Minim, Inc. (MINM) Risk Analysis

As disclosed previously and in Item 1 above in Part II of this Current Report on Form 10-Q, on June 26, 2024, the Company received a letter from the listing staff of The Nasdaq Stock Market LLC ("Nasdaq") that the Company was no longer in compliance with the minimum stockholders' equity requirement for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(b)(1) (the "Stockholders' Equity Rule"). The Stockholders' Equity Rule requires companies listed on the Nasdaq Capital Market to maintain stockholders' equity of at least $2,500,000 or to meet alternatives of market value of listed securities or net income from continuing operations, which the Company does not currently meet. In response to the letter, we submitted a request to submit our appeal and plan to regain compliance with the Stockholders' Equity Rule to the Nasdaq Hearings Panel (the "Panel"). On July 22, 2024, we received a letter (the "Letter") from the Nasdaq Office of General Counsel, stating that the Company's appeal to the Nasdaq Hearings Panel ("Panel") of the Nasdaq Listings Qualification staff's (the "Staff") delist determination dated June 26, 2024, for the Company's failure to maintain compliance with the equity requirement in Listing Rule 5550(b)(1) had been abandoned. However, the Company has not abandoned its request for a hearing. Due to a clerical error, the Company was unaware of the passage of the time required to provide a written submission prior to the oral hearing in front of the Panel, until July 23, 2024. On July 23rd, we immediately filed a submission in support of an appeal to the Nasdaq Listing and Hearing Review Council regarding the hearing abandonment determination and the future delisting of the Company's securities from Nasdaq, and on July 24, 2024 we remitted an additional $15,000 for this appeal to the Listing Council the following day. We strongly believe that such appeal should be granted, and that the delisting action referenced in the Staff's determination letter, dated June 26, 2024, should continue to remain stayed, pending a final written decision by the Panel, due to the Company's particular circumstances. Following such appeal, and in anticipation of being granted an oral hearing in front of the Panel, the Company put in place a plan (the "Plan") to regain compliance with the terms of the minimum stockholders' equity requirement of at least $2,500,000 for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(1) and delivered such Plan to the Panel. Nevertheless on July 24, 2024, the Company's securities trading was suspended on The Nasdaq Stock Market LLC ("Nasdaq") effective with the open of business on July 24, 2024, at which point the Company's common stock was eligible to trade on the OTC Market's Pink Current Information. Our securities trading has merely been suspended on Nasdaq at this time, not delisted. It will not be delisted unless and until Nasdaq files a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission after all internal procedural periods have run. The NASDAQ Office of General Counsel did not respond to our notice of intent to appeal to the Nasdaq Listing and Hearing Review Council regarding the hearing abandonment determination and the future delisting of the Company's securities from Nasdaq until August 1, 2024, the date originally scheduled for the Panel hearing, when we received a message which stated that the NASDAQ is unable to consider an appeal to the Nasdaq Listing and Hearing Review Council in this matter. The NASDAQ's position is that pursuant to Nasdaq Rule 5820, companies may appeal Panel Decisions to the Listing Council. However, in our matter, there was no Hearing and there is no Panel Decision to appeal. The NASDAQ further indicated that the information regarding our right to appeal to the Listing Council which was included in the letter confirming abandonment of the appeal appears to have been included in error, and that it would issue a refund for the appeal fee, thus informing us that this matter was not appealable to the Listing Council. Following some discussions and correspondence with the Nasdaq Office of General Counsel, on August 12, 2024 we delivered a letter to the Nasdaq stating that the Company is of the view that the NASDAQ has acted arbitrarily and capriciously in making its determinations concerning our continued listing, has acted inconsistent with prior precedent, as well as inconsistent with Nasdaq's own Listing Rules, including, inter alia, Rule 5840(f) governing the delivery of documents which requires that the NASDAQ in these circumstances utilize all methods of communications; Rules 5814(a)(4) and (5) governing the scheduling of a hearing and the timing for submission of Written Submissions and Written Updates; Rule 5820 as presently in effect which provides the Listing Council broad discretion to review this matter, a review for which the Company had duly applied and paid for; as well as a number of additional Rules. We requested the Nasdaq Office of the General Counsel allow us to present its case to the Nasdaq Hearings Panel, as soon thereafter as possible, or alternatively to be allowed to appeal to the Nasdaq Listing and Hearing Review Council the determination of "deemed" abandonment of the Hearing Request. We also requested that the suspension in the trading of our shares be lifted pending final resolution of the above matters and a final decision to delist having been made following the Company's exhaustion of all available administrative relief. On August 13, 2024 we were notified by the Vice President and Deputy General Counsel of the Nasdaq that its position remains unchanged. On the same day, Company counsel responded to the Nasdaq that we intend to immediately seek injunctive and equitable relief against the NASDAQ at a court of competent authority, and that we would expect the Nasdaq will not take any further steps to affect the status quo. We believe the delisting decision, and specifically the "deemed abandonment" of our appeal to the Panel constituted, inter alia: (i) a breach of contract by Nasdaq, (ii) an abuse of NASDAQ's discretionary authority, (iii) breach of NASDAQ's listing rules as approved by the SEC, and (iv) material procedural unfairness. NASDAQ's staff subjectively determined that we were deemed to have abandoned our appeal to the Panel without any basis whatsoever in NASDAQ's listing rules as approved by the SEC for making such a determination. NASDAQ's decision, and the subsequent suspension of the trading in our shares, caused, and continues to cause, irreparable harm to our operations, our reputation and our shareholders. It has also severely negatively impacted our ability to execute on already announced and signed contracts. In light of the above, we filed for, and on August 20, 2024, were granted a temporary restraining order ("TRO") by the Supreme Court of the State of New York, Kings County (the "State Court"). The application for the TRO was filed by the Company in order to prohibit The Nasdaq Stock Market ("Nasdaq") from delisting the Company's common stock from Nasdaq. The TRO was effective until September 5, 2024. On August 20, 2024, following the State Court's grant of the TRO, Nasdaq removed the case to federal court. On September 4, 2024, the U.S. District Court for the Eastern District of New York remanded the case to the State Court. On September 5, 2024, the parties entered into a stipulation which was ordered by the State Court on September 6, 2024, to extend the TRO until September 30, 2024, at which point oral arguments were to be heard by the State Court. That TRO continued until, on October 18, 2024, the Court denied the request by the Company for a preliminary injunction enjoining the Nasdaq from taking further action to delist the Company. We subsequently, on October 22, 2024 discontinued our case against the Nasdaq, without prejudice. On October 23, 2024, the Nasdaq issued a press release announcing that it will delist our common stock and file a Form 25 with the Securities and Exchange Commission ("SEC"). On October 24, 2024, the Nasdaq filed a Form 25 with the SEC, announcing its determination to remove from listing the securities of the Company, effective at the opening of the trading session on November 4, 2024, stating, inter alia, that Nasdaq filed the Form 25 pursuant to Nasdaq Rule 5830 because all available review and appeal procedures and periods available to us under Nasdaq Rules have expired. On October 25, 2024, we filed with the SEC an Application for Review, pursuant to 15 U.S.C.S. § 78s(d), the October 24, 2024 decision of Nasdaq to delist the Company's securities and to deny us the right to a hearing on such delisting, by incorrectly deeming our appeal abandoned, and then denying us the right to appeal Nasdaq's decision deeming our right to a hearing as abandoned requests. In conjunction with the submission of this appeal, we also submitted to the SEC a motion for an emergency stay of the delisting, pursuant to the SEC's Rule of Practice 401. On November 1, 2024, the SEC granted us an administrative stay of the delisting pending further order of the SEC, to give the SEC an opportunity to consider the Company's motion for a stay. The SEC noted in its order that the administrative stay should not be construed in any way as a ruling on the merits of our motion for a preliminary stay. As disclosed on our Form 8-K filed with the Commission on November 18, 2024, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with Cao Yu, an individual ("Cao"), Hu Bin, an individual, and Youxin Consulting Limited, a Hong Kong company (the "Investors"), whereby, at the closing of the transactions contemplated by the Purchase Agreement (the "Closing"), subject to satisfaction of certain closing conditions, including our stockholders voting in favor of the transaction at a Special Meeting, we will sell and the Investors will purchase 1,984,733 shares of the Company's newly formed Series preferred stock, $0.001 par value per share (the "Preferred Stock"), at a price per share of $1.31, for an aggregate purchase price of $2,600,000, subject to the conditions described below, pursuant to the exemptions afforded by the Securities Act of 1933, as amended, and Regulation S thereunder. The Purchase Agreement contains customary representations, warranties and agreements of the Company and the Investors, limitations and conditions regarding sales of the Purchased Securities or underlying Common Stock, indemnification rights and other obligations of the parties. Furthermore, the Purchase Agreement contains certain conditions to closing, including: (i) a resolution appointing three (3) individuals identified in writing by the Investors to fill the vacancies on the Board of Directors caused by the resignations of all of the members of the Board of Directors as of the Closing Date, (ii) satisfactory evidence that all reasonably required waivers and/or settlement agreements with the Company's creditors, vendors and employees have been received, (iii) the Certificate of Designation of the rights and privileges of the Series B Preferred Stock, (iv) satisfactory evidence that all third-party and governmental consents have been received or sent and not revoked, (v) satisfactory evidence that all holders of equity of the Company with redemption rights or rights to participate in the issuance of Series B Preferred Stock and the shares of Common Stock issuable upon conversion of such shares, if any, have been waived, (vi) satisfactory evidence that all persons with the right to receive severance, retention bonuses, "stay" bonuses, change in control bonuses, transaction bonuses or other similar payments or arrangements have waived any and all rights to receive such bonuses, (vii) satisfactory evidence that identified all related party transactions have been terminated, (viii) satisfactory evidence that all employment agreements have been terminated, (ix) satisfactory evidence that a satisfactory written opinion of the Company's counsel that all of the Series B Preferred Stock and the securities to be purchased pursuant to the Securities Purchase Agreement, dated on even date of the Purchase Agreement, by and among David Elliot Lazar and the Investors are, and the shares of Common Stock underlying the Series B Preferred Stock will be, duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such shares was or would be issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities, (x) the Company's shares be listed on the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or any successors to any of the foregoing by no later than December 31, 2024, and (xi) the approval from the stockholders of the Company of the transactions contemplated by the Purchase Agreement. We continue to vigorously dispute the certifications included by Nasdaq in its Form 25 regarding Minim's delisting, as we believe we were not allowed any review and appeal procedures available under the Nasdaq Rules. We also believe that upon closing of the Purchase Agreement we would be in compliance with the Stockholders' Equity Rule. However, the closing of the investment pursuant to the Purchase Agreement is subject to, inter alia, the Company confirming its continued listing on the Nasdaq by no later than December 31, 2024. While we intend to comply with the Nasdaq rules, there can be no assurance that the Company will be able to regain or remain in compliance with the Stockholders' Equity Rule or other applicable Nasdaq listing requirements on an ongoing and long-term basis, nor that the Nasdaq staff will permit us to present the Purchase Agreement to either the Hearing Panel or the Nasdaq Listing and Hearing Review Council, nor that such bodies will grant the Company additional time to achieve compliance by confirming our continued listing on the Nasdaq subject to closing of the Purchase Agreement, nor that we will be successful with our appeal to the SEC. If we are unable to satisfy these Nasdaq requirements or standards, and we are not able to close the transactions contemplated by the Purchase Agreement, or otherwise successfully petition the SEC to allow us to present to the applicable Nasdaq reviewing body a plan for regaining compliance with the Stockholders' Equity Rule or other applicable Nasdaq listing requirements, we could be subject to final delisting from the Nasdaq, which could have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.