GENASYS INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The discussion and analysis set forth below should be read in conjunction with
the accompanying unaudited condensed consolidated financial statements and the
related notes included under Item 1 of this Quarterly Report on Form 10-Q,
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations included in our Annual Report on Form 10-K for the year
ended September 30, 2021.

Forward Looking Statements

This report contains certain statements of a forward-looking nature relating to
future events or future performance. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions or
variations of such words are intended to identify forward-looking statements but
are not the only means of identifying forward-looking statements. Prospective
investors are cautioned that such statements are only predictions and actual
events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider various factors identified in
this report and any matters set forth under Part I, Item 1A (Risk Factors) of
our Annual Report on Form 10-K, which could cause actual results to differ
materially from those indicated by such forward-looking statements.

For the purposes of this quarterly report, the terms “we”, “us”, “our”, “Genasys” and the “Company” mean Genasys inc. and its consolidated subsidiaries.


Genasys is a global provider of critical communications hardware and software
solutions designed to alert and inform to help keep people safe. Our unified
platform receives information from a wide variety of sensors and
Internet-of-Things (IoT) inputs to collect real-time information on developing
and active emergency situations. Genasys uses this information to create and
disseminate alerts, warnings, notifications, and instructions through multiple
channels before, during, and after public safety and enterprise threats,
critical events, and other crisis situations.

Our multi-channel approach includes:

Genasys emergency management (GEM) is Genasys’ software-based product platform. The GEM product line consists of GEM SoftwareIMNS and Zonehaven.

GEM Software is an interactive, cloud-based SaaS solution that sends at-risk
individuals or groups critical information when an emergency occurs. GEM
Software acts as both a communications input and output, receiving information
from state-of-the-art sensors and emergency services, and quickly relaying
notifications, alerts, and instructions to at-risk populations and first
responders. GEM Software operators can create and send critical, verified, and
secure notifications and messages using emails, voice calls, text messages,
panic buttons, desktop alerts, television, social media, and more.

Integrated Mass Notification System (IMNS) is Genasys' comprehensive emergency
response solution, uniting GEM Software and Genasys speaker system hardware in a
multichannel solution. IMNS gives operators the ability to communicate critical
notifications across platforms using a command and control interface that can be
accessed from an emergency operations center, authorized computer, or smart
phone. Notifications can be sent using text messages, emails, IPAWS, desktop
alerts, television, voice calls, social media, and Genasys speaker systems. By
providing several digital, software-based notifications and audible voice alerts
through speakers, IMNS creates layered redundancy to enable the maximum number
of people receive critical communications.

Zonehaven is a multipronged SaaS application that serves both first responders
and the communities they protect. Zonehaven can function as a standalone
application or as a GEM Software integration. When an incident occurs, it is
immediately tracked by the Zonehaven platform, which maps the incident,
simulates the speed and direction of the incident, and determines which zones
(geographic areas) are at risk and need to be evacuated. As an incident
develops, Zonehaven's real-time updates provide emergency organizations and
at-risk populations up-to-date information to stay safe.

• National Emergency Warning System (NEWS) provides multichannel public safety
notifications and instructions to designated areas, groups, or agencies when a
crisis occurs. The NEWS platform is cloud-based, geo-redundant, and end-to-end
encrypted. NEWS is a SaaS product that requires mobile telecom services for
installation, integration and to deliver Location-based SMS and Cell Broadcast
alerts and notifications that can be sent to anyone, anywhere, with no recipient
opt-in, registration, or download required. NEWS can locate recipients and
deliver messages in near real time, compared to other SMS alert providers that
can take up to 15 minutes. Despite NEWS' reach and scope, all data is
anonymized, helping individuals stay safe and informed without sacrificing


• LRAD is the world's leading Acoustic Hailing Device (AHD) that projects siren
tones and audible voice messages with exceptional vocal clarity in a 30° beam
from close range to 5,500 meters. LRADs are used throughout the world in
multiple applications and circumstances to safely hail and warn, inform and
direct, prevent misunderstandings, determine intent, establish large safety
zones, resolve uncertain situations, and save lives.

Our critical communications systems are being used in more than 100 countries
throughout the world in a range of diverse applications, including public
safety, emergency warning, mass notification, defense, law enforcement, critical
event management and many more. We continue to develop new communication
innovations and believe we have established significant competitive advantages
in our principal markets.

Development of business during the fiscal quarter ended December 31, 2021:

GEM software announced service contracts in five we Announced States

• Announced Zonehaven Evacuation Software Services Contracts with 13 California

    counties announced

• Received a follow-up GEM Software contract from a global car manufacturer for

    operations in a Latin America country received

• Announcement that GEM Enterprise provides emergency and operations communications

    for The Green Bay Packers and Lambeau Field

• Has received $1.9 million in international LRAD defense and wildlife preservation

    orders received

• Received a follow-up $1.8 million LRAD command as part of a previously announced announcement we

    Navy IDIQ contract received

• Partnership with Danimex Communication to develop sales of hardware and software in


Revenues for the Company's first quarter of fiscal 2022, were $10.7 million, an
increase from $8.0 million in the first quarter of fiscal 2021. Both LRAD ($7.5
million) and IMNS ($2.6 million) revenues increased $0.4 million and $2.3
million, respectively, offset by a $0.1 million decrease in software revenue
($0.6 million) compared to the prior year quarter. The timing of budget cycles,
government financial issues and military conflict in certain areas of the world,
often delay contract awards, resulting in uneven quarterly revenues. Gross
profit increased compared to the same quarter in the prior year as a result of
higher sales offset by increased software engineering expenses. Operating
expenses in the quarter ended December 31, 2021, increased 47.9% to $6.5 million
compared to $4.4 million in the same period in the prior year. We reported a net
loss of $1.3 million for the first quarter of fiscal 2022, or a loss of $0.04
per share, compared to a net loss of $0.6 million, or a loss of $0.02 per share,
for the same quarter in the prior year.

Global Business Outlook

Our products, systems and solutions continue to gain worldwide awareness and
recognition through media exposure, product demonstrations, and word of mouth as
a result of positive responses and increased acceptance. We believe we have a
solid global brand, technology, and product foundation, which we continue to
expand to serve new markets and customers for greater business growth.  We
believe we have strong market opportunities for our product offerings throughout
the world in the defense, public safety, emergency warning, mass notification,
critical event management and law enforcement sectors as a result of increasing
threats to government, commerce, homeland security, and critical infrastructure.
Our products, systems and solutions also have many applications within the fire
rescue, maritime, asset protection, and wildlife preservation business segments.

Genasys has developed a global market and an increased demand for LRAD AHDs and
advanced outdoor mass notification speakers. We have a reputation for producing
quality products that feature industry leading broadcast area coverage, vocal
intelligibility, and product reliability. We intend to continue building on our
AHD leadership position by offering enhanced voice broadcast systems and
accessories for an expanding range of applications. In executing our strategy,
we use direct sales to governments, militaries, large end-users, system
integrators, and prime vendors. We have built a worldwide distribution channel
consisting of partners and resellers that have significant expertise and
experience selling integrated communication solutions into our various target
markets. As our primary AHD sales opportunities are with domestic and
international governments, military branches, and law enforcement agencies, we
are subject to each customer's unique budget cycle, which leads to long selling
cycles and uneven revenue flow, complicating our product planning.


The proliferation of natural and man-made disasters, emergency events and civil
unrest require technologically advanced, multichannel solutions to deliver clear
and timely critical communications to help keep people safe during crisis
situations. Businesses are also incorporating critical communication and
emergency management systems that locate and help safeguard employees when
crises occur.

By providing the only SaaS platform that unifies sensors and IoT inputs with
multichannel, multiagency alerting and notifications, Genasys seeks to deliver
reliable, fast, and intuitive solutions for creating and disseminating
geolocation-targeted warnings, information, and instructions before, during, and
after public safety and business threats, critical events, and other life safety

As the mass notification market is more mature with many established manufacturers and vendors, we believe our advanced technology and unified platform provide opportunities for success in the large and growing markets for public safety, alerts emergency and critical communications.

In fiscal 2022, we intend to continue to pursue domestic and international
business opportunities with the support of business development consultants, key
representatives, and resellers. We plan to grow our revenue through increased
direct sales to governments and agencies that desire to integrate our
communication technologies into their homeland security and public safety
systems. This includes building on fiscal 2021 domestic defense sales by
pursuing further U.S. military opportunities. We also plan to pursue emergency
warning, enterprise and critical event management, government, law enforcement,
fire rescue, homeland and international security, private and commercial
security, border security, maritime security, and wildlife preservation business

Our research and development strategy involves incorporating further innovations
and capabilities into our GEM, IMNS, Zonehaven, NEWS and LRAD products, systems
and solutions to meet the needs of our target markets.

Our GEM, IMNS, Zonehaven and NEWS software solutions represent more complex,
integrated offerings. We are pursuing certain certifications, which are often
required when bidding on government and mass notification opportunities. We
intend to invest engineering resources to enhance our GEM, IMNS, Zonehaven and
NEWS software solutions to compete for larger emergency warning and critical
communications business opportunities. We are also configuring alternative
solutions to achieve lower price points to meet the needs of certain customers
or applications. We also engage in ongoing value engineering to reduce the cost
and simplify the manufacturing of our products.

In March 2020, the World Health Organization ("WHO") classified the COVID-19
outbreak as a pandemic. While the impact of the COVID-19 pandemic did not have a
material adverse effect on our financial position or results of operations for
the nine months ended June 30, 2021, we monitor the developments and assess
areas where there is potential for our business to be impacted. A significant
portion of our sales force is working remotely, which could, among other things,
negatively impact our ability to engage in sales-related initiatives, or
efficiently conduct day-to-day operations. Other businesses and governments with
which we engage are likely operating under similar restrictions and experiencing
disruptions, which may create obstacles in the coordination of business
activities, including the negotiation and fulfillment of orders. Disruptions in
the supply chain could negatively impact our ability to source materials or
manufacture and distribute products. While we do not currently anticipate a
material reduction in demand for our commercialized products, we could
experience a decrease in new orders, which could negatively impact our revenues
and reduce our liquidity and cash flows. Growth in revenue could also be impeded
by these factors. The financial markets have been subject to significant
volatility that could impact our ability to enter into, modify, and negotiate
favorable terms and conditions relative to equity and debt financing activities.
We have $10.1 million in cash and cash equivalents as of December 31, 2021,
which we believe provides sufficient capital to fund our operations for at least
the next twelve months and withstand the potential near-term consequences of the
pandemic, although liquidity constraints and access to capital markets could
adversely impact our liquidity and warrant changes to our investment strategy.
While we have not yet experienced a material impact, the full magnitude of the
pandemic cannot be measured at this time, and therefore, any of the
aforementioned circumstances, as well as other factors, may cause our results of
operations to vary substantially from year to year and quarter to quarter.

Based on various standards published to date, we believe the work our associates
perform is critical, essential and life sustaining. We are taking a variety of
measures to promote the safety and security of our employees while ensuring the
availability and functionality of our critical infrastructure. We are following
Center for Disease Control guidelines to reduce the transmission of COVID-19,
such as the imposition of travel restrictions, cancellation of events, the
promotion of social distancing, the adoption of work-from-home arrangements, and
limiting access to our facilities. Some or all of these policies and initiatives
could impact our operations. In addition, the following events related to the
COVID-19 pandemic could result in lost or delayed revenue to the Company:
limitations on the ability of our suppliers to meet delivery requirements and
commitments; limitations on the ability of our employees to perform their work
due to illness caused by the pandemic, or local, state or federal orders
requiring employees to remain at home; limitations on the ability of carriers to
deliver our products to customers; unforeseen deviations from customers or
foreign governments restricting the ability to do business; and, limitations on
the ability of our customers to pay us on a timely basis, if at all.


A large number of components and sub-assemblies manufactured by outside
suppliers within our supply chain are produced within 50 miles of our facility.
We do not source component parts directly from suppliers in China, however, it
is likely that some of our suppliers source parts in China. The COVID-19
pandemic has adversely impacted worldwide supply chains and the ability to
obtain sufficient amounts of component parts, including semiconductor chips and
integrated circuits, resins, coating and other equipment and components.
Negative impacts on our supply chain could have a material adverse effect on our
business. We are in contact with our suppliers and evaluating what impact may
result from COVID-19.

Critical Accounting Policies

We have identified a number of accounting policies as critical to our business
operations and the understanding of our results of operations. These are
described in our consolidated financial statements located in Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year ended September 30, 2021. The impact and
any associated risks related to these policies on our business operations is
discussed below and throughout Management's Discussion and Analysis of Financial
Condition and Results of Operations when such policies affect our reported and
expected financial results.

The methods, estimates and judgments we use in applying our accounting policies,
in conformity with U.S. generally accepted accounting principles, have a
significant impact on the results we report in our financial statements. We base
our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. The estimates affect the
carrying values of assets and liabilities. Actual results may differ from these
estimates under different assumptions or conditions.


Comparison of Results of Operations for the Three Months Ended December 31, 2021
and 2020 (in thousands)

                                          Three Months Ended
                           December 31, 2021              December 31, 2020
                                         % of                           % of
                                         Total                         Total                Fav(Unfav)
                          Amount        Revenue         Amount        Revenue         Amount           %
Product sales           $    9,570          89.6 %    $    6,950           86.6 %    $   2,620           37.7 %
Contract and other           1,107          10.4 %         1,078           13.4 %           29            2.7 %
Total revenues              10,677         100.0 %         8,028          100.0 %        2,649           33.0 %

Cost of revenues             5,783          54.2 %         4,324           53.9 %       (1,459 )        (33.7 %)
Gross Profit                 4,894          45.8 %         3,704           46.1 %        1,190           32.1 %

Operating expenses
Selling, general and
administrative               5,134          48.1 %         3,331           41.5 %       (1,803 )        (54.1 %)
Research and
development                  1,369          12.8 %         1,066           13.3 %         (303 )        (28.4 %)
Total operating
expenses                     6,503          60.9 %         4,397           54.8 %       (2,106 )        (47.9 %)

Loss from operations        (1,609 )      (15.1% %)         (693 )        (8.6% )         (916 )        132.2 %

Other income, net               13           0.1 %            69            0.9 %          (56 )        (81.2 %)

Loss before income
taxes                       (1,596 )       (14.9 %)         (624 )         (7.8 %)        (972 )        155.8 %
Income tax benefit            (291 )        (2.7 %)           (5 )         (0.1 %)         286       (5,720.0 %)
Net loss                $   (1,305 )       (12.2 %)   $     (619 )         (7.7 %)   $    (686 )        110.8 %

Net revenue
Hardware                $   10,127          94.8 %    $    7,387           92.0 %        2,740           37.1 %
Software                       550           5.2 %           641            8.0 %          (91 )        (14.2 %)
Total net revenue       $   10,677         100.0 %    $    8,028          100.0 %    $   2,649           33.0 %

The tables above set forth for the periods indicated certain items of our
condensed consolidated statements of operations expressed in dollars and as a
percentage of net revenues. The financial information and the discussion below
should be read in conjunction with the condensed consolidated financial
statements and notes contained in this report.


Revenues increased $2,649 or 33%, compared to the same quarter in the prior
year. LRAD revenues ($7,512) increased $444 and IMNS ($2,614) increased $2,295,
while software revenue ($550) decreased $91, compared to the prior year quarter.
Higher revenue in the first quarter of fiscal 2022 was largely due to the larger
backlog at the start of the fiscal year compared to the prior year amount.
Software revenue was lower primarily due to lower professional services
performed in the current quarter, offset by higher recurring software revenue.
The receipt of orders is often uneven due to the timing of budget cycles,
government financial issues and military conflict. As of December 31, 2021, we
had aggregate deferred revenue of $1,388 for extended warranty obligations and
software support agreements.

Gross profit

The increase in gross profit compared to the same period in the prior year was
due to higher hardware revenue in this year's quarter. Gross profit as a
percentage of sales was essentially unchanged compared to the prior year period
primarily due to greater gross profit recognized on higher hardware revenue in
this year's quarter offset by higher costs from increased software related
personnel added via acquisition and new hires in the last year to support the
growing SasS product line.

As our products have varying gross margins, product mix may affect gross
profits. In addition, our margins vary based on the sales channels through which
our products are sold in a given period. We continue to implement product
updates and changes, including raw material and component changes, that may
impact product costs. We have limited warranty cost experience with product
updates and changes and estimated future warranty costs can impact our gross
margins. We do not believe that historical gross profit margins should be relied
upon as an indicator of future gross profit margins.


Selling, general and administrative expenses

Selling, general and administrative expenses increased $1,803, or 54.1%, over
the prior year quarter. The increase was largely due to $982 of higher
compensation expense from a 42% increase in sales and marketing personnel over
the prior year, $379 increased amortization expense related to an acquisition,
and $323 of higher travel, sales and marketing activities in the current year

We incurred non-cash share-based compensation expenses allocated to selling,
general and administrative expenses in the three-months ended December 31, 2021
and 2020 of $531 and $171, respectively.

We may devote additional resources to marketing and selling our products in future periods as we identify ways to optimize potential opportunities. Commission charges will fluctuate depending on the nature of our sales.

Research and development costs

Research and development expenses increased $303 this year as more engineering
time was incurred to expand the base software offering compared to the prior
year when more time was devoted to professional service contracts.

Included in research and development expenses for the three months ended
December 31, 2021 and 2020, was $12 and $6respectively, non-cash share-based compensation costs.

Research and development costs vary period to period due to the timing of
projects, and the timing and extent of using outside consulting, design and
development firms. We seek to continually improve our product offerings, and we
expect to continue to expand our product line with new products, customizations
and enhancements. Based on current plans, we may expend additional resources on
research and development in the current year compared to the prior year.

Net Loss

Net loss in the first quarter of fiscal year 2022 was $1,305, an increase of
$686, compared to the net loss in the first quarter of fiscal year 2021. The
increase was primarily due to the increased operating expenses resulting from
the acquisition of Zonehaven and additional engineering, sales and marketing

Other Metrics

We monitor a number of financial and operating metrics, including the following
key metrics, to evaluate our business, measure our performance, identify trends
affecting our business, formulate business plans and make strategic decisions.
Our other business metrics may be calculated in a manner different than similar
other business metrics used by other companies (in thousands):

Adjusted EBITDA

Adjusted EBITDA represents our net income before other income, net, income tax
expense (benefit), depreciation and amortization expense and stock-based
compensation. We do not consider these items to be indicative of our core
operating performance. The items that are non-cash include depreciation and
amortization expense and stock-based compensation. Adjusted EBITDA is a measure
used by management to understand and evaluate our core operating performance and
trends and to generate future operating plans, make strategic decisions
regarding allocation of capital and invest in initiatives that are focused on
cultivating new markets for our solutions. In particular, the exclusion of
certain expenses in calculating adjusted EBITDA facilitates comparisons of our
operating performance on a period-to-period basis. Adjusted EBITDA is not a
measure calculated in accordance with generally accepted accounting principles
in the United States of America ("U.S. GAAP"). We believe that adjusted EBITDA
provides useful information to investors and others in understanding and
evaluating our operating results in the same manner as our management and board
of directors. Nevertheless, use of adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as a substitute
for analysis of our financial results as reported under U.S. GAAP. Some of these
limitations are: (1) although depreciation and amortization are non-cash
charges, the intangible assets that are amortized and property and equipment
that is depreciated, will need to be replaced in the future, and adjusted EBITDA
does not reflect cash capital expenditure requirements for such replacement or
for new capital expenditure requirements; (2) adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital needs; (3) adjusted
EBITDA does not reflect the potentially dilutive impact of equity-based
compensation; (4) adjusted EBITDA does not reflect tax payments or receipts that
may represent a reduction or increase in cash available to us; and (5) other
companies, including companies in our industry, may calculate adjusted EBITDA or
similarly titled measures differently, which reduces the usefulness of the
metric as a comparative measure. Because of these and other limitations, you
should consider adjusted EBITDA alongside our other U.S. GAAP-based financial
performance measures, net income and our other U.S. GAAP financial results.


The following table presents a reconciliation of adjusted EBITDA to net income,
the most directly comparable U.S. GAAP measure, for each of the periods
indicated (in thousands):

                                   Years ended September 30,
                                     2021               2020
Net loss                        $       (1,305 )     $      (619 )
Other income, net                          (13 )             (69 )
Income tax expense (benefit)              (291 )              (5 )
Depreciation and amortization              639               281
Stock-based compensation                   558               182
Adjusted EBITDA                 $         (412 )     $      (230 )

Cash and capital resources

Cash and cash equivalents as of December 31, 2021 was $10,136, down $3,031
compared with $13,167 at September 30, 2021. We had short-term marketable
securities of $3,938 as of December 31, 2021, compared with $5,686 at September
30, 2021. We had long-term marketable securities of $3,381 at December 31, 2021,
compared with $1,875 at September 30, 2021. In addition to cash and cash
equivalents, short and long-term marketable securities, other working capital
and expected future cash flows from operating activities in subsequent periods,
we have a $10 million revolving line of credit available as a source of

Although there is uncertainty related to the anticipated impact of the recent
COVID-19 outbreak on the Company's future results, we believe our efficient
business model and strong balance sheet keep us positioned to manage our
business through this crisis as it continues to unfold. We continue to manage
all aspects of our business including, but not limited to, monitoring the
financial health of our customers, suppliers and other third-party relationships
and developing new opportunities for growth.

The main factors that could affect our liquidity include:

  • ability to meet sales projections;
  • government spending levels;
  • introduction of competing technologies;
  • product mix and effect on margins;
  • ability to reduce current inventory levels;
  • product acceptance in new markets;
  • value of shares repurchased;
  • value of dividends declared;
  • impact of COVID-19 on global market conditions; and
  • impact of COVID-19 on customers' ability to pay.

The main factors that could affect our ability to obtain liquidity from external sources include:

  • volatility in the capital markets; and
  • market price and trading volume of our common stock.

Based on our current cash position, and assuming currently planned expenditures
and level of operations, we believe we have sufficient capital to fund
operations for the twelve-month period subsequent to the issuance of the interim
financial information. However, we operate in a rapidly evolving and
unpredictable business environment that may change the timing or amount of
expected future cash receipts and expenditures. Accordingly, there can be no
assurance that we may not be required to raise additional funds through the sale
of equity or debt securities or from credit facilities. Additional capital, if
needed, may not be available on satisfactory terms, or at all.


Cash Flows

Our cash flows from operating, investing and financing activities, as reflected
in the condensed consolidated statements of cash flows, are summarized in the
table below:

                                          Three months ended
                               December 31, 2021       December 31, 2020
Cash provided by (used in):
Operating activities          $            (2,702 )   $             1,272
Investing activities          $                72     $            (4,264 )
Financing activities          $              (395 )   $                54

Operating Activities

Net loss of $1,305 for the three months ended December 31, 2021 was decreased by
$1,131 of non-cash items that included an increase to deferred income taxes,
share-based compensation, depreciation and amortization, warranty provision and
inventory obsolescence. Cash used by operating activities in the quarter
reflected an increase in inventory of $2,752 and a decrease in accrued
liabilities and other of $1,743 for payment of incentive compensation earned in
fiscal year 2021. This was offset by an $889 decrease in accounts receivable on
lower revenue this quarter compared to the fourth quarter of fiscal year 2021, a
$979 decrease in prepaid expenses and a $99 increase in accounts payable.

Net loss of $619 for the three months ended December 31, 2020 was increased by
$667 of net non-cash items that included depreciation and amortization,
share-based compensation, operating ROU asset amortization, warranty provision,
inventory obsolescence, and both realized and unrealized loss on a foreign
currency forward contract. Cash used by operating activities in the quarter
reflected an increase in inventory of $1,114 due to a fiscal first quarter
customer order that was not shipped until the fiscal second quarter, and a net
decrease of $314 in accrued and other liabilities primarily for payment of
incentive compensation earned in fiscal year 2020, offset by increased customer
deposits. Cash provided by operating activities included a decrease in accounts
receivable of $2,300 due to lower fiscal first quarter revenue compared to
shipments in the fourth quarter of fiscal year 2020, lower prepaid expenses and
other of $120, and an increase in accounts payable of $232.

We had accounts receivable of $6,787 as of December 31, 2021, compared with
$7,682 as of September 30, 2021. Terms with individual customers vary greatly.
We regularly provide thirty-day terms to our customers if credit is approved.
Our receivables can vary dramatically due to overall sales volume, quarterly
variations in sales, timing of shipments to and receipts from large customers,
payment terms, and the timing of contract payments.

As of December 31, 2021 and September 30, 2021, our working capital was $15,433
and $18,019, respectively. The decrease in working capital was primarily due to
the net loss this quarter, change in the short-term/long-term mix of marketable
securities and the use of cash to repurchase shares of Company stock.

Investing Activities

Our net cash provided by investing activities was $72 for the three months ended
December 31, 2021, compared with cash used in investing activities of $4,264 for
the three months ended December 31, 2020. In the first quarter of fiscal 2021,
$4,367 was used for the Amika Mobile asset purchase. In the first quarter of
fiscal 2022, we decreased our holdings of short and long-term marketable
securities by $231, compared with a decrease of $132 in the three months ended
December 31, 2020. Cash used in investing activities for the purchase of
property and equipment was $159 and $29 for the three months ended December 31,
2021 and 2020, respectively. We anticipate some additional expenditures for
tooling and equipment during the balance of fiscal year 2022.

Financing Activities

In the three months ended December 31, 2021, proceeds from the exercise of stock
options provided $46 of cash, compared with proceeds from stock options of $54
for the three months ended December 31, 2020.

In December 2018, the Board of Directors approved a new share buyback program
beginning January 1, 2019, under which the Company was authorized to repurchase
up to $5 million of its outstanding common shares. In December 2020, the board
voted to extend this program's expiration date to December 31, 2022. During the
quarter ended December 31, 2021, 116,868 shares were purchased for $441. No
shares were repurchased during the quarter ended December 31, 2020. All
repurchased shares have been retired and as of December 31, 2021, $3.7 million
was available for share repurchase under this program.


Recent accounting pronouncements

New pronouncements issued for future implementation are described in Note 3, Recent Accounting Pronouncements, to our Condensed Consolidated Financial Statements.

© Edgar Online, source Previews


Comments are closed.