Moving iMage Technologies(MITQ) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales increased 68.5% to $5.852 million for the three months ended September 30, 2022, compared to $3.474 million for the same period in 2021, primarily due to an increase in projector sales and the inclusion of the new QSC product line [130]. - Gross profit rose 115.9% to $1.559 million for the three months ended September 30, 2022, with gross profit as a percentage of total revenues increasing to 26.6% from 20.8% [131]. - Net loss for the three months ended September 30, 2022, was $95,000, a significant improvement from a net loss of $577,000 in the same period of 2021, driven by increased revenue and gross profit percentage [138]. Expenses - Research and development expenses increased to $66,000 in the three months ended September 30, 2022, from $54,000 in the same period in 2021, reflecting heightened activity in product development [134]. - Selling, general and administrative expenses increased to $1.445 million for the three months ended September 30, 2022, compared to $1.207 million in 2021, primarily due to higher payroll and compensation expenses [135]. - The company plans to continue investing in expanding operations and increasing headcount to support growth, with total operating expenses expected to rise in the foreseeable future [118]. Cash Flow and Liquidity - Cash balance as of September 30, 2022, was approximately $2.294 million, a slight decrease from $2.340 million at June 30, 2022 [139]. - Net cash used by operating activities was $20,000 for the three months ended September 30, 2022, compared to $769,000 for the same period in 2021, indicating improved operational efficiency [140]. - The company believes existing sources of liquidity will be sufficient to fund operations for at least 12 months from the date of the financial statements [139]. Investments - Investments in marketable securities decreased to $4.549 million as of September 30, 2022, down from $4.688 million at June 30, 2022 [139]. - Net cash used in investing activities was $26,000 for the three months ended September 30, 2022, primarily due to investments in marketable securities [141]. Operational Challenges - The company continues to face challenges from the COVID-19 pandemic, which has adversely affected its business, results of operations, cash flows, and financial condition [117]. - Fluctuations in revenues and earnings are anticipated due to factors beyond the company's control, including customer order levels and economic conditions [122]. Internal Controls - The company reported a material weakness in internal control over financial reporting as of September 30, 2022, affecting the effectiveness of disclosure controls and procedures [144]. - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that materially affected the company's internal controls [146]. Future Outlook - The company aims to add new customers and expand sales to existing customers, focusing on educating prospective customers about the technical merits and cost savings of its products [119]. - Future performance will depend on achieving brand recognition for proprietary products and increasing marketing expenditures to maintain brand awareness [120]. - The company expects to maintain gross margins despite competition and pricing pressures by focusing on increased sales volume and introducing new products with higher margins [121].