What changed in FiEE, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of FiEE, Inc.'s 2023 and 2024 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 2024 report.
+240 added−359 removedSource: 10-K (2024-12-31) vs 10-K (2024-04-12)
Top changes in FiEE, Inc.'s 2024 10-K
240 paragraphs added · 359 removed · 120 edited across 2 sections
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+167 / −217 · 117 edited
- Item 1A. Risk Factors+73 / −142 · 3 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
3 edited+70 added−139 removed0 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
3 edited+70 added−139 removed0 unchanged
2023 filing
2024 filing
Biggest changeIn particular, the combined company must perform system and process evaluation and testing of its internal control over financial reporting to allow management and the combined company’s independent registered public accounting firm to report on the effectiveness of its internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act (“Section 404”).
Biggest changeRules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm.
Minim and e2Companies do not anticipate that the combined company will pay any cash dividends in the foreseeable future. The current expectation is that the combined company will retain its future earnings, if any, to fund the development and growth of the combined company’s business.
We have never declared or paid any cash dividends on our stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes.
Epidemic and pandemic diseases (including the COVID-19 pandemic) could have a material adverse effect on our business, financial condition, results of operations, cash flows, and ability to comply with regulatory requirements.
Complying with these reporting and other regulatory requirements are time-consuming and expensive and could have a negative effect on our business, results of operations and financial condition.
Removed
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.
Added
ITEM 1A. – RISK FACTORS Risks Related to Our Company After the cessation of our legacy business and since transitioning to new product offerings upon the closing of the Purchase Agreement, we do not have a significant revenue generating business.
Removed
On March 12, 2024, we entered into an Agreement and Plan of Merger (“Merger Agreement”) with e2Companies LLC (“e2Companies”).
Added
Prior to the cessation of our legacy business, our principal assets, product offerings and business primarily consisted of providing consumer networking and intelligent software services.
Removed
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).
Added
After the closing of the transactions under the Purchase Agreement on February 18, 2025, we have transitioned to becoming a digital service provider and our current business operations focus on integrating artificial intelligence and data analytics into content creation and brand management.
Removed
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.
Added
However, as we are still in the early stages of our new business offerings as of April 10, 2025, we have had limited operations and have received limited revenue from our operations. As a result, it may be difficult for an investor to make a determination as to the possible success or failure of our business.
Removed
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.
Added
We may fail to successfully execute our business plan. Our shareholders may lose their investment if we fail to execute our business plan. Our prospects must be considered in light of the certain risks and uncertainties, including but not limited to, competition and the ability to retain experienced personnel and general economic conditions.
Removed
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.
Added
We cannot guarantee that we will be successful in executing our business plan. If we fail to successfully execute our business plan, our shareholders may lose their entire investment. The Company may suffer from lack of availability of additional funds.
Removed
There can be no assurance that the Merger will be completed in the expected timeframe, or at all.
Added
We expect to have ongoing needs for working capital in order to fund operations and to continue to expand our operations. To that end, we will be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital on favorable terms, if at all.
Removed
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”).
Added
If we are successful, whether the terms are favorable or unfavorable, there is a potential that we will fail to comply with the terms of such financing, which could result in severe liability for our Company.
Removed
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.
Added
If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund liabilities, or (d) seek protection from creditors. In addition, any future sale of our equity securities would dilute our existing shareholders and could be at prices substantially below prices at which our shares currently trade.
Removed
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.
Added
Our inability to raise capital could require us to significantly curtail or terminate our operations altogether. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders.
Removed
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.
Added
The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.
Removed
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.
Added
In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations.
Removed
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.
Added
These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in us. Our acquisition strategy creates risks for our business. We expect that we will pursue acquisitions of other businesses, assets or technologies to grow our business.
Removed
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.
Added
We may fail to identify attractive acquisition candidates or we may be unable to reach acceptable terms for future acquisitions. We might not be able to raise enough cash to compete for attractive acquisition targets.
Removed
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.
Added
If we are unable to complete acquisitions in the future, our ability to grow our business will be impaired. 5 We may pay for acquisitions by issuing additional shares of our common stock, which would dilute our stockholders, or by issuing debt, which could include terms that restrict our ability to operate our business or pursue other opportunities and subject us to meaningful debt service obligations.
Removed
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.
Added
We may also use significant amounts of cash to complete acquisitions. To the extent that we complete acquisitions in the future, we likely will incur future depreciation and amortization expenses associated with the acquired assets. We may also record significant amounts of intangible assets, including goodwill, which could become impaired in the future.
Removed
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.
Added
Acquisitions involve numerous other risks, including: ● difficulties integrating the operations, technologies, services and personnel of the acquired companies; ● challenges maintaining our internal standards, controls, procedures and policies; ● diversion of management’s attention from other business concerns; ● over-valuation by us of acquired companies; ● litigation resulting from activities of the acquired company, including claims from terminated employees, customers, former stockholders and other third parties; ● insufficient revenues to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired companies; ● insufficient indemnification or security from the selling parties for legal liabilities that we may assume in connection with our acquisitions; ● entering markets in which we have no prior experience and may not succeed; ● risks associated with foreign acquisitions, such as communication and integration problems resulting from geographic dispersion and language and cultural differences, compliance with foreign laws and regulations and general economic or political conditions in other countries or regions; ● potential loss of key employees of the acquired companies; and ● impairment of relationships with clients and employees of the acquired companies or our clients and employees as a result of the integration of acquired operations and new management personnel.
Removed
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.
Added
We may be unable to scale our operations successfully. Our growth strategy will place significant demands on our management and financial, administrative and other resources. Operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial, administrative and other resources.
Removed
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.
Added
If we are unable to respond to and manage changing business conditions, or the scale of its operations, then the quality of our services, our ability to retain key personnel, and our business could be harmed. We may suffer from a lack of liquidity.
Removed
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.
Added
By incurring indebtedness, we subject ourselves to increased debt service obligations which could result in operating and financing covenants that would restrict our operations and liquidity.
Removed
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.
Added
This would impair our ability to hire the necessary senior and support personnel required for our business, as well as carry out our acquisition strategy and other business objectives. 6 We do not currently have an independent board of directors, or committees of the board of directors.
Removed
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.
Added
Our board of directors currently consists of one sole director, our former Chief Executive Officer, David Lazar, and we have determined that he is not considered “independent” under the definition set forth in the listing standards of the Nasdaq. We do not have a board of directors that consists of a majority of independent directors.
Removed
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.
Added
Nor have we established committees of the board of directors. However, we plan to establish an independent audit committee, compensation committee and nomination committee pursuant to the Nasdaq listing standards in connection with seeking re-listing on the Nasdaq.
Removed
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.
Added
The requirements of remaining a public company may strain our resources and distract our management, which could make it difficult to manage our business. We are required to comply with various regulatory and reporting requirements, including those required by the SEC.
Removed
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.
Added
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.
Removed
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.
Added
The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis.
Removed
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.
Added
It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting.
Removed
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.
Added
As a result, we may not be able to complete the assessment and remediation process on a timely basis.
Removed
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.
Added
In the event that we determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected. 7 Risks Related to Our Common Stock We have not been in compliance with the Nasdaq’s requirements for continued listing and as a result our common stock has been suspended from trading on the Nasdaq, and in the future it may be delisted from trading on the Nasdaq, which has had and will continue to have a material effect on us and our stockholders.
Removed
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.
Added
We currently do not meet the Nasdaq’s Stockholders’ Equity Requirement and are suspended from trading on the Nasdaq.
Removed
As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors.
Added
Additionally, the Nasdaq, in its letter to us on April 7, 2025, also raised the Additional Deficiencies that we failed to comply with the Nasdaq’s shareholder approval requirements pursuant to the Nasdaq Listing Rule 5635 (b), (c) and (d) for the closing of the transactions under the Purchase Agreement, and that we do not currently comply with the Nasdaq’s majority independent board, independent audit committee, compensation committee and nomination committee requirements as set forth in the Nasdaq Listing Rule 5605(b)(1), 5605(c)(2), 5605(d)(2) and 5605(e), respectively.
Removed
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.
Added
There can be no assurance whether or when the suspension of trading on the Nasdaq will be lifted. If our common stock is delisted, there can be no assurance whether or when it would again be listed for trading on the Nasdaq or any other exchange.
Removed
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.
Added
If our common stock is delisted, the market price of our shares will likely decline further and become more volatile, and our stockholders may find that their ability to trade in our stock will be adversely affected.
Removed
Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
Added
Furthermore, institutions whose charters do not allow them to hold securities in unlisted companies might sell our shares, which could have a further adverse effect on the price of our stock.
Removed
The terms of the Merger Agreement prohibit Minim from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances if the Minim Board of Directors determines in good faith, after consultation with its independent financial advisor and outside counsel, that an unsolicited competing proposal constitutes, or would reasonably be expected to result in, a superior competing proposal and that failure to take such action would be reasonably likely to result in a breach of the fiduciary duties of the Minim Board of Directors.
Added
In addition, our ability to hire and retain key personnel and employees may be adversely affected by volatility or reductions in the price of our common stock, since these employees are generally granted equity-based awards. We have previously experienced and may continue to experience employee attrition and difficulty attracting talent as a result of these issues.
Removed
In the event that the Minim Board of Directors withdraws or modifies its recommendation for approval of the merger based on such superior competing proposal, e2Companies may terminate the Merger Agreement.
Added
We may not be successful in attracting, integrating, or retaining qualified personnel to fulfill our current or future needs, nor may we be successful in keeping the qualified personnel we currently have. Our common stock currently trades on the Pink Tier of OTC Markets and investors may have difficulty buying and selling our shares or obtaining market quotations for them.
Removed
The exchange ratio is not adjustable based on the market price of Minim common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.
Added
Our common stock currently trades on the Pink Tier of OTC Market Group LLC’s Marketplace. The Company plans to update its symbol, pending FINRA’s update of our name in its records. The OTC Market is a network of security dealers who buy and sell stock.
Removed
The Merger Agreement has set the exchange ratio formula for the e2Companies common units, and the exchange ratio is only adjustable upward or downward to reflect Minim’s and e2Companies’ equity capitalization as of immediately prior to the effective time of the merger.
Added
The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information.
Removed
Any changes in the market price of common stock before the completion of the merger will not affect the number of shares e2Companies unitholders will be entitled to receive pursuant to the Merger Agreement.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
117 edited+50 added−100 removed93 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
117 edited+50 added−100 removed93 unchanged
2023 filing
2024 filing
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.
Biggest changeCONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2024 and 2023 2024 2023 Cash flows provided by (used in) operating activities: Net loss $ (4,224,278 ) $ (17,633,924 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 347,671 612,138 Amortization of right-of-use assets 22,512 150,968 Amortization of debt issuance costs - 29,845 Stock-based compensation 897,163 279,395 Provision for (recovery of) credit losses (312,983 ) 174,652 Vendor liability forgiveness, net of asset transfers 2,200,929 - Changes in operating assets and liabilities: Accounts receivable 1,014,360 1,882,377 Inventories 404,299 15,462,559 Prepaid expenses and other current assets (98,990 ) 324,963 Other assets 33,384 53,458 Accounts payable (3,249,333 ) 8,306,503 Accrued expenses (784,230 ) (3,237,131 ) Deferred revenue - (1,405,280 ) Operating lease liabilities (22,512 ) (150,968 ) Net cash provided by (used in) operating activities (3,772,008 ) 4,849,555 Cash flows provided by (used in) investing activities: Purchases of equipment - (162,270 ) Sales or property and equipment 11,642 Certification costs incurred and capitalized - (219,595 ) Net cash provided by (used in) investing activities 11,642 (381,865 ) Cash flows provided by (used in) financing activities: Net repayment on the bank credit line - (4,788,478 ) Proceeds from preferred stock issuance 3,081,206 - Net cash provided by (used in) financing activities 3,081,206 (4,788,478 Net change in cash, cash equivalents, and restricted cash (679,160 ) (320,788 ) Cash, cash equivalents, and restricted cash - Beginning 709,322 1,030,110 Cash, cash equivalents, and restricted cash - Ending $ 30,162 $ 709,322 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ - $ 238,329 Income taxes $ 11,125 $ 42,619 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 January 22, 2024, the Company, entered into a Letter Agreement re Product Purchase (the “Letter Agreement”) and a Debt Settlement Agreement (the “Settlement Agreement,” and with the Letter Agreement, the “Agreements”) with Motorola Mobility, LLC (“Motorola”).
On January 22, 2024, the Company, entered into a Letter Agreement re Product Purchase (the “Letter Agreement”) and a Debt Settlement Agreement (the “Settlement Agreement,” and the Letter Agreement, the “Agreements”) with Motorola Mobility, LLC (“Motorola”).
On December 6, 2023, the Company and Slingshot Capital entered into a Debt Conversion Agreement (“Conversion Agreement”) pursuant to which the Company agreed to issue 734,343 shares of the Company’s common stock (based on $ 1.533 per share) (the “Shares”) in exchange for the cancellation of a total principal amount of $ 1,000,000 (“Principal Amount”) outstanding under the Bridge Loan Agreement and Bridge Term Note (collectively, the “Loan Agreements”), with Slingshot Capital, plus $ 125,778 in accrued and unpaid interest on such Principal Amount as of December 6, 2023.
On December 6, 2023, the Company and Slingshot Capital entered into a Debt Conversion Agreement (“Conversion Agreement”) pursuant to which the Company agreed to issue 734,343 shares of the Company’s common stock (based on $ 1.533 per share) (the “Shares”) in exchange for the cancellation of a total principal amount of $ 1,000,000 (“Principal Amount”) outstanding under the Bridge Loan Agreement and Bridge Term Note (collectively, the “Loan Agreements”), with Slingshot Capital, plus $ 125,778 in accrued and unpaid interest on such Principal Amount as of December 6, 2023.
The price per share used in the exchanged was determined by the weighted average price per share and trade volume on September 13, 2023 and November 28, 2023. Slingshot Capital is owned by the Company’s former Chairperson of the Board and a former Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively.
The price per share used in the exchanged was determined by the weighted average price per share and trade volume on September 13, 2023 and November 28, 2023. Slingshot Capital is owned by the Company’s former Chairperson of the Board and a former Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively.
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.
Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements.
Other considerations of ASC 606 include the following: ● Returned Goods - analyses of actual returned products are compared to the product return estimates and historically have resulted in immaterial differences. The Company has concluded that the current process of estimating the return reserve represents a fair measure to adjust revenue.
Other considerations of ASC 606 include the following: ● Returned Goods - analyses of actual returned products are compared to the product return estimates and historically have resulted in immaterial differences. The Company has concluded that the process of estimating the return reserve represents a fair measure to adjust revenue.
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.
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 consolidated financial statements are free of material misstatement, whether due to error or fraud.
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.
Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
The Company has concluded that transfer of control of its hardware products transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Revenues from sales of hardware products are recognized at a point in time upon transfer of control.
The Company concluded that transfer of control of its hardware products transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Revenues from sales of hardware products are recognized at a point in time upon transfer of control.
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’s significant operating losses raise substantial doubt about its ability to continue as a going concern.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.
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.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
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.
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.
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).
The price protection accrual was not material at December 31, 2024 and December 31, 2023. ● 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 Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include but are not limited to equity offerings, debt financings, and cost reductions. However, given a variety of external factors, the Company may be unable to access further equity or debt financing when needed.
The Company is evaluating strategies to obtain the required additional funding for future operations. These strategies may include but are not limited to equity offerings, debt financings, and cost reductions. However, given a variety of external factors, the Company may not be able to access further equity or debt financing when needed.
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.
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.
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.
Tax positions must meet a “more-likely-than-not” recognition threshold. At December 31, 2024 and 2023, 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, 2024 and 2023. The Company files income tax returns in the U.S., India, and Mexico.
(c) Vendor Obligation Releases In its efforts to manage its liquidity and cash-flow position, the Company negotiated and executed liability release agreements with certain vendors in Q4 2023 who comprised $ 5.0 million of outstanding accounts payable as of December 31, 2023.
F-20 (c) Vendor Obligation Releases In its efforts to manage its liquidity and cash-flow position, the Company negotiated and executed liability release agreements with certain vendors in Q4 2023 who comprised $ 5.0 million of outstanding accounts payable as of December 31, 2023.
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 .
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, 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.
The Company’s consolidated financial statements as of December 31, 2024, 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.
Rent expense was $ 55 thousand and $ 54 thousand for the year ended December 31, 2023, and 2022, respectively. On December 1, 2021, the Company executed an amendment to extend the lease from June 2022 to May 2024 with monthly payments of approximately $ 5 thousand.
Rent expense was $ 23 thousand and $ 55 thousand for the year ended December 31, 2024 and 2023, respectively. On December 1, 2021, the Company executed an amendment to extend the lease from June 2022 to May 2024 with monthly payments of approximately $ 5 thousand.
The Company derives its net sales primarily from the sales of hardware products to computer peripherals retailers, computer product distributors, OEMs, and direct to consumers and other channel partners via the Internet. The Company accounts for point-of-sale taxes on a net basis.
The Company derived its net sales primarily from the sales of hardware products to computer peripherals retailers, computer product distributors, OEMs, and direct to consumers and other channel partners via the Internet. The Company accounts for point-of-sale taxes on a net basis.
Transaction Price Allocated to the Remaining Performance Obligations The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog.
F-14 Transaction Price Allocated to the Remaining Performance Obligations The remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog.
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.
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-22 The 2019 Plans authorize grants to purchase shares of authorized but unissued common stock.
In May 2020, the Company signed a two-year lease agreement for 3,218 square feet of office space at 275 Turnpike Executive Park in Canton, MA. The agreement includes a one-time option to cancel the second year of lease with three months advance notice . The location is currently utilized by the Company’s research and development group.
In May 2020, the Company signed a two-year lease agreement for 3,218 square feet of office space at 275 Turnpike Executive Park in Canton, MA. The agreement includes a one-time option to cancel the second year of lease with three months advance notice . The location was utilized by the Company’s research and development group.
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.
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.
To reduce risk, the Company closely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are not limited to, engaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the marketplace.
To reduce risk, the Company closely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are no t limited to, engaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the marketplace.
F-14 ● Price protection - if the Company reduces the price on any products sold to the customer, the Company will guarantee an account credit for the price difference for all quantities of that product that the customer still holds.
F-12 ● Price protection - if the Company reduces the price on any products sold to the customer, the Company will guarantee an account credit for the price difference for all quantities of that product that the customer still holds.
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.
The rebate and promotion accrual was not material at December 31, 2024 and 2023, respectively. Contract Balances Accounts receivable is recorded when the Company has an unconditional right to the consideration.
Liquidity The Company’s operations have historically been financed through the issuance of common stock and borrowings. Since inception, the Company has incurred significant losses and negative cash flows from operations.
F-7 Liquidity The Company’s operations have historically been financed through the issuance of common stock and borrowings. Since inception, the Company has incurred significant losses and negative cash flows from operations.
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.
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 $ 0 million and $ 2.0 million in 2024 and 2023, respectively.
As of December 31, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to SaaS performance obligations that are unsatisfied or partially unsatisfied was $ 0 .
As of December 31, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations related to SaaS performance obligations that are unsatisfied or partially unsatisfied was $ 0 .
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.
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 2024 2023 Federal tax (benefit) rate 21 % 21 % Increase (decrease) in taxes resulting from: State income taxes - 4 Change in valuation allowance (21 ) (21 ) Expiration of NOLs - (5 ) Expiration of stock options - (1 ) Permanent differences - 1 Changes in Federal and state rates - 1 Effective income tax rate 0 % 0 % The Company reviews annually the guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements.
On April 17, 2023, the Company effected a 25:1 reverse stock split for each share of common stock issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock split. Use of Estimates The preparation of consolidated financial statements in conformity with U.S.
All percentages have been calculated using unrounded amounts. On April 17, 2023, the Company effected a 25:1 reverse stock split for each share of common stock issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock split. Use of Estimates The preparation of consolidated financial statements in conformity with U.S.
(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.
F-25 (11) RELATED PARTY TRANSACTIONS The Company leased 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.
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.
F-18 (6) Leases The Company performed 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.
Contributions by the Company are made in accordance with the investment elections made by each participant for his or her deferral contributions. The matching contribution is applied to the employee accounts after each payroll. The Company matching contributions charged to expense were $ 98 thousand and $ 179 thousand in the years ended December 31, 2023, and 2022, respectively.
Contributions by the Company are made in accordance with the investment elections made by each participant for his or her deferral contributions. The matching contribution is applied to the employee accounts after each payroll. The Company matching contributions charged to expense were $ 0 thousand and $ 98 thousand in the years ended December 31, 2024, and 2023, respectively.
F-30 Merger Agreement with e2 Companies, LLC On March 12, 2024, the “Company”, and its wholly owned subsidiary, MME Sub 1 LLC, which was formed in March 2024, a Florida limited liability company (“Merger Sub”), entered into an Agreement and Plan of Merger (“Merger Agreement”) with e2Companies LLC, a Florida limited liability company (“e2Companies”).
Merger Agreement with e2 Companies, LLC On March 12, 2024, the “Company”, and its wholly owned subsidiary, MME Sub 1 LLC, a Florida limited liability company (“Merger Sub”), formed in March 2024, entered into an Agreement and Plan of Merger (“Merger Agreement”) with e2Companies LLC, a Florida limited liability company (“e2Companies”).
The common share equivalents consist of shares of common stock issuable upon exercise of outstanding stock options. Revenue Recognition The Company primarily sells hardware products to its customers. The hardware products include cable modems and gateways, mobile broadband modems, wireless routers, MoCA adapters and mesh home networking devices.
The common share equivalents consist of shares of common stock issuable upon exercise of outstanding stock options. Revenue Recognition The Company primarily sold hardware products to its customers. The hardware products included cable modems and gateways, mobile broadband modems, wireless routers, MoCA adapters and mesh home networking devices.
The Company accrues for assurance-type warranties, which do not include any additional distinct services other than the assurance that the goods comply with agreed-upon specifications. The warranty reserve was no t material at December 31, 2023 and December 31, 2022.
The Company accrues for assurance-type warranties, which do not include any additional distinct services other than the assurance that the goods comply with agreed-upon specifications. The warranty reserve was not material at December 31, 2024 and December 31, 2023.
Other than the Mexico facility, the Company has an India operation and has no other operations in a foreign location. The India operation had no tax obligations as of December 31, 2023. F-28 (10) RETIREMENT PLAN The Company sponsors a 401(k) retirement savings plan for employees.
Other than the Mexico facility, the Company has an India operation and has no other operations in a foreign location. The India operation had no tax obligations as of December 31, 2024. (10) RETIREMENT PLAN The Company sponsors a 401(k) retirement savings plan for employees.
Each share of Series A Preferred Stock shall be convertible, at the option of the holder, into one share of common stock of the Company, $.01 par value per share (the “Common Stock”), and vote on an “as-if-converted” basis and shall have full ratchet protection in any subsequent offerings.
Each share of Series A Preferred Stock shall be convertible, at the option of the holder, into 1.4 shares of common stock of the Company, $0.01 par value per share (the “Common Stock”), and vote on an “as-if-converted” basis and shall have full ratchet protection in any subsequent offerings.
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 were offered over a defined contract period, generally one year, and were sold to Internet service providers, who then promoted the services to their subscribers. These services were available as an on-demand application over the defined term.
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 sales returns accrual was $ 0 thousand and $ 578 thousand at December 31, 2024 and 2023, respectively. ● Warranties - the Company does not offer its customers a separate warranty for purchase. Therefore, there is no separate performance obligation.
The Company did not renew the lease and the lease expired on November 30, 2023. Lease payments total approximately $ 9 thousand per month. Rent expense was $ 101 thousand and $ 110 thousand for the years ended December 31, 2023 and 2022, respectively.
The Company did not renew the lease, and the lease expired on November 30, 2023. Lease payments total approximately $ 9 thousand per month. Rent expense was $ 0 thousand and $ 101 thousand for the years ended December 31, 2024 and 2023, 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.
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 $ 0 thousand and $ 30 thousand for the years ended December 31, 2024 and 2023, respectively.
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.
Under the Economic Growth and Tax Relief Reconciliation Act, employees who are age 50 or older could contribute an additional $ 7,500 per year for a maximum of $ 30,500 for 2024. 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.
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.
These costs are amortized over an 18- month period, beginning when the related products are available to be sold. As of December 31, 2024 and 2023, the balance outstanding for certifications costs, net of accumulated amortization, was $ 0 thousand and $ 417 thousand, respectively. F-10 The long-term insurance policies are amortized over the term of the coverage period.
F-23 Royalty expense under the License Agreement amounted to $ 6,600,000 and $ 6,600,000 for the years ended December 31, 2023 and 2022, respectively, and is reported in selling and marketing expense on the accompanying consolidated statements of operations.
Royalty expense under the License Agreement amounted to $ 0 and $ 6,600,000 for the years ended December 31, 2024 and 2023, respectively, and is reported in selling and marketing expense on the accompanying consolidated statements of operations.
In aggregate, the executed release agreements resulted in a reduction of outstanding accounts payable obligations by $3.6 million from $5.0 million to $1.4 million. The executed release agreements become effective and are contingent upon payment of the $ 1.4 million negotiated amounts, which was paid during the period of Q1 2024.
In aggregate, the executed release agreements resulted in a reduction of outstanding accounts payable obligations by $3.6 million from $5.0 million to $1.4 million. The executed release agreements became effective and are contingent upon payment of the $ 1.4 million negotiated amounts received during the period of Q1 2024.
Effective January 1, 2022, the Company increased the Company match to an amount not to exceed 3% of an employee’s contribution. Employees could contribute to the 401(k) up to 100% of their wages with a maximum of $ 20,500 for 2022.
Effective January 1, 2022, the Company increased the Company match to an amount not to exceed 3% of an employee’s contribution. Employees could contribute to the 401(k) up to 100% of their wages with a maximum of $ 23,000 for 2024.
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.
The Company has not experienced any credit losses on its cash and cash equivalents through December 31, 2024 and has not experienced any credit losses as of the date of filing this Form 10-K F-8 For the year ended December 31, 2024, two customers accounted for 10% or greater individually, and 96% in the aggregate of the Company’s total net sales.
The agreements include service offerings, which deliver applications and technologies via cloud-based deployment models that the Company develops functionality for, provides unspecified updates and enhancements for, and hosts, manages, provides upgrade and support for the customers’ access by entering into solution agreements for a stated period.
The agreements included service offerings, which deliver applications and technologies via cloud-based deployment models that the Company developed functionality for, provided unspecified updates and enhancements for, and hosts, manages, provided upgrade and support for the customers’ access by entering into solution agreements for a stated period.
For the year ended December 31, 2022, two customers accounted for 10% or greater individually, and 87% in the aggregate of the Company’s total net sales.
For the year ended December 31, 2023, two customers accounted for 10% or greater individually, and 80% in the aggregate of the Company’s total net sales.
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.
As of December 31, 2024 and 2023, the balance outstanding for long-term insurance policies, net of accumulated amortization, was $ 22 thousand and $ 47 thousand, respectively.
Under the Purchase Agreement, the Company has agreed to designate 2,800,000 of the Preferred Stock as Series A Preferred Stock (the “Series A Preferred Stock”) for the sale to Lazar.
Under the Purchase Agreement, the Company agreed to designate 2,000,000 of the Preferred Stock as Series A Preferred Stock (the “Series A Preferred Stock”) for the sale to Lazar (or a Lazar Transferee).
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.
F-13 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 $ 0 thousand and $ 363 thousand in 2024 and 2023, respectively. Segment The Company operates as a single operating segment.
Stock Option Activity Stock option activity under Stock Option Plans was as follows: Summary of stock option activity Outstanding Options Weighted average exercise price Weighted average remaining contractual term Aggregate Intrinsic Value Outstanding at December 31, 2021 94,583 $ 36.75 2.80 $ 10.50 Granted - - - - Exercised (17,233 ) 13.75 - - Forfeited (38,424 ) 36.75 - - Outstanding at December 31, 2022 38,926 $ 46.75 2.20 $ 10.50 Granted - - - - Exercised - - - - Forfeited (38,926 ) 46.75 - - Outstanding at December 31, 2023 - $ - - $ - Exercisable at December 31, 2023 - $ - - $ - There were no options granted during 2023 and 2022 under the stock option plan.
Stock Option Activity Stock option activity under Stock Option Plans was as follows: Summary of stock option activity Outstanding Options Weighted average exercise price Weighted average remaining contractual term Aggregate Intrinsic Value Outstanding at December 31, 2022 38,926 $ 46.75 2.20 $ 10.50 Granted - - - - Exercised - - - - Forfeited (38,926 ) 46.75 - - Outstanding at December 31, 2023 - $ - - $ - Outstanding at December 31, 2024 - Exercisable at December 31, 2024 - $ - - $ - There were no options granted during 2024 and 2023 under the stock option plan.
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.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States.
The monthly fees charged to the customers are based on the number of subscribers utilizing the services each month, and the revenue recognized generally corresponds to the monthly billing amounts as the services are delivered. Multiple Performance Obligations The Company has hardware products that include SaaS services as a bundled product.
The monthly fees charged to the customers were based on the number of subscribers utilizing the services each month, and the revenue recognized generally corresponded to the monthly billing amounts as the services were delivered. Multiple Performance Obligations The Company had hardware products that included SaaS services as a bundled product.
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”.
F-6 FiEE, INC. f/k/a Minim, Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2024 and 2023 (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION FiEE, Inc. (formerly, 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 “FiEE” or the “Company”.
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.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Page Report of Independent Registered Public Accounting Firm (PCAOB ID 7116) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-4 Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-6 Notes to Consolidated Financial Statements F-7 – F-27 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of FiEE, Inc.
The Company leases the facility that comprises its headquarters at 848 Elm Street in Manchester, NH. The facility lease agreement was effective from August 1, 2019 to July 31, 2021 and was renewed for a one-year extension until July 31, 2022.
The Company did not renew the lease, and the lease expired on May 31, 2024. The Company leased the facility that comprises its headquarters at 848 Elm Street in Manchester, NH. The facility lease agreement was effective from August 1, 2019 to July 31, 2021 and was renewed for a one-year extension until July 31, 2022.
All shares and associated amounts have been retroactively restated to reflect the stock split. Preferred Stock The Company is authorized to issue 2,000,000 shares of preferred stock at $ 0.001 par value per share. As of December 31, 2023 and 2022, no shares of preferred stock were outstanding.
All shares and associated amounts have been retroactively restated to reflect the stock split. Preferred Stock and Warrants The Company is authorized to issue 3,000,000 shares of preferred stock at $ 0.001 par value per share. As of December 31, 2024 and 2023, the Company had 2,305,357 and 0 shares, respectively, of preferred stock were outstanding.
A summary of plan activity for the 2021 Equity Plans is as follows: Schedule of restricted stock units Weighted Average Units Grant Date Fair value Unvested at December 31, 2021 48,956 $ 31.00 Granted 34,080 15.50 Vested (25,331 ) 21.00 Forfeited (13,189 ) 34.75 Unvested at December 31, 2022 44,516 $ 23.75 Granted 14,831 5.39 Vested (20,498 ) (21.63 ) Forfeited (38,849 ) (17.86 ) Unvested at December 31, 2023 - $ - Stock-based Compensation Expense The following table sets forth stock-based compensation expense included in the Company’s consolidated statements of operations: Schedule of stock based compensation expense Years ended December 31, 2023 2022 Cost of goods sold $ 17,205 $ 79,498 Sales and marketing 55,657 201,373 General and administrative 75,921 456,970 Research and development 130,612 432,754 Total stock-based compensation expense $ 279,395 $ 1,170,595 F-26 (9) INCOME TAXES Income tax expense consists of: Schedule of income taxes Current Deferred Total Year Ended December 31, 2022: U.S.
F-23 A summary of plan activity for the 2021 Equity Plans is as follows: Schedule of restricted stock units Weighted Average Grant Date Units Fair value Unvested at December 31, 2022 44,516 $ 23.75 Granted 14,831 5.39 Vested (20,498 ) (21.63 ) Forfeited (38,849 ) (17.86 ) Unvested at December 31, 2023 - $ - Stock-based Compensation Expense The following table sets forth stock-based compensation expense included in the Company’s consolidated statements of operations: Schedule of stock based compensation expense Years ended December 31, 2024 2023 Cost of goods sold $ - $ 17,205 Sales and marketing - 55,657 General and administrative 897,163 75,921 Research and development - 130,612 Total stock-based compensation expense $ 897,163 $ 279,395 (9) INCOME TAXES Income tax expense consists of: Schedule of income taxes Current Deferred Total Year Ended December 31, 2023: U.S.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 45 MINIM, INC.
ITEM 7A. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. 19 ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FiEE, INC. f/k/a Minim, Inc.
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.
F-11 The Company also sold and earned revenues from Software as a Service (“SaaS”), including services that enabled and secured a better-connected home with the AI-driven smart home WiFi management and security platform. Customers did not have the contractual right or ability to take possession of the hosted software.
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.
(12) SUBSEQUENT EVENTS The Company considers events or transactions that occur after the balance sheet date but prior to April 10, 2025 to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.
Leases The Company determines if an arrangement is a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset.
As of December 31, 2024, the Company has fully amortized its intangible asset. Leases The Company determines if an arrangement is a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset.
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.
As of December 31, 2024, the Company had cash and cash equivalents of $30 30,162 thousand and during the year ended December 31, 2024, the Company recorded a net loss of $4.2 million. The Company will require additional liquidity to continue operations beyond the next 12 months.
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’s intangible asset is amortized using the straight-line method over their estimated useful life. 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.
They are due to expire in varying amounts from 2033 through 2040. A valuation allowance has been established for the full amount of net deferred income tax assets as management has concluded that it is more likely than-not that the benefits from such assets will not be realized.
A valuation allowance has been established for the full amount of net deferred income tax assets as management has concluded that it is more likely than no t that the benefits from such assets will not be realized.
On July 18, 2022, the lease agreement was amended to a month-to-month lease arrangement and may be terminated by either party with a 60-day notice. The facility lease agreement provides for the lease of 2,656 square feet of office space. Rent expense was $ 42 thousand and $ 33 thousand for the years ended December 31, 2023 and 2022, 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 lease was cancelled in December 2024. The facility lease agreement provided for the lease of 2,656 square feet of office space.
Intangible assets consisted of the following at December 31, 2023 and 2022: Schedule of intangible assets Estimated As of December 31, 2023 As of December 31, 2022 Useful Gross Gross Life Carrying Accumulated Carrying Accumulated (in years) Amount Amortization Net Amount Amortization Net Customized internal use software 2.5 $ - $ - $ - $ 230,106 $ (207,399 ) $ 22,707 Acquired web domain 5.0 86,732 (53,485 ) 33,247 86,732 (36,138 ) 50,594 $ 86,732 $ (53,485 ) $ 33,247 $ 316,838 $ (243,537 ) $ 73,301 Amortization expense was $xx thousand and $ 40 thousand in the years ended December 31, 2023 and 2022, respectively.
F-16 Intangible Assets Intangible assets consisted of the following at December 31, 2024 and 2023: Schedule of intangible assets Estimated As of December 31, 2024 As of December 31, 2023 Useful Gross Gross Life Carrying Accumulated Carrying Accumulated (in years) Amount Amortization Net Amount Amortization Net Customized internal use software 2.5 $ - $ - $ - $ - $ - $ - Acquired web domain 5.0 - - - 86,732 (53,485 ) 33,247 $ - $ - $ - $ 86,732 $ (53,485 ) $ 33,247 Amortization expense was $ 33 thousand and $ 40 thousand in the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, the Company had an accumulated deficit of $92.5 92,468,778 million and cash and cash equivalents of $709 709,322 thousand. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.
As of December 31, 2024, the Company had an accumulated deficit of $96.7 96,693,056 million and cash and cash equivalents of $30 thousand. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.
Equipment Equipment, net consists of the following: Schedule of equipment December 31, Estimated Useful 2023 2022 lives in years Computer hardware and software $ 603,836 $ 497,913 3 Machinery and equipment 726,326 725,568 5 Molds, tools and dies 1,242,711 1,187,541 5 Office furniture and fixtures 79,147 78,728 5 2,652,020 2,489,750 Accumulated depreciation (2,219,515 ) (1,852,777 ) $ 432,505 $ 636,973 Depreciation expense was $ 368 thousand and $ 403 thousand for the years ended December 31, 2023 and 2022, respectively.
Equipment Equipment, net consists of the following: Schedule of equipment December 31, Estimated Useful lives 2024 2023 in years Computer hardware and software $ 603,836 $ 603,836 3 Machinery and equipment 726,326 726,326 5 Molds, tools and dies 1,212,398 1,242,711 5 Office furniture and fixtures 79,147 79,147 5 2,621,706 2,652,020 Accumulated depreciation (2,501,835 ) (2,219,515 ) $ 119,871 $ 432,505 Depreciation expense was $ 282 thousand and $ 368 thousand for the years ended December 31, 2024 and 2023, respectively.
Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, restricted cash and accounts receivable. Substantially all the Company’s cash and cash equivalents and restricted cash are held at one financial institution, Silicon Valley Bank, which was placed into receivership by the FDIC on March 9, 2023.
Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, restricted cash and accounts receivable. Substantially all the Company’s cash and cash equivalents and restricted cash are held at one financial institution.
Federal $ - $ - $ - State and local 16,623 - 16,623 Foreign 25,996 - 25,996 $ 42,619 $ - $ 42,619 The principal components of deferred tax assets, net, were as follows at December 31: Schedule of deferred tax assets 2023 2022 Deferred income tax assets: Capitalized research and development $ - $ 1,234,710 Inventories 550,023 889,821 Accounts receivable 261,564 357,920 Accrued expenses 29,414 266,665 Net operating loss and tax credit carry forwards 19,244,464 14,742,578 Plant and equipment 85,332 39,311 Stock compensation - 120,661 Other – interest expense 293,932 187,990 Total deferred income tax assets 20,464,729 17,839,656 Valuation allowance (20,464,729 ) (17,839,656 ) Net deferred tax assets $ - $ - As of December 31, 2023, the Company had Federal net operating loss carry forwards of approximately $ 76.9 million which are available to offset future taxable income.
Federal $ - $ - $ - State and local 11,216 - 11,216 Foreign - - - $ 11,216 $ - $ 11,216 The principal components of deferred tax assets, net, were as follows at December 31: Schedule of deferred tax assets 2024 2023 Deferred income tax assets: Capitalized research and development $ - $ - Inventories - 550,023 Accounts receivable - 261,564 Accrued expenses - 29,414 Net operating loss and tax credit carry forwards 14,629,440 19,244,464 Plant and equipment - 85,332 Stock compensation - - Other – interest expense - 293,932 Total deferred income tax assets 14,629,440 20,464,729 Valuation allowance (14,629,440 ) (20,464,729 ) Net deferred tax assets $ - $ - F-24 As of December 31, 2024, the Company had Federal net operating loss carry forwards of approximately 70 million, which are available to offset future taxable income.
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.
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 lease was terminated in December 2024. The facility lease agreement provided for 2,656 square feet.
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