FiEE, Inc.
For the period ended Dec 31, 2025. Filed Mar 20, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 20, 2026
FIEE$3.12+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-04-10.
0001829126-25-002538
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-20.
0001829126-26-002591
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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Tables are not compared: 9 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
As part of our ongoing strategic initiatives, we are actively planning to develop and integrate blockchain technology into our operations in the future. Through the acquisition of HGK, we have successfully applied blockchain technology to our digital authentication services. This advancement is aimed at enhancing the security, transparency, and efficiency of our services and systems.
Current report
In line with our growth strategy, we are also targeting potential acquisitions in key sectors such as AI, hardware, and the IoT. The acquisitions completed in 2025 have enabled us to strengthen our technological capabilities and expand our market presence. These strategic initiatives reflect our commitment to innovation and expansion, positioning us for long-term growth and success in emerging industries.
Current report
Additionally, we are exploring entry into the MCN business. Our goal is to serve as a bridge between influencers or content creators and the global market, facilitating valuable connections and expanding our reach in this rapidly evolving digital space.
Current report
These strategic initiatives reflect our commitment to innovation and expansion, positioning us for long-term growth and success in emerging industries.
Current report
Key Factors Affecting Our Performance
Current report
Generally, our gross margin depends on a number of factors, including the type of service and customer category. Digital content services tend to have higher gross margins but require ongoing investments; software development services have gross margins that depend on project complexity; digital authentication services, leveraging AI and blockchain technologies, have high gross margin potential.
Current report
Our future growth is largely dependent on our ability to acquire new customers, which is crucial for expanding our SaaS - MCN digital services, software services, and digital authentication services. This will rely on the effectiveness of our marketing and sales efforts to reach teams and organizations across diverse industries. The success of our growth strategy, as well as our future prospects, hinges on our ability to attract and retain new customers. While we see a substantial market opportunity in the MCN business, continued investment in sales and marketing, research and development, and customer support will be essential to further grow our international customer base.
Current report
In order to sustain and expand our existing customer base, we prioritize ensuring that our customers continue to derive value from our services. By building long-term, meaningful relationships, we aim to help customers leverage our services to establish stronger connections in the global marketplace. As they increasingly recognize the value we provide, we expect them to expand their usage and upgrade their service plans, driving revenue growth within our current customer base. This approach underpins our strategy to enhance both customer retention and revenue growth over time.
Current report
Revenues
Current report
Our total revenues increased year-over-year by $5.6 million or 867.9%. The increase in revenues primarily reflects the Company’s strategic transition from legacy hardware operations to SaaS solutions, with a new business model focusing on integrating AI and big data into content creation and brand management. Notably, during March 2025, we successfully secured our first customer orders and generated initial sales, marking a critical milestone in the strategic pivot. Our target clients are individuals or entities seeking to grow their online presence as influencers or content creators.
Current report
As of December 31, 2025, we onboarded approximately 800 customers, corresponding to SaaS – MCN digital service fees totalling $6.8 million, of which $5.3 million was recognized as revenue.
Current report
Building on this momentum, we introduced customized software services in July 2025. As of December 31, 2025, we secured contracts totalling $1.2 million for customized software services, a portion of which was recognized as revenue in the current period based on the progress of completion. As of December 31, 2025, we successfully signed contracts with 13 customers for these services, with related accounts receivable amounting to $589 thousand.
Current report
Through the acquisition of HGK in November 2025, we added the ability to provide digital authentication services. As of December 31, 2025, digital authentication services generated $329 thousand in revenue, serving one corporate client and 38 individual clients. This business leverages AI and blockchain technology to provide authentication, certification, and display services for artworks, further diversifying our revenue streams.
Current report
Cost of Revenue and Gross Margin
Current report
Gross margin increased in fiscal 2025 compared to the prior fiscal year, primarily due to a notable turnaround in the Company’s profitability since the third quarter of fiscal 2025. The first half of fiscal 2025 was characterized by an initial investment and strategic positioning phase, with the implementation of increased operational capacity and a successful diversification into new, higher-margin service lines commencing in July 2025. The improvement in gross margin was primarily contributed by the MCN digital services revenue stream, which leverage AI and other technologies to reduce reliance on human labor, resulting in significantly higher margins compared to traditional service models. As a result, the Company achieved a substantial increase in its gross margin. The benefits of this strategic shift and enhanced scale are clearly reflected in the consolidated results for fiscal 2025.
Current report
Sales and marketing expenses increased by $352 thousand in fiscal 2025, as compared to the prior year, primarily due to the Company’s business transformation. In 2024, the Company was in a transition period with reduced legacy operations, resulting in low sales support costs. In 2025, with the full launch of new business operations, the Company increased marketing activities and investments to promote its digital content services, software development services, and digital authentication services.
Current report
General and administrative expenses increased by $1.3 million, or 61.8%, to $3.3 million for the year ended December 31, 2025, compared to $2.0 million for the year ended December 31, 2024. This increase was primarily driven by $1.1 million in non-cash warrant issuance costs recognized in the third quarter of 2025. The remaining increase was attributable to expanded business operations following our strategic transformation, including higher professional fees and personnel costs associated with launching and scaling our new digital content, software development, and digital authentication services. These increases were partially offset by continued cost discipline and operational efficiencies realized from our transition away from legacy hardware operations.
Current report
Research and development expenses decreased by $66 thousand in fiscal 2025, as compared to the prior year. The research and development expenses incurred in 2025 were primarily related to software subscriptions and support costs.
Current report
Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of revenues, depending on actual revenues achieved in any given year.
Current report
Other income (expense), net was an expense of $29,881 in fiscal 2025 and income of $82 in fiscal 2024, primarily due to increased foreign currency exchange losses resulting from significantly more foreign currency transactions in 2025 as the Company expanded its operations in Hong Kong and Japan.
Current report
Income Tax Expense (Benefit)
Current report
Income tax expense (benefit) was an expense of $448,204 in fiscal 2025 and benefit of $11,216 in fiscal 2024. This significant change was primarily due to the profitability of the Company’s Hong Kong subsidiary in 2025, resulting in Hong Kong Profits Tax. In 2024, the Company was in a business transition period with losses from legacy operations, resulting in an income tax benefit.
Current report
In 2025, the Company used $4.9 million in investing activities, primarily consisting of $4.7 million for acquisition of assets and $0.2 million for purchases of property, equipment and software.
Current report
Cash Flows from Financing Activities.
Current report
Cash provided from financing activities in 2025 consisted of proceeds from issuance of Common Stock of $4 million, net proceeds from the issuance of a convertible note of $300 thousand.
Current report
Our primary short-term needs for capital, which are subject to change, include:
Current report
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 product development programs, will significantly impact our cash management decisions.
Current report
To support our strategic transition to SaaS solutions and the scaling of our AI-driven platform, management anticipates requiring approximately $10 million in total funding over the next three years. We plan to allocate (1) $4.0 million in 2026 to develop AI technology for content, build fan community and membership system, (2) $3.0 million in 2027 to enhance our SaaS system, and develop robust security for other IP protection technologies, and (3) $3.0 million in 2028 to advance AI media development and expand content creation capabilities.
Current report
To provide for such liquidity needs over the next three years, on May 9, 2025, we entered into a Purchase Agreement with Helena, whereby we have the right to issue and sell to Helena, from time to time, and Helena shall purchase from us, up to $15,000,000 of the Common Stock. In no event shall the number of shares of Common Stock issuable to Helena cause the aggregate number of shares of Common Stock beneficially owned by Helena and its affiliates as a result of previous issuances and sales of Common Stock to Helena to exceed 9.99% of the then issued and outstanding Common Stock. The purchase price is based on 95% of the lowest VWAP during the three (3) Trading Days following Helena’s receipt of the shares.
Current report
On May 9, 2025, the Company also entered into, and simultaneously closed the transactions under, a Securities Purchase Agreement with Cao Yu, whereby the Company sold 1,585,366 shares of the Company’s Common Stock to Cao Yu, for an aggregate purchase price of $2,600,000.
Current report
On May 9, 2025, the Company also entered into, and simultaneously closed the transactions under, a Securities Purchase Agreement with Hu Bin, whereby the Company sold 853,659 shares of Common Stock to Hu Bin, for an aggregate purchase price of $1,400,000.
Current report
On January 30, 2026, we entered into a Securities Purchase Agreement with certain investors to issue an aggregate of 394,476 shares of Common Stock at $5.07 per share for gross proceeds of approximately $2 million. The transaction is expected to close at the end of the first quarter of 2026.
Current report
Commitments and Contractual Obligations
Current report
We did not have any material off-balance sheet arrangements as of December 31, 2025. Please refer to Note 7 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Current report
Please refer to Note 2 Summary of Significant Accounting Policies, in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report, for a full description of recent accounting standards, including the expected dates of adoption and estimated effects on the financial condition and results of operations, which are hereby incorporated by reference.
Current report
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.
Current report
Management considers revenue recognition to be a critical accounting policy because it requires significant judgment in identifying performance obligations and determining the appropriate timing and pattern of revenue recognition for service contracts. The application of this policy involves evaluating contract terms, including the nature of promised services and the period over which control is transferred to the customer, which could materially affect the amount and timing of revenue recognized.
Current report
Revenue Recognition
Current report
We adopted ASC 606, Revenue from Contracts with Customers, which requires a five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, including: (1) identifying the contracts or agreements with a customer; (2) identifying the performance obligations in the contract or agreement; (3) determining the transaction price; (4) allocating the transaction price to the separate performance obligations; and (5) recognizing revenue as each performance obligation is satisfied. We apply the five-step model to contracts only when it is probable that we will collect the consideration to which it is entitled in exchange for the services it transfers to our clients.
Current report
Revenues from SaaS service before the end of 2024
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Removed paragraphs (27)
Previous report
Generally, our gross margin for a given product depended on a number of factors, including the type of customer to whom we were selling. The gross margin for products sold to retailers tended 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 tended to be higher.
Previous report
Our cash and cash equivalents balance on December 31, 2024 was $30 thousand compared to $709 thousand on December 31, 2023. On December 31, 2024, we had no outstanding borrowings. Our working capital was $(0.3) million as of December 31, 2024.
Previous report
The major changes in cash and cash equivalents during fiscal 2024 was a decrease of approximately $3.2 million in accounts payable, a decrease of $0.7 million in accounts receivable, a decrease of $0.4 million in inventory, and decrease in accrued expense of $0.8 million, offset by $2.2 million in vendor forgiveness, net of asset transfers and proceeds from common stock and preferred stock of $3.5 million. In fiscal 2024, the Company also had a net loss of $4.2 million, which contributed to a decrease in cash and cash equivalents.
Previous report
In the years ended December 31, 2024 and 2023, we generated net sales of $0.6 million and $26.1 million, respectively.
Previous report
Please refer to Note 2 of the Notes to the Consolidated Financial Statements, which is incorporated herein by reference.
Previous report
**Revenue Recognition.**We primarily sold hardware products to computer peripherals retailers, computer product distributors, OEMs, and direct to consumers and other channel partners via the Internet. The hardware products included cable modems and gateways, mobile broadband modems, wireless routers, MoCA adapters and mesh home networking devices. We also sold the Minim subscription service that enabled and secured a better-connected home using the Minim AI-driven smart home WiFi management and security platform.
Previous report
The SaaS was offered over a defined contract period, generally one year. These services were available as an on-demand application over the defined term. The agreements included service offerings, which deliver applications and technologies via cloud-based deployment models that we develop functionality for, provide unspecified updates and enhancements for, and host, manage, provide upgrades and support for the customers’ access by entering into solution agreements for a stated period. The monthly fees charged to the customers were based on the number of subscribers utilizing the services each month, and the revenue recognized generally corresponded to the monthly billing amounts as the services were delivered. Customers did not have the contractual right or ability to take possession of the hosted software.
Previous report
We considered each product and each service contract to be a distinct performance obligation. Revenue is recognized when a performance obligation is satisfied, which occurs when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue from product sales is recognized at a point in time when management has determined that control has transferred to the customer, which is generally when legal title has transferred to the customer. Revenue from SaaS contracts is recognized as the output of the service is transferred to the customer over time, typically evenly over the contract term. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Previous report
Our contracts with customers often included promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the stand-alone selling price (“SSP”) for each distinct performance obligation. We used an observable price to estimate SSP for items that are sold separately. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determined the SSP using information that may include market conditions and other observable inputs.
Previous report
Product Returns. Products are returned by retail stores and distributors for inventory balancing and warranty repair or replacements. Analyses of actual returned product are compared to analyses of the product return estimates. We have concluded that the process of estimating the return reserve represents a fair measure with which to adjust revenue. Returned goods are variable and under ASC Topic 606, Revenue from Contracts with Customers, are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). Under ASC Topic 606, the Company monitors pending authorized returns of goods and, if deemed appropriate, records the right of return asset accordingly.
Previous report
**Inventory Valuation and Cost of Goods Sold.**Inventory is valued at the lower of cost, determined by the first-in, first-out method, or its net realizable value. We reviewed inventories for obsolete and slow-moving products and made provisions based on our estimate of the probability that the material will not be consumed or that it will be sold below cost. Additionally, material product certification costs on new products were capitalized and amortized over the expected period of value of the respective products.
Previous report
**Valuation of Deferred Tax Assets.**We estimate our income tax expense and deferred income tax position. This process involves the estimation of our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our balance sheet. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income. To the extent we believe that recovery is not likely, we establish a valuation allowance. Changes in the valuation allowance are reflected in the statement of operations.
Previous report
Significant management judgment is required in determining our provision for income taxes and any valuation allowances. We have recorded a 100% valuation allowance against our deferred income tax assets. It is management’s estimate that, after considering all available objective evidence, historical and prospective, with greater weight given to historical evidence, it is more likely than not that these assets will not be realized. If we establish a record of continuing profitability, at some point we will be required to reduce the valuation allowance and recognize an equal income tax benefit which will increase net income in that period.
Previous report
Net Sales
Previous report
Our total net sales decreased year-over-year by $25.5 million or 97.5%. The decline 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 $0.0 million and $1.6 million in the years ended December 31, 2024 and 2023, respectively. The decrease in other networking products of $0.6 thousand in 2024 compared to 2023 is primarily due to a reduction in MoCA products.
Previous report
Cost of Goods Sold and Gross Margin
Previous report
Gross profit decreased and gross margin increased in fiscal 2024 compared to the prior fiscal year, primarily due to the decline in net sales offset by inventory reserves of $1.8 million in 2023.
Previous report
Sales and marketing expenses decreased in fiscal 2024, as compared to the prior year, primarily due to a decrease in Motorola royalty fees of $5.2 million, marketing programs of $2.1 million, personnel costs of $1.4 million, and other market support costs of $0.7 million.
Previous report
General and administrative expenses decreased $2.6 million primarily due to a decrease of $0.9 million in personnel costs, software costs of $0.9 million, $0.5 million in professional services fees, and $0.4 in other general and administrative support costs.
Previous report
The decrease of $3.3 million was primarily due to personnel costs of $2.3 million, $0.2 million software licenses, $0.4 million professional services fees, and $0.4 million in other research and development support costs.
Previous report
Other income (expense), net was an expense of $82 in fiscal 2024 and expense of $385 thousand in fiscal 2023, primarily due to the Company paying in full the outstanding balance of the SVB Loan Agreement in October 2023
Previous report
**Income Tax Expense.**We recorded minimum state income tax for a few states and tax related to our operations in Mexico, which was $11 thousand and $43 thousand in fiscal 2024 and fiscal 2023, respectively.
Previous report
Our principal sources of liquidity are cash and cash equivalents. As of December 31, 2024, we had cash and cash equivalents of $30 thousand as compared to $709 thousand in cash and cash equivalents on December 31, 2023. On December 31, 2024, we had no outstanding borrowings and working capital of $(0.3) million. We have continued to fund our operations through proceeds of common and preferred stock.
Previous report
In 2023, $162 thousand was used to purchase equipment and $219 thousand was used for certification costs.
Previous report
Cash used in financing activities in 2023 consisted of $4.8 million in borrowing repayments under our SVB line-of-credit.
Previous report
Contractual Obligations
Previous report
In 2006, the Company entered into a maquiladora agreement with North American Production Sharing, Inc. (“NAPS”). This agreement provided that NAPS provide certain personnel and other services for a production facility in Mexico on our behalf. Although the maquiladora agreement expired on September 25, 2019, the agreement automatically renewed annually unless otherwise cancelled per provisions in the agreement. The agreement expired and was not renewed in 2023. Any related assets, liabilities, or expenses are reported in the accompanying financial statements. Additionally, the Company was obligated to pay future minimum required royalty payments associated with certain licensing agreements which are not included in our consolidated balance sheet, refer to Note 7 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Reworded paragraphs (18)
Previous wording
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties including those discussed under Part I, Item 1A, “Risk Factors.” These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.
Current wording
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Annual Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties including those discussed under Part I, Item 1A, “Risk Factors.” These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.
Previous wording
In our legacy business, we historically provided consumer networking and intelligent software service, including delivering comprehensive WiFi as a service platform to make everyone’s connected home safe and supportive for life and work.
Current wording
We historically delivered comprehensive WiFi/Software as a Service platform to make everyone’s connected home safe and supportive for life and work. We continue to grow and expand our SaaS operations as a digital service provider focused on integrating AI and data analytics into content creation and brand management. In addition to our SaaS solutions, we now also offer customized software development services and digital authentication services.
Previous wording
The following table sets forth certain financial data derived from our consolidated statements of operations for the years ended December 31, 2024 and 2023 presented in absolute dollars and as a percentage of net sales, with dollars and percentage change year over year.
Current wording
The following table sets forth certain financial data derived from our consolidated statements of operations for the years ended December 31, 2025 and 2024 presented in absolute dollars and as a percentage of revenues, with dollars and percentage change year over year. There can be no assurance that the current trend will continue in future periods.
Previous wording
Cost of goods sold consisted 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.
Current wording
Cost of revenue for the year ended December 31, 2024 consisted primarily of the following: the cost of direct labor; 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; and costs attributable to the provision of service offerings.
Previous wording
The decrease in gross profit was attributable to less sales, largely resulting from the Motorola license termination. 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.
Current wording
The increase in gross profit was attributable to higher revenue in 2025, largely resulting from the lack of revenue in 2024 due to the termination of the Motorola license. Our gross margin can be affected by a number of factors, including fluctuation in labor cost, foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of revenue 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.
Previous wording
The following table presents net sales, cost of goods sold, and gross margin, for the periods indicated:
Current wording
The following table presents revenues and gross margin, for the periods indicated:
Previous wording
Selling and marketing expenses consisted primarily of advertising, trade shows, corporate communications and other marketing expenses, product marketing expenses, outbound freight costs, 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:
Current wording
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:
Previous wording
The Company’s ability to maintain adequate levels of liquidity depends in part on our ability to generate cash from operations and its ability to raise additional funds through equity or debt financing. The Company is evaluating options related to its liquidity. The Company will continue to monitor its costs in relation to its sales and adjust its cost structure accordingly.
Current wording
The Company’s operations have historically been financed through the issuance of common stock and preferred stock. Since inception, the Company has incurred significant losses and negative cash flows from operation and an accumulated deficit of $95.6 million. The Company began generating operating profit in the fourth quarter of 2025. During the year ended December 31, 2025, the Company reported a net income of $1.1 million, a positive working capital of $2.4 million. As of December 31, 2025, we had cash of $3.1 million as compared to $30 thousand on December 31, 2024. On December 31, 2025, we had no borrowings outstanding and had a working capital of $2.4 million. Previously, we have funded our operations and financing activities primarily through the sale of our preferred stock and Common Stock. Our ability to maintain adequate levels of liquidity depends in part on our ability to generate cash from operations and our ability to raise additional funds through equity or debt financing. We are evaluating options related to our liquidity and will continue to monitor our costs in relation to our sales and adjust our cost structure accordingly.
Previous wording
Our historical cash outflows have primarily been associated with: (1) cash used for operating activities such as the purchase and growth of inventory, expansion of our sales and marketing and research and development and other working capital needs; (2) capital expenditures related to the acquisition of equipment; and (4) cash used to repay our debt obligations and related interest expense. Fluctuations in our working capital due to timing differences of our cash receipts and cash disbursements also impact our cash inflows and outflows.
Current wording
Our historical cash outflows have primarily been associated with: (1) cash used for operating activities such as the purchase and growth of inventory, expansion of our sales and marketing and research and development 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 our working capital due to timing differences of our cash receipts and cash disbursements also impact our cash inflows and outflows.
Previous wording
Our consolidated financial statements as of December 31, 2024 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.
Current wording
Our consolidated financial statements as of December 31, 2025 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 twelve months.
Previous wording
Cash provided by operating activities of $4.9 million for 2023 reflected our net loss of $17.6 million, adjusted for non-cash expenses, consisting primarily of $0.6 million of depreciation and amortization, $0.3 million of stock-based compensation expense, and a $0.2 million provision for accounts receivable allowance. Uses of cash included a reduction in accrued expenses of $3.3 million and decrease in deferred revenue of $1.4 million. Sources of cash included a decrease of accounts receivable of $1.9 million, a decrease in inventory of $15.5 million, and decrease in prepaid expenses and other current assets of $0.3 million.
Current wording
Cash provided by operating activities of $3.6 million during 2025 reflected our net income of $1.1 million, adjusted for non-cash expenses, consisting primarily of: $0.5 million in depreciation and amortization expense, $0.1 million in stock-based compensation expense, $1.1 million in value of warrants issued, $9 thousand in non-cash interest expense, and $7 thousand in loss on disposal of fixed assets. Uses of cash included increases in accounts receivable of $0.6 million, other receivables of $1.1 million, prepaid and other current assets of $27 thousand, and other long-term assets of $59 thousand, as well as decreases in operating lease liabilities of $51 thousand. Sources of cash included increases in accounts payable of $0.2 million, contract liabilities of $1.5 million, income tax payable of $0.4 million and accrued expenses and other current liabilities of $0.6 million.
Previous wording
Cash Flows from Financing Activities. Cash provided in financing activities in 2024 consisted of proceeds of issuance of preferred stock of $3.1 million.
Current wording
Cash provided in financing activities in 2024 consisted of proceeds of issuance of preferred stock of $3.1 million.
Previous wording
At December 31, 2024, we believe our current cash and cash equivalents may 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, and generate cash from operations. Based on these factors, management determined that there is substantial doubt regarding our ability to continue as a going concern. The Company will continue to monitor its costs in relation to its sales and adjust accordingly.
Current wording
At December 31, 2025, we do not believe our current cash will 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 expenditures and increase revenues. Based on these factors, management determined that there is substantial doubt regarding our ability to continue as a going concern. We will continue to monitor our costs in relation to our sales and adjust accordingly.
Previous wording
Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of any future operating losses, the level and timing of future new formed operations to generate sales and expenditures, the results and scope of ongoing research and product development programs, working capital required to support our sales growth, funds required to service our debt, our sales and marketing programs, our need for infrastructure to support our sales growth, the acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment.
Current wording
Our future liquidity and capital requirements will be influenced by numerous factors, including the extent 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 sales growth, funds required to service our debt, the receipt of and time required to obtain regulatory clearances and approvals, our sales and marketing programs, our need for infrastructure to support our sales growth, the continuing acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment.
Previous wording
Our ability to fund our longer-term cash needs is subject to various risks, many of which are beyond our control—See “Risk Factors—We may require significant additional capital to pursue our growth strategy, and our failure to raise capital when needed could prevent us from executing our growth strategy.” Should we require additional funding, such as additional capital investments, we may need to raise the required additional funds through bank borrowings or public or private sales of debt or equity securities. We cannot assure that such funding will be available in needed quantities or on terms favorable to us, if at all.
Current wording
Our ability to fund our longer-term cash needs is subject to various risks, many of which are beyond our control—See “Risk Factors—We may require significant additional capital to pursue our growth strategy, and our failure to raise capital when needed could prevent us from executing our growth strategy.” Should we require additional funding, such as additional capital investments, we may need to raise the required additional funds through bank borrowings or public or private sales of debt or equity securities. We cannot guarantee that such funding will be available in needed quantities or on terms favourable to us, if at all.
Previous wording
At December 31, 2024, we have Federal net operating loss carry forwards of approximately $73.9 million 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 be realized.
Current wording
At December 31, 2025, we have Federal net operating loss carry forwards of approximately $68.2 million 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 December 31, 2025 and December 31, 2024, we recorded a full valuation allowance against our net deferred tax assets.
Previous wording
For a description of our operating leases, refer to Note 6 and for a description of our bank credit line and bridge loan agreement, license agreement and purchase commitments, refer to Note 5 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Current wording
For a description of our operating leases, refer to Note 6 and for a description of our license agreement and purchase commitments, refer to Note 7 in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Previous wording
Following is a discussion of what we view as our more significant accounting policies and estimates pertaining to the operations of the Company. As described below, management judgments and estimates must be made and used in connection with the preparation of our consolidated financial statements. We have identified areas where material differences could result in the amount and timing of our net sales, costs, and expenses for any period if we had made different judgments or used different estimates.
Current wording
Following is a discussion of what we view as our more significant accounting policies and estimates pertaining to the operations of the Company. As described below, management judgments and estimates must be made and used in connection with the preparation of our consolidated financial statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Cost of revenue for the year ended December 31, 2025 consisted primarily of the following: the cost of direct labor; amortization of certain acquired intangibles and software development costs, outsourced authentication service costs, and costs attributable to the provision of service offerings.