TSS Inc(TSSI) - 2023 Q1 - Quarterly Report

Revenue Performance - Revenue for the three-month period ended March 31, 2023, was $6.6 million, an increase of$1.4 million or 27% compared to the first quarter of 2022[83]. - Systems integration segment revenues increased by $1.2 million, or 39$4.3 million in the first quarter of 2023, driven by improved supply chain conditions[83]. - The facilities business saw a $3.9 million increase in revenues from MDC deployments in 2022, contributing to the overall revenue growth[76]. - The company expects fluctuations in the number of MDC deployments on a quarterly basis, impacting revenues and profits[76]. Cost and Profitability - Cost of revenue as a percentage of revenue was 74$533,000 or 31% compared to the first quarter of 2022, mainly due to higher compensation and professional fees[92]. - The company recorded an operating loss of $665,000 for the three-month period ended March 31, 2023, compared to an operating loss of$173,000 in the first quarter of 2022[93]. - Net loss for the three-month period ended March 31, 2023, was $786,000 or$0.04 per share, compared to a net loss of $308,000 or$0.02 per share for the same period in 2022[95]. Cash Flow and Financial Position - Cash used in operating activities was $13.5 million for the three-month period ended March 31, 2023, compared to cash provided by operating activities of$4.9 million for the same period in 2022[101]. - The Company had cash and cash equivalents of $6.7 million as of March 31, 2023, down from$20.4 million at the end of 2022[100]. - Cash used in investing activities was $185,000 for the three-month period ended March 31, 2023, primarily for leasehold improvements[102]. - Cash used in financing activities was$1,000 for the three-month period ended March 31, 2023, compared to $23,000 for the same period in 2022[103]. - As of March 31, 2023, the Company had an accumulated deficit of$67.2 million and negative working capital of $499,000[97]. Future Outlook and Risks - Management anticipates profitability in the next quarter and for the year ended December 31, 2023, based on a significant backlog of delayed projects[98]. - The Company may require additional capital for business acquisitions or if there is a sudden increase in reseller and procurement services[97]. - Management believes that adequate trade credit will be available to finance reseller activities as the business grows in 2023 and beyond[101]. - There are potential risks that revenues may not meet projections or costs may exceed estimates, affecting liquidity and growth opportunities[99]. - Supply chain disruptions continue to affect the timing of systems integration revenue, with expectations of ongoing issues for several quarters[84]. - The Company has a history of annual operating losses, attributed to COVID-19 and supply chain constraints[97].