What changed in FiEE, Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of FiEE, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+323 added−391 removedSource: 10-K (2024-04-12) vs 10-K (2023-03-31)
Top changes in FiEE, Inc.'s 2023 10-K
323 paragraphs added · 391 removed · 151 edited across 2 sections
- Item 1A. Risk Factors+135 / −209 · 14 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+188 / −182 · 137 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
14 edited+121 added−195 removed7 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
14 edited+121 added−195 removed7 unchanged
2022 filing
2023 filing
Biggest changeRisks Related to Our Products, Technology and Intellectual Property We may be subject to product returns resulting from defects or from overstocking of our products. Product returns could result in the failure to attain market acceptance of our products, which would harm our business.
Biggest changeAdditionally, such outbreaks could disrupt our ability to timely file periodic reports required by the Securities and Exchange Commission or the stock exchanges on which our common stock is listed, which may lead to the delisting or downgrading of our common stock on such stock exchanges. 34 Risks Related to Our Products, Technology and Intellectual Property We may be subject to product returns resulting from defects or from overstocking of our products.
Our consolidated financial statements as of December 31, 2022 were prepared under the assumption that we will continue as a going concern. At December 31, 2022, we had cash and cash equivalents of $530 thousand. We estimate that our existing cash resources will not be sufficient to fund our operations into the first quarter of 2024.
Our consolidated financial statements as of December 31, 2023 were prepared under the assumption that we will continue as a going concern. At December 31, 2023, we had cash and cash equivalents of $709,000. We estimate that our existing cash resources will not be sufficient to fund our operations into the first quarter of 2025.
Our independent registered public accounting firm expressed substantial doubt as to our ability to continue as a going concern in its report dated March 31, 2023 included elsewhere in this Form 10-K.
Our independent registered public accounting firm expressed substantial doubt as to our ability to continue as a going concern in its report dated April 12, 2024 included elsewhere in this Form 10-K.
When we seek additional financing to fund our business activities as a result of the substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all. COVID-19 pandemic has had and may likely continue to adversely affect our business.
When we seek additional financing to fund our business activities as a result of the substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.
We are often indemnified by our suppliers relative to certain intellectual property rights. However, these indemnifications do not cover all possible suits, and there can be no assurance that a relevant indemnification will be honored by the indemnifying party or that the indemnifying party has the financial resources to meet its indemnification obligation.
However, these indemnifications do not cover all possible suits, and there can be no assurance that a relevant indemnification will be honored by the indemnifying party or that the indemnifying party has the financial resources to meet its indemnification obligation. 35
Security breaches and data loss may expose us to liability, harm our reputation and adversely affect our business. As part of our business operations, we collect, store, process, use and disclose sensitive data relating to our business, including in connection with the provision of our cloud services and in our information systems and data centers (including third-party data centers).
As part of our business operations, we collect, store, process, use and disclose sensitive data relating to our business, including in connection with the provision of our cloud services and in our information systems and data centers (including third-party data centers).
Other companies may hold or obtain patents on inventions or may otherwise claim proprietary rights to technology necessary to our business. We cannot predict the extent to which we may be required to seek licenses. We cannot assure you that the terms of any licenses we may be required to seek will be reasonable.
Particular aspects of our technology could be found to infringe on the intellectual property rights or patents of others. Other companies may hold or obtain patents on inventions or may otherwise claim proprietary rights to technology necessary to our business. We cannot predict the extent to which we may be required to seek licenses.
We attempt to license appropriate patents either directly or through our integrated circuit suppliers. However, we are subject to costs and senior management distractions due to patent-related litigation. Patent litigation matters are complex and time consuming and expose Minim to potentially material obligations.
We may experience costs and senior management distractions due to patent-related matters. Many of our products incorporate patented technology. We attempt to license appropriate patents either directly or through our integrated circuit suppliers. However, we are subject to costs and senior management distractions due to patent-related litigation.
It is impossible to assess the potential cost and senior management distraction associated with patent litigation matters that are currently outstanding or may occur in the future. 20 We may have difficulty protecting our intellectual property. Our ability to compete is heavily affected by our ability to protect our intellectual property.
Patent litigation matters are complex and time consuming and expose Minim to potential material obligations. It is impossible to assess the potential cost and senior management distraction associated with patent litigation matters that are currently outstanding or may occur in the future. We could infringe the intellectual property rights of others.
We are also exposed to the risk of product returns from our customers as a result of contractual stock rotation privileges and our practice of assisting some of our customers in balancing their inventories. Overstocking has led in the past and may lead in the future to higher than normal customer returns.
We are exposed to the risk of product returns from our customers. Overstocking has led in the past and may lead in the future to higher-than-normal customer returns. Security breaches and data loss may expose us to liability, harm our reputation and adversely affect our business.
ITEM 1A. – RISK FACTORS Risks Related to Our Business There is substantial doubt about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to curtail or cease our operations.
There is no assurance that, following any such acquisition, the combined company will achieve the synergies expected to justify the transaction, which could result in a material adverse effect on the combined company’s business and prospects. 33 Risks Related to the Minim Business and to the Company There is substantial doubt about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to curtail or cease our operations.
We may be unsuccessful in integrating the operations of the business we have acquired or expect to acquire in the future . From time to time, we may acquire businesses, assets, or securities of companies that we believe will provide a strategic fit with our business.
We may be unsuccessful in integrating the operations of the business we expect to acquire in the future .
If our license agreements with Motorola were to be terminated for any reason, our net sales would be materially adversely affected. 15 We may require additional funding, which may be difficult to obtain on favorable terms, if at all.
We may require additional funding, which may be difficult to obtain on favorable terms, if at all. Over the next 12 months we may require additional funding if, for instance, we continue to experience losses.
The loss of one or more of our largest customers, the failure of such customers to pay amounts due to us, or a material reduction in the amount of purchases made by such customers could have a material adverse effect on our business, financial position, results of operations and cash flows.
Any of these events could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Removed
The COVID-19 global pandemic and related mitigation measures taken by many countries have materially adversely affected and could in the future materially adversely impact our business.
Added
ITEM 1A. – RISK FACTORS Risks Related to the Merger with e2Companies The announcement and pendency of an Agreement and Plan of Merger with e2Companies LLC may result in disruptions to our business, and the Merger could divert management’s attention, and result in negative publicity or legal proceedings, any of which could negatively impact our operating results and ongoing business.
Removed
During the course of the pandemic, we have experienced disruptions to the supply chain and transportation network, including lockdowns, port closures and congestion, reduced availability of air and ground transport labor and vehicles, increased border controls or closures, schedule changes, shipping delays and shortages in freight capacity, and similar disruptions could occur in the future.
Added
On March 12, 2024, we entered into an Agreement and Plan of Merger (“Merger Agreement”) with e2Companies LLC (“e2Companies”).
Removed
These disruptions have led to significant limitations on the availability of key transportation resources and has negatively impacted our ability to ship volume predictably and on a lower cost basis, particularly when we experienced significant increases in the cost of ocean freight and air freight due to the pandemic.
Added
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), holders of the outstanding common units of e2Companies (“e2 Shares”) will receive such number of shares of common stock, par value $0.01 per share, of the Company (“Company Shares”) representing approximately 97% of the issued and outstanding Company Shares (on a fully-diluted basis).
Removed
A large concentration of electrical and mechanical components that go into our products are manufactured in China and when factory lockdowns occurred in China, it has materially and adversely affected our manufacturing partners and component suppliers in that area and negatively impacts our profitability as we seek to transport an increased number of products from manufacturing locations in Asia to North America as quickly as possible.
Added
Pursuant to the Merger Agreement, MME Sub 1 LLC (“Merger Sub”), a subsidiary of Minim, Inc., will merge with and into e2Companies, with e2Companies remaining as the surviving entity (the “Merger”). The pursuit of the proposed Merger has placed an increased burden on management and internal resources, which may have a negative impact on our ongoing business.
Removed
As the COVID-19 pandemic continues to evolve, together with shifting measures taken by countries in response, it is difficult to predict how the supply chain and transportation network will be impacted. If worker illnesses, government shutdowns or other workforce interruptions occur and cause disruptions to our supply chain and transportation network, our business could be materially adversely impacted.
Added
It also diverts management’s time and attention from the day-to-day operation of our business. This could adversely affect our financial results. Any of the foregoing, individually or in combination, could materially and adversely affect our business, our financial condition and our results of operations and prospects.
Removed
The COVID-19 pandemic has increased demand uncertainty, which has led to unexpected results of operations. During the COVID-19 pandemic, we experienced a significant increase in demand for our cable modems and gateway products due to consumers responding to work-from-home and shelter-in-place measures.
Added
The Merger may not be completed within the expected timeframe, or at all, for a variety of reasons, including the possibility that the Merger Agreement is terminated, and the failure to complete the Merger could adversely affect our business, results of operations, financial condition, and the market price of our common stock.
Removed
As vaccines become widely available and consumers return to work or school and the impact of the COVID-19 pandemic lessens, this increase in demand began to subside. If this demand subsides at a rapid pace, our net sales, profitability and other financial results could be adversely affected.
Added
There can be no assurance that the Merger will be completed in the expected timeframe, or at all.
Removed
This increase in demand has also put strain on our manufacturing partners, suppliers and logistics partners to produce and deliver a sufficient number of products to meet this demand.
Added
The Merger Agreement contains a number of customary closing conditions that must be satisfied or waived prior to the completion of the Merger, including, among others, (i) the Company Shares to be issued in the Merger (“Merger Consideration”) being approved for listing on the Nasdaq Capital Market (“Nasdaq”), (ii) the effectiveness of a registration statement on Form S-4 registering the Merger Consideration; (iii) any waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, will have expired or been terminated; and (iv) the consent or approval of the Company’s stockholders, as applicable, of (a) the Merger, (b) the issuance of the Merger Consideration, and (c) an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to among other things, change the Company’s name to e2Companies, Inc. following the Merger (the “Stockholder Approvals”).
Removed
In particular, the limited and delayed availability of certain key components for our products, such as specialized chipsets, significantly constrains our ability to meet the increased consumer demand and over the course of the past year, we have seen lead times for some of these key components increase dramatically up to 52 weeks.
Added
The Merger Agreement may be terminated under certain customary and limited circumstances prior to the closing including by the mutual consent of the Company and e2Companies if the closing has not occurred by June 15, 2024, subject to the right of either party to gain a 30 day extension, and including, but not limited to, if the Stockholder Approvals have not been obtained, if the Company Shares are delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), upon uncured breaches of representations, warranties and covenants or if a court of competent jurisdiction permanently restrains the Merger from occurring.
Removed
This in turn puts pressure on our ability to accurately forecast and increases the likelihood that the accuracy of such forecasts will be lower, which could materially adversely affect our financial results. If we were to experience weakened demand in products, our net sales, profitability and other financial results would be materially adversely impacted.
Added
If the Merger is not completed within the expected timeframe or at all, we may be subject to a number of material risks, including: - the market price of our common stock may decline to the extent that current market prices reflect a market assumption that the Merger will be completed; 23 - some costs related to the Merger must be paid whether or not the Merger is completed, and we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction with e2Companies, as well as the diversion of management and resources towards the Merger, for which we will have received little or no benefit if completion of the Merger does not occur; and - we may experience negative publicity and/or reactions from our investors and various business relationships.
Removed
The COVID-19 pandemic has caused us to modify our business practices, including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers.
Added
Stockholder litigation could prevent or delay the closing of the pending Merger or otherwise negatively impact our business, operating results and financial condition. We may incur additional costs in connection with the defense or settlement of stockholder litigation in connection with the pending Merger. Such litigation may adversely affect our ability to complete the pending Merger.
Removed
Work-from-home and other measures introduce additional operational risks, including cybersecurity risks and have affected the way we conduct our product development, testing, customer support, and other activities, which could have an adverse effect on our operations. Furthermore, we rely on third-party laboratories to test and certify our products.
Added
We could incur significant costs in connection with such litigation, including costs associated with the indemnification obligations to our directors and officers. Such litigation may be distracting to management and may require us to incur additional, significant costs.
Removed
If these service providers close or reduce staffing, it could delay our product development efforts. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.
Added
Such litigation could result in the Merger being delayed and/or enjoined by a court of competent jurisdiction, which could prevent the Merger from becoming effective. The issuance of shares of Minim common stock to e2Companies unitholders in the merger will substantially dilute the voting power of current Minim stockholders.
Removed
In addition, work-from-home and related business practice modifications present challenges to maintaining our corporate culture, including employee engagement and productivity, both during the immediate pandemic crisis and as we make additional adjustments in the eventual transition from it. 13 The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including how quickly and to what extent normal economic and operating conditions can resume.
Added
Having a minority share position will reduce the influence that current stockholders have on the management of Minim. Pursuant to the terms of the Merger Agreement, at the effective time of the merger, Minim will issue (or reserve for future issuance) shares of its common stock to e2Companies unitholders as merger consideration.
Removed
We are similarly unable to predict the degree to which the pandemic impacts our customers, suppliers, vendors, and other partners, and their financial conditions, but a material effect on these parties could also adversely affect us. The impact of COVID-19 can also exacerbate other risks discussed below, which could in turn have a material adverse effect on us.
Added
As a result, upon completion of the merger, the current Minim stockholders will hold approximately an amount of shares currently expected to be approximately 3% of the fully diluted equity of the combined company.
Removed
Developments related to COVID-19 have been rapidly changing, and additional impacts and risks may arise that we are not aware of or able to appropriately respond to currently.
Added
Accordingly, the issuance of the shares of Minim common stock to e2Companies unitholders in the merger will significantly reduce the ownership stake and relative voting power of each share of Minim common stock held by current Minim stockholders. Consequently, following the merger, the ability of Minim’s current stockholders to influence the management of Minim will be substantially reduced.
Removed
Should the COVID-19 situation or global economic slowdown not improve or worsen, or if our attempts to mitigate its impact on our operations and costs are not successful, our business, results of operations, financial condition and prospects may be adversely affected.
Added
The issuance, or expected issuance, of Minim common stock in connection with the merger could decrease the market price of Minim common stock. In connection with the merger and as part of the merger consideration, Minim expects to issue shares of Minim common stock to e2Companies’ unitholders.
Removed
If disruptions in our transportation network occur or our shipping costs substantially increase, we may be unable to sell or timely deliver our products, and our gross margins could decrease. We are highly dependent upon the transportation systems we use to ship our products, including vessel, air, and ground freight.
Added
The anticipated issuance of Minim common stock in the merger may result in fluctuations in the market price of Minim common stock, including a stock price decrease.
Removed
Our attempts to closely match our inventory levels to our product demand intensify the need for our transportation systems to function effectively and without delay. The outbreak of the COVID-19 pandemic led to limitations on the availability of key transportation resources and an increase in the cost and duration of air and ocean freight.
Added
In addition, the perception in the market that the holders of a large number of shares of Minim common stock may intend to sell shares could reduce the market price of Minim common stock. The intended benefits of the merger may not be realized.
Removed
These developments negatively impact our profitability as we seek to transport products from manufacturing locations in Asia to the U.S. market. The transportation network is subject to disruption or congestion from a variety of causes, including labor disputes and port strikes, acts of war or terrorism, natural disasters, pandemics, and congestion from higher shipping volumes.
Added
The merger poses risks for Minim’s and e2Companies’ ongoing operations, including, among others: ● that senior management’s attention may be diverted from the management of Minim’s and e2Companies’ current operations and development of its products; ● costs and expenses associated with any undisclosed or potential liabilities; and ● unforeseen difficulties may arise in integrating e2Companies’ and Minim’s business in the combined company. 24 As a result of the foregoing, the combined company may be unable to realize the full strategic and financial benefits currently anticipated from the merger, and Minim or e2Companies cannot assure you that the merger will be accretive to Minim or e2Companies in the near term or at all.
Removed
Transport delays in our product could materially and adversely affect our business and financial results, including revenue and profitability shortfalls. Although transportation availability and durations improved and costs of transportation began to decrease in the second half of 2022, there is a significant degree of uncertainty.
Added
Furthermore, if Minim or e2Companies fails to realize the intended benefits of the merger, the market price of the combined company’s common stock could decline to the extent that the market price reflects those benefits.
Removed
While transportation costs decreased and transportation availability and duration have improved recently, if the transportation network has significant cost increases or availability limitations again, it would severely disrupt our business and harm our operating results, including our profitability.
Added
Minim’s stockholders will have experienced substantial dilution of their ownership interests in Minim without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the merger.
Removed
We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costs.
Added
If the merger is completed, e2Companies executive officers and e2Companies appointees to the combined company ’ s board of directors will have the ability to significantly influence the combined company ’ s management and business affairs, as well as matters submitted to the combined company ’ s board of directors or stockholders for approval, especially if they decide to act together with the current e2Companies unitholders.
Removed
Any shortage or delay in the supply of key product components, or any sudden, unforeseen price increase for such components, would harm our ability to meet product deliveries as scheduled or as budgeted. Many of the semiconductors used in our products are obtained from sole source suppliers on a purchase order basis.
Added
Upon completion of the merger, the former e2Companies unitholders will own approximately 97% of the combined company on a fully diluted basis. If the merger is completed, the combined company is expected to be led by e2Companies executive officers.
Removed
Semiconductor suppliers have experienced and continue to experience component shortages themselves, which in turn adversely impact our ability to procure semiconductors from them in sufficient quantities and in a timely manner. Our third-party manufacturers generally purchase these components on our behalf on a purchase order basis, and we do not have any guaranteed supply arrangements with our suppliers.
Added
Furthermore, the combined company’s anticipated board of directors will consist of seven members, five of which will be appointed by e2Companies pursuant to the terms of the Merger Agreement.
Removed
If demand for a specific component increases, we may not be able to obtain an adequate number of that component in a timely manner, and prices to obtain such components may increase. In addition, if worldwide demand for the components increases significantly, the availability of these components could be limited and prices for such components may increase.
Added
As a result, such persons, if they choose to act together, will have the ability to significantly influence the combined company’s management and business affairs, as well as matters submitted to the combined company’s board of directors or stockholders for approval.
Removed
Also, many standardized components used broadly in electronic devices are manufactured in significant quantities in concentrated geographic regions, particularly in China. As a result, protracted crises such as a global pandemic could lead to eventual shortages of necessary components sourced from impacted regions.
Added
The announcement and pendency of the merger could have an adverse effect on Minim’s or e2Companies’ business, financial condition, results of operations or business prospects.
Removed
Additionally, government intervention to reduce the consumption of electricity in China could have a disruptive impact on component production and supply availability. It could be difficult, costly, and time consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components.
Added
The announcement and pendency of the merger could disrupt Minim’s and/or e2Companies’ businesses in the following ways, among others: ● Minim’s or e2Companies’ current and prospective employees could experience uncertainty about their future roles within the combined company, and this uncertainty might adversely affect Minim’s or e2Companies’ ability to retain, recruit and motivate key personnel; ● the attention of Minim’s or e2Companies’ management may be directed towards the completion of the merger and other transaction-related considerations and may be diverted from the day-to-day business operations of Minim or e2Companies, as applicable, and matters related to the merger may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to Minim or e2Companies, as applicable; ● customers, prospective customers, suppliers, collaborators and other third parties with business relationships with Minim or e2Companies may decide not to renew or may decide to seek to terminate, change or renegotiate their relationships with Minim or e2Companies as a result of the merger, whether pursuant to the terms of their existing agreements with Minim or e2Companies; and ● the market price of Minim’s common stock may decline to the extent that the current market price reflects a market assumption that the proposed merger will be completed.
Removed
In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill our orders for our products.
Added
Should they occur, any of these matters could adversely affect the businesses of, or harm the financial condition, results of operations or business prospects of, Minim or e2Companies. 25 During the pendency of the merger, Minim or e2Companies may not be able to enter into a business combination with another party and will be subject to contractual limitations on certain actions because of restrictions in the Merger Agreement.
Removed
If we are unable to obtain sufficient supply of components, or if we experience an interruption in the supply of components, our product shipments could be reduced or delayed or our cost of obtaining these components may increase.
Added
Covenants in the Merger Agreement impede the ability of Minim or e2Companies to make dispositions or acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the merger, potential spin-off of all or a portion of Minim’s assets prior to the consummation of the merger, excluding certain permitted financings as set forth in the Merger Agreement.
Removed
Component shortages and delays affect our ability to meet scheduled product deliveries, damage our brand and reputation in the market, and cause us to lose sales and market share. At times, we may elect to purchase components in the direct market, which may be more expensive and may result in reduced margins.
Added
As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors.
Removed
If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory, or lose sales from having too few products. We determine production levels based on our forecasts of demand for our products. Actual demand for our products depends on many factors, which makes it difficult to forecast.
Added
In addition, while the Merger Agreement is in effect and subject to limited exceptions, Minim is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into certain extraordinary transactions with any third party, such as a sale of assets, an acquisition, a tender offer, a merger or other business combination outside the ordinary course of business.
Removed
We have experienced differences between our actual demand and our forecasted demand in the past and expect differences to arise in the future.
Added
These restrictions may prevent Minim from pursuing otherwise attractive business opportunities or other capital structure alternatives and making other changes to its business or executing certain of its business strategies prior to the completion of the merger, which could be favorable to Minim stockholders.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
137 edited+51 added−45 removed122 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
137 edited+51 added−45 removed122 unchanged
2022 filing
2023 filing
Biggest changeCONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022 and 2021 2022 2021 Cash flows used in operating activities: Net loss $ (15,549,244 ) $ (2,198,667 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 837,228 957,490 Amortization of right-of-use assets 172,060 145,143 Amortization of debt issuance costs 71,401 41,586 Amortization of sales contract costs 75,514 32,343 Stock-based compensation 1,170,595 996,937 Goodwill impairment charge 58,872 — Intangible asset impairment charge 67,415 — Provision for (recovery of) accounts receivable allowances (98,489 ) 63,217 Provision for inventory reserves 1,785,566 643,671 Non-cash loan forgiveness — (20,000 ) Changes in operating assets and liabilities: Accounts receivable 2,220,746 4,259,454 Inventories 6,690,515 (18,030,117 ) Prepaid expenses and other current assets 227,150 (188,766 ) Other assets 63,044 (92,161 ) Accounts payable (9,621,054 ) 862,453 Accrued expenses (839,265 ) (2,261,266 ) Deferred revenue 670,532 661,826 Operating lease liabilities (172,659 ) (145,410 ) Net cash used in operating activities (12,170,073 ) (14,272,267 ) Cash flows from investing activities: Purchases of equipment (276,665 ) (593,120 ) Certification costs incurred and capitalized (418,352 ) (88,708 ) Net cash used in investing activities (695,017 ) (681,828 ) Cash flows from financing activities: Net proceeds from the bank credit line (377,811 ) 5,166,289 Proceeds from bridge loan agreement 1,000,000 – Repayment of the Rosenthal bank credit line — (2,442,246 ) Costs associated with bank credit line — (142,801 ) Repayment of government loan (34,237 ) (26,232 ) Proceeds from stock option exercises 236,803 1,167,724 Proceeds from public offering, net of offering costs — 22,730,049 Net cash provided by financing activities 824,755 26,452,783 Net change in cash, cash equivalents, and restricted cash (12,040,335 ) 11,498,688 Cash, cash equivalents, and restricted cash - Beginning 13,070,445 1,571,757 Cash, cash equivalents, and restricted cash - Ending $ 1,030,110 $ 13,070,445 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 394,615 $ 270,407 Income taxes $ 88,348 $ 63,773 Cash is reported on the consolidated statements of cash flows as follows: Cash and cash equivalents $ 530,110 $ 12,570,445 Restricted cash 500,000 500,000 Total cash, cash equivalents, and restricted cash $ 1,030,110 $ 13,070,445 The accompanying notes are an integral part of these consolidated financial statements.
Biggest changeCONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2023 and 2022 2023 2022 Cash flows used in operating activities: Net loss $ (17,633,924 ) $ (15,549,244 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 612,138 837,228 Amortization of right-of-use assets 150,968 172,060 Amortization of debt issuance costs 29,845 71,401 Amortization of sales contract costs - 75,514 Stock-based compensation 279,395 1,170,595 Goodwill impairment charge - 58,872 Intangible asset impairment charge - 67,415 Provision for (recovery of) credit losses 174,652 (98,489 ) Provision for inventory reserves - 1,785,566 Changes in operating assets and liabilities: Accounts receivable 1,882,377 2,220,746 Inventories 15,462,559 6,690,515 Prepaid expenses and other current assets 324,963 227,150 Other assets 53,458 63,044 Accounts payable 8,306,503 (9,621,054 ) Accrued expenses (3,237,131 ) (839,265 ) Deferred revenue (1,405,280 ) 670,532 Operating lease liabilities (150,968 ) (172,659 ) Net cash provided by (used in) operating activities 4,849,555 (12,170,073 ) Cash flows from investing activities: Purchases of equipment (162,270 ) (276,665 ) Certification costs incurred and capitalized (219,595 ) (418,352 ) Net cash used in investing activities (381,865 ) (695,017 ) Cash flows from financing activities: Net repayment on the bank credit line (4,788,478 ) (377,811 ) Proceeds from bridge loan agreement - 1,000,000 Repayment of government loan - (34,237 ) Proceeds from stock option exercises - 236,803 Net cash provided by (used in) financing activities (4,788,478 ) 824,755 Net change in cash, cash equivalents, and restricted cash (320,788 ) (12,040,335 ) Cash, cash equivalents, and restricted cash - Beginning 1,030,110 13,070,445 Cash, cash equivalents, and restricted cash - Ending $ 709,322 $ 1,030,110 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 238,329 $ 394,615 Income taxes $ 42,619 $ 88,348 Cash is reported on the consolidated statements of cash flows as follows: Cash and cash equivalents $ 709,322 $ 530,110 Restricted cash - 500,000 Total cash, cash equivalents, and restricted cash $ 709,322 $ 1,030,110 The accompanying notes are an integral part of these consolidated financial statements.
The transaction price allocated to the SaaS offering is recognized ratably beginning when the customer is expected to activate their account and over a three-year period that the Company has estimated based on the expected replacement of the hardware.
The transaction price allocated to the SaaS offering is recognized ratably beginning when the customer is expected to activate their account and over a three-year period that the Company has estimated based on the expected replacement of the hardware.
On November 9, 2021, the Company’s Board of Directors approved of the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan (collectively, the “2021 Equity Plans”) and terminated the 2019 Plans.
On November 9, 2021, the Company’s Board of Directors approved the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan (collectively, the “2021 Equity Plans”) and terminated the 2019 Plans.
(incorporated by reference to Exhibit 10.2 to the Form 8-K filed by the Company on March 4, 2022).*+ 10.12 Employment Agreement, dated as of December 4, 2020, by and between the Company and Sean Doherty (incorporated by reference to Exhibit 10.29 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 10.13 Transition and Separation Agreement, dated as of December 22, 2021, by and between the Company and Sean Doherty (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on December 22, 2022).* 10.14 Employment Agreement, dated as of December 4, 2020, by and between the Company and Nicole Zheng (incorporated by reference to Exhibit 10.30 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 10.15 Employment Agreement, dated as of March 2, 2022, by and between the Company and John Lauten (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on March 4, 2022).*+ 10.16 Employment Agreement, dated as of March 21, 2022, by and between the Company and Mehul Patel (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed by the Company on March 24, 2022).*+ 10.17 Transition and Separation Agreement, dated July 8, 2022, between Minim, Inc. and Nicole Hayward Zheng. *+ 10.18 Amendment to Employment Agreement, dated August 15, 2022, between Minim, Inc. and Mehul Patel.*+ 10.19 Executive Employment Agreement, dated August 15, 2022, between Minim, Inc. and Dustin Tacker. *+ 10.20 Transition and Separation Agreement, dated August 15, 2022, between Minim, Inc. and Gray Chynoweth.*+ 10.21 Separation Agreement, dated August 15, 2022, between Minim, Inc. and John Lauten.*+ 10.22 Form of Severance Agreement (incorporated by reference to Exhibit 10.1 of to the Form 8-K/A filed by the Company on October 27, 2021).*+ 10.23 Minim, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.24 Minim, Inc. 2021 Non-Employee Directors Compensation Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.25 Form of Executive Officer Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.26 Form of Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.27 Inducement Award Agreement for Restricted Stock Units, by and between the Company and Bill Wallace, dated as of December 6, 2021 (incorporated by reference to Exhibit 99.1 to the Form S-8 filed by the Company on December 16, 2021).* + 10.28 Minim, Inc. 2019 Stock Option Plan (incorporated by reference to Appendix D to the Definitive Proxy Statement filed by the Company on May 28, 2019).*+ 10.29 Minim, Inc. 2019 Directors Stock Option Plan (incorporated by reference to Appendix C to the Definitive Proxy Statement filed by the Company on May 28, 2019).*+ 10.30 Loan and Security Agreement, dated as of March 12, 2021, by and between the Company and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on March 15, 2021).* 10.31 First Amendment to Loan and Security Agreement, dated as of November 1, 2021, by and among Silicon Valley Bank, the Company and Zoom Connectivity, Inc.
(incorporated by reference to Exhibit 10.2 to the Form 8-K filed by the Company on March 4, 2022).*+ 10.12 Employment Agreement, dated as of December 4, 2020, by and between the Company and Sean Doherty (incorporated by reference to Exhibit 10.29 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 10.13 Transition and Separation Agreement, dated as of December 22, 2021, by and between the Company and Sean Doherty (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on December 22, 2022).* 10.14 Employment Agreement, dated as of December 4, 2020, by and between the Company and Nicole Zheng (incorporated by reference to Exhibit 10.30 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 10.15 Employment Agreement, dated as of March 2, 2022, by and between the Company and John Lauten (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on March 4, 2022).*+ 10.16 Employment Agreement, dated as of March 21, 2022, by and between the Company and Mehul Patel (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed by the Company on March 24, 2022).*+ 10.17 Transition and Separation Agreement, dated July 8, 2022, between Minim, Inc. and Nicole Hayward Zheng. *+ 10.18 Amendment to Employment Agreement, dated August 15, 2022, between Minim, Inc. and Mehul Patel.*+ 10.19 Executive Employment Agreement, dated August 15, 2022, between Minim, Inc. and Dustin Tacker.*+ 10.20 Transition and Separation Agreement, dated August 15, 2022, between Minim, Inc. and Gray Chynoweth.*+ 10.21 Separation Agreement, dated August 15, 2022, between Minim, Inc. and John Lauten.*+ 10.22 Form of Severance Agreement (incorporated by reference to Exhibit 10.1 of to the Form 8-K/A filed by the Company on October 27, 2021).*+ 10.23 Minim, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.24 Minim, Inc. 2021 Non-Employee Directors Compensation Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.25 Form of Executive Officer Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 10.26 Form of Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Company on November 16, 2021).*+ 51 10.27 Inducement Award Agreement for Restricted Stock Units, by and between the Company and Bill Wallace, dated as of December 6, 2021 (incorporated by reference to Exhibit 99.1 to the Form S-8 filed by the Company on December 16, 2021).* + 10.28 Minim, Inc. 2019 Stock Option Plan (incorporated by reference to Appendix D to the Definitive Proxy Statement filed by the Company on May 28, 2019).*+ 10.29 Minim, Inc. 2019 Directors Stock Option Plan (incorporated by reference to Appendix C to the Definitive Proxy Statement filed by the Company on May 28, 2019).*+ 10.30 Loan and Security Agreement, dated as of March 12, 2021, by and between the Company and Silicon Valley Bank (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on March 15, 2021).* 10.31 First Amendment to Loan and Security Agreement, dated as of November 1, 2021, by and among Silicon Valley Bank, the Company and Zoom Connectivity, Inc.
Hitchcock (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by the Company on October 13, 2020).* 10.9 Employment Agreement, dated as of May 22, 2019, by and between Zoom Connectivity, Inc. and Graham Chynoweth (incorporated by reference to Exhibit 10.28 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 10.10 Assignment and Amendment of Employment Agreement, dated as of December 4, 2020, by and among Graham Chynoweth, the Company and Zoom Connectivity, Inc.
Hitchcock (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by the Company on October 13, 2020).* 10.9 Employment Agreement, dated as of May 22, 2019, by and between Zoom Connectivity, Inc. and Graham Chynoweth (incorporated by reference to Exhibit 10.28 to the Form 10-K/A filed by the Company on April 30, 2021).*+ 50 10.10 Assignment and Amendment of Employment Agreement, dated as of December 4, 2020, by and among Graham Chynoweth, the Company and Zoom Connectivity, Inc.
Recently Issued Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments Credit Losses — Measurement of Credit Losses on Financial Instruments. ” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable.
Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments Credit Losses — Measurement of Credit Losses on Financial Instruments. ” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable.
All significant intercompany balances and transactions have been eliminated in the consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts.
All significant intercompany balances and transactions have been eliminated in the consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. Certain amounts in the consolidated financial statements and associated notes may not add up due to rounding. All percentages have been calculated using unrounded amounts.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Principal amounts borrowed under the Bridge Loan Agreement bear interest for the period from the Effective Date until February 28, 2023 of 8.00 % per annum. Unpaid principal after February 28, 2023 bear an interest of 14.00 % per annum until paid in full.
Principal amounts borrowed under the Bridge Loan Agreement bear interest for the period from the Effective Date until February 28, 2023 of 8.00% per annum. Unpaid principal after February 28, 2023 bears an interest of 14.00% per annum until paid in full.
Under the terms of the loans, the Company received forgiveness of an aggregate $ 20,000 and $ 1,048,000 in 2021 and 2020, respectively. The Company repaid $ 34,000 and $ 26,000 in 2022 and 2021, respectively. As of December 31, 2022, the Company had no outstanding balances under the loans.
Under the terms of the loans, the Company received forgiveness of an aggregate $ 20,000 and $ 1,048,000 in 2021 and 2020, respectively. The Company repaid $ 34,000 and $ 26,000 in 2022 and 2021, respectively. As of December 31, 2023 and 2022, the Company had no outstanding balances under the loans.
(Exhibit numbers refer to numbers in the Exhibit Table of Item 601.) 2.1 Separation and Distribution Agreement by and between Zoom Technologies, Inc. and the Company (incorporated by reference to Annex B of the Preliminary Proxy Statement filed by Zoom Technologies, Inc. on May 13, 2009).* 2.2 Agreement and Plan of Merger, dated as of November 12, 2020, by and among the Company, Elm Acquisition Sub, Inc., Zoom Connectivity, Inc. and the Representative named therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on November 13, 2020).* 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed by the Company on September 4, 2009).* 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on November 18, 2015).* 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on November 18, 2015).* 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 30, 2019).* 3.5 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 4, 2021).* 3.6 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on June 4, 2021).* 3.7 Certificate of Correction of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K/A filed by the Company on June 30, 2021).* 3.8 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 23, 2021).* 3.9 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 30, 2021).* 3.10 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on March 31, 2023).* 4.1 Description of Securities (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).* 10.1 License Agreement, dated as of May 13, 2015, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.3 to the Form 10-Q/A filed by the Company on December 6, 2016).*† 10.2 Amendment to License Agreement, dated as of August 16, 2016, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.4 to the Form 10-Q/A filed by the Company on December 6, 2016).*† 10.3 Amendment to License Agreement, dated as of August 21, 2017, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by the Company on November 9, 2017).*† 34 10.4 Amendment to License Agreement, dated as of March 27, 2020, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.19 to the Form 10-K/A filed by the Company on April 29, 2020).*†† 10.5 Stock Purchase Agreement, dated as of May 3, 2019, by and between the Company and the Investors listed therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on May 6, 2019).* 10.6 License Agreement, dated as of March 27, 2020, by and between the Company, MTRLC LLC and Motorola Mobility LLC (incorporated by reference to Exhibit 10.19 to the Form 10-K/A filed by the Company on April 29, 2020).*†† 10.7 Stock Purchase Agreement, dated as of May 26, 2020, by and between the Company and the Investors listed therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on May 27, 2020).* 10.8 Standstill and Voting Agreement, dated as of October 9, 2020, by and among the Company, Zulu Holdings LLC and Jeremy P.
(Exhibit numbers refer to numbers in the Exhibit Table of Item 601.) 2.1 Separation and Distribution Agreement by and between Zoom Technologies, Inc. and the Company (incorporated by reference to Annex B of the Preliminary Proxy Statement filed by Zoom Technologies, Inc. on May 13, 2009).* 2.2 Agreement and Plan of Merger, dated as of November 12, 2020, by and among the Company, Elm Acquisition Sub, Inc., Zoom Connectivity, Inc. and the Representative named therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on November 13, 2020).* 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed by the Company on September 4, 2009).* 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on November 18, 2015).* 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on November 18, 2015).* 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 30, 2019).* 3.5 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 4, 2021).* 3.6 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on June 4, 2021).* 49 3.7 Certificate of Correction of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K/A filed by the Company on June 30, 2021).* 3.8 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 23, 2021).* 3.9 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on March 31, 2023).* 3.10 Certificate of Designation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on March 1, 2024).* 3.11 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on March 6, 2024). 3.12 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 30, 2021). 4.1 Description of Securities (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).* 10.1 License Agreement, dated as of May 13, 2015, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.3 to the Form 10-Q/A filed by the Company on December 6, 2016).*† 10.2 Amendment to License Agreement, dated as of August 16, 2016, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.4 to the Form 10-Q/A filed by the Company on December 6, 2016).*† 10.3 Amendment to License Agreement, dated as of August 21, 2017, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by the Company on November 9, 2017).*† 10.4 Amendment to License Agreement, dated as of March 27, 2020, by and between the Company and Motorola Mobility LLC (incorporated by reference to Exhibit 10.19 to the Form 10-K/A filed by the Company on April 29, 2020).*†† 10.5 Stock Purchase Agreement, dated as of May 3, 2019, by and between the Company and the Investors listed therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on May 6, 2019).* 10.6 License Agreement, dated as of March 27, 2020, by and between the Company, MTRLC LLC and Motorola Mobility LLC (incorporated by reference to Exhibit 10.19 to the Form 10-K/A filed by the Company on April 29, 2020).*†† 10.7 Stock Purchase Agreement, dated as of May 26, 2020, by and between the Company and the Investors listed therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on May 27, 2020).* 10.8 Standstill and Voting Agreement, dated as of October 9, 2020, by and among the Company, Zulu Holdings LLC and Jeremy P.
In evaluating potential impairment of these assets, we specifically consider whether any indicators of impairment are present, including, but not limited to: ● whether there has been a significant adverse change in the business climate that affects the value of an asset: ● whether there has been a significant change in the extent or way an asset is used; and ● whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life.
In evaluating potential impairment of these assets, we specifically consider whether any indicators of impairment are present, including, but not limited to: F-11 ● whether there has been a significant adverse change in the business climate that affects the value of an asset: ● whether there has been a significant change in the extent or way an asset is used; and ● whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life.
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2022 and 2021, the Company’s cash equivalents were held in institutions in the U.S. and include deposits in higher-interest bank accounts which were unrestricted as to withdrawal or use.
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2023 and 2022, the Company’s cash equivalents were held in institutions in the U.S. and include deposits in higher-interest bank accounts which were unrestricted as to withdrawal or use.
Management of the Company believes it will not have sufficient resources to continue as a going concern through at least one year from the issuance of these financial statements. Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Management of the Company believes it will not have sufficient resources to continue as a going concern through at least one year from the issuance of these financial statements. F-8 Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
The price protection accrual was not material at December 31, 2022 and December 31, 2021. ● Volume Rebates and Promotion Programs - volume rebates are variable dependent upon the volume of goods sold-through the Company’s customers to end-users and under ASC Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods).
The price protection accrual was not material at December 31, 2023 and December 31, 2022. ● Volume Rebates and Promotion Programs - volume rebates are variable dependent upon the volume of goods sold-through the Company’s customers to end-users and under ASC Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods).
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2023 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2024 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the balance sheet and any resulting gain or loss is reflected in the Company’s statements of operations in the period realized. Goodwill The Company records goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired.
When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the balance sheet and any resulting gain or loss is reflected in the Company’s statements of operations in the period realized. F-10 Goodwill The Company records goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired.
ITEM 13 – CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2023 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
ITEM 13 – CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2024 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
As of December 31, 2022, the Company determined that the goodwill was impaired after the annual impairment test indicated that the carrying amount of the Company’s single reporting unit exceeded the estimated fair value and accordingly recorded a $ 59 thousand impairment charge to general and administrative expense in the statement of operations.
As of December 31, 2022, the Company determined that the goodwill was impaired after the annual impairment test indicated that the carrying amount of the Company’s single reporting unit exceeded the estimated fair value and accordingly recorded a $59 58,872 thousand impairment charge to general and administrative expense in the statement of operations.
These costs include sales commissions on software maintenance contracts with a contract period of one year or less as sales commissions on contract renewals are commensurate with those paid on the initial contract. Contract Balances The Company records accounts receivable when it has an unconditional right to the consideration.
These costs include sales commissions on software maintenance contracts with a contract period of one year or less as sales commissions on contract renewals are commensurate with those paid on the initial contract. F-16 Contract Balances The Company records accounts receivable when it has an unconditional right to the consideration.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Management believes that the Company has adequate legal defences with respect to the legal proceedings to which it is a defendant or respondent and that the outcome of these pending proceedings is not likely to have a material adverse effect on the financial condition, results of operations, or cash flows of the Company.
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.
ITEM 11 - EXECUTIVE COMPENSATION Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2023 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
ITEM 11 - EXECUTIVE COMPENSATION Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2024 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year.
F-15 Goodwill In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers.
Goodwill In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers.
Bridge Loan On November 30, 2022 (the “Effective Date”), the Company and Slingshot Capital, LLC (“Slingshot Capital”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”) pursuant to which Slingshot Capital agreed to make available a bridge loan in the principal amount up of up to $ 1,500,000 .
F-20 Bridge Loan On November 30, 2022 (the “Effective Date”), the Company and Slingshot Capital, LLC (“Slingshot Capital”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”) pursuant to which Slingshot Capital agreed to make available a bridge loan in the principal amount up of up to $ 1,500,000 .
The Company’s consolidated financial statements as of December 31, 2022, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
The Company’s consolidated financial statements as of December 31, 2023, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
Tax years subsequent to 2016 remain subject to examination for both U.S. Federal and state tax reporting purposes. Tax years subsequent to 2015 remain subject to examination for Mexico tax reporting purposes. The foreign income tax reported represents tax on operations for the Company that is located in a special economic zone in Mexico.
Tax years subsequent to 2017 remain subject to examination for both U.S. Federal and state tax reporting purposes. Tax years subsequent to 2016 remain subject to examination for Mexico tax reporting purposes. The foreign income tax reported represents tax on operations for the Company that is located in a special economic zone in Mexico.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or are required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.
F-10 The SaaS agreements are offered over a defined contract period, generally one year, and are sold to Internet service providers, who then promote the services to their subscribers. These services are available as an on-demand application over the defined term.
The SaaS agreements are offered over a defined contract period, generally one year, and are sold to Internet service providers, who then promote the services to their subscribers. These services are available as an on-demand application over the defined term.
F-8 The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.
The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.
Contract assets consist of unbilled receivables (see Note 5). The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of cable modems and gateway, and the majority of the Company’s customers are retailers and distributors.
Contract assets consist of unbilled receivables (see Note 3). The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of cable modems and gateway, and the majority of the Company’s customers are retailers and distributors.
Going Concern The Company’s consolidated financial statements as of December 31, 2022 were prepared under the assumption that the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Going Concern The Company’s consolidated financial statements as of December 31, 2023 were prepared under the assumption that the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
F-9 Income Taxes We compute deferred income taxes based on the differences between the financial statement and tax basis of assets and liabilities using enacted rates in effect in the years in which the differences are expected to reverse.
F-12 Income Taxes We compute deferred income taxes based on the differences between the financial statement and tax basis of assets and liabilities using enacted rates in effect in the years in which the differences are expected to reverse.
Capitalized implementation costs are amortized on a straight-line basis over its estimated useful life, however there were no capitalized costs incurred during the years ended December 31, 2022 and 2021, respectively.
Capitalized implementation costs are amortized on a straight-line basis over its estimated useful life, however there were no capitalized costs incurred during the years ended December 31, 2023 and 2022, respectively.
F-20 (b) Commitments The Company is party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC for the manufacture, sale and marketing of consumer cable modem products, consumer routers, WiFi range extenders, MoCa adapters, cellular sensors, home powerline network adapters, and access points worldwide through a wide range of authorized sales channels.
(b) Commitments The Company was a party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC for the manufacture, sale and marketing of consumer cable modem products, consumer routers, WiFi range extenders, MoCa adapters, cellular sensors, home powerline network adapters, and access points worldwide through a wide range of authorized sales channels.
Advertising Costs Advertising costs are expensed as incurred and reported in selling expense in the accompanying consolidated statements of operations, and include costs of advertising, production, trade shows, and other activities designed to enhance demand for the Company’s products. The Company reported advertising costs of approximately $ 4.0 million and $ 2.8 million in 2022 and 2021, respectively.
Advertising Costs Advertising costs are expensed as incurred and reported in selling expense in the accompanying consolidated statements of operations, and include costs of advertising, production, trade shows, and other activities designed to enhance demand for the Company’s products. The Company reported advertising costs of approximately $ 2.0 million and $ 4.0 million in 2023 and 2022, respectively.
The Company delivers intelligent networking products that reliably and securely connect homes and offices around the world. We are the exclusive global license holder to the Motorola brand for home networking hardware. The Company designs and manufactures products including cable modems, cable modem/routers, mobile broadband modems, wireless routers, Multimedia over Coax (“MoCA”) adapters and mesh home networking devices.
The Company delivers intelligent networking products that reliably and securely connect homes and offices around the world. We were the exclusive global license holder to the Motorola brand for home networking hardware until 2023. The Company designs and manufactures products including cable modems, cable modem/routers, mobile broadband modems, wireless routers, Multimedia over Coax (“MoCA”) adapters and mesh home networking devices.
F-24 (13) RELATED PARTY TRANSACTIONS The Company leases office space located at 848 Elm Street, Manchester, NH. The landlord is an affiliate entity owned by Mr. Hitchcock. The two-year facility lease agreement was effective from August 1, 2019, to July 31, 2021 and was extended to July 31, 2022.
(11) RELATED PARTY TRANSACTIONS The Company leases office space located at 848 Elm Street, Manchester, NH. The landlord is an affiliate entity owned by Mr. Hitchcock. The two-year facility lease agreement was effective from August 1, 2019, to July 31, 2021 and was extended to July 31, 2022.
On July 18, 2022, the lease agreement was amended to a month-to-month lease arrangement and may be terminated by either party with a 60-day notice. The facility lease agreement provides for 2,656 square feet. For the twelve-months period ended December 31, 2022 and 2021, the rent expense was $ 33 thousand and $ 30 thousand, respectively.
On July 18, 2022, the lease agreement was amended to a month-to-month lease arrangement and may be terminated by either party with a 60-day notice. The facility lease agreement provides for 2,656 square feet. For the twelve-months period ended December 31, 2023 and 2022, the rent expense was $ 42 thousand and $ 33 thousand, respectively.
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2023 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year. 33 PART IV Item 15.
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by this part is hereby incorporated by reference from our definitive proxy statement for our 2024 annual meeting of stockholders which will be filed with the SEC within 120 days after the close of our fiscal year. 48 PART IV Item 15.
The Company also sells and earns revenues from Software as a Service (“SaaS”), including services that enables and secures a better-connected home with the AI-driven smart home WiFi management and security platform. Customers do not have the contractual right or ability to take possession of the hosted software.
F-13 The Company also sells and earns revenues from Software as a Service (“SaaS”), including services that enable and secures a better-connected home with the AI-driven smart home WiFi management and security platform. Customers do not have the contractual right or ability to take possession of the hosted software.
These costs are amortized over an 18- month period, beginning when the related products are available to be sold. As of December 31, 2022 and 2021, the balance outstanding for certifications costs, net of accumulated amortization, was $ 402 thousand and $ 297 thousand, respectively. The long-term insurance policies are amortized over the term of the coverage period.
These costs are amortized over an 18- month period, beginning when the related products are available to be sold. As of December 31, 2023 and 2022, the balance outstanding for certifications costs, net of accumulated amortization, was $ 417 thousand and $ 402 thousand, respectively. The long-term insurance policies are amortized over the term of the coverage period.
The following is a reconciliation of the statutory Federal income tax rate to the actual effective income tax rate for continuing operations: SCHEDULE OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE 2022 2021 Federal tax (benefit) rate 21 % 20 % Increase (decrease) in taxes resulting from: State income taxes 1 (2 ) Change in valuation allowance (9 ) (5 ) Expiration of NOLs (13 ) — Expiration of stock options (1 ) (14 ) Permanent differences (1 ) (4 ) Changes in Federal and state rates 1 3 Effective income tax rate (1 )% (2 )% The Company reviews annually the guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements.
The following is a reconciliation of the statutory Federal income tax rate to the actual effective income tax rate for continuing operations: Schedule of reconciliation of statutory federal income tax rate 2023 2022 Federal tax (benefit) rate 21 % 21 % Increase (decrease) in taxes resulting from: State income taxes 4 1 Change in valuation allowance (21 ) (9 ) Expiration of NOLs (5 ) (13 ) Expiration of stock options (1 ) (14 ) Permanent differences 1 (1 ) Changes in Federal and state rates 1 1 Effective income tax rate 0 % (1 )% The Company reviews annually the guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31 MINIM, INC.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 45 MINIM, INC.
Tax positions must meet a “more-likely-than-not” recognition threshold. At December 31, 2022 and 2021, the Company did not have any material uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2022 and 2021. The Company files income tax returns in the U.S., India, and Mexico.
Tax positions must meet a “more-likely-than-not” recognition threshold. At December 31, 2023 and 2022, the Company did no t have any material uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2023 and 2022. The Company files income tax returns in the U.S., India, and Mexico.
The Prior Plans and the 2019 Plans will continue to govern outstanding stock options previously granted thereunder. The Company has initially reserved 3,000,000 shares and 1,250,000 shares of common stock for issuance of awards under the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan, respectively. On June 9, 2022, the 2021 Equity Plans were approved by the Company’s shareholders.
The Prior Plans and the 2019 Plans will continue to govern outstanding stock options previously granted thereunder. The Company has initially reserved 120,000 shares and 50,000 shares of common stock for issuance of awards under the Omnibus Incentive Compensation Plan and Non-Employee Directors Compensation Plan, respectively. On June 9, 2022, the 2021 Equity Plans were approved by the Company’s shareholders.
Under the Economic Growth and Tax Relief Reconciliation Act, employees who are age 50 or older could contribute an additional $ 6,500 per year for a maximum of $ 27,000 for 2022. Contributions by the employees are invested in one or more funds at the direction of the employee; however, employee contributions cannot be invested in Company stock.
Under the Economic Growth and Tax Relief Reconciliation Act, employees who are age 50 or older could contribute an additional $ 6,500 per year for a maximum of $ 22,500 for 2023. Contributions by the employees are invested in one or more funds at the direction of the employee; however, employee contributions cannot be invested in Company stock.
However, as of December 31, 2022, substantial doubt exists about the Company’s ability to continue as a going concern.
However, as of December 31, 2023, substantial doubt exists about the Company’s ability to continue as a going concern.
For the year ended December 31, 2022, the Company recorded an impairment charge of $ 67 thousand related to its customer relationships, which is associated with the Company’s ISP business that is being discontinued. The Company’s other intangible assets and long-lived assets were determined to not be impaired as of December 31, 2022.
For the years ended December 31, 2023 and 2022, respectively, the Company recorded an impairment charge of $ 0 thousand and $ 67 thousand related to its customer relationships, which is associated with the Company’s ISP business that is being discontinued. The Company’s other intangible assets and long-lived assets were determined to not be impaired as of December 31, 2023.
(14) SUBSEQUENT EVENTS The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.
F-29 (12) SUBSEQUENT EVENTS The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.
As of December 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
As of December 31, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Changes in Internal Control over Financial Reporting The Company reported a material weakness in its internal control over financial reporting as set forth in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021, filed with the Securities and Exchange Commission on August 19, 2022.
Changes in Internal Control over Financial Reporting The Company reported a material weakness in its internal control over financial reporting as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 31, 2023.
F-17 The Company incurred $ 143 thousand in origination costs in connection with entering into the SVB Loan Agreement. These origination costs were recorded as a debt discount and are being expensed over the remaining term of the facility. Interest expense was $ 71 thousand and $ 70 thousand for the years ended December 31, 2022 and 2021, respectively.
The Company incurred $ 143 thousand in origination costs in connection with entering into the SVB Loan Agreement. These origination costs were recorded as a debt discount and are being expensed over the remaining term of the facility. Interest expense was $ 30 thousand and $ 71 thousand for the years ended December 31, 2023 and 2022, respectively.
The Company has not experienced any credit losses on its cash and cash equivalents and restricted cash through December 31, 2022 and has not experienced any credit losses as of the date of filing this Form 10-K F-7 For the year ended December 31, 2022, two customers accounted for 10% or greater individually, and 87 % in the aggregate of the Company’s total net sales.
The Company has not experienced any credit losses on its cash and cash equivalents and restricted cash through December 31, 2023 and has not experienced any credit losses as of the date of filing this Form 10-K F-9 For the year ended December 31, 2023, two customers accounted for 10% or greater individually, and 80% in the aggregate of the Company’s total net sales.
F-6 MINIM, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION Minim, Inc. and its wholly owned subsidiaries, Cadence Connectivity, Inc., MTRLC LLC, and Minim Asia Private Limited, are herein collectively referred to as “Minim” or the “Company”.
F-7 MINIM, INC. Notes to Consolidated Financial Statements Years Ended December 31, 2023 and 2022 (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION Minim, Inc. and its wholly owned subsidiaries, MME Sub 1 LLC, Cadence Connectivity, Inc., MTRLC LLC, and Minim Asia Private Limited, are herein collectively referred to as “Minim” or the “Company”.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 F-4 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7- F-25 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stockholders and the Board of Directors Minim, Inc.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm (PCAOB ID 5041 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) F-3 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-4 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-7 Notes to Consolidated Financial Statements F-8- F-31 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of Minim, Inc.
These judgments, estimates and assumptions made by the Company include, but are not limited to revenue recognition, the allowance for doubtful accounts (collectability); contract liabilities (sales returns); valuation allowance for deferred income tax assets; write-downs of inventory for slow-moving and obsolete items and stock-based compensation.
These judgments, estimates and assumptions made by the Company include, but are not limited to revenue recognition, expected credit losses; contract liabilities (sales returns); valuation allowance for deferred income tax assets; write-downs of inventory for slow-moving and obsolete items and stock-based compensation.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.
For the year ended December 31, 2021, two customers accounted for 10% or greater individually, and 92 % in the aggregate of the Company’s total net sales.
For the year ended December 31, 2022, two customers accounted for 10% or greater individually, and 87% in the aggregate of the Company’s total net sales.
As of December 31, 2022 and 2021, the balance outstanding for long-term insurance policies, net of accumulated amortization, was $ 71 thousand and $ 142 thousand, respectively.
As of December 31, 2023 and 2022, the balance outstanding for long-term insurance policies, net of accumulated amortization, was $ 47 thousand and $ 71 thousand, respectively.
The sales returns accrual was $ 982 thousand and $ 1.6 million at December 31, 2022 and 2021, respectively. ● Warranties - the Company does not offer its customers a separate warranty for purchase. Therefore, there is no separate performance obligation.
The sales returns accrual was $ 578 thousand and $ 982 thousand at December 31, 2023 and 2022, respectively. ● Warranties - the Company does not offer its customers a separate warranty for purchase. Therefore, there is no separate performance obligation.
The total valuation allowance increased by $ 1.3 million from December 31, 2021 to December 31, 2022. The Federal and state NOLs may be subject to certain limitations under Section 382 of the Internal Revenue Code, which could significantly restrict the Company’s ability to use the NOLs to offset taxable income in subsequent years.
The total valuation allowance increased by $ 2.6 million from December 31, 2022 to December 31, 2023. F-27 The Federal and state NOLs may be subject to certain limitations under Section 382 of the Internal Revenue Code, which could significantly restrict the Company’s ability to use the NOLs to offset taxable income in subsequent years.
The license agreement has a term ending December 31, 2025. In connection with the license agreement, the Company has committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products.
The license agreement had a term ending December 31, 2025 prior to its cancellation in 2023. In connection with the license agreement, the Company had committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products.
The Company has initially reserved 4,000,000 shares and 1,000,000 shares of common stock for issuance of awards under the 2019 Stock Option Plans and the 2019 Directors Option Plan, respectively. The 2019 Plans authorize grants to purchase shares of authorized but unissued common stock.
The Company has initially reserved 160,000 shares and 40,000 shares of common stock for issuance of awards under the 2019 Stock Option Plans and the 2019 Directors Option Plan, respectively. F-24 The 2019 Plans authorize grants to purchase shares of authorized but unissued common stock.
As of December 31, 2022 and 2021, no shares of preferred stock was outstanding. The Board of Directors may determine the rights, preferences, privileges, qualifications, limitations and restrictions granted or imposed upon any series of preferred stock. Common Stock The Company is authorized to issue 60,000,000 shares of common stock at $ 0.01 par value per share.
The Board of Directors may determine the rights, preferences, privileges, qualifications, limitations and restrictions granted or imposed upon any series of preferred stock. Common Stock The Company is authorized to issue 60,000,000 shares of common stock at $ 0.01 par value per share.
Shipping and Freight Costs The Company records the expense associated with customer-delivery shipping and freight costs in selling and marketing expense. The Company reported shipping and freight costs of $ 452 thousand and $ 334 thousand in 2022 and 2021, respectively. Segment The Company operates as a single operating segment.
Shipping and Freight Costs The Company records the expense associated with customer-delivery, shipping and freight costs in selling and marketing expense. The Company reported shipping and freight costs of $ 363 thousand and $ 452 thousand in 2023 and 2022, respectively. F-15 Segment The Company operates as a single operating segment.
As of December 31, 2021, the Company had no impairment.
As of December 31, 2023, the Company had no impairment.
The components of lease costs were as follows: SCHEDULE OF COMPONENTS OF LEASE COSTS 2022 2021 Years ended December 31, 2022 2021 Operating lease costs $ 181,361 $ 152,293 Short-term lease costs 29,740 35,604 Total lease costs $ 211,101 $ 187,897 The weighted-average remaining lease term and discount rate were as follows: SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE Years ended December 31, 2022 2021 Operating leases: Weighted average remaining lease term (years) 1.1 1.7 Weighted average discount rate 4.2 % 4.0 % F-19 Supplemental cash flow information and non-cash activity related to our operating leases are as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES 2022 2021 Years ended December 31, 2022 2021 Operating cash flow information: Amounts included in measurement of lease liabilities $ 172,730 $ 145,410 Non-cash activities: ROU asset obtained in exchange for lease liability $ 103,914 $ 299,821 The maturity of the Company’s operating lease liabilities as of December 31, 2022 were as follows: SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES Years ended December 31, 2023 $ 155,379 2024 22,794 Total lease payments $ 178,173 Less: imputed interest (4,693 ) Present value of operating lease liabilities $ 173,480 Operating lease liabilities, current $ 150,968 Operating lease liabilities, noncurrent $ 22,512 ( 9) COMMITMENTS AND CONTINGENCIES (a) Contingencies The Company is a party to various lawsuits and administrative proceedings arising in the ordinary course of business.
The components of lease costs were as follows: Schedule of components of lease costs Years ended December 31, 2023 2022 Operating lease costs $ 155,379 $ 181,361 Short-term lease costs 41,550 29,740 Total lease costs $ 196,929 $ 211,101 The weighted-average remaining lease term and discount rate were as follows: Schedule of weighted average remaining lease term and discount rate Years ended December 31, 2023 2022 Operating leases: Weighted average remaining lease term (years) 0.4 1.1 Weighted average discount rate 4.2 % 4.2 % Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Schedule of supplemental cash flow information related to operating leases Years ended December 31, 2023 2022 Operating cash flow information: Amounts included in measurement of lease liabilities $ 150,968 $ 172,730 Non-cash activities: ROU asset obtained in exchange for lease liability $ - $ 103,914 F-22 The maturity of the Company’s operating lease liabilities as of December 31, 2023 were as follows: Schedule of maturity of operating lease liabilities Years ended December 31, 2024 $ 22,794 Total lease payments $ 22,794 Less: imputed interest (282 ) Present value of operating lease liabilities $ 22,512 Operating lease liabilities, current $ 22,512 Operating lease liabilities, noncurrent $ - ( 7) COMMITMENTS AND CONTINGENCIES (a) Contingencies The Company is a party to various lawsuits and administrative proceedings arising in the ordinary course of business.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations and will need additional funding within the next twelve months.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying 2022 financial statements were prepared assuming that the Company would continue as a going concern. As discussed in Note 1 to the 2022 financial statements, the Company suffered recurring losses and negative cash flows from operations and needed additional funding within the next twelve months.
Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period.
GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period.
As part of the Company’s annual impairment test, which determined that the carrying amount of its single reporting unit exceeded its fair value, the Company recorded a goodwill impairment charge of $ 59 thousand for the year ended December 31, 2022.
As part of the Company’s annual impairment test, which determined that the carrying amount of its single reporting unit exceeded its fair value, the Company recorded a goodwill impairment charge of $ 0 thousand and $59 58,872 thousand for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2021, the Company had no impairment. Intangible Assets In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers.
F-18 Intangible Assets In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers.
F-18 (8) Leases LEASES The Company performs most of the final assembly, testing, packaging, warehousing and distribution at two production and warehouse facilities, totalling approximately 24,000 square feet, in Tijuana, Mexico. In November 2021, the Company entered into operating lease agreements extending each lease through November 30, 2023. Lease payments total approximately $ 9 thousand per month.
F-21 (6) Leases The Company performs most of the final assembly, testing, packaging, warehousing and distribution at two production and warehouse facilities, totalling approximately 24,000 square feet, in Tijuana, Mexico. In November 2021, the Company entered into operating lease agreements extending each lease through November 30, 2023.
During 2022 and 2021, the Company had two and one suppliers that provided 93 % and 97 %, respectively, of the Company’s purchased inventory. Accounts Receivable, Net Accounts receivable are recorded at invoice value, net of any allowance for doubtful accounts.
During 2023 and 2022, the Company had one and two suppliers that provided 86% and 93% , respectively, of the Company’s purchased inventory. Accounts Receivable, Net Accounts receivable are recorded at invoice value, net of any allowance for doubtful accounts that are based on credit losses.
The intrinsic value is the difference between the estimated fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option. The total fair value of options that vested during the years ended December 31, 2022 and 2021 was $ 710 thousand and $ 1.0 million, respectively.
The total intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $ 0 and $ 140 thousand, respectively. The intrinsic value is the difference between the estimated fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option.
At December 31, 2022, two customers with an accounts receivable balance of 10% or greater individually accounted for a combined 75 % of the Company’s accounts receivable. At December 31, 2021, four customers with an accounts receivable balance of 10% or greater individually accounted for a combined 86 % of the Company’s accounts receivable.
At December 31, 2023, one customer with an accounts receivable balance of 10% or greater individually accounted for 96% of the Company’s accounts receivable. At December 31, 2022, two customers with an accounts receivable balance of 10% or greater individually accounted for a combined 75% of the Company’s accounts receivable.
This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management.
This raised substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters were also described in Note 1 to the 2022 financial statements. The 2022 financial statements did not include any adjustments that might result from the outcome of this uncertainty.
The rebate and promotion accrual was no t material at December 31, 2022, and $ 175 thousand at December 31, 2021, respectively. F-11 Contract Balances Accounts receivable is recorded when the Company has an unconditional right to the consideration.
The rebate and promotion accrual was not material at December 31, 2023 and 2022, respectively. Contract Balances Accounts receivable is recorded when the Company has an unconditional right to the consideration.
As of December 31, 2022, the Company had cash and cash equivalents of $ 530 thousand and during the year ended December 31, 2022, the Company recorded a net loss of $ 15.5 million. The Company will require additional liquidity to continue operations beyond the next 12 months.
As of December 31, 2023, the Company had cash and cash equivalents of $709 709,322 thousand and during the year ended December 31, 2023, the Company recorded a net loss of $17.6 17,633,924 million. The Company will require additional liquidity to continue operations beyond the next 12 months.
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