What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2025-02-13 · 46 added, 49 removed, 109 unchanged (47% of the section changed)

12 unchanged sentences

● Our customers’ adjustments in their order levels,

● Seasonality in our business, specifically our second fiscal quarter which is traditionally weaker,

● Seasonality in our business, specifically our second fiscal quarter, is traditionally weaker,

● Changes in our pricing policies or the pricing policies of our competitors or suppliers,

35 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 December 31, 2024, a large majority of domestic and international theatres were open.

As of March 31, 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

2 unchanged sentences

Investment in growth .

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.

Based on June 30, 2024 losses, we continue to selectively evaluate opportunities to expand our operations.

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

We plan to invest in our sales and support operations to support our new product initiatives and budget goals.

36 unchanged sentences

Results of Operations

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.

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

Three Months Ended March 31,

Net sales decreased 8.2% to $3.571 million for the three months ended March 31, 2025 from $3.890 million for the three months ended March 31, 2024 due to higher one-time sales in the three months ended March 31, 2024.

Three Months Ended March 31,

Gross profit dollars increased by $0.387 million or 57.2% to $1.063 million for the three months ended March 31, 2025 from $0.676 million for the three months ended March 31, 2024.

As a percentage of total revenues, gross profit percentage increased to 29.8% from 17.4% due to higher margin product revenues along with lower inventory reserve additions.

Research and Development

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.

Three Months Ended March 31,

Research and development expenses decreased by $(0.024) million or 33% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to headcount reduction.

Selling, General and Administrative Expense

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.

Three Months Ended March 31,

The increase in selling, general and administrative expense of $0.032 million or 2.6% was due to higher compensation expense and rent expense in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Other Income (Expense)

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.

Three Months Ended March 31,

Other Income(Expense) was $0.030 million for the three months ended March 31, 2025 compared to Other Income(Expense) of $0.048 million for the three months ended March 31, 2024 or a decline of $(0.018) million.

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

Three Months Ended March 31,

Net loss was $(0.240) million for the three months ended March 31, 2025 compared to a net loss of $(0.601) million for the three months ended March 31, 2024 or a loss reduction of $0.361 million.

The loss reduction was due to a combination of higher gross margin of $0.387 million, offset by higher operating expenses of $(0.008) million and lower other income of $(0.018) million.

Nine months ended March 31, 2025 compared to the nine months ended March 31, 2024

Nine Months Ended March 31,

Net sales decreased $(1.526) million or 8.2% to $12.264 million for the nine months ended March 31, 2025 from $13.790 million for the nine months ended March 31, 2024 due to higher one-time sales in the nine months ended March 31, 2024.

Nine Months Ended March 31,

Gross profit increased $0.116 million or 3.6% to $3.370 million for the nine months ended March 31, 2025 from $3.254 million for the nine months ended March 31, 2024 .

As a percentage of total revenues, gross profit percentage increased to 27.5% from 23.6% due to higher margin product revenues in March 31, 2025 compared to March 31, 2024 .

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.

Nine Months Ended March 31,

Research and development expenses decreased by $(0.055) million or 25.9% for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024 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.

Nine Months Ended March 31,

The decrease in selling, general and administrative expense of $0.026 million or 0.6% due to headcount reduction and lower compensation expense in the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024.

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.

Nine Months Ended March 31,

Other Income(Expense) was $0.107 million for the nine months ended March 31, 2025 compared to Other Income(Expense) of $0.140 million for the nine months ended March 31, 2024 or a decline of $(0.033) million.

The decline was due to a lower interest income on cash savings accounts in the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024.

Nine Months Ended March 31,

Net loss was $(0.792) million for the nine months ended March 31, 2025 compared to a net loss of $(0.956) million for the nine months ended March 31, 2024 or a loss decrease of $0.164 million.

The loss reduction was due to a combination of higher gross margin of $0.116 million and lower operating expenses of $0.081 million offset by lower other income of $(0.033) million.

Liquidity and Capital Resources

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

The cash balance at March 31, 2025 was approximately $5.369 million, as compared to $5.278 million at June 30, 2024.

Cash Flows from Operating Activities

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.

Compared to March 31, 2024, net cash provided by operating activities increased by $0.415 million in March 31, 2025 due to cost reductions.

Net cash provided by operating activities was $0.091 million for the nine months ended March 31, 2025, primarily due to 0.214 million in working capital increases along with $(0.792) million in net losses and 0.669 million in other non-cash expenses.

Within the working capital change, net cash provided included $0.786 million in accounts receivable, prepaids, payables and unearned warranty revenue offset by 0.572 million in inventory, accrued expenses, customer deposit declines and lease liabilities.

For the nine months ended March 31, 2024, net cash used by operating activities was $(0.324) million, primarily due to $(0.030) million in working capital decreases along with $(0.956) million in net losses and offset by $0.662 million in other non-cash expenses due primarily to extended payable terms.

Within working capital change, the uses of cash of $(0.978) million included changes in inventory, prepaids, payables and lease liabilities offset by $0.948 million of changes in receivables, accrued expense, unearned warranty revenue, deposits and customer deposits.

Cash Flows from Investing Activities

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.

Net cash used in investing activities was zero for the nine months ended March 31, 2025.

Net cash used in investing activities was $(0.012) million for the nine months ended March 31, 2024, for equipment purchases.

Cash Flows from Financing Activities

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

Net cash provided by financing activities was zero for the nine months ended March 31, 2025 and $(0.334) million used to repurchase shares in the nine months ended March 31, 2024.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (“US GAAP”).

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 six months ended December 31, 2024 to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

There have been no material changes during the nine months ended March 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 2. Management’s Discussion and Analysis