FiEE, Inc. Q3 FY2022 earnings call

• Revenue was boosted by Amazon Prime Day in July, which saw a 53% increase from the prior year's Prime Day, and continued success with e-commerce channels. - Started Q4 with October Amazon Prime Day, with gross sales approximately 50% of July's Prime Day performance, though lighter than hoped due to consumer purchase delays. - Focused on reducing inventory levels by purchasing a small selection of products and focusing on recovering return items rather than new purchases. - Advancing the product roadmap to develop a whole stack software offering for consumer side, including premium support, network diagnostics, etc. - Planning to fully exit the ISP business by November 2023. - Mobile app paired to all products. - Expanded e-commerce footprint to include Lenovo.com, Office Depot, Staples, Newegg. - Successfully launched new mesh products Motorola Q11 and Q14, the first WiFi 6E products. - Recognized as a finalist in the Outstanding Use Case, Customer Experience category of the 2022 Leading Lights Global Communication Industry Award program by Light Reading.

Third quarter revenue of Minim totaled $13.8 million, up 8% compared to Q2 2022. Gross margin for the quarter was 22.3%, up from 19.7% in the prior quarter; excluding one-time costs, gross margin continued to approach 30%. Inventory decreased from $34.3 million at the end of Q2 to $30.3 million at the end of Q3. The company expects to reduce inventories to a range of $25 million to $27 million by the end of 2022 and further to the low-20s by the end of Q1 into Q2. Cash balance as of the end of the quarter was $1.9 million. Accounts payable was reduced from $11.4 million at the end of Q2 to $6.9 million at the end of Q3. Outstanding debt was $5.8 million, which was a drawdown of the company's $25 million line of credit, with $0.5 million availability on the credit line as of September 30, 2022.

• Expect to reduce inventories to a range of $25 million to $27 million by the end of 2022 and further to the low-20s by the end of Q1 into Q2. - Cash balance is expected to be plus or minus $0.5 million from the September ending cash balance. - Focus on prudent allocation of capital, executing on the product roadmap to create new revenue streams, and expanding distribution channels.

• Macro environment challenges in the industry. - Risk of inventory obsolescence. - Cash burn risk. - Potential reverse stock split risk as indicated by the need to consider options due to stock price. - Bank credit line expiration risk, with the Silicon Valley Bank line expiring November 2023, less than 12 months from filing, and working on extending the terms.

Q: Concerns about lack of revenue growth, cash burn, and potential reverse split.

A: Mehul Patel and Dustin Tacker addressed that revenue growth is expected from new contracts and software subscriptions, cash burn will be managed through inventory reduction, and the Board is considering reverse split options with an extension from NASDAQ to April 2023.

Q: Question about stock price and potential stock purchases.

A: Management is considering investing in company shares and reviewing options.

Q: Vision for 3 years from now.

A: Mehul Patel discussed growth through software subscriptions, expanding distribution channels, and global market expansion.

Q: Royalty agreement with Motorola.

A: Dustin Tacker stated the royalty agreement with Motorola expires in 2025, expecting renewal with minimum and incremental royalty rates.

Q: Patent protection.

A: Mehul Patel said the company is continuing to develop technology and file patents for both hardware and software.

Q: 10-Q filing and going concern.

A: Dustin Tacker said the 10-Q will be filed Monday, with going concern language due to the bank line expiring, but working on extending the terms.

Q: Diversification into bitcoin router.

A: Mehul Patel said it is not on the current roadmap, focusing on executing the current strategy.