What changed in this filing

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Item 1. Financial Statements

2022-04-11 compared with 2021-11-15 · 222 added, 135 removed, 318 unchanged (53% of the section changed)

3 unchanged sentences

(in thousands except share and per share amounts)

September 30,

Current Assets:

1 unchanged sentence

Accounts receivable, net

Inventories, net

Prepaid expenses and other

4 unchanged sentences

Total Long-Term Assets

Liabilities And Stockholders’ Equity/Members’ Deficit

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities:

3 unchanged sentences

Line of credit

Notes payable – related party

Notes payable – current

6 unchanged sentences

Total Liabilities

Stockholders’ Equity/Member’s Deficit

Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 10,636,278 shares issued and outstanding at September 30, 2021

Stockholders’ Equity (Deficit)

Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 10,636,278 and 5,666,667 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively

Additional paid-in capital

Members’ deficit

Accumulated deficit

Total Stockholders’ Equity/Members’ Deficit

Total Liabilities and Stockholders’ Equity/Members’ Deficit

Total Stockholders’ Equity (Deficit)

Total Liabilities and Stockholders’ Equity (Deficit)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands except share and per share amounts)

Three months ended

September 30,

Six Months Ended

Cost of goods sold

4 unchanged sentences

Total operating expenses

Loss from operations

Other expense:

Operating loss

Other (income) expenses:

Unrealized gain

Interest expense

Total other expense

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

*- The weighted average shares outstanding and net loss per share at September 30, 2020 are proforma information.

Total other (income) expense

Weighted average shares outstanding:

basic and diluted

Net loss per common share basic and diluted

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ AND MEMBERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(in thousands except share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands except for share amounts)

Retained Earnings

Three months ended September 30, 2020 and December 31, 2021:

Additional Paid-In

Equity (Deficit)

Balance as of July 1, 2020

Share Exchange (see Note 1)

Balance as of July 1, 2020, as adjusted

Shares issued in private placement

Balance as of September 30, 2020

Balance as of December 30, 2020

Six months ended December 31, 2020:

Balance as of July 1, 2020

Reverse recapitalization

Common shares issued for LLC Members’ interest

Shares of common stock issued for cash, net of costs

Share Exchange (see Note 1)

Balance as of July 1, 2020, as adjusted

Shares issued in private placement

Balance as of December 31, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands except for share amounts)

Retained Earnings

Three months ended September 30, 2021and December 31, 2021

Additional Paid-In

Balance as of July 1, 2021

Shares of common stock issued for cash, net of issuance costs

Cashless exercise of warrants

Stock option compensation expense

Grant of options for services

Balance as of September 30, 2021

The accompanying Notes are an integral part of these condensed consolidated financial statements.

Grant of options for services

Balance as of December 31, 2021

Six months ended December 31, 2021:

Balance as of July 1, 2021

Shares of common stock issued for cash, net of issuance costs

Cashless exercise of warrants

Grant of options for services

Balance as of December 31, 2021

MOVING IMAGE TECHNOLOGIES, INC.

1 unchanged sentence

(in thousands)

Three months ended

September 30,

Six Months Ended

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Provision for doubtful accounts

Provision for (reversal of) doubtful accounts

Depreciation expense

Amortization expense

Unrealized Gain on investments

Deferred rent

8 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities

Purchases of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Cash acquired through Exchange Agreement

Proceeds from equity raises, net of offering costs

Net borrowings (payments) on notes payable

Net Proceeds from initial public offering

Payments on line of credit

Proceeds from PPP notes payable

Proceeds from private placement

Payments on notes payable

Net cash provided by financing activities

5 unchanged sentences

Reclassification of IPO related costs from other assets to equity

Reverse Capitalization, net of cash received

Cash paid during the period:

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Organization:

Moving iMage Technologies, Inc.

(“PubCo”), a Delaware corporation (together with its wholly-owned subsidiaries unless the context indicates otherwise, (the “Company”) was incorporated in June 2020.

The Company, through its wholly-owned subsidiaries, Moving iMage Technologies, LLC (“MiT LLC”) and Moving iMage Acquisition Co., designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements.

Moving iMage Technologies, Inc., a Delaware corporation, together with its wholly-owned subsidiaries unless the context indicates otherwise, the (“Company”) was incorporated in June 2020.

The Company, through its wholly-owned subsidiary, Moving iMage Technologies, LLC (“MiT LLC”) and MiT LLC's wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA Caddy Products), designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements.

The Company also 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.

4 unchanged sentences

Share Exchange:

On July 7, 2021, in connection with the initial public offering of 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 (the “Share Exchange”).

MiT LLC was considered the acquirer for accounting purposes.

In connection with the Exchange Agreement, the outstanding Notes Payable of $ 1,272,000 between PubCo and MiT LLC was forgiven and eliminated in consolidation.

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.

Because the Share Exchange occurred subsequent to the Company’s fiscal year ended June 30, 2021, the historical financial statements presented in this Quarterly Report on Form 10-Q includes information derived from the audited consolidated financial statements of MiT LLC at June 30, 2021 and the unaudited results of operations and cash flows of MT, LLC for the three months ended September 30, 2020.

In June 2020, MiT LLC members created Moving iMage Technologies, Inc.

(“MIT Inc.”) to facilitate the Company’s initial public offering offering (“IPO”).

Upon formation of MiT, Inc., 2,000,000 shares of MiT, Inc.

common stock were issued to members of MiT LLC.

On July 7, 2021, MiT LLC and MiT Inc.

entered into an exchange agreement (“Exchange Agreement”) whereby the members of MiT LLC exchanged their membership interest for 2,350,000 shares of common stock in MiT Inc.

As a result of the Exchange Agreement, the members of MiT LLC owned approximately 79 % or 4,452,334 of the outstanding common stock of MiT Inc.

As a result, MiT LLC (the entity where the Company conducts its business) became a wholly-owned subsidiary of MiT Inc.

(the SEC registrant).

The transaction was accounted for as a merger of entities under common ownership in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

This determination was primarily based on the facts that, immediately before and after the transaction:

(i) MiT LLC owners owned a substantial majority of the voting rights in the combined company, (ii) MiT LLC designated a majority of the members of the initial board of directors of the combined company, and (iii) MiT LLC’s senior management holds all key positions in the senior management of the combined company.

As a result, the historical financial statements of MiT LLC and MiT Inc.

for the three months ended September 30, 2020 and for the six months ended December 31, 2020 have been retroactively revised to reflect the consolidation of MiT, Inc.

and MiT LLC in a manner similar to pooling of interest.

All inter-company transactions and balances between MiT Inc.

and MiT, LLC have been eliminated.

The condensed consolidated statements of stockholders’ equity (deficit) for the periods ended December 31, 2021 and 2020 have been retroactively revised to give effect of the change in reporting entity (as-if-pooling) accounting of MiT Inc.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Initial Public Offering:

3 unchanged sentences

None of the potentially dilutive securities were included in the computation of diluted earnings per share as their impact would be anti-dilutive.

In connection with the IPO, all MiT LLC membership units were exchanged for 2,350,000 shares of the Company’s common stock.

On July 12, 2021, in connection with the IPO, warrants to purchase 139,611 shares of the Company’s common stock were exercised on a cashless basis.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

COVID-19 Impact and Liquidity :

6 unchanged sentences

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 quarters ended September 30, 2021 and 2020, have been adversely affected.

As a result of the aforementioned factors, our financial and operating results for the three and six months ended December 31, 2021 and 2020, have been adversely affected.

Additionally, our projected financial and operating results for the remainder of fiscal 2022 are expected to be materially adversely affected.

1 unchanged sentence

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.

During the second half of the 2021 calendar year, several larger theater chains have reopened in many parts of the United States.

The ability of these chains to reopen was 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.

Such reopenings have been 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.

Such reopening has been 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.

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.

MOVING IMAGE TECHNOLOGIES, INC.

5 unchanged sentences

Principles of Consolidation :

The condensed consolidated financial statements include the accounts of PubCo, its wholly-owned subsidiary MiT LLC and MiT LLC’s wholly-owned subsidiary, Moving iMage Acquisition Co.

(DBA Caddy Products).

The condensed consolidated financial statements include the accounts of MiT Inc., its wholly-owned subsidiary, Moving iMage Technologies, LLC (“MiT LLC”), and MiT LLC’s wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA Caddy Products).

All significant intercompany transactions and balances have been eliminated in consolidation.

1 unchanged sentence

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Unaudited Interim Consolidated Financial Statements:

Unaudited Interim Condensed Consolidated Financial Statements:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

3 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2021, and with the disclosures and risk factors presented therein.

The June 30, 2021 consolidated balance sheet has been derived from the audited consolidated financial statements.

Operating results for the three months ended September 30, 2021 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2022.

The June 30, 2021 condensed consolidated balance sheet has been derived from the audited consolidated financial statements and updated to reflect the effects of the exchange agreement between MiT LLC and MiT Inc.

Operating results for the three months and six months ended December 31, 2021 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2022.

Measurement of Fair Values :

8 unchanged sentences

The Company capitalized certain legal, accounting and other third-party fees that are directly associated with its recent IPO as deferred offering costs (non-current) until such financings were consummated.

As of June 30, 2021, $ 1.1 million of deferred offering costs are capitalized in other assets.

After completion of the IPO in July 2021, these costs have been recorded in Stockholder’s Equity as a reduction of proceeds received as a result of the offering.

As of June 30, 2021, $ 1,116,000 of deferred offering costs were capitalized in other assets.

After completion of the IPO in July 2021, these costs have been recorded in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a reduction of proceeds received from the offering.

MOVING IMAGE TECHNOLOGIES, INC.

16 unchanged sentences

The Company does not charge interest on past due balances or require collateral on its accounts receivable.

As of June 30, 2021 and September 30, 2021, the allowance for bad debts is approximately $ 356,000 and $ 266,000 , respectively.

As of June 30, 2021 and December 31, 2021 the allowance for bad debts is approximately $ 356,000 and $ 316,000 , respectively.

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.

2 unchanged sentences

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 September 30, 2021, inventory on hand was comprised primarily of finished goods ready for sale.

As of June 30, 2021 and December 31, 2021, inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition:

11 unchanged sentences

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).

Accounts receivable balance as of July 1, 2020 was $ .809 million.

Accounts receivable balance as of July 1, 2020 was $ 809,000 .

The Company does not have contract assets that represent conditional rights to consideration.

4 unchanged sentences

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 three months ended September 30, 2021 included $ .573 million for revenue recognized that was included in contract liability as of July 1, 2021.

The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2021 included $ 790,000 for revenue recognized that was included in contract liability as of July 1, 2021.

Contract liabilities as of July 1, 2020 were $ 854,000 .

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.

Deferred contract acquisition costs consist of sales commissions paid to the sales force, and the related employer payroll taxes, and 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.

2 unchanged sentences

Disaggregation of Revenue (in 000’s):

September 30 2021

September 30 2020

December 31, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Equipment upon delivery (point in time)

1 unchanged sentence

Total revenues

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.

Revenue from the sale of equipment is recognized upon delivery of such equipment to customers and when performance conditions are satisfied.

Revenue from installation is recognized upon completion of the installation project and when the 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.

There were no software revenues during the three or six months ended December 31, 2021 or 2020.

Returns and Allowances:

3 unchanged sentences

Advertising Costs:

Advertising costs of approximately $ 1,000 and $ 2,000 for the three months ended September 30, 2021 and 2020, respectively, are expensed as incurred within selling and marketing expenses.

Advertising costs were approximately $ 11,600 and $ 2,200 for the three months ended December 31, 2021 and 2020, respectively, and $ 11,700 and $ 5,100 for the six months ended December 31, 2021 and 2020, respectively.

Advertising costs are expensed as incurred within selling and marketing expenses.

MOVING IMAGE TECHNOLOGIES, INC.

2 unchanged sentences

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 as of December 31, 2021 and June 30, 2021 represents the excess of the purchase price over the fair value of the net identifiable assets acquired in the 2019 Caddy Acquisition.

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 Company’s impairment assessment begins with a qualitative assessment to determine whether it’s 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.

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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 three months ended September 30, 2021 or 2020.

The Company tested goodwill impairment in relation to the COVID-19 pandemic and no impairments were identified for the three and six months ended December 31, 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.

2 unchanged sentences

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 three months ended September 30, 2021 or 2020.

There were no intangible asset impairments recognized for the three months and six months ended December 31, 2021 or 2020.

Business Combinations:

2 unchanged sentences

The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

The transaction resulted in the transferring of an entity under common control.

Income Taxes:

2 unchanged sentences

Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized.

Because the Company has had recurring losses from operations, at September 30, 2021 it has taken a full valuation allowance against all potential deferred tax assets.

Prior to July 7, 2021, MiT LLC was 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 financial statements prior to July 7 th , 2021.

Because the Company has had recurring losses from operations, at December 31, 2021 it has taken a full valuation allowance against all potential deferred tax assets.

Prior to July 7, 2021, MiT LLC was a limited liability company treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits (losses) of the Company being passed through to the members.

As such, there is no recognition of federal or state income taxes in the financial statements prior to July 7, 2021.

Any uncertain tax position taken by the members is not an uncertain position of the Company.

The Company evaluate the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company evaluated the realizability of deferred tax Assets (“DTA”) at June 30, 2021 (most recent year end, presented as comparative in 10Q balance sheet), July 7, 2021(date of exchange agreement), September 30, 2021 (Q1 reporting period) and December 31, 2021 (Q2 reporting period).

Because the Company has had recurring losses from operations at June 30, 2021, and further loses for the period ended September 30, 2021 and December 31, 2021, which will generate NOL’s and it has taken a full valuation allowance against all potential deferred tax assets.

Goodwill recognized in connection with acquisitions represents the residual amount of the purchase price over separately identifiable intangible assets and pursuant to 26 U.S.

Code section 197 is deductible for tax purposes.

The following table summarizes deferred tax assets and liabilities as of the date of the Exchange Agreement and quarterly through December 31, 2021:

Existing valuation allowance

Deferred Tax Liabilities

Prior to business combination

Total July 7, 2021

Deferred tax assets

Deferred tax liabilities

Valuation allowance

Total MiT Inc.

December 31, 2021

MOVING IMAGE TECHNOLOGIES, INC.

1 unchanged sentence

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following table summarizes the components of deferred tax assets and deferred tax liabilities quarterly through December 31, 2021:

Assets (Liabilities)

Inventory reserve

Accumulated depreciation

Accumulated goodwill amortization

Deferred rent

Warranty reserve

Allowance for doubtful accounts

Valuation allowance

Total July 1, 2021

Inventory reserve

Accumulated depreciation

Accumulated goodwill amortization

Deferred rent

Warranty reserve

Stock compensation

Net operating loss carryforward

Allowance for doubtful accounts

Valuation allowance

Total December 31, 2021

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Product Warranty:

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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 September 30, 2021, the Company has established a warranty reserve of $ 29,000 and $ 33,000 respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

As of June 30, 2021 and December 31, 2021, the Company has established a warranty reserve of $ 29,000 and $ 32,000 , respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands):

September 30,

Product warranty liability, beginning of period

2 unchanged sentences

Settlements made

Product warranty liability, end of the period

Product warranty liability, end of period

Research and Development:

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Recently Issued Accounting Pronouncements:

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No.

In February 2016, FASB issued Accounting Standards Update (“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.

2 unchanged sentences

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.

The Company is in the process of evaluating the impact of this standard.

In December 2019, FASB issued ASU No.

2019-12, Income Taxes (Topic 740) :

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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.

Other pronouncements issued by FASB with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

MOVING IMAGE TECHNOLOGIES, INC.

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NOTE 2 — LOSS PER SHARE

Basic earnings/(loss) per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period.

Diluted earnings/(loss) per share data is computed using the weighted average number of common shares outstanding during each period.

Dilutive common equivalent shares consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method.

A reconciliation of basic and diluted earnings/(loss) per share is as follows:

Basic loss per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period.

Diluted loss per share data is computed using the weighted average number of common and potentially dilutive securities outstanding during each period.

Potentially dilutive securities consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method.

A reconciliation of basic and diluted loss per share is as follows:

For the Three Months Ended

September 30,

For the Six Months Ended

For the Three Months Ended

For the Six Months Ended

Weighted average common shares outstanding, basic and diluted

Earnings/(loss) per share

Loss per share

Basic and diluted

1 unchanged sentence

For the Three Months Ended

September 30,

For the Six Months Ended

For the Three Months Ended

For the Six Months Ended

Total potentially dilutive shares

The Pro forma weighted average shares outstanding and net loss per share has been presented for the three months ended September 30, 2020, to show the effect of the exchange of Class B Membership Interests of MIT LLC for shares of common stock of PubCo prior to the initial public offering.

NOTE 3 — PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in thousands):

September 30,

Production equipment

5 unchanged sentences

Net property plant and equipment

Depreciation expense related to property, plant and equipment was $ 13,000 and $ 34,000 for the three months ended September 30, 2021 and 2020, respectively, of which $ 9,000 and $ 30,000 is included in cost of goods sold and $ 4,000 and $ 4,000 in general and administrative expense, respectively.

Depreciation expense related to property, plant and equipment was $ 0 and $ 33,000 for the three months ended December 31, 2021 and 2020, respectively, of which $ 0 and $ 30,000 is included in cost of goods sold and $ 0 and $ 3,000 in general and administrative expense, respectively.

MOVING IMAGE TECHNOLOGIES, INC.

1 unchanged sentence

NOTE 3 — PROPERTY, PLANT AND EQUIPMENT (continued)

Depreciation expense related to property, plant and equipment was $ 13,000 and $ 67,000 for the six months ended December 31, 2021 and 2020, respectively, of which $ 9,000 and $ 60,000 is included in cost of goods sold and $ 4,000 and $ 7,000 in general and administrative expense, respectively.

Depreciation of property, plant and equipment is calculated using the straight-line method over their estimated useful lives as follows:

5 unchanged sentences

Other equipment

NOTE 4 — GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of September 30, 2021 (in thousands):

NOTE 4 —INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of December 31, 2021 (in thousands):

Customer relationships

1 unchanged sentence

Customer relationships

Amortization expense was $ 24,000 and $ 24,000 for the three months ended September 30, 2021 and 2020, respectively, and are included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at September 30,2021 in each of the five fiscal years subsequent to September 30, 2021, and thereafter is as follows (amounts in thousands):

2022 remaining

Amortization expense was $ 24,000 and $ 24,000 for the three months ended December 31, 2021 and 2020, respectively, and was $ 48,000 and $ 48,000 for the six months ended December 31, 2021 and 2020, respectively, and is included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at December 31, 2021 in each of the five years subsequent to December 31, 2021, and thereafter is as follows (amounts in thousands):

MOVING IMAGE TECHNOLOGIES, INC.

2 unchanged sentences

Accrued expenses consist of the following (in thousands):

September 30,

Employee compensation

8 unchanged sentences

On the effective date of the IPO, the lender exercised these warrants to acquire 94,723 shares of the common stock on a cashless basis.

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.

Approximately $ 400,000 of the proceeds from this loan were used to pay amounts owed to Caddy in connection with the Caddy acquisition.

No further borrowings are available under this agreement from March 31, 2020.

1 unchanged sentence

In July 2021, the outstanding balance, and all accrued interest, was paid in full.

Long-term debt at September 30, 2021 was as follows (in thousands):

September 30, 2021

Long-term debt at December 31, 2021 was as follows (in thousands):

December 31, 2021

Long-term debt at June 30, 2021 was as follows (in thousands):

2 unchanged sentences

Caddy indemnity promissory note

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 %.

The Caddy Promissory note was payable in monthly installments through August 2024 at an interest rate of Prime plus 2.75 %.

The Caddy Indemnity note was 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.

All of the notes were collateralized by Caddy assets.

In addition, the notes were guaranteed by Phil Rafnson, the Company’s majority shareholder.

In August 2021, all related Caddy notes and balances were paid in full

MOVING IMAGE TECHNOLOGIES, INC.

3 unchanged sentences

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 .

On March 13, 2021, the Company received proceeds in the amount of approximately $ 698,000 from a second PPP loan.

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.

2 unchanged sentences

In May 2021, the Company received notification from the Small Business Administration 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 $ 110,000 is included in notes payable current in the condensed consolidated balance sheets.

As of December 31, 2021, the outstanding balance of the second PPP loan was $ 698,000 , of which $ 147,000 is included in notes payable current in the condensed 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 7 — STOCKHOLDERS’/MEMBERS' EQUITY AND STOCK BASED COMPENSATION

In April 2022, the Company received notice that on March 23, 2022, its second PPP loan in the amount of $ 698,000 plus accrued interest has been fully forgiven and is paid in full.

NOTE 7 — STOCKHOLDERS’ EQUITY

In 2019, the Company adopted the 2019 Omnibus Incentive Plan (the “Plan”).

The Plan, as amended, provides for the issuance of stock-based awards to employees.

As of September 30, 2021, the Plan provides for the issuance of up to 750,000 stock based awards.

There are 600,000 stock based awards available to grant under the Plan at September 30, 2021.

In connection with the Company’s IPO, the underwriters received warrants to acquire 241,500 shares of the Company’s common stock at an exercise price of $ 3.75 per share.

None of the potentially dilutive securities were included in the computation of diluted earnings per share as their impact would be anti-dilutive.

In July 2021, the Company granted options to non-employee directors to purchase an aggregate of 150,000 shares of its common stock at an exercise price of $ 3.00 per shares.

As of December 31, 2021, the Plan provides for the issuance of up to 750,000 stock-based awards.

There are 600,000 stock-based awards available to grant under the Plan at December 31, 2021.

In July 2020, the Company, through a Private Placement, issued 666,667 shares of stock for total gross proceeds of $ 887,000 .

Net proceeds of $ 784,000 were received after deducting offering costs of $ 103,000 .

In conjunction with the private placement, warrants for 50,000 shares were issued to Boustead Securities, LLC.

In July 2021, MiT Inc.

entered into an Exchange Agreement with MiT LLC pursuant to which MiT Inc.

agreed to exchange membership units for 2,350,000 shares of Common Stock representing 41.4 % of the equity as of such date on a fully diluted basis for no consideration.

The shares were exchanged as part of the Exchange Agreement with the Company as described in Note 1.

In July 2021, the Company granted options to non-employee directors to purchase an aggregate of 150,000 shares of its common stock at an exercise price of $ 3.00 per share.

The options vest one year from the date of grant, expire ten years from the date of grant and had an aggregate grant date fair value of $ 244,200 , which will be recognized ratably over the vesting period.

These options, which were the only options granted during the three months ended September 30, 2021, had a grant-date fair value of $ 1.63 per share.

The Company recognized compensation expense for stock option awards of $ 56,000 during the three months ended September 30, 2021 in its condensed consolidated statements of operations.

These options, which were the only options granted during the six months ended December 31, 2021, had a grant-date fair value of $ 1.63 per share.

The Company recognized compensation expense for stock option awards of approximately $ 62,000 and $ 118,000 during the three- and six-month periods ended December 31, 2021, respectively.

None of the these potentially dilutive securities were included in the computation of diluted earnings per share as their impact would be anti-dilutive.

At June 30, 2021, there was $ 188,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of 9 months .

During the three months ended September 30, 2021, warrant holders exercised 139,611 warrants on a cashless basis.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2021, there was $ 126,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of six months .

During the six months ended December 31, 2021, warrant holders exercised 139,611 warrants on a cashless basis.

NOTE 8 — RELATED PARTY TRANSACTIONS

As of June 30, 2021, there was an outstanding balance of $ 1.272 million owed to the PubCo by MiT LLC, which is reflected in the June 30, 2021 balance sheet as Note payable – related party.

Per terms of the loan agreement, this entire amount was forgiven in conjunction with the Company’s IPO in July 2021 and eliminated in consolidation in connection with the Exchange Agreement.

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.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — CUSTOMER AND VENDOR CONCENTRATIONS

Two customers accounted for approximately 27 % and 13 % of the Company’s sales for the three months ended September 30, 2021.

At September 30, 2021, the amount of outstanding receivables related to these customers was approximately $ 132,000 .

Two customers accounted for 49 % and 10 % of the Company’s sales for the three months ended September 30, 2020.

There was no outstanding balances related to these customers at June 30, 2021.

Approximately 21 % of the Company’s purchases were provided by one vendor for the three months ended September 30, 2021.

Approximately 25 % and 12 % of the Company’s purchases were provided by two vendors for the three months ended September 30, 2020.

Two customers accounted for approximately 20 % and 18 % of the Company’s sales for the three months ended December 31, 2021.

Three customers accounted for approximately 23 %, 10 % and 10 % of the Company's sales for the six months ended December 31, 2021.

At December 31, 2021, the amount of outstanding receivables related to these customers was approximately $ 240,000 .

One customer accounted for 48 % of the Company’s sales for the three months ended December 31, 2020.

One customer accounted for 49 % of the Company's sales for the six months ended December 31, 2020.

At December 31, 2020, the amount of outstanding receivables related to this customer was approximately $ 153,000 .

Approximately 21 % of the Company’s purchases were provided by one vendor for the three months ended December 31, 2021.

Approximately 14 % and 10 % of the Company’s purchases were provided by two vendors for the three months ended December 31, 2020.

Approximately 33 % of the Company’s purchases were provided by one vendor for the six months ended December 31, 2021.

Approximately 16 % of the Company’s purchases were provided by one vendor for the six months ended December 31, 2020.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company occupies an executive office and warehouse space in Fountain Valley, CA, pursuant to separate lease agreements.

Rent expense was $ 70,000 for both of the three months ended September 30, 2021 and 2020.

Future minimum lease payments at September 30, 2021 under these arrangements are as follows:

Rent expense was $ 70,000 for both of the three months ended December 31, 2021 and 2020.

Rent expense was $ 141,000 for both of the six months ended December 31, 2021 and 2020.

Future minimum lease payments at December 31, 2021 under these arrangements are as follows:

(in thousands)

Operating leases

2022 remaining

Total future minimum lease payments

2 unchanged sentences

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 11 — SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements except for the transaction described below.

On February 23, 2022, the Company received a notice from NYSE Regulation stating that the Company was not in compliance with the NYSE American LLC’s continued listing standards under the timely filing criteria included in Section 1007 of the NYSE

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

American Company Guide because the Company failed to timely file with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the period ended December 31, 2021.

In April 2022, the Company received notice that on March 23, 2022, its second PPP loan in the amount of $ 698,000 plus accrued interest has been fully forgiven and is paid in full.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements