# TaoWeave, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [TaoWeave, Inc.](/companies/twav.md) (CIK 746210)
- Form: 10-Q
- Filed: 2023-11-14
- Accepted by EDGAR: Nov 14, 2023, 12:38 ET
- Period: 2023-09-30
- Accession: 0000746210-23-000113
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/746210/000074621023000113/glow-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/746210/000074621023000113/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $872.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $2.9m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $224.0k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $622.0k | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $5.0k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $16.0k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$925.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$3.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $38.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$895.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$3.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.30 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.58 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.30 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.58 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 3,463,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 2,676,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$2.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $6.8m | us-gaap:Cash |
| Current assets | at 2023-09-30 | $7.6m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $8.0m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $1.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $1.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $6.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 25,313 characters.

### Overview

We are a provider of patented multi-stream collaboration products and managed services for video collaboration and network solutions. The Company currently operates in two segments: (1) “Collaboration Products,” which represents the business surrounding our Mezzanine™ product offerings, and (2) “Managed Services,” which represents the business surrounding managed services for video collaboration and network solutions.

### Mezzanine™ Product Offerings

Our flagship product is called Mezzanine™, a family of turn-key products that enable dynamic and immersive visual collaboration across multi-users, multi-screens, multi-devices, and multi-locations (see further description of Mezzanine™ in Part I, Item 1). Mezzanine™ allows multiple people to share, control and arrange content simultaneously, from any location, enabling all participants to see the same content in its entirety at the same time in identical formats, resulting in dramatic enhancements to both in-room and virtual videoconference presentations. Applications include video telepresence, laptop and application sharing, whiteboard sharing and slides. Spatial input allows content to be spread across screens, spanning different walls, scalable to an arbitrary number of displays and interaction with our proprietary wand device. Mezzanine™ substantially enhances day-to-day virtual meetings with technology that accelerates decision making, improves communication, and increases productivity. Mezzanine™ scales up to support the most immersive and commanding innovation centers; across to link labs, conference spaces, and situation rooms; and down for the smallest work groups. Mezzanine’s digital collaboration platform can be sold as delivered systems in various configurations for small teams to total immersion experiences. The family includes the 200 Series (two display screen), 300 Series (three screen), and 600 Series (six screen). We also sell maintenance and support contracts related to Mezzanine™.

Historically, customers have used Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. As discussed below, sales of our Mezzanine product have been adversely affected by commercial response to the COVID-19 pandemic. Like many technology companies, we will continue to monitor and manage our costs relative to demand with the goal of growing the Company’s revenue in the future. To the extent we believe new investments in product development, marketing, or sales are warranted as a result of changes in market demand, we believe additional capital will be required to fund those efforts and our ongoing operations.

### Managed Services for Video Collaboration

We provide a range of managed services for video collaboration, from automated to orchestrated, to simplify the user experience in an effort to drive adoption of video collaboration throughout our customers’ enterprise. We deliver our services through a hybrid service platform or as a service layer on top of our customers’ video infrastructure. We provide our customers with i) managed videoconferencing, where we set up and manage customer videoconferences and ii) remote service management, where we provide 24/7 support and management of customer video environments.

### Managed Services for Network

We provide our customers with network solutions that ensure reliable, high-quality and secure traffic of video, data and internet. Network services are offered to our customers on a subscription basis. Our network services business carries variable costs associated with the purchasing and reselling of this connectivity.

### Oblong’s Results of Operations

### Three Months Ended September 30, 2023 (the “2023 Third Quarter”) compared to the Three Months Ended September 30, 2022 (the “2022 Third Quarter”)

Certain information concerning the Company’s segments for the three months ended September 30, 2023 and 2022 and is presented below (in thousands):

|  | Three Months Ended September 30, 2023 Managed Services | Collaboration Products | Corporate | Total |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $603 | $269 | $— | $872 |
| Cost of revenues | 398 | 250 | — | 648 |
| Gross profit | $205 | $19 | $— | $224 |
| Gross profit % | 34% | 7% |  | 26% |
| Allocated operating expenses | $— | $151 | $— | $151 |
| Unallocated operating expenses | — | — | 998 | 998 |
| Total operating expenses | $— | $151 | $998 | $1,149 |
| Income (loss) from operations | $205 | $(132) | $(998) | $(925) |
| Interest and other (income) expense, net | (35) | 5 | — | (30) |
| Net income (loss) before tax | 240 | (137) | (998) | (895) |
| Income tax expense | — | — | — | — |
| Net income (loss) | $240 | $(137) | $(998) | $(895) |

|  | Three Months Ended September 30, 2022 Managed Services | Collaboration Products | Corporate | Total |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $797 | $388 | $— | $1,185 |
| Cost of revenues | 552 | 289 | — | 841 |
| Gross profit | $245 | $99 | $— | $344 |
| Gross profit % | 31% | 26% |  | 29% |
| Allocated operating expenses | $— | $6,425 | $— | $6,425 |
| Unallocated operating expenses | — | — | 1,079 | 1,079 |
| Total operating expenses | $— | $6,425 | $1,079 | $7,504 |
| Income (loss) from operations | $245 | $(6,326) | $(1,079) | $(7,160) |
| Interest and other expense (income), net | 1 | (6) | — | (5) |
| Income (loss) before income taxes | 244 | (6,320) | (1,079) | (7,155) |
| Income tax benefit | — | (3) | — | (3) |
| Net income (loss) | $244 | $(6,317) | $(1,079) | $(7,152) |

Unallocated operating expenses in Corporate include costs during the 2023 and 2022 Third Quarters that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses.

*Revenue.* Total revenue decreased 26% in the 2023 Third Quarter compared to the 2022 Third Quarter. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.

| Revenue: Managed Services | Three Months Ended September 30, 2023 | % of Revenue | 2022 | % of Revenue |
| --- | ---: | ---: | ---: | ---: |
| Video collaboration services | $38 | 4% | $69 | 6% |
| Network services | 557 | 64% | 716 | 60% |
| Professional and other services | 8 | 1% | 12 | 1% |
| Total Managed Services revenue | $603 | 69% | $797 | 67% |
| Revenue: Collaboration Products |  |  |  |  |
| Visual collaboration product offerings | $268 | 31% | $385 | 33% |
| Professional services | 1 | —% | — | —% |
| Licensing | — | —% | 3 | —% |
| Total Collaboration Products revenue | 269 | 31% | 388 | 33% |
| Total revenue | $872 | 100% | $1,185 | 100% |

#### Managed Services

- The decrease in revenue for video collaboration services is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and loss of customers to competition.
- The decrease in revenue for network services is mainly attributable to net attrition of customers and lower demand for our services given the competitive environment and pressure on pricing that exists in the network services business.
- We expect revenue declines in our Managed Services segment will continue in the future.

#### Collaboration Products

- Customers generally use our Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. The year over year decrease in revenue for our Collaboration Products business is primarily attributable to the aftermath of the COVID-19 pandemic on our existing and target customers as they continue to evaluate behavioral changes in how and when employees choose to work from traditional office environments, resulting in delayed buying decisions for our Collaboration Products. Continuation of the ongoing effects of the COVID-19 pandemic, could cause further disruptions to our operations and the operations of our customers, suppliers and logistics partners and could significantly adversely affect our near-term and long-term revenues, earnings, liquidity and cash flows.

*Cost of Revenue (exclusive of depreciation and amortization).* Cost of revenue, exclusive of depreciation and amortization and casualty loss, includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes which have been billed to customers. Cost of revenue by segment is presented in the following table (in thousands):

| Cost of Revenue | Three Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Managed Services | $398 | $552 |
| Collaboration Products | 250 | 289 |
| Total cost of revenue | $648 | $841 |

The decrease in our consolidated cost of revenue is mainly attributable to lower costs associated with the decrease in revenue during the same period. Our consolidated gross profit as a percentage of revenue was 26% in the 2023 Third Quarter compared to 29% in the 2022 Third Quarter. The gross profit as a percentage of revenue for our Collaboration Products segment was 7% in the 2023 Third Quarter compared to 26% in the 2022 Third Quarter. This decrease was mainly attributable to an increase in our inventory obsolescence reserve of $58,000 in the 2023 Third Quarter compared to the 2022 Third Quarter.

Operating expenses are presented in the following table (in thousands):

| Operating expenses (gains): | Three Months Ended September 30, 2023 | 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $5 | $232 | $(227) | (98)% |
| Sales and marketing | 81 | 282 | (201) | (71)% |
| General and administrative | 977 | 1,229 | (252) | (21)% |
| Impairment charges | — | 5,169 | (5,169) | (100)% |
| Depreciation and amortization | 86 | 592 | (506) | (85)% |
| Total operating expenses | $1,149 | $7,504 | $(6,355) | (85)% |

*Research and Development*. Research and development expenses include internal and external costs related to developing new product offerings as well as features and enhancements to our existing product offerings. The decrease in research and development expenses for the 2023 Third Quarter compared to the 2022 Third Quarter is primarily attributable to the ceasing of the majority of R&D activities during late 2022, which resulted in lower personnel costs due to reduced headcount, consulting, and outsourced labor costs between these periods.

*Sales and Marketing Expenses*. The decrease in sales and marketing expenses for 2023 Third Quarter compared to the 2022 Third Quarter is primarily attributable to i) lower personnel costs due to reduced headcount and less sales as discussed above, ii) reduced marketing costs between these periods, and iii) reduced overhead between these periods due to the termination of an office lease that was not renewed.

*General and Administrative Expenses*. General and administrative expenses include direct corporate expenses and costs of personnel in the various corporate support categories, including executive, finance and accounting, legal, human resources and information technology. The decrease in general and administrative expenses for the 2023 Third Quarter compared to the 2022 Third Quarter is primarily attributable to reduced overhead and professional service expenses as a result of cost cutting measures.

*Impairment Charges.* There were no impairment charges for the 2023 Third Quarter. The impairment charges in the 2022 Third Quarter were attributable to impairment of long-lived assets. Future declines of our revenue, cash flows and/or market capitalization may give rise to a triggering event that may require the Company to record impairment charges in the future related to our intangible assets and other long-lived assets.

*Depreciation and Amortization*. The decrease in depreciation and amortization expenses for the 2023 Third Quarter compared to the 2022 Third Quarter is mainly attributable to the disposition and impairment of certain assets during the year ended 2022, as well as a decrease in depreciation as certain assets became fully depreciated.

*Loss from Operations.* The decrease in the Company’s loss from operations for the 2023 Third Quarter compared to the 2022 Third Quarter is mainly attributable to lower operating expenses as addressed above.

*Interest and Other Income, Net.* Interest and other income, net for the 2023 Third Quarter primarily comprised of interest income related to our cash accounts, partially offset by interest expense.

### Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022

Certain information concerning the Company’s segments for the nine months ended September 30, 2023 and 2022 and is presented below (in thousands):

|  | Nine Months Ended September 30, 2023 Managed Services | Collaboration Products | Corporate | Total |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $1,933 | $933 | $— | $2,866 |
| Cost of revenues | 1,288 | 956 | — | 2,244 |
| Gross profit (loss) | $645 | $(23) | $— | $622 |
| Gross profit (loss)% | 33% | (2)% |  | 22% |
| Allocated operating expenses | $3 | $61 | $— | $64 |
| Unallocated operating expenses | — | — | 3,777 | 3,777 |
| Total operating expenses | $3 | $61 | $3,777 | $3,841 |
| Income (loss) from operations | $642 | $(84) | $(3,777) | $(3,219) |
| Interest and other income, net | (69) | (25) | — | (94) |
| Net income (loss) before tax | 711 | (59) | (3,777) | (3,125) |
| Income tax expense | 7 | 31 | — | 38 |
| Net income (loss) | $704 | $(90) | $(3,777) | $(3,163) |

|  | Nine Months Ended September 30, 2022 Managed Services | Collaboration Products | Corporate | Total |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $2,573 | $1,477 | $— | $4,050 |
| Cost of revenues | 1,722 | 1,078 | — | 2,800 |
| Gross profit | $851 | $399 | $— | $1,250 |
| Gross profit % | 33% | 27% |  | 31% |
| Allocated operating expenses | $57 | $17,954 | $— | $18,011 |
| Unallocated operating expenses | — | — | 3,954 | 3,954 |
| Total operating expenses | $57 | $17,954 | $3,954 | $21,965 |
| Income (loss) from operations | $794 | $(17,555) | $(3,954) | $(20,715) |
| Interest and other expense (income), net | 7 | (6) | — | 1 |
| Net income (loss) before tax | 787 | (17,549) | (3,954) | (20,716) |
| Income tax expense | 8 | — | — | 8 |
| Net income (loss) | $779 | $(17,549) | $(3,954) | $(20,724) |

Unallocated operating expenses in Corporate include costs during the nine months ended September 30, 2023 and 2022 that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses.

*Revenue.* Total revenue decreased 29% in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The following table summarizes the changes in components of our revenue (in thousands), and the significant changes in revenue are discussed in more detail below.

| Revenue: Managed Services | Nine Months Ended September 30, 2023 | % of Revenue | 2022 | % of Revenue |
| --- | ---: | ---: | ---: | ---: |
| Video collaboration services | $148 | 5% | $264 | 7% |
| Network services | 1,758 | 61% | 2,260 | 56% |
| Professional and other services | 27 | 1% | 49 | 1% |
| Total Managed Services revenue | $1,933 | 67% | $2,573 | 64% |
| Revenue: Collaboration Products |  |  |  |  |
| Visual collaboration product offerings | $932 | 33% | $1,467 | 36% |
| Professional services | 1 | —% | — | —% |
| Licensing | — | —% | 10 | —% |
| Total Collaboration Products revenue | 933 | 33% | 1,477 | 36% |
| Total revenue | $2,866 | 100% | $4,050 | 100% |

#### Managed Services

- The decrease in revenue for video collaboration services is mainly attributable to lower revenue from existing customers (either from reductions in price or level of services) and loss of customers to competition.
- The decrease in revenue for network services is mainly attributable to net attrition of customers and lower demand for our services given the competitive environment and pressure on pricing that exists in the network services business.
- We expect revenue declines in our Managed Services segment will continue in the future.

#### Collaboration Products

- Customers generally use our Mezzanine™ products in traditional office and operating center environments such as conference rooms or other presentation spaces. The year over year decrease in revenue for our Collaboration Products business is primarily attributable to the aftermath of the COVID-19 pandemic on our existing and target customers as they continue to evaluate behavioral changes in how and when employees choose to work from traditional office environments, resulting in delayed buying decisions for our Collaboration Products. Continuation of the ongoing effects of the COVID-19 pandemic, could cause further disruptions to our operations and the operations of our customers, suppliers and logistics partners and could significantly adversely affect our near-term and long-term revenues, earnings, liquidity and cash flows.

*Cost of Revenue (exclusive of depreciation and amortization).* Cost of revenue, exclusive of depreciation and amortization and casualty loss, includes all internal and external costs related to the delivery of revenue. Cost of revenue also includes taxes which have been billed to customers. Cost of revenue by segment is presented in the following table (in thousands):

| Cost of Revenue | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Managed Services | $1,288 | $1,722 |
| Collaboration Products | 956 | 1,078 |
| Total cost of revenue | $2,244 | $2,800 |

The decrease in our consolidated cost of revenue is mainly attributable to lower costs associated with the decrease in revenue during the same period. Our consolidated gross profit as a percentage of revenue was 22% for the nine months ended September 30, 2023 compared to 31% for the nine months ended September 30, 2022. The gross profit as a percentage of revenue for our Collaboration Products segment was (2)% for the nine months ended September 30, 2023 compared to 27% for the nine months ended September 30, 2022. This decrease was mainly attributable to i) an increase in our inventory obsolescence reserve of $210,000 in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, ii) a one-time assessment for common area charges on warehouse space of $12,000, and iii) an increase in personnel costs as a percentage of revenue between these periods.

Operating expenses are presented in the following table (in thousands):

| Operating expenses (gains): | Nine Months Ended September 30, 2023 | 2022 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $16 | $1,634 | $(1,618) | (99)% |
| Sales and marketing | 241 | 1,161 | (920) | (79)% |
| General and administrative | 3,723 | 4,104 | (381) | (9)% |
| Impairment charges | 2 | 12,715 | (12,713) | (100)% |
| Casualty loss (gain), net of insurance proceeds | (400) | 533 | (933) | (175)% |
| Depreciation and amortization | 259 | 1,818 | (1,559) | (86)% |
| Total operating expenses | $3,841 | $21,965 | $(18,124) | (83)% |

*Research and Development*. Research and development expenses include internal and external costs related to developing new product offerings as well as features and enhancements to our existing product offerings. The decrease in research and development expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to the ceasing of R&D activities during late 2022, which resulted in lower personnel costs due to reduced headcount, consulting, and outsourced labor costs between these periods.

*Sales and Marketing Expenses*. The decrease in sales and marketing expenses for nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to i) lower personnel costs due to reduced headcount and less sales as discussed above, including the reversal of approximately $294,000 in accrued compensation, ii) reduced marketing costs between these periods, and iii) reduced overhead between these periods due to the termination of an office lease that was not renewed.

*General and Administrative Expenses*. General and administrative expenses include direct corporate expenses and costs of personnel in the various corporate support categories, including executive, finance and accounting, legal, human resources and information technology. The decrease in general and administrative expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to a decrease in office related expenses and bad debt expense.

*Impairment Charges.* Impairment charges for the nine months ended September 30, 2023 were attributable to property and equipment related to our Managed Services segment. The impairment charges for the nine months ended September 30, 2022 were attributable to i) the impairment of goodwill and ii) the impairment of a right-of-use asset related to a leased office space no longer being utilized. Future declines of our revenue, cash flows and/or market capitalization may give rise to a triggering event that may require the Company to record impairment charges in the future related to our intangible assets and other long-lived assets.

*Casualty Loss.* In June 2022, the Company discovered that $533,000 of inventory was stolen from the Company’s warehouse in City of Industry, California, and we recorded a casualty loss in operating expenses. During the nine months ended September 30, 2023, we received and recorded a recovery payment from one of our insurance policies of $400,000 as an offset to this casualty loss.

*Depreciation and Amortization*. The decrease in depreciation and amortization expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is mainly attributable to the disposition and impairment of certain assets during the year ended 2022, as well as a decrease in depreciation as certain assets became fully depreciated.

*Interest and Other Income, Net.* Interest and other income, net for the nine months ended September 30, 2023 primarily comprised of interest income related to our cash accounts, partially offset by interest expense.

*Loss from Operations.* The decrease in the Company’s loss from operations for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is mainly attributable to lower operating expenses as addressed above.

### Off-Balance Sheet Arrangements

As of September 30, 2023, we had no off-balance sheet arrangements.

### Inflation

Management does not believe inflation had a significant effect on the Condensed Consolidated Financial Statements for the periods presented.

### Critical Accounting Policies

There have been no changes to our critical accounting policies during the nine months ended September 30, 2023. Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “*Critical Accounting Policies”* in “*Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”* as well as in our Condensed Consolidated Financial Statements and the footnotes thereto, each included in our 2022 Annual Report.

### Liquidity and Capital Resources

As of September 30, 2023, we had $6,766,000 in cash and working capital of $6,297,000. For the nine months ended September 30, 2023, we incurred a net loss of $3,163,000 and used $2,288,000 of net cash in operating activities.

Net cash provided by financing activities for the nine months ended September 30, 2023 was $5,969,000, attributable to net proceeds from an equity financing and net cash proceeds received from the exercise of warrants. The Company expects to use the net proceeds from the Private Placement and the proceeds, if any, from the exercise of outstanding warrants for general corporate purposes and potential strategic alternatives. We believe that our existing cash and cash equivalents will be sufficient to fund our operations and meet our working capital requirements for at least the next 12 months from the filing date of this Report with the SEC.

We believe additional capital will be required, in the long-term, to fund operations and provide growth capital including investments in technology, product development and sales and marketing. To access capital to fund operations or provide growth capital, we will need to raise capital in one or more debt and/or equity offerings. There can be no assurance that we will be successful in raising necessary capital or that any such offering will be on terms acceptable to the Company. If we are unable to raise additional capital that may be needed on terms acceptable to us, it could have a material adverse effect on the Company.

## Market risk

As filed, 135 characters.

As a “*smaller reporting company”* as defined by the rules and regulations of the SEC, we are not required to provide this information.

## Controls and procedures

As filed, 1,435 characters.

#### Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2023. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the

SEC’s rules and forms and are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

#### Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the fiscal quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 798 characters.

A description of the risks associated with our business, financial conditions and results of operations is set forth in “*Part I. Item 1A. Risk Factors”* of our 2022 Annual Report, *as well as under “Part II. Item 1A. Risk Factors”* in our Q1 2023 Quarterly Report on Form 10-Q, for the three months ended March 31, 2023, filed with the SEC on May 10, 2023 (the “Q1 2023 Quarterly Report”). There have been no material changes to these risks during the three months ended September 30, 2023. The risks described in the 2022 Annual Report and the Q1 2023 Quarterly Report are not the only risks facing us. 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 condition or future results.

Filed Nov 14, 2023.
Source: SEC EDGAR, the filing index for accession 0000746210-23-000113. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.