general and administrative expenses, for the periods

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

Three Months ended March 31,

General and administrative

and administrative expenses decreased in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily

due to decreases in personnel expenses of $219 thousand, professional fees of $143 thousand, and software subscriptions of $127 thousand.

General and administrative expenses decreased in the six months ended June 30, 2023, as compared to the six months ended June 30, 20212

primarily due to decreases in personnel expenses of $155 thousand, professional fees of $365 thousand, and software subscriptions of

$121 thousand.

and administrative expenses decreased $125 thousand primarily due to a decrease in professional fees of $222 thousand, partially offset

by an increase in personnel expenses of $63 thousand and software subscriptions of $17 thousand.

general and administrative expense increases or decreases in absolute dollars are difficult to predict due to the lack of visibility

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for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

Three Months ended March 31,

Research and development

and development expenses decreased in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily

due to personnel expenses.

Research and development expenses increased in the six months ended June 30, 2023, as compared to the six

months ended June 30, 2022, primarily due to personnel expenses.

decrease of $58 thousand was primarily due to decreases in personnel expenses of $102 thousand, contract labor of $39 thousand, and software

subscriptions of $14 thousand, partially offset by an increase in certification costs of $95 thousand.

believe that innovation and technological leadership is critical to our future success, and we are committed to continuing a significant

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principal sources of liquidity are cash and cash equivalents and borrowings under our SVB line-of-credit.

As of June 30, 2023, we had

As of March 31, 2023, we had

cash and cash equivalents of $0.8 million as compared to $0.5 million on December 31, 2022.

On June 30, 2023, we had $2.4 million of

On March 31, 2023, we had $3.8 million of

borrowings outstanding and $395 thousand available on our $10.0 million SVB line-of-credit and working capital of $12.1 million.

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and outflows.

consolidated financial statements as of June 30, 2023 were prepared under the assumption that we will continue as a going concern.

consolidated financial statements as of March 31, 2023 were prepared under the assumption that we will continue as a going concern.

going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

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beyond the next 12 months.

consolidated financial statements as of June 30, 2023, do not include any adjustments to the carrying amounts and classification of assets,

liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern.

If we are unable to continue

as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our

financial statements, and it is likely that investors will lose all or part of their investment.

consolidated financial statements as of March 31, 2023, do not include any adjustments to the carrying amounts and classification of

assets, liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern.

If we are unable to

continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried

on our financial statements, and it is likely that investors will lose all or part of their investment.

following table presents our cash flows for the periods presented:

Six Months ended June 30,

Three Months ended March 31,

Cash provided by (used in) operating activities

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Flows from Operating Activities.

Cash provided by operating activities of $2.5 million during the six months ended June 30, 2023

reflected our net loss of $9.7 million, adjusted for non-cash expenses, consisting primarily of $0.2 million of stock-based compensation

expense and $0.3 million in depreciation and amortization expense.

Uses of cash included an increase in accrued expenses of $2.3 million.

Sources of cash included primarily a decrease of accounts receivable of $0.8 million, inventories of $6.9 million, increase in accounts

payable of $5.9 million, increase in prepaid expenses of $0.1 million, and increase in deferred revenue of $0.1 million.

used in operating activities of $8.5 million during the six months ended June 30, 2022 reflected

our net loss of $2.1 million, adjusted for non-cash expenses, consisting primarily of stock-based compensation expense of $0.6 million.

Uses of cash include an increase in inventories of $3.2 million and increase in accounts payable of $0.5 million and accrued expenses

Cash provided by operating activities of $1.3 million during the three months ended March 31,

2023 reflected our net loss of $4.0 million, adjusted for non-cash expenses, consisting primarily of $124 thousand of stock-based compensation

expense, $229 thousand in depreciation and amortization expense, and $72 thousand in accounts receivable reserve allowance.

included an increase in accounts receivable of $0.5 million and prepaid expenses of $81 thousand.

Sources of cash included primarily

a decrease of inventories of $2.6 million, increase in accounts payable of $2.5 million, increase in accrued expenses of $0.3 million,

and increase in deferred revenue of $0.1 million.

used in operating activities of $4.3 million during the three months ended March 31, 2022 reflected our net loss of $2.5 million, adjusted

for non-cash expenses, consisting primarily of $563 thousand of stock-based compensation expense.

Uses of cash included a decrease in

accounts payable of $4.2 million and a decrease in accrued expenses $600 thousand.

Sources of cash included primarily a decrease of inventories

of $2.5 million.

Flows from Investing Activities.

During the six months ended June 30, 2023, $162 thousand was used to purchase equipment and

During the three months ended March 31, 2023, $6 thousand was used to purchase equipment and

$122 thousand was used for certification costs.

the six months ended June 30, 2022, $0.1 million was used to purchase equipment and $0.3 million was used for certification costs.

the three months ended March 31, 2022, $115 thousand was used to purchase equipment and $156 thousand was used for certification costs.

Flows from Financing Activities.

Cash used in financing activities during the six months ended June 30, 2023 consisted of repayment

of $2.3 million on the borrowings under our SVB line-of-credit.

provided by financing activities in during the three months ended June 30, 2022 consisted of a source of cash of $0.5 million from borrowings

under our SVB line-of-credit, and $0.2 million in proceeds from the exercise of common stock options.

Cash used in financing activities during the three months ended March 31, 2023 consisted of

repayment of $945 thousand on the borrowings under our SVB line-of-credit.

provided by financing activities in during the three months ended March 31, 2022 consisted of a source of cash of $2.0 million from borrowings

under our SVB line-of-credit, and $99 thousand in proceeds from the exercise of common stock options.

Liquidity Needs

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as well as the status of each of our product development programs, will significantly impact our cash management decisions.

June 30, 2023, we believe our current cash and cash equivalents, other working capital and borrowings under our SVB line-of-credit will

March 31, 2023, we believe our current cash and cash equivalents, other working capital and borrowings under our SVB line-of-credit will

not be sufficient to fund working capital requirements, capital expenditures and operations during the next twelve months.

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that such funding will be available in needed quantities or on terms favorable to us, if at all.

June 30, 2023, we have Federal and state net operating loss carry forwards of approximately $59.8 million and $34.2 million, respectively,

March 31, 2023, we have Federal and state net operating loss carry forwards of approximately $57.9 million and $31.6 million, respectively,

available to reduce future taxable income.

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as management has concluded that it is more-likely than-not that the benefits from such assets will not realize the benefits of our deferred

As a result, as of June 30, 2023 and December 31, 2022, we recorded a full valuation allowance against our net deferred tax

As a result, as of March 31, 2023 and December 31, 2022, we recorded a full valuation allowance against our net deferred

and Contractual Obligations

the six months ended June 30, 2023, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital commitments

and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2022.

the three months ended March 31, 2023, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital

commitments and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2022.

Sheet Arrangements

did not have any material off-balance sheet arrangements as of June 30, 2023.

See Note 6 to the accompanying consolidated financial statements

for additional disclosure.

did not have any material off-balance sheet arrangements as of March 31, 2023.

See Note 6 to the accompanying consolidated financial

statements for additional disclosure.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis