BALANCE SHEET COMPONENTS

12 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET COMPONENTS

(4) BALANCE SHEET COMPONENTS

Inventories

Inventories, net consists of the following:

	December 31,
	2023		2022
Materials	$	210,318	$	397,133
Work in process		1,640,347		5,842,251
Finished goods		8,101,982		19,175,822
Total	$	9,952,647	$	25,415,206

Finished goods includes consigned inventory held by our customers of $0 and $4.2 million at December 31, 2023 and 2022, respectively. The Company reviews inventory for obsolete and slow-moving products each quarter and makes provisions based on its estimate of the probability that the material will not be consumed or that it will be sold below cost. The inventory reserves were $1.7 million and $2.5 million for the years ended December 31, 2023 and 2022, respectively.

Equipment

Equipment, net consists of the following:

	December 31,						Estimated Useful
	2023			2022			lives in years
Computer hardware and software	$	603,836		$	497,913		3
Machinery and equipment		726,326			725,568		5
Molds, tools and dies		1,242,711			1,187,541		5
Office furniture and fixtures		79,147			78,728		5
		2,652,020			2,489,750
Accumulated depreciation		(2,219,515	)		(1,852,777	)
	$	432,505		$	636,973

Depreciation expense was $368 thousand and $403 thousand for the years ended December 31, 2023 and 2022, respectively.

Goodwill

In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers. Cadence Connectivity recorded $58 thousand of goodwill related to this acquisition in its historical accounts of December 2018. As of December 31, 2022, the Company determined that the goodwill was impaired after the annual impairment test indicated that the carrying amount of the Company’s single reporting unit exceeded the estimated fair value and accordingly recorded a $59 thousand impairment charge to general and administrative expense in the statement of operations.

Intangible Assets

In December 2018, Cadence Connectivity acquired the net assets of MCP Networks Inc., a provider of a cloud-based home network management platform. The acquisition expanded Cadence Connectivity’s subscriber base and thereby offered sales opportunities of Cadence Connectivity’s SaaS to these subscribers. Cadence Connectivity recorded $122 thousand of customer relationships related to this acquisition in its historical accounts of December 2018. As of December 31, 2022, the Company determined that the intangible asset of customer relationships was impaired as result of the Company’s discontinuation of the ISP business to which these customers are associated and accordingly recorded a $67 thousand impairment, net of accumulated amortization, to sales and marketing expense in the statement of operations. As of December 31, 2023, the Company had no impairment.

Intangible assets consisted of the following at December 31, 2023 and 2022:

	Estimated		As of December 31, 2023							As of December 31, 2022
	Useful		Gross							Gross
	Life		Carrying		Accumulated					Carrying		Accumulated
	(in years)		Amount		Amortization			Net		Amount		Amortization			Net
Customized internal use software		2.5	$	-	$	-		$	-	$	230,106	$	(207,399	)	$	22,707
Acquired web domain		5.0		86,732		(53,485	)		33,247		86,732		(36,138	)		50,594
			$	86,732	$	(53,485	)	$	33,247	$	316,838	$	(243,537	)	$	73,301

Amortization expense was $xx thousand and $40 thousand in the years ended December 31, 2023 and 2022, respectively.

The estimated annual amortization expense for each of the two succeeding years and thereafter is as follows:

Years ended December 31,
2024	$	17,346
2025		15,901
Total	$	33,247

Accrued expenses

Accrued expenses consists of the following:

	December 31,
	2023		2022
Inventory purchases	$	-	$	24,901
Payroll and related benefits		-		430,358
Professional fees		229,950		290,588
Royalty costs		-		1,650,000
Sales allowances		697,884		1,226,856
Sales and use tax		150,009		113,200
Other		-		704,821
Total accrued other expenses	$	1,077,843	$	4,440,724