What changed in this filing

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Item 1. Financial Statements

2026-02-12 compared with 2025-11-14 · 145 added, 139 removed, 460 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands except share and per share amounts)

September 30,

Current Assets:

25 unchanged sentences

Stockholders’ Equity

Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 9,939,732 and 9,939,080 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively

Common stock, $ 0.00001 par value, 100,000,000 shares authorized, 9,945,115 and 9,939,080 shares issued and outstanding at December 31, 2025 and June 30, 2025, respectively

Additional paid-in capital

10 unchanged sentences

Three Months Ended

September 30,

$ 5,582 $ 5,252

Six Months Ended

Cost of goods sold

4 unchanged sentences

Total operating expenses

Operating income (loss)

Operating (loss)

Other income (expense)

3 unchanged sentences

Net income (loss)

$ 509 $ ( 25 )

Earnings per share:

$ 0.05 $ ( 0.00 )

Earnings (loss) per share:

Shares used in computing earnings per share:

9,939,123 9,896,850

10,232,873 9,896,850

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

2 unchanged sentences

(in thousands except for share amounts)

Three Months Ended September 30, 2025

Common Stock Paid -In Accumulated

Three and Six Months Ended December 31, 2025

Balance as of June 30, 2025

9,939,080 $ — $ 12,061 $ ( 7,204 ) $ 4,857

Issuance of stock to directors

Grant of options to officer

— — — 509 509

Grant of options to officers

Balance as of September 30, 2025

9,939,732 $ — $ 12,070 $ ( 6,695 ) $ 5,375

Three Months Ended September 30, 2024

Issuance of stock to directors

Grant of options to officers

Balance as of December 31, 2025

Three and Six Months Ended December 31, 2024

Balance as of June 30, 2024

9,896,850 — 11,965 ( 6,255 ) 5,710

Grant of options to officer

— — — ( 25 ) ( 25 )

Balance as of September 30, 2024

9,896,850 $ — $ 11,970 $ ( 6,281 ) $ 5,690

Grant of options to officer

Share buyback and cancellation

Balance as of December 31, 2024

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

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

Net income (loss)

$ 509 $ ( 25 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Provision for credit losses

8 unchanged sentences

Accounts payable

( 109 ) ( 429 )

Accrued expenses and customer refunds

1 unchanged sentence

Customer deposits

( 168 ) ( 342 )

Lease liabilities

( 53 ) ( 47 )

Net cash used in operating activities

( 167 ) ( 32 )

Net cash (used in) provided by operating activities

Net decrease in cash

( 167 ) ( 32 )

Cash, beginning of the period

Cash, end of the period

$ 5,548 $ 5,246

Non-cash investing and financing activities:

Accruals settled by stock issuance

Right-of-use assets from new lease

$ — $ ( 988 )

Right-of-use assets from lease modification

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

8 unchanged sentences

(DBA “Caddy Products”) designs, develops and manufactures innovative products for the entertainment, cinema, grocery, worship, restaurant, sports and restroom industries.

mpact of the COVID- 19 Pandemic:

Impact of the COVID- 19 Pandemic:

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

3 unchanged sentences

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 2020 and through 2022 the theatres reopened as soon as local restrictions, and the status of the COVID- 19 pandemic would allow.

As of September 30, 2025 , 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 management’s current estimates, it believes it will generate sufficient cash to sustain operations for a period of 12 months from the issuance of these financial statements.

11 unchanged sentences

The June 30, 2025 condensed consolidated balance sheet has been derived from the audited consolidated financial statements.

Operating results for the three months ended September 30, 2025 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2026 .

Operating results for the three and six months ended December 31, 2025 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2026 .

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

17 unchanged sentences

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

As of September 30, 2025 and June 30, 2025 the allowance for credit losses is approximately $ 281,000 and $ 236,000 , respectively.

As of December 31, 2025 and June 30, 2025 the allowance for credit losses is approximate ly $ 346,000 and $ 236,000 , 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 September 30, 2025 and June 30, 2025 , the inventory reserve was $ 1,413,000 and $ 1,413,000 res pectively, and inventory on hand was comprised primarily of finished goods ready for sale.

As of December 31, 2025 and June 30, 2025 , the inventory reserve was $ 1,462,000 and $ 1,413,000 res pectively, and inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition:

2 unchanged sentences

The Company generates all its revenue from agreements with customers based on equipment shipment dates and when customer location work is completed.

In cases of 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.

In cases of agreements with multiple performance obligations, management 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.

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.

Management 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.

9 unchanged sentences

Contract Liabilities ($ in Thousands)

September 30,

Customer refunds

Customer deposits

$ 933 $ 1,101

Unearned warranty revenue

Customer refunds

$ 926 $ 1,515

3 unchanged sentences

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.

Three Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Disaggregation of Revenue ($ in Thousands)

15 unchanged sentences

Advertising Costs:

Advertising costs were approximately $ 3,000 and $ 4,000 fo r the three months ended September 30, 2025 and 2024 , respectively.

Advertising costs were approximatel y $ 5,000 and $ 8,000 fo r the three months ended December 31, 2025 and 2024, respectively an d $ 6,400 and $ 12,200 for the six months ended December 31, 2024 and 2023, respectively.

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

3 unchanged sentences

Management reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully recoverable.

There was no intangible asset impairments recognized for the three months ended September 30, 2025 or 2024 .

There was no intangible asset impairments recognized for the three and six months ended December 31, 2025 or 2024.

Business Combinations:

8 unchanged sentences

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.

The following table summarizes the components of deferred tax assets and deferred tax liabilities at September 30, 2025 and June 30, 2025 (in thousands):

The following table summarizes the components of deferred tax assets and deferred tax liabilities at December 31, 2025 and June 30, 2025 (in thousands):

$ in Thousands

Deferred Tax Assets (Liabilities)

September 30, 2025

December 31, 2025

June 30, 2025

15 unchanged sentences

The Company has the right to return defective products for up to three years, depending on the manufacturers’ individual policies.

As of September 30, 2025 and June 30, 2025 , the Company has established a warranty reserve of $ 37,000 and $ 35,000 , respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

As of December 31, 2025 and June 30, 2025 , the Company has established a warranty reserve o f $ 37,000 and $ 37,000 , respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

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):

The changes in the Company’s aggregate warranty liabilities were as follows for the six months ended December 31, 2025 and the year ended June 30, 2025 ( in thousands):

Warranty Liabilities

September 30,

($ in Thousands)

20 unchanged sentences

ASU 2023 - 09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

The Company will adopt ASU 2023 - 09 in its fourth quarter of 2026 using a prospective transition method.

The Company will adopt ASU 2023 - 09 in its fourth quarter of 2026 using a prospective transition method for its 2026 fiscal year along with ASU 2025 - 05.

In July 2025, the FASB issued ASU 2025 No.

2 unchanged sentences

The Company will first adopt this standard in the first quarter of its fiscal year ending June 30, 2027.

NOTE 2 — 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.

NOTE 2 — 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.

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:

Loss per Share

Income (Loss) per Share

For the Three Months

For the Six Months

(In Thousands except for share

Ended September 30

Ended December 31

and per share price)

4 unchanged sentences

Effect of dilutive share-based awards

— — 312,500 —

Weighted-average dilutive shares

6 unchanged sentences

For the quarter ended September 30, 2024, the following securities were excluded from the calculation of diluted loss per share in each period because their inclusion would have been anti-dilutive:

For the Three Months Ended

September 30,

For the Six Months Ended

450,000 450,000

1 unchanged sentence

450,000 450,000

For the three months ended September 30, 2025 the Company had net income while on September 30, 2024 the Company had a net loss.

For the three months ended December 31, 2025 the Company had a net loss, while for the six months ended December 31, 2025 the Company had net income.

However, all potentially dilutive securities were also deemed to be anti-dilutive because their exercise price exceeded the weighted average trading price of the Company’s stock for the period.

NOTE 3 — INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of September 30, 2025 (in thousands):

The following table summarizes the Company’s intangible assets as of December 31, 2025 (in thousands):

Customer relations

6 unchanged sentences

$ 1,118 $ 755 $ 364

Amortization expense w as $ 15,000 and $ 15,000 for the th ree months ended September 30, 2025 and 2024 , respectively, and is included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at September 30, 2025 in each of the years subsequent to September 30, 2025 , and thereafter is as follows (amounts in thousands);

2026, balance of the fiscal year

Amortization expense w as $ 15,000 and $ 15,000 for the th ree months ended December 31, 2025 and 2024 respectively, and $ 29,000 and $ 29,000 for the six months ended December 31, 2025 and 2024, respectively,

and is included in general and administrative expense.

Estimated amortization expense related to intangible assets subject to amortization at December 31, 2025 in each of the years subsequent to December 31, 2025 , and thereafter is as follows (amounts in thousands);

NOTE 4 — ACCRUED EXPENSES

1 unchanged sentence

Accrued Expenses

September 30,

($ in Thousands)

4 unchanged sentences

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

As of September 30, 2025 , the Plan provides for the issuance of up to 1,500,000 stock-based awards.

There are 1,020,000 s tock-based awards available to grant under the Plan at September 30, 2025 .

As of December 31, 2025 , the Plan provides for the issuance of up t o 1,500,000 sto ck-based awards.

There are 1,020,000 s tock-based awards available to grant under the Plan at December 31, 2025 .

On October 30, 2024, and as part of Francis Godfrey’s appointment as the Company’s President and Chief Operating Officer, the Board granted Francis Godfrey 200,000 options with an exercise price of $ 0.65 with 25 % vesting immediately and the remainder vesting at 25 % per year thereafter .

NOTE 5 — STOCKHOLDERS ’ EQUITY (continued)

The Company recognized compensation expense of approxima tely $ 7,300 and $ 5,000 for stock options during the three months ended September 30, 2025 and 2024 , respectively.

For the quarter ended September 30, 2024, none of these potentially dilutive securities were included in the computation of diluted earnings per share as their impact would be anti-dilutive.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model during the three months ended September 30, 2025 .

There were no option grants during the three months ended September 30, 2024 :

September 30, 2025

October 30, 2024

The Company recognized compensation expense of approxima tely $ 7,300 and $ 32,000 for stock options during the three months ended December 31, 2025 and 2024, respectively, and $ 15,000 and $ 37,000 during the six months ended December 31, 2025 and December 31, 2024, respectively.

For the quarter ended December 31, 2025, none of these potentially dilutive securities were included in the computation of diluted earnings per share while for the quarter ended September 30, 2024, none of these potentially dilutive securities were included in the computation of diluted earnings per share as their impact would be anti-dilutive.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model during the three and six months ended December 31, 2024 .

There were no option grants during the three and six months ended December 31, 2025:

Three and Six

December 31, 2024

Risk-free interest rate

3 unchanged sentences

NOTE 5 — STOCKHOLDERS ’ EQUITY (continued)

A summary of the status of the Company’s stock options as of September 30, 2025 and changes during the three months ended September 30, 2025 are presented below.

A summary of the status of the Company’s stock options as of December 31, 2025 and changes during the six months ended December 31, 2025 are presented below.

Balance, July 1, 2025

3 unchanged sentences

Cancelled during the period

Balance, September 30, 2025

Balance, December 31, 2025

450,000 $ 0.65

A summary of the status of the Company’s stock options as of September 30, 2024 and changes during the three months ended September 30, 2024 are presented below.

A summary of the status of the Company’s stock options as of December 31, 2024 and changes during the six months ended December 31, 2024 are presented below.

Balance, July 1, 2024

3 unchanged sentences

Canceled during the period

Balance, September 30, 2024

Balance, December 31, 2024

450,000 $ 0.90

The following table summarizes information about outstanding and exercisable stock options at September 30, 2025 :

The following table summarizes information about outstanding and exercisable stock options at December 31, 2025 :

Exercise Price

3 unchanged sentences

The Company records director fee expense at the end of each board m eeting.

On September 24, 2025, the Company subsequently issued 652 shares to an independent director for director fees earned during the three -month period of July 2025 through September 2025.

During the three months ended December 31, 2025, the Company issued 5,383 shares to the independent directors for director fees earned.

Through the six months ended December 31, 2025, the Company issued 6,035 shares to the independent directors for director fees earned.

NOTE 6 — CUSTOMER AND VENDOR CONCENTRATIONS

One customer accounted for 12 % of the Company’s net sales for the three months ended September 30, 2025 .

Three customers accounted for 17 %, 13 % and 11 %, respectively, of the Company’s sales for the three months ended September 30, 2024.

At September 30, 2025 , the amount of outstanding receivables related to the one customer was appro ximately $ 348,000 .

At September 30, 2024, the amount of outstanding receivables related to the one customer was approximately $ 135,000 .

Two vendors accounted for 2 2% and 17 %, r espectively, of the Company’s purchases for the three months ended September 30, 2025 .

Approximately 26 % of the Company’s purchases were provided by one vendor for the three months ended September 30, 2024 .

One customer accounted for 8 % of the Company’s net sales for the three months ended December 31, 2025 .

Two customers accounted for 7 % and 6 %, respectively, of the Company’s sales for the six months ended December 30, 2025.

At December 31, 2025 , the amount of outstanding receivables related to the two customers was approximately $ 287,000 .

For the three months ended December 31, 2024, two customers accounted for 15 % and 12 % of the Company’s sales.

For the six months ended December 31, 2024, two customers accounted for 13 % and 11 %, respectively, of the Company’s sales.

At December 31, 2025, the amount of outstanding receivables related to the two customers was approximately $ 287,000 .

At June 30, 2025, there were no outstanding receivables related to the top customers.

For the three months ended December 31, 2025 one vendor accounted for 31 % of the Company’s purchases.

For the six months ended December 31, 2025 one vendor accounted for 31 % of the Company’s purchases.

For the six months ended December 31, 2024, two vendors accounted for 17 and 10 % of the Company’s purchases.

Approximately 18 % of the Company’s purchases were provided by one vendor for the three months ended December 31, 2024 .

NOTE 7 — LEASE COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company occupies an executive office and warehouse space in Fountain Valley and Whittier, 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.

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 an operating or a financing lease.

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

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

The office lease agreement, as amended, expire on January 31, 2030, and does not include any renewal options.

The office lease agreement, as amended, expires on January 31, 2030, and does not include any renewal options.

The Whittier, CA warehouse lease agreement commenced on February 1, 2025 expires on January 31, 2028, and does not include any renewal options.

3 unchanged sentences

NOTE 7 — LEASE COMMITMENTS AND CONTINGENCIES (continued)

The Company’s operating lease expense was $ 79,000 and $ 86,000 for the three months ended September 30, 2025 and 2024 , respectively.

Future minimum lease payments at September 30, 2025 under these arrangements are as follows:

The Company’s operating lease expense was $ 79,000 and $ 99,000 for the three months ended December 31, 2025 and 2024, respectively, and $ 159,000 and $ 185,000 for the six months ended December 31, 2025 and 2024, respectively.

Future minimum lease payments at December 31, 2025 under these arrangements are as follows:

Operating leases

4 unchanged sentences

Present value of operating lease payments

The following table sets forth the ROU assets and operating lease liabilities as of September 30, 2025 :

The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2025 :

(in thousands)

18 unchanged sentences

($ in Thousands)

Quarter Ended

September 30,

Three Months Ended

$ 3,793 $ 3,441

7 unchanged sentences

$ ( 388 ) $ ( 527 )

($ in Thousands)

Six Months Ended

$ 9,375 $ 8,693

Cost of Sales

Segment operating expenses:

Payroll and related

( 105 ) ( 88 )

Total segment operating expenses

Interest and other Income

Net income (loss)

$ 122 $ ( 552 )

NOTE 9 — SUBSEQUENT EVENTS

On October 31, 2025, Moving iMage Technologies, Inc.

(the “Company”) entered into an Asset Purchase Agreement (the “APA”) with QSC, LLC (“QSC”) pursuant to which the Company purchased certain assets comprising QSC’s Digital Cinema Speaker Series (“DCS”) loudspeaker product line including, the DCS loudspeaker product line, including the SC, SR, SB, and RSM product families;

intellectual property, including trademarks, designs, and trade secrets;

inventory and raw materials;

OEM supplier agreements;

product technical documentation;

and rights to service and support existing DCS customers, for a purchase price of $ 1.5 million.

Management has evaluated events from September 30, 2025 thro ugh November 14, 2025, t he date these financial statements were available to be issued and determined that there have been no other events that occurred that would require adjustment to our disclosures in the condensed consolidated financial statements.

Management has evaluated events from December 31, 2025 thro ugh February 12, 2025, t he date these financial statements were available to be issued and determined that there have been no other events that occurred that would require adjustment to our disclosures in the condensed consolidated financial statements.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

20 unchanged sentences

Unforeseen catastrophic events such as the COVID-19 pandemic, armed conflict, terrorism, fires, typhoons and earthquakes,

A lack of entertainment content caused by entertainment content provider labor disputes, strikes and work shutdowns, and

A lack of entertainment content caused by entertainment content provider labor disputes, strikes and work shutdowns,

Any other disruptions, such as labor shortages, unplanned maintenance or other manufacturing problems.

19 unchanged sentences

Factors affecting our performance

Effect of COVID-19 global 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 on our customers, specifically those in the entertainment and cinema industries.

Throughout 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, 2025, 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 recovers from the 2023 SAG-AFTRA strike, 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 our current estimates of recovery, we believe we have, and will generate, sufficient cash to sustain operations.

After overcoming the prior year Covid-19 impacts, based on our current estimates of recovery, we believe we have, and will generate, sufficient cash to sustain operations.

Investment in growth .

46 unchanged sentences

Results of Operations

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

Three Months Ended September 30,

Net sales increased 6.3% to $5.582 million for the three months ended September 30, 2025 from $5.252 million for the three months ended September 30, 2024 due to higher one-time sales.

Three Months Ended September 30,

Gross profit dollars increased by $0.302 million or 22.0% to $1.674 million for the three months ended September 30, 2025 from $1.372 million for the three months ended September 30, 2024.

Three months ended December 31, 2025 compared to the three months ended December 31, 2024

Three Months Ended December 31,

Net sales increased by 10.2% to $3.793 million for the three months ended December 31, 2025 from $3.441 million for the three months ended December 31, 2024 due to higher one-time sales.

Estimated quarterly recurring sales revenues are 2 million.

Three Months Ended December 31,

Gross profit dollars increased by $0.229 million or 24.5% to $1.165 million for the three months ended December 31, 2025 from $0.936 million for the three months ended December 31, 2024.

As a percentage of total revenues, gross profit percentage increased to 30.7% from 27.2% due to higher margin product revenues.

Research and Development

Three Months Ended September 30,

Research and development expenses decreased by $(0.013) million or 21.3% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to headcount reduction.

Three Months Ended December 31,

Research and development expenses remained the same for both the three months ended December 31, 2025 and the three months ended December 31, 2024.

Selling, General and Administrative Expense

Three Months Ended September 30,

The decrease in selling, general and administrative expense of $0.103 million or 7.5% was due to lower compensation expense, lower rent and lower travel and related costs in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Three Months Ended September 30,

Other Income was $0.159 million for the three months ended September 30, 2025 compared to Other Income of $0.048 million for the three months ended September 30, 2024 or an increase of $0.116 million.

The increase was due largely to a one-time payables extinguishment of $0.128 million income in the three months ended September 30, 2025 compared to only interest income for the three months ended September 30, 2024.

Three Months Ended December 31,

The increase in selling, general and administrative expense of $0.076 million or 5.2% was due to higher legal expense related the October 2025 DCS inventory purchase in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Three Months Ended December 31,

Other Income was $0.020 million for the three months ended December 31, 2025 compared to Other Income of $0.034 million for the three months ended December 31, 2024 or an increase of $0.014 million.

The decrease was due to lower interest income on cash savings accounts in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Net Income (Loss)

Three Months Ended September 30,

Net income was $0.509 million for the three months ended September 30, 2025 compared to a net loss of $(0.025) million for the three months ended September 30, 2024 or an improvement in loss reduction of $0.534 million.

The improvement was due to a combination of higher gross margin of $0.302 million, lower operating expenses of $0.116 million and higher other income of $0.116 million.

Three Months Ended December 31,

Net loss was $(0.388) million for the three months ended December 31, 2025 compared to a net loss of $(0.527) million for the three months ended December 31, 2024 or an improvement in loss reduction of $0.139 million.

The improvement was due to a combination of higher gross margin of $0.229 million offset by higher selling, general and administrative expenses of $0.076 million and lower other income of $0.014 million.

Six months ended December 31, 2025 compared to the six months ended December 31, 2024

Six Months Ended December 31,

Net sales increased 7.8% to $9.375 million for the six months ended December 31, 2025 from $8.693 million for the six months ended December 31, 2024 due to higher one-time sales.

Six Months Ended December 31,

Gross profit dollars increased by $0.532 million or 23.1% to $2.839 million for the six months ended December 31, 2025 from $2.307 million for the six months ended December 31, 2024.

As a percentage of total revenues, gross profit percentage increased to 30.3% from 26.5% due to higher margin product revenues.

Research and Development

Six Months Ended December 31,

Research and development expenses decreased by $(0.014) million or 12.8% for the six months ended December 31, 2025 compared to the six months ended December 31, 2024 due to headcount reduction.

Selling, General and Administrative Expense

Six Months Ended December 31,

In the six months ended December 31, 2025, selling, general and administrative expense decreased by $(0.026) million or 0.9% due largely to cost reductions enacted in August 2024 compared to the six months ended December 31, 2024.

Six Months Ended December 31,

Other Income was $0.051 million for the six months ended December 31, 2025 compared to Other Income of $0.077 million for the six months ended December 31, 2024 or a decrease of $0.026 million.

The decrease was due to lower interest income on cash savings accounts in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Net Income (Loss)

Six Months Ended December 31,

Net income was $0.122 million for the six months ended December 31, 2025 compared to a net loss of $(0.552) million for the six months ended December 31, 2024 or an improvement in loss reduction of $0.674 million.

The improvement was due to a combination of higher gross margin of $0.532 million, and lower operating expenses of $0.040 million and lower other income of $0.026 million.

Liquidity and Capital Resources

1 unchanged sentence

We believe that our existing sources of liquidity, including cash and operating cash flow, will be sufficient to fund our operations and to meet our projected capital needs for a period of at least 12 months from the date the condensed consolidated financial statements are available to be issued.

The cash balance at September 30, 2025 was approximately $5.548 million, as compared to $5.715 million at June 30, 2025.

The cash balance at December 31, 2025 was approximately $3.913 million, as compared to $5.715 million at June 30, 2025.

The $1.802 million decrease was largely due to the DCS inventory purchase of $1.5 million in October 2025.

On October 31, 2025, the Company entered into an Asset Purchase Agreement (the “APA”) with QSC, LLC (“QSC”) pursuant to which the Company purchased certain assets comprising QSC’s Digital Cinema Speaker Series (“DCS”) loudspeaker product line including, the DCS loudspeaker product line, including the SC, SR, SB, and RSM product families;

intellectual property, including trademarks, designs, and trade secrets;

inventory and raw materials;

OEM supplier agreements;

product technical documentation;

and rights to service and support existing DCS customers, for a purchase price of $1.5 million.

Cash Flows from Operating Activities

Compared to September 30, 2024 , net cash used in operating activities increased by $0.135 million in September 30, 2025 due to increased accounts receivable and prepaids.

Net cash used in operating activities was $(0.167) million for the three months ended September 30, 2025 , primarily due to $(0.804) million in working capital decreases which were offset by $0.509 million in net losses and $0.128 million in other non-cash expenses.

Within the working capital change, net cash provided included $0.547 million in inventory, accrued expenses and unearned warranty revenue offset by ($(1.351) million in accounts receivable, prepaids, accounts payable, customer deposit declines and lease liabilities.

For the three months ended September 30, 2024 , net cash used by operating activities incr eased by $0.175 million in September 30, 2024 due to cost reductions and lower inventory levels.

Net cash used by operating activities was $(0.032) million for the three months ended September 30, 2024, primarily due to $(0.180) million in working capital decreases along with $(0.025) million in net losses and offset by $0.173 million in other non-cash expenses.

Within working capital change, the cash used of $(0.818) million included declines in payables, customer deposits and lease liabilities offset by $0.638M in provision for receivables, inventory, prepaids, accrued expense and unearned warranty revenue.

Compared to December 31, 2024 , net cash used in operating activities decreased by $1.845 million in December 31, 2025 due largely to the DCS inventory purchase of $1.500 million in October 2025.

Net cash used in operating activities was $(1.802) million for the six months ended December 31, 2025 , primarily due to $(2.687) million in working capital decreases which were offset by $0.122 million in net income and $0.324 million in other non-cash expenses.

Within the working capital change, cash used in operating activities included $(2.687) million in inventory, accounts payable, customer deposits, lease liabilities and accrued expenses and offset by $0.434 million in accounts receivable and unearned warranty revenue.

For the six months ended December 31, 2024 , n et cash provided by operating activities was $0.038 million for the six months ended December 31, 2024, primarily due to 0.202 million in working capital increases along with $(0.552) million in net losses and 0.388 million in other non-cash expenses.

Within the working capital change, net cash provided included $1.518M in accounts receivable, inventory, prepaids, accrued expense, unearned warranty revenue offset by $(1.316) million in payables, customer deposit declines and lease liabilities.

Cash Flows from Investing Activities

Net cash from investing activities was zero for the three months ended September 30, 2025 and zero for the three months ended September30, 2024.

Net cash from investing activities was zero for the six months ended December 31, 2025 and 2024.

Cash Flows from Financing Activities

Net cash from financing activities was zero for the three months ended September 30, 2025 and zero for the three months ended September 30, 2024.

Net cash from financing activities was zero for the six months ended December 31, 2025 and 2024.

Critical Accounting Policies and Estimates

For a discussion of the critical accounting policies and estimates, refer to the “Critical Accounting Policies and Estimates” section in Part II, Item 7 of our 2024 Form 10-K.

There have been no material changes during the three months ended September 30, 2025 to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

There have been no material changes during the six months ended December 31, 2025 to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

Additionally, refer to Note 1 of our notes to our unaudited consolidated financial statements included in this Form 10-Q for additional discussion of our summary of significant accounting policies and use of estimates.

2 unchanged sentences

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