What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2022-11-14 · 182 added, 180 removed, 179 unchanged (67% of the section changed)

20 unchanged sentences

thereto, and with our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, found

in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on August 19, 2022.

we believe that the assumptions underlying the forward-looking statements contained in this Quarterly Report are reasonable, any of the

in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

believe that the assumptions underlying the forward-looking statements contained in this Quarterly Report are reasonable, any of the

assumptions could be inaccurate, and therefore there can be no assurance that such statements will be accurate.

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costs associated with products sold to retailers also tend to be higher.

Gross margin for sales to these master distributors tends to

be low, since lower pricing to these distributors helps them to cover the support and marketing costs for their country.

cash and cash equivalents balance on September 30, 2022 was $1.4 million compared to $12.6 million on December 31, 2021.

September 30, 2022, we had $5.8 million of outstanding borrowings on our asset-based credit line with availability of $0.5 million

and working capital of $19.7 million.

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

and payable on November 1, 2023.

The Company is evaluating financing and equity options and is currently executing

plans to reduce inventory levels by purchasing a selection of products while selling existing inventory to improve cash and

inventory positions by the end of the 2022 fiscal year.

Minim’s sales to certain countries are currently handled

by a single master distributor for each country that handles the support and marketing costs within the country.

Gross margin for sales

to these master distributors tends to be low, since lower pricing to these distributors helps them to cover the support and marketing

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,

we had $2.4 million of outstanding borrowings on our asset-based credit line with availability of $25 thousand and working capital of

$6.3 million.

Company’s ability to maintain adequate levels of liquidity depends in part on our ability to sell inventory on hand, increasing

SaaS sales, and collect related receivables.

the Company has recently experienced losses and has a decrease in sales in the current quarter compared to prior quarters as a result

of declining consumer spending in home networking equipment since the peak of the pandemic, our sales are ahead of pre-pandemic sales.

In the three and nine months ended September 30, 2022 and 2021, we generated net sales of $13.8 million and $15.0 million, respectively,

and $40.0 million and $44.9 million, respectively.

have been no material changes due to the impact of the COVID-19 pandemic on our business from that disclosed in our most recently filed

Annual Report.

Our most recent Annual Report on Form 10-K/A for the year ended December 31, 2021 as filed with the SEC on August 19,

2022 provides additional information about our business and operations.

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.

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

material liquidity pressures as it has attempted to manage its negative cash-flow position due to supply disruptions from its principal

manufacturing partners as a result of the Company’s inability to pay past expenses, which has severely impacted revenue and its

cash position.

The Company has conducted two reductions in force and made other changes to lower operating expenses.

However, these reductions

did not fully offset the Company’s lack of continual revenue from normal operations.

As such, substantial doubt exists about our

ability to continue as a going concern, and we will require additional liquidity to continue operations.

most recent Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 31, 2023 provides additional

information about our business and operations.

Accounting Standards

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and valuation of deferred tax assets are described under “Critical Accounting Policies and Estimates” in “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K/A for the

year ended December 31, 2021.

For the nine months ended September 30, 2022, there have been no significant changes in our critical accounting

policies and estimates.

Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year

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.

of Operations

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

ended September 30, 2022 and 2021 presented in absolute dollars and as a percentage of net sales, with dollars and percentage change

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:

thousands, except percentage data)

of goods sold

and marketing

and administrative

and development

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

Cost of goods sold

Operating expenses:

on sale of trademark, net

income (loss)

income (expense):

other income (expense)

Selling and marketing

General and administrative

Research and development

Total operating expenses

Operating loss

Total other expense

Total other income (expense)

Loss before income taxes

income (loss)

of the three and nine months ended September 30, 2022 to the three and nine months ended September 30, 2021

following table sets forth our revenues by product and the changes in revenues for the three and nine months ended September 30, 2022,

as compared to the three and nine months ended September 30, 2021:

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:

Three Months Ended

Nine Months Ended

September 30,

Six Months Ended

(In thousands, except percentage data)

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Other network products

Company’s revenues by geographic area are earned entirely in North America, with the exception of immaterial sales in regions beyond

North America, for the three and nine months ended September 30, 2022 and 2021.

total net sales decreased year-over-year by $1.2 million or 8.0% in the three months ended September 30, 2022 and by $5.0 million or

11.0% in the nine months ended September 30, 2022.

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

branded cable modems and gateways.

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.

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

related to SaaS offerings increased by $30 thousand or 14.6% in the three months ended September 30, 2022 and increased by $41 thousand

or 8.5% during the nine months ended September 30, 2022.

The decrease in the other category of $34 thousand and $1.5 thousand in the

three and nine months ended 2022 compared to 2021 is primarily due to a reduction in DSL products and a refocus on new product introductions.

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.

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

of Goods Sold and Gross Margin

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and costs attributable to the provision of service offerings.

decrease in gross profit was attributable to higher cost inventory resulting from inflationary costs and recording inventory reserves

on a specific product.

decrease in gross profit was attributable to sales growth of Motorola branded cable modems and gateways, including intelligent networking

products that include Minim software.

We outsource our manufacturing, warehousing and distribution logistics.

We believe this outsourcing strategy allows

us to better manage our product costs and gross margin.

Our gross margin can be affected by a number of factors, including fluctuation

in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives,

changes in our cost of goods sold due to fluctuations and increases in prices paid for components, overhead costs, inbound freight and

duty/tariffs, conversion costs, and charges for excess or obsolete inventory.

We believe this outsourcing

strategy allows us to better manage our product costs and gross margin.

Our gross margin can be affected by a number of factors, including

fluctuation in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel

sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, overhead costs,

inbound freight and duty/tariffs, conversion costs, and charges for excess or obsolete inventory.

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

Three Months Ended

Nine Months Ended

September 30,

Six Months Ended

(In thousands, except percentage data)

profit and gross margin decreased in the three and nine months ended September 30, 2022, compared to the three months ended in the prior

fiscal year period, primarily due to higher component material costs related to chipset premiums and recording of inventory reserves

on a specific product.

the remainder of fiscal 2022, we expect gross margin to be subject to similar variabilities experienced in fiscal 2021.

experienced meaningful increase in costs for sea freight transportation as well as costs of materials and components for our

We expect these costs to remain elevated for the foreseeable future.

We continue to experience disruptions from the

profit and gross margin decreased in the three months ended June 30, 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.

Forecasting gross margin percentages is difficult, and there are several risks related to our ability

to maintain or improve our current gross margin levels.

Our cost of goods sold as a percentage of net sales can vary significantly

based upon factors such as:

uncertainties surrounding revenue volumes, including future pricing and/or potential discounts as a

result of the economy, competition, the timing of sales, and related production level variances;

import customs duties and imposed

These disruptions could

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

If such disruptions become widespread,

they could significantly affect our ability to fulfill the demand for our products.

Forecasting gross margin percentages is difficult,

and there are several risks related to our ability to maintain or improve our current gross margin levels.

Our cost of goods sold as

a percentage of net sales can vary significantly based upon factors such as:

uncertainties surrounding revenue volumes, including future

pricing and/or potential discounts as a result of the economy, competition, the timing of sales, and related production level variances;

import customs duties and imposed tariffs;

changes in technology;

changes in product mix;

expenses associated with writing off excessive or obsolete inventory;

expenses associated with writing off excessive

or obsolete inventory;

fluctuations in freight costs;

manufacturing and purchase price variances;

and changes in prices on commodity components.

and changes in prices on commodity

and Marketing

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

thousands, except percentage data)

and marketing

and marketing expenses increased in the three months ended September 30, 2022, as compared to the three months ended September 30, 2021,

primarily due to increases in marketing program campaigns of $433 thousand and Motorola royalty fees of $63 thousand.

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

Selling and marketing

expenses increased in the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, primarily due

to an increase in marketing program campaigns of $1.2 million and Motorola royalty fees of $0.2 million.

the remainder of fiscal 2022, we expect our selling and marketing expenses as a percentage of net sales in fiscal 2022 to be above fiscal

Expenses may fluctuate depending on sales levels achieved as certain expenses, such as commissions, are determined based

upon the net sales achieved.

Forecasting selling and marketing expenses is highly dependent on expected net sales levels and could vary

significantly depending on actual net sales achieved in any given quarter.

Marketing expenses may also fluctuate depending upon the timing,

extent and nature of marketing programs.

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.

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

to fiscal 2022 levels.

Expenses may fluctuate depending on sales levels achieved as certain expenses, such as commissions, are determined

based upon the net sales achieved.

Forecasting selling and marketing expenses is highly dependent on expected net sales levels and could

vary significantly depending on actual net sales achieved in any given quarter.

Marketing expenses may also fluctuate depending upon

the timing, extent and nature of marketing programs.

and Administrative

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

thousands, except percentage data)

and administrative

and administrative expenses increased in the three months ended September 30, 2022, as compared to the three months ended September 30,

2021, primarily due to increases in personnel expenses of $405 thousand, including $130 thousand in severance expense, software subscriptions

of $87 thousand, and increases in professional fees of $162 thousand.

General and administrative expenses increased in the nine months

ended September 30, 2022, as compared to the nine months ended September 30, 2021, primarily due to increases in personnel expenses of

$1.0 million, director fees of $291 thousand, and software subscriptions of $510 thousand, partially offset by a decrease in professional

fees of $376 thousand.

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

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.

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

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Three Months Ended

Nine Months Ended

September 30,

Six Months Ended

(In thousands, except percentage data)

Research and development

and development expenses decreased in the three months ended September 30, 2022, as compared to the three months ended September 30,

2021, primarily due to personnel expenses.

Research and development expenses decreased in the nine months ended September 30, 2022, as

compared to the three months ended September 30, 2021, primarily due to product certification costs.

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.

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 September 30, 2022, we

had cash and cash equivalents of $1.4 million as compared to $12.6 million on December 31, 2021.

On September 30, 2022, we had $5.8 million

of borrowings outstanding and $0.5 million available on our $25.0 million SVB line-of-credit and working capital of $19.7 million.

have funded our operations and investing activities primarily through borrowings on our line of credit, the sale of assets and the sale

of our common stock.

As of June 30, 2023, we had

cash and cash equivalents of $0.3 million as compared to $0.5 million on December 31, 2022.

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

borrowings outstanding and $25 thousand available on our $10.0 million SVB line-of-credit and working capital of $6.3 million.

funded our operations and investing activities primarily through borrowings on our line of credit, the sale of assets and the sale of

our common stock.

historical cash outflows have primarily been associated with:

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acquisition of equipment;

and (4) cash used to repay our debt obligations and related interest expense.

Fluctuations in our working capital

due to timing differences of our cash receipts and cash disbursements also impact our cash inflows and outflows.

(4) cash used to repay our debt obligations and related interest expense;

and (5) cash used for acquisitions.

Fluctuations in our working capital due to timing differences of our cash receipts and cash disbursements also impact our cash inflows

and outflows.

consolidated financial statements as of June 30, 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.

substantial doubt exists about our ability to continue as a going concern, and we will require additional liquidity to continue operations

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.

following table presents our cash flows for the periods presented:

Nine Months ended

September 30,

Cash used in operating activities

Six Months ended June 30,

Cash provided by (used in) operating activities

Cash used in investing activities

Cash provided by financing activities

Net decrease in cash and cash equivalents

Cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Flows from Operating Activities.

Cash used in operating activities of $11.5 million for 2022 reflected our net loss of $11.0

million, adjusted for non-cash expenses, consisting primarily of $0.6 million of depreciation and amortization and $1.0 million of stock-based

compensation expense.

Uses of cash includes an increase of accounts receivables of $1.4 million and a decrease in accounts payable of

$5.5 million.

Sources of cash included a decrease of inventories of $2.7 million, decrease of other assets of $0.3 million, increase

in accrued expenses of $0.3 million, and increases in deferred revenue of $0.5 thousand.

used in operating activities of $10.0 million for 2021 reflected our net loss of $0.4 million, adjusted for non-cash expenses, consisting

primarily of stock-based compensation expense of $0.8 million.

Uses of cash include an increase of accounts receivables of $2.4 million,

increase in inventories of $6.8 million and increase in accounts payable of $0.8 million and accrued expenses of $2.2 million.

of cash included an increase in deferred revenue of $1.1 million.

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

of $2.4 million.

Flows from Investing Activities.

In 2022, $0.3 million was used to purchase equipment and $0.3 million was used for certification

2021, cash of $0.5 million was used to purchase equipment and $0.1 million was used for certification costs.

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

$220 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.

Flows from Financing Activities.

Cash provided by financing activities in 2022 consisted of a source of cash of $0.7 million

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

provided by financing activities in 2021 consisted of a source of cash of $22.7 million in a public offering, $7.1 million from borrowings

under our SVB line-of-credit, and $1.2 million in proceeds from the exercises of common stock options.

Uses of cash include the repayment

of the Rosenthal & Rosenthal, Inc.

line-of-credit of $2.4 million.

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.

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.

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

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 of $11.5 million.

As of September 30, 2022, the Company had an accumulated deficit of $70.3 million and cash

and cash equivalents of $1.4 million.

The SVB Loan Agreement matures, and all outstanding amounts become due and payable on November 1,

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 financial statements have been prepared assuming the

Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities

and commitments in the normal course of business.

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, decrease operating costs, obtain additional

equity or debt financing.

is currently executing plans to reduce inventory levels by purchasing a selection of products while selling existing inventory to improve

cash and inventory positions by the end of the 2022 fiscal year.

We intend to retain any future earnings to support operations and to

finance the growth and development of our business, and we do not anticipate paying any dividends in the foreseeable future.

June 30, 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.

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 revenue s.

Based on these factors, management determined that there is

substantial doubt regarding our ability to continue as a going concern.

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 costs in

relation to its sales and adjust its cost structure accordingly.

future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of any future operating

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regulatory clearances and approvals, our sales and marketing programs, our need for infrastructure to support our sales growth, the continuing

acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment and cash that

may be required to settle our foreign currency hedges.

acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment.

ability to fund our longer-term cash needs is subject to various risks, many of which are beyond our control—See “Risk Factors—We

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

September 30, 2022, we have Federal and state net operating loss carry forwards of approximately $60.0

million and $26.8 million, respectively, available to reduce future taxable income.

valuation allowance has been established for the full amount of deferred income tax assets as management has concluded that it is more-likely

than-not that the benefits from such assets will

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

available to reduce future taxable income.

A valuation allowance has been established for the full amount of deferred income tax assets

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

and Contractual Obligations

the nine months ended September 30, 2022, 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/A for the year ended December 31, 2021.

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.

Sheet Arrangements

did not have any material off-balance sheet arrangements as of September 30, 2022.

See Note 6 to the accompanying consolidated financial

statements for additional disclosure.

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.

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