MOVING iMAGE TECHNOLOGIES INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Pursuant to Rules 13a-15(b) and 15-d-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of June 30, 2021, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the Company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. The term “disclosure controls and procedures”, as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, based on the material weaknesses in the Company’s internal control over financial reporting as described below, our disclosure controls and procedures were not effective, at the reasonable assurance level, as of the end of the period covered by this report. 33 During the years ended June 30, 2021 and 2020 and prior to the completion of our IPO, we had been a private company with limited accounting personnel and other resources to address our internal control over financial reporting. During the course of preparing our consolidated financial statements for the years ended June 30, 2021 and 2020, we determined that we had a material weaknesses in our internal control over financial reporting relating to our financial reporting processes relating to (i) the design and operation of our closing and financial reporting process, (ii) the fact that we had no formal or documented accounting policies or procedures, (iii) the fact that certain segregation of duties issues existed and (iv) the fact that there was no formal review process around journal entries recorded. To address this weakness, we are in the process of instituting a number of accounting processes and procedures and hired a seasoned financial executive consultant as Interim Chief Financial Officer, who then became a regular employee full-time CFO when we became a public company. The CFO is also undertaking training of our senior and accounting personnel in the intricacies of being a public company. The actions we have taken are subject to continued review, supported by confirmation and testing by management. While we have implemented a plan to remediate these weaknesses, we cannot assure you that we will be able to remediate these weaknesses, which could impair our ability to accurately and timely report our financial position, results of operations or cash flows. Changes in Internal Control over Financial Reporting During the quarter ended June 30, 2021, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 34 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth the names, ages and titles of our directors, director nominees, executive officers and key personnel: Name Age Title Executive Officers and Directors: Phil Rafnson 74 President, Chief Executive Officer and Chairman of the Board Jose Delgado 58 Executive Vice President, Sales and Marketing Bevan Wright 52 Executive Vice President, Operations Michael Sherman 59 Chief Financial Officer Katherine D. Crothall, Ph.D. 72 Director John C. Stiska 79 Director Scott Anderson 67 Director Key Personnel: Jerry Van de Rydt 68 Senior Vice President, FF& E Sales David Richards 65 Senior Vice President, Engineering Thomas Lipiec 58 Senior Vice President, Sales and Customer Service Frank Tees 47 Vice President, Technical Sales & Support Executive Officers and Directors : Phil Rafnson has been our Chairman of the Board since the company’s founding in 2003 and became President and Chief Executive Officer in January 2021. Mr. Rafnson has been a major participant in the cinema equipment business for over 30 years going from a sound engineer for RCA Service Co. to National Sales Manager for Xetron Inc., to President and owner of Media Technology Source (MTS), one of the largest global cinema equipment distribution companies until he sold MTS in 1999. He has served as Board member of the International Theatre Equipment Association for 12 years and Officer and President of that association for more than 4 years. Mr. Rafnson’s experience in the cinema equipment industry qualifies him to serve on our board of directors. Jose Delgado has been our Executive Vice President, Sales and Marketing since the company’s founding in 2003. Prior to joining MiT, Mr. Delgado spent fifteen years at Christie Digital Systems in increasing positions of responsibility, as National Sales Manager, Director of Sales, and Vice President of Sales. During his tenure he increased by 10-fold the cinema presentation product sales of Christie, helping the company become a major force in the cinema industry. Previously he held various positions at JVC, including Sales Representative for video products for the Los Angeles and Las Vegas markets. Bevan Wright is a Company founding partner and has been our Executive Vice President, Operations since the Company’s founding in 2003. In the industry since 1985, Bevan spent ten years as Cinema Systems Product and Engineering Manager at Christie Digital Systems, directing product development and engineering support for all cinema product lines, managing the product lines to develop and bring to market fully-integrated solutions for cinema exhibitors. The previous nine years he held engineering and operations positions at Christie, United Artists, and with other cinema exhibitors. Mr. Wright has over 34 years of experience in the cinema industry in varying positions from operations to technical services and he holds the Bachelors of Science degree in Mechanical Engineering from Arizona State University, and two patents in cinema projection technology. Michael Sherman, C.P.A., has been our Chief Financial Officer since July 2021 and was previously our Interim Chief Financial Officer since July 2018. A senior financial professional for over 25 years, Mr. Sherman has held executive finance positions within a range of companies, both public and private. Prior to joining MiT, Mr. Sherman was a Finance and Accounting Consultant primarily providing acquisition and other transactional services to companies in the Telecom and Manufacturing industries. At EBSCO Industries, he acted as Corporate Controller and Warehouse Director, while leading the financial integration and on-boarding of the acquisition of an online stand-up desk company in Waukegan, Illinois. At FDH Velocitel, he was responsible for finance and accounting integration aspects of the acquisition of FDH in Raleigh, North Carolina. At Mitsubishi Automation, as acting Corporate Controller, he was responsible for their $300 million Annual Operating Plan for North and South America, while overseeing all finance functions. Prior to consulting, he was Associate Vice President — Accounting for TCS Education System, where he was responsible for overall system accounting, the acquisitions of the Santa Barbara and Ventura Colleges of Law, as well as preparation and submission of the company’s IRS form 990 for 11 legal entities. Prior to that, he held a senior management position of Global Vice President of Finance with Liquid Controls Group, an operating group of IDEX, where he was responsible for 7 entities in 5 Countries. While there, he also led the acquisition of TopTech Systems in Florida and Faure Herman in France. Prior to IDEX, he was Vice President Finance for KaVo Dental, a Division of Danaher, where he was responsible for all aspects of Finance and Accounting. A former Public Accounting C.P.A. with Coopers & Lybrand for 6 years, where he provided audit, accounting, and business advisory services to a portfolio of clients engaged in the manufacturing and distribution sectors, he holds a bachelor degree in Accountancy from Northern Illinois University. 35 Katherine D. Crothall, Ph.D . became a Director in July 2021. Ms. Crothall has been the Chairman, Chief Executive Officer and President of Aspire Bariatrics, Inc. (“Aspire”) since November 2010. Prior to Aspire, Dr. Crothall served as a Principal of Liberty Venture Partners, Inc. from 2006 to November 2010. Prior to Liberty, she founded Animas Corporation in 1996 and served as its Chairman, President, Chief Executive Officer, led its $69 million IPO in 2004, and sold it to Johnson and Johnson in 2006. From October 1988 to September 1993, Dr. Crothall served as President and Chief Executive Officer of Luxar Corporation, which she founded in 1988, sold and manufactured CO2 lasers for cosmetic, oral, surgical, dental, dermatological and surgical applications. Dr. Crothall founded Laakmann Electro-Optics, which manufactured and marketed CO2 lasers and was sold to Johnson & Johnson in 1981. She was employed as an engineer at Hughes Aircraft from 1971 to 1978. She has been an Independent Director of Valeritas Holdings, Inc. since October 10, 2016. Dr. Crothall is a director of Adhezion BioMedical and a former Director of Xanitos, Inc. She served as a former Director of Othera Pharmaceuticals Inc., Intact Vascular, Inc., and Lungpacer, Inc. Dr. Crothall served as a Director of Animas Corp. since 1996 until its sale to J&J in 2006. She holds over 20 patents and is the recipient of several awards including the Ernst & Young Entrepreneur of the Year Award in 2003 and the Greater Philadelphia Raymond Rafferty Entrepreneurial Excellence Award in 2004. She has authored numerous technical papers and has given numerous papers at scientific/medical symposiums. Dr. Crothall holds a B.S. in Electrical Engineering from the University of Pennsylvania and Master of Science and a Ph.D. in Electrical Engineering from the University of Southern California. Dr. Crothall’s extensive experience in public company finance and acquisition experience qualifies her to serve on our board of directors. John C. Stiska became a Director in July 2021. Since 2005, Mr. Stiska has been the principal of Regent Partners, a merchant banking firm, and was a Senior Advisor to Agility Capital, LLC, a venture lending fund from 2007 to 2013; prior to that he was Chairman of Commercial Bridge Capital, LLC, also a venture lending fund. Over the past two decades, John Stiska has served as a CEO, Chairman, Director and investor in more than thirty private and public companies. Underlying his extensive, twenty-year business leadership and development experience, and service on numerous Boards of Directors, John was a practicing Corporate and Securities partner at Brobeck, Phleger & Harrison, and of Counsel at Latham & Watkins. He also taught Securities Regulation as an Adjunct Professor of Law at the University of San Diego School of Law. He started his career and became a partner at Luce, Forward, Hamilton & Scripps, before being one of the founding partners of Aylward, Kintz, Stiska, Wassenaar and Shannahan, which merged into and became the San Diego Office of the Brobeck Firm, shortly after which time he joined Intermark, Inc. as President, and subsequently took Intermark, Inc. and its majority owned company Triton Group Ltd through an extensive Chapter 7 reorganization and refinancing, emerging as a successfully restructured public company, Triton Group Ltd. Mr. Stiska received a B.A. in Accounting, BBA, in 1965 and a J.D. from the University of Wisconsin in 1970. Mr. Stiska’s extensive experience in public company finance and related corporate matters qualifies him to serve on our board of directors. Scott Lloyd Anderson, J.D., CPA became a Director in July 2021. Mr. Anderson practiced with KPMG as a tax CPA in the early 1980s and since 1983 has practiced as an attorney representing businesses and their respective owners. Mr. Anderson is a shareholder at the law firm of Fabyanske, Westra, Hart & Thomson, P.A., which he joined in 1985. Mr. Anderson was on the board of directors of the firm from 1988 through 2014 and was elected president of the firm over four different time frames. Over the last 30 years, Mr. Anderson has structured, negotiated and closed over 200 merger and acquisition transactions of privately held companies ranging in transaction value from a few million to over a billion dollars. Mr. Anderson has been on the board of directors of various construction companies and is a principal owner, director and officer of a safety engineering company, a small investment company and a small oil and gas company. Mr. Anderson also assisted with the initial organization of the Company in 2003. Mr. Anderson has a B.A. in Business Administration from Augsburg University located in Minneapolis, Minnesota and a J.D. from William Mitchell College of Law located in St. Paul, Minnesota. Mr. Anderson also taught accounting and business law at Augsburg University. Mr. Anderson’s extensive experience in finance and acquisition transactions and prior accounting experience qualifies him to serve on our board of directors. Key Personnel : Jerry Van de Rydt has been our Senior Vice President, FF&E Sales since 2005. Jerry has been involved in the cinema industry for over 30 years. Previously he ran the Los Angeles office of MTS, which under his leadership became the largest cinema equipment distributor on the West Coast, outfitting over 2,000 screens for clients such as Pacific, Edwards, Mann, Harkins, & Krikorian Theaters, Deluxe Laboratories just to name a few. In 2002, he started his own company, Rydt Entertainment Systems which MiT acquired three years later. David Richards has been our Senior Vice President, Engineering since the company’s founding in 2003. Mr. Richards has nineteen years of experience in the cinema industry. He spent five years in engineering and engineering management positions at Christie. He has been active in SMPTE for the past eighteen years, and presently serves on several of the SMPTE DC28 digital cinema committees as well as the Film Technology committee and Projection Technology committee. Mr. Richards is past chair of the SMPTE Hollywood section (’96 – ’97), and was Program Chair for the first and second SMPTE Film Conferences, held in 1997 and 1998. He is the author of several SMPTE papers and articles for various trade publications. He has a background in mechanical, electronic and electrical engineering design. 36 Thomas Lipiec has been our Senior Vice President, Sales & Customer Service since shortly after the company’s founding in 2003. Mr. Lipiec has over 32 years of professional experience in the cinema industry. Tom’s career began by occupying several positions at various cinema exhibitors. He later obtained engineering positions at Lucasfilm/THX and was the Director of the post-production division of THX Ltd. Additionally, he was the Vice President of Business Development at Constellation 3D. Tom’s involvement with Lucasfilm included collaborations with Skywalker Sound and ILM, etc. These specific technical efforts gained him 2 movie credits for Star Wars: Episode I and Star Wars: Episode II (D.C. & DVD). Frank Tees has been our Vice President, Technical Sales & Support since 2011. Mr. Tees started his cinema career in 1989, serving in most aspects of theater exhibition with Krikorian Premiere Theaters. He spent the past 15 years with the world’s largest exhibitor, Regal Entertainment Group, and since 2002 has been Director of Technical Services for the Southwest Region. He managed a team of technicians in preparation, installation and service of film and digital cinema equipment for 1000 screens in Southern California, Hawaii, Nevada and Arizona. Frank has extensive training on 3D and standard DLP and Sony projection systems and practical experience installing them in an integrated and networked environment. Frank also managed Regal’s technical training program and developed preventative maintenance and tracking guidelines to service systems according to their warranty. Family Relationships There are no family relationships among any of our executive officers or directors. Board Leadership Structure Our board of directors does not have a policy on whether or not the role of the Chief Executive Officer and Chairman should be separate or, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. Currently, we operate with Mr. Rafnson serving as our Chairman and our Chief Executive Officer. We currently believe that Mr. Rafnson serving in both capacities best serves the Company and suits the talents, expertise and experience that Mr. Rafnson brings to the Company. Committees of the Board of Directors Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which operate pursuant to a charter adopted by our board of directors. The board of directors may also establish other committees from time to time to assist our company and the board of directors. The composition and functioning of all of our committees comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, NYSE and SEC rules and regulations, as applicable. Each committee’s charter is available on our website at www.movingimagetech.com. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be part of this Report. Board Member Independence We are listed on the NYSE American and accordingly, we have applied the listing standards of the NYSE American in determining the “independence” of the members of our Board of Directors. Based on the listing standards of the NYSE American and after reviewing the relationships with members of our Board, our Board of Directors has determined that Katherine D. Crothall, Ph.D., John C. Stiska, Scott Lloyd Anderson qualify as independent directors. The nominating and governance committee reviews with the Board at least annually the qualifications of new and existing Board members, considering the level of independence of individual members, together with such other factors as the Board may deem appropriate, including overall skills and experience. The nominating and governance committee also evaluates the composition of the Board as a whole and each of its committees to ensure the Company’s on-going compliance with the independence standards of the NYSE American. Audit committee John C. Stiska, Katherine D. Crothall, Ph.D. and Scott Lloyd Anderson serve on the audit committee, which is chaired by John C. Stiska. Our board of directors has determined that each are “independent” for audit committee purposes as that term is defined by the rules of the SEC and NYSE, and that each has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our board of directors has designated John C. Stiska as an “audit committee financial expert,” as defined under the applicable rules of the SEC. The audit committee’s responsibilities include: · appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; · pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; · reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements; · reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us; · coordinating the oversight and reviewing the adequacy of our internal control over financial reporting; · establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns; 37 · recommending, based upon the audit committee’s review and discussions with management and our independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K; · monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters; · preparing the audit committee report required by SEC rules to be included in our annual proxy statement; · reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and · reviewing quarterly earnings releases. Compensation committee John C. Stiska, Katherine D. Crothall, Ph.D. and Scott Lloyd Anderson serve on the compensation committee, which is chaired by Katherine D. Crothall, Ph.D. Our board of directors has determined that each member of the compensation is “independent” as defined in the applicable NYSE rules. The compensation committee’s responsibilities include: · annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer; · evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation: (i) recommending to the board of directors the cash compensation of our Chief Executive Officer, and (ii) reviewing and approving grants and awards to our Chief Executive Officer under equity-based plans; · reviewing and recommending to the board of directors the cash compensation of our other executive officers; · reviewing and establishing our overall management compensation, philosophy and policy; · overseeing and administering our compensation and similar plans; · reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters and evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable NYSE rules; · retaining and approving the compensation of any compensation advisors; · reviewing and approving our policies and procedures for the grant of equity-based awards; · reviewing and recommending to the board of directors the compensation of our directors; and · preparing the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement. None of the members of our compensation committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee. Nominating and corporate governance committee John C. Stiska, Katherine D. Crothall, Ph.D. and Scott Lloyd Anderson serve on the nominating and corporate governance committee, which is chaired by Scott Lloyd Anderson. Our board of directors has determined that each member of the nominating and corporate governance committee is “independent” as defined in the applicable NYSE rules. The nominating and corporate governance committee’s responsibilities include: · developing and recommending to the board of directors’ criteria for board and committee membership; · establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders; · reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us; · identifying individuals qualified to become members of the board of directors; 38 · recommending to the board of directors the persons to be nominated for election as directors and to each of the board’s committees; · reviewing and recommending to the board of directors’ appropriate corporate governance guidelines; and · overseeing the evaluation of our board of directors. Code of business conduct and ethics We have adopted a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions. A current copy of this code is posted on the Corporate Governance section of our website, which is located at www.movingimagetech.com. The information on our website is deemed not to be incorporated in this Report or to be a part of this Report. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K. Delinquent Section 16(a) Reports There are no delinquent Section 16(a) reports since the Company became subject to the Exchange Act on July 7, 2021, after its 2021 fiscal year end. ITEM 11. EXECUTIVE COMPENSATION Compensation of Named Executive Officers The summary compensation table below shows certain compensation information for services rendered in all capacities for the fiscal years ended June 30, 2021 and 2020. Other than as set forth herein, no executive officer’s salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred. Name and Principal Position Fiscal Year Salary ($) Bonus ($) Stock Awards ($) (1) Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Glenn Sherman(1) 2021 $ 46,440 — — — — — $ 46,440 Former President and Chief Executive Officer 2020 $ 112,913 — — — — — $ 112,913 Philip Rafnson(1) 2021 $ 39,000 $ 25,000 — — — — $ 64,000 President and Chief Executive Officer 2020 $ 0.00 — — — — — $ 0.00 Jose Delgado 2021 $ 161,135 — — — — — $ 161,135 Executive Vice President, Sales and Marketing 2020 $ 195,058 — — — — — $ 195,058 Bevan Wright 2021 $ 152,654 — — — — — $ 152,654 Executive Vice President, Operations 2020 $ 195,058 — — — — — $ 195,058 Michael Sherman 2021 $ 146,000 — — — — — $ 146,000 Chief Financial Officer(2) 2020 $ 178,000 — — — — — $ 178,000 (1) Glenn Sherman stepped down as President and Chief Executive Officer in January 2021. In February 2021, Mr. Rafnson assumed this position. (2) Effective August 1, 2018, Michael Sherman was appointed Interim Chief Financial Officer at an annual salary of $208,000. Mr. Sherman was appointed Chief Financial Officer on July 12, 2021. Employment Agreements We currently do not maintain any employment, severance or change in control agreements with our named executive officers. In addition, our named executive officers are not entitled to any payments or other benefits in connection with a termination of employment or a change in control. 39 Outstanding Equity Awards at Fiscal Year-End There were no equity awards outstanding for any named executive officer as of June 30, 2021. 2019 Incentive Stock Plan We have adopted a 2019 Omnibus Incentive Stock Plan (the “Plan”). An aggregate of 750,000 shares of our common stock is reserved for issuance and available for awards under the Plan, including incentive stock options granted under the Plan. The Plan administrator may grant awards to any employee, director, consultant or other person providing services to us or our affiliates. The Plan shall be initially administered by the Board. The Plan administrator has the authority to determine, within the limits of the express provisions of the Plan, the individuals to whom awards will be granted, the nature, amount and terms of such awards and the objectives and conditions for earning such awards. The Board may at any time amend or terminate the Plan, provided that no such action may be taken that adversely affects any rights or obligations with respect to any awards previously made under the Plan without the consent of the recipient. No awards may be made under the Plan after the tenth anniversary of its effective date. Awards under the Plan may include incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted stock Units, performance share or Unit awards, other stock-based awards and cash-based incentive awards. Stock Options . The Plan administrator may grant to a participant options to purchase our common stock that qualify as incentive stock options for purposes of Section 422 of the Internal Revenue Code (“incentive stock options”), options that do not qualify as incentive stock options (“non-qualified stock options”) or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise will be determined by the Plan administrator. The exercise price for stock options will be determined by the Plan administrator in its discretion, but non-qualified stock options and incentive stock options may not be less than 100% of the fair market value of one share of our company’s common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted. Stock options must be exercised within a period fixed by the Plan administrator that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise period may not exceed five years. At the Plan administrator’s discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of our common stock held by the participant or in any other form of consideration acceptable to the Plan administrator (including one or more forms of “cashless” or “net” exercise). Stock Appreciation Rights. The Plan administrator may grant to a participant an award of SARs, which entitles the participant to receive, upon its exercise, a payment equal to (i) the excess of the fair market value of a share of common stock on the exercise date over the SAR exercise price, times (ii) the number of shares of common stock with respect to which the SAR is exercised. The exercise price for a SAR will be determined by the Plan administrator in its discretion; provided, however, that in no event shall the exercise price be less than the fair market value of our common stock on the date of grant. Restricted Shares and Restricted Units. The Plan administrator may award to a participant shares of common stock subject to specified restrictions (“restricted shares”). Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period and/or the attainment of specified performance targets over the forfeiture period. The Plan administrator also may award to a participant Units representing the right to receive shares of common stock in the future subject to the achievement of one or more goals relating to the completion of service by the participant and/or the achievement of performance or other objectives (“restricted Units”). The terms and conditions of restricted share and restricted Unit awards are determined by the Plan administrator. Performance Awards. The Plan administrator may grant performance awards to participants under such terms and conditions as the Plan administrator deems appropriate. A performance award entitles a participant to receive a payment from us, the amount of which is based upon the attainment of predetermined performance targets over a specified award period. Performance awards may be paid in cash, shares of common stock or a combination thereof, as determined by the Plan administrator. Other Stock-Based Awards. The Plan administrator may grant equity-based or equity-related awards, referred to as “other stock-based awards,” other than options, SARs, restricted shares, restricted Units, or performance awards. The terms and conditions of each other stock-based award will be determined by the Plan administrator. Payment under any other stock-based awards will be made in common stock or cash, as determined by the Plan administrator. Cash-Based Awards. The Plan administrator may grant cash-based incentive compensation awards, which would include performance-based annual cash incentive compensation to be paid to covered employees subject to Section 162(m) of the Code. The terms and conditions of each cash-based award will be determined by the Plan administrator. 40 Compensation of Directors No obligations with respect to compensation for non-employee directors have been accrued or paid for any periods presented in this Report. Going forward, our board of directors believes that attracting and retaining qualified non-employee directors will be critical to the future value growth and governance of our company. Our board of directors also believes that a significant portion of the total compensation package for our non-employee directors should be equity-based to align the interest of these directors with our stockholders. On July 7, 2021, the effective date of the IPO,, each of our non-management directors were granted options to purchase 50,000 shares of common stock at a per share exercise price of $3.00. The options vest over a one year period of time. Directors who are also our employees will not receive any additional compensation for their service on our board of directors. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth information regarding beneficial ownership of our capital stock by: · each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Common Stock; · each of our named executive officers; · each of our directors and director nominees; and · all of our current executive officers, directors and director nominees as a group. Applicable percentage ownership is based on 10,626,738 shares of Common Stock outstanding at September 13, 2021. The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security, warrant, option, or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the number of shares outstanding as of such date. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our Common Stock listed below have sole voting and investment power with respect to the shares shown. Unless otherwise noted below, the address of each person listed on the table is c/o Moving iMage Technologies, Inc., 17760 Newhope Street, Fountain Valley, CA 92708. Shares Beneficially Owned Name of Beneficial Owner Shares % Named Executive Officers and Directors Phil Rafnson(1) 2,033,128 19.1 % Bevan Wright 590,630 5.6 % Jose Delgado 511,503 4.8 % Michael Sherman — * Katherine D. Crothall, Ph.D. — — John C. Stiska — — Scott Anderson — — All executive officers, directors as a group (10 persons) 3,135,261 29.5 % 5% Stockholders: David Richards 328,307 3.1 % * Less than 1% (1) Represents shares held by Sound Management Investors, LLC, an entity wholly-owned and controlled by Mr. Rafnson. 41 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE All amounts due to Caddy by the Company further to the acquisition of Caddy are personally guaranteed by Phil Rafnson, our Chairman of the Board. In July 2021, the Company provided a discretionary $50,000 payment to the Company’s CEO and Chairman of the Board of Directors in relation to these personal guarantees provided in conjunction with financing Company debt. See Debt footnote. In October 2019, the Company executed a loan agreement with an unaffiliated lender to provide a $1.0 million asset-based bridge loan to be used for working capital purposes. Funds borrowed bear interest at 13% per annum and are due and payable one year from the origination date of the loan. The loan is secured by all assets of the Company and is personally guaranteed by Phil Rafnson, our Chairman of the Board. Sound Management Investors, LLC, an entity controlled by Mr. Rafnson, has pledged all shares of the Company held by it as further security for the repayment of such loan. In July 2021, 100% of the outstanding balance, plus accrued interest, was paid off in full. In conjunction, all security interests have been terminated. In July 2020, Glenn Sherman, our former President, and David Richards, our Senior Vice President, Engineering and a 5% stockholder, purchased 97,334 and 5,000 shares, respectively, of Acquisition Co. at $1.50 per share. We have agreed to indemnify, defend and hold harmless the members of Moving iMage Technologies LLC from any taxes which may at any time be asserted with respect to the Share Exchange. Director and Officer Indemnification and Insurance We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us or will require us to indemnify each director (and in certain cases their related venture capital funds) and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer. Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify each of our directors and officers to the fullest extent permitted by the DGCL. We also intend to purchase a policy of directors’ and officers’ liability insurance that will insure our directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances. For further information, see “Executive Compensation —  Limitation on Liability and Indemnification Matters.” Policies and Procedures Regarding Related Party Transactions Our board of directors has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee will be tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. All of the transactions described in this section occurred prior to the adoption of any related party transactions policy. A “related person” means: · any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; · any person who is known by us to be the beneficial owner of more than 5% of our Common Stock; · any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Common Stock; or · any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest. 42 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table provides information regarding the fees billed to us by CohnReznick in the fiscal years ended June 30, 2021 and 2020. All fees described below were approved by the Board: For the fiscal years ended June 30 2021 2020 Audit Fees (1) $ 243,976 $ 290,783 Audit Related Fees — — Tax Fees — — All Other Fees — — Total Fees: $ 243,976 $ 290,783 (1) Audit fees includes fees associated with the annual audits of our financial statements, quarterly reviews of our financial statements, and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements The financial statements have been included in Item 8 above. (a)(2) Financial Statement Schedules Schedules have been omitted because they are not applicable, not material or because the information is included in the consolidated financial statements or the notes thereto. (a)(3) Exhibits The exhibits are incorporated by reference from the Exhibit Index attached hereto. ITEM 16. FORM 10-K SUMMARY None. 43 MOVING IMAGE TECHNOLOGIES, LLC FINANCIAL STATEMENTS June 30, 2021 and 2020 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS F-3 CONSOLIDATED STATEMENTS OF OPERATIONS F-4 CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ DEFICIT F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Members Moving iMage Technologies, LLC Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Moving iMage Technologies, LLC (the “Company”) as of June 30, 2021 and 2020, and the related consolidated statements of operations, changes in members’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for years then ended, in conformity with the accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ CohnReznick LLP We have served as the Company's auditor since 2018. Jericho, NY September 29, 2021 F- 2 MOVING IMAGE TECHNOLOGIES, LLC CONSOLIDATED BALANCE SHEETS (in thousands) June 30, 2021 2020 Assets Current Assets: Cash $ 1,269 $ 1,058 Accounts receivable, net 454 809 Inventories, net 1,534 1,594 Prepaid expenses and other 86 77 Total Current Assets 3,343 3,538 Long-Term Assets: Property, plant and equipment, net 21 151 Intangibles, net 935 1,030 Goodwill 287 287 Other assets 1,133 698 Total Long-Term Assets 2,376 2,166 Total Assets $ 5,719 $ 5,704 Liabilities And Members’ Deficit Current Liabilities: Accounts payable $ 1,911 $ 2,694 Accrued expenses 620 454 Customer deposits 1,339 828 Line of credit 590 75 Notes payable – related party 1,272 - Notes payable – current 237 444 Unearned warranty revenue 34 26 Total Current Liabilities 6,003 4,521 Long-Term Liabilities: Notes payable, net of current portion 1,702 1,557 Line of credit, net of current portion - 575 Deferred rent 25 20 Total Long-Term Liabilities 1,727 2,152 Total Liabilities 7,730 6,673 Members’ Deficit (2,011 ) (969 ) Total Liabilities and Members’ Deficit $ 5,719 $ 5,704 The accompanying Notes are an integral part of these consolidated financial statements. F- 3 MOVING IMAGE TECHNOLOGIES, LLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except share and per share amounts) Year Ended June 30, 2021 Year Ended June 30, 2020 Net sales $ 7,247 $ 16,367 Cost of goods sold 5,558 12,033 Gross profit 1,689 4,334 Operating expenses: Research and development 152 240 Selling and marketing 1,458 2,295 General and administrative 1,578 2,419 Total operating expenses 3,188 4,954 Operating loss (1,499 ) (620 ) Other expenses (income) PPP loan forgiveness (694 ) — Interest expense 237 263 Total other expense (income) (457 ) 263 Net loss $ (1,042 ) $ (883 ) Pro Forma C-Corporation Information (Unaudited) — See Note 10 Historical net loss before income taxes $ (1,042 ) $ (883 ) Pro forma benefit for income taxes (292 ) (247 ) Pro forma net loss $ (750 ) $ (636 ) Pro forma net loss per common share basic $ (.13 ) $ (.11 ) Pro forma shares outstanding: basic 5,666,667 5,666,667 Pro forma net loss per common share diluted $ (.13 ) $ (.11 ) Pro forma shares outstanding: diluted 5,666,667 5,666,667 The accompanying Notes are an integral part of these consolidated financial statements F- 4 MOVING IMAGE TECHNOLOGIES, LLC CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ DEFICIT (in thousands) Balance June 30, 2019 $ (86 ) Net loss (883 ) Balance June 30, 2020 (969 ) Net loss (1,042 ) Balance June 30, 2021 $ (2,011 ) The accompanying Notes are an integral part of these consolidated financial statements. F- 5 MOVING IMAGE TECHNOLOGIES, LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended June 30, 2021 Year Ended June 30, 2020 Cash flows from operating activities: Net loss $ (1,042 ) $ (883 ) Adjustments to reconcile net loss to net cash used in operating activities: Change in fair value of contingent consideration — (150 ) PPP loan forgiveness (694 ) — Provision for doubtful accounts 73 80 Depreciation expense 132 126 Amortization expense 95 88 Deferred rent 5 13 Changes in operating assets and liabilities Accounts receivable 282 1,478 Inventories 60 89 Prepaid expenses and other (428 ) 220 Accounts payable (783 ) (352 ) Accrued expenses 166 (1,060 ) Unearned warranty revenue (8 ) (42 ) Customer deposits 511 (183 ) Net cash used in operating activities (1,631 ) (576 ) Cash flows from investing activities Cash acquired in business combination — 128 Purchases of property, plant and equipment (2 ) (2 ) Cash flows from investing activities (2 ) 126 Cash flows from financing activities Payments on notes payable (128 ) (418 ) Net borrowings (payments) on line of credit (60 ) 650 Proceeds from notes payable 1,334 — PPP Loan proceeds 698 694 Net cash provided by financing activities 1,844 926 Net increase in cash 211 476 Cash, beginning of the year 1,058 582 Cash, end of the year $ 1,269 $ 1,058 Non-cash investing and financing activities: Deferred IPO costs $ 246 $ 263 Acquisition of certain Caddy net assets by issuing notes payable $ — $ 1,905 Cash paid during the period: Interest $ 237 $ 183 The accompanying Notes are an integral part of these consolidated financial statements. F- 6 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Moving iMage Technologies, LLC, (“MiT LLC” or the “Company”) a Delaware limited liability company formed in September 2003, designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements. MiT LLC offers single source solutions for cinema design, procurement, installation and service to the creative and production communities for screening, digital intermediate and other critical viewing rooms. MiT LLC offers a wide range of technical, design and consulting services such as custom engineering, systems design, integration and installation, and digital technology, as well as software solutions for operations enhancement and theatre management. MiT LLC also provides turnkey furniture, fixture and equipment services to commercial cinema exhibitors for new construction and remodels including design, consulting, installation and project management as well as procurement of seats, lighting, acoustical treatments, screens, projection and sound. Through its wholly-owned subsidiary, Moving iMage Acquisition Co. (DBA “Caddy Products”), the company designs, develops and manufactures innovative products for the entertainment, cinema, grocery, worship, restaurant, sports and restroom industries. Share Exchange: On July 7, 2021, in connection with the initial public offering of Moving iMage Technologies, Inc. (the “PubCo”), MiT LLC entered into an Exchange Agreement (the “Exchange Agreement”) whereby the equity holders of MiT LLC, assigned and transferred to PubCo their units of MiT LLC, in exchange for an aggregate of 2,350,000 shares of Common Stock of PubCo (the “Share Exchange”). MiT LLC is considered the acquirer for accounting purposes. As a result of the Share Exchange, MiT LLC became a wholly-owned subsidiary of PubCo and is the entity where the Company’s business operations are located. However, since the Share Exchange occurred subsequent to the Company’s fiscal year ended June 30, 2021, this Annual Report on Form 10-K includes the audited consolidated financial statements, and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", discusses the results of operations, of MiT LLC for the fiscal year ended June 30, 2021. F- 7 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Initial Public Offering: On July 12, 2021, Moving iMage Technologies, Inc. (“PubCo”) closed its initial public offering, (“IPO”) and issued 4,830,000 shares of its common stock at a price of $3.00 per share for net proceeds of approximately $11,469,000 after deducting underwriting discounts, commissions, and other expenses of approximately $1,906,100. In connection with the IPO, all MiT LLC membership units were exchanged for 2,350,000 shares of PubCo common stock. On July 12, 2021, in connection with the PubCo’s IPO, cashless warrants were exercised for the right to purchase 44,888 shares of the Company’s common stock. COVID-19 Impact and Liquidity : In December 2019, COVID-19 was initially reported, and in March 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns. The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries. Cinemas have been shuttered since March 2020 in an effort to stem the spread of COVID-19 and studios, for the most part, have rescheduled their film releases until cinemas can reopen. Specifically, the pandemic has had a material adverse effect on our business. A significant number of our customers have temporarily ceased operations and others have cancelled or pushed back the delivery of pending product orders and/or delayed the start of scheduled theater refurbishing and construction projects. In addition, we have experienced increased challenges in or cost of acquiring new customers and increased risk in collectability of accounts receivable. As a result of the aforementioned factors, our financial and operating results for the year ended June 30, 2021 have been, and our projected financial and operating results for fiscal 2022, are expected to be, materially adversely affected. The ultimate impact of the COVID-19 pandemic on our business and results of operations beyond fiscal 2021 is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the COVID-19 pandemic and any additional preventative and protective actions that governments, or we or our customers, may direct, which may result in an extended period of continued business disruption and reduced operations. We expect that our results of operations, including revenues, in future periods will continue to be adversely impacted by the COVID-19 pandemic and its negative effects on global economic conditions, which include the possibility of a global recession. Recently, several of the larger theater chains have reopened in many parts of the United States. The ability of these chains to reopen is predicated in large part on decisions by state and local officials to allow, limit or prohibit the reopening of establishments such as cinemas in response to regionally specific COVID-19 outbreaks. It is reasonable to expect that any such reopening’s will be done on a gradual basis with limited occupancy and specific procedures, products, and technologies required to be implemented to protect the safety and health of returning patrons and employees. F- 8 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In response to uncertainties associated with the COVID-19 pandemic, we have taken, and are continuing to take, significant steps to preserve cash and remain in a strong competitive position when the current crisis subsides by eliminating non-essential costs, reducing employee hours and deferring all non-essential capital expenditures to minimum levels. Among other mitigating actions, we have implemented targeted furloughs, significantly reduced our service and distribution activities and temporarily reduced compensation of our executive officers and certain other employees. We have also implemented remote work policies for many employees, and the resources available to such employees may not enable them to maintain the same level of productivity and efficiency, and these and other employees may face additional demands on their time, such as increased responsibilities resulting from school closures or illness of family members. Our increased reliance on remote access to our information systems also increases our exposures to potential cybersecurity breaches. The Company has recognized recurring losses. The Company had a working capital deficit of $(2,660,000) and $(983,000) at June 30, 2021 and 2020, respectively. Members’ deficit was $(2,011,000) and $(969,000) at June 30, 2021 and 2020, respectively. Cash as of June 30, 2021 was $1,269,000 and the Company incurred a net loss of $(1,042,000) and $(883,000) for the years ended June 30, 2021 and 2020, respectively. The Company incurred negative operating cash flow of $(1,631,000) and $(576,000) for the years ended June 30, 2021 and 2020, respectively. As of the date these financial statements were issued, with the actions taken above, existing cash, and cash raised from our initial public offering (See Initial Public Offering), the Company will have sufficient liquidity to fund operations and essential capital expenditures for the 12 months from the date these financial statements were issued. Principles of Consolidation : The Consolidated Financial Statements include the accounts of Moving iMage Technologies, LLC and its wholly-owned subsidiary, Moving iMage Acquisition Co. (DBA Caddy Products). All significant intercompany transactions and balances have been eliminated in consolidation. Basis of Presentation: The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Measurement of Fair Values : The Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities on either a recurring or nonrecurring basis. When measuring the fair value of an asset or a liability, the Company uses observable market data to the extent such information is available. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: — Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. — Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). — Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. F- 9 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (non-current) until such financings are consummated. After consummation of the equity financing, these costs are recorded in members’ deficit as a reduction of proceeds received as a result of the offering. Should the equity financing to which those costs relate no longer be considered probable of being consummated, all deferred offering costs will be charged to operating expenses in the statement of operations at such time. As of June 30, 2021 and 2020, $1.1 million and $0.698 million, respectively, of deferred offering costs are capitalized in other assets. In July 2021, these costs were reclassified to Equity upon completion of the above IPO. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities (including sales returns, bad debts, inventory reserves, warranty reserves, purchase price allocation and asset impairments), disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Concentration of Cash: The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on its cash balances. Accounts Receivable: Accounts receivable are carried at original invoice amount less allowance for bad debts. Management determines the allowance for bad debts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 90 days past the customer’s granted terms. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of June 30, 2021 and 2020, the allowance for bad debts is approximately $356,000 and $283,000, respectively. F- 10 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Inventories: Inventories are stated at the lower of cost or net realizable value, with cost being determined on the first-in first-out cost method of accounting. The Company purchases finished goods and materials to assemble kits in quantities that it anticipates will be fully used in the near term. Changes in operating strategy, customer demand, and fluctuations in market values can limit the Company’s ability to effectively utilize all products purchased and can result in finished goods with above-market carrying costs which may cause losses on sales to customers. The Company’s policy is to closely monitor inventory levels, obsolescence and lower market values compared to costs and, when necessary, reduce the carrying amount of its inventory to its net realizable value. As of June 30, 2021 and 2020, inventory on hand was comprised primarily of finished goods ready for sale. Revenue Recognition: On July 1, 2019, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) and all related Accounting Standards Updates by applying the modified retrospective method to all contracts that were not completed on July 1, 2019. The modified retrospective approach required the Company to recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of members’ deficit on July 1, 2019. Comparative information has not been restated and continues to be reported under the historical accounting standards in effect for those periods. The adoption of the new revenue standard did not result in a cumulative effect adjustment to our members’ equity since there was no significant impact upon adoption of the new standard. There was also no material impact to revenues, or any other financial statement line items for the year ended June 30, 2020 as a result of applying ASC 606. Revenue is recognized when control of the promised goods is transferred at the point of shipment to a customer and when performance conditions are satisfied as per the agreement, in an amount that reflects the consideration that we expect to receive in exchange for those goods as per the agreement with the customer. We generate all our revenue from agreements with customers. In case there are agreements with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. We allocate the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation and then evaluate how the services are transferred to the customer to determine the timing of revenue recognition. The Company considers the U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a customer may not pay for the products provided or services performed. If there are circumstances where the above criteria are not met, revenues recognized are presented net of cost of goods sold. Contract assets consist of conditional or unconditional rights to consideration. Accounts receivable represent amounts billed to customers where the Company has an enforceable right to payment for performance completed to date (i.e., unconditional rights to consideration). The Company does not have contract assets that represent conditional rights to consideration. Accounts Receivable balance as of July 1, 2019 was $2.128 million. There were no other contract assets as of June 30, 2021 or 2020. Contract liabilities consist of refund and warranty liabilities, as well as deposits received in advance on sales to certain customers. Such deposits are reflected as customer deposits and recognized in revenue when control of the products is transferred or when performance conditions are satisfied per the agreement. The change in contract liabilities (customer deposits and unearned warranty revenue) during the year ended June 30, 2020 included $1.079 million for revenue recognized that was included in contract liability as of July 1, 2019. The change in contract liabilities (customer deposits and unearned warranty revenue) during the year ended June 30, 2021 included $.690 million for revenue recognized that was included in contract liability as of July 1, 2020. Contract liabilities as of July 1, 2019 were $1.079 million. F- 11 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cost of goods sold includes cost of inventory sold during the period, net of vendor discounts and allowances, and shipping and handling costs, and sales taxes. Taxes collected from customers are included in Accounts Payable on a net basis (excluded from revenues) until remitted to the government. Deferred contract acquisition costs consist of sales commissions paid to the sales force and the related employer payroll taxes, collectively “deferred contract acquisition costs”, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined that sales commissions paid are an immaterial component of obtaining a customer’s contract and has elected to expense sales commissions when earned. For the years ended Disaggregation of Revenue (in 000’s): June 30, 2021 June 30, 2020 Equipment upon delivery (point in time) $ 7,093 $ 16,658 Installation (point in time) 154 303 Software and services (over time) — 406 Total revenues $ 7,247 $ 16,367 Revenue from the sale of equipment is recognized upon delivery of such equipment to customers and performance conditions are satisfied. Revenue from installation is recognized upon completion of installation project and performance obligation is complete. Software subscription revenue for remote monitoring services is recognized on a straight-line basis over the term of the contract, usually one year. Services revenues are generally recognized over time as the contracts are performed. F- 12 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Returns and Allowances: The Company records allowances for discounts and product returns at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends. Shipping and Handling Costs: Shipping and handling costs are included in cost of goods sold and are recognized as a period expense during the period in which they are incurred. Advertising Costs: Advertising costs of approximately $19,000 in 2021 and $14,000 for 2020 are expensed as incurred within selling and marketing expenses. Goodwill and Intangible Assets: Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in June, or more frequently if a triggering event occurs between impairment testing dates. The Company operates as a single operating segment and as a single reporting unit for the purpose of evaluating goodwill impairment. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that fair value of the reporting unit is less than its carrying value. The qualitative assessment includes comparing the overall financial performance of the Company against the planned results used in the last quantitative goodwill impairment test. Additionally, the Company’s fair value is assessed in light of certain events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. If it is determined under the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative impairment test is performed. Under the quantitative impairment test, the estimated fair value of the reporting unit would be compared with its carrying value (including goodwill). If the fair value of the reporting unit exceeds its carrying value, then no impairment exists. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss would be recognized for the excess of the carrying value of the reporting unit over the fair value, not to exceed the carrying amount of goodwill. The Company tested goodwill impairment in relation to the COVID-19 pandemic and no impairments were identified for the years ended June 30, 2021 or 2020. Goodwill is at risk of future impairment in the event of significant unexpected changes in the Company’s forecasted future results and cash flows, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate, or if there is a decline in the stock price. Intangible assets arising from business combinations, such as customer relationships, trade names, and/or intellectual property, are initially recorded at fair value. The Company amortizes these intangible assets over the determined useful life which generally ranges from 11 to 20 years. The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully recoverable. There were no intangible asset impairments recognized for the years ended June 30, 2021 or 2020. F- 13 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Business Combinations: The Company includes the results of operations of the businesses that it acquires commencing on the respective dates of acquisition. The Company allocates the fair value of the purchase price of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Income Taxes: The Company is a limited liability company treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, there is no recognition of federal or state income taxes in the accompanying financial statements. Any uncertain tax position taken by the members is not an uncertain position of the Company. In accordance with the operating agreement of MiT, to the extent possible without impairing the Company’s ability to continue to conduct its business and activities, and in order to permit its members to pay taxes on the taxable income of the Company, MiT makes distributions to members in the amounts equal to the estimated tax liability of its members computed as if members paid income tax at the highest marginal federal and state rate applicable to an individual resident of Fountain Valley, CA. There were no member distributions in the years ended June 30, 2021 or 2020. Product Warranty: The Company’s digital equipment products are sold under various limited warranty arrangements ranging from one year to three years. Company policy is to establish reserves for estimated product warranty costs in the period when the related revenue is recognized. The Company has the right to return defective products for up to three years, depending on the manufacturers’ individual policies. As of June 30, 2021 and 2020, the Company has established a warranty reserve of $29,000 and $65,000, respectively, which is included in accrued expenses in the accompanying consolidated balance sheets. The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands): June 30, 2021 2020 Product warranty liability beginning of period $ 65 $ 111 Accruals for warranties issued 29 18 Change in estimates (37 ) - Settlements made (28 ) (64 ) Product warranty liability end of the period $ 29 $ 65 F- 14 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Research and Development: The Company incurs costs to develop new products, as well as improve the appeal and functionality of its existing products. Research and development costs are charged to expense when incurred. Recently Issued Accounting Pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842 ), which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company has not yet evaluated the impact of this standard. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) : Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective beginning January 1, 2022. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its financial position and results of operations upon adoption. Other pronouncements issued by the FASB with future effective dates are either not applicable or not significant to the consolidated financial statements of the Consolidated Company. NOTE 2 — PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following (in thousands): June 30, 2021 June 30, 2020 Production equipment $ 307 $ 307 Leasehold improvements 202 202 Furniture and fixtures 45 45 Computer equipment 44 42 Other equipment 114 114 712 710 Accumulated depreciation 691 559 Net property plant and equipment $ 21 $ 151 Depreciation expense related to property, plant and equipment was $132,000 in 2021 and $126,000 in 2020, with $120,000 and $111,000 included in cost of goods sold and $12,000 and $15,000 in general and administrative expense, respectively. F- 15 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — PROPERTY, PLANT AND EQUIPMENT (continued) Depreciation of property, plant and equipment is calculated using the straight-line method over their estimated useful lives as follows: Useful Lives Leasehold improvements 5 years or remaining lease term Furniture and fixtures 5 years Production equipment 3 – 7 years Computer equipment 3 years Other equipment 3 – 7 years NOTE 3 — GOODWILL AND INTANGIBLE ASSETS The following table summarizes the Company’s intangible assets as of June 30, 2021 (in thousands): Amortization Period Gross Asset Cost Accumulated Amortization Net Book Value Customer relations 11 years $ 970 $ 169 $ 801 Patents 20 years 70 7 63 Trademark 20 years 78 7 71 $ 1,118 $ 183 $ 935 The following table summarizes the Company’s intangible assets as of June 30, 2020 (in thousands): Amortization Period Gross Asset Cost Accumulated Amortization Net Book Value Customer relations 11 years $ 970 $ 81 $ 889 Patents 20 years 70 3 67 Trademark 20 years 78 4 74 $ 1,118 $ 88 $ 1,030 Amortization expense was $95,000 and $88,000 for the years ended June 30, 2021 and 2020, respectively, and are included in general and administrative expense. Goodwill – June 30, 2019 $ - Caddy acquisition 287 Goodwill – June 30, 2020 287 Goodwill – June 30, 2021 $ 287 F- 16 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 — GOODWILL AND INTANGIBLE ASSETS (continued) Estimated amortization expense related to intangible assets subject to amortization at June 30,2021 in each of the five fiscal years subsequent to June 30, 2021, and thereafter is as follows (amounts in thousands): 2022 $ 96 2023 96 2024 96 2025 96 2026 96 Thereafter 455 Total $ 935 F- 17 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 — ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): June 30, 2021 2020 Employee compensation $ 485 $ 168 Others 135 286 Total $ 620 $ 454 NOTE 5 — DEBT Line of Credit In October 2019, the Company executed a line of credit agreement with an unaffiliated lender to provide a $1.0 million asset-based bridge loan to be used for working capital purposes. Funds are available on a borrowing base formula with an advance rate of 75% of Moving iMage Technologies, LLC’s accounts receivable less than 90 days in age (excluding Caddy’s receivables). Funds borrowed bear interest at 13% per annum and are due and payable one year from the origination date of the loan. The loan is secured by all assets of the Company and is personally guaranteed by Phil Rafnson, our CEO and Chairman of the Board. Sound Management Investors, LLC, an entity controlled by Mr. Rafnson, pledged all membership units of the Company held by it as further security for the repayment of such loan. In connection therewith, on the effective date of the initial public offering, the Company will issue the lender a warrant to acquire $350,000 of shares of common stock at a per share exercise price equal to the initial public offering price, 83,333 shares underlying said warrant at the assumed initial public offering price of $3.00 per share. Approximately $400,000 of the proceeds from the loan were used to pay amounts owed to Caddy for the closing note further to the Caddy acquisition. In March 2020, the Company was informed that it is in default on this loan agreement due to the impact of COVID-19 on our customers’ ability to pay. In April 2020, the Company executed an amendment to pay down $350,000 of the outstanding balance. In addition, monthly interest-only payments on the outstanding amount are due on the first day of each month. Loan covenants have been removed. The line of credit is due September 2021 at an interest rate of 13% per annum. No further borrowings are available under this agreement from March 31, 2020. As of June 30, 2021, the outstnading balance of this line of credit was $590,000. In July 2021, the outstanding balance was paid in full. Long-term debt at June 30, 2021 and 2020 was as follows (in thousands): 2021 2020 Balance Current Long Term Balance Current Long Term Caddy promissory note $ 1,059 $ 142 $ 917 $ 1,117 $ 119 $ 998 PPP loan 698 73 625 694 307 387 Caddy indemnity promissory note 182 22 160 190 18 172 Total $ 1,939 $ 237 $ 1,702 $ 2,001 $ 444 $ 1,557 F- 18 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 — DEBT (continued) The Caddy Promissory note is payable in monthly installments through August 2024 at an interest rate of Prime plus 2.75%. The Caddy Indemnity note is payable in monthly installments due July 2024 at an interest rate of Prime plus 2.75%. On January 1, 2020, the interest rate margin increased to 3.75% on both notes. All of the notes are collateralized by Caddy assets. In addition, the notes are guaranteed by Phil Rafnson, the Company’s majority shareholder. In August 2021, all related notes and balances were paid in full. Paycheck Protection Program: On May 6, 2020, the Company received loan proceeds in the amount of approximately $694,000 under the Paycheck Protection Program (“PPP”). On March 13, 2021, the Company received a second PPP loan receiving proceeds in the amount of approximately $698,000. The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. In May 2021, the Company received notification from the SBA that the first loan in the amount of $694,000, including accrued interest, has been fully forgiven. As of June 30, 2021, the outstanding balance of the second PPP loan was $698,000, of which $73,000 is included in notes payable current in the consolidated balance sheets. Any unforgiven portion of a PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP. While the Company currently believes that its use of the second loan proceeds will meet the conditions for forgiveness of the loan, we cannot assure you that we will not take actions that could cause the Company to be ineligible for forgiveness of the second loan, in whole or in part. NOTE 6 — MEMBERS’ EQUITY As of June 30, 2020, the Company had one class of membership units outstanding, consisting of 9,900 Class B Voting Membership Units. NOTE 7 — RELATED PARTY TRANSACTIONS In July 2020, the Company received a $784,000 forgivable noninterest-bearing working capital loan from PubCo, (formerly MIT Acquisition, Inc.), an affiliated entity. In September 2020, the PubCo. signed a Letter of Intent to provide the Company additional borrowings, under the same terms as the working capital loan. In February and March 2021, the proceeds of approximately $550,000 were received by the Company under this agreement providing additional working capital. As of June 30, 2021, the outstanding balance under this agreement is $1.272 million. Per terms of the loan agreement, this entire amount was forgiven in conjunction with the Company’s IPO in July 2021. In July 2021, the Company provided a discretionary $50,000 payment to the Company’s CEO and Chairman of the Board of Directors for personal guarantees provided in conjunction with financing company debt. See Debt footnote. F- 19 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — CUSTOMER AND VENDOR CONCENTRATIONS Customers : One customer accounted for more than 10% of the Company’s sales for the years ended June 30, 2021. There was no outstanding balance related to this customer at June 30, 2021. No customers accounted for more than 10% of sales for the year ended June 30, 2020. Vendors: No vendor provided more than 10% of the Company’s purchases for the year ended June 30, 2021. Approximately 14% and 13% of the Company’s purchases were provided by two vendors for the year ended June 30, 2020. At June 30, 2020, the amount in outstanding payables related to these two vendors was approximately $760,000. NOTE 9 — COMMITMENTS AND CONTINGENCIES Operating Leases: The Company occupies an executive office and warehouse space in Fountain Valley, CA, pursuant to separate lease agreements. Rent expense was $281,000 in 2021 and $285,000 in 2020. In September 2018, the Company reached an agreement to extend the executive office lease effective February 1, 2019 by an additional five years. The monthly rent payable for the first year of the newly extended term is $12,620 and will be increased by 3% on each anniversary date. In April 2020, the Company reached an agreement whereby April, May and June 2020 monthly rent payments related to this lease in the amount of $19,500 are deferred but payable in six monthly installments of $3,250 commencing on the first day of July 2020. In addition, the term of the lease was extended for one year from the anniversary date. Also, in September 2018, the Company reached an agreement to extend the warehouse lease effective February 1, 2019 by an additional five years. The monthly rent payable for the first year of the newly extended term is $9,465 and will be increased by 3% on each anniversary date. In April 2020, the Company reached an agreement whereby April, May and June 2020 monthly rent payments in the amount of $14,624 are deferred but payable in six monthly installments of $2,437 commencing on the first day of July 2020. In addition, the term of the lease was extended for one year from the anniversary date. F- 20 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — COMMITMENTS AND CONTINGENCIES (continued) Future minimum lease payments at June 30, 2021 under these arrangements are as follows: Operating leases (in thousands) Total Payments 2022 $ 285 2023 293 2024 302 2025 174 Total future minimum lease payments $ 1,054 Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position. NOTE 10 — PRO FORMA INCOME TAXES AND INCOME PER SHARE (Unaudited) Immediately prior to the effectiveness of the Company’s registration statement on Form S-1, the Company converted into a Delaware C-corporation and is subject to federal and state income taxes. Accordingly, a pro forma income tax provision has been disclosed as if the Company was a corporation for all periods presented. For the purposes of the pro forma tax provision, we have applied a 28% combined federal and state income rate. A pro forma net loss or income per common share has been disclosed for the years ended June 30, 2021 and 2020, assuming that an appropriate exchange ratio will be used to exchange the Class B Membership Interests for shares of common stock at the time of the proposed initial public offering such that the number of shares of common stock outstanding on a basic basis will be 5,666,667 on and immediately prior to the effective date of the offering, and 5,750,333 immediately prior to the closing date of the offering. F- 21 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION On July 28, 2019, the Company completed the acquisition of Caddy. Caddy designs, manufactures and distributes patented cup holders, trays, advertising displays and theater step and aisle lighting. Caddy products are utilized in many facilities throughout more than 91 countries worldwide. Its markets include the cinema, sports stadiums, grocery, performing arts, worship and retail industries. Caddy was acquired for an aggregate purchase price of $2.013 million, consisting of a $0.377 million Closing Promissory Note, a $1.178 million Promissory Note, a $0.2 million Indemnity Promissory Note and contingent consideration valued at $0.15 million, and the assumption of $0.108 million of liabilities as of the opening balance sheet date. The contingent consideration is based on the achievement of financial objectives during the 12-month period following the close of the transaction which expired in July 2020. The following table summarizes (in thousands) the fair value of the consideration transferred or to be transferred, to acquire Caddy: (in thousands) Notes issued for the acquisition $ 1,905 Liabilities assumed 108 $ 2,013 F- 22 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION (continued) As this acquisition was effective on July 28, 2019, the results of operations of Caddy are included in the consolidated financial statements for the period beginning July 29, 2019. The transaction has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The following table summarizes (in thousands) the purchase price allocation for the acquisition: Cash $ 128 Accounts receivable and other assets 239 Property plant and equipment, net 241 Customer relationships 970 Patents 70 Trademark 78 Total identifiable assets acquired 1,726 Goodwill 287 Net assets acquired $ 2,013 The estimated fair value of the patents and trademark intangible assets was determined using the “relief from royalty method” under the income approach, which is a valuation technique that provides an estimate of the fair value of an asset based on the cost savings that are available through ownership of the asset by the avoidance of paying royalties to license the use of the assets from another owner. The estimated fair value of the customer relationships was determined using the “excess earnings method” under the income approach, which represents the total income to be generated by the asset. Some of the more significant assumptions inherent in the development of these asset valuations include the projected revenue associated with the asset, the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, as well as other factors. The discount rate used to arrive at the present value of the customer relationships, and trademarks and patents, at the acquisition date, was 25.4%. The remaining useful lives of the trademark was based on its level of recognition in the marketplace as a market leader for cupholders and a market participant’s use of these intangible assets and the pattern of projected economic benefit of these intangible assets. The remaining useful lives of customer relationships were based on the customer attrition and the projected economic benefit of these clients. F- 23 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION (continued) The estimated fair value of the contingent consideration was determined based on the Company’s estimates using the probability-weighted gross profit approach. The fair value of the contingent consideration as of September 30, 2019 was $0.15 million and the Company has recorded this amount in liabilities on the financial statements. Any subsequent changes in the fair value of the contingent consideration obligations will be recorded in the consolidated statements of operations. The criteria were not met and no money has been paid. The amounts assigned to customer relationships and trademark are amortized over the estimated useful life of 11 years and 20 years, respectively. The weighted average life over which these acquired intangibles will be amortized is approximately 15 years. Pro forma Financial Information (UNAUDITED): The pro forma results presented below include the effects of the Company’s acquisition on July 28, 2019 as if it occurred on July 1, 2019. Year ended June 30, 2020 Revenue $ 16,525 Net loss $ (902 ) F- 24 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis Our liabilities measured at fair value on a recurring basis consisted of the following as of June 30, 2020: June 30, 2020 Fair Value Hierarchy Category (in thousands) Level 1 Level 2 Level 3 Liabilities: Contingent consideration – business combinations $ - $ - $ - Total Liabilities $ - $ - $ - F- 25 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — FAIR VALUE MEASUREMENTS (continued) Assets and Liabilities Measured at Fair Value on a Recurring Basis (continued) The following table represents the changes in the estimated fair value of our liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the year ended June 30, 2020: (in thousands) Year Ended June 30, 2020 Fair value measurement at beginning of period $ - Contingent consideration liabilities recorded for business combinations, including measurement period adjustments 150 Changes in fair values, recorded in operating expenses (150 ) Payments of contingent consideration - Fair value measurement at end of period $ - F- 26 MOVING IMAGE TECHNOLOGIES, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — FAIR VALUE MEASUREMENTS (continued) Our estimated liability for contingent consideration represents potential payments of additional consideration for business combinations, payable if certain defined performance goals are achieved. Changes in the fair value of contingent consideration are recorded in the consolidated statements of operations within selling, general and administrative expenses. Contingent Consideration – Business Combinations - The fair value of the contingent consideration related to business combinations is estimated using probability-weighted gross profit approach. These fair value measurements are based on significant inputs not observable in the market. The key internally developed assumptions used in these models is consideration at each reporting period, and any changes in the fair value resulting from either the passage of time or events occurring after the acquisition date, such as changes in the expectations of achieving the performance targets, are recorded within selling, general, and administrative expenses. Other Financial Instruments - The carrying amounts of accounts receivable, accounts payable, and notes payable approximate fair value due to their short maturities. Assets and Liabilities Not Measured - In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. F- 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fountain Valley, State of California, on September 29, 2021. Moving iMage Technologies, Inc. By: /s/ Phil Rafnson Phil Rafnson President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Phil Rafnson and Michael Sherman, jointly and severally, his or her attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might do or could do in person hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his or her substitute, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated. Name and Signature Title Date /s/ Phil Rafnson President, Chief Executive Officer and Chairman of the Board September 29, 2021 Phil Rafnson (Principal Executive Officer) /s/ Michael Sherman Chief Financial Officer September 29, 2021 Michael Sherman (Principal Financial and Accounting Officer) /s/ Katherine D. Crothall, Ph.D. Director September 29, 2021 Katherine D. Crothall, Ph.D. /s/ John C. Stiska Director September 29, 2021 John C. Stiska /s/ Scott Anderson Director September 29, 2021 Scott Anderson 44 EXHIBIT INDEX Index to Exhibits Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed/ Furnished Herewith 1.1 Underwriting Agreement dated July 7, 2021 between Moving iMage Technologies, Inc. and Boustead Securities, LLC, as representative of the underwriters named therein 8-K 001-40511 1.1 7/13/21 3.1 Certificate of Incorporation, as amended S-1/A 333-234159 3.1 10/1/20 3.2 Bylaws S-1/A 333-234159 3.2 10/1/20 4.1 Form of Common Stock Certificate S-1/A 333-234159 4.1 2/21/20 4.2 Representative’s Warrant dated July 12, 2021 8-K 001-40511 4.1 7/13/21 10.1 Management Services Agreement dated October 3, 2018 between the Company and Caddy Products, Inc. S-1/A 333-234159 10.1 10/11/19 10.2 Form of Indemnity Agreement between the Company and its directors and officers S-1/A 333-234159 10.2 2/21/20 10.3 2019 Omnibus Incentive Plan S-1/A 333-234159 10.3 10/11/19 10.3(a) Form of Stock Option Award Agreement S-1/A 333-234159 10.3(a) 10/11/19 10.3(b) Form of Restricted Stock Award Agreement S-1/A 333-234159 10.3(b) 10/11/19 10.3(c) Form of Restricted Stock Unit Agreement S-1/A 333-234159 10.3(c) 10/11/19 10.6 Term Sheet dated July 24, 2018 between the Company and Caddy Products, Inc. S-1/A 333-234159 10.6 10/11/19 10.7 Agreement and Plan of Merger and Reorganization dated July 3, 2017 among Monster Digital, Inc., the Company and Innovate Biopharmaceuticals, Inc. 8-K 001-37797* 2.1 7/6/17 10.8 Asset Purchase Agreement dated effective as of January 1, 2019 by and among Moving iMage Technologies, LLC, MiT Acquisition Co. LLC, Caddy Products, Inc., and the Estate of Peter Bergin S-1/A 333-234159 10.8 2/21/20 10.9 Loan Agreement dated as of October 24, 2019 by and between Agility Capital III, LLC Moving iMage Technologies, LLC and MiT Acquisition Co. LLC S-1/A 333-234159 10.9 2/21/20 10.10 Exchange Agreement dated July 7, 2021 among the Company, and the Members of Moving iMage Technologies, LLC 8-K 001-40511 10.1 7/13/21 21.1 List of Subsidiaries ü 23.1 Consent of CohnReznick LLP 24 Power of Attorney (included on signature page) ü 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. ü 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. ü 32.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ü † Compensatory plan or arrangement * Form 8-K filed by 9 Meters Biopharma, Inc.( formerly Innovate Biopharmaceuticals, Inc. and formerly Monster Digital, Inc.). 45