What changed in this filing

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Item 1. Financial Statements

2023-11-13 compared with 2022-11-14 · 300 added, 247 removed, 303 unchanged (64% of the section changed)

FINANCIAL STATEMENTS

AND SUBSIDIARIES

Balance Sheets

September 30,

Consolidated Balance Sheets

Current assets

1 unchanged sentence

Restricted cash

Accounts receivable, net of allowance of doubtful accounts of $ 335,804 and $ 236,819 as of September 30, 2022 and December 31, 2021, respectively

Inventories, net

Accounts receivable, net of allowance of doubtful accounts of $ 209,710 and $ 138,331 as of June 30, 2023 and December 31, 2022, respectively

Prepaid expenses and other current assets

7 unchanged sentences

Accounts payable

Current maturities of government loan

Bridge loan agreement

Current maturities of operating lease liabilities

13 unchanged sentences

issued and outstanding:

46,578,730 shares at September 30, 2022 and 45,885,043 shares at December 31, 2021, respectively

1,888,274 shares at June 30, 2023 and 1,877,970 shares at December 31, 2022 respectively

Additional paid-in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

accompanying notes to consolidated financial statements.

accompanying notes to condensed consolidated financial statements.

AND SUBSIDIARIES

Statements of Operations

Three Months Ended

September 30,

Nine Months Ended

September 30,

Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Cost of goods sold

4 unchanged sentences

Total operating expenses

Sale of trademark, net

Operating income (loss)

Operating loss

( 5,460,130 )

( 4,285,868 )

Other income (expense):

( 9,385,602 )

( 6,740,271 )

Other expense:

Interest expense, net

Gain on forgiveness of debt (Note 5)

Total other expense

Income (loss) before income taxes

Loss before income taxes

( 5,572,705 )

( 4,375,840 )

Net income (loss)

( 9,643,162 )

1 unchanged sentence

$ ( 5,597,681 )

Net income (loss) per share:

Basic weighted average common and common equivalent shares

Diluted weighted average common and common equivalent shares

accompanying notes to consolidated financial statements.

$ ( 4,426,559 )

$ ( 9,668,138 )

$ ( 6,965,060 )

Net loss per share:

Basic and diluted

Basic and diluted weighted average common and common equivalent shares

accompanying notes to condensed consolidated financial statements.

AND SUBSIDIARIES

Statements of Stockholders’ Equity

the nine months ended September 30, 2022

Consolidated Statements of Stockholders’ Equity

the six months ended June 30, 2023

Balance at December 31, 2022

2 unchanged sentences

( 4,070,457 )

Stock option exercises

Common stock issued for vested restricted units

Stock-based compensation

3 unchanged sentences

( 5,597,681 )

Stock option exercises, net

Common stock issued for vested restricted stock units

Stock-based compensation

1 unchanged sentence

$ ( 84,502,992 )

( 4,062,580 )

the six months ended June 30, 2022

Balance at December 31, 2021

$ ( 59,285,610 )

Common stock issued for vested restricted stock units

Stock-based compensation

Balance at September 30, 2022

( 2,538,500 )

the nine months ended September 30, 2021

Balance at December 31, 2020

( 2,538,500 )

5 unchanged sentences

( 4,426,559 )

Stock option exercises

Stock option exercises, net

Stock-based compensation

1 unchanged sentence

$ ( 66,250,669 )

Net income (loss)

Stock option exercises

Public offering equity, net of issuance costs

Stock-based compensation

Balance at September 30, 2021

$ ( 57,486,478 )

accompanying notes to consolidated financial statements.

accompanying notes to condensed consolidated financial statements.

AND SUBSIDIARIES

Statements of Cash Flows

Nine Months Ended September 30,

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Cash flows used in operating activities:

8 unchanged sentences

Provision for accounts receivable allowances

Provision for inventory reserves

Non-cash loan forgiveness

Provision for inventory valuation adjustment

Changes in operating assets and liabilities:

1 unchanged sentence

( 1,383,166 )

( 2,375,552 )

( 6,856,073 )

Prepaid expenses and other current assets

5 unchanged sentences

Operating lease liabilities

Net cash used in operating activities

( 11,462,714 )

Net cash provided by (used in) operating activities

( 8,549,247 )

4 unchanged sentences

Cash flows from financing activities:

Net proceeds from the SVB bank credit line

Costs associated with bank credit line

Repayment of the Rosenthal bank credit line

Net proceeds from (payment on) the bank credit line

( 2,347,336 )

Repayment of government loan

Net proceeds from public offering

Proceeds from stock option exercises

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net cash provided by (used in) financing activities

( 2,347,336 )

Net increase (decrease) in cash and cash equivalents

( 8,353,335 )

Cash, cash equivalents, and restricted cash - Beginning

2 unchanged sentences

Cash paid during the period for:

accompanying notes to consolidated financial statements.

Cash is reported on the consolidated statements of cash flows as follows:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

accompanying notes to condensed consolidated financial statements.

AND SUBSIDIARIES

27 unchanged sentences

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with

the audited financial statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021.

the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

results of the Company’s operations can vary during each quarter of the year.

1 unchanged sentence

financial statements may not be the same as those for the full year or any future periods.

amounts in the consolidated financial statements and associated notes may not add due to rounding.

All percentages have been calculated

using unrounded amounts.

prior year amounts have been reclassified to conform to the current year presentation.

None of the reclassifications impacted the consolidated

statements of operations for the three- and nine- month period ended September 30, 2021.

None of the reclassifications impacted the condensed

consolidated statements of operations for the three-months and six months ended June 30, 2023.

April 17, 2023, the Company effected a 25:1 reverse stock split for each share of common stock issued and outstanding.

All shares and

associated amounts have been retroactively restated to reflect the stock split.

Company’s operations have historically been financed through the issuance of common stock and borrowings.

1 unchanged sentence

Company has incurred significant losses and negative cash flows from operations.

During the nine months ended September 30, 2022, the

Company incurred a net loss of $ 11.0

million and had negative cash flows from operating activities

As of September 30, 2022, the Company had an accumulated

deficit of $ 70.3 million

and cash and cash equivalents of $ 1.4

The SVB Loan Agreement matures, and

all outstanding amounts become due and payable on November 1, 2023.

These conditions raise substantial doubt about our

ability to continue as a going concern within one year from the date of filing these financial statements.

The Company’s ability

to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow

from operations, decreasing operating costs, obtaining additional equity or debt financing.

These financial statements do not include

any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary

should the Company be unable to continue as a going concern.

If cash on hand and availability on the line of credit are not sufficient,

the Company will and has the ability to reduce expenses and defer inventory purchases to preserve cash on hand.

During the nine months ended June 30, 2023, the Company

incurred a net loss of $ 9.7 million and had positive cash flows from operating activities of $ 2.5 million.

As of June 30, 2023, the Company

had an accumulated deficit of $ 84.5 million and cash and cash equivalents of $ 0.3 million.

The Company 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.

The Company’s financial position and operating

results raise substantial doubt about the Company’s ability to continue as a going concern.

The Company believes it does

not have sufficient resources through its cash and cash equivalents, other working capital and borrowings under its SVB line-of-credit

to continue as a going concern through at least one year from the issuance of these financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K/A for the year ended December 31, 2021.

The Company’s significant accounting policies did not change during the nine months ended September 30, 2022.

Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022.

The Company’s significant accounting policies did not change during the six months ended June 30, 2023.

Issued Accounting Standards

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

“ 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

The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated financial

the exception of the new standard discussed above, 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.

June 2016, the FASB issued ASU No.

2016-13, “ Financial Instruments Credit Losses — Measurement of Credit Losses on Financial

” 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.

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 .

REVENUE AND OTHER CONTRACTS WITH CUSTOMERS

17 unchanged sentences

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.

condensed consolidated balance sheets.

Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one

12 unchanged sentences

SCHEDULE OF CONTRACT BALANCES

September 30,

Accounts receivable

Total contract assets

June 30, 2023

December 31, 2022

Deferred revenue, current

Deferred revenue, noncurrent

Total contract liabilities

the three and nine months ended September 30, 2022, the change in contract liabilities balances was as follows:

the six months ended June 30, 2023, the change in contract balances was as follows:

SCHEDULE OF CHANGE IN CONTRACT BALANCES

1 unchanged sentence

Revenue recognized

Balance at March 31, 2022

Revenue recognized

Balance at June 30, 2023

Revenue recognized

Balance at September 30, 2022

Disaggregation

1 unchanged sentence

SCHEDULE OF DISAGGREGATION OF REVENUE BY DISTRIBUTION CHANNEL

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended June 30,

Six Months Ended June 30,

following table sets forth our revenues by product:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended June 30,

Six Months Ended June 30,

Cable modems & gateways

3 unchanged sentences

SCHEDULE OF INVENTORIES

September 30,

Raw materials

Work in process

Finished goods

goods includes consigned inventory held by our customers of $ 3.8 million and $ 4.5 million at September 30, 2022 and December 31, 2021,

respectively and includes in-transit inventory of $ 1.3 million and $ 6.3 million at September 30, 2022 and December 31, 2021, respectively.

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 $ 1.6 million and $ 0.8 million

as of September 30, 2022, and December 31, 2021, respectively.

goods includes consigned inventory held by our customers of $ 3.5 million and $ 4.2 million at June 30, 2023 and December 31, 2022, respectively,

and includes $ 0 in-transit inventory at June 30, 2023 and December 31, 2022, respectively.

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 $ 2.2 million and $ 2.5 million as of June 30, 2023 and December 31, 2022,

respectively.

expenses consist of the following:

SCHEDULE OF ACCRUED EXPENSES

September 30,

Inventory purchases

6 unchanged sentences

BANK CREDIT LINES AND GOVERNMENT LOANS

December 18, 2012, the Company entered into a Financing Agreement with Rosenthal & Rosenthal, Inc.

(the “Financing Agreement”).

The Financing Agreement, as amended, provided for up to $ 5.0 million of revolving credit, subject to a borrowing base formula and other

terms and conditions as specified therein.

March 12, 2021, the Company terminated its Financing Agreement with Rosenthal & Rosenthal 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

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”).

The SVB Loan Agreement, as amended, provides for a revolving facility up to a principal amount of $ 25.0 million,

which is subject to a borrowing base formula.

The SVB Loan Agreement matures, and all outstanding amounts become due and payable on November

The SVB Loan Agreement is secured by substantially all the Company’s assets but excludes the Company’s intellectual

All other substantial terms, including the commercial credit card line of $ 1.0 million, of the SVB Loan Agreement remain unchanged.

Company Incurred $ 143 thousand of origination costs in connection with the SVB Loan Agreement.

These origination costs were recorded

as debt discount and are being expensed over the remaining term of the SVB Loan Agreement.

Amortization of debt issuance costs was $ 18

thousand and $ 12 thousand in the three months ended September 30, 2022 and 2021, respectively.

Amortization of debt issuance costs was

$ 53 thousand and $ 26 thousand in the nine months ended September 30, 2022 and 2021, respectively.

of September 30, 2022, the Company had $ 5.9 million outstanding, which is net of origination costs of $ 47.8 thousand, on its SVB Loan

Agreement, with availability of $ 0.5 million.

The interest rate was 7.25 % as of September 30, 2022.

April 15, 2020, the Company entered into a note payable with Primary Bank, a bank under the Small Business Administration (“SBA”),

Paycheck Protection Program (“PPP”), in the amount of $ 583 thousand, which matured on April 15, 2022.

Under the terms of

the PPP note, the Company was able to apply for and receive forgiveness of $ 513 thousand of the original principal balance in 2020.

the nine months ended September 30, 2022, the PPP note is fully repaid.

February 2021, the Company received an additional forgiveness of $ 20 thousand related to the Economic Injury Disaster Loan Advance received

with the PPP note.

COMMITMENTS AND CONTINGENCIES

Lease Obligations

Company has entered into agreements to lease its warehouses and distribution centers and certain

office space under operating leases.

The Company recognizes lease expense for these leases on a straight-line basis over the lease

Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases, except leases with

an initial term of 12 months or less .

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

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 judgment to mitigate the impact of events, conditions, contingencies, or risks which

may adversely affect the collateral or its value.

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%).

December 12, 2022, the Company entered into its second Amendment to the SVB Loan Agreement (the “Second Amendment”).

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.

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.

Amortization of debt issuance costs

was $ 6 thousand and $ 18 thousand for the three months ended June 30, 2023 and 2022, respectively.

Amortization of debt issuance costs

was $ 21 thousand and $ 35 thousand for the six months ended June 30, 2023 and 2022, respectively.

of June 30, 2023, the Company had $ 2.4 million outstanding, net of origination costs of $ 8 thousand, under the SVB Loan Agreement, and

this credit line had availability of $ 25 thousand.

interest rate on the bank credit lines was 9.25 % as of June 30, 2023.

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 which First-Citizens entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank.

The Company has had no business service interruptions or funding issues due to the bank transfer.

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.

addition, pursuant to the SVB Loan Agreement, the Company cannot pay any dividends without the prior written consent of SVB.

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.

amounts borrowed under the Bridge Loan Agreement bear interest for the period from the Effective Date until February 28, 2023 of 8.00 %

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 %.

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 .

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.

As of June 30, 2023, the accrued interest is $ 69 thousand and is included

in accrued expenses in the condensed consolidated balance sheet.

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.

Capital is owned by the Company’s Chairperson of the Board and a Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively.

2020, 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 $ 1,068,000 .

The Company repaid $ 34,000 during the six months ended June 30, 2022.

of June 30, 2023, the Company had no outstanding balances under the government loans.

Company has entered into agreements to lease its warehouses and distribution centers and certain office space under operating leases.

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Right-of-use (“ROU”)

assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less.

components of lease costs were as follows:

OF COMPONENTS OF LEASE COSTS

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease costs

3 unchanged sentences

OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

Period Ended September 30,

Period Ended June 30,

Operating leases:

3 unchanged sentences

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES

Nine Months ended

September 30,

Six Months ended June 30,

Operating cash flow information:

2 unchanged sentences

ROU asset obtained in exchange for lease liability

maturity of the Company’s operating lease liabilities as of September 30, 2022, were as follows:

maturity of the Company’s operating lease liabilities as of June 30, 2023 were as follows:

OF MATURITY OF OPERATING LEASE LIABILITIES

6 unchanged sentences

Operating lease liabilities, noncurrent

COMMITMENTS AND CONTINGENCIES

Company is party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain

1 unchanged sentence

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”).

a wide range of authorized sales channels.

The license agreement has a term ending December 31, 2025.

4 unchanged sentences

SCHEDULE OF MINIMUM ANNUAL ROYALTY PAYMENTS

Years ending December 31,

Years ended December 31,

2023 (remaining)

expense under the License Agreement was $ 1.7 million and $ 1.6 million for the three months ended September 30, 2022 and 2021, respectively,

and $ 5.0 million and $ 4.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Royalty expenses are included

in selling and marketing expenses on the accompanying consolidated statements of operations.

expense under the License Agreement was $ 1.7 million and $ 1.7 million for the three months ended June 30, 2023 and 2022, respectively,

and $ 3.4 million and $ 3.3 million for the six months ended June 30, 2023 and 2021, respectively.

Royalty expense is included in selling

and marketing expenses on the accompanying condensed consolidated statements of operations.

As of June 30, 2023 and June 30, 2022, the

Company had $ 4.4 million and $ 1.7 million, respectively, outstanding in royalty payments and are included in accounts payable ($ 4.4 million

and $ 0 million, respectively) and accrued expenses ($ 0.0 million and $ 1.7 million, respectively) in the condensed consolidated balance

Contingencies

Company is subject to various lawsuits and administrative proceedings arising in the ordinary course of business.

Company is party to various lawsuits and administrative proceedings arising in the ordinary course of business.

The Company evaluates

9 unchanged sentences

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

At September 30, 2022, the Company is not currently a party to any legal proceedings.

At June 30, 2023, the Company is not currently a party to any legal proceedings that, if determined adversely to the Company, in

management’s opinion, are currently expected to individually or in the aggregate have a material adverse effect on the Company’s

business, operating results or financial condition taken as a whole.

The Company expenses its legal fees as incurred.

4 unchanged sentences

financial condition, results of operations, and cash flows.

Management believes that the Company has adequate legal defenses 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.

SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS

few companies account for a substantial portion of the Company’s revenues.

In the three months ended September 30, 2022, two companies,

In the three months ended June 30, 2023, two companies,

including a marketplace facilitator, accounted for 10% or greater individually and 82 % in the aggregate of the Company’s total

At September 30, 2022, three companies, including a marketplace facilitator, with an accounts receivable balance of 10% or

greater individually accounted for a combined 91 % of the Company’s accounts receivable.

In the three months ended September 30,

2021, two companies, including a marketplace facilitator, accounted for 10% or greater individually and 85 % in the aggregate of the Company’s

total net sales.

At September 30, 2021, three companies with an accounts receivable balance of 10% or greater individually accounted

for a combined 82 % of the Company’s accounts receivable.

In the nine months ended September 30, 2022 and 2021, two and three companies,

respectively, accounted for 10% or greater individually and 89 % and 86 %, respectively, in the aggregate of the Company’s total

At June 30, 2023, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined

77 % of the Company’s accounts receivable.

In the three months ended June 30, 2022, two companies, including a marketplace facilitator,

accounted for 10% or greater individually and 91 % in the aggregate of the Company’s total net sales.

At June 30, 2022, three companies

with an accounts receivable balance of 10% or greater individually accounted for a combined 91 % of the Company’s accounts receivable.

Company’s customers generally do not enter into long-term agreements obligating them to purchase products.

19 unchanged sentences

During the three months ended

September 30, 2022 and 2021, the Company had two suppliers and one supplier, respectively, that provided 91 % and 97 %, respectively, of

the Company’s purchased inventory.

During the nine months ended September 30, 2022 and 2021, the Company had two suppliers and

one supplier, respectively, that provided 97 % and 98 %, respectively, of the Company’s purchased inventory.

SALE OF TRADEMARK

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 in the three

and nine months ended September 30, 2021 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.

the three and nine months ended September 30, 2022, we recorded no

income tax benefits for the net operating losses incurred or for the research and development tax credits generated due to the

uncertainty of realizing a benefit from those items.

June 30, 2023 and 2022, the Company had one supplier and two suppliers, respectively, that provided 97 % and 98 %, respectively, of the

Company’s purchased inventory.

the three and six months months ended June 30, 2023, we recorded no income tax benefits for the net operating losses incurred or for

the research and development tax credits generated due to the uncertainty of realizing a benefit from those items.

have evaluated the positive and negative evidence bearing upon the Company’s ability to realize its deferred tax assets, which

3 unchanged sentences

than not that we will not realize the benefits of our deferred tax assets.

As a result, as of September 30, 2022 and December 31, 2021,

we recorded a full valuation allowance against our net deferred tax assets.

of September 30, 2022 and December 31, 2021, the Company had federal net operating loss carry forwards of approximately

$ 60.0 million and $ 62.7 million, respectively, which are available to offset future taxable income.

They are due to expire in

varying amounts from 2022 to 2040.

Federal net operating losses occurring after December 31, 2017, of approximated $ 21.5 million may

be carried forward indefinitely.

As of September 30, 2022 and December 31, 2021, the Company had state net operating loss carry forwards

of approximately $ 26.8 million and $ 19.9 million, respectively, which are available to offset future taxable income.

They are due to

expire in varying amounts from 2033 through 2040 .

As a result, as of June 30, 2023 and December 31, 2022, we

recorded a full valuation allowance against our net deferred tax assets.

of June 30, 2023 and December 31, 2022, the Company had federal net operating loss carry forwards of approximately $ 59.8 million and

$ 60.6 million, respectively, which are available to offset future taxable income.

They are due to expire in varying amounts from 2023

Federal net operating losses occurring after December 31, 2017, of approximated $ 25.3 million may be carried forward indefinitely.

As of June 30, 2023 and December 31, 2023, the Company had state net operating loss carry forwards of approximately $ 34.2 million and

$ 29.8 million, respectively, which are available to offset future taxable income.

They are due to expire in varying amounts from 2033

through 2041.

We recorded minimum state income taxes and taxes related to our operations in Mexico.

For the three and nine months ended September 30, 2022 and 2021, income tax expense was $ 16 thousand and $ 73 thousand, respectively,

compared to prior year periods of $ 8 thousand and $ 41 thousand, respectively.

For the three months ended June 30,

2023 and 2022, income tax expense was $ 6 thousand and $ 6 thousand, respectively.

RELATED PARTY TRANSACTIONS

Company leases office space located at the 848 Elm Street, Manchester, NH.

Company leases office space located at 848 Elm Street, Manchester, NH.

The landlord is an affiliate entity owned by Mr.

The two-year facility lease agreement was effective from August 1, 2019, to July 31, 2021 and was extended to July 31, 2022.

two-year facility lease agreement was effective from August 1, 2019, to July 31, 2021 and was extended to July 31, 2022.

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 at an aggregate annual rental price of $ 32 thousand.

Rent expense was $ 8

thousand and $ 24 thousand for the three and nine months ended September 30, 2022 and 2021, respectively.

EARNINGS INCOME (LOSS) PER SHARE

income (loss) per share for the three and nine months ended September 30, 2022 and 2021, respectively, are as follows:

The facility lease agreement provides for 2,656 square feet.

For the three-months period ended June 30, 2023 and 2022, the rent expense

was $ 9 thousand and $ 8 thousand, respectively.

For the six-months period ended June 30, 2023 and 2022, the rent expense was $ 18 thousand

and $ 16 thousand, respectively.

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.

Capital is owned by the Company’s Executive Chairperson of the Board and a Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock,

respectively.

April 7, 2023, the previous principal executive officer Mehul Patel, resigned from Minim Inc.

Jeremy Hitch, Executive Chairman of the

Board became the acting principal executive officer of the Company.

See additional information in the Company’s Subsequent Events

EARNINGS (LOSS) PER SHARE

loss per share for the three and six months ended June 30, 2023 and 2022, respectively, are as follows:

SCHEDULE OF NET INCOME (LOSS) PER SHARE

September 30,

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

$ ( 5,597,681 )

1 unchanged sentence

$ ( 9,668,138 )

$ ( 6,965,060 )

Weighted average common shares - basic

1 unchanged sentence

Weighted average common shares - dilutive

Basic net income (loss) per share

Diluted net income (loss) per share

loss per common share for the three and nine months ended September 30, 2022 and 2021 excludes the effects of 1,257,581 and 1,135,996

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.

Basic and diluted

loss per common share for the three and six months ended June 30, 2023 and 2022 excludes the effects of 22,717 and 1,350,839 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.

SUBSEQUENT EVENTS

Company previously filed in Form 8-K on April 28, 2022 that the Company had received a letter (the “Notification Letter”)

from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the minimum

closing bid price per share for its ordinary shares was below $ 1.00 for a period of 30 consecutive business days and that the Company

did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2).

to Nasdaq Listing Rule 5810(c)(3)(A), the Company had a compliance period of 180 calendar days, or until October 24, 2022 (the “Compliance

Period”), to regain compliance with Nasdaq’s minimum bid price requirement.

During this period, the Company had not regained

compliance by October 24, 2022.

On October 25, 2022, the Company requested and received an additional 180 calendar day extension (“Extended

Notification Letter”), which expires April 23, 2023.

The Company has intention to cure the deficiency during the second compliance

at any time during the Compliance Period, the closing bid price per share of the Company’s ordinary shares is at least $ 1.00 for

a minimum of 10 consecutive business days, Nasdaq will provide the Company a written confirmation of compliance and the matter will be

Notification Letter and Extended Notification Letter had no immediate effect on the listing or trading of the Company’s ordinary

shares on the Nasdaq Capital Market.

Company has evaluated subsequent events from September 30, 2022 through the date of this filing and has determined that there are no

such events, other than those noted above, requiring recognition or disclosure in the financial statements.

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 did not

effect the number of shares of authorized common stock.

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.

April 17, 2023, Minim, Inc.

completed a 1-for-25 share reverse stock split of its common stock.

As a result, Minim shareholders at the

effective time received 1 new share of Minim common stock for every 25 shares that they held.

Minim did not issue any fractional shares

as a result of the reverse split.

Instead, all shareholders with fractional shares, received, upon surrendering to the exchange agent

of certificate(s) representing such pre-Reverse Stock Split shares, to a cash payment in lieu thereof.

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 have been adjusted, on a retroactive basis, to reflect

the reverse stock split in quarter ending June 30, 2023.

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

Selected financial information

Preferred Stock authorized

Preferred Stock issued

Common Stock authorized

Common Stock issued

$ ( 15,549,244 )

Basic and diluted net loss per share

Weighted average common and common equivalent shares:

Basic and diluted

letter of intent that may result in the Company being acquired

September 29, 2023, the Company entered into a non-binding letter of intent with an investor whereby the investor would purchase $ 2.4

million of convertible preferred stock and warrants, which, on a fully-diluted basis, would constitute a majority of the Company’s

outstanding common stock and the proceeds of which would be used for the sole purpose of settling all of the Company’s and its

subsidiaries’ liabilities (the “Transaction”).

the Transaction were to occur, the Letter of Intent contemplates the investor would be appointed as the Company’s chief executive

officer and the investor and its nominees would be appointed to the Company’s board of directors to which they would constitute

a majority of the then-board of directors.

Company and the investor are working on completing definitive transaction documents regarding the Transaction, but, as the Letter of

Intent is non-binding, there can be no assurances that such definitive transaction documentation will be executed or that the Transaction

will be completed.

Company has evaluated subsequent events from June 30, 2023 through the date of this filing and has determined that there are no such

events, other than those noted above, requiring recognition or disclosure in the financial statements.

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 1. Financial Statements