Moving iMage Technologies, Inc. — FY2022 Form 10-K
Business context and reporting period. The filing reports the fiscal year ended June 30, 2022, compared with the year ended June 30, 2021; it is not a report for calendar Q4 2021. Moving iMage Technologies supplies cinema and entertainment-venue equipment, products, project management, installation, and technical services. The company also sells Caddy products and is developing software and other newer offerings.
Financial results and liquidity
Amounts below are in millions, except per-share data and percentages.
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $18.351 | $7.247 |
| Gross profit / margin | $4.461 / 24.3% | $1.689 / 23.3% |
| Operating expenses | $6.223 | $3.250 |
| Operating loss | $(1.762) | $(1.561) |
| Net loss | $(1.345) | $(0.645) |
| Net loss per share, basic and diluted | $(0.13) | $(0.11) |
| Cash from operating activities | $(3.387) | $(1.697) |
| Cash from investing activities | $(4.956) | $0.548 |
| Cash from financing activities | $9.413 | $1.360 |
- Revenue rose 153.2%, which management attributed primarily to recovery in cinema exhibition. Gross margin increased 1.0 percentage point, mainly from product mix, parts and services, and Caddy cupholder sales.
- SG&A increased to $5.985 million from $3.098 million, reflecting the prior-year cost reductions and higher public-company legal, accounting, and regulatory costs. Higher SG&A more than offset gross-profit growth, increasing the net loss.
- FY2022 other income included $705,000 of PPP loan forgiveness, offset in part by $242,000 of unrealized investment losses and $6,000 of realized investment losses. FY2021 included $694,000 of PPP forgiveness and a $459,000 realized investment gain.
- At June 30, 2022, cash was $2.340 million and marketable securities were $4.688 million ($4.363 million current and $0.325 million long-term). Current assets were $13.362 million and current liabilities $5.414 million.
- Total liabilities were $5.436 million; the company reported no outstanding debt at June 30, 2022, compared with $1.939 million of notes and line-of-credit borrowings at June 30, 2021. Operating-lease payments totaled $0.769 million over the disclosed future periods.
- The IPO generated $11.244 million of net proceeds as presented in the cash-flow and equity statements. Operating cash use rose, primarily as accounts receivable and inventory increased, partly offset by higher customer deposits.
Material changes and outlook
- Backlog was approximately $10.03 million at June 30, 2022, versus $9.44 million a year earlier; orders were planned to ship substantially by December 31, 2022. Backlog may be delayed, amended, or cancelled and is not assured revenue.
- Theaters had largely reopened by fiscal year-end, but the industry’s recovery remained underway. Management cited evolving release windows, streaming competition, supply-chain delays, inflation, labor shortages, and wage pressures. It said it believed available and expected cash would sustain operations for 12 months from issuance of the financial statements; no quantified revenue or earnings guidance is provided.
- The company made a $1.5 million inventory purchase under an April 2022 QSC asset purchase agreement, outside its usual small-inventory approach. It also continued investment in new products, including accessibility and multilingual systems, CineQC, and direct-view LED support.
- After year-end, Regal’s parent, Cineworld, filed for bankruptcy protection on September 7, 2022. The filing identifies this as an industry/customer-related risk; it does not quantify the company’s resulting exposure.
Risks, contingencies, and governance matters
- Customer concentration remains relevant: the top ten customers represented 48% of FY2022 revenue and 48% of receivables at year-end. No single customer exceeded 10% of FY2022 revenue; three customers represented 18%, 16%, and 10% of receivables. One vendor represented 39% of accounts payable.
- Management concluded internal control over financial reporting and disclosure controls were ineffective at June 30, 2022 because of material weaknesses in the close and reporting process, undocumented accounting procedures, segregation of duties, and journal-entry review. Remediation was underway; success and timing were not assured. The auditor did not audit or opine on internal controls.
- CohnReznick resigned as auditor in April 2022 and Haskell & White was engaged. The supplied filing text does not state the reason for the resignation. Haskell & White issued an unmodified opinion on the FY2022 financial statements.
- The filing reports no material pending legal proceedings. It describes ordinary-course litigation and product-liability exposure, but no material adverse outcome was identified as pending.
- Other principal risks include cinema-market recovery, supplier availability and pricing, long and seasonal project cycles, backlog conversion, competition, customer payment risk, access to capital, and the company’s limited resources. Inflation had increased during FY2022; management said it had historically offset inflation through pricing or efficiencies.
Important facts for investors to verify
- Whether the company converts its $10.03 million backlog to revenue and collects receivables, particularly given customer concentration and Cineworld’s bankruptcy.
- How quickly operating cash use moderates, including the cash impact of inventory, receivables, and customer deposits.
- The composition, liquidity, and subsequent value of the $4.688 million marketable-securities portfolio and the effect of investment valuation changes.
- Progress and independent confirmation of remediation of the disclosed material weaknesses, and the circumstances surrounding the auditor change.
- Whether newer products and the QSC inventory purchase produce demand and margins consistent with management’s expectations; the filing provides no quantified forward guidance.