UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________ to ________
Commission File Number 0-53722
MINIM, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 04-2621506 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| 03101 | ||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (617) 423-1072
(Former Name or Former Address, and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.01 per share | MINM | The Nasdaq Capital Market |
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑ NO
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☑ NO
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | ||
| Non-accelerated filer | Smaller Reporting Company | ||
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
Yes ☐ NO ☑
The number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of November 6, 2017,9, 2023, was 15,067,790 shares.
MINIM, INC. AND SUBSIDIARIES
INDEX
| 2 |
PART I - FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
MINIM, INC.
Condensed Consolidated Balance Sheets
| ASSETS | September 30, 2017 (Unaudited) | December 31, 2016 |
| Current assets | ||
| Cash and cash equivalents | $90,853 | $179,846 |
| Accounts receivable, net of allowances of $661,892 at September 30, 2017 and $507,296 at December 31, 2016 | 2,104,555 | 2,498,259 |
| Inventories, net | 5,306,662 | 4,926,612 |
| Prepaid expenses and other current assets | 935,984 | 652,402 |
| Total current assets | 8,438,054 | 8,257,119 |
| Other assets | 398,824 | 588,907 |
| Equipment, net | 187,374 | 175,743 |
| Total assets | $9,024,252 | $9,021,769 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Bank debt | $594,778 | $1,306,620 |
| Accounts payable | 3,761,662 | 2,502,323 |
| Accrued expenses | 1,214,240 | 1,051,616 |
| Total liabilities | 5,570,680 | 4,860,559 |
| Commitments and contingencies (Note 4) | ||
| Stockholders' equity | ||
| Common stock: Authorized: 25,000,000 shares at $0.01 par value | ||
| Issued and outstanding: 15,037,790 shares at September 30, 2017 and 14,685,290 shares at December 31, 2016 | 150,378 | 146,853 |
| Additional paid-in capital | 40,163,143 | 39,893,919 |
| Accumulated deficit | (36,859,949) | (35,879,562) |
| Total stockholders' equity | 3,453,572 | 4,161,210 |
| Total liabilities and stockholders' equity | $9,024,252 | $9,021,769 |
March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 802,090 | $ | 530,110 | ||||
| Restricted cash | 500,000 | 500,000 | ||||||
| Accounts receivable, net of allowance of doubtful accounts of $209,710 and $138,331 as of March 31, 2023 and December 31, 2022, respectively | 3,194,760 | 2,758,406 | ||||||
| Inventories, net | 22,766,496 | 25,415,206 | ||||||
| Prepaid expenses and other current assets | 441,971 | 360,735 | ||||||
| Total current assets | 27,705,317 | 29,564,457 | ||||||
| Equipment, net | 552,190 | 636,973 | ||||||
| Operating lease right-of-use assets, net | 134,071 | 173,480 | ||||||
| Intangible assets, net | 46,256 | 73,301 | ||||||
| Other assets | 514,240 | 511,795 | ||||||
| Total assets | $ | 28,952,074 | $ | 30,960,006 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Bank credit line | $ | 3,828,380 | $ | 4,758,663 | ||||
| Accounts payable | 5,336,178 | 2,837,191 | ||||||
| Current maturities of bridge loan agreement | 1,000,000 | 1,000,000 | ||||||
| Current maturities of operating lease liabilities | 125,010 | 150,968 | ||||||
| Accrued expenses | 4,729,053 | 4,440,724 | ||||||
| Deferred revenue, current | 629,691 | 633,542 | ||||||
| Total current liabilities | 15,648,312 | 13,821,088 | ||||||
| Operating lease liabilities, less current maturities | 9,061 | 22,512 | ||||||
| Deferred revenue, noncurrent | 896,990 | 771,738 | ||||||
| Total liabilities | 16,554,363 | 14,615,338 | ||||||
| Commitments and Contingencies (Note 7) | - | - | ||||||
| Stockholders’ equity | ||||||||
| Preferred Stock, authorized: shares at $ par value; shares issued and outstanding | — | — | ||||||
| Common Stock, authorized: shares at $ par value; issued and outstanding: shares at March 31, 2023 and shares at December 31, 2022 respectively | 471,883 | 469,492 | ||||||
| Additional paid-in capital | 90,831,139 | 90,710,030 | ||||||
| Accumulated deficit | (78,905,311 | ) | (74,834,854 | ) | ||||
| Total stockholders’ equity | 12,397,711 | 16,344,668 | ||||||
| Total liabilities and stockholders’ equity | $ | 28,952,074 | $ | 30,960,006 | ||||
See accompanying notes to condensed consolidated financial statements.
| 3 |
MINIM, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2017 | 2016 | 2017 | 2016 | |
| Net sales | $8,582,076 | $5,990,432 | $20,556,157 | $12,688,142 |
| Cost of goods sold | 5,515,753 | 4,064,834 | 13,561,520 | 8,727,755 |
| Gross profit | 3,066,323 | 1,925,598 | 6,994,637 | 3,960,387 |
| Operating expenses: | ||||
| Selling | 1,812,921 | 1,473,787 | 5,341,239 | 3,520,030 |
| General and administrative | 383,475 | 354,237 | 1,153,753 | 1,236,239 |
| Research and development | 457,309 | 352,849 | 1,367,718 | 1,154,789 |
2,653,705 | 2,180,873 | 7,862,710 | 5,911,058 | |
| Operating income (loss) | 412,618 | (255,275) | (868,073) | (1,950,671) |
| Other income (expense): | ||||
| Interest income | 22 | 21 | 59 | 238 |
| Interest expense | (30,636) | (27,778) | (87,178) | (32,115) |
| Other, net | 65 | 41,482 | (11,072) | 42,232 |
| Total other income (expense) | (30,549) | 13,725 | (98,191) | 10,355 |
| Income (loss) before income taxes | 382,069 | (241,550) | (966,264) | (1,940,316) |
| Income taxes | 4,984 | 2,034 | 14,123 | 3,312 |
| Net income (loss) | $377,085 | $(243,584) | $(980,387) | $(1,943,628) |
| Net income (loss) per share: | ||||
| Basic | $0.03 | $(0.02) | $(0.07) | $(0.14) |
| Diluted | $0.02 | $(0.02) | $(0.07) | $(0.14) |
| Basic weighted average common and common equivalent shares | 14,953,285 | 13,877,407 | 14,851,229 | 13,722,680 |
| Diluted weighted average common and common equivalent shares | 16,419,374 | 13,877,407 | 14,851,229 | 13,722,680 |
| 2023 | 2022 | |||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net sales | $ | 10,751,785 | $ | 13,299,255 | ||||
| Cost of goods sold | 8,142,580 | 9,108,018 | ||||||
| Gross profit | 2,609,205 | 4,191,237 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 3,723,812 | 3,652,026 | ||||||
| General and administrative | 1,326,464 | 1,451,032 | ||||||
| Research and development | 1,484,399 | 1,542,582 | ||||||
| Total operating expenses | 6,534,675 | 6,645,640 | ||||||
| Operating loss | (3,925,470 | ) | (2,454,403 | ) | ||||
| Other expense: | ||||||||
| Interest expense, net | 144,987 | 78,097 | ||||||
| Total other expense | 144,987 | 78,097 | ||||||
| Loss before income taxes | (4,070,457 | ) | (2,532,500 | ) | ||||
| Income tax provision | — | 6,000 | ||||||
| Net loss | $ | (4,070,457 | ) | $ | (2,538,500 | ) | ||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
| Weighted average common and common equivalent shares: Basic and diluted | ||||||||
See accompanying notes to condensed consolidated financial statements.
| 4 |
MINIM, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, | ||
2017 | 2016 | |
Cash flows from operating activities: | ||
| Net income (loss) | $(980,387) | $(1,943,628) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 391,181 | 389,487 |
| Stock based compensation | 170,074 | 164,795 |
| Provision for accounts receivable allowances | 540 | 8,988 |
| Provision for inventory reserves | 186,440 | 10,450 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 393,164 | (1,801,446) |
| Inventories | (566,490) | (1,454,910) |
| Prepaid expenses and other assets | (327,462) | (193,245) |
| Accounts payable and accrued expenses | 1,421,963 | 1,084,228 |
| Net cash provided by (used in) operating activities | 689,023 | (3,735,281) |
| Cash flows from investing activities: | ||
| Cost of other assets | (75,000) | (295,000) |
| Additions to plant and equipment | (93,849) | (32,303) |
| Net cash provided by (used in) investing activities | (168,849) | (327,303) |
| Cash flows from financing activities: | ||
| Net funds received from (to) bank credit lines | (711,842) | 2,141,799 |
| Proceeds from stock option exercises | 102,675 | 249,389 |
| Net cash provided by (used in) financing activities | (609,167) | 2,391,188 |
| Net change in cash | (88,993) | (1,671,396) |
| Cash and cash equivalents at beginning of period | 179,846 | 1,846,704 |
| Cash and cash equivalents at end of period | $90,853 | $175,308 |
| Supplemental disclosures of cash flow information: | ||
| Cash paid during the period for: | ||
| Interest | $87,178 | $32,115 |
| Income taxes | $14,123 | $3,312 |
For the three months ended March 31, 2023
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at December 31, 2022 | 1,877,970 | $ | 469,492 | $ | 90,710,030 | $ | (74,834,854 | ) | $ | 16,344,668 | ||||||||||
| Net loss | — | — | — | (4,070,457 | ) | (4,070,457 | ) | |||||||||||||
| Common stock issued for vested restricted units | 9,565 | 2,391 | (2,391 | ) | — | — | ||||||||||||||
| Stock-based compensation | — | — | 123,500 | — | 123,500 | |||||||||||||||
| Balance at March 31, 2023 | 1,887,535 | $ | 471,883 | $ | 90,831,139 | $ | (78,905,311 | ) | $ | 12,397,711 | ||||||||||
For the three months ended March 31, 2022
| Common Stock | Additional Paid In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at December 31, 2021 | 1,835,402 | $ | 458,850 | $ | 89,313,273 | $ | (60,673,683 | ) | $ | 29,098,440 | ||||||||||
| Net loss | — | — | — | (2,538,500 | ) | (2,538,500 | ) | |||||||||||||
| Stock option exercises | 7,231 | 1,807 | 97,362 | — | 99,169 | |||||||||||||||
| Stock-based compensation | — | — | 562,875 | — | 562,875 | |||||||||||||||
| Balance at March 31, 2022 | 1,842,633 | $ | 460,657 | $ | 89,973,510 | $ | (63,212,183 | ) | $ | 27,221,984 | ||||||||||
See accompanying notes to condensed consolidated financial statements.
| 5 |
MINIM, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| 2023 | 2022 | |||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net loss | $ | (4,070,457 | ) | $ | (2,538,500 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 229,423 | 130,727 | ||||||
| Amortization of right-of-use assets | 39,409 | 45,805 | ||||||
| Amortization of debt issuance costs | 15,188 | 17,605 | ||||||
| Amortization of sales contract costs | — | 9,605 | ||||||
| Stock based compensation | 123,500 | 562,875 | ||||||
| Provision for accounts receivable allowances | 71,379 | 9,714 | ||||||
| Provision for inventory reserves | — | 40,266 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (507,733 | ) | (331,313 | ) | ||||
| Inventories | 2,648,710 | 2,505,790 | ||||||
| Prepaid expenses and other current assets | (81,248 | ) | (53,489 | ) | ||||
| Other assets | 8,410 | 17,778 | ||||||
| Accounts payable | 2,498,991 | (4,179,887 | ) | |||||
| Accrued expenses | 288,307 | (600,100 | ) | |||||
| Deferred revenue | 121,401 | 97,276 | ||||||
| Operating lease liabilities | (39,409 | ) | (46,208 | ) | ||||
| Net cash provided by (used in) operating activities | 1,345,871 | (4,312,056 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of equipment | (6,330 | ) | (115,103 | ) | ||||
| Certification costs capitalized | (122,120 | ) | (156,300 | ) | ||||
| Net cash used in investing activities | (128,450 | ) | (271,403 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from the bank credit line | 945,441 | 1,989,222 | ||||||
| Repayment of government loan | — | (26,506 | ) | |||||
| Proceeds from stock option exercises | — | 99,169 | ||||||
| Net cash provided by financing activities | 945,441 | 2,061,885 | ||||||
| Net increase (decrease) in cash and cash equivalents | 271,980 | (2,521,574 | ) | |||||
| Cash, cash equivalents, and restricted cash - Beginning | 1,030,110 | 13,070,445 | ||||||
| Cash, cash equivalents, and restricted cash - Ending | $ | 1,302,090 | $ | 10,548,871 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 103,950 | $ | 78,331 | ||||
| Income taxes | $ | — | $ | 6,000 | ||||
| Cash is reported on the condensed consolidated statements of cash flows as follows: | ||||||||
| Cash and cash equivalents | $ | 802,090 | $ | 10,048,871 | ||||
| Restricted cash | 500,000 | 500,000 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 1,302,090 | $ | 10,548,871 | ||||
See accompanying notes to condensed consolidated financial statements.
| 6 |
MINIM, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) SummaryNATURE 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”. 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. Our AI-driven cloud software platform and applications make network management and security simple for home and business users, as well as the service providers that assist them— leading to higher customer satisfaction and decreased support burden.
On January 21, 2022, Zoom Connectivity, Inc. filed with the Secretary of Significant Accounting Policies
Basis of Presentation
The accompanying condensedunaudited consolidated financial statements of the Company have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial statements”information that are normally required by U.S. generally accepted accounting principles (“GAAP”) are unaudited. However, thecan be condensed consolidated balance sheet as of December 31, 2016 was derived from audited financial statements.or omitted. In the opinion of management, the accompanying financial statements include all normal and recurring adjustments that are considered necessary adjustments to present fairlyfor the condensed consolidatedfair presentation of the Company’s financial position results of operations and cash flows of Zoom Telephonics, Inc. (the “Company” or “Zoom”). The adjustments are of a normal, recurring nature.
The results of the accountingCompany’s operations can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for share-based payment transactions, including the income tax consequences, classificationfull year or any future periods.
Certain prior year amounts have been reclassified to conform to the current year presentation. None of awards as either equity or liabilities,the reclassifications impacted the condensed consolidated statements of operations for the three- month period ended March 31, 2023.
On April 17, 2023, the Company effected a 25:1 reverse stock split for each share of common stock issued and classification onoutstanding. All shares and associated amounts have been retroactively restated to reflect the statementstock split.
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.flows from operations. During the three months ended March 31, 2023, the Company incurred a net loss of $4.0 million and had positive cash flows from operating activities of $1.3 million. As of March 31, 2023, the Company had an accumulated deficit of $78.9 million and cash and cash equivalents of $0.8 million. The Company adopted ASU 2016-09 as of January 1, 2017implemented cost reduction plans to align its cost structure to its sales and elected an accounting policyincrease its liquidity. The Company will continue to record forfeitures as they occur. The impact of this changemonitor its cost in accounting policy had an insignificant effect on accumulated deficit as of January 1, 2017. ASU 2016-09 also provides that companies no longer record excess tax benefits or certain tax deficiencies in additional paid-in capital. Instead, all excess tax benefitsrelation to its sales and tax deficiencies are recorded as income tax expense or benefit in the statement of operations. There was no financial statement impact of adopting this provision of ASU 2016-09 as the Company is currently in a net operating loss position and the excess tax benefits that existed from options previously exercised had a full valuation allowance. adjust its cost structure accordingly. The effects of adopting the remaining provisions in ASU 2016-09 affecting the classification of awards as either equity or liabilities when an entity partially settles the award in cash in excess of the employer’s minimum statutory withholding requirements and classification in the statement of cash flows did not have a significant impact on the Company’s financial position and operating results raise substantial doubt about the Company’s ability to continue as a going concern. The Company believes it does not have sufficient resources through its cash and cash equivalents, other working capital and borrowings under its SVB line-of-credit to continue as a going concern through at least one year from the issuance of operations or cash flows.these financial statements.
| 7 |
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022. The Company’s significant accounting policies did not change during the three months ended March 31, 2023.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, "Financial“Financial Instruments Credit Losses —Measurement— 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.collected, which includes the Company’s accounts receivable. This ASU 2016-13 is effective for public business entities that are SEC filersthe Company for fiscal yearsreporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted in any interim or annual period for fiscal years beginning after December 15, 2018. An entity should apply the amendments in ASU 2016-13 through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (modified-retrospective approach).2022. The Company is currently evaluatingassessing the potential impact that the adoption of this ASU 2016-13 may have on its consolidated financial statements.
There have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s cashfinancial position, results of operations and cash equivalents balance on September 30, 2017 was approximately $91 thousand, down from $180 thousand on December 31, 2016. Major usesflows.
(3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS
Revenue is recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware products bundled with Software-as-a-Service (“SaaS”) offerings are recognized at the time control of cash werethe product transfers to the customer. The transaction price allocated to the SaaS offering is recognized ratably beginning when the customer is expected to activate their account and over a $980 thousand loss for the nine months ended September 30, 2017, a decrease of approximately $712 thousand in bank debt, an increase of approximately $380 thousand in inventory, and an increase of approximately $284 thousand in prepaid expenses. These were offset by an increase of approximately $1.4 million in accounts payable and accrued expenses, a decrease of approximately $394 thousand in accounts receivable, and a decrease of approximately $190 thousand in other assets.
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. Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the past, the Company has experienced dramatic growth over the last yearprocess of being scheduled for shipment, and one-half. Sales in 2016 were up 65% over sales in 2015 and sales in the first nine months of 2017 were up 62% over sales in the first nine months of 2016. that are not yet invoiced.
Contract costs
The Company believes that year-over-year growth is likely to continue forrecognizes the foreseeable future due toincremental costs of obtaining a number of factors including the strength of the Motorola brand, new product introductions, increased shelf space, growing online retailer sales, and international expansion. Because of projected sales increases, the associated improved net income, and its Financing Agreement (as defined below)contract with
The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. These costs include sales commissions on SaaS 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. Contract liabilities consist of deferred revenue, which represents payments received in advance of revenue recognition related to SaaS agreements and for prepayments for products or services yet to be delivered.
| 8 |
Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer.
The following table reflects the contract balances as of the periods ended:
SCHEDULE OF CONTRACT BALANCES
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Deferred revenue, current | $ | 629,691 | $ | 633,542 | ||||
| Deferred revenue, noncurrent | $ | 896,990 | $ | 771,738 | ||||
During the three months ended March 31, 2023, the change in contract balances was as follows:
SCHEDULE OF CHANGE IN CONTRACT BALANCES
| Balance at December 31, 2022 | $ | 1,405,280 | ||
| Billings | 296,264 | |||
| Revenue recognized | (174,863 | ) | ||
| Balance at March 31, 2023 | $ | 1,526,681 |
Disaggregation of Revenue
The following table sets forth our revenues by distribution channel:
SCHEDULE OF DISAGGREGATION OF REVENUE BY DISTRIBUTION CHANNEL
| 2023 | 2022 | |||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Retailers | $ | 10,281,349 | $ | 12,341,289 | ||||
| Distributors | 44,964 | 307,207 | ||||||
| Other | 425,472 | 650,759 | ||||||
| Revenues | $ | 10,751,785 | $ | 13,299,255 | ||||
The following table sets forth our revenues by product:
| 2023 | 2022 | |||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cable modems & gateways | $ | 10,574,055 | $ | 12,883,047 | ||||
| Other networking products | 91,631 | 272,566 | ||||||
| SaaS | 86,099 | 143,642 | ||||||
| Revenues | $ | 10,751,785 | $ | 13,299,255 | ||||
| 9 |
(4) BALANCE SHEET COMPONENTS
Inventories
| Inventories consist of : | September 30, 2017 | December 31, 2016 |
| Materials | $1,287,621 | $888,830 |
| Work in process | 209,694 | 27,708 |
| Finished goods | 3,809,347 | 4,010,074 |
| Total | $5,306,662 | $4,926,612 |
Inventories, net consists of the following:
SCHEDULE OF INVENTORIES
March 31, 2023 | December 31, 2022 | |||||||
| Materials | $ | 346,926 | $ | 397,133 | ||||
| Work in process | 5,189,184 | 5,842,251 | ||||||
| Finished goods | 17,230,386 | 19,175,822 | ||||||
| Total | $ | 22,766,496 | $ | 25,415,206 | ||||
Finished goods includes consigned inventory held by our customers of $835,800$3.6 million and $4.2 million at September 30, 2017March 31, 2023 and $442,300 at December 31, 2016.2022, respectively, and includes $0 in-transit inventory at March 31, 2023 and December 31, 2022, respectively. The Company reviews inventory for obsolete and slow movingslow-moving products each quarter and makes provisions based on its estimate of the probability that the material will not be consumed or that it will be sold below cost. The provision for inventory reserves were $2.5 million and $2.5 million as of March 31, 2023 and December 31, 2022, respectively.
Accrued expenses
Accrued expenses consist of the following:
SCHEDULE OF ACCRUED EXPENSES
March 31, 2023 | December 31, 2022 | |||||||
| Inventory purchases | $ | 27,004 | $ | 24,901 | ||||
| Payroll & related benefits | 510,538 | 430,358 | ||||||
| Professional fees | 214,019 | 290,588 | ||||||
| Royalty costs | 1,712,500 | 1,650,000 | ||||||
| Sales allowances | 1,453,797 | 1,226,856 | ||||||
| Sales and use tax | 116,992 | 113,200 | ||||||
| Other | 694,203 | 704,821 | ||||||
| Total accrued other expenses | $ | 4,729,053 | $ | 4,440,724 | ||||
(5) BANK CREDIT LINES AND GOVERNMENT LOANS
Bank Credit Line
On March 12, 2021, the Company terminated its Financing Agreement and entered into a loan and security agreement with Silicon Valley Bank (the “SVB Loan Agreement”). On November 1, 2021, the Company entered into the first amendment to the SVB Loan Agreement (the “First Amendment”). The SVB Loan Agreement, as amended, provides for a revolving facility up to a principal amount of $25.0 million. The borrowing base equals the sum of (a) 85.0 percent of eligible customer receivables, plus (b) the least of (i) 60 percent of the value of eligible inventory (valued at cost), (ii) 85% of the net orderly liquidation value of inventory, and (iii) $6.2 million in each, as determined by SVB from the Company’s most recent borrowing base statement; provided that SVB has the right to decrease the foregoing percentages in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the collateral or its value.
The SVB Loan Agreement is secured by substantially all of the Company’s assets but excludes the Company’s intellectual property. Loans under the credit facility bear interest at a rate per annum equal to (i) at all times when a streamline period is in effect, the greater of (a) one-half of one percent (0.50%) above the Prime Rate or (b) three and three-quarters of one percent (3.75%) and (ii) at all times when a streamline period is not effect, the greater of (a) one percent (1.0%) above the Prime Rate and (b) four and one-quarter of one percent (4.25%).
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On December 12, 2022, the Company entered into its second Amendment to the SVB Loan Agreement (the “Second Amendment”). The Second Amendment (i) reduced the aggregate amount available under the revolving credit line from $25 million to $10 million, (ii) extends maturity to January 15, 2024, and (iii) provides a waiver for an existing default under the SVB Loan Agreement by virtue of the Company having entered into a Bridge Loan and Security Agreement dated as of November 23, 2022 by and among Borrower and Slingshot Capital, LLC, under which Borrower incurred certain Indebtedness and granted a Lien to Slingshot Capital.
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. Amortization of debt issuance costs was $60,096$15 thousand and $18 thousand for the three months ended SeptemberMarch 31, 2023 and 2022, respectively.
As of March 31, 2023, the Company had $3.8 million outstanding, net of origination costs of $15 thousand, under the SVB Loan Agreement, and this credit line had availability of $395 thousand.
The interest rate on the bank credit lines was 9.00% as of March 31, 2023.
On March 10, 2023, Silicon Valley Bank went into receivership with the Federal Deposit Insurance Corporation (FDIC) and is now the Silicon Valley Bridge Bank. The SVB Loan Agreement has been transferred to Silicon Valley Bridge Bank, and the revolving facility remains accessible to the Company. On March 27, 2023, the SVB Loan Agreement was transferred to First-Citizens Bank & Trust Company (“First-Citizens”) upon which First-Citizens entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank. The Company has had no business service interruptions or funding issues due to the bank transfer.
Covenants
The SVB Loan Agreement includes a minimum interest expense per month of $20 thousand. The First Amendment required the Company to maintain certain levels of minimum adjusted EBITDA, which were tested on the last day of each calendar quarter and measured for the trailing 3-month period ending on the last day of each quarter. The Second Amendment removed the minimum EBITDA covenants.
In addition, pursuant to the SVB Loan Agreement, the Company cannot pay any dividends without the prior written consent of SVB.
Bridge Loan
On November 30, 20172022 (the “Effective Date”), the Company and $7,838Slingshot Capital, LLC (“Slingshot Capital”) entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”) pursuant to which Slingshot Capital agreed to make available a bridge loan in the principal amount up of up to $1,500,000. In conjunction with the Bridge Loan Agreement, the Company executed a bridge term note (the “Bridge Term Note”) in favor of Slingshot Capital. The Company has drawn down $1,000,000 under the Bridge Loan Agreement. Subject to Slingshot Capital’s sole discretion, the other $500,000 may be drawn by the Company.
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. In the event of default, all outstanding principal and interest shall bear interest at an annual rate of 18%.
In connection with the Bridge Loan Agreement, the Company, Slingshot Capital, and Silicon Valley Bank (the “Senior Lender”) executed a subordination agreement (the “Subordination Agreement”) on November 30, 2022. The Loan Agreement is subordinated to the outstanding indebtedness and obligations under the Company’s senior credit facility. Subject to the Senior Lender’s written consent, the Company shall grant Slingshot Capital a second-priority security interest in all of the Company’s collateral, which shall be subordinated to any and all security interests granted to the Senior Lender and at all times shall be limited to the same collateral granted to the Senior Lender under the senior credit facility.
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Principal and interest are not due and payable until the maturity date, which is January 15, 2024, unless the Company’s senior credit facility with the Senior Lender is paid in full in cash on an earlier date. As of March 31, 2023, the accrued interest is $33 thousand and is included in accrued expenses in the condensed consolidated balance sheet.
The Company reimbursed Slingshot Capital $20,000 for its reasonable and documented expenses and fees related to the negotiations, documentation, and execution of the Bridge Loan Agreement, Subordination Agreement, and Bridge Term Note.
Slingshot Capital is owned by the Company’s Chairperson of the Board and a Board of Director, Jeremy Hitchcock and Elizabeth Hitchcock, respectively.
Government Loans
During 2020, the Company participated in the Coronavirus Aid, Relief, and Economic Security Act and received an aggregate $1,128,000 in unsecured loans under the Small Business Administration Paycheck Protection Program, at a fixed rate of 1% per annum. Under the terms of the loans, the Company received forgiveness of an aggregate $1,068,000. The Company repaid $30,000 during the three months ended SeptemberMarch 31, 2022 and had $4,000 of an outstanding balance as of March 31, 2022. The Company fully repaid the remaining $4,000 balance as of April 30, 2016. 2022. As of March 31, 2023, the Company had no outstanding balances under the government loans.
(6) Leases
The provisionCompany has entered into agreements to lease its warehouses and distribution centers and certain office space under operating leases. The Company recognizes lease expense for inventory reserves was $186,440these leases on a straight-line basis over the lease term. Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less.
The components of lease costs were as follows:
SCHEDULE OF COMPONENTS OF LEASE COSTS
| 2023 | 2022 | |||||||
| Three Months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating lease costs | $ | 40,253 | $ | 48,231 | ||||
| Short-term lease costs | 8,900 | — | ||||||
| Total lease costs | $ | 49,153 | $ | 48,231 | ||||
The weighted-average remaining lease term and discount rate were as follows:
SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE
| Period Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating leases: | ||||||||
| Weighted average remaining lease term (years) | 0.9 | 1.5 | ||||||
| Weighted average discount rate | 3.8 | % | 5.6 | % | ||||
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
| 2023 | 2022 | |||||||
| Three Months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating cash flow information: | ||||||||
| Amounts included in measurement of lease liabilities | $ | 41,132 | $ | 48,632 | ||||
| Non-cash activities: | ||||||||
| ROU asset obtained in exchange for lease liability | $ | — | $ | — | ||||
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The maturity of the nine months ended September 30, 2017 and $10,450 for the nine months ended September 30, 2016.
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES
| Years ended December 31, | ||||
| 2023 (remainder) | $ | 114,247 | ||
| 2024 | 22,794 | |||
| Total lease payments | $ | 137,041 | ||
| Less: imputed interest | (2,970 | ) | ||
| Present value of operating lease liabilities | $ | 134,071 | ||
| Operating lease liabilities, current | $ | 125,010 | ||
| Operating lease liabilities, noncurrent | $ | 9,061 |
(7) COMMITMENTS AND CONTINGENCIES
(a) Commitments and Contingencies
The Company is party to various lawsuits and administrative proceedings arising in the ordinary course of business. The Company evaluates such lawsuits and proceedings on a case-by-case basis, and its policy is to vigorously contest any such claims that it believes are without merit. The Company's management believes that the ultimate resolution of such matters will not materially and adversely affect the Company's business, financial position, or results of operations.
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. Additionally, the Company is required to make quarterly royalty payments equal to a certain percentage of the preceding quarter’s net sales with minimum annual royalty payments as follows:
| Year ending December 31, | |
| 2017 | $3,000,000 |
| 2018 | $3,500,000 |
| 2019 | $4,500,000 |
| 2020 | $5,100,000 |
SCHEDULE OF MINIMUM ANNUAL ROYALTY PAYMENTS
| Years ended December 31, | ||||
| 2023 (remaining) | $ | 6,850,000 | ||
| 2024 | 7,100,000 | |||
| 2025 | 7,100,000 | |||
| Total | $ | 21,050,000 |
Royalty expense under the License Agreement was $583,333$1.7 million and $1.6 million for the third quarter of 2016three months ended March 31, 2023 and $750,000 for the third quarter of 2017,2022, respectively and royalty expense is included in selling expenseand marketing expenses on the accompanying condensed consolidated statements of operations. As of March 31, 2023 and March 31, 2022, the Company had $2.7 million and $1.6 million, respectively, outstanding in royalty payments and are included in accounts payable ($1.0 million and $0 million, respectively) and accrued expenses ($1.7 million and $1.6 million, respectively) in the condensed consolidated balance sheets.
(b) Contingencies
The balanceCompany is party to various lawsuits and administrative proceedings arising in the ordinary course of business. The Company evaluates such lawsuits and proceedings on a case-by-case basis, and its policy is to vigorously contest any such claims which it believes are without merit.
The Company reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the committed royalty expense for 2017 amountsloss can be reasonably estimated. This review is updated periodically as additional information becomes available. If both of the criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of the loss or range of losses, that the amount is not material, or that an estimate of the loss cannot be made. At March 31, 2023, the Company is not currently a party to $750,000 forany legal proceedings that, if determined adversely to the remaining quarter of 2017.
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In the ordinary course of its business, the Company is subject to lawsuits, arbitrations, claims, and planned increaseother legal proceedings in production demand, driven in part byconnection with their business. Some of the launchlegal actions include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of Motorola branded products,these matters could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows. Management believes that the Company has committedadequate legal defenses with North American Production Sharing, Inc. (“NAPS”)respect to extend its existing lease used in connection with the Production Sharing Agreement (“PSA”) entered into betweenlegal proceedings to which it is a defendant or respondent and that the outcome of these pending proceedings is not likely to have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, the Company and NAPS. The extension term is December 1, 2015 through November 30, 2018 and allowsunable to predict the Company to contract additional Mexican personnel to work in the Tijuana facility.
(8) SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS
Relatively few customerscompanies account for a substantial portion of the Company’s revenues. In the third quarter of 2017, three customersmonths ended March 31, 2023, two companies, including a marketplace facilitator, accounted for 10% or greater separatelyindividually and 92% combined of88% in the Company’s total net sales. In the first nine months of 2017, three customers accounted for 10% or greater separately and 90% combinedaggregate of the Company’s total net sales. At September 30, 2017, three customersMarch 31, 2023, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 83%84% of the Company’s accounts receivable. In the third quarter of 2016, three customersmonths ended March 31, 2022, two companies, including a marketplace facilitator, accounted for 10% or greater separatelyindividually and 86% combined of90% in the Company’s total net sales. In the first nine months of 2016, three customers accounted for 10% or greater separately and 81% combinedaggregate of the Company’s total net sales. At September 30, 2016 three customersMarch 31, 2022, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 88%88% of the Company’s accounts receivable.
The Company’s customers generally do not enter into long-term agreements obligating them to purchase products. The Company may not continue to receive significant revenues from any of these or from other large customers. A reduction or delay in orders from any of the Company’s significant customers, or a delay or default in payment by any significant customer could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentration, its net sales and operating income could fluctuate significantly due to changes in political or economic conditions, or the loss, reduction of business, or less favorable terms for any of the Company'sCompany’s significant customers.
The Company depends on many third-party suppliers for key components contained in its product offerings. For some of these components, the Company may only use a single source supplier, in part due to the lack of alternative sources of supply. During the three months ended March 31, 2023 and 2022, the Company had one supplier and two suppliers, respectively, that provided 90% and 99%, respectively, of the Company’s purchased inventory.
(9) INCOME TAXES
During the three months ended March 31, 2023, we recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits generated due to the uncertainty of realizing a benefit from those items.
We have evaluated the positive and negative evidence bearing upon the Company’s ability to realize its deferred tax assets, which primarily consist of net operating loss carryforwards and research and development tax credits. We considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and we have concluded that it is more likely than not that we will not realize the benefits of our deferred tax assets. As a result, as of March 31, 2023 and December 31, 2022, we recorded a full valuation allowance against our net deferred tax assets.
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As of March 31, 2023 and December 31, 2022, the Company had federal net operating loss carry forwards of approximately $57.9 million and $60.6 million, respectively, which are available to offset future taxable income. They are due to expire in varying amounts from 2023 to 2041. Federal net operating losses occurring after December 31, 2017, of approximated $23.4 million may be carried forward indefinitely. As of March 31, 2023 and December 31, 2023, the Company had state net operating loss carry forwards of approximately $31.6 million and $29.8 million, respectively, which are available to offset future taxable income. They are due to expire in varying amounts from 2033 through 2041. We recorded minimum state income taxes and taxes related to our operations in Mexico. For the three months ended March 31, 2023 and 2022, income tax expense was $6 thousand and $6 thousand, respectively.
(10) 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 three-months period ended March 31, 2023 and 2022, the rent expense was $9 thousand and $8 thousand, respectively.
On November 30, 2022, the Company and Slingshot Capital, LLC (“Slingshot Capital”) entered into a FinancingBridge Loan Agreement with Rosenthal & Rosenthal, Inc. (the “Financing“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 Financing Agreement originally provided for upCompany has drawn down $1,000,000 under the Bridge Loan Agreement. Subject to $1.75 million of revolving credit, subject to a borrowing base formula andSlingshot Capital’s sole discretion, the other terms and conditions. The Financing Agreement continued until November 30, 2014 with automatic renewals from year to year thereafter, unless sooner terminated$500,000 may be drawn by either party. The lender has the right to terminateCompany.
Slingshot Capital is owned by the Financing Agreement at any time on 60 days’ prior written notice.
On April 7, 2023, the Company maintain tangible net worthprevious principal executive officer Mehul Patel, resigned from Minim Inc. Jeremy Hitch, Executive Chairman of not less than $2.5 million and working capitalthe Board became the acting principal executive officer of not less than $2.5 million.
SCHEDULE OF NET INCOME (LOSS) PER SHARE
| 2023 | 2022 | |||||||
| Three Months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Numerator: | ||||||||
| Net loss | $ | (4,070,457 | ) | $ | (2,538,500 | ) | ||
| Denominator: | ||||||||
| Weighted average common shares – basic | 1,880,185 | 1,840,129 | ||||||
| Effect of dilutive common share equivalents | — | — | ||||||
| Weighted average common shares – dilutive | 1,880,185 | 1,840,129 | ||||||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
Diluted loss from operations. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential shares of common stock had been issued. Potential shares of common stock that may be issued by the Company include shares of common stock that may be issued upon exercise of outstanding stock options. Under the treasury stock method, the unexercised options are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase shares of common stock at the average market price during the period.
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(12) SUBSEQUENT EVENTS
Reverse Stock Split
On March 30, 2023, the Board of Directors of Minim, Inc. approved a 1-for-25 reverse split of the Company’s common stock to be effected through an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”). The Amendment did not effect the number of shares of authorized common stock.
The reverse stock split was subject to shareholder approval at a Special Shareholders Meeting (the “Special Meeting”), which took place on March 28, 2023. A majority of shareholders voted in favor of the reverse stock split. The Company’s definitive proxy statement relating to the Special Meeting filed on March 14, 2023, includes additional details regarding the Amendment.
On April 17, 2023, Minim, Inc. completed a 1-for-25 share reverse stock split of its common stock. As a result, Minim shareholders at the effective time received 1 new share of Minim common stock for every shares that they held. Minim did not issue any fractional shares as a result of the reverse split. Instead, all shareholders with fractional shares, received, upon surrendering to the exchange agent of certificate(s) representing such pre-Reverse Stock Split shares, to a cash payment in lieu thereof.
All of the Company’s historical shares and per share information related to issued and outstanding common stock and outstanding equity awards exercisable into common stock in these consolidated financial statements have been adjusted, on a retroactive basis, to reflect the reverse stock split in quarter ending March 31, 2023.
The following unaudited pro forma selected financial information reflects the impact of the reverse stock split had the effective date of the reverse stock been as of December 31, 2022. The pro forma results have been prepared for comparative purposes only and are not intended to be a projection of future operating results.
SCHEDULE OF PRO FORMA FINANCIAL INFORMATION
| Selected financial information | As Reported | Pro forma | ||||||
| Preferred Stock authorized | 2,000,000 | 2,000,000 | ||||||
| Preferred Stock issued | 0 | 0 | ||||||
| Common Stock authorized | 60,000,000 | 60,000,000 | ||||||
| Common Stock issued | 46,949,240 | 1,887,969 | ||||||
| Net Loss | $ | (15,549,244 | ) | $ | (15,549,244 | ) | ||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
| Weighted average common and common equivalent shares: | ||||||||
| Basic and diluted |
Non-binding letter of intent that may result in the Company being acquired
On September 29, 2023, the Company entered into a non-binding letter of intent with an investor whereby the investor would purchase $2.4 million of convertible preferred stock and warrants, which, on a fully-diluted basis, would constitute a majority of the Company’s outstanding common stock and the proceeds of which would be used for the sole purpose of settling all of the Company’s and its subsidiaries’ liabilities (the “Transaction”).
If the Transaction were to occur, the Letter of Intent contemplates the investor would be appointed as the Company’s chief executive officer and the investor and its nominees would be appointed to the Company’s board of directors to which they would constitute a majority of the then-board of directors.
The Company and the investor are working on completing definitive transaction documents regarding the Transaction, but, as the Letter of Intent is non-binding, there can be no assurances that such definitive transaction documentation will be executed or that the Transaction will be completed.
The Company has evaluated subsequent events from March 31, 2023 through the date of this filing and has determined that there are no such events, other than those noted above, requiring recognition or disclosure in the financial statements.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following Management’s Discussion and Analysis of 1995.
The following discussion should be read in conjunction with the attached Unaudited Condensed Consolidated Financial Statements and notes thereto, and with our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023. Although we believe that the assumptions underlying the forward-looking statements contained in this Quarterly Report are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements will be accurate. The risks, uncertainties and other factors which mayassumptions referred to above that could cause our or our industry's actual results performance or achievements to bediffer materially different from any futurethe results performance or achievements expressed or implied by thesuch forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding: Zoom's plans, expectationsthose discussed under the heading “Risk Factors” in Part II, Item 1A hereto and intentions, including statements relating to Zoom's prospects and plans relating to sales of and markets for its products; and Zoom's financial condition or results of operations.
Overview
We deliver a comprehensive WiFi as a Service platform to make everyone’s connected home safe and supportive for life and work. We believe the year ended December 31, 2016, filed withhome router must go the Securities and Exchange Commission on March 22, 2017 and in our other filings with the Securities and Exchange Commission. Readers should also be cautioned that results of any reported period are often not indicative of results for any future period.
We continually seek to improve our product designs and manufacturing approach in order to improveelevate product performance and reduce our costs. We pursue a strategy of outsourcing rather than internally developing our modemhardware product chipsets, which are application-specific integrated circuits that form the technology base for our modems. By outsourcing the chipset technology, we are able to concentrate our research and development resources on modem system design, leverage the extensive research and development capabilities of our chipset suppliers, and reduce our development time and associated costs and risks. As a result of this approach, we are able to quickly develop new products while maintaining a relatively low level of research and development expense as a percentage of net sales. We also outsource aspects of our manufacturing to contract manufacturers as a means of reducing our costs of production, and to provide us with greater flexibility in our production capacity.
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Generally, our gross margin for a given product generally depends on a number of factors, including the type of customer to whom we are selling. The gross margin for products sold to retailers tends to be higher than for some of our other customers; but the sales, support, returns, and overhead costs associated with products sold to retailers also tend to be higher. OurMinim’s sales to certain countries are currently handled by a single master distributor for each country whothat handles the support and marketing costs within the country. Gross margin for sales to these master distributors tends to be low, since lower pricing to these distributors helps them to cover the support and marketing costs for their country.
Our cash and cash equivalents balance on March 31, 2023 was $0.8 million compared to $0.5 million on December 31, 2022. On March 31, 2023, we had 32 employees, 27$3.8 million of outstanding borrowings on our asset-based credit line with availability of $395 thousand and working full-timecapital of $12.1 million.
The Company’s ability to maintain adequate levels of liquidity depends in part on our ability to sell inventory on hand, increasing SaaS sales, and 5 working less than five days per week. Twelve employeescollect related receivables.
The Company continues to experience losses, which in part is due to declining revenues. In the three months ended March 31, 2023 and 2022, we generated net sales of $10.8 million and $13.3 million, respectively.
As reported in Form 8-K filed with the SEC on August 28, 2023, the Company has continued to experience material liquidity pressures as it has attempted to manage its negative cash-flow position due to supply disruptions from its principal manufacturing partners as a result of the Company’s inability to pay past expenses, which has severely impacted revenue and its cash position. The Company has conducted two reductions in force and made other changes to lower operating expenses. However, these reductions did not fully offset the Company’s lack of continual revenue from normal operations. As such, substantial doubt exists about our ability to continue as a going concern, and we will require additional liquidity to continue operations.
Our most recent Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 31, 2023 provides additional information about our business and operations.
Recent Accounting Standards
See Note 2 Summary of Significant Accounting Policies, in Notes to Unaudited Consolidated Financial Statements in Item 1 of Part 1 of this Report on 10-Q, for a full description of recent accounting standards, include the expected dates of adoption and estimated effects on the financial condition and results of operations, which are hereby incorporated by reference.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. To the extent there are material differences between these estimates and actual results, our financial statements may be affected. Our management evaluates its estimates, assumptions and judgments on an ongoing basis.
Our critical accounting policies and estimates, which are revenue recognition, product returns, inventory valuation and costs of goods sold, and valuation of deferred tax assets are described under “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022. For the three months ended March 31, 2023, there have been no significant changes in our critical accounting policies and estimates.
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Results of Operations
The following table sets forth certain financial data derived from our condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022 presented in absolute dollars and as a percentage of net sales, with dollars and percentage change period over period:
| Three Months ended March 31, | Change | |||||||||||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||||||||||
| Net sales | $ | 10,752 | 100.0 | % | $ | 13,299 | 100 | % | $ | (2,547 | ) | (19.2 | )% | |||||||||||
| Cost of goods sold | 8,143 | 75.7 | 9,108 | 68.5 | (965 | ) | (10.6 | ) | ||||||||||||||||
| Gross profit | 2,609 | 24.3 | 4,191 | 31.5 | (1,582 | ) | (37.7 | ) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling and marketing | 3,724 | 34.6 | 3,652 | 27.5 | 72 | 2.0 | ||||||||||||||||||
| General and administrative | 1,326 | 12.3 | 1,451 | 10.9 | (125 | ) | (8.6 | ) | ||||||||||||||||
| Research and development | 1,484 | 13.8 | 1,543 | 11.6 | (59 | ) | (3.8 | ) | ||||||||||||||||
| Total operating expenses | 6,462 | 60.8 | 6,646 | 50.0 | (184 | ) | (2.8 | ) | ||||||||||||||||
| Operating loss | (3,853 | ) | (36.5 | ) | (2,455 | ) | (18.5 | ) | (1,398 | ) | (56.9 | ) | ||||||||||||
| Total other expense | (145 | ) | (1.3 | ) | (78 | ) | (0.5 | ) | (67 | ) | (85.9 | ) | ||||||||||||
| Loss before income taxes | (3,998 | ) | (37.9 | ) | (2,533 | ) | (19.0 | ) | (1,465 | ) | (57.8 | ) | ||||||||||||
| Income tax provision | -_ | _- | 6 | - | 6 | (100.0 | ) | |||||||||||||||||
| Net loss | $ | (3,998 | ) | (37.9 | )% | $ | (2,539 | ) | (19.1 | )% | $ | (1,459 | ) | (57.5 | )% | |||||||||
Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022
The following table sets forth our revenues by product and the changes in revenues for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022:
| Three Months Ended | ||||||||||||||||
| March 31, 2023 | March 31, 2022 | $ Change | % Change | |||||||||||||
| (In thousands, except percentage data) | ||||||||||||||||
| Cable modems & gateways | $ | 10,574 | $ | 12,883 | $ | (2,309 | ) | (17.9 | )% | |||||||
| Other networking products | 92 | 272 | (180 | ) | (66.2 | |||||||||||
| SaaS | 86 | 144 | (58 | ) | (40.3 | |||||||||||
| Total | $ | 10,752 | $ | 13,299 | $ | (2,547 | ) | (19.2 | )% | |||||||
The majority of the Company’s revenues by geographic area are earned in North America for the three months ended March 31, 2023 and 2022.
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Net Sales
Our total net sales decreased year-over-year by $2.5 million or 19%. The decrease in net sales is directly attributable to decreased sales of Motorola branded cable modems and gateways. In both 2023 and 2022, we primarily generated our sales by selling cable modems and gateways. Sales related to SaaS offerings were engaged$86 thousand and $144 in the three months ended March 31, 2023 and 2022, respectively. The decrease in other category of $180 thousand in 2023 compared to 2022 is primarily due to a reduction in DSL and MoCA products due to a refocus on new product introductions. Generally, our lower sales outside North America reflect the fact that cable modems are sold successfully through retailers in the U.S. but not in most countries outside the U.S., due primarily to variations in government regulations.
Cost of Goods Sold and Gross Margin
Cost of goods sold consists primarily of the following: the cost of finished products from our third-party manufacturers; overhead costs, including purchasing, product planning, inventory control, warehousing and distribution logistics; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-downs for excess and obsolete inventory; amortization of certain acquired intangibles and software development costs; and costs attributable to the provision of service offerings.
The decrease in gross profit was attributable to sales growth of Motorola branded cable modems and gateways, including intelligent networking products that include Minim software. We outsource our manufacturing, warehousing and distribution logistics. We believe this outsourcing strategy allows us to better manage our product costs and gross margin. Our gross margin can be affected by a number of factors, including fluctuation in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, overhead costs, inbound freight and duty/tariffs, conversion costs, and charges for excess or obsolete inventory.
The following table presents net sales and gross margin, for the periods indicated:
| Three Months ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Net sales | $ | 10,752 | $ | 13,299 | $ | (2,547 | ) | (19.2 | )% | |||||||
| Gross margin | 24.3 | % | 31.5 | % | ||||||||||||
Gross profit and gross margin decreased in the three months ended March 31, 2023, compared to the three months ended in the prior fiscal year period, primarily due to insufficient sales levels necessary to cover fixed costs and certain variable costs.
For the remainder of fiscal 2023, we expect gross margin to be subject to similar variabilities experienced in the first quarter of 2023 and in 2022. We experienced meaningful increases in costs of freight, materials, and components for our products. Although freight and certain component costs have reduced, we will not realize improvements to margins until we are able to work through inventory obtained when freight and component costs were elevated. We may continue to experience disruptions from the pandemic, with manufacturing partners being affected by factory uptime and scarcity of materials and components. These disruptions could increase the length of time taken between order to production and transportation of inventory. If such disruptions become widespread, they could significantly affect our ability to fulfill the demand for our products. Forecasting gross margin percentages is difficult, and there are several risks related to our ability to maintain or improve our current gross margin levels. Our cost of goods sold as a percentage of net sales can vary significantly based upon factors such as: uncertainties surrounding revenue volumes, including future pricing and/or potential discounts as a result of the economy, competition, the timing of sales, and related production level variances; import customs duties and imposed tariffs; changes in technology; changes in product mix; expenses associated with writing off excessive or obsolete inventory; fluctuations in freight costs; manufacturing and purchase price variances; and changes in prices on commodity components.
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Selling and Marketing
Selling and marketing expenses consist primarily of advertising, trade shows, corporate communications and other marketing expenses, product marketing expenses, outbound freight costs, amortization of certain intangibles, personnel expenses for sales and marketing staff, technical support expenses, and facility allocations. The following table presents sales and marketing expenses, for the periods indicated:
| Three Months ended March 31, | ||||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||||
| Selling and marketing | $ | 3,724 | $ | 3,652 | $ | 72 | 2.0 | % | ||||||||
Selling and marketing expenses were flat in the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to reductions in personnel expenses by $193 thousand and subscription fees of $54 thousand, which were offset by increases in allowance for bad debt of $72 thousand, Motorola royalty fees of $63 thousand, and $148 thousand in marketing campaigns and other sales support costs.
For the remainder of fiscal 2023, we expect our selling and marketing expenses as a percentage of net sales in fiscal 2023 to be similar to fiscal 2022 levels. Expenses may fluctuate depending on sales levels achieved as certain expenses, such as commissions, are determined based upon the net sales achieved. Forecasting selling and marketing expenses is highly dependent on expected net sales levels and could vary significantly depending on actual net sales achieved in any given quarter. Marketing expenses may also fluctuate depending upon the timing, extent and nature of marketing programs.
General and Administrative
General and administrative expenses consist of salaries and related expenses for executives, finance and accounting, human resources, information technology, professional fees, including legal costs associated with defending claims against us, allowance for doubtful accounts, facility allocations, and other general corporate expenses. The following table presents general and administrative expenses, for the periods indicated:
| Three Months ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| General and administrative | $ | 1,326 | $ | 1,451 | $ | (125 | ) | (8.6 | )% | |||||||
General and administrative expenses decreased $125 thousand primarily due to a decrease in professional fees of $222 thousand, partially offset by an increase in personnel expenses of $63 thousand and software subscriptions of $17 thousand.
Future general and administrative expense increases or decreases in absolute dollars are difficult to predict due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, and other factors.
Research and Development
Research and development expenses consist primarily of personnel expenses, payments to suppliers for design services, safety and regulatory testing, product certification expenditures to qualify our products for sale into specific markets, prototypes, IT, and other consulting fees. Research and development expenses are recognized as they are incurred. Our research and development organization is focused on enhancing our ability to introduce innovative and easy-to-use products and services. The following table presents research and development expenses, for the periods indicated:
| Three Months ended March 31, | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Research and development | $ | 1,484 | $ | 1,543 | $ | (59 | ) | (3.8 | )% | |||||||
The decrease of $58 thousand was primarily due to decreases in personnel expenses of $102 thousand, contract labor of $39 thousand, and software subscriptions of $14 thousand, partially offset by an increase in certification costs of $95 thousand.
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We believe that innovation and technological leadership is critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services. We continue to invest in research and development to expand our hardware product offerings focused on premium WiFi 6E, WiFi 6, and quality control. Five employees were involvedsoftware solutions. For the remainder of fiscal 2023, we expect research and development expenses as a percentage of net sales in fiscal 2023 to be in line with or slightly above fiscal 2022 levels. Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of net sales, depending on actual net sales achieved in any given year.
Liquidity and Capital Resources
Our principal sources of liquidity are cash and cash equivalents and borrowings under our SVB line-of-credit. As of March 31, 2023, we had cash and cash equivalents of $0.8 million as compared to $0.5 million on December 31, 2022. On March 31, 2023, we had $3.8 million of borrowings outstanding and $395 thousand available on our $10.0 million SVB line-of-credit and working capital of $12.1 million. We have funded our operations which m
Our historical cash outflows have primarily been associated with: (1) cash used for operating activities such as the purchase and growth of inventory, purchasing, warehousing, freight, invoicing, shipping, collections,expansion of our sales and returns. Nine employees were engaged in sales, marketing and customer support. The remaining six employees performed executive, accounting, administrative,research and management information systems functions. Our dedicated personneldevelopment infrastructure and other working capital needs; (2) expenditures related to increasing our manufacturing capacity and improving our manufacturing efficiency; (3) capital expenditures related to the acquisition of equipment; (4) cash used to repay our debt obligations and related interest expense; and (5) cash used for acquisitions. Fluctuations in Tijuana, Mexico are employeesour working capital due to timing differences of our Mexican service providercash receipts and cash disbursements also impact our cash inflows and outflows.
Our consolidated financial statements as of March 31, 2023 were prepared under the assumption that we 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. However, substantial doubt exists about our ability to continue as a going concern, and we will require additional liquidity to continue operations beyond the next 12 months.
Our consolidated financial statements as of March 31, 2023, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern. If we are notunable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that investors will lose all or part of their investment.
Cash Flows
The following table presents our cash flows for the periods presented:
| Three Months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash provided by (used in) operating activities | $ | 1,346 | $ | (4,312 | ) | |||
| Cash used in investing activities | (129 | ) | (271 | ) | ||||
| Cash provided by (used in) financing activities | (945 | ) | 2,061 | |||||
| Net increase (decrease) in cash and cash equivalents | $ | 272 | $ | (2,522 | ) | |||
Cash Flows from Operating Activities. Cash provided by operating activities of $1.3 million during the three months ended March 31, 2023 reflected our net loss of $4.0 million, adjusted for non-cash expenses, consisting primarily of $124 thousand of stock-based compensation expense, $229 thousand in depreciation and amortization expense, and $72 thousand in accounts receivable reserve allowance. Uses of cash included an increase in our headcount.
Cash used in connection withoperating activities of $4.3 million during the preparationthree months ended March 31, 2022 reflected our net loss of $2.5 million, adjusted for non-cash expenses, consisting primarily of $563 thousand of stock-based compensation expense. Uses of cash included a decrease in accounts payable of $4.2 million and a decrease in accrued expenses $600 thousand. Sources of cash included primarily a decrease of inventories of $2.5 million.
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Cash Flows from Investing Activities. During the three months ended March 31, 2023, $6 thousand was used to purchase equipment and $122 thousand was used for certification costs.
During the three months ended March 31, 2022, $115 thousand was used to purchase equipment and $156 thousand was used for certification costs.
Cash Flows from Financing Activities. Cash used in financing activities during the three months ended March 31, 2023 consisted of repayment of $945 thousand on the borrowings under our SVB line-of-credit.
Cash provided by financing activities in during the three months ended March 31, 2022 consisted of a source of cash of $2.0 million from borrowings under our SVB line-of-credit, and $99 thousand in proceeds from the exercise of common stock options.
Future Liquidity Needs
Our primary short-term needs for capital, which are subject to change, include expenditures related to:
| ● | the acquisition of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities; | |
| ● | upgrades to our information technology infrastructure to enhance our capabilities and improve overall productivity; | |
| ● | support of our commercialization efforts related to our current and future products, including expansion of our direct sales force and field support resources; | |
| ● | the continued advancement of research and development activities. |
Our capital expenditures are largely discretionary and within our control. We expect that our product sales and the resulting operating loss as well as the status of each of our financial statements. We have identified areas where material differences could resultproduct development programs, will significantly impact our cash management decisions.
At March 31, 2023, we believe our current cash and cash equivalents, other working capital and borrowings under our SVB line-of-credit will not be sufficient to fund working capital requirements, capital expenditures and operations during the next twelve months. Our ability to continue as a going concern will depend on our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce or contain expenditures and increase revenues. Based on these factors, management determined that there is substantial doubt regarding our ability to continue as a going concern. In the first quarter of 2023, the Company has implemented cost reduction plans to align its cost structure to its sales and increase its liquidity. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.
Our future liquidity and capital requirements will be influenced by numerous factors, including the amountextent and duration of any future operating losses, the level and timing of future sales and expenditures, the results and scope of ongoing research and product development programs, working capital required to support our net sales costs,growth, funds required to service our debt, the receipt of and expenses for any period if we had made different judgments or used different estimates.
Our ability to fund our longer-term cash needs is recorded as a reserve against accounts receivable, a reduction insubject to various risks, many of which are beyond our net sales, and the corresponding changecontrol—See “Risk Factors—We may require significant additional capital to inventory reserves and cost of sales.
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At March 31, 2023, we have Federal and amortized over the expected period of value of the respective products.
Commitments and Contractual Obligations
During the three months ended September 30, 2017 to the three months ended September 30, 2016
Off-Balance Sheet Arrangements
We did not have any material changes to our off-balance sheet arrangements from those disclosed in our Form 10-Kas of March 31, 2023. See Note 6 to the accompanying consolidated financial statements for the year ended December 31, 2016.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.
| ITEM 4. | CONTROLS AND PROCEDURES |
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer who is also our Acting Chief Financial Officer,Chairman of the Company, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In connection with the preparation of this Quarterly Report on the Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and Acting Chief Financial Officer,Chairman of the Company, 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 Exchange Act as of September 30, 2017.March 31, 2023. Based upon that evaluation and other than as disclosed herein, our Chief Executive Officer and Acting Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
During our preparation of our Annual Report on Form 10-K for the year ended December 31, 2023, we identified a material weakness with financial reporting whereby the Company did not have beenproperly designed internal controls over timely preparation and independent review of account analyses, account summaries and account reconciliations. These internal control failures resulted in material adjustments required to properly state expense, inventory, deferred revenue, accrued expenses, accounts receivables, and revenues as of and for the year ending December 31, 2022. This material weakness could result in the Company incorrectly reporting its condensed consolidated balance sheets, condensed consolidated statement of operations, condensed stockholder’s equity, and condensed consolidated statements of cash flows. To remediate the material weakness, the Company is instituting reporting enhancements within its accounting system, standardized and timely account reconciliations, and independent and regular reviews by the finance department to ensure the Company records are complete and accurate. In addition, the Company will hire an additional resource to provide additional oversight in the reviews and completion of timely analysis and reconciliations. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed before the end of 2023.
Other than as disclosed herein, there were no significant changes in our internal controlscontrol over financial reporting that occurred during the period covered by this reportthree months ended March 31, 2023 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
None.
| ITEM 1A. | RISK FACTORS |
There have been no material changes to all forward-looking statements wherever they appear in this report. Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include the risk factors containedset forth in our 2022 Annual Report on Form 10-K for the year ended December 31, 2016,2022, filed with the SEC on March 22, 2017, as well as those discussed in this report and in31, 2023, which includes a detailed discussion of our other filings with the SEC.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
None.
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| ITEM 6. | EXHIBITS |
| * | In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference. |
| ** | Compensation Plan or Arrangement. |
| † | In accordance with Item 601(b)(32)(ii) of Regulation S-K, the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Companyregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MINIM, INC. (Registrant) | ||
| Date: November 13, 2023 | By: | /s/ Jeremy Hitchcock |
Jeremy Hitchcock Executive Chairman of the Company | ||
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