[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements and management's analysis of FIEE, Inc. for the three months ended March 31, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents FIEE, Inc.'s unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) This section provides the unaudited condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024 | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :--------------------------- | :------------------ | | Cash and cash equivalents | $9,104 | $30,162 | | Total current assets | $103,453 | $164,919 | | Total assets | $357,894 | $307,035 | | Total current liabilities | $846,703 | $437,027 | | Total liabilities | $861,796 | $437,027 | | Total stockholders' deficit | $(503,902) | $(129,992) | - The company's cash and cash equivalents decreased significantly from **$30,162** at December 31, 2024, to **$9,104** at March 31, 2025[12](index=12&type=chunk) - Total current liabilities more than doubled from **$437,027** at December 31, 2024, to **$846,703** at March 31, 2025, primarily due to new 'Due to related party' liabilities of **$355,170** and 'Current maturities of operating lease liabilities' of **$58,688**[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) This section presents the unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024 | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $125 | $639,893 | | Cost of goods sold | $750 | $432,634 | | Gross (loss) margin | $(625) | $207,259 | | Total operating expenses | $370,496 | $3,476,938 | | Operating loss | $(371,121) | $(3,269,679) | | Net loss | $(373,910) | $(3,258,955) | | Basic and diluted net loss per share | $(0.10) | $(1.18) | - Net sales decreased by **100%** from **$639,893** in Q1 2024 to **$125** in Q1 2025, reflecting a significant shift away from previous business operations[15](index=15&type=chunk) - The company reported a gross loss of **$625** in Q1 2025, compared to a gross margin of **$207,259** in Q1 2024[15](index=15&type=chunk) - Net loss significantly improved from **$(3,258,955)** in Q1 2024 to **$(373,910)** in Q1 2025, largely due to a substantial reduction in operating expenses, particularly the absence of 'Vendor liability forgiveness, net of asset transfers' which was **$2,364,955** in Q1 2024[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Unaudited%29) This section presents the unaudited condensed consolidated statements of stockholders' equity for the three months ended March 31, 2025 and December 31, 2024 | Metric | December 31, 2024 | March 31, 2025 | | :------------------------ | :---------------- | :------------- | | Accumulated Deficit | $(96,693,056) | $(97,066,966) | | Total Stockholders' Deficit | $(129,992) | $(503,902) | - The accumulated deficit increased from **$(96,693,056)** at December 31, 2024, to **$(97,066,966)** at March 31, 2025, primarily due to the net loss incurred during the quarter[18](index=18&type=chunk) - Total stockholders' deficit worsened from **$(129,992)** at December 31, 2024, to **$(503,902)** at March 31, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This section presents the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(371,058) | $(2,482,265) | | Net cash used in investing activities | $- | $- | | Net cash provided by financing activities | $350,000 | $2,800,000 | | Net increase (decrease) in cash and cash equivalents | $(21,058) | $317,735 | | Cash and cash equivalents - Ending | $9,104 | $1,027,057 | - Net cash used in operating activities decreased significantly from **$(2,482,265)** in Q1 2024 to **$(371,058)** in Q1 2025[21](index=21&type=chunk) - Cash provided by financing activities decreased from **$2,800,000** in Q1 2024 (due to preferred stock issuance) to **$350,000** in Q1 2025 (due to proceeds from debt)[21](index=21&type=chunk) - The company experienced a net decrease in cash and cash equivalents of **$(21,058)** in Q1 2025, resulting in an ending cash balance of **$9,104**[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed notes accompanying the unaudited condensed consolidated financial statements [(1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION](index=8&type=section&id=%281%29%20NATURE%20OF%20OPERATIONS%20AND%20BASIS%20OF%20PRESENTATION) This note describes FIEE, Inc.'s business transformation from a networking company to a digital service provider focused on AI and data analytics - FIEE, Inc. (formerly Minim, Inc.) pivoted from a networking company with an exclusive Motorola brand license (until 2023) to a digital service provider focused on **AI** and data analytics for content creation and brand management[23](index=23&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - The company's new focus includes **SaaS** solutions for digital presence optimization, customized graphic/video content, and editorial calendars, delivered through digital account management, content operations/growth analytics, and community engagement[26](index=26&type=chunk)[27](index=27&type=chunk) - The company changed its name from Minim, Inc. to FiEE, Inc. effective **February 27, 2025**[28](index=28&type=chunk) - As of March 31, 2025, the Company had an accumulated deficit of **$97 million** and cash and cash equivalents of **$9 thousand**, indicating significant losses and negative cash flows from operations[31](index=31&type=chunk) - On March 25, 2025, the Company entered into a non-binding LOI to acquire **100%** equity interests in Suzhou Yixuntong Network Technology Co., Ltd. for up to **$2,000,000**, aiming to expand its Multi-Channel Network business[32](index=32&type=chunk)[33](index=33&type=chunk) [(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=%282%29%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note confirms that the Company's significant accounting policies remained unchanged during the quarter - The Company's significant accounting policies remained unchanged during the three months ended March 31, 2025, as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024[37](index=37&type=chunk) [(3) REVENUE AND OTHER CONTRACTS WITH CUSTOMERS](index=9&type=section&id=%283%29%20REVENUE%20AND%20OTHER%20CONTRACTS%20WITH%20CUSTOMERS) This note details the Company's revenue recognition policies and the significant shift in revenue composition from hardware to SaaS - Revenue from hardware products bundled with **SaaS** offerings is recognized when product control transfers, with the **SaaS** portion recognized ratably over an estimated one to three-year period[39](index=39&type=chunk) Revenue by Source | Revenue Source | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Retailers | $- | $638,904 | | Other online and offline channels | $125 | $989 | | Total Revenue | $125 | $639,893 | Revenue by Product | Product | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Cable modems & gateways | $- | $638,804 | | Other networking products | $- | $1,089 | | SaaS | $125 | $- | | Total Revenue | $125 | $639,893 | - The company's revenue composition shifted entirely to **SaaS** in Q1 2025, with **$125** in SaaS revenue, compared to **$639,893** from hardware products (cable modems & gateways, other networking products) in Q1 2024[44](index=44&type=chunk) [(4) BALANCE SHEET COMPONENTS](index=11&type=section&id=%284%29%20BALANCE%20SHEET%20COMPONENTS) This note provides a breakdown of key balance sheet components, particularly other payables and accrued expenses Other Payables and Accrued Expenses | Other Payables and Accrued Expenses | March 31, 2025 | March 31, 2024 | | :---------------------------------- | :------------- | :------------- | | Payroll & related benefits | $64,344 | $141,559 | | Professional fees | $116,690 | $104,947 | | Board of director fees | $12,500 | $173,000 | | Sales and use tax | $81,708 | $150,009 | | Vendor contingent payments | $26,905 | $415,259 | | Total other payables and accrued expenses | $332,079 | $1,011,679 | - Total other payables and accrued expenses decreased from **$1,011,679** at March 31, 2024, to **$332,079** at March 31, 2025, driven by significant reductions in vendor contingent payments, board of director fees, and payroll & related benefits[45](index=45&type=chunk) [(5) LEASES](index=11&type=section&id=%285%29%20LEASES) This note details changes in the Company's lease agreements and the resulting impact on lease liabilities - The Company's previous office and warehouse leases expired, and a newly established Hong Kong subsidiary executed new office lease agreements in **February 2025**[46](index=46&type=chunk) Lease Liability Components | Lease Liability Component | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Current operating lease liabilities | $58,688 | $9,061 | | Long-term operating lease liabilities | $15,093 | $- | | Total lease liabilities | $73,781 | $9,061 | - Total lease liabilities increased significantly from **$9,061** in Q1 2024 to **$73,781** in Q1 2025, reflecting the new lease agreements[47](index=47&type=chunk) [(6) COMMITMENTS AND CONTINGENCIES](index=12&type=section&id=%286%29%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the Company's commitments, including the termination of the Motorola license, vendor liability reductions, and legal proceedings - The exclusive license agreement with Motorola Mobility LLC for consumer networking products was cancelled in **2023**, and all related royalty payments and obligations were satisfied by **January 22, 2024**, through asset transfers and a debt settlement agreement[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) - The Company negotiated liability release agreements with vendors in **Q4 2023**, reducing outstanding accounts payable by **$3.6 million** from **$5.0 million** to **$1.4 million**, contingent on payment of negotiated amounts[53](index=53&type=chunk) - As of March 31, 2025, management believes no current legal proceedings are expected to have a material adverse effect on the Company's business, operating results, or financial condition[55](index=55&type=chunk) [(7) SIGNIFICANT CUSTOMERS AND DEPENDENCY ON KEY SUPPLIERS](index=13&type=section&id=%287%29%20SIGNIFICANT%20CUSTOMERS%20AND%20DEPENDENCY%20ON%20KEY%20SUPPLIERS) This note discusses customer acquisition for the new SaaS business and the absence of significant supplier concentration - The Company acquired **1** new customer upon launching its **SaaS** product on **March 28, 2025**, and had **39** customers by **April 30, 2025**, with prepaid subscription fees totaling **$203 thousand**[57](index=57&type=chunk) - In Q1 2024, two companies accounted for **100%** of total net sales, and one company accounted for **100%** of accounts receivable, indicating high customer concentration in the prior business model[58](index=58&type=chunk) - The Company did not have any concentration of suppliers during the three months ended March 31, 2025 and 2024[59](index=59&type=chunk) [(8) RELATED PARTY TRANSACTIONS](index=13&type=section&id=%288%29%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions with related parties, including changes in rent expense and new promissory notes - Rent expense from a related party (former Chairman of the Board) decreased from **$14 thousand** in Q1 2024 to **$0** in Q1 2025, as the lease was not renewed in **September 2024**[60](index=60&type=chunk) Due to Related Party | Due to Related Party | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------- | :-------------------------------- | :-------------------------------- | | Cao Yu | $53,000 | $- | | David Lazar | $302,170 | $- | | Total | $355,170 | $- | - A new unsecured promissory note with David Lazar (Noteholder) for a principal amount of **$300,000** became effective **February 18, 2025**, due by **December 31, 2025**[63](index=63&type=chunk) [(9) EARNINGS (LOSS) PER SHARE](index=14&type=section&id=%289%29%20EARNINGS%20%28LOSS%29%20PER%20SHARE) This note presents the calculation of basic and diluted net loss per share for the periods presented Earnings (Loss) Per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(373,910) | $(3,258,955) | | Weighted average common shares – basic | 3,713,792 | 2,770,382 | | Basic and diluted net loss per share | $(0.10) | $(1.18) | - Basic and diluted net loss per share improved from **$(1.18)** in Q1 2024 to **$(0.10)** in Q1 2025, reflecting a reduced net loss despite an increase in weighted average common shares[64](index=64&type=chunk) [(10) EQUITY](index=14&type=section&id=%2810%29%20EQUITY) This note describes significant equity transactions, including preferred stock issuance, warrant sales, and subsequent agreements - On **January 23, 2024**, the Company sold **2,000,000** shares of Series A Preferred Stock and issued warrants to purchase **2,800,000** shares of Common Stock to David Lazar for an aggregate purchase price of **$2,800,000**[65](index=65&type=chunk) - On **February 18, 2025**, David Lazar sold his Series A Preferred Stock, warrants, and receivables to Cao Yu, Hu Bin, and Youxin Consulting Limited for **$500,000**, with **$300,000** directed to the Company for **1,200,000** newly issued Common Stock shares to Lazar (later rescinded and replaced with a Convertible Note)[71](index=71&type=chunk) - On **May 9, 2025**, a Second Amended and Restated Securities Purchase Agreement was executed, removing references to Lazar Common Stock and Earnout Shares, and Purchasers agreed to surrender the Warrant and forgive Lazar Receivables[72](index=72&type=chunk) [(11) SUBSEQUENT EVENTS](index=16&type=section&id=%2811%29%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the balance sheet date, including board appointments, Nasdaq compliance issues, and new financing agreements - Hu Bin, Cao Yu, David Natan, and Chan Oi Fat were appointed to the Company's board of directors and various committees in **April 2025**[73](index=73&type=chunk)[74](index=74&type=chunk) - The Company received a second letter from Nasdaq on **April 7, 2025**, citing additional deficiencies including failure to comply with shareholder approval requirements and majority independent board/committee requirements, in addition to the previously noted stockholders' equity requirement[81](index=81&type=chunk) - On **May 9, 2025**, the Company sold **1,585,366** shares of common stock to Cao Yu for **$2,600,000** and **853,659** shares to Hu Bin for **$1,400,000**[84](index=84&type=chunk)[85](index=85&type=chunk) - On **May 9, 2025**, the Company entered into a Securities Purchase Agreement with Helena Global Investment Opportunities I Ltd. to potentially issue and sell up to **$15,000,000** of Common Stock over **36 months** to fund future liquidity needs[129](index=129&type=chunk)[130](index=130&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=18&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses FIEE, Inc.'s financial condition and results, highlighting the strategic pivot to AI-driven SaaS, declining sales, and liquidity challenges [Overview](index=18&type=section&id=Overview) This overview summarizes the Company's strategic transition to a digital service provider and its current financial position - The Company is transitioning from a WiFi/Software as a Service platform for connected homes to a digital service provider integrating **AI** and data analytics into content creation and brand management[92](index=92&type=chunk) - Cash and cash equivalents decreased from **$30 thousand** on December 31, 2024, to **$9 thousand** on March 31, 2025, with a negative working capital of **$743 thousand**[94](index=94&type=chunk) - Net sales for the three months ended March 31, 2025, were **$125**, a significant decrease from **$640 thousand** in the prior year, reflecting declining revenues[96](index=96&type=chunk) [Recent Accounting Standards](index=19&type=section&id=Recent%20Accounting%20Standards) This section confirms no new significant accounting pronouncements impacted the Company's financial statements - There have been no new accounting pronouncements with significant or potential significance to the Company's financial position, results of operations, and cash flows during the period[38](index=38&type=chunk)[97](index=97&type=chunk) [Critical Accounting Policies and Estimates](index=19&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that no significant changes occurred in the Company's critical accounting policies and estimates - No significant changes occurred in the Company's critical accounting policies and estimates, including revenue recognition, product returns, inventory valuation, costs of goods sold, warrants, and valuation of deferred tax assets, for the three months ended March 31, 2025[99](index=99&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance, detailing changes in net sales, cost of goods sold, gross margin, and operating expenses Results of Operations Summary | Metric | March 31, 2025 | March 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------- | :------------- | :--------- | :--------- | | Net sales | $125 | $639,893 | $(639,768) | (100.0)% | | Cost of goods sold | $750 | $432,634 | $(431,884) | (99.8)% | | Gross profit (loss) | $(625) | $207,259 | $(207,884) | (100.3)% | | Selling and marketing | $- | $21,037 | $(21,037) | (100.0)% | | General and administrative | $340,496 | $1,018,516 | $(678,020) | (66.6)% | | Research and development | $30,000 | $72,430 | $(42,430) | (58.6)% | | Vendor liability forgiveness, net of asset transfers | $- | $2,364,955 | $(2,364,955) | (100.0)% | | Total operating expenses | $370,496 | $3,476,938 | $(3,106,442) | (89.3)% | | Operating loss | $(371,121) | $(3,269,679) | $2,898,558 | (88.6)% | | Net loss | $(373,910) | $(3,258,955) | $2,885,045 | (88.5)% | [Net Sales](index=20&type=section&id=Net%20Sales) This section details the significant year-over-year decrease in net sales due to the strategic business transition - Total net sales decreased by **$640 thousand (100%)** year-over-year, reflecting the strategic transition from legacy hardware to **SaaS** solutions[102](index=102&type=chunk) - The new **AI** and big data-focused **SaaS** business secured its first customer orders and generated initial sales in **March 2025**, onboarding **39** customers by **April 30, 2025**, with **$203 thousand** in prepaid service fees[102](index=102&type=chunk) [Cost of Goods Sold and Gross Margin](index=20&type=section&id=Cost%20of%20Goods%20Sold%20and%20Gross%20Margin) This section explains the decrease in gross profit and the resulting gross loss due to lower sales and upfront costs - Gross profit decreased due to lower sales, primarily from the Motorola license termination, resulting in a gross loss of **(500)%** in Q1 2025 compared to a **32.4%** gross margin in Q1 2024[104](index=104&type=chunk)[105](index=105&type=chunk) - The Q1 2025 gross margin is not indicative of future trends, as the new business incurred elevated upfront costs during its initial launch phase[107](index=107&type=chunk) [Selling and Marketing](index=21&type=section&id=Selling%20and%20Marketing) This section highlights the significant reduction in selling and marketing expenses - Selling and marketing expenses decreased by **$21 thousand (100%)** in Q1 2025 compared to Q1 2024, primarily due to reductions in sales support costs[108](index=108&type=chunk) [General and Administrative](index=21&type=section&id=General%20and%20Administrative) This section details the decrease in general and administrative expenses due to business reallocation and cost reduction efforts - General and administrative expenses decreased by **$678 thousand (66.6%)** in Q1 2025, mainly due to the reallocation of business operations from hardware to software focus and cost reduction efforts[110](index=110&type=chunk) [Research and Development](index=22&type=section&id=Research%20and%20Development) This section outlines the decrease in research and development expenses and the Company's new SaaS platform development - Research and development expenses decreased by **$42 thousand (58.6%)** in Q1 2025, primarily due to reduced software subscriptions and support costs[112](index=112&type=chunk) - In Q1 2025, the Company collaborated with a new vendor to develop the 'FiEE All-in-One Media Operations **SaaS** Platform' for content creation, multi-platform publishing, data analytics, and collaboration[112](index=112&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash position, working capital, going concern issues, and future funding strategies - As of March 31, 2025, cash and cash equivalents were **$9 thousand**, down from **$30 thousand** on December 31, 2024, with negative working capital of **$743 thousand**[114](index=114&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern beyond the next **12 months**, requiring additional liquidity[116](index=116&type=chunk) - Management anticipates needing approximately **$10 million** in total funding over the next **3 years** to support the strategic transition to **SaaS**, with allocations for infrastructure development, **AI** technology, and system enhancements[128](index=128&type=chunk) - On **May 9, 2025**, the Company entered into a Purchase Agreement with Helena Global Investment Opportunities I Ltd., granting the right to issue and sell up to **$15,000,000** of Common Stock over **36 months** to address liquidity needs[129](index=129&type=chunk)[130](index=130&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) This section analyzes the Company's cash flow activities from operations, investing, and financing Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Cash (used in) operating activities | $(371,058) | $(2,482) | | Cash used in investing activities | $- | $- | | Cash provided by financing activities | $350,000 | $2,800 | | Net increase (decrease) in cash and cash equivalents | $(21,058) | $318 | - Net cash used in operating activities decreased significantly from **$2.5 million** in Q1 2024 to **$371 thousand** in Q1 2025, primarily due to reduced net loss and changes in working capital[118](index=118&type=chunk)[119](index=119&type=chunk) - Financing activities provided **$350 thousand** in Q1 2025 from debt proceeds, a decrease from **$2.8 million** in Q1 2024 from preferred stock issuance[121](index=121&type=chunk) [Future Liquidity Needs](index=23&type=section&id=Future%20Liquidity%20Needs) This section addresses the Company's anticipated capital requirements and strategies for securing additional funding - The Company's current cash and cash equivalents are believed to be insufficient to fund working capital, capital expenditures, and operations for the next **twelve months**, necessitating additional equity or debt financing[124](index=124&type=chunk) - Future capital requirements will be influenced by operating losses, sales levels, R&D programs, working capital needs, debt servicing, regulatory approvals, and market acceptance of products[125](index=125&type=chunk) - The Company has federal net operating loss carryforwards of approximately **$69.3 million**, but a full valuation allowance has been established against deferred income tax assets[127](index=127&type=chunk) [Commitments and Contractual Obligations](index=25&type=section&id=Commitments%20and%20Contractual%20Obligations) This section confirms no material changes to the Company's capital commitments and contractual obligations - No material changes to capital commitments and contractual obligations were reported during the three months ended March 31, 2025, beyond those disclosed in the Form 10-K for December 31, 2024[136](index=136&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) This section states that the Company had no material off-balance sheet arrangements - The Company did not have any material off-balance sheet arrangements as of March 31, 2025[137](index=137&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=25&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, FIEE, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[138](index=138&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2024, finding them effective with no material changes in internal control - The Company's disclosure controls and procedures were deemed effective as of **March 31, 2024**, following an evaluation by management, including the CEO and CFO[139](index=139&type=chunk)[140](index=140&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended March 31, 2025, that have affected, or are reasonably likely to affect, internal control over financial reporting[141](index=141&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The Company reported no legal proceedings for the period - There are no legal proceedings to report[143](index=143&type=chunk) [ITEM 1A. RISK FACTORS](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K - No material changes to the risk factors set forth in the **2024** Annual Report on Form 10-K were identified[144](index=144&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The Company reported no unregistered sales of equity securities or use of proceeds for the period - There are no unregistered sales of equity securities and use of proceeds to report[145](index=145&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=26&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities for the period - There are no defaults upon senior securities to report[146](index=146&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company - Mine safety disclosures are not applicable to the Company[147](index=147&type=chunk) [ITEM 5. OTHER INFORMATION](index=26&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The Company reported no other information for the period - There is no other information to report[148](index=148&type=chunk) [ITEM 6. EXHIBITS](index=27&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation and Bylaws, Securities Purchase Agreements, and certifications required by the Sarbanes-Oxley Act - Key exhibits include the Certificate of Amendment of Amended and Restated Certificate of Incorporation (effective **Feb 27, 2025**), Second Amended and Restated Bylaws, and Amended and Restated Securities Purchase Agreement (effective **Feb 18, 2025**)[150](index=150&type=chunk) - Certifications pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of **2002** are included as exhibits[150](index=150&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) The report is duly signed on behalf of FIEE, INC. by Li Wai Chung, Chief Executive Officer and President, as the Principal Executive Officer - The report was signed by Li Wai Chung, Chief Executive Officer and President of FIEE, INC., on **May 15, 2025**[155](index=155&type=chunk)

Business Transition and Strategy - The company transitioned from its legacy business to a digital service provider focused on integrating artificial intelligence and data analytics into content creation and brand management as of April 10, 2025[21][45]. - The company has stopped substantially all of its legacy business operations as of April 10, 2025, marking a complete transition to new business offerings[21]. - The company is in the early stages of its new business model, which may result in limited revenue generation and operational challenges[45]. - The company plans to pursue acquisitions to grow its business, which may involve risks related to identifying suitable candidates and securing financing[49]. - A potential transaction is being evaluated for acquiring 100% equity interests in Suzhou Yixuntong Network Technology Co., Ltd., which may generate operational cash flow[162]. Financial Performance - Total net sales decreased by $25.5 million or 97.5%, from $26.1 million in 2023 to $0.6 million in 2024, primarily due to decreased sales of Motorola branded cable modems and gateways[107]. - The company reported a net loss of $4.2 million in 2024, compared to a net loss of $17.6 million in 2023, reflecting an improvement of $15.6 million or 88.5%[104]. - The company reported a net loss of $4,224,278 for 2024, compared to a net loss of $17,633,924 in 2023, representing a reduction in losses of about 76.01%[151]. - Cash used in operating activities was $3.8 million in 2024, compared to cash provided of $4.8 million in 2023, reflecting a significant operational cash flow decline[122]. - The company has substantial doubt about its ability to continue as a going concern, requiring additional liquidity to sustain operations beyond the next 12 months[120][128]. Operational Challenges - The company is currently under suspended trading status on the Nasdaq due to failing to meet the minimum stockholders' equity requirement of at least $2,500,000[28]. - The company has received a stay of delisting from the SEC pending further review, indicating ongoing regulatory challenges[31]. - The company may experience difficulties in scaling operations, which could affect service quality and employee retention[51]. - The company faces risks related to integrating acquired companies, including potential over-valuation and litigation from acquired entities[53]. Cost Management and Expenses - Selling and marketing expenses dropped by $9.4 million or 99.3%, from $9.5 million in 2023 to $66.2 thousand in 2024, mainly due to a reduction in Motorola royalty fees and marketing programs[111]. - General and administrative expenses decreased by $2.7 million to $2.1 million in 2024, a reduction of 56.7% compared to 2023[112]. - Research and development expenses decreased by $3.3 million or 96.7%, from $3.4 million in 2023 to $113.3 thousand in 2024[104]. - The company incurred total operating expenses of $4,442,835 in 2024, down from $17,677,479 in 2023, a decrease of approximately 74.88%[151]. Shareholder and Equity Information - The company has authorized the issuance of 60,000,000 shares of common stock, which may lead to substantial dilution for existing investors[72]. - The company has committed to increasing the Stated Value of its Series A Convertible Preferred Stock from $1.40 to $2.75 as part of the Securities Purchase Agreement[37]. - The company has never declared or paid any cash dividends and does not intend to do so in the foreseeable future[74]. - The company currently trades on the Pink Tier of OTC Markets, which may limit liquidity and market quotations for its shares[60]. Assets and Liabilities - Total current assets decreased to $164,919 in 2024 from $11,399,114 in 2023, a decline of approximately 98.55%[148]. - Total liabilities decreased to $437,027 in 2024 from $12,244,048 in 2023, a reduction of approximately 96.43%[148]. - Cash and cash equivalents decreased from $709 thousand in 2023 to $30 thousand in 2024[90]. - The accumulated deficit increased to $96,693,056 in 2024 from $92,468,778 in 2023, an increase of about 4.83%[154]. Compliance and Governance - The company plans to establish an independent audit committee, compensation committee, and nomination committee to comply with Nasdaq listing standards[54]. - The company has not maintained effective internal controls over financial reporting, which could impair investor confidence and affect stock price[75].

Core Points - Nasdaq Stock Market announced the delisting of Minim, Inc.'s common stock, which has been suspended since July 24, 2024 [1] - Nasdaq will file a Form 25 with the Securities and Exchange Commission to finalize the delisting process, effective ten days after the filing [1] - Additional information regarding the delisting and the trading status of Minim, Inc.'s securities can be found in the company's public filings or by contacting the company directly [1] Company Information - Minim, Inc.'s securities have not traded on Nasdaq since their suspension on July 24, 2024 [1] - The delisting process is governed by Nasdaq's rules, specifically the Nasdaq Rule 5800 Series [1]

Financial Performance - The company reported net sales of $0 million for the three months ended June 30, 2024, a decrease of $7.2 million or 100% compared to $7.2 million in the same period of 2023[76]. - For the six months ended June 30, 2024, net sales decreased by $17.3 million or 296.0% compared to $17.9 million in the same period of 2023[84]. - The gross profit for the three months ended June 30, 2024 was $0, down from $486 thousand in the same period of 2023, representing a decrease of 100%[80]. - The company experienced a net loss of $(488) thousand for the three months ended June 30, 2024, compared to a net loss of $(5,559) thousand in the same period of 2023, reflecting a 91.3% improvement[80]. - Cash used in operating activities was $2.88 million for the first half of 2024, reflecting a net loss of $3.7 million adjusted for non-cash expenses[99]. Operating Expenses - Total operating expenses for the three months ended June 30, 2024 were $489 thousand, a decrease of 91.8% compared to $5,947 thousand in the same period of 2023[80]. - Selling and marketing expenses decreased by 99.1% to $66,000 in the first half of 2024 compared to $7.31 million in the same period of 2023, driven by reductions in personnel and marketing campaign costs[88]. - General and administrative expenses decreased by 51.6% to $567,000 in Q2 2024 compared to $1.17 million in Q2 2023, mainly due to lower personnel and software subscription expenses[90]. - Research and development expenses fell by 96.5% to $41,000 in Q2 2024 compared to $1.19 million in Q2 2023, attributed to decreases in personnel and contract labor costs[93]. Liquidity and Cash Position - The company had cash and cash equivalents of $0.6 million as of June 30, 2024, down from $0.7 million on December 31, 2023[73]. - As of June 30, 2024, cash and cash equivalents were $0.6 million, down from $0.7 million on December 31, 2023, with negative working capital of $0.7 million[95]. - The company is evaluating options related to its liquidity and will continue to monitor costs in relation to sales[74]. - The company has substantial doubt about its ability to continue as a going concern without additional liquidity to support operations beyond the next 12 months[97]. Sales and Market Trends - The decrease in net sales is primarily attributed to reduced sales of Motorola branded cable modems and gateways[84]. - Sales related to SaaS offerings were $0 thousand for the three months ended June 30, 2024, down from $74 thousand in the same period of 2023[84]. - The company expects future selling and marketing expenses to decrease compared to the first half of 2024, contingent on sales levels achieved[89]. - Future research and development expenses are anticipated to decrease compared to the first half of 2024, depending on the timing and number of development activities[94]. Tax Considerations - Federal and state net operating loss carryforwards amount to approximately $79.2 million and $47.9 million, respectively, available to reduce future taxable income[107].

Core Viewpoint - Minim, Inc. has received a notification from Nasdaq indicating non-compliance with the minimum stockholders' equity requirement of $2,500,000 for continued listing on The Nasdaq Capital Market [1] Group 1: Nasdaq Notification and Appeal - The company was informed by Nasdaq's Listing Qualifications Department that it does not meet the stockholders' equity requirement [1] - Minim has appealed the determination to a Hearings Panel, which will stay the suspension of its securities pending the Panel's decision [2] - The company has requested that the Staff determination be stayed while the appeal is resolved [2] Group 2: Compliance Strategy - Minim intends to regain compliance with the stockholders' equity requirement through a direct equity investment and/or business combination before the hearing [3] - There is no assurance that the company will successfully execute this plan [3] Group 3: Company Overview - Minim, Inc. was established in 1977 and specializes in intelligent software for enhancing WiFi connections [4] - The company's cloud platform supports various routers and apps, focusing on customer control over their connected experience and privacy [4]

Company Overview - Minim, Inc. is a networking company founded in 1977, now focused on delivering intelligent software to enhance WiFi connections for users [4] - The company is headquartered in Manchester, N.H., and its cloud platform supports various routers and apps to improve user experience and privacy [4] Compliance and Regulatory Issues - Minim received a notification from Nasdaq's Listing Qualifications Department indicating that it does not meet the minimum stockholders' equity requirement of at least $2,500,000 for continued listing on The Nasdaq Capital Market [2] - The company has appealed this determination to a Hearings Panel, seeking to stay the suspension of its securities pending the Panel's decision [1][2] - To regain compliance with the stockholders' equity requirement, the company plans to pursue a direct equity investment and/or a business combination before the hearing [3]

Financial Performance - For the three months ended March 31, 2024, net sales were $640,000, a decrease of $10.1 million or 94% compared to $10.8 million in the same period of 2023[89][96]. - Gross profit for the same period was $207,000, representing a gross margin of 32.4%, compared to $2.6 million and a gross margin of 24.3% in 2023[94][99]. - Operating loss for the three months ended March 31, 2024, was $3.27 million, a slight improvement from a loss of $3.93 million in the prior year[94]. - Selling and marketing expenses decreased by 99.4% to $21,000, primarily due to reductions in personnel expenses and marketing campaigns[101]. - General and administrative expenses decreased by 23.2% to $1.02 million, mainly due to a reduction in personnel expenses and other administrative costs[103]. - Research and development expenses for Q1 2024 were $72,000, a decrease of $1.4 million or 95.1% compared to Q1 2023[105]. Cash and Liquidity - The company had cash and cash equivalents of $1.0 million as of March 31, 2024, up from $0.7 million at the end of 2023[87]. - As of March 31, 2024, cash and cash equivalents were $1.0 million, up from $0.7 million on December 31, 2023, with negative working capital of $0.3 million[107]. - Cash used in operating activities for Q1 2024 was $2.5 million, reflecting a net loss of $3.3 million[111]. - Cash provided by financing activities in Q1 2024 included proceeds from the issuance of preferred stock totaling $2.8 million[113]. - The company has substantial doubt about its ability to continue as a going concern and will require additional liquidity to continue operations beyond the next 12 months[109]. - Future liquidity needs will be influenced by operating losses, sales timing, and expenditures related to product development and marketing[119]. - The company will continue to monitor costs in relation to sales and adjust accordingly to manage cash flow[118]. Revenue Challenges - The company continues to experience losses attributed to declining revenues, particularly from Motorola branded products[89][96]. - The majority of revenues are generated in North America, with significant challenges in sales outside the U.S. due to regulatory variations[96]. - Future gross margin is expected to be subject to variabilities similar to those experienced in Q1 2024, with several risks affecting its maintenance[100].

Merger and Acquisition - The merger agreement states that holders of e2Companies' outstanding common units will receive shares representing approximately 97% of the issued and outstanding shares of Minim common stock [23]. - The combined company will be led by an experienced senior management team from e2Companies, with two board members designated by Minim [34]. - The merger is conditioned upon the approval of the Company Shares for listing on the Nasdaq and the effectiveness of a registration statement on Form S-4 [25]. - The merger agreement includes a 180-day lock-up on the sale or transfer of Company Shares received by e2Companies' Class A Unitholders [28]. - The merger is expected to provide additional fundraising opportunities for the combined company in the future [34]. - The merger agreement may be terminated if the closing has not occurred by June 15, 2024, subject to a 30-day extension [26]. - The merger with e2Companies is expected to close before June 30, 2024, with Minim becoming a wholly owned subsidiary of e2Companies [41]. - The merger requires the written consent of holders of at least a majority of the outstanding shares of Minim common stock and Minim Preferred Stock [39]. - Current Minim stockholders will hold approximately 3% of the fully diluted equity of the combined company post-merger, significantly diluting their voting power [131]. - Minim expects to incur substantial expenses related to the merger, including significant fees for legal, accounting, and financial advisory services, which may exceed initial estimates [143]. - The merger poses risks of negative publicity and potential litigation that could adversely affect Minim's business and financial condition [130]. - If the merger is not completed, Minim's stock price may decline, reflecting market assumptions about the merger's completion [128]. - The merger may divert management's focus from day-to-day operations, potentially impacting ongoing business performance [125]. - The merger agreement includes restrictions that may prevent Minim from pursuing other business opportunities during the pendency of the merger [140]. - The anticipated benefits of the merger may not be realized, leading to a decline in the market price of the combined company's stock [136]. - The merger could result in significant integration challenges between Minim and e2Companies, affecting operational efficiency [135]. - The merger between Minim and e2Companies may face material adverse changes, but both parties are still required to complete it unless specific conditions are met [147]. - The market price of Minim's common stock may decline if adverse changes occur during the merger process [148]. - Stockholders may experience significant dilution of their ownership interests without receiving corresponding benefits from the merger [151]. - The combined company may issue additional equity securities in the future, leading to further dilution for existing investors [159]. - The concentration of capital stock ownership with insiders may limit the influence of other stockholders on corporate matters [161]. - The combined company will incur significant legal and compliance costs as a public entity, which could impact its financial performance [166]. - The combined company may face challenges in implementing effective internal controls over financial reporting as required by the Sarbanes-Oxley Act [168]. - There is a risk of write-downs or restructuring charges post-merger that could negatively affect the combined company's financial condition and stock price [170]. - The combined company does not anticipate paying cash dividends in the foreseeable future and plans to retain future earnings for business development [171]. Financial Performance - Minim's management believes that continuing to operate as a stand-alone entity poses significant risks, including insufficient capital resources and ongoing net operating losses [36]. - Minim had approximately $76.9 million in net operating loss carryforwards as of December 31, 2023, which will be limited due to the ownership change resulting from the merger [146]. - The company reported a net loss of $17.6 million for fiscal 2023, contributing to a decrease in cash and cash equivalents [205]. - Net sales for the years ended December 31, 2023, and 2022 were $26.1 million and $50.6 million, respectively, indicating a significant decline in revenue [207]. - The company had a working capital of $(0.8) million as of December 31, 2023, reflecting liquidity challenges [204]. - The major changes in cash and cash equivalents included a decrease of approximately $1.9 million in accounts receivables and a decrease of $15.5 million in inventory [205]. - As of December 31, 2023, the company had cash and cash equivalents of $709,000, which is insufficient to fund operations into the first quarter of 2025 [178]. - The company is evaluating options related to its liquidity and will continue to monitor costs in relation to sales [206]. Product and Technology - Minim held the exclusive global license to design, manufacture, and sell consumer networking products under the Motorola brand until 2023 [16]. - e2Companies' Virtual Utility product is designed to provide full visibility and control over distributed energy resources, enhancing grid reliability and power quality [58]. - e2Companies' products include electricity micro-grids aimed at providing reliable power without reliance on the traditional grid [59]. - The R3Di System provides up to 1 megawatt of power, sufficient for approximately 100 households, and is designed for continuous power delivery 24/7 [63]. - The R3Di System has a battery life of 20 years or 10,000 cycles, significantly longer than traditional lead-acid batteries which last about 5 years [68]. - The R3Di System reduces emissions by 19,322 tons cradle-to-gate compared to battery storage systems, with a net present value of $645,695 [76]. - The societal return on investment (SROI) for the R3Di System is approximately $7 million compared to diesel generators, with a reduction of 13,061 tons of CO2e emissions during generator run time [79]. - The R3Di System is hydrogen ready up to 20% and can operate on multiple fuel sources, including liquid natural gas and renewable natural gas [80]. - The GROVE platform provides real-time grid information and asset health monitoring, helping to optimize energy consumption and reduce costs [81]. - The R3Di System achieves a 99% reduction in NOx, 99% reduction in PM, 88% reduction in CO, and 61% reduction in VOC emissions [81]. - e2Companies has 15 years of experience in developing compliance products and services, ensuring regulatory adherence for energy and utility customers [83]. - The company offers a cloud monitoring solution, ICe2c, for real-time information access and proactive operations management [85]. - e2Companies provides full indemnification for its products and services, covering customers from regulatory fines and penalties due to environmental standard violations [86]. - e2Companies' flagship technology, the R3Di system, received patent approval in February 2022, making it the sole supplier of a high-capacity discharge open transition system [116]. Market and Industry Trends - e2Companies aims to capture greater market share in the continental U.S., Puerto Rico, and Canada by investing heavily in these markets [42]. - e2Companies has shifted its sales strategy from a 15-year ESA model to an OEM model, which is expected to shorten the sales cycle and increase current revenue [43]. - By 2030, EV charging demand is expected to surge from 11 billion kWh to 230 billion kWh, necessitating 1.2 million public chargers [101]. - Global data center energy consumption is projected to grow 27% by 2030, reaching 353 terawatt hours (TWh) [106]. - The industrial sector is predicted to see a 26% increase in emissions by 2050, highlighting the need for e2Companies' solutions [107]. - e2Companies faces competition from established companies in the energy sector, including engine OEMs and uninterruptible power source OEMs [113]. - The U.S. Department of Energy estimates that tripling the current scale of VPPs could address 10-20% of projected peak demand, avoiding approximately $10 billion in annual grid costs [98]. - e2Companies' Virtual Utility product offers customers complete energy choice, contrasting with traditional Virtual Power Plants (VPPs) that are utility-owned [99]. Revenue Recognition - Revenue is recognized when control of products or services is transferred to the customer, typically at the point of legal title transfer [213]. - Revenue from SaaS contracts is recognized evenly over the contract term as the service output is delivered [213]. - Product returns are estimated and recognized as a reduction of revenue as performance obligations are satisfied, such as upon shipment of goods [215]. - The company uses observable prices to estimate the stand-alone selling price (SSP) for distinct performance obligations [214]. - Significant judgment is required to determine whether products and services are distinct performance obligations [214]. - The current process of estimating the return reserve is deemed a fair measure for adjusting revenue [215]. - The company monitors pending authorized returns and records the right of return asset if appropriate [215].

Financial Performance - For the three months ended September 30, 2023, net sales decreased by $7.1 million or 51.6% compared to the same period in 2022, and for the nine months, net sales decreased by $15.4 million or 38.4%[104]. - The company generated net sales of $6.7 million and $24.6 million for the three and nine months ended September 30, 2023, respectively, compared to $13.8 million and $40.0 million for the same periods in 2022[97]. - Sales of Motorola branded cable modems and gateways were the primary contributors to the decline in net sales[105]. - SaaS offerings saw a significant decrease, with sales dropping by $233 thousand or 98.4% in the three months ended September 30, 2023, and by $361 thousand or 68.9% during the nine months[105]. - The company's gross profit for the three months ended September 30, 2023, was a loss of $2.998 million, compared to a profit of $3.083 million in the same period in 2022[104]. - Operating loss for the three months ended September 30, 2023, was $6.722 million, an increase of 70.1% compared to the loss of $3.952 million in the same period in 2022[104]. - The company reported a net loss of $16.5 million for the nine months ended September 30, 2023[120]. Liquidity and Financial Stability - Cash and cash equivalents remained unchanged at $0.5 million from December 31, 2022, to September 30, 2023[96]. - The company reported $0.9 million of outstanding borrowings on its asset-based credit line as of September 30, 2023[96]. - The company has experienced material liquidity pressures and has conducted two reductions in force to lower operating expenses[98]. - Substantial doubt exists about the company's ability to continue as a going concern without additional liquidity[98]. - As of September 30, 2023, the company believes its current cash and cash equivalents, along with other working capital and borrowings, will not be sufficient to fund working capital requirements, capital expenditures, and operations for the next twelve months[125]. - The company has substantial doubt about its ability to continue as a going concern and will require additional liquidity to continue operations beyond the next 12 months[118]. Cost Management - Selling and marketing expenses decreased by 45.5% to $2.1 million for the three months ended September 30, 2023, compared to $3.8 million in the same period of 2022[110]. - General and administrative expenses decreased by 49.9% to $963 thousand for the three months ended September 30, 2023, compared to $1.9 million in the same period of 2022[112]. - Research and development expenses decreased by 47.6% to $687 thousand for the three months ended September 30, 2023, compared to $1.3 million in the same period of 2022[114]. - The company has implemented cost reduction plans to align its cost structure with sales and increase liquidity during 2023[125]. Future Outlook - The company expects gross margin to be subject to similar variabilities experienced in the first half of 2023 and in 2022, with ongoing risks related to supply chain disruptions[109]. - Future liquidity and capital requirements will be influenced by factors such as operating losses, sales timing, and ongoing research and product development[126]. - The company may require significant additional capital to pursue its growth strategy, and failure to raise capital could hinder execution of this strategy[127]. - The company plans to support commercialization efforts related to current and future products, including expansion of its direct sales force[130]. - Upgrades to information technology infrastructure are planned to enhance capabilities and improve overall productivity[130]. Tax and Operating Losses - The company has Federal and state net operating loss carry forwards of approximately $62.0 million and $37.3 million, respectively, available to reduce future taxable income[128]. - A full valuation allowance has been established for deferred income tax assets, indicating that it is more likely than not that the benefits from such assets will not be realized[128]. Capital Commitments - There were no material changes to capital commitments and contractual obligations during the nine months ended September 30, 2023, compared to the previous year[129]. - The company did not have any material off-balance sheet arrangements as of September 30, 2023[130].

Financial Performance - For the three months ended June 30, 2023, net sales decreased by $5.7 million or 44.1% compared to the same period in 2022, totaling $7.2 million[98]. - For the six months ended June 30, 2023, net sales decreased by $8.2 million or 31.4%, totaling $17.9 million[98]. - The gross profit for the three months ended June 30, 2023, was $486 thousand, a decrease of $2.1 million or 80.9% year-over-year[98]. - The operating loss for the three months ended June 30, 2023, was $5.5 million, an increase of $1.2 million or 27.4% compared to the same period in 2022[98]. - The company reported a net loss of $5.6 million for the three months ended June 30, 2023, compared to a net loss of $4.4 million in the same period of 2022, reflecting a 26.5% increase in losses[98]. Liquidity and Going Concern - Cash and cash equivalents decreased to $0.3 million as of June 30, 2023, down from $0.5 million on December 31, 2022[90]. - The company experienced material liquidity pressures due to supply disruptions and negative cash-flow positions, raising substantial doubt about its ability to continue as a going concern[92]. - There is substantial doubt regarding the company's ability to continue as a going concern, requiring additional liquidity to sustain operations beyond the next 12 months[113]. - As of June 30, 2023, the company had $2.4 million of borrowings outstanding and $25 thousand available on its $10.0 million SVB line-of-credit[111]. Sales and Revenue Breakdown - Sales of Motorola branded cable modems and gateways were the primary contributors to the decline in net sales[99]. - SaaS sales decreased by $72 thousand or 49.3% in the three months ended June 30, 2023, compared to the same period in 2022[99]. - Net sales for the three months ended June 30, 2023, were $17,947 thousand, a decrease of $5,669 thousand or 44.1% compared to the same period in 2022[102]. Cost and Expense Management - Gross margin for the three months ended June 30, 2023, was 6.8%, down from 19.7% in the prior year, primarily due to insufficient sales levels to cover fixed and variable costs[102]. - Selling and marketing expenses decreased by $243 thousand or 6.3% in the three months ended June 30, 2023, compared to the same period in 2022, mainly due to a reduction in personnel expenses[104]. - General and administrative expenses decreased by $448 thousand or 27.7% in the three months ended June 30, 2023, compared to the same period in 2022, primarily due to lower personnel and professional fees[106]. - Research and development expenses decreased by $187 thousand or 13.6% in the three months ended June 30, 2023, compared to the same period in 2022, but increased by 8.4% in the six months ended June 30, 2023[108]. Future Outlook and Investments - The company anticipates that future gross margin percentages will be influenced by variabilities in costs and potential disruptions from the pandemic[103]. - As of June 30, 2023, the company has Federal net operating loss carry forwards of approximately $59.8 million and state net operating loss carry forwards of approximately $34.2 million available to reduce future taxable income[123]. - A full valuation allowance has been established against the company's net deferred tax assets, indicating that it is more-likely than-not that the benefits from such assets will not be realized[123]. - The company is investing in the acquisition of equipment and fixed assets for current and future manufacturing and research and development facilities[125]. - Upgrades to the company's information technology infrastructure are being made to enhance capabilities and improve overall productivity[125]. - The company is supporting commercialization efforts related to current and future products, including the expansion of its direct sales force and field support resources[125]. - Continued advancement of research and development activities is a priority for the company[125].