What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-05-16 · 252 added, 275 removed, 311 unchanged (63% of the section changed)

3 unchanged sentences

(in thousands except share and per share amounts)

September 30,

Current Assets:

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Accounts receivable, net

Inventories, net

Prepaid expenses and other

2 unchanged sentences

Marketable securities

Right-of-use asset

Property, plant and equipment, net

1 unchanged sentence

Total Long-Term Assets

Liabilities and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current Liabilities:

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Customer deposits

Line of credit

Notes payable – current

Lease liability – current

Unearned warranty revenue

1 unchanged sentence

Long-Term Liabilities:

Notes payable, net of current portion

Lease liability – non-current

Deferred rent

1 unchanged sentence

Total Liabilities

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 March 31, 2022 and June 30, 2021, respectively

Stockholders’ Equity

Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 10,958,398 and 10,828,398 shares issued and outstanding at September 30, 2022 and June 30, 2022, respectively

Additional paid-in capital

Accumulated deficit

Total Stockholders’ Equity (Deficit)

Total Liabilities and Stockholders’ Equity (Deficit)

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

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

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(in thousands except share and per share amounts)

Nine Months Ended

September 30,

Cost of goods sold

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Total operating expenses

Operating loss

Other (income) expense:

Unrealized gain on marketable securities

Realized gain on marketable securities

PPP loan and interest forgiveness

Operating income (loss)

Other (income) expenses:

Unrealized loss on investments

Realized loss on investments

Interest and other income

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Total other (income) expense

Net income (loss)

Weighted average shares outstanding:

basic and diluted

Net income (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’ EQUITY (DEFICIT)

(in thousands except for share amounts)

Retained Earnings

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

Additional Paid-In

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 31, 2020

Balance as of March 31, 2021

Nine months ended March 31, 2021:

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 March 31, 2021

Net loss per common share basic and diluted

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

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Retained Earnings

Three months ended September 30, 2021, December 31, 2021, and March 31, 2022:

Additional Paid-In

Balance as of June 30, 2022

Issuance of stock to employees

Balance as of Sep 30, 2022

Balance as of July 1, 2021

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

Shares of common stock issued for cash

Cashless exercise of warrants

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Balance as of September 30, 2021

Grant of options for services

Balance as of December 31, 2021

Grant of options for services

Balance as of March 31, 2022

Nine months ended March 31, 2022:

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 March 31, 2022

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

MOVING IMAGE TECHNOLOGIES, INC.

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(in thousands)

Nine Months Ended

Three Months Ended

September 30,

Cash flows from operating activities:

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Amortization expense

Unrealized gain on investments

Realized gain on investments

Deferred rent

Stock option compensation expense

PPP loan forgiveness

Unrealized loss on investments

Realized loss on investments

Cash expended in excess of rent expense

Stock compensation expense

Changes in operating assets and liabilities

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Cash flows from investing activities

Sale of (investment in) marketable securities

Sale of marketable securities

Purchases of marketable securities

Purchases of property, plant and equipment

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Payments on line of credit

Proceeds from private placement

Paycheck Protection Program loan proceeds

Payments on notes payable

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Non-cash investing and financing activities:

Deferred IPO costs

Reclassification of IPO related costs from other assets to equity

Accrued expenses settled by issuance of common stock

Right-of-use asset recorded upon adoption of ASC 842

Cash paid during the period:

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Organization:

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.

Moving iMage Technologies, Inc.

(“Company”), a Delaware corporation, together with its wholly-owned subsidiaries unless the context indicates otherwise, 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.

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Additionally, the Company 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.

The Company also provides turnkey furniture, fixtures 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.

The Company 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.

Moving iMage Acquisition Co.

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

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

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

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

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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.

entered into an exchange agreement (“Exchange Agreement”) whereby the members of MiT LLC exchanged their membership interests 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 shares, 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”).

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.

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 and for the nine months ended March 31, 2021 have been retroactively revised to reflect the consolidation of MiT, Inc.

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 March 31, 2022 and 2021 have been retroactively revised to give effect of the change in reporting entity 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:

On July 12, 2021, the Company 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 $ 12,360,000 after deducting underwriting discounts, commissions, and other expenses of approximately $ 2,130,000 .

On July 12, 2021, the Company closed its IPO and issued 4,830,000 shares of its common stock at a price of $ 3.00 per share for net proceeds of approximately $ 12,360,000 after deducting underwriting discounts, commissions, and other expenses of approximately $ 2,130,000 .

Upon the completion of its IPO, the Company reclassified deferred IPO related costs of approximately $ 1,116,000 from other assets to additional paid-in capital.

In connection with the Company’s IPO, the underwriters received warrants to acquire 241,500 shares of the Company’s common stock at $ 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.

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.

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 three and nine months ended March 31, 2022 and 2021, have been adversely affected.

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

The ultimate impact of the COVID-19 pandemic on our business and results of operations in fiscal 2022 and beyond 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.

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 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.

MOVING IMAGE TECHNOLOGIES, INC.

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

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.

As of the date these Condensed Consolidated Financial Statements were issued, with the actions taken above, existing cash, including the 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 condensed consolidated financial statements were available to be issued.

Impact of the COVID-19 Pandemic:

The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry.

The social and economic effects have been widespread.

At various points during the pandemic, authorities around the world imposed measures intended to control the spread of COVID-19, including stay-at-home orders and restrictions on large public gatherings, which caused movie theaters in countries around the world to temporarily close.

The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries.

As a result, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers.

Throughout Calendar 2020 and 2021 the theatres reopened as soon as local restrictions and the status of the COVID-19 pandemic would allow.

As of September 30, 2022, a large majority of domestic and international theatres were open.

The industry’s recovery to historical levels of new film content, both in terms of the number of new films and box office performance, is still underway, as the industry also continues to adjust to evolving theatrical release windows, competition from streaming and other delivery platforms, supply chain delays, inflationary pressures, labor shortages, wage rate pressures and other economic factors.

Based on the Company’s current estimates of recovery, it believes it has, and will generate, sufficient cash to sustain operations for a period of 12 months from the issuance of these financial statements.

Nonetheless, the COVID-19 pandemic has had, and continues to have, adverse effects on the Company’s business, results of operations, cash flows and financial condition.

Principles of Consolidation :

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).

The condensed consolidated financial statements include the accounts of MiT Inc., its wholly-owned subsidiary, 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.

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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, 2022, and with the disclosures and risk factors presented therein.

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 nine months ended March 31, 2022 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, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.

Operating results for the three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2023.

Segment Reporting:

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance.

Operating segments may be aggregated only to a limited extent.

The Company’s CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance.

The Company has determined that it has a single operating and reportable segment.

Measurement of Fair Values :

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Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

quoted prices (unadjusted) in active markets for identical assets or liabilities.

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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.

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of September 30, 2022 (in thousands):

September 30, 2022

Equity Securities

State and Municipal Debt Securities

Fixed Income Funds

Alternative Funds

Real Estate Funds

Less Long-term

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):

June 30, 2022

Equity Securities

State and Municipal Debt Securities

Fixed Income Funds

Alternative Funds

Real Estate Funds

Less Long-term

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.

There were no impairments recognized for the quarter ended September 30, 2022 or the year ended June 30, 2022.

Deferred Offering Costs:

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, $ 1,116,000 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.

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

MOVING IMAGE TECHNOLOGIES, INC.

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

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 were recorded in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a reduction of proceeds received from the offering.

Use of Estimates:

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Concentration of Cash:

The Company maintains its cash and cash equivalents in bank accounts which, at times, may exceed federally insured limits.

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.

Cash Equivalents and Marketable Securities:

All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.

The Company’s investments in marketable debt securities are carried at either amortized cost or fair value.

Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity.

Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as available-for sale.

Realized gains and losses on available-for-sale debt securities are included in net income/loss.

Unrealized gains and losses, net of tax, on available-for-sale debt securities are recognized in other comprehensive gain/(loss).

The Company’s investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations.

The Company’s marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net.

The cost of securities sold is determined using the specific identification method.

Accounts Receivable:

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

As of March 31, 2022 and June 30, 2021, the allowance for bad debts is approximately $ 126,000 and $ 261,000 , respectively.

As of September 30, 2022 and June 30, 2022, the allowance for bad debts is approximately $ 141,000 and $ 138,000 , 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.

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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 March 31, 2022 and June 30, 2021, inventory on hand was comprised primarily of finished goods ready for sale.

As of March 31, 2022 and June 30, 2021, inventory reserve was $ 581,000 and $ 375,000 , respectively.

As of September 30, 2022 and June 30, 2022, the inventory reserve was $ 401,000 and $ 434,000 , respectively, and inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition:

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“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 cases where 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.

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, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods as per the agreement with the customer.

The Company generates all its revenue from agreements with customers.

In case there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates 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.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation and then evaluates how the services are transferred to the customer to determine the timing of revenue recognition.

The Company considers the U.S.

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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).

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

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

MOVING IMAGE TECHNOLOGIES, INC.

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

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.

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 nine months ended March 31, 2022 included $ 1.273 million for revenue recognized that was included in contract liability as of July 1, 2021.

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

The change in contract liabilities (customer deposits and unearned warranty revenue) during the three months ended September 30, 2022 included $ 1.589 million for revenue recognized that was included in contract liabilities as of June 30, 2022.

The change in contract liabilities (customer deposits and unearned warranty revenue) during the three months ended September 30, 2021 included $ 0.573 million for revenue recognized that was included in contract liabilities as of June 30, 2022.

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.

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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.

Management 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 Three

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Disaggregation of Revenue (in 000’s):

March 31, 2022

March 31, 2021

March 31, 2022

March 31, 2021

September 30, 2022

September 30, 2021

Equipment upon delivery (point in time)

Installation (point in time)

Software subscription and services (over time)

Total revenues

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

Revenue from the sale of equipment is recognized upon shipment 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.

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Services revenues are generally recognized over time as the contracts are performed.

There were no software revenues during the three or nine months ended March 31, 2022 or 2021.

Returns and Allowances:

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Advertising Costs:

Advertising costs were approximately $ 4,300 and $ 4,600 for the three months ended March 31, 2022 and 2021, respectively, and $ 16,000 and $ 9,700 for the nine months ended March 31, 2022 and 2021, respectively.

Advertising costs were approximately $ 6,700 and $ 1,000 for the three months ended September 30, 2022 and 2021, respectively.

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

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Goodwill and Intangible Assets:

Goodwill as of March 31, 2022 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 as of September 30, 2022 and June 30, 2022 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’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.

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.

On July 1, 2022, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment” .

As such, the Company’s goodwill impairment test includes a one-step qualitative impairment test whereby a goodwill impairment loss will be measured as the excess of a reporting units carrying amount over its fair value.

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 three and nine months ended March 31, 2022 or 2021.

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.

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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 and nine months ended March 31, 2022 or 2021.

There were no intangible asset impairments recognized for the three months ended September 30, 2022 or 2021.

Business Combinations:

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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:

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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 March 31, 2022 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 evaluates 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) December 31, 2021 (Q2 reporting period) and March 31, 2022 (Q3 reporting period).

Because the Company has had recurring losses from operations at June 30, 2021, and further losses for the nine months ended March 31, 2022, 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 through March 31, 2022:

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.

March 31, 2022

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

MOVING IMAGE TECHNOLOGIES, INC.

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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 through March 31, 2022:

The following table summarizes the components of deferred tax assets and deferred tax liabilities at June 30, 2022 and September 30, 2022 (in thousands):

Assets (Liabilities)

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Accumulated depreciation

Accumulated goodwill amortization

Accumulated intangible amortization

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Warranty reserve

Stock compensation

Net operating loss carryforward

Unrealized loss on marketable securities

Allowance for doubtful accounts

Valuation allowance

Total July 1, 2021

Total June 30, 2022

Inventory reserve

Accumulated depreciation

Accumulated goodwill amortization

Accumulated intangible amortization

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Net operating loss carryforward

Unrealized loss on marketable securities

Allowance for doubtful accounts

Valuation allowance

Total March 31, 2022

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Total September 30, 2022

On July 1, 2022 the Company adopted ASU 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.

In accordance with ASC 842, on July 1, 2022 the Company recognized Right of Use Assets in the amount of $ 665,000 and a lease liabilities of $ 681,000 for the leases associated with its executive office and warehouse space, as described in Note 11.

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 March 31, 2022, the Company has established a warranty reserve of $ 29,000 and $ 37,000 , respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

As of September 30, 2022 and June 30, 2022, the Company has established a warranty reserve of $ 50,000 and $ 55,000 , respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Nine Months Ended

Twelve Months Ended

Quarter Ended September 30,

Year Ended June 30,

Product warranty liability, beginning of period

Accruals for warranties issued

Change in estimates

Settlements made

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Recently Issued Accounting Pronouncements:

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.

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.

Management is in the process of evaluating the impact of this standard effective July 1, 2022.

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 is effective beginning July 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.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments.

Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset.

The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset.

Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date.

The new guidance provides no threshold for recognition of impairment allowance.

Therefore, entities must also measure expected credit losses on assets that have a low risk of loss.

For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables.

ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies, and as such the Company will adopt this standard on July 1, 2023.

The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements.

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 — INVESTMENTS

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

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of March 31, 2022 (amounts in 000’s):

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of September 30, 2022 (in thousands):

Cash Equivalents

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — INCOME (LOSS) PER SHARE

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

NOTE 2 — INVESTMENTS (continued)

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 30, 2022 (in thousands):

Cash Equivalents

Communication

Consumer Discretionary

Consumer Staples

Information Technology

State & Municipal Bonds

Fixed income funds

Alternative, real estate and other

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — LOSS PER SHARE

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 income (loss) per share is as follows:

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

For the Three Months Ended

For the Nine Months Ended

For the Three Months Ended

For the Nine Months Ended

Net income (loss)

September 30,

Weighted average common shares outstanding, basic and diluted

Income (loss) per share

Loss per share

Basic and diluted

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For the Three Months Ended

For the Nine Months Ended

For the Three Months Ended

For the Nine Months Ended

September 30,

Total potentially dilutive shares

For the three month period ended March 31, 2021 and the nine month periods ended March 31, 2022 and 2021, the Company had a net loss, therefore all potentially dilutive securities are deemed to be anti-dilutive and are not included in the diluted loss per share computation.

For the three month period ended March 31, 2022 the Company had net income.

All potentially dilutive securities for the three month period ended March 31, 2022 were excluded from the computation of earnings per share because their exercise prices were out of the money and were thus also anti-dilutive when computed using the treasury stock method.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended September 30, 2022 and 2021, the Company had net losses, therefore all potentially dilutive securities are deemed to be anti-dilutive and are not included in the diluted loss per share computation.

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT

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

September 30,

Production equipment

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Net property plant and equipment

Depreciation expense related to property, plant and equipment was $ 3,000 and $ 33,000 for the three months ended March 31, 2022 and 2021, respectively, of which $ 0 and $ 30,000 is included in cost of goods sold and $ 3,000 and $ 3,000 in general and administrative expense, respectively.

Depreciation expense related to property, plant and equipment was $ 2,000 and $ 13,000 for the three months ended September 30, 2022 and 2021, respectively, of which $ 0 and $ 9,000 is included in cost of goods sold and $ 2,000 and $ 4,000 in general and administrative expense, respectively.

MOVING IMAGE TECHNOLOGIES, INC.

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NOTE 4 — PROPERTY, PLANT AND EQUIPMENT (continued)

Depreciation expense related to property, plant and equipment was $ 15,000 and $98,000 for the nine months ended March 31, 2022 and 2021, respectively, of which $ 9,000 and $ 90,000 is included in cost of goods sold and $ 7,000 and $ 8,000 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 5 —INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of March 31, 2022 (in thousands):

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of September 30, 2022 (in thousands):

Customer relationships

1 unchanged sentence

Customer relationships

Amortization expense was $ 24,000 and $ 24,000 for the three months ended March 31, 2022 and 2021, respectively, and was $ 72,000 and $ 72,000 for the nine months ended March 31, 2022 and 2021, respectively, and is included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at March 31, 2022 in each of the five years subsequent to March 31, 2022, and thereafter is as follows (amounts in thousands):

Amortization expense was $ 24,000 and $ 24,000 for the three months ended September 30, 2022 and 2021, respectively, and is included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at September 30, 2022 in each of the five years subsequent to September 30, 2022, and thereafter is as follows (in thousands):

Goodwill at September 30, 2022 and June 30, 2022 was $ 287,000 .

MOVING IMAGE TECHNOLOGIES, INC.

2 unchanged sentences

Accrued expenses consist of the following (in thousands):

September 30,

Employee compensation

Accrued warranty

NOTE 7 — DEBT

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In October 2019, MiT LLC 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 borrowed bore interest at 13 % per annum and were due and payable one year from the origination date of the loan.

The loan was secured by all assets of MiT LLC and was personally guaranteed by Phil Rafnson, our CEO and Chairman of the Board.

4 unchanged sentences

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.

As of June 30, 2021, the outstanding balance of this line of credit was $ 590,000 .

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

There was no outstanding debt as of March 31, 2022.

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

June 30, 2021

Caddy promissory note

Caddy indemnity promissory note

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 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 — DEBT (continued)

In July 2021, the outstanding balance of the line of credit, approximately $ 590,000 , and all accrued interest, was paid in full.

Notes Payable

In August 2021, all remaining amounts due on notes related to the Caddy acquisition, approximately $ 1,241,000 , were paid in full.

Paycheck Protection Program

1 unchanged sentence

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.

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 Small Business Administration that the first loan in the amount of $ 694,000 , including accrued interest, has been fully forgiven.

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.

The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provided 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 were forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

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, was fully forgiven.

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.

There is no outstanding debt as of September 30 or June 30, 2022.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — STOCKHOLDERS’ EQUITY

1 unchanged sentence

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

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 March 31, 2022.

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.

As of September 30, 2022, the Plan provides for the issuance of up to 1,500,000 stock-based awards.

There are 1,220,000 stock-based awards available to grant under the Plan at September 30, 2022.

In July 2021, MiT Inc.

3 unchanged sentences

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 nine months ended March 31, 2022, had a grant-date fair value of $ 1.63 per share.

The Company recognized compensation expense for stock option awards of approximately $ 60,000 and $ 178,000 during the three and nine month periods ended March 31, 2022, 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 March 31, 2022, there was $ 66,000 of total unrecognized compensation cost related to nonvested stock option awards that is expected to be recognized over a weighted average period of three months .

During the nine months ended March 31, 2022, warrant holders exercised 139,611 warrants on a cashless basis.

NOTE 9 — RELATED PARTY TRANSACTIONS

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.

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 was 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 approximately $ 0 and $ 56,000 during the three month periods ended September 30, 2022 and 2021, respectively.

At September 30, 2022, there was no unrecognized compensation cost related to nonvested stock option awards.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model.

The following weighted average assumptions were used for option grants during the three months ended September 30, 2021:

Risk-free interest rate

Expected volatility

Dividend yield

Expected option term in years

On July 12, 2022, the Company granted 130,000 shares of common stock, with a fair market value of approximately $ 153,000 , to employees as compensation for previously provided service, which was accrued as of June 30, 2022.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — STOCKHOLDERS’ EQUITY (continued)

A summary of the status of the Company’s stock options as of September 30, 2022 and changes during the three months ended September 30, 2022 are presented below.

Balance, July 1, 2022

Granted during the period

Exercised during the period

Terminated/Expired during the period

Balance, September 30, 2022

A summary of the status of the Company’s stock options as of September 30, 2021 and changes during the three months ended September 30, 2021 are presented below.

Balance, July 1, 2021

Granted during the period

Exercised during the period

Terminated/Expired during the period

Balance, September 30, 2021

The following table summarizes information about outstanding and exercisable stock options at September 30, 2022:

Range of Exercise Price

Exercise Price

A summary of the status of the Company’s stock warrants as of September 30, 2021 and changes during the three month period ended September 30, 2021 are presented below.

Balance, July 1, 2021

Granted during the period

Exercised during the period

Terminated/Expired during the period

Balance, September 30, 2021

In July 2021, warrants were exercised on a cashless basis resulting in the issuance of 139,611 shares of common stock.

No warrants were outstanding, and there was no warrant activity in the three month period ended September 30, 2022.

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — RELATED PARTY TRANSACTIONS

NOTE 10 — CUSTOMER AND VENDOR CONCENTRATIONS

Two customers accounted for approximately 11 % and 10 % of the Company’s sales for the three months ended March 31, 2022.One customer accounted for approximately 32 % of the Company's sales for the nine months ended March 31, 2022.

At March 31, 2022, the amount of outstanding receivables related to these customers was approximately $ 120,000 .

Two customers accounted for 14 % and 13 % of the Company’s sales for the three months ended March 31, 2021.

One customer accounted for 31 % of the Company's sales for the nine months ended March 31, 2021.

At March 31, 2021, the amount of outstanding receivables related to this customer was approximately $ 1,000 .

Approximately 14 % and 13 % of the Company’s purchases were provided by two vendors for the three months ended March 31, 2022.

Approximately 17 %, 16 % and 10 % of the Company’s purchases were provided by three vendors for the three months ended March 31, 2021.

Approximately 10 % of the Company’s purchases were provided by one vendor for the nine months ended March 31, 2022.

Approximately 50 % of the Company’s purchases were provided by one vendor for the nine months ended March 31, 2021.

NOTE 11 — COMMITMENTS AND CONTINGENCIES

One customer accounted for approximately 17 % of the Company’s sales for the three months ended September 30, 2022.

At September 30, 2022, the was no amount of outstanding receivables related to this customer.

Two customers accounted for 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 .

Approximately 32 % and 14 % of the Company’s purchases were provided by two vendor for the three months ended September 30, 2022.

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

NOTE 11 — LEASE 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 $ 70,000 for both of the three months ended March 31, 2022 and 2021.

Rent expense was $ 141,000 for the nine months ended March 31, 2022 and 2021.

Future minimum lease payments for the next 5 years at March December 31, 2021 under these arrangements are as follows:

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

Under ASC 842, at contract inception the Company determined whether the contract is or contains a lease and whether the lease should be classified as on operating or a financing lease.

Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our condensed consolidated balance sheet.

The Company’s executive office and warehouse lease agreements are classified as operating leases.

The lease agreements, as amended, expire on January 31, 2025 and do not include any renewal options.

The agreements provide for initial monthly base amounts plus annual escalations through the term of the leases.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay a portion of real estate taxes and common operating expenses during the lease terms.

The Company’s operating lease expense was $ 68,000 and $ 70,000 for the three months ended September 30, 2022 and 2021, respectively.

Future minimum lease payments at September 30, 2022 under these arrangements are as follows:

(in thousands)

Operating leases

Total future minimum lease payments

Operating leases (FOR FISCAL YEAR ENDED JUNE 30,)

Total undiscounted operating lease payments

Less imputed interest (at 8 % )

Present value of operating lease payments

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 — LEASE COMMITMENTS AND CONTINGENCIES (continued)

The following table sets forth the ROU assets and operating lease liabilities as of September 30, 2022:

(in thousands)

ROU assets-net

Current operating lease liabilities

Long-term operating lease liabilities

Total ROU liabilities

The Company’s weighted average remaining lease term for its operating leases is 2.3 years.

Legal Matters:

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NOTE 12 — 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 April 21, 2022, Moving iMage Technologies, Inc.

(the “Company”) entered into an Asset Purchase Agreement (the “Agreement”) with QSC, LLC (the”Seller”) whereby the Company agreed to purchase from the Seller all of its infrared-based

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

assistive listening and closed caption devices for cinema patrons for an aggregate purchase price of $ 1.5 million, which amount may be adjusted based on the full cost value and quantities in inventory at the time of closing.

In April 2022, underwriter warrants were exercised on a cashless basis resulting in the issuance of 192,120 shares of common stock.

The Company has evaluated subsequent events from September 30, 2022 through November 14, 2022, the date these financial statements were available to be issued and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.

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