UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

(Amendment No. 1)

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022

☐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 1-37649

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.)

848 Elm Street, Manchester, NH		03101
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (~~833~~(833)) 966-4646

(Former Name or Former Address, if Changed Since Last ~~Report~~)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 (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 ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

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,” 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 August ~~11, 2021,~~17, 2022, was ~~45,831,239~~46,504,232 shares.

EXPLANATORY NOTE

Overview

Minim, Inc. (“Minim”, the “Company”, “we”, “our” and similar terms) is filing this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2022 to amend and restate certain items presented in our Annual Report on Form 10-K/A for the year ended December 31, 2021 which was filed with the Securities and Exchange Commission (“SEC”) on August 19, 2022. The original Annual Report on Form 10-K for the year ended December 31, 2021 was filed on March 31, 2022 (the “Original Form 10-K”). The original Quarterly Report on Form 10-Q for the period ended March 31, 2022 was filed with the SEC on May 12, 2022 (the “Original 10-Q”).

The Form 10-Q/A contains our restated annual financial statements as of and for the period ended March 31, 2022 and year ended December 31, 2021. This Form 10-Q/A includes a restatement of our consolidated balance sheet as of March 31, 2022 and December 31, 2021 and the related consolidated statements of stockholders’ equity for the periods then ended. This Form 10-Q/A also includes amendments to:

(1) Part I, Item 1A, Risk Factors,

(2) Part I, Item 1 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the period ended March 31, 2022,

(3) management’s determinations with respect to disclosure controls and procedures and internal control over financial reporting for the period ended March 31, 2022 contained in Part I, Item 4, “Controls and Procedures”; and

(4) the Chief Executive Officer and Chief Financial Officer certifications in Exhibits 31.1, 31.2, and 32.1 and the financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101.

See below and Part I, Item 1, Note 12, “Restatement of Previously Issued Consolidated Financial Statements” in the notes to the consolidated financial statements included in this Form 10-Q/A, for a detailed discussion of the effect of the restatement on the previously issued financial statements as of and for the period ended March 31, 2022.

Other than as described above, this Form 10-Q/A does not reflect adjustments for events occurring after the filing of the Original Form 10-Q except to the extent that they are otherwise required to be included and discussed herein.

For the convenience of the reader, we have included all items in this Form 10-Q/A which supersedes in its entirety the Original Form 10-Q.

Background on the Restatement

On August 3, 2022, the Audit Committee of the Company, after consultation with the Company’s management, concluded that the following financial statements previously filed by the Company with the Securities and Exchange Commission (“SEC”) should no longer be relied upon due to errors in such financial statements relating to the recording and reporting of inventory costing, inventory reserves, and related internal controls (the “Inventory Costing Errors”):

(1) the fiscal year ended December 31, 2021; and

(2) the fiscal quarter ended March 31, 2022 (collectively, the “Non-Reliance Periods”).

Accordingly, investors should no longer rely upon the Company’s previously released financial statements for the Non-Reliance Periods and should rely instead on the 10-K/A as well as this 10-Q/A filed for the fiscal quarter ended March 31, 2022. In addition, investors should no longer rely upon earnings releases for these periods and other communications relating to these financial statements. The Company’s management identified the Inventory Costing Errors during its inventory testing procedures for the preparation of the Company’s financial statements for the quarterly period ended June 30, 2022.

The correction of the Inventory Costing Errors resulted in the determination that customer returned inventory was not properly valued and inventory for the year ended December 31, 2021 was understated by $1,912,817. The Company, upon conducting an analysis of the impact of insufficient reserves on previously reported financial results in conjunction with the customer returned inventory error, determined that the inventory reserves for the year ended December 31, 2021 were understated by $524,744. The aggregate net impact of the Inventory Costing Errors to the year ended December 31, 2021 increases inventory and reduces net loss by $1,388,073. The Inventory Costing Errors did not result in required adjustments to the consolidated statement of operations and consolidated statement of cash flows for the period ended March 31, 2022. The aggregate net impact of $1,338,073 amended and accounted for in the year ended December 31, 2021 resulted in amending the consolidated balance sheet for the period ended March 31, 2022 by increasing inventory and reducing accumulated deficit by $1,338,073.

The Inventory Costing Errors did not impact the period ended March 31, 2021.

For the period ended March 31, 2022, the foregoing changes did not have any impact on the Company’s cash position, cash flows, revenues, statement of operations, or liquidity and did not affect compliance with the financial covenants contained in the Company’s credit facility or compliance with any other agreement of the Company.

Management has considered the effect of the Inventory Costing Errors on the Company’s prior conclusion to the adequacy of its internal controls over financial reporting and disclosure controls and procedures as of the end of December 31, 2021 and March 31, 2022. As a result of the Inventory Costing Errors, management has determined that material weaknesses existed in the Company’s internal control over financial reporting as of the end of December 31, 2021 and March 31, 2022. See Part II Item 9A – Controls and Procedures in the Company’s Form 10-K/A for the year ended December 31, 2021 for a description of these matters.

As a result of the restatement included herein caused by the Inventory Costing Errors, the Company is reporting herein inventories, net, for the period ended March 31, 2022 and year ended December 31, 2021 of $31,345,231 and $33,891,287, respectively, compared to the originally reported $29,957,158 and $32,503,214, respectively. Accumulated deficit for the period ended March 31, 2022 and year ended December 31, 2021 is amended to $61,824,110 and $59,285,610, respectively, from originally reported $63,212,183 and $60,673,683, respectively.

The following table summarizes the effects of the restatement on certain key items of the Company’s previously issued consolidated financial statements for the period ended March 31, 2022:

	Period ended March 31, 2022
	As Previously Reported			Inventory Costing Errors		Inventory Reserve Error			As Restated
Selected balance sheet amounts
Inventories, net	$	29,957,158		$	1,912,817	$	(524,744	)	$	31,345,231
Total assets		48,287,906			1,912,817		(524,744	)		49,675,979
Accumulated deficit		(63,212,183	)		1,912,817		(524,744	)		(61,824,110	)
Total stockholders’ equity		27,221,984			1,912,817		(524,744	)		28,610,057

	Year ended December 31, 2021
	As Previously Reported			Inventory Costing Errors		Inventory Reserve Error			As Restated
Selected balance sheet amounts
Inventories, net	$	32,503,214		$	1,912,817	$	(524,744	)	$	33,891,287
Total assets		52,912,959			1,912,817		(524,744	)		54,301,032
Accumulated deficit		(60,673,683	)		1,912,817		(524,744	)		(59,285,610	)
Total stockholders’ equity		29,098,440			1,912,817		(524,744	)		30,486,513

MINIM, INC. AND SUBSIDIARIES

INDEX

		Page

		Part I - Financial Information

ITEM 1.	FINANCIAL STATEMENTS	25

	Consolidated Balance Sheets (Unaudited)	2

~~Consolidated Statements of Operations (Unaudited)~~		3

~~Consolidated Statements of Stockholders’ Equity (Unaudited)~~		4

~~Consolidated Statements of Cash Flows (Unaudited)~~		5

	Consolidated Statements of Operations (Unaudited)	6

	Consolidated Statements of Stockholders’ Equity (Unaudited)	7

	Consolidated Statements of Cash Flows (Unaudited)	8

	Notes to Consolidated Financial Statements (Unaudited)	69

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1918

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25

ITEM 4.	CONTROLS AND PROCEDURES	25

Part II - Other Information

ITEM 1.	LEGAL PROCEEDINGS	26

ITEM 1A.	RISK FACTORS	26

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	26

ITEM 4.	MINE SAFETY DISCLOSURES	26

ITEM 5.	OTHER INFORMATION	26

ITEM 6.	EXHIBITS	27

SIGNATURES			28

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

MINIM, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30,
2021

December 31,
2020

(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 812,373 $ 771,757
Restricted cash 750,000 800,000
Accounts receivable, net of allowance of doubtful accounts of $173,603 as of June 30, 2021 and December 31, 2020 9,254,845 9,203,334
Inventories, net 19,579,030 16,504,840
Prepaid expenses and other current assets 304,455 399,119
Total current assets 30,700,703 27,679,050

Equipment, net 633,662 455,066
Operating lease right-of-use assets, net 91,179 86,948
Goodwill 58,872 58,872
Intangible assets, net 332,963 388,629
Other assets 845,855 942,404
Total assets $ 32,663,234 $ 29,610,969

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Bank credit line $ 7,228,672 $ 2,442,246
Accounts payable 12,204,708 11,744,834
Current maturities of government loan 60,470 65,225
Current maturities of operating lease liabilities 92,654 65,651
Accrued expenses 5,045,579 7,465,063
Deferred revenue, current 349,961 —
Total current liabilities 24,982,044 21,783,019

Long term government loan, less current maturities — 15,245
Operating lease liabilities, less current maturities — 22,235
Deferred revenue, noncurrent 652,899 —
Total Liabilities 25,634,943 21,820,499

Commitments and Contingencies (Note 6) - -

Stockholders’ equity
Common Stock: Authorized: 40,000,000 shares at $0.01 par value; issued and outstanding: 35,631,239 shares at June 30, 2021 and 35,074,922 shares at December 31, 2020, respectively 356,350 350,749
Additional paid-in capital 65,858,315 64,526,664
Accumulated deficit (59,186,374 ) (57,086,943 )
Total stockholders’ equity 7,028,291 7,790,470
Total liabilities and stockholders’ equity $ 32,663,234 $ 29,610,969

~~See accompanying notes to consolidated financial statements.~~

~~MINIM, INC. AND SUBSIDIARIES~~

Consolidated Statements of Operations
(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020

Net sales $ 14,893,145 $ 10,272,757 $ 29,910,719 $ 22,228,360
Cost of goods sold 10,415,427 8,148,888 20,329,211 17,009,273
Gross profit 4,477,718 2,123,869 9,581,508 5,219,087

Operating expenses:
Selling and marketing 3,209,247 2,283,490 6,383,196 4,637,733
General and administrative 1,326,493 716,166 2,403,861 1,544,105
Research and development 1,386,358 644,492 2,774,530 1,297,244
Total operating expenses 5,922,098 3,644,148 11,561,587 7,479,082

Operating loss (1,444,380 ) (1,520,279 ) (1,980,079 ) (2,259,995 )

Other income (expense):
Interest expense, net (78,041 ) (2,242 ) (106,362 ) (7,640 )
Other, net — 892 20,000 443
Total other income (expense) (78,041 ) (1,350 ) (86,362 ) (7,197 )

Loss before income taxes (1,522,421 ) (1,521,629 ) (2,066,441 ) (2,267,192 )

Income taxes 31,490 6,356 32,990 12,672

Net loss $ (1,553,911 ) $ (1,527,985 ) $ (2,099,431 ) $ (2,279,864 )

Net loss per share:
Basic and diluted $ (0.04 ) $ (0.07 ) $ (0.06 ) $ (0.10 )

Basic and diluted weighted average common and common equivalent shares 35,482,181 22,275,441 35,368,931 21,776,101

~~See accompanying notes to consolidated financial statements.~~

~~MINIM, INC. AND SUBSIDIARIES~~

Consolidated Statements of Stockholders’ Equity
(Unaudited)

Common Stock
Shares Amount
Additional
Paid-in Capital
Accumulated Deficit Total

Balance at December 31, 2020 35,074,922 $ 350,749 $ 64,526,664 $ (57,086,943 ) $ 7,790,470

Net loss — — — (545,520 ) (545,520 )
Private investment offering, net of offering costs of $237,030
Private investment offering, net of offering costs of $237,030, shares
Stock option exercises 287,932 2,879 376,268 — 379,147
Stock-based compensation — — 404,718 — 404,718
Balance at March 31, 2021 35,362,854 $ 353,628 $ 65,307,650 $ (57,632,463 ) $ 8,028,815
Net loss — — — (1,553,911 ) (1,553,911 )
Stock option exercises, net 268,385 2,722 339,541 — 342,263
Stock-based compensation — — 211,124 — 211,124
Balance at June 30, 2021 35,631,239 $ 356,350 $ 65,858,315 $ (59,186,374 ) $ 7,028,291

Common Stock
Shares Amount
Additional
Paid In Capital
Accumulated Deficit Total

Balance at December 31, 2019 20,929,928 $ 209,299 $ 46,496,330 $ (40,596,638 ) $ 6,108,991

Net loss — — — (751,879 ) (751,879 )
Stock option exercises 346,834 3,468 194,190 — 197,658
Stock-based compensation — — 127,053 — 127,053
Balance at March 31, 2020 21,276,762 $ 212,767 $ 46,817,573 $ (41,348,517 ) $ 5,681,823
Net loss — — — (1,527,985 ) (1,527,985 )
Private investment offering, net of offering costs of $237,030 2,237,103 22,371 3,140,999 — 3,163,370
Stock option exercises 267,566 2,676 211,716 — 214,392
Stock-based compensation — — 67,548 — 67,548
Balance at June 30, 2020 23,781,431 $ 237,814 $ 50,237,836 $ (42,876,502 ) $ 7,599,148

~~See accompanying notes to consolidated financial statements.~~

~~MINIM, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows~~
~~(Unaudited)~~

Six Months Ended
June 30,

2021 2020
Cash flows used in operating activities:
Net loss $ (2,099,431 ) $ (2,279,864 )

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 337,463 96,546
Amortization of right-of-use assets 54,971 54,640
Stock-based compensation 615,842 194,601
Provision recovery of accounts receivable allowances — (112,308 )
Provision for inventory reserves 118,927 9,578
Non-cash loan forgiveness (20,000 ) —
Non-cash interest expense 13,999 —
Changes in operating assets and liabilities:
Accounts receivable (51,511 ) (817,929 )
Inventories (3,193,116 ) 2,808,903
Prepaid expenses and other current assets 94,664 44,604
Other assets (65,898 ) —
Accounts payable 454,713 2,106,480
Accrued expenses (2,377,861 ) 1,155,687
Deferred revenue 966,399 —
Operating lease liabilities (54,434 ) (54,506 )
Net cash used in operating activities (5,205,273 ) 3,206,431

Cash flows from investing activities:
Purchases of equipment (297,947 ) (71,910 )
Certification costs incurred and capitalized — (308,000 )
Net cash used in investing activities (297,947 ) (379,910 )

Cash flows from financing activities:
Net proceeds from bank credit lines 4,865,332 —
Proceeds from debt — 583,300
Net proceeds from private placement offering — 3,163,370
Bank credit line (92,905 ) —
Proceeds from stock option exercises 721,409 412,050
Net cash provided by financing activities 5,493,836 4,158,720
��
Net change in cash (9,383 ) 6,985,241

Cash, cash equivalents, and restricted cash - Beginning 1,571,757 1,366,893

Cash, cash equivalents, and restricted cash - Ending $ 1,562,373 $ 8,352,134

Supplemental disclosures of cash flow information:

Cash paid during the period for:
Interest $ 106,417 $ 8,432
Income taxes $ 32,990 $ 12,672

	March 31, 2022 (Unaudited, As Restated)			December 31, 2021 (As Restated)

ASSETS
Current assets
Cash and cash equivalents	$	10,048,871		$	12,570,445
Restricted cash		500,000			500,000
Accounts receivable, net of allowance of doubtful accounts of $246,534 and $236,819 as of March 31, 2022 and December 31, 2021, respectively		5,202,262			4,880,663
Inventories, net		31,345,231			33,891,287
Prepaid expenses and other current assets		641,374			587,885
Total current assets		47,737,738			52,430,280

Equipment, net		805,679			762,818
Operating lease right-of-use assets, net		195,821			241,626
Goodwill		58,872			58,872
Intangible assets, net		232,312			262,698
Other assets		645,557			544,738
Total assets	$	49,675,979		$	54,301,032

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Bank credit line	$	7,071,901		$	5,065,074
Accounts payable		8,208,513			12,458,246
Current maturities of government loan		7,731			34,237
Current maturities of operating lease liabilities		123,891			143,486
Accrued expenses		4,749,664			5,279,917
Deferred revenue, current		404,453			291,296
Total current liabilities		20,566,153			23,272,256

Operating lease liabilities, less current maturities		72,198			98,811
Deferred revenue, noncurrent		427,571			443,452
Total liabilities		21,065,922			23,814,519

Commitments and Contingencies (Note 6)		-			-

Stockholders’ equity
Preferred Stock, authorized: 2,000,000 shares at $0.01 par value; 0 shares issued and outstanding		—			—
Common Stock, authorized: 60,000,000 shares at $0.01 par value; issued and outstanding: 46,065,817 shares at March 31, 2022 and 45,885,043 shares at December 31, 2021 respectively		460,657			458,850
Additional paid-in capital		89,973,510			89,313,273
Accumulated deficit		(61,824,110	)		(59,285,610	)
Total stockholders’ equity		28,610,057			30,486,513
Total liabilities and stockholders’ equity	$	49,675,979		$	54,301,032

See accompanying notes to consolidated financial statements.

MINIM, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

	2022			2021
	Three Months Ended
	March 31,
	2022			2021
Net sales	$	13,299,255		$	15,017,574
Cost of goods sold		9,108,018			9,913,784
Gross profit		4,191,237			5,103,790

Operating expenses:
Selling and marketing		3,652,026			3,173,950
General and administrative		1,451,032			1,077,368
Research and development		1,542,582			1,388,170
Total operating expenses		6,645,640			5,639,488
Operating loss		(2,454,403	)		(535,698	)

Other income (expense):
Interest expense, net		(78,097	)		(28,322	)
Gain on forgiveness of debt (Note 5)		—			20,000
Total other income (expense)		(78,097	)		(8,322	)

Loss before income taxes		(2,532,500	)		(544,020	)

Income tax provision		6,000			1,500
Net loss	$	(2,538,500	)	$	(545,520	)

Basic and diluted net loss per share	$	(0.06	)	$	(0.02	)

Weighted average common and common equivalent shares: Basic and diluted		46,003,232			35,254,243

See accompanying notes to consolidated financial statements.

MINIM, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

For the three months ended March 31, 2022


	Common Stock				Additional Paid In		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2021 (as restated)		45,885,043	$	458,850	$	89,313,273	$	(59,285,610	)	$	30,486,513

Net loss		—		—		—		(2,538,500	)		(2,538,500	)
Stock option exercises		180,774		1,807		97,362		—			99,169
Stock-based compensation		—		—		562,875		—			562,875
Balance at March 31, 2022 (as restated)		46,065,817	$	460,657	$	89,973,510	$	(61,824,110	)	$	28,610,057

~~MINIM, INC., AND SUBSIDIARIES~~For the three months ended March 31, 2021

Notes to Consolidated Financial Statements
(Unaudited)

	Common Stock				Additional Paid In		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2020		35,074,922	$	350,749	$	64,526,664	$	(57,086,943	)	$	7,790,470

Net loss		—		—		—		(545,520	)		(545,520	)
Stock option exercises		287,932		2,879		376,268		—			379,147
Stock-based compensation		—		—		404,718		—			404,718
Balance at March 31, 2021		35,362,854	$	353,628	$	65,307,650	$	(57,632,463	)	$	8,028,815

See accompanying notes to consolidated financial statements.

~~(1)~~

~~NATURE OF OPERATIONS AND BASIS OF PRESENTATION~~7

MINIM, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	2022			2021
	Three Months Ended March 31,
	2022			2021
Cash flows used in operating activities:
Net loss	$	(2,538,500	)	$	(545,520	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		130,727			167,293
Amortization of right-of-use assets		45,805			18,916
Amortization of debt issuance costs		17,605			2,418
Amortization of sales contract costs		9,605			5,566
Stock based compensation		562,875			404,718
Provision for accounts receivable allowances		9,714			—
Provision for inventory reserves		40,266			—
Non-cash loan forgiveness		—			(20,000	)
Changes in operating assets and liabilities:
Accounts receivable		(331,313	)		557,314
Inventories		2,505,790			(1,479,232	)
Prepaid expenses and other current assets		(53,489	)		(3,624	)
Other assets		17,778			(110,447	)
Accounts payable		(4,179,887	)		(1,365,295	)
Accrued expenses		(600,100	)		(2,811,777	)
Deferred revenue		97,276			228,436
Operating lease liabilities		(46,208	)		(18,513	)
Net cash used in operating activities		(4,312,056	)		(4,969,747	)

Cash flows from investing activities:
Purchases of equipment		(115,103	)		(257,563	)
Certification costs capitalized		(156,300	)		—
Net cash used in investing activities		(271,403	)		(257,563	)

Cash flows from financing activities:
Net proceeds from the SVB bank credit line		1,989,222			7,009,270
Repayment of the Rosenthal bank credit line		—			(2,442,246	)
Costs associated with bank credit line		—			(92,905	)
Repayment of government loan		(26,506	)		—
Proceeds from stock option exercises		99,169			379,147
Net cash provided by financing activities		2,061,885			4,853,266

Net decrease in cash and cash equivalents		(2,521,574	)		(374,044	)
Cash, cash equivalents, and restricted cash - Beginning		13,070,445			1,571,757

Cash, cash equivalents, and restricted cash - Ending	$	10,548,871		$	1,197,713

Supplemental disclosures of cash flow information:

Cash paid during the period for:
Interest	$	78,331		$	25,945
Income taxes	$	6,000		$	1,500

Cash is reported on the consolidated statements of cash flows as follows:

Cash and cash equivalents	$	10,048,871		$	397,713
Restricted cash		500,000			800,000
Total cash, cash equivalents and restricted cash	$	10,548,871		$	1,197,713

See accompanying notes to consolidated financial statements.

MINIM, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Minim, Inc.~~, formerly known as Zoom Telephonics, Inc.,~~ and its wholly owned subsidiaries, ~~Zoom~~Cadence Connectivity, Inc., MTRLC LLC, and ~~MTRLC LLC,~~Minim Asia Private Limited, are herein collectively referred to as “Minim” or the “Company”. ~~We deliver innovative Internet access~~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 ~~June 3, 2021, the Company~~January 21, 2022, Zoom Connectivity, Inc. filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change its legal corporate name from “Zoom ~~Telephonics,~~Connectivity, Inc.” to ~~“Minim,~~“Cadence Connectivity, Inc.”, effective as of January 21, 2022.

Restatement

Subsequent to the issuance of the financial statements for the period ended March 31, 2022, the Company’s management identified the Inventory Costing Errors during its inventory testing procedures for the preparation of the Company’s financial statements for the quarterly period ended June 3,30, 2022. In connection with this review, the Company identified that customer returned product was not properly valued due to incorrect costs per unit being applied, resulting in a $1,912,817 in undervalued inventory for the year ended December 31, 2021. The Company’s enterprise resource planning (“ERP”) system requires manual, rather than systematic, inputted costs per unit on certain inventory transactions. In conjunction with the inventory costing review, the Company conducted an analysis on inventory reserves and identified additional inventory reserves and provisions of $524,744. The inventory reserves are specific to the inventory costing error and excess product on hand for a product. The aggregate net impact of the Inventory Costing Errors for the year ended December 31, 2021 increases inventory and reduces net loss by $1,388,073. The Inventory Costing Errors did not result in adjustments to the consolidated statement of operations and consolidated statement of cash flows for the period ended March 31, 2022. The aggregate net impact of $1,338,073 amended and accounted in the year ended December 31, 2021 results in amended consolidated balance sheet for the period ended March 31, 2022 by increasing inventory and reducing accumulated deficit by $1,338,073.

The Inventory Costing Errors did not impact the period ended March 31, 2021.

~~On July 7, 2021,~~For the period ended March 31, 2022, the foregoing changes did not have any impact on the Company’s ~~common stock, $0.01~~ ~~par value per share (the “Common Stock”), ceased trading on~~cash position, cash flows, revenues, statement of operations, or liquidity and does not affect compliance with the ~~OTCQB and commenced trading on The Nasdaq Capital Market under~~financial covenants contained in the ~~ticker symbol “MINM.”~~Company’s credit facility or compliance with any other agreement of the Company.

The following table summarizes the effects of the restatement on certain key items of the Company’s previously issued consolidated financial statements for the period ended March 31, 2022:

SCHEDULE OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS


	Period ended March 31, 2022
	As Previously Reported			Inventory Costing Errors		Inventory Reserve Error			As Restated
Selected balance sheet amounts
Inventories, net	$	29,957,158		$	1,912,817	$	(524,744	)	$	31,345,231
Total assets		48,287,906			1,912,817		(524,744	)		49,675,979
Accumulated deficit		(63,212,183	)		1,912,817		(524,744	)		(61,824,110	)
Total stockholders’ equity		27,221,984			1,912,817		(524,744	)		28,610,057


	Year ended December 31, 2021
	As Previously Reported			Inventory Costing Errors		Inventory Reserve Error			As Restated
Selected balance sheet amounts
Inventories, net	$	32,503,214		$	1,912,817	$	(524,744	)	$	33,891,287
Total assets		52,912,959			1,912,817		(524,744	)		54,301,032
Accumulated deficit		(60,673,683	)		1,912,817		(524,744	)		(59,285,610	)
Total stockholders’ equity		29,098,440			1,912,817		(524,744	)		30,486,513

Basis of Presentation

The accompanying unaudited consolidated financial statements ~~including~~of the ~~accounts of Minim, Inc. and its wholly-owned subsidiaries,~~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 information that are normally required by U.S. generally accepted accounting principles (“GAAP”) can be condensed or omitted. In the opinion of management, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. All intercompany balances and transactions have been eliminated in consolidation. The information included in this Quarterly Report on Form ~~10-Q~~10-Q/A should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020.~~2021.

The results of the Company’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 the full year or any future periods.

Certain prior year amounts have been reclassified to conform to the current year presentation. None of the reclassifications impacted the consolidated statements of operations for the three- month period ended ~~June 30, 2020.~~

~~Use of Estimates~~

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Actual results may differ from those estimates. Significant estimates made by the Company include: 1) allowance for doubtful accounts for accounts receivable (collectability); 2) contract liabilities (sales returns, and other variable considerations); 3) asset valuation allowance for deferred income tax assets; 4) write-downs of inventory for slow-moving and obsolete items, and market valuations; and 5) stock-based compensation.March 31, 2021.

~~Zoom Connectivity Merger~~Liquidity

~~On November 12, 2020,~~The Company’s operations have historically been financed through the issuance of common stock and borrowings. Since inception, the Company ~~entered into an Agreement~~has incurred significant losses and Plan of Merger (the “Merger Agreement”) with Zoom Connectivity, Inc., (“Zoom Connectivity”), a Delaware corporation, that designs, develops, sells and supports an IoT security platform that enables and secures a better connected home. Undernegative cash flows from operations. During the ~~Merger Agreement, Elm Acquisition Sub, Inc., a wholly-owned subsidiary of~~three months ended March 31, 2022, the Company ~~was merged with~~incurred a net loss of $2.5million and ~~into Zoom Connectivity in exchange for~~ ~~10,784,534~~ ~~shares~~had negative cash flows from operating activities of ~~Common Stock~~$4.3 million. As of ~~the Company. As a result of the merger, effected December 4, 2020, Zoom Connectivity was the surviving entity and became a wholly-owned subsidiary of the Company.~~

~~Immediately prior to closing of the Merger Agreement, the majority stockholder of~~March 31, 2022, the Company ~~was also~~had an accumulated deficit of $61.8million and cash and cash equivalents of $10.0 million. The Company believes it has 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 ~~majority stockholder~~issuance of Zoom Connectivity. As a result of the common ownership upon closing of the transaction, the merger was considered a common-control transaction and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of October 9, 2020, which was the date that the majority stockholder acquired control of the Company and, therefore, held control over both companies. The consolidated financial statements incorporate Zoom Connectivity’s financial results and financial information for the period beginning October 9, 2020, and the comparative information of the prior period does not include the financial results of Zoom Connectivity prior to October 9, 2020. The merger of the Company with Zoom Connectivity is referred to as the “Zoom Connectivity Merger” within these financial statements.

~~(2)~~

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies are disclosed in its Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020.~~2021. The Company’s significant accounting policies did not change during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Recently Adopted Accounting Standards

~~In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2019-12 “~~~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~”, which is intended to improve consistent application and simplify the accounting for income taxes. This ASU removes certain exceptions to the general principals in Topic 740 and clarifies and amends existing guidance. The Company adopted the new standard effective January 1, 2021. The adoption had no impact on the Company’s financial condition, results of operations or cash flows.None

Recently Issued Accounting Standards

In June 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable. This ASU is effective for the Company for reporting periods beginning after December 15, 2022. The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated financial statements.

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance”. ASU 2021-10 includes tax credits, but not within Topic 740, “Income Taxes”, cash grants, grants of other assets and project grants. The ASU excludes transactions in which a government is a customer within ASC Topic 606, “Revenue from Contracts with Customers”. This ASU is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated. financial statements.

With the exception of the new standards discussed above, there have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial ~~condition,~~position, results of operations and cash flows.

~~(3)~~

~~REVENUE RECOGNITION~~

The Company primarily sells hardware products to its customers. The hardware products include cable modems and gateways, mobile broadband modems, wireless routers, MoCA adapters and mesh home networking devices. The Company derives its net sales primarily from the sales of hardware products to computer peripherals retailers, computer product distributors, OEMs, and direct to consumers and other channel partners via the Internet. The Company accounts for point-of-sale taxes on a net basis.

The Company also sells and earns revenues from software as a service (“SaaS”), including software service that enables and secures a better-connected home with the AI-driven smart home WiFi management and security platform. Customers do not have the contractual right or ability to take possession of the hosted software.

The Company has concluded that transfer of control of its hardware products transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Revenues from sales of hardware products are recognized at a point in time upon transfer of control.

The Company sells software as a SaaS offering. The SaaS agreements are offered over a defined contract period, generally one year, and are sold to Internet service providers, who then promote the services to their subscribers. These services are available as an on-demand application over the defined term. The agreements include service offerings, which deliver applications and technologies via cloud-based deployment models that the Company develops functionality for, provides unspecified updates and enhancements for, and hosts, manages, provides upgrade and support for the customers access by entering into solution agreements for a stated period. The monthly fees charged to the customers are based on the number of subscribers utilizing the services each month, and the revenue recognized generally corresponds to the monthly billing amounts as the services are delivered.

~~Multiple Performance Obligations~~(3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS

During the six months ended June 30, 2021, the Company introduced new hardware products that include SaaS software services as a bundled product to its customers. The Company accounts for these sales in accordance with the multiple performance obligation guidance of ASC Topic 606. For multiple performance obligation contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria of being distinct, the Company considers a number of factors, such as degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. SaaS included with certain hardware products is considered distinct from the hardware, and therefore the hardware and SaaS software services offerings are treated as separate performance obligations.

After identifying the separate performance obligations, the transaction price is allocated to the separate obligations on a relative standalone selling price basis (“SSP”). SSP’s are generally determined based on the prices charged to customers when the performance obligation is sold separately or using an adjusted market assessment. The estimated SSP of the hardware and SaaS offerings are directly observable from the sales of those products and software based on a range of prices.

Revenue is recognized for each distinct performance obligation as control is transferred to the customer. ~~In general, control of the hardware transfers to the customer at time of shipment or delivery while the SaaS offering is delivered over the service period.~~ Revenue attributable to hardware products bundled with ~~SaaS~~Software-as-a-Service (“SaaS”) offerings are recognized at the time control of the 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 three-year period that the Company has estimated based on the expected replacement of the hardware.

Transaction Price Allocated to the Remaining Performance Obligations

The ~~following table includes estimated revenue expected to be recognized in~~remaining performance obligations represent the ~~future related~~transaction price allocated to performance obligations ~~for the SaaS offering~~ that are unsatisfied or ~~(partially unsatisfied)~~partially unsatisfied as of ~~June 30, 2021:~~

~~SCHEDULE OF PERFORMANCE OBLIGATIONS~~

1 year 2 years Greater than 2 years Total
Performance obligations $ 349,961 $ 330,391 $ 322,508 $ 1,002,860

~~Other considerations~~the end of ~~ASC 606 include~~ the ~~following:~~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 process of being scheduled for shipment, and that are not yet invoiced.

● ~~Warranties~~ Contract costs- the Company does not provide separate warranty for purchase to customers. Therefore, there is not a separate performance obligation. The Company does account for assurance-type warranties as a cost accrual and the warranties do not include any additional distinct services other than the assurance that the goods comply with agreed-upon specifications. The warranty reserve was not material at June 30, 2021 and December 31, 2020.

● ~~Returned Goods~~ ~~- analyses~~The Company recognizes the incremental costs of ~~actual returned products are compared~~obtaining a contract with a customer if the Company expects the benefit of those costs to ~~the product return estimates and historically have resulted in immaterial differences.~~be longer than one year. The Company has ~~concluded~~determined that certain sales commissions meet the requirements to be capitalized, and the Company amortizes these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current ~~process of estimating the return reserve represents a fair measure to adjust revenue. Returned goods are a form of variable consideration~~ and ~~under Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The sales returns accrual was $1.3~~ ~~million and $775~~ ~~thousand at June 30, 2021 and December 31, 2020, respectively.~~long-term assets on our consolidated balance sheets.

● ~~Price protection~~ ~~- price protection provides that if~~The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the ~~Company reduces~~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 price on any products sold to the customer, the Company will guarantee an account credit for the price difference for all quantities of that product that the customer still holds. Price protection is variable and under Topic 606 is estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The price protection accrual was not material.initial contract.

● ~~Volume Rebates and Promotion Programs~~ - volume rebates are variable dependent upon the volume of goods sold-through the Company’s customers to end-users and under Topic 606 are estimated and recognized as a reduction of revenue as performance obligations are satisfied (e.g., upon shipment of goods). The rebate and promotion accrual was $~~113~~ ~~thousand and $384~~ ~~thousand at June 30, 2021 and December 31, 2020, respectively.~~

Contract Balances

The Company records accounts receivable when it has an unconditional right to the consideration. ~~Contract liabilities are recorded when cash payments are received or due in advance of performance.~~ Contract liabilities consist of deferred revenue, ~~where~~which represents payments received in advance of revenue recognition related to SaaS agreements and for prepayments for products or services yet to be delivered.

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 ~~Company has unsatisfied performance obligations.~~products or services are delivered to the customer.

The following table reflects the contract balances as of the periods ended:

SCHEDULE OF CONTRACT BALANCES

Balance Sheet Location June 30, 2021 December 31, 2020
Accounts receivable, net Accounts receivable, net $ 9,254,845 $ 9,203,334
Contract liabilities - current Deferred revenue, current $ 349,961 $ —
Contract liabilities – non-current Deferred revenue, non-current $ 652,899 $ —

	March 31,		December 31,
	2022		2021

Accounts receivable	$	5,202,262	$	4,880,663
Total contract assets	$	5,202,262	$	4,880,663

Deferred revenue, current	$	404,453	$	291,296
Deferred revenue, noncurrent		427,571		443,452
Total contract liabilities	$	832,024	$	734,748

During the three months ended March 31, 2022, the change in contract liabilities balances was as follows:

SCHEDULE OF CHANGE IN CONTRACT BALANCES

Balance at December 31, 2021	$	734,748
Billings		177,759
Revenue recognized		(80,483	)
Balance at March 31, 2022	$	832,024

Disaggregation of Revenue

The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of cable modems and gateway, and the majority of the Company’s customers are retailers and distributors.

~~Disaggregated revenue~~following table sets forth our revenues by distribution ~~channel for three and six months ended:~~channel:

SCHEDULE OF DISAGGREGATION OF REVENUE BY DISTRIBUTION CHANNEL

2021 2020 2021 2020
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020

Retailers $ 12,995,760 $ 8,321,755 $ 26,787,278 $ 19,296,044
Distributors 1,872,934 1,587,617 2,786,084 2,185,146
Other 24,451 363,385 337,357 747,170
Total $ 14,893,145 $ 10,272,757 $ 29,910,719 $ 22,228,360

	Three Months Ended March 31,
	2022		2021
Retailers	$	12,341,289	$	13,791,518
Distributors		307,207		913,150
Other		650,759		312,906
	$	13,299,255	$	15,017,574

~~Disaggregated revenue~~The following table sets forth our revenues by ~~product for three and six months ended:~~product:

2021 2020 2021 2020
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020

Cable Modems & gateways $ 12,808,320 $ 9,192,784 $ 27,395,410 $ 20,362,794
Software as a service 152,704 — 277,376 —
Other 1,932,121 1,079,973 2,237,933 1,865,566
Total $ 14,893,145 $ 10,272,757 $ 29,910,719 $ 22,228,360
Revenues $ 14,893,145 $ 10,272,757 $ 29,910,719 $ 22,228,360

	Three Months Ended March 31,
	2022		2021
Cable modems & gateways	$	12,883,047	$	14,587,090
Other networking products		272,566		305,812
SaaS		143,642		124,672
	$	13,299,255	$	15,017,574

(4) BALANCE SHEET COMPONENTS

Inventories

~~(4)~~

~~INVENTORIES~~

Inventories, net consists of the following:

SCHEDULE OF INVENTORIES

Inventories consist of :	June 30, 2021		December 31, 2020
					March 31, 2022 (As Restated)		December 31, 2021 (As Restated)
Raw materials	$	1,521,699	$	1,238,332	$	1,601,870	$	1,047,156
Work in process		7,414		84,203
Finished goods		18,049,917		15,182,305		29,743,361		32,844,131
Total	$	19,579,030	$	16,504,840	$	31,345,231	$	33,891,287

Finished goods ~~include~~includes consigned inventory held by our customers of ~~approximately~~ $~~3.4~~4.8 million and $4.5 million at ~~June 30, 2021~~March 31, 2022 and ~~approximately $2.3~~ ~~million at~~ December 31, ~~2020~~2021, respectively and includes in-transit inventory of $~~5.6~~2.2 million and $~~6.2~~6.3 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The Company reviews inventory for obsolete and slow-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 ~~was~~were $~~214~~835 thousand and $~~139~~800 thousand ~~for the six months ended June 30, 2021~~as of March 31, 2022 and ~~the year ended~~ December 31, ~~2020,~~2021, respectively.

~~(5)~~

~~ACCRUED EXPENSES~~

Accrued expenses

Accrued expenses ~~consisted~~consist of the following:

SCHEDULE OF ACCRUED EXPENSES

	June 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Inventory	$	280,408	$	1,458,850
Payroll & related compensation		149,100		853,402
Inventory purchases					$	164,545	$	287,571
Payroll & related benefits						300,595		210,495
Professional fees		588,156		618,308		319,758		229,597
Royalty costs		1,586,571		1,906,439		1,649,999		1,588,025
Sales allowances		1,714,068		1,559,847		1,397,104		1,958,050
Sales and use tax		70,528		183,264		55,819		50,916
Other		656,748		884,953		861,844		955,263
Total accrued other expenses	$	5,045,579	$	7,465,063	$	4,749,664	$	5,279,917

(5) BANK CREDIT LINES AND GOVERNMENT LOANS

Bank Credit Line

On December 18, 2012, the Company entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). The Financing Agreement, as amended, provided for up to $5.0 million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified therein.

On March 12, 2021, the Company terminated its Financing Agreement with Rosenthal & Rosenthal 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 SVB Loan Agreement, as amended, provides for a revolving facility up to a principal amount of $25.0 million, which is subject to a borrowing base formula. The SVB Loan Agreement matures, and all outstanding amounts become due and payable on November 1, 2023. The SVB Loan Agreement is secured by substantially all the Company’s assets but excludes the Company’s intellectual property. All other substantial terms, including the commercial credit card line of $1.0 million, of the SVB Loan Agreement remain unchanged.

The Company incurred $143 thousand of origination costs in connection with the SVB Loan Agreement. These origination costs were recorded as debt discount and are being expensed over the remaining term of the SVB Loan Agreement. Amortization of debt issuance costs was $18 thousand and $2 thousand in the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the Company had $7.1 million outstanding, which is net of origination costs of $84 thousand, on its SVB Loan, with availability of $1.1 million. The interest rate was 4.5% as of March 31, 2022.

~~(6)~~

~~COMMITMENTS AND CONTINGENCIES~~13

Government Loans

On April 15, 2020, the Company entered into a note payable with Primary Bank, a bank under the Small Business Administration (“SBA”), Paycheck Protection Program (“PPP”), in the amount of $583 thousand, which matures on April 15, 2022. Under the terms of the PPP note, the Company was able to apply for and receive forgiveness of $513 thousand of the original principal balance in 2020.

In February 2021, the Company received an additional forgiveness of $20 thousand related to the Economic Injury Disaster Loan Advance received with the PPP note.

(6) COMMITMENTS AND CONTINGENCIES

(a) Lease Obligations

~~In May 2020, the Company signed a~~ ~~two-year lease agreement for~~ ~~3,218~~ ~~square feet at 275 Turnpike Executive Park in Canton, MA.~~ ~~The agreement includes a one-time option to cancel the second year of lease with three months advance notice.~~ ~~The location is currently being occupied by the research and development group of the Company. Rent expense was $~~13 ~~thousand and $~~4 ~~thousand for the three months ended June 30, 2021 and 2020, respectively. Rent expense was $~~27 ~~thousand and $~~4 ~~thousand for the six months ended June 30, 2021 and 2020, respectively.~~

~~Upon the completion of the Zoom Connectivity Merger, the Company assumed Zoom Connectivity’s office facility lease located at the 848 Elm Street in Manchester, NH.~~ ~~The~~ ~~two-year facility lease agreement is effective from August 1, 2019 to July 31, 2021~~ ~~and provides for the lease of~~ ~~2,656~~ ~~square feet of office space. Rent expense was $~~8 ~~thousand and $~~15 ~~thousand for the three and six months ended June 30, 2021, respectively.~~

~~In June 2019, the Company signed a~~ ~~twelve-month lease agreement for offices at 225 Franklin Street, Boston, MA. The lease for this office expired on~~ ~~June 30, 2020~~. The Company has ~~elected~~entered into agreements to ~~apply the short-term~~ lease ~~exception~~ its warehouses and distribution centers and certain office space under ~~ASC 842, which does not require the recognition of an~~ operating ~~lease liability or right-of-use asset on the consolidated balance sheet in relation to the lease at 225 Franklin Street. Rent expense was $134~~ ~~thousand and $261~~ ~~thousand for the three and six months ended June 30, 2020, respectively.~~

leases. The Company ~~performs most of the final assembly, testing, packaging, warehousing and distribution at an approximately~~ ~~24,000~~ ~~square foot production and warehouse facility in Tijuana, Mexico.~~ ~~On April 16, 2021, the Company signed a~~recognizes lease ~~extension to November 30, 2021.~~ ~~Rent expense was $~~22 ~~thousand and $~~49 ~~thousand for the three and six months ended June 30, 2021, respectively.~~

~~The Company also had a lease for approximately~~ ~~1,550~~ ~~square feet in Boston, MA that expired on October 31, 2019 and was terminated effective June 30, 2020. The Company had another lease for approximately~~ ~~1,500~~ ~~square feet in Boston that was terminated effective July 31, 2020.~~ ~~The Company has elected to apply the short-term lease exception for both of these leases under ASC 842. Rent~~ expense for these leases ~~was $~~35 ~~thousand and $~~71 ~~thousand for the three and six months ended June 30, 2020, respectively.~~

At inception of a lease the Company determines whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g., minimum rent payments) and non-lease components (e.g., maintenance, labor charges, etc.). The Company generally accounts for each component separately based on the estimated standalone price of each component.

As of June 30, 2021, the Company’s estimated future minimum committed rental payments, excluding executory costs, under the operating leases described above to their expiration or the earliest possible termination date, whichever is sooner. There is no future minimum committed rental payment that extend beyond 2022.

Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and long-term operating lease liabilities on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

~~Lease expense for operating leases is recognized~~ on a straight-line basis over the lease term. ~~Lease expense is included in general~~Right-of-use (“ROU”) assets and ~~administrative expenses~~lease liabilities are recorded on the ~~consolidated statements~~balance sheet for all leases, except leases with an initial term of ~~operations.~~12 months or less

~~The following table presents information about the amount and timing of the Company’s operating leases as of June 30, 2021.~~

~~SCHEDULE OF LEASE MATURITY~~

June 30, 2021
Maturity of Lease Liabilities Lease Payments
2021 (remaining) $ 72,741
2022 22,794
Less: Imputed interest (2,881 )
Present value of operating lease liabilities $ 92,654

Balance Sheet Classification
Current maturities of operating lease liabilities $ 92,654
Operating lease liabilities, less current maturities —
Total operating lease liabilities $ 92,654

Other Information
Weighted-average remaining lease term for operating leases 0.7
Weighted-average discount rate for operating leases 7.1 %

~~Cash Flows~~.

~~During the three months ended June 30, 2021~~The components of lease costs were as follows:

SCHEDULE OF COMPONENTS OF LEASE COSTS

	2022		2021
	Three Months ended March 31,
	2022		2021

Operating lease costs	$	48,231	$	20,774
Short-term lease costs		—		29,764
Total lease costs	$	48,231	$	50,538

The weighted-average remaining lease term and ~~2020, the Company recorded an additional lease liability and corresponding right-of-use asset of $~~59 ~~thousand and $~~96 ~~thousand, respectively. During the six months ended June 30, 2021 and 2020, the operating lease liability was reduced by $~~58 ~~thousand and $~~55 ~~thousand, respectively, and amortization expense of the right-of-use assets was $~~55 ~~thousand and $~~55 ~~thousand, respectively.~~discount rate were as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

	Three Months ended March 31,
	2022			2021
Operating leases:
Weighted average remaining lease term (years)		1.5			1.1
Weighted average discount rate		5.6	%		9.0	%

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

	2021		2020		2022		2021
	Six Months Ended June 30,				Three Months ended March 31,
	2021		2020		2022		2021
Operating cash flow information:
Amounts included in measurement of lease liabilities	$	59,202	$	57,404	$	48,632	$	20,372
Non-cash activities:
Right-of-use assets obtained in exchange for lease obligations	$	59,202	$	96,199
ROU asset obtained in exchange for lease liability					$	—	$	—

The maturity of the Company’s operating lease liabilities as of March 31, 2022 were as follows:

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Years ended December 31,
2022 (remainder)	$	101,487
2023		100,673
Total lease payments	$	202,160
Less: imputed interest		(6,071	)
Present value of operating lease liabilities	$	196,089
Operating lease liabilities, current	$	123,891
Operating lease liabilities, noncurrent	$	72,198

The lease extension for the Canton, MA office that was executed in December 2021 is not included in the operating lease liabilities because the commencement date begins on June 1, 2022. The operating lease payments are $32 thousand, $55 thousand, and $23 thousand for the years ending December 31, 2022, 2023, and 2024, respectively. These payments are off-balance sheet obligations until the commencement date of June 1, 2022.

(b) Commitments

The Company is party to a license agreement with Motorola Mobility LLC pursuant to which the Company has an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC for the manufacture, sale and marketing of consumer cable modem products, consumer routers, WiFi range extenders, MoCa adapters, cellular sensors, home powerline network adapters, and access points worldwide through a wide range of authorized sales channels. The license agreement has a term ending December 31, 2025.

In connection with the License Agreement, the Company has committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products. 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:

SCHEDULE OF MINIMUM ANNUAL ROYALTY PAYMENTS

Years ending December 31,
2021 (remaining)	$	3,175,000
2022		6,600,000
2022 (remaining)			$	4,950,000
2023		6,850,000		6,850,000
2024		7,100,000		7,100,000
2025		7,100,000		7,100,000

Total	$	30,825,000	$	26,000,000
Total minimum royalty payments	$	30,825,000

Royalty expense under the ~~license agreement~~License Agreement was $1.6 ~~million and $1.3~~ million for the three months ended ~~June 30,~~March 31, 2022 and 2021 and ~~2020, respectively, and $3.2~~ ~~million and $2.5~~ ~~million for the six months ended June 30, 2021 and 2020, respectively. The royalty expense~~ is included in selling and marketing expenses on the accompanying consolidated statements of operations.

(c) 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 which it believes are without merit.

On February 16, 2021, the Company received a letter from a law firm representing a purported stockholder of the Company requesting the opportunity to review certain books and records of the Company to investigate the possibility of breaches of fiduciary duty by current and former members of the Board of Directors and the Company’s controlling stockholder in connection with his and his affiliates’ acquisition of majority control of the Company without compensating the Company’s minority stockholders and the acquisition by merger of Zoom Connectivity in which he held a substantial equity stake. The parties have been in negotiations with the counsel for the purported stockholder to resolve this matter. The Company believes that the resolution of this matter is likely to include the imposition of certain corporate governance restrictions, which would expand on current practices of the Company over a longer period of time than the standstill agreement currently in effect with the Company’s controlling stockholder, on the Company and the controlling stockholder and his affiliates and the payment of legal expenses. The matter is under negotiation and is subject to change based upon the negotiations and any other factors that may arise. There can be no assurance that this matter will be resolved on satisfactory terms.

On June 29, 2021, the Company received a letter from a law firm representing a purported stockholder of the Company making a litigation demand on behalf of the Company and its stockholders to address certain alleged misconduct by the Company’s Board of Directors in connection with the implementation of an amendment to the Company’s Amended and Restated Certificate of Incorporation without having received proper stockholder approval thereof as required under Delaware corporation law. The letter demanded that the Board of Directors take immediate action to: deem the amendment ineffective and make appropriate disclosure of that fact and seek a valid stockholder approval of the amendment; and adopt and implement adequate internal controls and systems at the Company designed to prohibit and prevent a recurrence of the circumstances. The letter requested a response or contact with the law firm on or before July 16, 2021. On June 30, 2021, the Company filed with the Delaware Secretary of State a Certificate of Correction to void the previously filed amendment to the Company’s Amended and Restated Certificate of Incorporation. The Company filed an amendment to a Current Report on Form 8-K to disclose these matters. The Company held a special meeting of stockholders on July 22, 2021 and received the requisite stockholder approval of the amendment. On July 23, 2021, the Company filed with the Delaware Secretary of State an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of capital stock to ~~62,000,000~~ ~~shares, consisting of~~ ~~60,000,000~~ ~~shares of Common Stock and~~ ~~2,000,000~~ shares of Preferred Stock. The Company filed a Current Report on Form 8-K to disclose these matters. It is also expected that the Nominating and Governance Committee of the Board of Directors will review the Company’s internal controls and systems and the circumstances described in the demand letter to determine if any additional actions are necessary to prevent the recurrence of the circumstances relating to the foregoing events. The Company anticipates that the law firm that sent the demand letter will seek recovery of attorneys’ fees relating to this matter. The ultimate amount of any such recovery could be material but is not presently ascertainable. The Company intends vigorously to defend against any such claim for recovery of legal fees. There can be no assurance that this matter will be resolved on satisfactory terms.

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 loss 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. ~~Except for the matter disclosed above, at June 30, 2021,~~At March 31, 2022, the Company is not currently a party to any legal proceedings that, if determined adversely to the Company, in management’s opinion, are currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition taken as a whole. The Company expenses its legal fees as incurred.

In the ordinary course of its business, ~~in addition to the matters described above,~~ the Company is subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with their business. Some of ~~such additional proceedings~~the legal actions include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of ~~such~~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 adequate legal defenses with respect to ~~such additional~~the legal proceedings to which it is a defendant or respondent and that the outcome of ~~such~~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 is unable to predict the outcome of these matters.

1315

~~(7)~~

~~BANK CREDIT LINES AND GOVERNMENT LOANS~~(7) SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS

~~Bank Credit Line~~

~~On December 18, 2012 and as amended, the Company entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). The Financing Agreement provided for up to $4.0~~ million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified in the Financing Agreement. Borrowings are secured by all of the Company assets including intellectual property. The Company entered into an amendment on February 4, 2021 that increased the revolving credit line to $~~5.0~~ ~~million.~~

On March 12, 2021, the Company terminated its Financing Agreement with Rosenthal & Rosenthal, Inc. and entered into a new loan and security agreement with Silicon Valley Bank (the “SVB Loan Agreement”). The SVB Loan Agreement provides for a revolving facility up to a principal amount of $~~12.0~~ ~~million. The SVB Loan Agreement matures, and all outstanding amounts become due and payable on~~ ~~March 12, 2023. 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%). Interest is payable monthly.The availability of borrowings under the SVB Loan Agreement are subject to certain conditions and requirements, and the borrowing base amount is up to (a) 85% of eligible accounts receivable balances plus (b) the least of (i) 60% of eligible inventory, (ii) 85% of net orderly liquidation value, and (iii) $4.8 million. In conjunction with the SVB Loan Agreement, the Company secured a $~~1.0~~ ~~million commercial credit card line.~~

~~The Company incurred $~~93 thousand in origination costs in connection with entering into the SVB Loan Agreement. These origination costs were recorded as a debt discount and are being expensed over the remaining term of the facility. Interest expense was $78 ~~thousand and $~~3 ~~thousand for the three months ended June 30, 2021 and 2020, respectively. Interest expense was $106~~ ~~thousand and $~~8 ~~thousand for the six months ended June 30, 2021 and 2020, respectively.~~

~~As of June 30, 2021, the Company had $7.3~~ ~~million outstanding, net of origination costs of $~~79 ~~thousand, on the SVB Loan Agreement, and this credit line had availability of $2.8~~ ~~million. The interest rate was~~ ~~4.25% as of June 30, 2021.~~

~~Government Loans~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted to provide financial aid to family and businesses impacted by the COVID-19 pandemic. The Company participated in the CARES Act, and on April 15, 2020, the ~~Company~~ ~~entered into a note payable with Primary Bank, a bank under the Small Business Administration (“SBA”), Paycheck Protection Program (“PPP”) in the amount of $583~~ ~~thousand. This note payable matures on~~ ~~March 15, 2022~~ ~~with a fixed interest rate of~~ 1~~% per annum with interest deferred for six months. The PPP loan has an initial term of~~ ~~two years, is unsecured and guaranteed by the SBA. Under the terms of the PPP note, the Company was able to apply and receive forgiveness in November 2020 of $513~~ ~~thousand of the original principal balance. The Company used the proceeds from the PPP loan for qualifying expenses as defined in the PPP.~~

~~On April 11, 2020, Zoom Connectivity entered into a note payable with Primary Bank and received $545~~ ~~thousand under the PPP. This note payable matures on~~ ~~March 11, 2022~~ ~~with a fixed interest rate of~~ 1~~% per annum with interest deferred for six months. The PPP loan has an initial term of~~ ~~two years~~, is unsecured and guaranteed by the SBA. Under the terms of the PPP note, the Company was able to apply for forgiveness of the amount due on the PPP loan. The Company submitted an application for forgiveness of this loan and received forgiveness of $~~535~~ ~~thousand in principal and $~~3 ~~thousand in accrued interest from the SBA in November 2020. The Company used the proceeds from the PPP loan for qualifying expenses as defined in the PPP.~~

~~In February 2021, the Company received an additional forgiveness of $~~20 ~~thousand related to the Economic Injury Disaster Loan Advance received with the PPP note.~~

~~For the period ended June 30, 2021, the Company has recorded $~~61 ~~thousand of the PPP loans in current maturities of long-term debt in the balance sheet. For the fiscal year ended December 31, 2020, the Company had recorded $~~65 ~~thousand of the PPP loans in current maturities of long-term debt and $~~15 ~~thousand in long-term debt in the consolidated balance sheets.~~

~~(8)~~

~~SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS~~

Relatively few companies account for a substantial portion of the Company’s revenues. In the three months ended ~~June 30, 2021, three~~March 31, 2022, two companies accounted for 10% or greater individually and 9390% in the aggregate of the Company’s total net sales. At ~~June 30, 2021,~~March 31, 2022, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 7888% of the Company’s accounts receivable. In the three months ended ~~June 30, 2020, three~~March 31, 2021, two companies accounted for 10% or greater individually and 88% in the aggregate of the Company’s total net sales. At ~~June 30, 2020, four~~March 31, 2021, three companies with an accounts receivable balance of 10% or greater individually accounted for a combined 8987% of the Company’s accounts receivable. ~~In the six months ended June 30, 2021, two companies accounted for 10% or greater individually and~~ 85~~% in the aggregate of the Company’s total net sales. In the six months ended June 30, 2020, three companies accounted for 10% or greater individually and~~ 89~~% in the aggregate of the Company’s total net sales.~~

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’s significant customers.

The Company participates in the PC peripherals industry, which is characterized by aggressive pricing practices, continually changing customer demand patterns and rapid technological developments. The Company’s operating results could be adversely affected should the Company be unable to successfully anticipate customer demand accurately; manage its product transitions, inventory levels and manufacturing process efficiently; distribute its products quickly in response to customer demand; differentiate its products from those of its competitors or compete successfully in the markets for its new products.

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 ~~June 30,~~March 31, 2022 and 2021, the Company had two suppliers and one supplier, respectively, that provided 99~~% of the Company’s purchased inventory. During the three months ended June 30, 2020, the Company had one supplier that provided~~ 98% of the Company’s purchased inventory.

~~(9)~~

~~INCOME TAXES~~

(8) INCOME TAXES

During the ~~six~~three months ended ~~June 30, 2021 and 2020,~~March 31, 2022, we recorded 0income 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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we recorded a full valuation allowance against our net deferred tax assets.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had federal net operating loss ~~carry-forwards~~carry forwards of approximately $6454.8 million and $~~61.8~~62.7 million, respectively, which are available to offset future taxable income. They are due to expire in varying amounts ~~starting in~~from ~~2021~~2022 to 2040. Federal net operating losses occurring after December 31, 2017, of approximated $~~15.9~~16.3 million may be carried forward indefinitely. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had state net operating loss ~~carry-forwards~~carry forwards of approximately $2121.6 million and $~~19.2~~19.9 million, respectively, which are available to offset future taxable income. They are due to expire in varying amounts from ~~2032~~2033 through ~~2040.~~2040 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.. We recorded minimum state income taxes and ~~tax~~taxes related to our operations in Mexico. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, income tax expense was $316 thousand and $332 thousand, ~~respectively, compared to prior year periods of $~~6 ~~thousand and $~~13 ~~thousand.~~respectively.

1516

~~(10)~~

~~EARNINGS (LOSS) PER SHARE~~(9) RELATED PARTY TRANSACTIONS

Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares. 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.

~~Net loss per share for the three and six months ended June 30, 2021 and 2020, respectively, are as follows:~~

~~SCHEDULE OF NET LOSS PER SHARE~~

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Numerator:
Net loss $ (1,553,911 ) $ (1,527,985 ) $ (2,099,431 ) $ (2,279,864 )

Denominator:
Weighted average common shares - basic 35,482,181 22,275,441 35,368,931 21,776,101
Potentially dilutive common share equivalent 1,511,030 314,493 1.511,030 314,493
Weighted average common shares - dilutive $ 36,993,211 $ 22,589,934 36,879,961 22,090,594

Basic net loss per share $ (0.04 ) $ (0.07 ) $ (0.06 ) $ (0.10 )
Diluted net loss per share $ (0.04 ) $ (0.07 ) $ (0.06 ) $ (0.10 )

~~Diluted loss per common share excludes the effects of~~ ~~1,511,030~~ ~~and~~ ~~314,493~~ ~~common share equivalents for the three-month period ended June 30, 2021 and 2020, respectively, since such inclusion would be anti-dilutive. Diluted loss per common share excludes the effects of~~ ~~1,511,030~~ ~~and~~ ~~314,493~~ ~~common share equivalents for the six-month period ended June 30, 2021 and 2020, respectively, since such inclusion would be anti-dilutive.~~

~~(11)~~

~~RELATED PARTY TRANSACTIONS~~

~~Zoom Connectivity~~

On November 12, 2020, the Company entered into the Merger Agreement pursuant to which the Company and Zoom Connectivity merged and combined their businesses. Zoom Connectivity offers a cloud WiFi management platform that enables and secures a better-connected home by providing AI-driven WiFi management and IoT security platform for homes, SMBs, and broadband service providers. Mr. Jeremy Hitchcock was Chairman and, together with Ms. Elizabeth Hitchcock, a controlling stockholder of Zoom Connectivity. Prior to the Zoom Connectivity Merger, the Company had licensed Zoom Connectivity software products and, upon completion of the Zoom Connectivity Merger, the Company expected to integrate not only the Zoom Connectivity software with the Company’s hardware products but also to combine Zoom Connectivity’s business-to-business sales channels with the Company’s retail channels. Immediately prior to execution of the Merger Agreement, Mr. Hitchcock, the Company’s Chairman of the Board of Directors, and Ms. Hitchcock, his spouse and a director of the Company, were, through investment vehicles jointly beneficially owned by them, the majority stockholders of both the Company and Zoom Connectivity.

~~Zoom Connectivity Relationship~~

On July 25, 2019, the Company entered into a Master Partnership Agreement with Zoom Connectivity together with a related Statement of Work, License, Collaborative Agreement, Software/Service Availability Agreement and Software/Service Support Level Agreement (collectively, the “Partnership Agreement”). Mr. Hitchcock was the Chairman of Zoom Connectivity. Under the Partnership Agreement, the Company would integrate software and services into certain hardware products distributed by the Company, and Zoom Connectivity would be entitled to certain fees and a portion of revenue received from the end users of such services and software. The Company ~~and Zoom Connectivity entered into an additional Statement of Work on December 31, 2019 providing for further integration of Zoom Connectivity services, with a monthly minimum payment of $~~5 ~~thousand payable by the Company to Zoom Connectivity starting in January 2020 for a period of~~ ~~36 months~~ ~~and a requirement for Zoom Connectivity to purchase at least $~~90 ~~thousand of the Company’s hardware by December 2022. Minimum monthly payments under this agreement increased to $~~15 ~~thousand in July 2020. During the six months ended June 30, 2020, $~~45 ~~thousand of payments were made by the Company to Zoom Connectivity under the Partnership Agreement. The Company recorded $~~45 ~~thousand of expenses for the six months ended June 30, 2020. The Partnership Agreement terminated upon completion of the Zoom Connectivity Merger. During the six months ended June 30, 2020, $~~45 ~~thousand of payments were made by the Company to Zoom Connectivity under the Partnership Agreement. As of June 30, 2021,~~ 0 ~~amounts were due from or to the Company under the former Partnership Agreement.~~

~~Zoom Connectivity~~ leases office space located at the 848 Elm Street, Manchester, NH. The landlord is an affiliate entity owned by Mr. Hitchcock. The ~~two-year~~two-year facility lease agreement iswas effective from August 1, 2019, to July 31, 2021 and has been extended to July 31, 2022. The facility lease agreement provides for 2,656square feet at an aggregate annual rental price of $30thousand. ~~For the three-month period and six-month period ended June 30, 2021, the rent~~Rent expense was $8thousand for the three months ended March 31, 2022 and $15 ~~thousand, respectively.~~2021.

~~(12)~~

~~SUBSEQUENT EVENTS~~

(10) EARNINGS (LOSS) PER SHARE

Net loss per share for the three months ended March 31, 2022 and 2021, respectively, are as follows:

SCHEDULE OF NET INCOME (LOSS) PER SHARE

	2022			2021
	Three Months ended March 31,
	2022			2021
Numerator:
Net loss	$	(2,538,500	)	$	(545,520	)

Denominator:
Weighted average common shares – basic		46,003,232			35,254,243
Effect of dilutive common share equivalents		—			—
Weighted average common shares – dilutive		46,003,232			35,254,243

Basic and diluted net loss per share	$	(0.06	)	$	(0.02	)

Diluted loss per common share for the three months ended March 31, 2022 and 2021 excludes the effects of 249,524 and 1,679,375 common share equivalents, respectively, since such inclusion would be anti-dilutive. The common share equivalents consist of shares of common stock issuable upon exercise of outstanding stock options.

(11) SUBSEQUENT EVENTS

On ~~July 7, 2021,~~April 25, 2022, Minim, Inc. (Minim or “the “Company”), received a letter (the “Notification Letter”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the minimum closing bid price per share for its ordinary shares was below $1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). The Notification Letter has no immediate effect on the listing or trading of the Company’s ~~Common Stock ceased trading~~ordinary shares on the ~~OTCQB and commenced trading on The~~ Nasdaq Capital ~~Market under the ticker symbol “MINM.”~~Market.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until October 24, 2022 (the “Compliance Period”), to regain compliance with Nasdaq’s minimum bid price requirement. If at any time during the Compliance Period, the closing bid price per share of the Company’s ordinary shares is at least $1.00 for a minimum of 10 consecutive business days, Nasdaq will provide the Company a written confirmation of compliance and the matter will be closed.

In the event the Company does not regain compliance by October 24, 2022, the Company may be eligible for an additional 180 calendar day period to regain compliance. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary. If the Company chooses to implement a reverse stock split, it must complete the split no later than ten business days prior to October 24, 2022, or the expiration of the second compliance period if granted.

On April 28, 2022, the Company filed a Form 8-K announcing the receipt of the Notification Letter.

On July ~~20, 2021,~~18, 2022, the Company ~~renewed~~amended its Manchester ~~New Hampshire headquarter offices~~facility lease to a month-to-month lease arrangement and may be terminated by either party with ~~an effective term from August 1, 2021 to July 31, 2022.~~ ~~During the annual term, the rent expense is $~~a 60-day notice.

~~30,000~~.

A proposal on the amendment to our Amended and Restated Certificate of Incorporation was considered but not approved by the stockholders of the Company at its 2021 Annual Meeting of Stockholders held on June 2, 2021. The voting results of this proposal reflected a tabulation report that treated the proposal as “routine”; however, the Company’s proxy materials for the 2021 Annual Meeting of Stockholders described the proposal as “non-routine.” When tabulated as a non-routine matter, this proposal was not approved by the Company’s stockholders. Certain shares of Common Stock beneficially owned by executive officers and directors of the Company who had been stockholders of Zoom Connectivity, inadvertently were not voted at the meeting. If those votes had been cast at the meeting and were voted for the proposal, the proposal would have been approved by the requisite vote of the Company’s stockholders. See Note (6), Commitments and Contingencies in these Notes to Consolidated Financial Statements (Unaudited). On June 30, 2021, the Company filed with the Secretary of State of the State of Delaware a Certificate of Correction to void the previously filed amendment to the Company’s Certificate of Incorporation. The Company held a special meeting of stockholders on July 22, 2021 and received the requisite stockholder approval of the amendment. On July 23, 2021, the Company filed with the Delaware Secretary of State an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of capital stock to ~~62,000,000~~ ~~shares, consisting of~~ ~~60,000,000~~ ~~shares of Common Stock and~~ ~~2,000,000~~ ~~shares of preferred stock, $0.001~~ ~~par value per share (the “Preferred Stock”).~~

On July 28, 2021, the Company entered into an underwriting agreement with B. Riley Securities, Inc., as representative (the “Representative”) of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell an aggregate of ~~10,000,000~~ ~~shares of the Company’s Common Stock, to the Underwriters (the “Public Offering”). The shares of Common Stock were sold to the public at an offering price of $2.50~~ ~~per share and were purchased by the Underwriters from the Company at a price of $2.32715~~ ~~per share. The Company also granted the Underwriters a 30-day option to purchase up to an additional~~ ~~1,500,000~~ ~~shares of Common Stock. On August 2, 2021, the Company received $22.7~~ ~~million in aggregate net proceeds after deducting Underwriters’ discounts, commissions, and other offering expenses after issuing~~ ~~10,000,000~~ ~~shares of the Company’s Common Stock through the Public Offering.~~

One August 12, 2021, the Company entered into an agreement with Zoom Video Communications, Inc. (“Zoom Video”) to sell, and sold, all of the Company’s right, title and interest in the ZOOM® trademark for cash consideration in the amount of $4 ~~million.~~

The Company has evaluated subsequent events from ~~June 30, 2021~~March 31, 2022 through the date of this filing and has determined that there are no ~~additional~~such events, other than those noted above, requiring recognition or disclosure in the financial statements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~“Safe Harbor” Statement under the Private Securities Litigation Reform Act~~The following Management’s Discussion and Analysis of ~~1995.~~

~~Some~~Financial Condition and Results of ~~the statements~~Operations, as well as information contained in “Risk Factors” in Part II, Item 1A and elsewhere in this ~~report are forward-looking statements~~Quarterly Report on Form 10-Q/A, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended (the “Exchange Act”). These~~amended. We intend that these forward-looking statements ~~involve known~~be subject to the safe harbor created by those provisions. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “will,” “may,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “anticipate,” “intend,” “plan,” “future,” “potential,” “target,” “seek,” “continue,” “if” or other similar words. Forward-looking statements include statements regarding our strategies as well as (1) our ability to predict revenue and ~~unknown~~reduce costs related to our products or service offerings, (2) our ability to effectively manage our sales channel inventory and product mix to reduce excess inventory and lost sales, (3) our ability to forecast product sales volumes and accordingly manufacture and manage inventory, (4) our ability to generate sales of Motorola brand products sufficient to make that portion of our business profitable, and retain the Motorola brand license for the Motorola brand product we produce, (5) fluctuations in the level or quality of inventory, (6) the sufficiency of our capital resources and the availability of debt and equity financing, (7) the continuing impact of uncertain global economic conditions on the demand for our products, (8) our ability to maintain and scale adequate and secure software platform infrastructure, (9) the impact of competition on demand for our products and services and (10) our competitive position.

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, 2021, found in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on August 19, 2022. 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 may~~assumptions referred to above that could cause our ~~or our industry’s actual~~ results ~~performance or achievements~~ to bediffer materially ~~different~~ from ~~any future~~the results ~~performance or achievements~~ expressed or implied by ~~the~~such forward-looking ~~statements. Forward-looking~~ statements include, but are not limited to, ~~statements regarding:~~those discussed under the ~~Company’s plans, expectations~~heading “Risk Factors” in Part II, Item 1A hereto and ~~intentions, including statements relating to~~ the ~~Company’s prospects and plans relating to sales of and markets for its products; and the Company’s financial condition or results of operations.~~

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and assumptions discussed from time to time in our other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties you should not place undue reliance on these forward-looking statements. Also, thesepublic filings and public announcements. All forward-looking statements ~~represent our estimates and assumptions only~~included in this document are based on information available to us as of the date hereof. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Furthermore, past performance in operations and share price is not necessarily indicative of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that may arise after the date of this report. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. Factors that could cause or contribute to differences in our future financial results include those discussed in the risk factors set forth or discussed in our AnnualQuarterly Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on April 13, 2021 and in our other filings with the SEC, including Amendment No. 2 to our Registration Statement on Form S-1 filed with the SEC on July 28, 2021. Readers also are cautioned that results of any reported period are often not indicative of results for any future period.10-Q/A.

Overview

~~Minim delivers~~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 home router must go the way of the mobile phone. Today’s routers are simple, single-purpose devices that rarely receive firmware updates and have underdeveloped management applications, making them the #1 target in residential cybersecurity attacks. It can be so much more.

The router must offer frequent security updates, helpful apps, extensive personalization options and a delightful interface. That is what Minim delivers— not just the router or just an app, but WiFi as a Service. Technically, it’s composed of an intelligent router managed by a smart operating system that leverages cloud computing and AI to analyze and optimize the smart home, combined with intuitive applications to engage with it.

~~Minim serves both consumers~~We continually seek to improve our product designs and ~~businesses with its WiFi~~manufacturing approach to elevate product performance and reduce our costs. We pursue a strategy of outsourcing rather than internally developing our hardware 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 ~~Service platform:~~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 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. Minim’s sales to certain countries are currently handled by a single master distributor for each country that 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.

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~~Consumers~~ – Home broadband users can find our modem, router, modem/router, mesh WiFi, and MoCA networking products and mobile app under the Motorola brand on leading electronics retailers and e-commerce platforms in the U.S. and globally. With Motorola connectivity, our customers benefit from:

~~Savings on rental fees from their ISPs~~

~~Improved connected device performance~~

~~Fast internet speeds~~

~~Free support from our team of U.S.-based technicians~~

~~Reliability with 2-year product warranties~~

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~~Internet Service Providers (ISPs) -~~ Over 140 ISP customers to date have selected Minim to enhance their broadband services with our mobile app and improve customer support via the Minim Care Portal. ISP customers benefit from increased revenue through service plan upgrades and better subscriber retention, as well as decreased operational expenses through truck roll avoidance and reduced support calls.

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~~Hybrid & Small Businesses~~ ~~have selected Minim as an alternative to traditional enterprise security solutions, granting the business customer extensive cost savings, fast deployment times, and easy maintenance.~~

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~~Original Equipment Manufacturers (OEMs)~~ can freely and independently integrate the Minim agent in their networking devices. OEM customers benefit from increased competitiveness of their product offering and a recurring revenue stream with our software services. Our system integrator and OEM customers sell our products under their brand or incorporate our products as a component of their systems.

Our ~~intelligent networking products can now be found in leading retailers across the US, over 140 ISP broadband offerings globally,~~cash and ~~now in India e-commerce markets. We have been recently awarded a patent for an intuitive, guided,~~cash equivalents balance on March 31, 2022 was $10.0 million compared to $12.6 million on December 31, 2021. On March 31, 2022, we had $7.1 million of outstanding borrowings on our asset-based credit line with availability of $1.1 million and ~~standard approach to mesh WiFi system setup. Our products are differentiated by their ability to make complex network security and management simple, even enjoyable.~~

~~For the past three quarters, the company has posted exceptional year-over-year margin expansion and revenue growth; in the second quarter 2021, Minim doubled the topline growth rate~~working capital of its product category in US retailers, per NPD Group retail data. On the horizon, we see margin expansion and growth opportunities in subscription software, new markets, new channels, and new product categories, such as connected security cameras and thermostats.$27.2 million.

The ~~global smart home market is expected~~Company’s ability to ~~reach $313.95 billion by 2026 at a 25.3% CAGR, according~~maintain adequate levels of liquidity depends in part on our ability to ~~Mordor Intelligence. Looking ahead, we are aligned~~sell inventory on ~~a powerful imperative: to make the world’s smartest connectivity products accessible to everyone for personal~~hand, increasing SaaS sales, and ~~business use.~~collect related receivables.

~~The~~Although the Company ~~was founded in 1977~~has recently experienced losses, it has continued to experience sales growth. We have experienced six consecutive years with double-digit sales growth. In the three months ended March 31, 2022 and ~~is headquartered in Manchester, New Hampshire.~~

~~COVID-19 Pandemic~~2021, we generated net sales of $13.3 million and $15.0 million, respectively.

~~We are subject~~There have been no material changes due to ~~risks and uncertainties as a result of the COVID-19 pandemic. The extent of~~ the impact of the COVID-19 pandemic on our business ~~remains highly uncertain~~from that disclosed in our most recently filed Annual Report. Our most recent Annual Report on Form 10-K/A for the year ended December 31, 2021 as filed with the SEC on August 19, 2022 provides additional information about our business and ~~difficult~~operations.

Recent Accounting Standards

See Note 2 Summary of Significant Accounting Policies, in Notes to ~~predict as coronavirus continues to spread around~~Unaudited Consolidated Financial Statements in Item 1 of Part 1 of this Report on 10-Q/A, for a full description of recent accounting standards, include the ~~world including through new variants. Although the availability~~expected dates of ~~vaccines has increased, there are no assurances as to when the pandemic will be contained. Since March 2020, we have instituted office closures, travel restrictions~~adoption and a mandatory work-from-home policy for substantially all of our employees. The spread of COVID-19 has had a prolonged impact on our supply chain operations due to restrictions, reduced capacity and limited availability from suppliers whom we rely on for sourcing components and materials and from third-party partners whom we rely on for manufacturing, warehousing and logistics services. Although demand for our products has been strong in the short-term as consumers seek more bandwidth and better Wi-Fi, customers’ purchasing decisions over the long-term may be impacted by the pandemic and its impactestimated effects on the ~~economy, which could in turn impact our revenue~~financial condition and results of operations. Furthermore, our supply chain continues to face constraints primarily due to challenges in sourcing components and materials for our products. The prolonged impact of COVID-19 could exacerbate these constraints or cause further supply chain disruptions.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, ~~sales allowances,~~product returns, inventory valuation and ~~inventory~~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, ~~2020.~~2021. For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, there have been no significant changes in our critical accounting policies and estimates.

~~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.

Results of Operations

The following table sets forth ~~the unaudited~~certain financial data derived from our consolidated statements of operations for the three months ended March 31, 2022 and ~~six months ended June 30,~~ 2021 presented in absolute dollars and as a percentage of net sales, with ~~the comparable reporting~~dollars and percentage change period ~~in the preceding year.~~over period:

Three Months ended March 31, Change
2022 2021 $ %

Net sales $ 13,299 100.0 % $ 15,018 100.0 % $ (1,719 ) (11.4 )%
Cost of goods sold 9,108 68.5 9,914 66.0 (806 ) (8.1 )
Gross profit 4,191 31.5 5,104 34.0 (913 ) (17.9 )
Operating expenses:
Selling and marketing 3,652 27.5 3,174 21.1 478 15.1
General and administrative 1,451 10.9 1,077 7.2 374 34.7
Research and development 1,543 11.6 1,389 9.2 154 11.1
Total operating expenses 6,646 50.0 5,640 37.6 1,006 17.8

Operating loss (2,455 ) (18.5 ) (536 ) (3.6 ) (1,919 ) (358.0 )

Total other income (expense) (78 ) (0.5 ) (8 ) (0.1 ) (70 ) (875.0 )

Loss before income taxes (2,533 ) (19.0 ) (544 ) (3.6 ) (1,989 ) (365.6 )

Income tax provision 6 0.0 2 0.0 4 200.0

Net loss $ (2,539 ) (19.1 )% $ (546 ) (3.6 )% $ (1,993 ) (365.0 )%
Comparison of the three months ended March 31, 2022 to the three months ended March 31, 2021
The following table sets forth our revenues by product and the changes in revenues for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021:
Three Months Ended
March 31, 2022 March 31, 2021 $ Change % Change
(In thousands, except percentage data)
Cable modems & gateways $ 12,883 $ 14,587 $ (1,704 ) (11.7 )%
Other networking products 272 306 (34 ) (11.1 )%
SaaS 144 125 19 15.2 %
Total $ 13,299 $ 15,018 $ (1,719 ) (11.4 )%
The majority of the Company’s revenues by geographic area are earned in North America for the three months ended March 31, 2022 and 2021.
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Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 $ Change % Change June 30, 2021 June 30, 2020 $ Change % Change
(In thousands, except percentage data)
Net sales $ 14,893 $ 10,273 $ 4,620 45.0 % $ 29,911 $ 22,228 $ 7,683 34.6 %
Cost of goods sold 10,415 8,149 2,267 27.8 % 20,329 17,009 3,320 19.5 %
Gross profit 4,448 2,124 2,354 110.8 % 9,582 5,219 4,363 83.6 %
Operating expenses:
Selling and marketing expenses 3,209 2,283 926 40.5 % 6,383 4,638 1,745 37.6 %
General and administrative expenses 1,327 716 610 85.2 % 2,404 1,544 860 55.7 %
Research and development expenses 1,386 644 742 115.1 % 2,775 1,297 1,478 113.9 %
Total operating expenses 5,922 3,643 2,278 62.5 % 11,562 7,479 4,083 54.6 %
Operating loss (1,444 ) (1,519 ) 76 (5.0 )% (1,980 ) (2,260 ) 280 (12.4 )%
Operating income (expense):
Interest expense, net (78 ) (3 ) (75 ) (106 ) (8 ) (98 )
Other, net — 1 (1 ) 20 0 19
Total other income (expense) (78 ) (2 ) (76 ) (86 ) (7 ) (79 )
Loss before income taxes (1,522 ) (1,521 ) (1 ) 0.1 % (2,066 ) (2,267 ) 201 (8.9 )%
Income taxes 32 7 25 33 13 20
Net loss $ (1,554 ) $ (1,528 ) $ 24 1.6 % $ (2,099 ) $ (2,280 ) $ 221 (8 )%

Net ~~Sales.~~Sales
Our total net sales ~~increased in the three and six months ended June 30, 2021 compared to prior years~~decreased year-over-year by ~~$4.6~~$1.7 million ~~and $7.7 million, respectively.~~or 11.4%. The ~~growth~~decrease in net sales is directly attributable to ~~increased~~decreased sales of Motorola branded cable modems and gateways. In ~~the first six months of~~both 2022 and 2021, we primarily generated our sales by selling cable modems and gateways. ~~Software sales~~Sales related to SaaS offerings were ~~$0.2 million in the three~~$144 thousand and ~~six months ended June 30, 2021. The Company had no SaaS related sales~~$125 in the three months ended March 31, 2022 and ~~six months ended June 30, 2020.~~2021, respectively. The ~~increase~~decrease in other category of $34 thousand in 2022 compared to ~~prior year~~2021 is primarily due to ~~an increase~~a reduction in ~~mesh home networking devices.~~
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 $ Change $ Change June 30, 2021 June 30, 2020 $ Change % Change
(In thousands, except percentage data)
Cable modems & gateways $ 12,808 $ 9,193 $ 3,615 39.3 % $ 27,395 $ 20,363 $ 7,032 34.5 %
Software as a service 153 — 153 100 % 278 — 278 100 %
Other 1,932 1,080 852 78.9 % 2,238 1,865 373 20.0 %
Total $ 14,893 $ 10,273 $ 4,620 45.0 % $ 29,911 $ 22,228 $ 7,683 34.6 %
~~As shown in the table below, our net sales in North America increased in the three months ended~~DSL products and ~~six months ended June 30, 2021 compared to prior years. Net sales~~a refocus on new products with growth potential outside North America ~~decreased in the three months ended and six months ended June 30, 2021 compared to prior years.~~as well as within new product introductions. Generally, ~~the Company’s~~our lower sales outside North America reflect the fact that cable modems are sold successfully through retailers in the ~~United States~~U.S. but not in most countries outside the ~~United States,~~U.S., due primarily to variations in government regulations.

Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 $ Change % Change June 30, 2021 June 30, 2020 $ Change % Change
(In thousands, except percentage data)
North America $ 14,849 $ 10,051 $ 4,798 26.5 % $ 29,675 21,789 $ 7,886 36.2 %
Outside North America 44 222 (178 ) (80.2 )% 236 439 (203 ) (46.2 )%
Total $ 14,893 $ 10,273 $ 4,620 24.6 % $ 29,911 22,228 $ 7,683 34.6 %
Cost of Goods Sold and Gross Margin
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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.
~~Relatively few companies account~~
The decrease in gross profit was attributable to sales growth of Motorola branded cable modems and gateways, including intelligent networking products that include the 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 ~~a substantial portion of~~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 ~~Company’s revenues. In~~periods indicated:
Three Months ended March 31,
2022 2021 $ Change % Change

Net sales $ 13,299 $ 15,018 $ (1,719 ) (11.4 )%
Gross margin 31.5 % 34.0 %
Gross profit and gross margin decreased in the three months ended ~~June 30, 2021, three companies accounted for 10% or greater individually and 93% in the aggregate of the Company’s total net sales. In~~March 31, 2022, compared to the three months ended ~~June 30, 2020, three companies accounted for 10% or greater individually and 88%~~ in the ~~aggregate~~prior fiscal year period, primarily due to higher component material costs that were partially offset by increased sales prices of the Company’s total net sales. In the six months ended June 30, 2021, two companies accounted for 10% or greater individually and 85% in the aggregate of the Company’s total net sales. In the six months ended June 30, 2020, three companies accounted for 10% or greater individually and 89% in the aggregate of the Company’s total net sales.our products.

~~Our customers generally do not enter into long-term agreements obligating them~~For the remainder of fiscal 2022, we expect gross margin to ~~purchase~~be subject to similar variabilities experienced in fiscal 2021. In 2021, we experienced meaningful increase in costs for sea freight transportation as well as costs of materials and components for our products. ~~Because~~We expect these costs to remain elevated for the foreseeable future. We continue to experience disruptions from the pandemic, with manufacturing partners being affected by factory uptime, scarcity of materials and components and limited capacity to transport cargo via sea and air. These disruptions have increased the length of time taken between order to production and transportation of inventory. If such disruptions become more widespread, they could significantly affect our ~~significant customer concentration,~~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 ~~operating income could fluctuate significantly due to~~related production level variances; import customs duties and imposed tariffs; changes in ~~political~~technology; changes in product mix; expenses associated with writing off excessive or ~~economic conditions or the loss of, reduction of business with, or less favorable terms for any of our significant customers. A reduction or delay~~obsolete inventory; fluctuations in ~~orders from any of our significant customers, or a delay or default~~freight costs; manufacturing and purchase price variances; and changes in ~~payment by any significant customer could materially harm our business, results of operation and liquidity.~~prices on commodity components.

~~Gross Profit.~~ Gross profit was $4.5 million and $9.6 million for the three and six months ended June 30, 2021, respectively compared to prior years of $2.1 million and $5.2 million for the three and six months ended June 30, 2020, respectively. Gross margin increased to 30.1% for the three months ended June 30, 2021 compared to $20.7% in the same period of the prior year. For the six months ended June 30, 2021, the gross margins were 32.0% compared to 23.5% in the same period of the prior year. The increase in gross margins was primarily due to reduction in tariffs and air freight costs of $1.9 million and $3.4 million for the three and six months ended June 30, 2021, respectively, compared to prior years.
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~~Operating Expense.~~ Total operating expense increased to $5.9 million and $11.6 million for the three and six months ended June 30, 2021, respectively, compared to the three and six months ended June 30, 2020 of $3.6 million and $7.5 million, respectively. The table below illustrates the change in operating expense.
Three Months Ended Six Months Ended
Operating Expenses June 30, 2021 June 30, 2020 $ Change % Change June 30, 2021 June 30, 2020 $ Change % Change
(In thousands, except percentage data)
Selling and marketing expense $ 3,209 $ 2,283 925 40.5 % $ 6,383 $ 4,638 $ 1,745 37.6 %
General and administrative expense 1,327 716 610 85.2 % 2,404 1,544 860 58.4 %
Research and development expense 1,386 644 742 115.1 % 2,775 1,297 1,478 113.9 %
Total operating expense $ 5,922 $ 3,643 2,278 62.5 % $ 11,562 $ 7,479 $ 4,083 55.1 %

Selling and Marketing ~~Expense.~~
Selling and marketing ~~expense increased~~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 ~~three~~periods indicated:
Three Months ended March 31,
2022 2021 Change % Change
Selling and marketing $ 3,652 $ 3,174 $ 478 15.1 %
Selling and ~~six~~marketing expenses increased in the three months ended ~~June 30, 2021~~March 31, 2022, as compared to the ~~prior year periods~~three months ended March 31, 2021, primarily due to an increase in marketing program campaigns of $244 thousand, Motorola royalty fees of ~~$0.3 million~~$62 thousand, and ~~$0.6 million, respectively, and employee compensation~~software subscriptions of ~~$0.5 million and $1.0 million, respectively.~~$58 thousand.

For the remainder of fiscal 2022, we expect our selling and marketing expenses as a percentage of net sales in fiscal 2022 to be similar to fiscal 2021 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 ~~Expense.~~
General and administrative ~~expense increased~~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 ~~three~~periods indicated:
Three Months ended March 31,
2022 2021 $ Change % Change
General and administrative $ 1,451 $ 1,077 $ 374 34.7 %
General and ~~six months ended June 30, 2021 compared to the prior year periods~~administrative expenses increased $374 thousand primarily due to an increase in ~~professional services~~personnel expenses of ~~$0.4 million,~~$276 thousand, director fees of $143 thousand, and ~~an increase~~software subscriptions of $83 thousand, partially offset by a decrease in professional ~~services~~fees of ~~$0.9 million, respectively.~~$174 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 ~~Expense.~~ Research and development expense increased for the three and six months ended June 30, 2021 compared to the prior year periods primarily due to an increase in employee compensation of $0.6 million and $1.0 million, respectively, and an increase in consulting costs of $0.1 million and $0.2 million, respectively.

~~Other Income (Expense).~~ ~~Other income (expense), net~~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,
2022 2021 $ Change % Change
Research and development $ 1,543 $ 1,389 $ 154 11.1 %

The increase of $154 thousand was ~~$(78)~~primarily due to personnel expenses of $220 thousand and ~~$(86) thousand for the three and six months ended June 30, 2021 compared to the prior year periods~~increased contract labor, partially offset by a decrease in certification costs of ~~$(1) thousand and $(7) thousand, respectively.~~$66 thousand.

~~Income Tax Expense (Benefit).~~ We recorded minimum state income taxes and tax related to our operations in Mexico. For the three and six months ended June 30, 2021 income tax expense was $31 thousand and $33 thousand, respectively, compared to prior year periods of $6 thousand and $13 thousand.
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~~Unaudited Pro Forma Information~~
~~The following unaudited pro forma financial information summarizes~~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 software solutions. For the ~~combined results~~remainder of ~~operations for the Company~~fiscal 2022, we expect research and ~~Zoom Connectivity~~development expenses as ~~if the Zoom Connectivity Merger had been completed on January 1, 2020. The pro forma results have been prepared for comparative purposes only, and do not necessarily represent what the~~a percentage of net sales ~~or results of operations would have been had the Zoom Connectivity Merger been completed on January 1, 2020. In addition, these results are not intended~~in fiscal 2022 to be in line with or slightly above fiscal 2021 levels. Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a ~~projection~~percentage of ~~future operating results. The unaudited pro forma information includes adjustments to eliminate intercompany transactions and align accounting policies.~~net sales, depending on actual net sales achieved in any given year.

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
Pro forma revenue $ 10,430,519 $ 22,493,626
Pro forma net loss $ (2,267,626 ) $ (4,093,297 )
Pro forma net loss per share, basic and diluted $ (0.07 ) $ (0.13 )
Liquidity and Capital Resources
~~The Company’s~~Our principal sources of liquidity are cash ~~balance on June 30, 2021 was $1.6~~and cash equivalents and borrowings under our SVB line-of-credit. As of March 31, 2022, we had cash and cash equivalents of $10.0 million ~~of which $750 thousand was restricted. This compares~~as compared to ~~$1.6~~$12.6 million on December 31, ~~2020~~2021. On March 31, 2022, we had $7.1 million of ~~which $800 thousand was restricted. As of June 30, 2021, the Company had $7.2 million~~borrowings outstanding and ~~$2.8~~$1.1 million available on ~~its asset-based credit line with Silicon Valley Bank~~our $25.0 million SVB line-of-credit and working capital of ~~$5.7~~$27.2 million. We have funded our operations and investing activities primarily through borrowings on our line of credit, the sale of assets and the sale of our common stock.
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; 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.
Cash Flows
The following table presents our cash flows for the periods presented:
Three Months ended March 31,
2022 2021
Cash used in operating activities $ (4,312 ) $ (4,970 )
Cash used in investing activities (271 ) (257 )
Cash provided by financing activities 2,061 4,853
Net decrease in cash and cash equivalents $ (2,522 ) $ (374 )
Cash Flows from Operating Activities. Cash used in operating activities of $4.3 million for 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.

~~On February 4,~~Cash used in operating activities of $5.0 million for 2021 reflected our net loss of $546 thousand, adjusted for non-cash expenses, consisting primarily of stock-based compensation expense of $405 thousand. Uses of cash include an increase in inventories of $1.5 million and decreases in accounts payable of $1.4 million and accrued expenses of $2.8 million.
Cash Flows from Investing Activities. In 2022, $115 thousand was used to purchase equipment and $156 thousand was used for certification costs.
In 2021, cash of $257 thousand was used to purchase equipment.
Cash Flows from Financing Activities. Cash provided by financing activities in 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 ~~Company amended its Financing Agreement with~~exercise of common stock options.
Cash provided by financing activities in 2021 consisted of a source of cash of $7.0 million from borrowings under our SVB line-of-credit, and $379 thousand in proceeds from the exercises of common stock options. Uses of cash include the repayment of the Rosenthal & Rosenthal, Inc. ~~The amendment increased the size~~line-of-credit of ~~the revolving credit line from $4.0 million to $5.0 million effective the date of the amendment.~~$2.4 million.
23
Future Liquidity Needs

~~On March 12, 2021, the Company terminated its Financing Agreement with Rosenthal & Rosenthal, Inc. and entered into the Silicon Valley Bank (“SVB Loan Agreement”). The SVB Loan Agreement provides~~Our primary short-term needs for a revolving facility up to a principal amount of $12.0 million. The SVB Loan Agreement matures, and all outstanding amounts become due and payable on March 12, 2023. The SVB Loan Agreement is secured by substantially all the Company’s assets but excludes the Company’s intellectual property. The availability of borrowings under the SVB Loan Agreement iscapital, which are subject to ~~certain conditions~~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 ~~requirements,~~within our control. We expect that our product sales and the ~~borrowing base amount is up to (a) 85%~~resulting operating loss as well as the status of ~~eligible accounts receivable balances plus (b) the least~~each of (i) 60% of eligible inventory, (ii) 85% of net orderly liquidation value, and (iii) $4.8 million. In conjunction with the SVB Loan Agreement, the Company secured a $1.0 million commercial credit card line.our product development programs, will significantly impact our cash management decisions.

~~On July 28, 2021,~~At March 31, 2022, we believe our current cash and cash equivalents, other working capital and borrowings under our SVB line-of-credit will be sufficient to fund working capital requirements, capital expenditures and operations during the ~~Company entered into an underwriting agreement with B. Riley Securities, Inc., as representative (the “Representative”)~~next twelve months. We intend to retain any future earnings to support operations and to finance the growth and development of our business, and we do not anticipate paying any dividends in the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell an aggregate of 10,000,000 shares of the Company’s Common Stock, to the Underwriters. The shares of Common Stock were sold to the public at an offering price of $2.50 per share and were purchased by the Underwriters from the Company at a price of $2.32715 per share. The Company also granted the Underwriters a 30-day option to purchase up to an additional 1,500,000 shares of Common Stock (the “Option Shares”). On August 2, 2021, the Company received $22.7 million in aggregate net proceeds after deducting Underwriters’ discounts, commissions, and other offering expenses after issuing 10,000,000 shares of the Company’s Common Stock through the Public Offering.foreseeable future.

~~Based~~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 and cash that may be required to settle our foreign currency hedges.
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.
At March 31, 2022, we have Federal and state net operating loss carry forwards of approximately $54.8 million and $21.6 million, respectively, available to reduce future taxable income. A valuation allowance has been established for the ~~Company’s present business plan, funding available under~~full amount of deferred income tax assets as management has concluded that it is more-likely than-not that the SVB Loan Agreement and the net proceeds of the Company’s Public Offering , the Company expects to maintain acceptable levels of liquidity to meet its obligations as they become due during the next 12 months.benefits from such assets will

Commitments and Contractual Obligations

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, except as otherwise disclosed in this Form ~~10-Q,~~10-Q/A, there were no material changes to our capital commitments and contractual obligations from those disclosed in our Form ~~10-K~~10-K/A for the year ended December 31, ~~2020.~~2021.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of ~~June 30, 2021.~~March 31, 2022. See Note 6 to the accompanying consolidated financial statements for additional disclosure.

24

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 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 and our Chief Financial Officer, 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,~~10-Q/A, we carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of March 31, ~~2020.~~2022. Based upon that evaluation and other than as disclosed herein, our Chief Executive Officer and Chief Financial Officer concluded that due to the existence of material weaknesses in our internal controls over financial reporting, described below, our disclosure controls and procedures were not effective as of the end of the period covered by this ~~report.~~report in enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period..

During our preparation of our Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020, w~~e2021, we identified a material ~~weakness~~weaknesses with ~~tracking and timely recording of in-transit~~financial reporting to account for inventory ~~where title had been transferred to the Company. This~~transactions. These material ~~weakness could result~~weaknesses resulted in the Company ~~under-reporting~~incorrectly reporting its ~~inventory and current liabilities. The Company’s logistics firm had not provided title transfer dates to the Company for in-transit~~ inventory. The material weakness only impacted the consolidated balance sheet, other than stockholders’ equity, as of December 31, 2020, resulting in equal increases in the Company’s inventory and current liabilities, and did not impact the consolidated statements of operations.
To remediate the material ~~weakness described above,~~weaknesses, the Company ~~instituted a process, which includes requiring the Company’s logistics firm to provide title transfer dates to the Company for in-transit inventory. The Company will~~is instituting reporting enhancements within its accounting system, standardized and timely ~~record inventory~~account reconciliations, and ~~related liabilities based on the title transfer date,~~independent and ~~a member of~~regular reviews by the finance department ~~will review~~to ensure the Company inventory records ~~for completeness~~are complete and ~~accuracy.~~accurate. The material ~~weakness~~weaknesses 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~~these material ~~weakness~~weaknesses will be completed before the end of ~~2021.~~2022.

Other than as disclosed herein, there were no changes in our internal control over financial reporting during the ~~quarter~~three months ended ~~June 30, 2021~~March 31, 2022 that have affected, or are reasonably likely to affect, our internal control over financial reporting.

25
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

On February 16, 2021, the Company received a letter from a law firm representing a purported stockholder of the Company requesting the opportunity to review certain books and records of the Company to investigate the possibility of breaches of fiduciary duty by current and former members of the Board of Directors and the Company’s controlling stockholder in connection with his and his affiliates’ acquisition of majority control of the Company without compensating the Company’s minority stockholders and the acquisition by merger of Zoom Connectivity in which he held a substantial equity stake. The parties have been in negotiations with the counsel for the purported stockholder to resolve this matter. The Company believes that the resolution of this matter is likely to include the imposition of certain corporate governance restrictions, which would expand on current practices of the Company over a longer period of time than the standstill agreement currently in effect with the Company’s controlling stockholder, on the Company and the controlling stockholder and his affiliates and the payment of legal expenses. The matter is under negotiation and is subject to change based upon the negotiations and any other factors that may arise. There can be no assurance that this matter will be resolved on satisfactory terms.
On June 29, 2021, the Company received a letter from a law firm representing a purported stockholder of the Company making a litigation demand on behalf of the Company and its stockholders to address certain alleged misconduct by the Company’s Board of Directors in connection with the implementation of an amendment to the Company’s Amended and Restated Certificate of Incorporation without having received proper stockholder approval thereof as required under Delaware corporation law. The letter demanded that the Board of Directors take immediate action to: deem the amendment ineffective and make appropriate disclosure of that fact and seek a valid stockholder approval of the amendment; and adopt and implement adequate internal controls and systems at the Company designed to prohibit and prevent a recurrence of the circumstances. The letter requested a response or contact with the law firm on or before July 16, 2021. On June 30, 2021, the Company filed with the Delaware Secretary of State a Certificate of Correction to void the previously filed amendment to the Company’s Amended and Restated Certificate of Incorporation. The Company filed an amendment to a Current Report on Form 8-K to disclose these matters. The Company held a special meeting of stockholders on July 22, 2021 and received the requisite stockholder approval of the amendment. On July 23, 2021, the Company filed with the Delaware Secretary of State an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of capital stock to 62,000,000 shares, consisting of 60,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock. The Company filed a Current Report on Form 8-K to disclose these matters. It is also expected that the Nominating and Governance Committee of the Board of Directors will review the Company’s internal controls and systems and the circumstances described in the demand letter to determine if any additional actions are necessary to prevent the recurrence of the circumstances relating to the foregoing events. The Company anticipates that the law firm that sent the demand letter will seek recovery of attorneys’ fees relating to this matter. The ultimate amount of any such recovery could be material but is not presently ascertainable. The Company intends vigorously to defend against any such claim for recovery of legal fees. There can be no assurance that this matter will be resolved on satisfactory terms.
In the ordinary course of business, in addition to the matters described above, the Company is subject to lawsuits, arbitrations, claims, and other legal proceedings in connection with its business. Some of such additional proceedings include claims for substantial or unspecified compensatory and/or punitive damages. A substantial adverse judgment or other unfavorable resolution of such 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 adequate legal defenses with respect to such additional legal proceedings to which it is a defendant or respondent and that the outcome of such 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 is unable to predict the outcome of these matters.None.

ITEM 1A. RISK FACTORS

~~We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.~~
~~Nevertheless, we call your attention~~There have been no material changes to the ~~Risk Factors contained~~risk factors set forth in our 2021 Annual Report on Form ~~10-K~~10-K/A for the year ended December 31, ~~2020 and in our other filings with the SEC, including Amendment No. 2 to our Registration Statement on Form S-1~~2021, filed with the SEC on ~~July 28, 2021.~~August 19, 2022, which includes a detailed discussion of our risk factors in Part I, “Item 1A. Risk Factors”, which discussion is hereby incorporated by reference into this Part II, Item 1A. Our Risk Factors could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations.

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.

26

ITEM 6. EXHIBITS

Exhibit No. Exhibit Description

3.1 Amended and Restated ~~Certificate~~By-Laws of ~~Incorporation of the Company~~Minim, Inc., adopted and effective April 13, 2022 (incorporated by reference to Exhibit 3.1 to ~~the Company’s Registration Statement~~Minim, Inc. Current Report on Form 10, filed on September 4, 2009)*
~~3.2~~ ~~Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the~~ Form 8-K filed by the Company on ~~November 18, 2015)~~April 15, 2022).*
~~3.3~~ Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 30, 2019).*
~~3.4~~ Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on November 18, 2015).*
~~3.5~~ Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 4, 2021).*
~~3.6~~ Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on June 4, 2021).*
~~3.7~~ Certificate of Correction of Minim, Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K/A filed by the Company on June 30, 2021).*
~~3.8~~ Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 23, 2021).*
~~3.9~~ Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 30, 2021).*
~~4.1~~ Description of Securities (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).*
~~10.1~~ Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 of Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).*
~~10.2~~31.1 Trademark Acquisition Agreement, dated as of August 12, 2021, by and between the Company and Zoom Video Communications, Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on August 16, 2021).
~~31.1~~
~~31.2~~
~~32.1~~
~~32.2~~
CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2
CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101.INS
~~101.SCH~~
~~101.CAL~~
~~101.DEF~~
~~101.LAB~~
~~101.PRE~~

XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
~~______________~~
* 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 ~~SEC,~~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~~10-Q/A 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.

27

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MINIM, INC.
(Registrant)

Date: August ~~16, 2021~~19, 2022 By: /s/ ~~SEAN DOHERTY~~DUSTIN TACKER

~~Sean Doherty~~Dustin Tacker
Chief Financial Officer
(on behalf of Registrant and as Principal Financial Officer)

28


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020

Net sales	$	14,893,145		$	10,272,757		$	29,910,719		$	22,228,360
Cost of goods sold		10,415,427			8,148,888			20,329,211			17,009,273
Gross profit		4,477,718			2,123,869			9,581,508			5,219,087

Operating expenses:
Selling and marketing		3,209,247			2,283,490			6,383,196			4,637,733
General and administrative		1,326,493			716,166			2,403,861			1,544,105
Research and development		1,386,358			644,492			2,774,530			1,297,244
Total operating expenses		5,922,098			3,644,148			11,561,587			7,479,082

Operating loss		(1,444,380	)		(1,520,279	)		(1,980,079	)		(2,259,995	)

Other income (expense):
Interest expense, net		(78,041	)		(2,242	)		(106,362	)		(7,640	)
Other, net		—			892			20,000			443
Total other income (expense)		(78,041	)		(1,350	)		(86,362	)		(7,197	)

Loss before income taxes		(1,522,421	)		(1,521,629	)		(2,066,441	)		(2,267,192	)

Income taxes		31,490			6,356			32,990			12,672

Net loss	$	(1,553,911	)	$	(1,527,985	)	$	(2,099,431	)	$	(2,279,864	)

Net loss per share:
Basic and diluted	$	(0.04	)	$	(0.07	)	$	(0.06	)	$	(0.10	)

Basic and diluted weighted average common and common equivalent shares		35,482,181			22,275,441			35,368,931			21,776,101


	Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total

Balance at December 31, 2020	35,074,922	$	350,749	$	64,526,664	$	(57,086,943	)	$	7,790,470

Net loss	—		—		—		(545,520	)		(545,520	)
Private investment offering, net of offering costs of $237,030
Private investment offering, net of offering costs of $237,030, shares
Stock option exercises	287,932		2,879		376,268		—			379,147
Stock-based compensation	—		—		404,718		—			404,718
Balance at March 31, 2021	35,362,854	$	353,628	$	65,307,650	$	(57,632,463	)	$	8,028,815
Net loss	—		—		—		(1,553,911	)		(1,553,911	)
Stock option exercises, net	268,385		2,722		339,541		—			342,263
Stock-based compensation	—		—		211,124		—			211,124
Balance at June 30, 2021	35,631,239	$	356,350	$	65,858,315	$	(59,186,374	)	$	7,028,291

		1 year				2 years				Greater than 2 years				Total
Performance obligations		$	349,961			$	330,391			$	322,508			$	1,002,860

	Balance Sheet Location	June 30, 2021		December 31, 2020
Accounts receivable, net	Accounts receivable, net	$	9,254,845	$	9,203,334
Contract liabilities - current	Deferred revenue, current	$	349,961	$	—
Contract liabilities – non-current	Deferred revenue, non-current	$	652,899	$	—

	June 30, 2021
Maturity of Lease Liabilities		Lease Payments
2021 (remaining)	$	72,741
2022		22,794
Less: Imputed interest		(2,881	)
Present value of operating lease liabilities	$	92,654

Balance Sheet Classification
Current maturities of operating lease liabilities	$	92,654
Operating lease liabilities, less current maturities		—
Total operating lease liabilities	$	92,654

Other Information
Weighted-average remaining lease term for operating leases		0.7
Weighted-average discount rate for operating leases		7.1	%

	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
	Three Months Ended						Six Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Numerator:
Net loss	$	(1,553,911	)	$	(1,527,985	)	$	(2,099,431	)	$	(2,279,864	)

Denominator:
Weighted average common shares - basic		35,482,181			22,275,441			35,368,931			21,776,101
Potentially dilutive common share equivalent		1,511,030			314,493			1.511,030			314,493
Weighted average common shares - dilutive	$	36,993,211		$	22,589,934			36,879,961			22,090,594

Basic net loss per share	$	(0.04	)	$	(0.07	)	$	(0.06	)	$	(0.10	)
Diluted net loss per share	$	(0.04	)	$	(0.07	)	$	(0.06	)	$	(0.10	)

	Three Months ended March 31,										Change
	2022					2021					$			%

Net sales	$	13,299		100.0	%	$	15,018		100.0	%	$	(1,719	)		(11.4	)%
Cost of goods sold		9,108		68.5			9,914		66.0			(806	)		(8.1	)
Gross profit		4,191		31.5			5,104		34.0			(913	)		(17.9	)
Operating expenses:
Selling and marketing		3,652		27.5			3,174		21.1			478			15.1
General and administrative		1,451		10.9			1,077		7.2			374			34.7
Research and development		1,543		11.6			1,389		9.2			154			11.1
Total operating expenses		6,646		50.0			5,640		37.6			1,006			17.8

Operating loss		(2,455	)	(18.5	)		(536	)	(3.6	)		(1,919	)		(358.0	)

Total other income (expense)		(78	)	(0.5	)		(8	)	(0.1	)		(70	)		(875.0	)

Loss before income taxes		(2,533	)	(19.0	)		(544	)	(3.6	)		(1,989	)		(365.6	)

Income tax provision		6		0.0			2		0.0			4			200.0

Net loss	$	(2,539	)	(19.1	)%	$	(546	)	(3.6	)%	$	(1,993	)		(365.0	)%

	Three Months Ended
	March 31, 2022		March 31, 2021		$ Change			% Change
	(In thousands, except percentage data)
Cable modems & gateways	$	12,883	$	14,587	$	(1,704	)		(11.7	)%
Other networking products		272		306		(34	)		(11.1	)%
SaaS		144		125		19			15.2	%
Total	$	13,299	$	15,018	$	(1,719	)		(11.4	)%

		Three Months Ended												Six Months Ended
		June 30, 2021			June 30, 2020			$ Change			% Change			June 30, 2021			June 30, 2020			$ Change			% Change
	(In thousands, except percentage data)
Net sales		$	14,893		$	10,273		$	4,620			45.0	%	$	29,911		$	22,228		$	7,683			34.6	%
Cost of goods sold			10,415			8,149			2,267			27.8	%		20,329			17,009			3,320			19.5	%
Gross profit			4,448			2,124			2,354			110.8	%		9,582			5,219			4,363			83.6	%
Operating expenses:
Selling and marketing expenses			3,209			2,283			926			40.5	%		6,383			4,638			1,745			37.6	%
General and administrative expenses			1,327			716			610			85.2	%		2,404			1,544			860			55.7	%
Research and development expenses			1,386			644			742			115.1	%		2,775			1,297			1,478			113.9	%
Total operating expenses			5,922			3,643			2,278			62.5	%		11,562			7,479			4,083			54.6	%
Operating loss			(1,444	)		(1,519	)		76			(5.0	)%		(1,980	)		(2,260	)		280			(12.4	)%
Operating income (expense):
Interest expense, net			(78	)		(3	)		(75	)					(106	)		(8	)		(98	)
Other, net			—			1			(1	)					20			0			19
Total other income (expense)			(78	)		(2	)		(76	)					(86	)		(7	)		(79	)
Loss before income taxes			(1,522	)		(1,521	)		(1	)		0.1	%		(2,066	)		(2,267	)		201			(8.9	)%
Income taxes			32			7			25						33			13			20
Net loss		$	(1,554	)	$	(1,528	)	$	24			1.6	%	$	(2,099	)	$	(2,280	)	$	221			(8	)%

	Three Months Ended									Six Months Ended
Operating Expenses	June 30, 2021		June 30, 2020		$ Change		% Change			June 30, 2021		June 30, 2020		$ Change		% Change
			(In thousands, except percentage data)
Selling and marketing expense	$	3,209	$	2,283		925		40.5	%	$	6,383	$	4,638	$	1,745		37.6	%
General and administrative expense		1,327		716		610		85.2	%		2,404		1,544		860		58.4	%
Research and development expense		1,386		644		742		115.1	%		2,775		1,297		1,478		113.9	%
Total operating expense	$	5,922	$	3,643		2,278		62.5	%	$	11,562	$	7,479	$	4,083		55.1	%

	Three Months ended March 31,
	2022		2021		$ Change		% Change
Research and development	$	1,543	$	1,389	$	154		11.1	%

	●	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.

Exhibit No.		Exhibit Description

3.1		Amended and Restated ~~Certificate~~By-Laws of ~~Incorporation of the Company~~Minim, Inc., adopted and effective April 13, 2022 (incorporated by reference to Exhibit 3.1 to ~~the Company’s Registration Statement~~Minim, Inc. Current Report on Form 10, filed on September 4, 2009)*
~~3.2~~		~~Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the~~ Form 8-K filed by the Company on ~~November 18, 2015)~~April 15, 2022).*
~~3.3~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 30, 2019).*
~~3.4~~		Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on November 18, 2015).*
~~3.5~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 4, 2021).*
~~3.6~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by the Company on June 4, 2021).*
~~3.7~~		Certificate of Correction of Minim, Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K/A filed by the Company on June 30, 2021).*
~~3.8~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on July 23, 2021).*
~~3.9~~		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Company on June 30, 2021).*
~~4.1~~		Description of Securities (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).*
~~10.1~~		Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 of Amendment No. 1 to Form S-1 filed by the Company on July 26, 2021).*
~~10.2~~31.1		Trademark Acquisition Agreement, dated as of August 12, 2021, by and between the Company and Zoom Video Communications, Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company on August 16, 2021).
~~31.1~~ ~~31.2~~ ~~32.1~~ ~~32.2~~		CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2		CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
101.INS ~~101.SCH~~ ~~101.CAL~~ ~~101.DEF~~ ~~101.LAB~~ ~~101.PRE~~		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	MINIM, INC.
	(Registrant)

Date: August ~~16, 2021~~19, 2022	By:	/s/ ~~SEAN DOHERTY~~DUSTIN TACKER
		~~Sean Doherty~~Dustin Tacker
		Chief Financial Officer
		(on behalf of Registrant and as Principal Financial Officer)