MINIM INC

Previous wording

Our cash and cash equivalents balance on March 31, 2024 was $1.0 million compared to $0.7 million on December 31, 2023. On March 31, 2024, we had no outstanding borrowings and working capital of negative $0.3 million.

Current wording

Our cash and cash equivalents balance on June 30, 2024 was $0.6 million compared to $0.7 million on December 31, 2023. On June 30, 2024, we had no outstanding borrowings and working capital of negative $0.7 million.

Previous wording

The Company continues to experience losses, which in part is due to declining revenues. In the three months ended March 31, 2024 and 2023, we generated net sales of $0.6 million and $10.8 million, respectively.

Current wording

The Company continues to experience losses, which in part is due to declining revenues. In the three and six months ended June 30, 2024 and 2023, we generated net sales of $0 million and $7.2 million, respectively, and $0.6 million and $17.9 million, respectively.

Previous wording

Our critical accounting policies and estimates, which are revenue recognition, product returns, inventory valuation and costs of goods sold, warrants, 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, 2023. For the three months ended March 31, 2024, there have been no significant changes in our critical accounting policies and estimates.

Current wording

Our critical accounting policies and estimates, which are revenue recognition, product returns, inventory valuation and costs of goods sold, warrants, 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, 2023. For the six months ended June 30, 2024, there have been no significant changes in our critical accounting policies and estimates.

Previous wording

Comparison of the three months ended March 31, 2024 to the three months ended March 31, 2023

Current wording

Comparison of the three and six months ended June 30, 2024 to the three and six months ended June 30, 2023

Previous wording

The following table sets forth our revenues by product and the changes in revenues for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023:

Current wording

The following table sets forth our revenues by product and the changes in revenues for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023:

Previous wording

The majority of the Company’s revenues by geographic area are earned in North America for the three months ended March 31, 2024 and 2023.

Current wording

The majority of the Company’s revenues by geographic area are earned in North America for the three and six months ended June 30, 2023.

Previous wording

Our total net sales decreased year-over-year by $10.1 million or 94%. The decrease in net sales is directly attributable to decreased sales of Motorola branded cable modems and gateways. In both 2024 and 2023, we primarily generated our sales by selling cable modems and gateways. Sales related to SaaS offerings were $0 thousand and $86 in the three months ended March 31, 2024 and 2023, respectively. The decrease in other category of $91 thousand in 2024 compared to 2023 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.

Current wording

Our total net sales decreased year-over-year by $7.2 million or 100% in the three months ended June 30, 2024 and by $17.3 million or 296.0% in the six months ended June 30, 2024. The decrease in net sales is directly attributable to decreased sales of Motorola branded cable modems and gateways. In 2023, we primarily generated our sales by selling cable modems and gateways. Sales related to SaaS offerings were $0 thousand and $74 thousand in the three months ended June 30, 2024 and 2023, respectively, and $0 thousand and $160 thousand in the six months ended June 30, 2024, respectively. The decrease in other category of $233 thousand in the three months ended June 30, 2024 compared to the three months ended in June 30, 2023 and the decrease of $324 thousand in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 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.

Previous wording

Gross profit decreased in the three months ended March 31, 2024, 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.

Current wording

Gross profit decreased in the three months ended June 30, 2024, 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. Gross profit decreased in the six months ended June 30, 2024, compared to the six months ended in the prior fiscal year period, primarily due to inventory reserves applied during the period ended June 30, 2024.

Previous wording

For the remainder of fiscal 2024, we expect gross margin to be subject to similar variabilities experienced in the first quarter of 2024. 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.

Current wording

For the remainder of fiscal 2024, we expect gross margin to decrease due to our ongoing expense incurred to support customer accounts. Our cost of goods sold, as a percentage of net sales, can vary significantly based upon factors such as: uncertainties surrounding revenue volumes, including the timing of sales.

Previous wording

Selling and marketing expenses decreased in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to reductions in personnel expenses by $0.6 million, marketing campaigns by $1.4 million, Motorola royalty fees of $1.7 million, and other sales support costs of $0.3 million.

Current wording

Selling and marketing expenses decreased in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to reductions in personnel expenses by $0.5 million, marketing campaigns by $1.2 million, Motorola royalty fees of $1.7 million, and other sales support costs of $0.1 million. Selling and marketing expenses decreased in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to reductions in personnel expenses by $1.1 million, marketing campaigns by $2.2 million, Motorola royalty fees of $3.4 million, and other sales support costs of $0.5 million.

Previous wording

For the remainder of the fiscal year 2024, we expect our selling and marketing expenses to be comparable to fiscal Q1 2024. Expenses may fluctuate depending on sales levels achieved as certain expenses, such as commissions, and are determined based upon the net sales achieved. Forecasting both 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.

Current wording

For the remainder of the fiscal year 2024, we expect our selling and marketing expenses to decrease compared to first half of 2024. Expenses may fluctuate depending on sales levels achieved as certain expenses, and are determined based upon the net sales achieved. Forecasting both 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.

Previous wording

The decrease of $1.4 million was primarily due to decreases in personnel expenses of $1.0 million, contract labor of $0.1 million, software subscriptions of $0.1 million, and certification and other costs of $0.2 million. partially offset by an increase in certification costs of $95 thousand.

Current wording

The decrease of $1.1 million in the three months ended June 2024 as compared to the three months ended June 30, 2023 was primarily due to decreases in personnel expenses of $0.8 million, contract labor of $0.1 million, professional fees of $0.1 million, and other support costs of $0.1 million. The decrease of $2.6 million in the six months ended June 2024 as compared to the six months ended June 30, 2023 was primarily due to decreases in personnel expenses of $1.8 million, contract labor of $0.2 million, professional fees of $0.2 million, and certification and other costs of $0.4 million.

Previous wording

For the remainder of the fiscal year 2024, we expect research and development expenses to be comparable to fiscal Q1 2024. 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.

Current wording

For the remainder of the fiscal year 2024, we expect research and development expenses to decrease compared to the first half of 2024. 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.

Previous wording

Our principal sources of liquidity are cash and cash equivalents. As of March 31, 2024, we had cash and cash equivalents of $1.0 million as compared to $0.7 million on December 31, 2023. On March 31, 2024, we had no borrowings outstanding and working capital of negative $0.3 million. We have funded our operations and financing activities primarily through sale of preferred stock.

Current wording

Our principal sources of liquidity are cash and cash equivalents. As of June 30, 2024, we had cash and cash equivalents of $0.6 million as compared to $0.7 million on December 31, 2023. On June 30, 2024, we had no borrowings outstanding and working capital of negative $0.7 million. We have funded our operations and financing activities primarily through sale of preferred stock.

Previous wording

***Cash Flows from Operating Activities.***Cash used from operating activities of $2.5 million during the three months ended March 31, 2024 reflected our net loss of $3.3 million, adjusted for non-cash expenses, consisting primarily of $426 thousand of stock-based compensation expense, $104 thousand in depreciation and amortization expense, and $2.4 million in vendor forgiveness, net of asset transfers. Uses of cash included a decrease in accounts payable of $3.2 million and accrued expenses of $66 thousand. Sources of cash included primarily a decrease of accounts receivable of $709 thousand, and inventories of $404 thousand.

Current wording

***Cash Flows from Operating Activities.***Cash used from operating activities of $2.9 million during the six months ended June 30, 2024 reflected our net loss of $3.7 million, adjusted for non-cash expenses, consisting primarily of $426 thousand of stock-based compensation expense, $215 thousand in depreciation and amortization expense, and $2.2 million in vendor forgiveness, net of asset transfers. Uses of cash included a decrease in accounts payable of $3.1 million. Sources of cash included primarily a decrease of accounts receivable of $731 thousand, inventories of $404 thousand, and accrued expenses of $16 thousand.

Previous wording

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 accounts receivable of $0.5 million and prepaid expenses of $81 thousand. Sources of cash included primarily a decrease of inventories of $2.6 million, increase in accounts payable of $2.5 million, increase in accrued expenses of $0.3 million, and increase in deferred revenue of $0.1 million.

Current wording

Cash provided by operating activities of $2.5 million during the six months ended June 30, 2023 reflected our net loss of $9.7 million, adjusted for non-cash expenses, consisting primarily of $0.2 million of stock-based compensation expense and $0.3 million in depreciation and amortization expense. Uses of cash included an increase in accrued expenses of $2.3 million. Sources of cash included primarily a decrease of accounts receivable of $0.8 million, inventories of $6.9 million, increase in accounts payable of $5.9 million, increase in prepaid expenses of $0.1 million, and increase in deferred revenue of $0.1 million.

Previous wording

***Cash Flows from Investing Activities.***During the three months ended March 31, 2024, the Company had no cash flows generated or used by investing activities.

Current wording

***Cash Flows from Investing Activities.***During the six months ended June 30, 2024, the Company had no cash flows generated or used by investing activities.

Previous wording

During the three months ended March 31, 2023, $6 thousand was used to purchase equipment and $122 thousand was used for certification costs.

Current wording

During the six months ended June 30, 2023, $162 thousand was used to purchase equipment and $220 thousand was used for certification costs.

Previous wording

Cash Flows from Financing Activities. Cash provided from financing activities during the three months ended March 31, 2024 consisted of proceeds from issuance of preferred stock of $2.8 million.

Current wording

Cash Flows from Financing Activities. Cash provided from financing activities during the six months ended June 30, 2024 consisted of proceeds from issuance of preferred stock of $2.8 million.

Previous wording

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.

Current wording

Cash used in financing activities during the six months ended June 30, 2023 consisted of repayment of $2.3 million on the borrowings under our SVB line-of-credit.

Previous wording

At March 31, 2024, we have Federal and state net operating loss carry forwards of approximately $79.1 million and $47.9 million, respectively, available to reduce future taxable income. A valuation allowance has been established for the full amount of deferred income tax assets as management has concluded that it is more-likely than-not that the benefits from such assets will not realize the benefits of our deferred tax assets. As a result, as of March 31, 2024 and December 31, 2023, we recorded a full valuation allowance against our net deferred tax assets.

Current wording

At June 30, 2024, we have Federal and state net operating loss carry forwards of approximately $79.2 million and $47.9 million, respectively, available to reduce future taxable income. A valuation allowance has been established for the full amount of deferred income tax assets as management has concluded that it is more-likely than-not that the benefits from such assets will not realize the benefits of our deferred tax assets. As a result, as of June 30, 2024 and December 31, 2023, we recorded a full valuation allowance against our net deferred tax assets.

Previous wording

During the three months ended March 31, 2024, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2023.

Current wording

During the six months ended June 30, 2024, except as otherwise disclosed in this Form 10-Q, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Form 10-K for the year ended December 31, 2023.