What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-02-13 compared with 2024-11-14 · 49 added, 34 removed, 109 unchanged (43% of the section changed)

50 unchanged sentences

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, 2024, a large majority of domestic and international theatres were open.

As of December 31, 2024, 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

1 unchanged sentence

Based on our current estimates of recovery, we believe we have, and will generate, sufficient cash to sustain operations.

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

Investment in growth .

Based on 2024 losses, we will selectively invest in expanding our operations.

Based on June 30, 2024 losses, we will selectively invest in expanding our operations.

We expect our total operating expenses to decrease in the foreseeable future to meet our revenue and cost control objectives.

28 unchanged sentences

Cost of goods sold is also affected by inventory obsolescence if our inventory management is not effective or efficient.

We mitigate the risk of inventory obsolescence by stocking relatively small amounts of inventory at any given time, except for periodic strategic purchases, and relying instead on a strategy of manufacturing or acquiring products based on orders placed by our customers.

We mitigate the risk of inventory obsolescence by stocking relatively small amounts of inventory at any given time, except for periodic strategic purchases, and rely instead on a strategy of manufacturing or acquiring products based on orders placed by our customers.

General and administrative expenses

6 unchanged sentences

Results of Operations

Three months ended September 30, 2024 compared to the three months ended September 30, 2023

Three Months Ended September 30,

Net sales decreased 20.8% to $5.252 million for the three months ended September 30, 2024 from $6.635 million for the three months ended September 30, 2023 due to higher one-time sales in the three months ended September 2023.

Three Months Ended September 30,

Along with the 20.8% revenue decline, gross profit decreased 24.6% to $1.372 million for the three months ended September 30, 2024 from $1.819 million for the three months ended September 30, 2023 or an decrease of $(0.447) million.

As a percentage of total revenues, gross profit percentage decreased to 26.1% from 27.4% due to lower margin revenues.

Three months ended December 31, 2024 compared to the three months ended December 31, 2023

Three Months Ended December 31,

Net sales increased 5.4% to $3.441 million for the three months ended December 31, 2024 from $3.265 million for the three months ended December 31, 2023 due to higher one-time sales in the three months ended December 31, 2024.

Three Months Ended December 31,

Along with the 5.4% revenue increase, gross profit increased 23.3% to $0.936 million for the three months ended December 31, 2024 from $0.759 million for the three months ended December 31, 2023 or an increase of $0.177 million.

As a percentage of total revenues, gross profit percentage increased to 27.2% from 23.2% due to higher margin revenues.

Research and Development

Three Months Ended September 30,

Research and development expenses decreased by $(0.006) million or 9% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to lower compensation expense.

Three Months Ended December 31,

Research and development expenses decreased by $(0.025) million or 35% for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 due to headcount reduction.

Selling, General and Administrative Expense

Three Months Ended September 30,

The increase in selling, general and administrative expense of $0.011 million or 0.8% was due primarily fewer payroll hours allocated to cost of goods sold offset by lower headcount expense in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Three Months Ended December 31,

The decrease in selling, general and administrative expense of $0.067 million or 4.4% was due to headcount reduction and lower compensation expense in the three months ended December 31, 2024 compared to the three months ended December 31, 2023.

Other Income (Expense)

Three Months Ended September 30,

Other Income(Expense) was $0.043 million for the three months ended September 30, 2024 compared to Other Income(Expense) of $0.055 million for the three months ended September 30, 2023 or a decline $(0.012) million.

The decline was primarily due to a lower cash balance and the related lower interest income in the three months ended September 30, 2023 compared to the higher cash balance and the related higher interest income in the three months ended September 30, 2024.

Net (Loss)/Income

Three Months Ended September 30,

Net loss was $(0.025) million for the three months ended September 30, 2024 compared to net income of $0.439 million for the three months ended September 30, 2023 or a decline $(0.464) million.

The decrease was due to the lower gross margin of $(0.447) million, offset by higher operating expenses of $0.005 million and lower other income of $(0.012) million.

Three Months Ended December 31,

Other Income(Expense) was $0.034 million for the three months ended December 31, 2024 compared to Other Income(Expense) of $0.036 million for the three months ended December 31, 2023 or a decline of $(0.002) million.

The decline was due to a lower interest income on cash savings accounts in the three months ended December 31, 2023 compared to the three months ended December 31, 2024.

Three Months Ended December 31,

Net loss was $(0.527) million for the three months ended December 31, 2024 compared to a net loss of $(0.794) million for the three months ended December 31, 2023 or a loss reduction of $0.267 million.

The loss reduction was due to the higher gross margin of $0.177 million and lower operating expenses of $0.092 million offset by lower other income of $(0.002) million.

Six months ended December 31, 2024 compared to the six months ended December 31, 2023

Six Months Ended December 31,

Net sales decreased 12.2% to $8.693 million for the six months ended December 31, 2024 from $9.900 million for the six months ended December 31, 2023 due to higher one-time sales in the six months ended December 31, 2023.

Six Months Ended December 31,

Along with the 12.2% revenue decrease, gross profit decreased 10.5% to $2.307 million for the six months ended December 31, 2024 from $2.578 million for the six months ended December 31, 2023 or a decrease of $(0.271) million.

As a percentage of total revenues, gross profit percentage increased to 26.5% from 26.0% due to higher margin revenues.

Research and Development

Six Months Ended December 31,

Research and development expenses decreased by $(0.030) million or 21.6% for the six months ended December 31, 2024 compared to the six months ended December 31, 2023 due to headcount reduction.

Selling, General and Administrative Expense

Six Months Ended December 31,

The decrease in selling, general and administrative expense of $0.059 million or 2.0% due to headcount reduction and lower compensation expense in the six months ended December 31, 2024 compared to the six months ended December 31, 2023.

Other Income (Expense)

Six Months Ended December 31,

Other Income(Expense) was $0.077 million for the six months ended December 31, 2024 compared to Other Income(Expense) of $0.092 million for the six months ended December 31, 2023 or a decline of $(0.015) million.

The decline was due to a lower interest income on cash savings accounts in the six months ended December 31, 2023 compared to the six months ended December 31, 2024.

Six Months Ended December 31,

Net loss was $(0.552) million for the six months ended December 31, 2024 compared to a net loss of $(0.355) million for the six months ended December 31, 2023 or a loss increase of $(0.197) million.

The loss reduction was due to a lower gross margin of $(0.271) million and lower operating expenses of $0.089 million offset by lower other income of $(0.015) 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.

On July 7, 2021, the Company completed an initial public offering resulting in net proceeds of approximately $12.360 million.

Cash balance at September 30, 2024 was approximately $5.246 million, as compared to $5.278 million at June 30, 2024.

On August 8, 2024, the Board of Directors authorized salary reductions of $100,000 for the CEO from $250,000 to $150,000 and salary reductions for the Executive VP, Operations, Executive VP, Sales and Marketing from $234,000 to $212,000, respectively and the CFO from $220,000 to $200,000.

The cash balance at December 31, 2024 was approximately $5.316 million, as compared to $5.278 million at June 30, 2024.

Cash Flows from Operating Activities

Compared to September 30, 2023, net cash used by operating activities increased 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.

Net cash used in operating activities was $(0.207) million for the three months ended September 30, 2023, primarily due to $(0.735) million in working capital declines offset by the $0.439 million in net income and $0.090 million in other non-cash expenses.

The net change in other working capital was primarily due to increases in receivables, inventory and payables and decreases in customer deposits, offset by decreases in prepaid and accrued expenses.

Compared to December 31, 2023, net cash provided by operating activities increased by $1.402 million in December 31, 2024 due to cost reductions and lower inventory levels.

Net 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.

Net cash used in operating activities was $(1.364) million for the six months ended December 31, 2023, primarily due to $(1.190) million in working capital decreases along with $(0.355) million in net losses and offset by $0.181 million in other non-cash expenses.

Within working capital change, the uses of cash of $(1.268) million included changes in receivables, inventory, prepaids, payables and customer deposits.

Cash provided by working capital of $0.078 million was due to the changes in accrued expenses and lease liabilities.

Cash Flows from Investing Activities

Net cash used in investing activities was zero for the three months ended September 30, 2024.

Net cash used in investing activities was $(0.001) million for the three months ended September 30, 2023, for equipment purchases.

Net cash used in investing activities was zero for the six months ended December 31, 2024.

Net cash used in investing activities was $(0.012) million for the six months ended December 31, 2023, for equipment purchases.

Cash Flows from Financing Activities

Net cash used in financing activities was zero for the three months ended September 30, 2024 and the three months ended September 30, 2023.

Net cash used in financing activities was zero for the six months ended December 31, 2024 and the six months ended December 31, 2023.

Critical Accounting Policies and Estimates

2 unchanged sentences

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, 2024 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, 2024 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 2. Management’s Discussion and Analysis