10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                   

Commission file number: 001-40511

Moving iMage Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	85-1836381
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

17760 Newhope Street,
Fountain Valley, California	92708
(Address of principal executive offices)	(Zip Code)

(714) 751-7998

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value	MITQ	NYSE American

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑	Smaller reporting company ☑
	Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☑.

As of February 13, 2023, there were 10,958,398 shares of the registrant’s common stock, par value $0.00001 per share, outstanding.

MOVING iMAGE TECHNOLOGIES, INC.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements	F-3
	Condensed Consolidated Balance Sheets as of December 31, 2022 (unaudited) and June 30, 2022	F-3
	Condensed Consolidated Statement of Operations (unaudited) for the three and six months ended December 31, 2022 and 2021	F-4
	Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three and six months ended December 31, 2022	F-5
	Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three and six months ended December 31, 2021	F-5
	Condensed Consolidated Statement of Cash Flows (unaudited) for the six months ended December 31, 2022 and 2021	F-6
	Notes to Unaudited Condensed Consolidated Financial Statements	F-7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	31
ITEM 4.	Controls and Procedures	31
PART II - OTHER INFORMATION		32
ITEM 1.	Legal Proceedings	32
ITEM 1A.	Risk Factors	32
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
ITEM 3.	Defaults Upon Senior Securities	32
ITEM 4.	Mine Safety Disclosures	32
ITEM 5.	Other Information	32
ITEM 6.	Exhibits	32
SIGNATURES		33

F-2

PART I – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except share and per share amounts)

	December 31,		June 30,
	2022		2022
	(unaudited)			(Note 1)
Assets
Current Assets:
Cash and cash equivalents	$	1,575	$	2,340
Marketable securities–current		4,421		4,363
Accounts receivable, net		1,419		1,762
Inventories, net		4,727		4,033
Prepaid expenses and other		267		864
Total Current Assets		12,409		13,362
Marketable securities–non–current		319		325
Right-of-use asset		543		—
Property and equipment, net		23		22
Intangibles, net		791		839
Goodwill		287		287
Other assets		16		16
Total Assets	$	14,388	$	14,851
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	1,627	$	1,583
Accrued expenses		377		655
Customer deposits		2,245		3,158
Lease liability–current		265		—
Unearned warranty revenue		59		18
Total Current Liabilities		4,573		5,414
Lease liability–non-current		296		—
Deferred rent		—		22
Total Liabilities		4,869		5,436
Stockholders’ Equity
Common stock, $0.00001 par value, 100,000,000 shares authorized, 10,958,398 and 10,828,398 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively		—		—
Additional paid-in capital		12,653		12,500
Accumulated deficit		(3,134)		(3,085)
Total Stockholders’ Equity		9,519		9,415
Total Liabilities and Stockholders’ Equity	$	14,388	$	14,851

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except share and per share amounts)

(unaudited)

	Three Months		Three Months
	Ended		Ended		Six Months Ended		Six Months Ended
	December 31,		December 31,		December 31,		December 31,
	2022		2021		2022		2021
Net sales	$	4,843	$	3,419	$	10,695	$	6,893
Cost of goods sold		3,531		2,523		7,824		5,275
Gross profit		1,312		896		2,871		1,618
Operating expenses:
Research and development		61		65		127		119
Selling and marketing		594		571		1,204		1,115
General and administrative		795		902		1,630		1,565
Total operating expenses		1,450		1,538		2,961		2,799
Operating income (loss)		(138)		(642)		(90)		(1,181)
Other (income) expenses:
Unrealized (gain) loss on investments		(269)		—		(129)		—
Realized (gain) loss on investments		110		—		133		—
Interest and other income		(25)		—		(45)		—
Interest expense		—		2		—		40
Total other (income) expense		(184)		2		(41)		40
Net income (loss)	$	46	$	(644)	$	(49)	$	(1,221)
Weighted average shares outstanding: basic and diluted		10,958,398		10,636,278		10,943,561		10,445,482
Net income (loss) per common share basic and diluted	$	0.00	$	(0.06)	$	(0.00)	$	(0.12)

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-4

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

(in thousands except for share amounts)

Three months and six months ended December 31, 2022

						Retained Earnings
	Common Stock			Additional Paid-In		(Accumulated
	Shares	Amount		Capital		Deficit)		Total
Balance as of June 30, 2022	10,828,398	$	—	$	12,500	$	(3,085)	$	9,415
Issuance of stock to employees	130,000		—		153		—		153
Net loss	—		—		—		(95)		(95)
Balance as of September 30, 2022	10,958,398	$	—	$	12,653	$	(3,180)	$	9,473
Net income	—		—		—		46		46
Balance as of December 31, 2022	10,958,398	$	—	$	12,653	$	(3,134)	$	9,519

Three months and six months ended December 31, 2021

						Retained Earnings
	Common Stock			Additional Paid-In		(Accumulated
	Shares	Amount		Capital		Deficit)		Total
Balance as of June 30, 2021	5,666,667	$	—	$	1,011	$	(1,740)	$	(729)
Shares of common stock issued for cash, net of issuance costs	4,830,000		—		11,244		—		11,244
Cashless exercise of warrants	139,611		—		—		—		—
Grant of options for services	—		—		56		—		56
Net loss	—		—		—		(577)		(577)
Balance as of September 30, 2021	10,636,278	$	—	$	12,311	$	(2,317)	$	9,994
Grant of options for services	—		—		62		—		62
Net loss	—		—		—		(644)		(644)
Balance as of December 31, 2021	10,636,278	$	—	$	12,373	$	(2,961)	$	9,412

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-5

MOVING IMAGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended		Six Months Ended
	December 31,		December 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(49)	$	(1,221)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for (reversal of) doubtful accounts		(17)		(40)
Depreciation expense		3		13
Amortization expense		48		48
Unrealized gain on investments		(129)		—
Realized loss on investments		133		—
Cash expended in excess of rent expense		(4)		—
Stock compensation expense		—		118
Changes in operating assets and liabilities
Accounts receivable		360		(164)
Inventories		(694)		(1,964)
Prepaid expenses and other		597		(653)
Accounts payable		44		(703)
Accrued expenses		(125)		(302)
Unearned warranty revenue		41		(2)
Customer deposits		(913)		2,025
Net cash used in operating activities		(705)		(2,845)
Cash flows from investing activities
Sales of marketable securities		4,088		—
Purchase of marketable securities		(4,144)		—
Purchases of property, plant and equipment		(4)		(2)
Net cash used in investing activities		(60)		(2)
Cash flows from financing activities
Net Proceeds from initial public offering		—		12,360
Payments on line of credit		—		(590)
Payments on notes payable		—		(1,241)
Net cash provided by financing activities		—		10,529
Net increase (decrease) in cash and cash equivalents		(765)		7,682
Cash and cash equivalents, beginning of the period		2,340		1,270
Cash and cash equivalents, end of the period	$	1,575	$	8,952
Non-cash investing and financing activities:
Reclassification of IPO related costs from other assets to equity	$	—	$	1,116
Accrued expenses settled by issuance of common stock	$	153	$	—
Right-of-use asset recorded upon adoption of ASC 842	$	681	$	—
Cash paid during the period:
Interest	$	—	$	38

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-6

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization: Moving iMage Technologies, Inc., a Delaware corporation, together with its wholly-owned subsidiaries unless the context indicates otherwise, the (“Company”) was incorporated in June 2020. The Company, through its wholly-owned subsidiary, Moving iMage Technologies, LLC (“MiT LLC”) and MiT LLC's wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”), designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements. The Company also offers single source solutions for cinema design, procurement, installation and service to the creative and production communities for screening, digital intermediate and other critical viewing rooms. Additionally, the Company offers a wide range of technical, design and consulting services such as custom engineering, systems design, integration and installation, and digital technology, as well as software solutions for operations enhancement and theatre management. The Company also provides turnkey furniture, fixture and equipment services to commercial cinema exhibitors for new construction and remodels including design, consulting, installation and project management as well as procurement of seats, lighting, acoustical treatments, screens, projection and sound.

Moving iMage Acquisition Co. (DBA “Caddy Products”) designs, develops and manufactures innovative products for the entertainment, cinema, grocery, worship, restaurant, sports and restroom industries.

Share Exchange:

In June 2020, MiT LLC members created Moving iMage Technologies, Inc. (“MIT Inc.”) to facilitate the Company’s initial public offering (“IPO”). Upon formation of MiT, Inc., 2,000,000 shares of MiT, Inc. common stock were issued to members of MiT LLC. On July 7, 2021, MiT LLC and MiT Inc. entered into an exchange agreement (“Exchange Agreement”) whereby the members of MiT LLC exchanged their membership interest for 2,350,000 shares of common stock in MiT Inc. As a result of the Exchange Agreement, the members of MiT LLC owned approximately 79% or 4,452,334 of the outstanding common stock of MiT Inc. As a result, MiT LLC (the entity where the Company conducts its business) became a wholly-owned subsidiary of MiT Inc. (the SEC registrant).

The transaction was accounted for as a merger of entities under common ownership in accordance with generally accepted accounting principles in the United States of America (“GAAP”). This determination was primarily based on the facts that, immediately before and after the transaction: (i) MiT LLC owners owned a substantial majority of the voting rights in the combined company, (ii) MiT LLC designated a majority of the members of the initial board of directors of the combined company, and (iii) MiT LLC’s senior management holds all key positions in the senior management of the combined company.

Initial Public Offering: On July 12, 2021, the Company closed its initial public offering ("IPO") and issued 4,830,000 shares of its common stock at a price of $3.00 per share for net proceeds of approximately $12,360,000 after deducting underwriting discounts, commissions, and other expenses of approximately $2,130,000. Upon the completion of its IPO, the Company reclassified deferred IPO related costs of approximately $1,116,000 from other assets to additional paid-in capital. In connection with the Company’s IPO, the underwriters received warrants to acquire 241,500 shares of the Company’s common stock at $3.75 per share.

On July 12, 2021, in connection with the IPO, warrants to purchase 139,611 shares of the Company’s common stock were exercised on a cashless basis.

Impact of the COVID-19 Pandemic: The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry. The social and economic effects have been widespread. At various points during the pandemic, authorities around the world imposed measures intended to control the spread of COVID-19, including stay-at-home orders and restrictions on large public gatherings, which caused movie theaters in countries around the world to temporarily close. The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries. As a result, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers.

F-7

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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, 2022, 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 industry also continues to adjust to evolving theatrical release windows, competition from streaming and other delivery platforms, supply chain delays, inflationary pressures, labor shortages, wage rate pressures and other economic factors.

Based on the its current estimates of recovery, the Company believes it has, and will generate, sufficient cash to sustain operations for a period of 12 months from the issuance of these financial statements. Nonetheless, the COVID-19 pandemic has had, and continues to have, adverse effects on the Company’s business, results of operations, cash flows and financial condition.

Principles of Consolidation: The condensed consolidated financial statements include the accounts of MiT Inc., its wholly-owned subsidiary, MiT LLC, and MiT LLC’s wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”). All significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation: The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position and operating results have been included in these statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2022, and with the disclosures and risk factors presented therein. The June 30, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. Operating results for the three months and six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2023.

Segment Reporting: An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment.

Measurement of Fair Values: The Company’s accounting policies and disclosures require the measurement of fair values for both financial and non-financial assets and liabilities on either a recurring or nonrecurring basis. When measuring the fair value of an asset or a liability, the Company uses observable market data to the extent such information is available. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

— Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

— Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

— Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

F-8

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	843	$	—	$	—	$	843
State and Municipal Debt Securities		880		—		—		880
Fixed Income Funds		2,715		—		—		2,715
Alternative Funds		—		256		—		256
Real Estate Funds		—		46		—		46
Subtotal								4,740
Less Long-term								(319)
Net Current							$	4,421

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):

	June 30, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	764	$	—	$	—	$	764
State and Municipal Debt Securities		889		—		—		889
Fixed Income Funds		2,687		—		—		2,687
Alternative Funds		—		300		—		300
Real Estate Funds		—		48		—		48
Subtotal								4,688
Less Long-term								(325)
Net Current							$	4,363

The carrying amounts of accounts receivable, accounts payable, and notes payable approximate fair value due to their short maturities.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis - In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. There were no impairments recognized for the quarter ended December 31, 2022 or the year ended June 30, 2022.

Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that were directly associated with its IPO and other financings as deferred offering costs (non-current) until such financings are consummated.

As of June 30, 2021, $1,116,000 of deferred offering costs were capitalized in other assets. After completion of the IPO in July 2021, these costs were recorded in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a reduction of proceeds received from the offering.

F-9

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities (including sales returns, bad debts, inventory reserves, warranty reserves, purchase price allocation and asset impairments), disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Concentration of Cash: The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on its cash balances.

Accounts Receivable: Accounts receivable are carried at original invoice amount less allowance for bad debts. Management determines the allowance for bad debts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 90 days past the customer’s granted terms. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of December 31, 2022 and June 30, 2022 the allowance for bad debts is approximately $121,000 and $138,000, respectively.

Inventories: Inventories are stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out cost method of accounting. The Company purchases finished goods and materials to assemble kits in quantities that it anticipates will be fully used in the near term. Changes in operating strategy, customer demand, and fluctuations in market values can limit the Company’s ability to effectively utilize all products purchased and can result in finished goods with above-market carrying costs which may cause losses on sales to customers. The Company’s policy is to closely monitor inventory levels, obsolescence and lower market values compared to costs and, when necessary, reduce the carrying amount of its inventory to its net realizable value. As of December 31, 2022 and June 30, 2022, the inventory reserve was $401,000 and $434,000, respectively, and inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition: The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue is recognized when control of the promised goods is transferred at the point of shipment to a customer, and when performance conditions are satisfied, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods as per the agreement with the customer. The Company generates all its revenue under agreements with customers. In case there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation and then evaluates how the services are transferred to the customer to determine the timing of revenue recognition.

The Company considers the U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a customer may not pay for the products provided or services performed. If there are circumstances where the above criteria are not met, revenues recognized are presented net of cost of goods sold.

Contract assets consist of conditional or unconditional rights to consideration. Accounts receivable represent amounts billed to customers where the Company has an enforceable right to payment for performance completed to date (i.e., unconditional rights to consideration). The Company does not have contract assets that represent conditional rights to consideration.

F-10

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Contract liabilities consist of refund and warranty liabilities, as well as deposits received in advance on sales to certain customers. Such deposits are reflected as customer deposits and recognized in revenue when control of the products is transferred or when performance conditions are satisfied per the agreement. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2022 included $2,571,000 for revenue recognized that was included in contract liability as of July 1, 2022. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2021 included $790,000 for revenue recognized that was included in contract liability as of July 1, 2021.

Cost of goods sold includes cost of inventory sold during the period, net of vendor discounts and allowances, and shipping and handling costs, and sales taxes. Taxes collected from customers are included in accounts payable on a net basis (excluded from revenues) until remitted to the government.

Deferred contract acquisition costs consist of sales commissions paid to the sales force, and the related employer payroll taxes, and are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined that sales commissions paid are an immaterial component of obtaining a customer’s contract and has elected to expense sales commissions when earned.

	For the Three		For the Three		For the Six		For the Six
	Months Ended		Months Ended		Months Ended		Months Ended
Disaggregation of Revenue (in 000’s):	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Equipment upon delivery (point in time)	$	4,717	$	3,355	$	10,431	$	6,788
Services (point in time)		108		64		234		105
Subscription and services (over time)		18		—		30		—
Total revenues	$	4,843	$	3,419	$	10,695	$	6,893

Revenue from the sale of equipment is recognized upon delivery of such equipment to customers and when performance conditions are satisfied.

Revenue from installation is recognized upon completion of the installation project and when the performance obligation is complete.

Subscription revenue for remote monitoring services is recognized on a straight-line basis over the term of the contract, usually one year. Services revenues are generally recognized over time as the contracts are performed.

Returns and Allowances: The Company records allowances for discounts and product returns at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends.

Shipping and Handling Costs: Shipping and handling costs are included in cost of goods sold and are recognized as a period expense during the period in which they are incurred.

Advertising Costs: Advertising costs were approximately $3,900 and $11,600 for the three months ended December 31, 2022 and 2021, respectively, and $10,600 and $11,700 for the six months ended December 31, 2022 and 2021, respectively. Advertising costs are expensed as incurred within selling and marketing expenses.

F-11

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill and Intangible Assets: Goodwill as of December 31, 2022 and June 30, 2022 represents the excess of the purchase price over the fair value of the net identifiable assets acquired in the 2019 Caddy Acquisition. Goodwill is reviewed for impairment at least annually, in June, or more frequently if a triggering event occurs between impairment testing dates. The Company operates as a single operating segment and as a single reporting unit for the purpose of evaluating goodwill impairment. On July 1, 2022, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. As such, the Company’s goodwill impairment test includes a one-step qualitative impairment test whereby a goodwill impairment loss will be measured as the excess of a reporting units carrying amount over its fair value. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. If the fair value of the reporting unit exceeds its carrying value, then no impairment exists. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss would be recognized for the excess of the carrying value of the reporting unit over the fair value, not to exceed the carrying amount of goodwill.

Goodwill is at risk of future impairment in the event of significant unexpected changes in the Company’s forecasted future results and cash flows, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate, or if there is a decline in the stock price.

Intangible assets arising from business combinations, such as customer relationships, trade names, and/or intellectual property, are initially recorded at fair value. The Company amortizes these intangible assets over the determined useful life which generally ranges from 11 to 20 years. The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully recoverable. There were no intangible asset impairments recognized for the three months and six months ended December 31, 2022 or 2021.

Business Combinations: The Company includes the results of operations of the businesses that it acquires commencing on the respective dates of acquisition. The Company allocates the fair value of the purchase price of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Income Taxes: The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

F-12

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following table summarizes the components of deferred tax assets and deferred tax liabilities at June 30, 2022 and December 31, 2022 (in thousands):

	Deferred Tax
	Assets (Liabilities)
Inventory reserve	$	122
Accumulated depreciation		(6)
Accumulated goodwill amortization		(12)
Accumulated intangible amortization		8
Unrealized loss on investments		68
Deferred rent		6
Warranty reserve		5
Stock compensation		68
Net operating loss carryforward		594
Allowance for doubtful accounts		39
Net		892
Valuation allowance		(892)
Total June 30, 2022	$	—
Inventory reserve	$	112
Accumulated depreciation		(5)
Accumulated goodwill amortization		(15)
Accumulated intangible amortization		(9)
Unrealized gain on investments		(38)
Deferred rent		5
Warranty reserve		17
Stock compensation		68
Net operating loss carryforward		636
Capital loss carry over		40
Allowance for doubtful accounts		34
Net		845
Valuation allowance		(845)
Total December 31, 2022	$	—

Leases: On July 1, 2022 the Company adopted ASU 2016-02, Leases (Topic 842) which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. In accordance with ASC 842, on July 1, 2022 the Company recognized Right of Use Assets in the amount of $665,000 and lease liabilities of $681,000 for the leases associated with its executive office and warehouse space, as described in Note 11.

Product Warranty: The Company’s digital equipment products are sold under various limited warranty arrangements ranging from one year to three years. Company policy is to establish reserves for estimated product warranty costs in the period when the related revenue is recognized. The Company has the right to return defective products it buys from third-party manufacturers, for up to three years, depending on the manufacturers’ individual policies. As of December 31, 2022 and June 30, 2022, the Company has established a warranty reserve of $50,000 and $55,000, respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

F-13

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands):

	Quarter Ended December 31,		Year Ended June 30,
	2022		2022
Product warranty liability, beginning of period	$	55	$	29
Accruals for warranties issued		61		60
Settlements made		(66)		(34)
Product warranty liability, end of period	$	50	$	55

Research and Development: The Company incurs costs to develop new products, as well as improve the appeal and functionality of its existing products. Research and development costs are charged to expense when incurred.

Recently Issued Accounting Pronouncements: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies, and as such the Company will adopt this standard on July 1, 2023. The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements.

Other pronouncements issued by FASB with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

F-14

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — INVESTMENTS

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 31, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	1,575	$	—	$	—	$	1,575	$	1,575	$	—	$	—
Equities
Communication		25		—		(2)		23		—		23		—
Consumer Discretionary		58		—		(8)		50		—		50		—
Consumer Staples		22		1		—		23		—		23		—
Energy		9		1		—		10		—		10		—
Financials		44		—		(5)		39		—		39		—
Health Care		39		1		—		40		—		40		—
Industrials		27		—		(3)		24		—		24		—
Information Technology		124		—		(24)		100		—		100		—
Materials		11		—		—		11		—		11		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		4		—		—		4		—		4		—
Mutual Funds		524		—		(13)		511		—		511		—
										—
Subtotal		897		3		(57)		843		—		843		—
Fixed Income
State & Municipal Bonds		899		—		(19)		880		—		561		319
Fixed income funds		2,747		—		(32)		2,715		—		2,715		—
Subtotal		3,646		—		(51)		3,595		—		3,276		319
Alternative, real estate and other		313		—		(11)		302		—		302		—
Total	$	6,431	$	3	$	(119)	$	6,315	$	1,575	$	4,421	$	319

F-15

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — INVESTMENTS (continued)

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 30, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	2,340	$	—	$	—	$	2,340	$	2,340	$	—	$	—
Equities
Communication		50		—		(11)		39		—		39		—
Consumer Discretionary		69		—		(15)		54		—		54		—
Consumer Staples		19		—		—		19		—		19		—
Energy		9		—		(1)		8		—		8		—
Financials		44		—		(8)		36		—		36		—
Health Care		40		—		—		40		—		40		—
Industrials		27		—		(7)		20		—		20		—
Information Technology		133		—		(25)		108		—		108		—
Materials		10		—		(2)		8		—		8		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		6		—		—		6		—		6		—
Mutual Funds		482		—		(64)		418		—		418		—
										—
Subtotal		899		—		(135)		764		—		764		—
Fixed Income
State & Municipal Bonds		906		—		(17)		889		—		564		325
Fixed income funds		2,759		—		(72)		2,687		—		2,687		—
Subtotal		3,665		—		(89)		3,576		—		3,251		325
Alternative, real estate and other		366		—		(18)		348		—		348		—
Total	$	7,270	$	—	$	(242)	$	7,028	$	2,340	$	4,363	$	325

F-16

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — LOSS PER SHARE

Basic loss per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted loss per share data is computed using the weighted average number of common and potentially dilutive securities outstanding during each period. Potentially dilutive securities consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method. A reconciliation of basic and diluted loss per share is as follows:

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended		For the Six Months Ended
	December 31,	December 31,	December 31,		December 31,
	2022	2022	2021		2021
Numerator:
Net income (loss)(in 000s's)	46	(49)	$	(644)	$	(1,221)
Denominator:
Weighted average common shares outstanding, basic and diluted	10,958,398	10,943,561		10,636,278		10,445,482
Income (Loss) per share
Basic and diluted	0.00	(0.00)	$	(0.06)	$	(0.12)

The following securities were excluded from the calculation of diluted loss per share in each period because their inclusion would have been anti-dilutive:

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended	For the Six Months Ended
	December 31,	December 31,	December 31,	December 31,
	2022	2022	2021	2021
Options	150,000	150,000	150,000	150,000
Warrants	—	—	241,500	241,500
Total potentially dilutive shares	150,000	150,000	391,500	391,500

For the six months ended December 31, 2022 and three and six months ended December 31, 2021, the Company had net losses. Therefore, all potentially dilutive securities are deemed to be anti-dilutive and are not included in the diluted loss per share computation. For the three months ended December 31, 2022 the Company had net income. However, all potentially dilutive securities were also deemed to be anti-dilutive because their exercise price exceeded the weighted average trading price of the Company's stock for the period.

NOTE 4 — PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Production equipment	$	307	$	307
Leasehold improvements		213		213
Furniture and fixtures		45		45
Computer equipment		51		47
Other equipment		120		120
		736		732
Accumulated depreciation		(713)		(710)
Net property and equipment	$	23	$	22

F-17

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - PROPERTY AND EQUIPMENT (continued)

Depreciation expense related to property and equipment was $1,000 and $0 for the three months ended December 31, 2022 and 2021, respectively, of which $0 and $0 is included in cost of goods sold and $1,000 and $0 in general and administrative expense, respectively.

Depreciation expense related to property and equipment was $3,000 and $13,000 for the six months ended December 31, 2022 and 2021, respectively, of which $0 and $9,000 is included in cost of goods sold and $3,000 and $4,000 in general and administrative expense, respectively.

Depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives as follows:

	Useful Lives
Leasehold improvements	5 years or remaining lease term
Furniture and fixtures	5 years
Production equipment	3 – 7 years
Computer equipment	3 years
Other equipment	3 – 7 years

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of December 31, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	302	$	668
Patents	20 years		70		12		58
Trademark	20 years		78		13		65
		$	1,118	$	327	$	791

The following table summarizes the Company’s intangible assets as of June 30, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	257	$	713
Patents	20 years		70		10		60
Trademark	20 years		78		12		66
		$	1,118	$	279	$	839

Amortization expense was $24,000 and $24,000 for the three months ended December 31, 2022 and 2021, respectively, and was $48,000 and $48,000 for the six months ended December 31, 2022 and 2021, respectively, and is included in general and administrative expense.

F-18

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS (continued)

Estimated amortization expense related to intangible assets subject to amortization at December 31, 2022 in each of the five years subsequent to December 31, 2022, and thereafter is as follows (amounts in thousands):

2023	$	48
2024		96
2025		96
2026		96
2027		96
Thereafter		359
Total	$	791

Goodwill at December 31, 2022 and June 30, 2022 was $287,000.

NOTE 6 — ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Employee compensation	$	155	$	468
Accrued warranty		50		55
Customer refund		150		51
Others		22		81
Total	$	377	$	655

NOTE 7 — DEBT

Line of Credit

In October 2019, MiT LLC executed a line of credit agreement with an unaffiliated lender to provide a $1.0 million asset-based bridge loan to be used for working capital purposes. The loan was secured by all assets of MiT LLC and was personally guaranteed by Phil Rafnson, our CEO and Chairman of the Board. Sound Management Investors, LLC, an entity controlled by Mr. Rafnson, pledged all membership units of MiT LLC held by it as further security for the repayment of such loan. In connection with this borrowing, the lender was issued warrants to acquire shares of the Company’s common stock upon completion of its IPO. On the effective date of the IPO, the lender exercised these warrants to acquire 94,723 shares of the common stock on a cashless basis.

Approximately $400,000 of the proceeds from this loan were used to pay amounts owed to Caddy in connection with the Caddy acquisition.

In July 2021, the outstanding balance of the line of credit, approximately $590,000, and all accrued interest, was paid in full.

Notes Payable

In August 2021, all remaining amounts due on notes related to the Caddy acquisition, approximately $1,241,000, were paid in full.

F-19

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 — DEBT (continued)

Paycheck Protection Program

On May 6, 2020, the Company received loan proceeds in the amount of approximately $694,000 under the Paycheck Protection Program (“PPP”). On March 13, 2021, the Company received proceeds in the amount of approximately $698,000 from a second PPP loan. The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provided for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest were forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. In May 2021, the Company received notification from the Small Business Administration that the first loan in the amount of $694,000, including accrued interest, has been fully forgiven.

In April 2022, the Company received notice that on March 23, 2022, its second PPP loan in the amount oof $698,000 plus accrued interest has been fully forgiven and is paid in full.

There is no outstanding debt as of December 31 or June 30, 2022.

NOTE 8 — STOCKHOLDERS’ EQUITY

In 2019, the Company adopted the 2019 Omnibus Incentive Plan (the “Plan”). The Plan, as amended, provides for the issuance of stock-based awards to employees. As of December 31, 2022, the Plan provides for the issuance of up to 1,500,000 stock-based awards. There are 1,220,000 stock-based awards available to grant under the Plan at December 31, 2022.

In July 2021, MiT Inc. entered into an Exchange Agreement with MiT LLC pursuant to which MiT Inc. agreed to exchange membership units for 2,350,000 shares of Common Stock representing 41.4% of the equity as of such date on a fully diluted basis for no consideration. The shares were exchanged as part of the Exchange Agreement with the Company as described in Note 1.

In July 2021, the Company granted options to non-employee directors to purchase an aggregate of 150,000 shares of its common stock at an exercise price of $3.00 per share. The options vest one year from the date of grant, expire ten years from the date of grant and had an aggregate grant date fair value of $244,200, which was recognized ratably over the vesting period. These options, which were the only options granted during the six months ended December 31, 2021, had a grant-date fair value of $1.63 per share. The Company recognized compensation expense for stock option awards of approximately $62,000 and $118,000 during the three and six months ended December 31, 2021, respectively The Company recognized no compensation expense for stock options during the three and six months ended December 31, 2022.

At December 31, 2022, there was no unrecognized compensation cost related to nonvested stock option awards.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model. The following weighted average assumptions were used for option grants during the six months ended December 31, 2021:

Risk-free interest rate	1.32	%
Expected volatility	61.0	%
Dividend yield	0	%
Expected option term in years	5.5

On July 12, 2022, the Company granted 130,000 shares of common stock, with a fair market value of approximately $153,000, to employees as compensation for previously provided service, which was accrued as of June 30, 2022.

F-20

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 — STOCKHOLDERS’ EQUITY (continued)

A summary of the status of the Company’s stock options as of December 31, 2022 and changes during the six months ended December 31, 2022 are presented below.

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2022	150,000	$	3.00
Granted during the period	—		—
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2022	150,000	$	3.00

A summary of the status of the Company’s stock options as of December 31, 2021 and changes during the six months ended December 31, 2021 are presented below.

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2021	—	$	—
Granted during the period	150,000		3.00
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2021	150,000	$	3.00

The following table summarizes information about outstanding and exercisable stock options at December 31, 2022:

		Number		Wtd. Avg.
	Range of Exercise Price	Outstanding	Wtd. Avg, Life	Exercise Price
$	3.00	150,000	8.5 years	$	3.00

A summary of the status of the Company’s stock warrants as of December 31, 2021 and changes during the six month period ended December 31, 2021 are presented below.

		Wtd. Avg.
		Exercise
	Warrants	Price
Balance, July 1, 2021	236,667	$	2.76
Granted during the period	241,500		3.75
Exercised during the period	(139,611)		2.76
Terminated/Expired during the period	(97,056)		2.76
Balance, December 31, 2021	241,500	$	3.75

In July 2021, warrants were exercised on a cashless basis resulting in the issuance of 139,611 shares of common stock.

No warrants were outstanding, and there was no warrant activity in the six month period ended December 31, 2022.

F-21

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — RELATED PARTY TRANSACTIONS

In July 2021, the Company provided a discretionary $50,000 payment to the Company’s CEO and Chairman of the Board of Directors for personal guarantees provided in conjunction with financing Company debt. See Note 7.

NOTE 10 — CUSTOMER AND VENDOR CONCENTRATIONS

Customers: Two customer accounted for 17% and 10% of the Company's sales for the three months ended December 31, 2022. One customer accounted for 17% of the Company’s sales for the six months ended December 31, 2022.

At December 31, 2022, the amount of outstanding receivables related to the Company's largest customer was approximately $265,000. No other customer represented more than 10% of accounts receivable at December 31, 2022.

Two customers accounted for approximately 20% and 18% of the Company's sales for the three months ended December 31, 2021. Three customers accounted for approximately 23%, 10% and 10% of the Company’s sales for the six months ended December 31, 2021.

At December 31, 2021, the amount of outstanding receivables related to these customers was approximately $240,000.

Vendors: Approximately 17% and 13% of the Company's purchases were provided by 2 vendors for the three months ended December 31, 2022. Approximately 21% of the Company's purchases were provided by one vendor for the three months ended December 31, 2021.

Approximately 26% and 13% of the Company’s purchases were provided by two vendors for the six months ended December 31, 2022. Approximately 33% of the Company’s purchases were provided by one vendor for the six months ended December 31, 2021.

NOTE 11 — LEASE COMMITMENTS AND CONTINGENCIES

Operating Leases: The Company leases executive office and warehouse space in Fountain Valley, CA, pursuant to separate lease agreements. Under ASC 842, at contract inception the Company determined whether the contract is or contains a lease and whether the lease should be classified as on operating or a financing lease. Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our condensed consolidated balance sheet.

The Company’s executive office and warehouse lease agreements are classified as operating leases.

The lease agreements, as amended, expire on January 31, 2025 and do not include any renewal options. The agreements provide for initial monthly base amounts plus annual escalations through the term of the leases.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay a portion of real estate taxes and common operating expenses during the lease terms.

The Company’s operating lease expense was $73,000 and $70,000 for the three months ended December 31, 2022 and 2021, respectively. The Company's operating lease expense was $141,000 and $141,000 for the six months ended December 31, 2022 and 2021, respectively.

F-22

MOVING IMAGE TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Future minimum lease payments at December 31, 2022 under these arrangements are as follows:

	(in thousands)
	Total
Operating leases	Payments
2023	$	148
2024		302
2025		154
Total undiscounted operating lease payments	$	604
Less imputed interest (at 8%)		(43)
Present value of operating lease payments	$	561

The Present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2022:

Assets		(in thousands)
ROU assets-net	$	543
Liabilities
Current operating lease liabilities	$	265
Long-term operating lease liabilities		296
Total ROU liabilities	$	561

The Company’s weighted average remaining lease term for its operating leases is 2.0 years.

Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

NOTE 12 — SUBSEQUENT EVENTS

Management has evaluated subsequent events from December 31, 2022 through February 14, 2023, the date these financial statements were available to be issued, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.

F-23

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain matters in this Quarterly Report on Form 10-Q (this “Report”), including (without limitation) statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.

Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, competitive position, business environment, and potential growth opportunities. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the Securities and Exchange Commission (the “SEC”) on September 28, 2022, and in our other filings with the SEC, could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:

● the potential duration and impact of the COVID-19 pandemic and its effect on our business, financial condition, results of operations and cash flows;

● interruptions or higher prices of products and services from our suppliers;

● inability to timely introduce new products and services or enhance existing products and services;

● our dependence on distributors, dealers and resellers to sell and market our products and services, and any failure on our part to maintain and further develop our sales channels;

● inability to accurately forecast consumer demand for our products and services and adequately manage our inventory;

● increasing product costs that may cause our operating margins to decline;

● significant variation in revenues and profitability in a particular quarter as a result of the length, unpredictability and seasonality of our sales and contract fulfillment cycles;

● significant customers who cease purchasing our products and services at any time;

● inability ability to maintain our brand;

● inability to offer high-quality customer support;

● our ability to successfully address any product liability claims as well as other legal proceedings;

● our ability to convert all of our backlog into revenue and cash flows;

● our ability to operate in a highly competitive market;

● the extent of competitive pricing pressure from our customers;

● our ability to successfully enter into and operate new lines of business;

● our ability to successfully acquire other businesses, product lines and technologies and address any problems encountered therewith;

● our ability to attract and retain highly skilled personnel and to manage our growth with our limited resources effectively;

● our ability to protect our trademarks and other intellectual property;

● the impact of security breaches through cyber-attacks, cyber intrusions or otherwise; and

● the impact of general political, social and economic conditions.

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Given these uncertainties, you should not place undue reliance on any forward-looking statements in this Report. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this Report. You should read this Report and the documents that we have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we expect.

Any forward-looking statement made by us in this Report speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward- looking statements, even if new information becomes available in the future. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Report.

Overview

We are a leading provider of technology, products, and services to movie theater operators and sports and entertainment venues.

1) We provide a set of valuable services to movie theater operators and other critical screening and viewing rooms. These services include overall project management, which can encompass a wide range of design, integration, installation, and procurement services for new auditorium builds, refurbishments, or upgrades to existing facilities.

2) We design and manufacture a set of proprietary products that are sold either as part of our project management services or a la carte. Examples of these products include our ADA-compliant accessibility products and our Caddy brand, a leading provider of proprietary cup holders, trays, and other products sold into our strategic markets of motion picture exhibition, entertainment, and sports venues as well as other non-strategic markets. We also resell third-party technologies, including but not limited to items such as screens, projectors, and servers.

3) We resell third-party products as part of our project management services or a la carte. These include technology products such as screens, projectors, servers, and FF&E (furniture, fixtures, and equipment).

4) Finally, we have a set of recently introduced products that we believe have the potential to be disruptive to the movie theater, entertainment and sports venue industries. For example, our operations enhancement and theater management solution include a software-as-a-service (SaaS) platform combined with other technologies that allow theater operators to improve their quality control. We have also developed a translator product and service that will enable moviegoers to watch a movie in any language that the film is available in, all in the same auditorium through a set of augmented reality glasses. Another example is a proprietary mobile cart we’ve developed to enable eSports and gaming in movie-theater auditoriums.

Factors affecting our performance

Effect of COVID-19 global pandemic.The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry. The social and economic effects have been widespread. At various points during the pandemic, authorities around the world imposed measures intended to control the spread of COVID-19, including stay-at-home orders and restrictions on large public gatherings, which caused movie theaters in countries around the world to temporarily close. The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries. As a result, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers.

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, 2022, 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 industry also continues to adjust to evolving theatrical release windows, competition from streaming and other delivery platforms, supply chain delays, inflationary pressures, labor shortages, wage rate pressures and other economic factors.

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Based on our current estimates of recovery, we believe we have, and will generate, sufficient cash to sustain operations. Nonetheless, the COVID-19 pandemic has had, and continues to have, adverse effects on the Company’s business, results of operations, cash flows and financial condition.

Investment in Growth. We have invested, and intend to continue to invest, in expanding our operations, increasing our headcount, developing our products and services to support our growth and expanding our infrastructure. We expect our total operating expenses to increase in the foreseeable future to meet our growth objectives. We plan to continue to invest in our sales and support operations with a particular focus in the near term of adding additional sales personnel to further broaden our support and coverage of our existing customer base, in addition to developing new customer relationships. Any investments we make in our sales and marketing organization will occur in advance of experiencing any benefits from such investments, and the return on these investments may be lower than we expect. In addition, as we invest in expanding our operations internationally, our business and results of operations will become further subject to the risks and challenges of international operations, including higher operating expenses and the impact of legal and regulatory developments outside the United States.

Adding New Customers and Expanding Sales to Our Existing Customer Base. We intend to target new customers by continuing to invest in our field sales force. We also intend to continue to target large customers’ organizations who have yet to use our products and services. A typical initial order involves educating prospective customers about the technical merits and capabilities and potential cost savings of our products and services as compared to our competitors’ products. We believe that customer references have been, and will continue to be, an important factor in winning new business. We expect that a substantial portion of our future sales will be sales to existing customers, including expansion of their product and service offerings, as we offer new products and services through the existing sales channel. Our business and results of operations will depend on our ability to continue to add new customers and sell additional products and services to our growing base of customers.

Promoting Our Brand and Offering Additional Products. Our future performance will depend on our continued ability to achieve brand recognition for our proprietary line of products. We plan to increase our marketing expenditures to continue to create and maintain prominent brand awareness. Also, our future performance will depend on our ability to continue to offer high quality, high performance and high functionality products and services. We intend to continue to devote efforts to introduce new products and services including new versions of our existing product lines. We expect that our results of operations will be impacted by the timing, size and level of success of these brand awareness and product and service offering efforts.

Ability to Maintain Gross Margins. Our gross margins have been and are expected to continue to be affected by a variety of factors, including competition, the timing of changes in pricing, shipment volumes, new product introductions, changes in product mixes, changes in our purchase price of components and assembly and test service costs and inventory write downs, if any. Our goal is to strive to maintain gross profits for products that may have a declining average selling price by continuing to focus on increased sales volume and looking to reduce operating costs. Decreases in average selling prices are primarily driven by competition and by reduced demand for products that face potential or actual technological obsolescence. We also focus on managing our inventory to reduce our overall exposure to price erosion. In addition, we seek to introduce new products and services with higher gross margins to offset the potential effect of price erosion on other lines of products. For example, we have recently productized and began marketing a new system which combines full compliance with the Americans with Disabilities Act with a multi-language capability — we expect this system will have higher margins than a substantial number of existing products we offer. In addition, we expect our offerings of Direct View LED screens to also carry significantly higher margins.

Fluctuations in Revenues and Earnings. Both the sales cycle and the contract fulfillment cycle are dependent on a number of factors from our customers that are not in our control. Accordingly, backlog, the conversion of backlog into revenue and related earnings may fluctuate from quarter to quarter depending on our customers’ particular requirements, which can sometimes change between the initial signing of a contract and its ultimate fulfillment.

Net sales

The principal factors that have affected or could affect our net sales from period to period are:

● The condition of the economy in general and of the cinema and/or cinema equipment industry in particular,

● Our customers’ adjustments in their order levels,

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

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

● The addition or termination of key supplier relationships,

● The rate of introduction and acceptance by our customers of new products and services,

● Our ability to compete effectively with our current and future competitors,

● Our ability to enter into and renew key relationships with our customers and vendors,

● Changes in foreign currency exchange rates,

● A major disruption of our information technology infrastructure,

● Unforeseen catastrophic events such as the COVID-19 pandemic, armed conflict, terrorism, fires, typhoons and earthquakes, and

● Any other disruptions, such as labor shortages, unplanned maintenance or other manufacturing problems.

Cost of goods sold

Cost of goods sold includes the cost of products or components that we purchase from third party manufacturers plus assembly and packaging labor costs for these third parties or in-house designed products. Cost of goods sold is also affected by inventory obsolescence if our inventory management is not effective or efficient. We mitigate the risk of inventory obsolescence by stocking relatively small amounts of inventory at any given time, except for periodic strategic purchases, and relying instead on a strategy of manufacturing or acquiring products based on orders placed by our customers.

General and administrative expenses

General and administrative expenses relate primarily to compensation and associated expenses for personnel in general management, information technology, human resources, procurement, planning and finance, as well as outside legal, investor relations, accounting, consulting and other operating expenses.

Selling and marketing expenses

Selling and marketing expenses relate primarily to salary and other compensation and associated expenses for internal sales and customer relations personnel, advertising, outbound shipping and freight costs, tradeshows, royalties under a brand license, and selling commissions.

Research and development expenses

Research and development expenses consist of compensation and associated costs of employees engaged in research and development projects, as well as materials and equipment used for these projects, and third-party compensation for research and development services. We do not engage in any long-term research and development contracts, and all research and development costs are expensed as incurred.

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Results of Operations

Three months ended December 31, 2022 compared to the three months ended December 31, 2021

Revenues

Three Months Ended December 31,
(in 000’s)
2022		2021
$	4,843	$	3,419

Net sales increased 41.6% to $4.843 million for the three months ended December 31, 2022 from $3.419 million for the three months ended December 31, 2021 primarily due to the recovery from the impact of COVID-19 on the exhibition industry.

Gross Profit

Three Months Ended December 31,
(in 000’s),
2022		2021
$	1,312	$	896

Gross profit increased 46.4% to $1.312 million for the three months ended December 31, 2022 from $.896 million for the three months ended December 31, 2021. As a percentage of total revenues, gross profit increase by 85 basis points to 27.09%. This increase is consistent with our expectations based on our selling product mix.

Research and Development

Three Months Ended December 31,
(in 000’s)
2022		2021
$	61	$	65

The decrease in research and development expense was primarily the result of the timing of activity. We expect research and development expense to increase as a percentage of sales in the future as we continue to increase product development on our green product line, SaaS (software as a service) products, LED screen support systems, Caddy products, and others as our business expands into new areas.

Selling, General and Administrative Expense

Three Months Ended December 31,
(in 000’s)
2022		2021
$	1,389	$	1,473

The decrease in selling, general and administrative expense was due primarily to stock compensation expense in the 2021 period, which wasn’t an expense in the 2022 period.

Other (Income) Expense

Three Months Ended December 31,
(in 000’s)
2022		2021
$	(184)	$	2

The change in other (income) expense was primarily due to realized and unrealized gains on marketable securities.

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Net Income (Loss)

Three Months Ended December 31,
(in 000’s)
2022		2021
$	46	$	(644)

Net income was $46 for the three months ended December 31, 2022 compared to a net loss of $(.644) million for the three months ended December 31, 2021. The improvement was the result of better operating results due to higher sales and gross profit, as well as gains on marketable securities.

Six months ended December 31, 2022 compared to six months ended December 31, 2021

Revenues

Six Months Ended December 31,
(in 000’s)
2022		2021
$	10,695	$	6,893

Net revenues increased 55.1% to $10.695 million for the six months ended December 31, 2022 from $6.893 million for the six months ended December 31, 2021 primarily due to the recovery from the impact of COVID-19 on the exhibition industry.

Gross Profit

Six Months Ended December 31,
(in 000’s),
2022		2021
$	2,871	$	1,618

Gross profit increased 77.4% to $2.871 million for the six months ended December 31, 2022 from $1.618 million for the six months ended December 31, 2021. As a percentage of total revenues, gross profit improved to 26.8% for the six months ended December 31, 2022 from 23.5% for the six months ended December 31, 2021. The Company has made several strategic inventory purchases, including the QSC purchase, which has allowed the Company to achieve increased gross margin on sales in the 2022 period. Additionally, in the 2022 period the Company had increased sales of used and refurbished equipment, which resulted in higher gross margins.

Research and Development

Six Months Ended December 31,
(in 000’s)
2022		2021
$	127	$	119

The increase in research and development expense was primarily associated with increased activity in the 2022 period. We expected research and development expense to increase as a percentage of sales in the future as we continue to increase product development on our green product line, SaaS (software as a service) products, LED screen support systems, Caddy products, and others as our business expands into new areas.

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Selling, General and Administrative Expense

Six Months Ended December 31,
(in 000’s)
2022		2021
$	2,834	$	2,680

The increase in selling, general and administrative expense was due primarily to increases in payroll and compensation expense as the Company has increased headcount.

Other (Income) Expense

Six Months Ended December 31,
(in 000’s)
2022		2021
$	(41)	$	40

The change in other (income) expense is predominantly the result of dividend and interest income on marketable securities.

Net Loss

Six Months Ended December 31,
(in 000’s)
2022		2021
$	(49)	$	(1,221)

Net loss was $(49,000) for the six months ended December 31, 2022 compared to a net loss of $(1.221) million for the six months ended December 31, 2021. This improvement is predominantly the result of higher sales and gross profit.

Liquidity and Capital Resources

During the past several years, we have primarily met our working capital and capital resource needs from our operating cash flows and financing activities. 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. On July 7, 2021, the Company completed an initial public offering resulting in net proceeds of approximately $12.360 million. Cash balance at December 31, 2022 was approximately $1.575 million, as compared to $2.430 million at June 30, 2022. Investments in marketable securities was $4.740 million at December 31, 2022, as compared to $4.688 million at June 30, 2022.

Cash Flows from Operating Activities

Net cash used by operating activities was $705,000 for the six months ended December 31, 2022, primarily due to a net loss of $49,000 combined with negative net changes in working capital items of $690,000. The net change in working capital was primarily due to increases in inventory and decreases in customer deposits, offset by decreases in accounts receivable and prepaid expenses. The Net cash used by operating activities was $2.845 million for the six months ended December 31, 2021, primarily due to a net loss of $1.221 million and combined net changes in working capital items of $1.763 million. The net change in working capital was primarily due to an increase in inventory of $1.964 million and payments of accounts payable and accrued expenses, offset by an increase in customer deposits.

Cash Flows from Investing Activities

Net cash used in investing activities was $60,000 for the six months ended December 31, 2022, predominantly the result of net investment activity related to marketable securities. Net cash used in investing activities was $2,000 for the six months ended December 31, 2021 for the purchase of equipment.

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Cash Flows from Financing Activities

There was no cash provided by or used in financing activities for the six months ended December 31, 2022. Net cash provided by financing activities was $10.529 million for the six months ended December 31, 2021. The increase relates to $12.360 million of IPO net proceeds offset by net repayments of $1.831 million of debt

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive) and Chief Financial Officer (our principal financial officer and principal accounting officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective at December 31, 2022 due to material weaknesses in our internal control over financial reporting as described below.

Prior to the completion of our IPO, we had been a private company with limited accounting personnel and other resources to address our internal control over financial reporting. During the course of preparing our consolidated financial statements for the years ended June 30, 2022 and 2021, we determined that we had material weaknesses in our internal control over financial reporting relating to our financial reporting processes relating to (i) the design and operation of our closing and financial reporting process, (ii) the fact that we had no formal or documented accounting policies or procedures, (iii) the fact that certain segregation of duties issues existed and (iv) the fact that there was no formal review process around journal entries recorded.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2022, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are not party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business.

ITEM 1A.RISK FACTORS

There have been no material changes to the risk factors reported in Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

Not applicable.

ITEM 6.EXHIBITS

Exhibit No.	Exhibit Description
31.1*	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2*	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1†	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Cash Flows, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Balance Sheets, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104*	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101).

* Filed herewith.

ª Indicates a management contract or compensatory plan or arrangement

† Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MOVING IMAGE TECHNOLOGIES, INC.
Date: February 14, 2022
	By:	/s/ Phil Raffnson
	Name:	Phil Rafnson
	Title:	Chief Executive Officer

33

EX-31.1

Exhibit 31.1

CEO Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Phil Rafnson, certify that:

I. I have reviewed this report on Form 10-Q of Moving iMage Technologies, Inc.;

2. Based on your knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on your knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other and recently deceased certifying officer Michael Sherman and I have been responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(t) and 15d-15(t)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer recently deceased CFO Michael Sherman and I have disclosed, based on their most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February
Date: February 14, 2022	By:	/s/ Phil Rafnson
		Phil Rafnson
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CFO Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William F. Greene, certify that:

I. I have reviewed this report on Form 10-Q of Moving iMage Technologies, Inc.;

2. Based on your knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on your knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other and recently deceased certifying officer Michael Sherman has been responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(t) and 15d-15(t)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and recently deceased CFO Michael Sherman have disclosed, based on their most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2022	By:	/s/ William F. Greene
		William F. Greene
		Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended December 31, 2022 of Moving iMage Technologies, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to your knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.

By:	/s/ Phil Rafnson
	Phil Rafnson
	Chief Executive Officer
	February 14, 2023
By:	/s/ William F. Greene
	William F. Greene
	Interim Chief Financial Officer
	February 14, 2023

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2022	Feb. 13, 2023
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2022
Entity File Number	001-40511
Entity Registrant Name	Moving iMage Technologies, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-1836381
Entity Address, Address Line One	17760 Newhope Street
Entity Address, City or Town	Fountain Valley
Entity Address State Or Province	CA
Entity Address, Postal Zip Code	92708
City Area Code	714
Local Phone Number	751-7998
Title of 12(b) Security	Common Stock, $0.00001 par value
Trading Symbol	MITQ
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,958,398
Entity Central Index Key	0001770236
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2022	Jun. 30, 2022
Current Assets:
Cash and Cash Equivalents	$ 1,575,000	$ 2,340,000
Marketable securities-current	4,421,000	4,363,000
Accounts receivable, net	1,419,000	1,762,000
Inventories, net	4,727,000	4,033,000
Prepaid expenses and other	267,000	864,000
Total Current Assets	12,409,000	13,362,000
Marketable securities-non-current	319,000	325,000
Right-of-use asset	543,000
Property and equipment, net	23,000	22,000
Intangibles, net	791,000	839,000
Goodwill	287,000	287,000
Other assets	16,000	16,000
Total Assets	14,388,000	14,851,000
Current Liabilities:
Accounts payable	1,627,000	1,583,000
Accrued expenses	377,000	655,000
Customer deposits	2,245,000	3,158,000
Lease liability-current	265,000
Unearned warranty revenue	59,000	18,000
Total Current Liabilities	4,573,000	5,414,000
Lease liability-non-current	296,000
Deferred rent		22,000
Total Liabilities	4,869,000	5,436,000
Stockholders' Equity
Common stock, $0.00001 par value, 100,000,000 shares authorized, 10,958,398 and 10,828,398 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively	0	0
Additional paid-in capital	12,653,000	12,500,000
Accumulated deficit	(3,134,000)	(3,085,000)
Total Stockholders' Equity	9,519,000	9,415,000
Total Liabilities and Stockholders' Equity	$ 14,388,000	$ 14,851,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Jun. 30, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, authorized	100,000,000	100,000,000
Common stock, issued	10,958,398	10,828,398
Common stock, outstanding	10,958,398	10,828,398

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 4,843	$ 3,419	$ 10,695	$ 6,893
Cost of goods sold	3,531	2,523	7,824	5,275
Gross profit	1,312	896	2,871	1,618
Operating expenses:
Research and development	61	65	127	119
Selling and marketing	594	571	1,204	1,115
General and administrative	795	902	1,630	1,565
Total operating expenses	1,450	1,538	2,961	2,799
Operating income (loss)	(138)	(642)	(90)	(1,181)
Other (income) expenses:
Unrealized (gain) loss on investments	(269)		(129)
Realized (gain) loss on investments	110		133
Interest and other income	(25)		(45)
Interest expense		2		40
Total other (income) expense	(184)	2	(41)	40
Net income (loss)	$ 46	$ (644)	$ (49)	$ (1,221)
Weighted average shares outstanding: basic	10,958,398	10,636,278	10,943,561	10,445,482
Weighted average shares outstanding: diluted	10,958,398	10,636,278	10,943,561	10,445,482
Net income (loss) per common share basic	$ 0.00	$ (0.06)	$ 0.00	$ (0.12)
Net income (loss) per common share diluted	$ 0.00	$ (0.06)	$ 0.00	$ (0.12)

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Retained Earnings (Accumulated Deficit)	Additional Paid-in Capital	Total
Balance at the beginning at Jun. 30, 2021	$ 0	$ (1,740)	$ 1,011	$ (729)
Balance at the beginning (in shares) at Jun. 30, 2021	5,666,667
Shares of common stock issued for cash, net of issuance costs	$ 0	0	11,244	11,244
Shares of common stock issued for cash, net of issuance costs (in shares)	4,830,000
Cashless exercise of warrants	$ 0	0	0	0
Cashless exercise of warrants (in shares)	139,611
Grant of options for services	$ 0	0	56	56
Net income (loss)	0	(577)	0	(577)
Balance at the end at Sep. 30, 2021	$ 0	(2,317)	12,311	9,994
Balance at the end (in shares) at Sep. 30, 2021	10,636,278
Grant of options for services	$ 0	0	62	62
Net income (loss)	0	(644)	0	(644)
Balance at the end at Dec. 31, 2021	$ 0	(2,961)	12,373	9,412
Balance at the end (in shares) at Dec. 31, 2021	10,636,278
Balance at the beginning at Jun. 30, 2022	$ 0	(3,085)	12,500	9,415
Balance at the beginning (in shares) at Jun. 30, 2022	10,828,398
Issuance of stock to employees	$ 0	0	153	153
Issuance of stock to employees (in shares)	130,000
Net income (loss)	$ 0	(95)	0	(95)
Balance at the end at Sep. 30, 2022	$ 0	(3,180)	12,653	9,473
Balance at the end (in shares) at Sep. 30, 2022	10,958,398
Net income (loss)	$ 0	46	0	46
Balance at the end at Dec. 31, 2022	$ 0	$ (3,134)	$ 12,653	$ 9,519
Balance at the end (in shares) at Dec. 31, 2022	10,958,398

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net loss	$ (49)	$ (1,221)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for (reversal of) doubtful accounts	(17)	(40)
Depreciation expense	3	13
Amortization expense	48	48
Unrealized gain on investments	(129)
Realized loss on investments	133
Cash expended in excess of rent expense	(4)
Stock compensation expense		118
Changes in operating assets and liabilities
Accounts receivable	360	(164)
Inventories	(694)	(1,964)
Prepaid expenses and other	597	(653)
Accounts payable	44	(703)
Accrued expenses	(125)	(302)
Unearned warranty revenue	41	(2)
Customer deposits	(913)	2,025
Net cash used in operating activities	(705)	(2,845)
Cash flows from investing activities
Sales of marketable securities	4,088
Purchase of marketable securities	(4,144)
Purchases of property, plant and equipment	(4)	(2)
Net cash used in investing activities	(60)	(2)
Cash flows from financing activities
Net Proceeds from initial public offering		12,360
Payments on line of credit		(590)
Payments on notes payable		(1,241)
Net cash provided by financing activities		10,529
Net increase (decrease) in cash and cash equivalents	(765)	7,682
Cash and cash equivalents, beginning of the period	2,340	1,270
Cash and cash equivalents, end of the period	1,575	8,952
Non-cash investing and financing activities:
Reclassification of IPO related costs from other assets to equity		1,116
Accrued expenses settled by issuance of common stock	153
Right-of-use asset recorded upon adoption of ASC 842	$ 681
Cash paid during the period:
Interest		$ 38

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2022

BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization: Moving iMage Technologies, Inc., a Delaware corporation, together with its wholly-owned subsidiaries unless the context indicates otherwise, the (“Company”) was incorporated in June 2020. The Company, through its wholly-owned subsidiary, Moving iMage Technologies, LLC (“MiT LLC”) and MiT LLC's wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”), designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements. The Company also offers single source solutions for cinema design, procurement, installation and service to the creative and production communities for screening, digital intermediate and other critical viewing rooms. Additionally, the Company offers a wide range of technical, design and consulting services such as custom engineering, systems design, integration and installation, and digital technology, as well as software solutions for operations enhancement and theatre management. The Company also provides turnkey furniture, fixture and equipment services to commercial cinema exhibitors for new construction and remodels including design, consulting, installation and project management as well as procurement of seats, lighting, acoustical treatments, screens, projection and sound.

Moving iMage Acquisition Co. (DBA “Caddy Products”) designs, develops and manufactures innovative products for the entertainment, cinema, grocery, worship, restaurant, sports and restroom industries.

Share Exchange:

In June 2020, MiT LLC members created Moving iMage Technologies, Inc. (“MIT Inc.”) to facilitate the Company’s initial public offering (“IPO”). Upon formation of MiT, Inc., 2,000,000 shares of MiT, Inc. common stock were issued to members of MiT LLC. On July 7, 2021, MiT LLC and MiT Inc. entered into an exchange agreement (“Exchange Agreement”) whereby the members of MiT LLC exchanged their membership interest for 2,350,000 shares of common stock in MiT Inc. As a result of the Exchange Agreement, the members of MiT LLC owned approximately 79% or 4,452,334 of the outstanding common stock of MiT Inc. As a result, MiT LLC (the entity where the Company conducts its business) became a wholly-owned subsidiary of MiT Inc. (the SEC registrant).

The transaction was accounted for as a merger of entities under common ownership in accordance with generally accepted accounting principles in the United States of America (“GAAP”). This determination was primarily based on the facts that, immediately before and after the transaction: (i) MiT LLC owners owned a substantial majority of the voting rights in the combined company, (ii) MiT LLC designated a majority of the members of the initial board of directors of the combined company, and (iii) MiT LLC’s senior management holds all key positions in the senior management of the combined company.

Initial Public Offering: On July 12, 2021, the Company closed its initial public offering ("IPO") and issued 4,830,000 shares of its common stock at a price of $3.00 per share for net proceeds of approximately $12,360,000 after deducting underwriting discounts, commissions, and other expenses of approximately $2,130,000. Upon the completion of its IPO, the Company reclassified deferred IPO related costs of approximately $1,116,000 from other assets to additional paid-in capital. In connection with the Company’s IPO, the underwriters received warrants to acquire 241,500 shares of the Company’s common stock at $3.75 per share.

On July 12, 2021, in connection with the IPO, warrants to purchase 139,611 shares of the Company’s common stock were exercised on a cashless basis.

Impact of the COVID-19 Pandemic: The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry. The social and economic effects have been widespread. At various points during the pandemic, authorities around the world imposed measures intended to control the spread of COVID-19, including stay-at-home orders and restrictions on large public gatherings, which caused movie theaters in countries around the world to temporarily close. The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries. As a result, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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, 2022, 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 industry also continues to adjust to evolving theatrical release windows, competition from streaming and other delivery platforms, supply chain delays, inflationary pressures, labor shortages, wage rate pressures and other economic factors.

Based on the its current estimates of recovery, the Company believes it has, and will generate, sufficient cash to sustain operations for a period of 12 months from the issuance of these financial statements. Nonetheless, the COVID-19 pandemic has had, and continues to have, adverse effects on the Company’s business, results of operations, cash flows and financial condition.

Principles of Consolidation: The condensed consolidated financial statements include the accounts of MiT Inc., its wholly-owned subsidiary, MiT LLC, and MiT LLC’s wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”). All significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation: The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position and operating results have been included in these statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2022, and with the disclosures and risk factors presented therein. The June 30, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. Operating results for the three months and six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2023.

Segment Reporting: An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment.

Measurement of Fair Values: The Company’s accounting policies and disclosures require the measurement of fair values for both financial and non-financial assets and liabilities on either a recurring or nonrecurring basis. When measuring the fair value of an asset or a liability, the Company uses observable market data to the extent such information is available. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

— Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

— Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

— Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	843	$	—	$	—	$	843
State and Municipal Debt Securities		880		—		—		880
Fixed Income Funds		2,715		—		—		2,715
Alternative Funds		—		256		—		256
Real Estate Funds		—		46		—		46
Subtotal								4,740
Less Long-term								(319)
Net Current							$	4,421

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):

	June 30, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	764	$	—	$	—	$	764
State and Municipal Debt Securities		889		—		—		889
Fixed Income Funds		2,687		—		—		2,687
Alternative Funds		—		300		—		300
Real Estate Funds		—		48		—		48
Subtotal								4,688
Less Long-term								(325)
Net Current							$	4,363

The carrying amounts of accounts receivable, accounts payable, and notes payable approximate fair value due to their short maturities.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis - In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. There were no impairments recognized for the quarter ended December 31, 2022 or the year ended June 30, 2022.

Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that were directly associated with its IPO and other financings as deferred offering costs (non-current) until such financings are consummated.

As of June 30, 2021, $1,116,000 of deferred offering costs were capitalized in other assets. After completion of the IPO in July 2021, these costs were recorded in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a reduction of proceeds received from the offering.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities (including sales returns, bad debts, inventory reserves, warranty reserves, purchase price allocation and asset impairments), disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Concentration of Cash: The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on its cash balances.

Accounts Receivable: Accounts receivable are carried at original invoice amount less allowance for bad debts. Management determines the allowance for bad debts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 90 days past the customer’s granted terms. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of December 31, 2022 and June 30, 2022 the allowance for bad debts is approximately $121,000 and $138,000, respectively.

Inventories: Inventories are stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out cost method of accounting. The Company purchases finished goods and materials to assemble kits in quantities that it anticipates will be fully used in the near term. Changes in operating strategy, customer demand, and fluctuations in market values can limit the Company’s ability to effectively utilize all products purchased and can result in finished goods with above-market carrying costs which may cause losses on sales to customers. The Company’s policy is to closely monitor inventory levels, obsolescence and lower market values compared to costs and, when necessary, reduce the carrying amount of its inventory to its net realizable value. As of December 31, 2022 and June 30, 2022, the inventory reserve was $401,000 and $434,000, respectively, and inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition: The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue is recognized when control of the promised goods is transferred at the point of shipment to a customer, and when performance conditions are satisfied, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods as per the agreement with the customer. The Company generates all its revenue under agreements with customers. In case there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation and then evaluates how the services are transferred to the customer to determine the timing of revenue recognition.

The Company considers the U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a customer may not pay for the products provided or services performed. If there are circumstances where the above criteria are not met, revenues recognized are presented net of cost of goods sold.

Contract assets consist of conditional or unconditional rights to consideration. Accounts receivable represent amounts billed to customers where the Company has an enforceable right to payment for performance completed to date (i.e., unconditional rights to consideration). The Company does not have contract assets that represent conditional rights to consideration.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Contract liabilities consist of refund and warranty liabilities, as well as deposits received in advance on sales to certain customers. Such deposits are reflected as customer deposits and recognized in revenue when control of the products is transferred or when performance conditions are satisfied per the agreement. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2022 included $2,571,000 for revenue recognized that was included in contract liability as of July 1, 2022. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2021 included $790,000 for revenue recognized that was included in contract liability as of July 1, 2021.

Cost of goods sold includes cost of inventory sold during the period, net of vendor discounts and allowances, and shipping and handling costs, and sales taxes. Taxes collected from customers are included in accounts payable on a net basis (excluded from revenues) until remitted to the government.

Deferred contract acquisition costs consist of sales commissions paid to the sales force, and the related employer payroll taxes, and are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined that sales commissions paid are an immaterial component of obtaining a customer’s contract and has elected to expense sales commissions when earned.

	For the Three		For the Three		For the Six		For the Six
	Months Ended		Months Ended		Months Ended		Months Ended
Disaggregation of Revenue (in 000’s):	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Equipment upon delivery (point in time)	$	4,717	$	3,355	$	10,431	$	6,788
Services (point in time)		108		64		234		105
Subscription and services (over time)		18		—		30		—
Total revenues	$	4,843	$	3,419	$	10,695	$	6,893

Revenue from the sale of equipment is recognized upon delivery of such equipment to customers and when performance conditions are satisfied.

Revenue from installation is recognized upon completion of the installation project and when the performance obligation is complete.

Subscription revenue for remote monitoring services is recognized on a straight-line basis over the term of the contract, usually one year. Services revenues are generally recognized over time as the contracts are performed.

Returns and Allowances: The Company records allowances for discounts and product returns at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends.

Shipping and Handling Costs: Shipping and handling costs are included in cost of goods sold and are recognized as a period expense during the period in which they are incurred.

Advertising Costs: Advertising costs were approximately $3,900 and $11,600 for the three months ended December 31, 2022 and 2021, respectively, and $10,600 and $11,700 for the six months ended December 31, 2022 and 2021, respectively. Advertising costs are expensed as incurred within selling and marketing expenses.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill and Intangible Assets: Goodwill as of December 31, 2022 and June 30, 2022 represents the excess of the purchase price over the fair value of the net identifiable assets acquired in the 2019 Caddy Acquisition. Goodwill is reviewed for impairment at least annually, in June, or more frequently if a triggering event occurs between impairment testing dates. The Company operates as a single operating segment and as a single reporting unit for the purpose of evaluating goodwill impairment. On July 1, 2022, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. As such, the Company’s goodwill impairment test includes a one-step qualitative impairment test whereby a goodwill impairment loss will be measured as the excess of a reporting units carrying amount over its fair value. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. If the fair value of the reporting unit exceeds its carrying value, then no impairment exists. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss would be recognized for the excess of the carrying value of the reporting unit over the fair value, not to exceed the carrying amount of goodwill.

Goodwill is at risk of future impairment in the event of significant unexpected changes in the Company’s forecasted future results and cash flows, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate, or if there is a decline in the stock price.

Intangible assets arising from business combinations, such as customer relationships, trade names, and/or intellectual property, are initially recorded at fair value. The Company amortizes these intangible assets over the determined useful life which generally ranges from 11 to 20 years. The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully recoverable. There were no intangible asset impairments recognized for the three months and six months ended December 31, 2022 or 2021.

Business Combinations: The Company includes the results of operations of the businesses that it acquires commencing on the respective dates of acquisition. The Company allocates the fair value of the purchase price of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Income Taxes: The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following table summarizes the components of deferred tax assets and deferred tax liabilities at June 30, 2022 and December 31, 2022 (in thousands):

	Deferred Tax
	Assets (Liabilities)
Inventory reserve	$	122
Accumulated depreciation		(6)
Accumulated goodwill amortization		(12)
Accumulated intangible amortization		8
Unrealized loss on investments		68
Deferred rent		6
Warranty reserve		5
Stock compensation		68
Net operating loss carryforward		594
Allowance for doubtful accounts		39
Net		892
Valuation allowance		(892)
Total June 30, 2022	$	—
Inventory reserve	$	112
Accumulated depreciation		(5)
Accumulated goodwill amortization		(15)
Accumulated intangible amortization		(9)
Unrealized gain on investments		(38)
Deferred rent		5
Warranty reserve		17
Stock compensation		68
Net operating loss carryforward		636
Capital loss carry over		40
Allowance for doubtful accounts		34
Net		845
Valuation allowance		(845)
Total December 31, 2022	$	—

Leases: On July 1, 2022 the Company adopted ASU 2016-02, Leases (Topic 842) which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. In accordance with ASC 842, on July 1, 2022 the Company recognized Right of Use Assets in the amount of $665,000 and lease liabilities of $681,000 for the leases associated with its executive office and warehouse space, as described in Note 11.

Product Warranty: The Company’s digital equipment products are sold under various limited warranty arrangements ranging from one year to three years. Company policy is to establish reserves for estimated product warranty costs in the period when the related revenue is recognized. The Company has the right to return defective products it buys from third-party manufacturers, for up to three years, depending on the manufacturers’ individual policies. As of December 31, 2022 and June 30, 2022, the Company has established a warranty reserve of $50,000 and $55,000, respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

NOTE 1 — BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands):

	Quarter Ended December 31,		Year Ended June 30,
	2022		2022
Product warranty liability, beginning of period	$	55	$	29
Accruals for warranties issued		61		60
Settlements made		(66)		(34)
Product warranty liability, end of period	$	50	$	55

Research and Development: The Company incurs costs to develop new products, as well as improve the appeal and functionality of its existing products. Research and development costs are charged to expense when incurred.

Recently Issued Accounting Pronouncements: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies, and as such the Company will adopt this standard on July 1, 2023. The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements.

Other pronouncements issued by FASB with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

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INVESTMENTS

6 Months Ended

Dec. 31, 2022

INVESTMENTS

INVESTMENTS

NOTE 2 — INVESTMENTS

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 31, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	1,575	$	—	$	—	$	1,575	$	1,575	$	—	$	—
Equities
Communication		25		—		(2)		23		—		23		—
Consumer Discretionary		58		—		(8)		50		—		50		—
Consumer Staples		22		1		—		23		—		23		—
Energy		9		1		—		10		—		10		—
Financials		44		—		(5)		39		—		39		—
Health Care		39		1		—		40		—		40		—
Industrials		27		—		(3)		24		—		24		—
Information Technology		124		—		(24)		100		—		100		—
Materials		11		—		—		11		—		11		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		4		—		—		4		—		4		—
Mutual Funds		524		—		(13)		511		—		511		—
										—
Subtotal		897		3		(57)		843		—		843		—
Fixed Income
State & Municipal Bonds		899		—		(19)		880		—		561		319
Fixed income funds		2,747		—		(32)		2,715		—		2,715		—
Subtotal		3,646		—		(51)		3,595		—		3,276		319
Alternative, real estate and other		313		—		(11)		302		—		302		—
Total	$	6,431	$	3	$	(119)	$	6,315	$	1,575	$	4,421	$	319

NOTE 2 — INVESTMENTS (continued)

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 30, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	2,340	$	—	$	—	$	2,340	$	2,340	$	—	$	—
Equities
Communication		50		—		(11)		39		—		39		—
Consumer Discretionary		69		—		(15)		54		—		54		—
Consumer Staples		19		—		—		19		—		19		—
Energy		9		—		(1)		8		—		8		—
Financials		44		—		(8)		36		—		36		—
Health Care		40		—		—		40		—		40		—
Industrials		27		—		(7)		20		—		20		—
Information Technology		133		—		(25)		108		—		108		—
Materials		10		—		(2)		8		—		8		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		6		—		—		6		—		6		—
Mutual Funds		482		—		(64)		418		—		418		—
										—
Subtotal		899		—		(135)		764		—		764		—
Fixed Income
State & Municipal Bonds		906		—		(17)		889		—		564		325
Fixed income funds		2,759		—		(72)		2,687		—		2,687		—
Subtotal		3,665		—		(89)		3,576		—		3,251		325
Alternative, real estate and other		366		—		(18)		348		—		348		—
Total	$	7,270	$	—	$	(242)	$	7,028	$	2,340	$	4,363	$	325

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LOSS PER SHARE

6 Months Ended

Dec. 31, 2022

LOSS PER SHARE

LOSS PER SHARE

NOTE 3 — LOSS PER SHARE

Basic loss per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted loss per share data is computed using the weighted average number of common and potentially dilutive securities outstanding during each period. Potentially dilutive securities consist of shares that would be issued upon the exercise of stock options and warrants, computed using the treasury stock method. A reconciliation of basic and diluted loss per share is as follows:

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended		For the Six Months Ended
	December 31,	December 31,	December 31,		December 31,
	2022	2022	2021		2021
Numerator:
Net income (loss)(in 000s's)	46	(49)	$	(644)	$	(1,221)
Denominator:
Weighted average common shares outstanding, basic and diluted	10,958,398	10,943,561		10,636,278		10,445,482
Income (Loss) per share
Basic and diluted	0.00	(0.00)	$	(0.06)	$	(0.12)

The following securities were excluded from the calculation of diluted loss per share in each period because their inclusion would have been anti-dilutive:

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended	For the Six Months Ended
	December 31,	December 31,	December 31,	December 31,
	2022	2022	2021	2021
Options	150,000	150,000	150,000	150,000
Warrants	—	—	241,500	241,500
Total potentially dilutive shares	150,000	150,000	391,500	391,500

For the six months ended December 31, 2022 and three and six months ended December 31, 2021, the Company had net losses. Therefore, all potentially dilutive securities are deemed to be anti-dilutive and are not included in the diluted loss per share computation. For the three months ended December 31, 2022 the Company had net income. However, all potentially dilutive securities were also deemed to be anti-dilutive because their exercise price exceeded the weighted average trading price of the Company's stock for the period.

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PROPERTY AND EQUIPMENT

6 Months Ended

Dec. 31, 2022

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

NOTE 4 — PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Production equipment	$	307	$	307
Leasehold improvements		213		213
Furniture and fixtures		45		45
Computer equipment		51		47
Other equipment		120		120
		736		732
Accumulated depreciation		(713)		(710)
Net property and equipment	$	23	$	22

NOTE 4 - PROPERTY AND EQUIPMENT (continued)

Depreciation expense related to property and equipment was $1,000 and $0 for the three months ended December 31, 2022 and 2021, respectively, of which $0 and $0 is included in cost of goods sold and $1,000 and $0 in general and administrative expense, respectively.

Depreciation expense related to property and equipment was $3,000 and $13,000 for the six months ended December 31, 2022 and 2021, respectively, of which $0 and $9,000 is included in cost of goods sold and $3,000 and $4,000 in general and administrative expense, respectively.

Depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives as follows:

	Useful Lives
Leasehold improvements	5 years or remaining lease term
Furniture and fixtures	5 years
Production equipment	3 – 7 years
Computer equipment	3 years
Other equipment	3 – 7 years

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Dec. 31, 2022

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the Company’s intangible assets as of December 31, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	302	$	668
Patents	20 years		70		12		58
Trademark	20 years		78		13		65
		$	1,118	$	327	$	791

The following table summarizes the Company’s intangible assets as of June 30, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	257	$	713
Patents	20 years		70		10		60
Trademark	20 years		78		12		66
		$	1,118	$	279	$	839

Amortization expense was $24,000 and $24,000 for the three months ended December 31, 2022 and 2021, respectively, and was $48,000 and $48,000 for the six months ended December 31, 2022 and 2021, respectively, and is included in general and administrative expense.

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS (continued)

Estimated amortization expense related to intangible assets subject to amortization at December 31, 2022 in each of the five years subsequent to December 31, 2022, and thereafter is as follows (amounts in thousands):

2023	$	48
2024		96
2025		96
2026		96
2027		96
Thereafter		359
Total	$	791

Goodwill at December 31, 2022 and June 30, 2022 was $287,000.

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ACCRUED EXPENSES

6 Months Ended

Dec. 31, 2022

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 6 — ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Employee compensation	$	155	$	468
Accrued warranty		50		55
Customer refund		150		51
Others		22		81
Total	$	377	$	655

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DEBT

6 Months Ended

Dec. 31, 2022

DEBT

DEBT

NOTE 7 — DEBT

Line of Credit

In October 2019, MiT LLC executed a line of credit agreement with an unaffiliated lender to provide a $1.0 million asset-based bridge loan to be used for working capital purposes. The loan was secured by all assets of MiT LLC and was personally guaranteed by Phil Rafnson, our CEO and Chairman of the Board. Sound Management Investors, LLC, an entity controlled by Mr. Rafnson, pledged all membership units of MiT LLC held by it as further security for the repayment of such loan. In connection with this borrowing, the lender was issued warrants to acquire shares of the Company’s common stock upon completion of its IPO. On the effective date of the IPO, the lender exercised these warrants to acquire 94,723 shares of the common stock on a cashless basis.

Approximately $400,000 of the proceeds from this loan were used to pay amounts owed to Caddy in connection with the Caddy acquisition.

In July 2021, the outstanding balance of the line of credit, approximately $590,000, and all accrued interest, was paid in full.

Notes Payable

In August 2021, all remaining amounts due on notes related to the Caddy acquisition, approximately $1,241,000, were paid in full.

NOTE 7 — DEBT (continued)

Paycheck Protection Program

On May 6, 2020, the Company received loan proceeds in the amount of approximately $694,000 under the Paycheck Protection Program (“PPP”). On March 13, 2021, the Company received proceeds in the amount of approximately $698,000 from a second PPP loan. The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), provided for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest were forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. In May 2021, the Company received notification from the Small Business Administration that the first loan in the amount of $694,000, including accrued interest, has been fully forgiven.

In April 2022, the Company received notice that on March 23, 2022, its second PPP loan in the amount oof $698,000 plus accrued interest has been fully forgiven and is paid in full.

There is no outstanding debt as of December 31 or June 30, 2022.

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STOCKHOLDERS' EQUITY

6 Months Ended

Dec. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 8 — STOCKHOLDERS’ EQUITY

In 2019, the Company adopted the 2019 Omnibus Incentive Plan (the “Plan”). The Plan, as amended, provides for the issuance of stock-based awards to employees. As of December 31, 2022, the Plan provides for the issuance of up to 1,500,000 stock-based awards. There are 1,220,000 stock-based awards available to grant under the Plan at December 31, 2022.

In July 2021, MiT Inc. entered into an Exchange Agreement with MiT LLC pursuant to which MiT Inc. agreed to exchange membership units for 2,350,000 shares of Common Stock representing 41.4% of the equity as of such date on a fully diluted basis for no consideration. The shares were exchanged as part of the Exchange Agreement with the Company as described in Note 1.

In July 2021, the Company granted options to non-employee directors to purchase an aggregate of 150,000 shares of its common stock at an exercise price of $3.00 per share. The options vest one year from the date of grant, expire ten years from the date of grant and had an aggregate grant date fair value of $244,200, which was recognized ratably over the vesting period. These options, which were the only options granted during the six months ended December 31, 2021, had a grant-date fair value of $1.63 per share. The Company recognized compensation expense for stock option awards of approximately $62,000 and $118,000 during the three and six months ended December 31, 2021, respectively The Company recognized no compensation expense for stock options during the three and six months ended December 31, 2022.

At December 31, 2022, there was no unrecognized compensation cost related to nonvested stock option awards.

The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model. The following weighted average assumptions were used for option grants during the six months ended December 31, 2021:

Risk-free interest rate	1.32	%
Expected volatility	61.0	%
Dividend yield	0	%
Expected option term in years	5.5

On July 12, 2022, the Company granted 130,000 shares of common stock, with a fair market value of approximately $153,000, to employees as compensation for previously provided service, which was accrued as of June 30, 2022.

NOTE 8 — STOCKHOLDERS’ EQUITY (continued)

A summary of the status of the Company’s stock options as of December 31, 2022 and changes during the six months ended December 31, 2022 are presented below.

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2022	150,000	$	3.00
Granted during the period	—		—
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2022	150,000	$	3.00

A summary of the status of the Company’s stock options as of December 31, 2021 and changes during the six months ended December 31, 2021 are presented below.

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2021	—	$	—
Granted during the period	150,000		3.00
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2021	150,000	$	3.00

The following table summarizes information about outstanding and exercisable stock options at December 31, 2022:

		Number		Wtd. Avg.
	Range of Exercise Price	Outstanding	Wtd. Avg, Life	Exercise Price
$	3.00	150,000	8.5 years	$	3.00

A summary of the status of the Company’s stock warrants as of December 31, 2021 and changes during the six month period ended December 31, 2021 are presented below.

		Wtd. Avg.
		Exercise
	Warrants	Price
Balance, July 1, 2021	236,667	$	2.76
Granted during the period	241,500		3.75
Exercised during the period	(139,611)		2.76
Terminated/Expired during the period	(97,056)		2.76
Balance, December 31, 2021	241,500	$	3.75

In July 2021, warrants were exercised on a cashless basis resulting in the issuance of 139,611 shares of common stock.

No warrants were outstanding, and there was no warrant activity in the six month period ended December 31, 2022.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 9 — RELATED PARTY TRANSACTIONS

In July 2021, the Company provided a discretionary $50,000 payment to the Company’s CEO and Chairman of the Board of Directors for personal guarantees provided in conjunction with financing Company debt. See Note 7.

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CUSTOMER AND VENDOR CONCENTRATIONS

6 Months Ended

Dec. 31, 2022

CUSTOMER AND VENDOR CONCENTRATIONS

CUSTOMER AND VENDOR CONCENTRATIONS

NOTE 10 — CUSTOMER AND VENDOR CONCENTRATIONS

Customers: Two customer accounted for 17% and 10% of the Company's sales for the three months ended December 31, 2022. One customer accounted for 17% of the Company’s sales for the six months ended December 31, 2022.

At December 31, 2022, the amount of outstanding receivables related to the Company's largest customer was approximately $265,000. No other customer represented more than 10% of accounts receivable at December 31, 2022.

Two customers accounted for approximately 20% and 18% of the Company's sales for the three months ended December 31, 2021. Three customers accounted for approximately 23%, 10% and 10% of the Company’s sales for the six months ended December 31, 2021.

At December 31, 2021, the amount of outstanding receivables related to these customers was approximately $240,000.

Vendors: Approximately 17% and 13% of the Company's purchases were provided by 2 vendors for the three months ended December 31, 2022. Approximately 21% of the Company's purchases were provided by one vendor for the three months ended December 31, 2021.

Approximately 26% and 13% of the Company’s purchases were provided by two vendors for the six months ended December 31, 2022. Approximately 33% of the Company’s purchases were provided by one vendor for the six months ended December 31, 2021.

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LEASE COMMITMENTS AND CONTINGENCIES

6 Months Ended

Dec. 31, 2022

LEASE COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS AND CONTINGENCIES

NOTE 11 — LEASE COMMITMENTS AND CONTINGENCIES

Operating Leases: The Company leases executive office and warehouse space in Fountain Valley, CA, pursuant to separate lease agreements. Under ASC 842, at contract inception the Company determined whether the contract is or contains a lease and whether the lease should be classified as on operating or a financing lease. Operating leases are included in ROU (right-of-use) assets and operating lease liabilities in our condensed consolidated balance sheet.

The Company’s executive office and warehouse lease agreements are classified as operating leases.

The lease agreements, as amended, expire on January 31, 2025 and do not include any renewal options. The agreements provide for initial monthly base amounts plus annual escalations through the term of the leases.

In addition to the monthly base amounts in the lease agreements, the Company is required to pay a portion of real estate taxes and common operating expenses during the lease terms.

The Company’s operating lease expense was $73,000 and $70,000 for the three months ended December 31, 2022 and 2021, respectively. The Company's operating lease expense was $141,000 and $141,000 for the six months ended December 31, 2022 and 2021, respectively.

Future minimum lease payments at December 31, 2022 under these arrangements are as follows:

	(in thousands)
	Total
Operating leases	Payments
2023	$	148
2024		302
2025		154
Total undiscounted operating lease payments	$	604
Less imputed interest (at 8%)		(43)
Present value of operating lease payments	$	561

The Present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2022:

Assets		(in thousands)
ROU assets-net	$	543
Liabilities
Current operating lease liabilities	$	265
Long-term operating lease liabilities		296
Total ROU liabilities	$	561

The Company’s weighted average remaining lease term for its operating leases is 2.0 years.

Legal Matters: From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

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SUBSEQUENT EVENTS

6 Months Ended

Dec. 31, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12 — SUBSEQUENT EVENTS

Management has evaluated subsequent events from December 31, 2022 through February 14, 2023, the date these financial statements were available to be issued, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements.

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Dec. 31, 2022

BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Organization: Moving iMage Technologies, Inc., a Delaware corporation, together with its wholly-owned subsidiaries unless the context indicates otherwise, the (“Company”) was incorporated in June 2020. The Company, through its wholly-owned subsidiary, Moving iMage Technologies, LLC (“MiT LLC”) and MiT LLC's wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”), designs, integrates, installs and distributes proprietary and custom designed equipment as well as off the shelf cinema products needed for contemporary cinema requirements. The Company also offers single source solutions for cinema design, procurement, installation and service to the creative and production communities for screening, digital intermediate and other critical viewing rooms. Additionally, the Company offers a wide range of technical, design and consulting services such as custom engineering, systems design, integration and installation, and digital technology, as well as software solutions for operations enhancement and theatre management. The Company also provides turnkey furniture, fixture and equipment services to commercial cinema exhibitors for new construction and remodels including design, consulting, installation and project management as well as procurement of seats, lighting, acoustical treatments, screens, projection and sound.

Moving iMage Acquisition Co. (DBA “Caddy Products”) designs, develops and manufactures innovative products for the entertainment, cinema, grocery, worship, restaurant, sports and restroom industries.

Share Exchange

Share Exchange:

In June 2020, MiT LLC members created Moving iMage Technologies, Inc. (“MIT Inc.”) to facilitate the Company’s initial public offering (“IPO”). Upon formation of MiT, Inc., 2,000,000 shares of MiT, Inc. common stock were issued to members of MiT LLC. On July 7, 2021, MiT LLC and MiT Inc. entered into an exchange agreement (“Exchange Agreement”) whereby the members of MiT LLC exchanged their membership interest for 2,350,000 shares of common stock in MiT Inc. As a result of the Exchange Agreement, the members of MiT LLC owned approximately 79% or 4,452,334 of the outstanding common stock of MiT Inc. As a result, MiT LLC (the entity where the Company conducts its business) became a wholly-owned subsidiary of MiT Inc. (the SEC registrant).

The transaction was accounted for as a merger of entities under common ownership in accordance with generally accepted accounting principles in the United States of America (“GAAP”). This determination was primarily based on the facts that, immediately before and after the transaction: (i) MiT LLC owners owned a substantial majority of the voting rights in the combined company, (ii) MiT LLC designated a majority of the members of the initial board of directors of the combined company, and (iii) MiT LLC’s senior management holds all key positions in the senior management of the combined company.

Initial Public Offering

Initial Public Offering: On July 12, 2021, the Company closed its initial public offering ("IPO") and issued 4,830,000 shares of its common stock at a price of $3.00 per share for net proceeds of approximately $12,360,000 after deducting underwriting discounts, commissions, and other expenses of approximately $2,130,000. Upon the completion of its IPO, the Company reclassified deferred IPO related costs of approximately $1,116,000 from other assets to additional paid-in capital. In connection with the Company’s IPO, the underwriters received warrants to acquire 241,500 shares of the Company’s common stock at $3.75 per share.

On July 12, 2021, in connection with the IPO, warrants to purchase 139,611 shares of the Company’s common stock were exercised on a cashless basis.

Impact of the COVID-19 Pandemic

Impact of the COVID-19 Pandemic: The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry. The social and economic effects have been widespread. At various points during the pandemic, authorities around the world imposed measures intended to control the spread of COVID-19, including stay-at-home orders and restrictions on large public gatherings, which caused movie theaters in countries around the world to temporarily close. The repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment and cinema industries. As a result, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, and negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers.

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, 2022, 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 industry also continues to adjust to evolving theatrical release windows, competition from streaming and other delivery platforms, supply chain delays, inflationary pressures, labor shortages, wage rate pressures and other economic factors.

Based on the its current estimates of recovery, the Company believes it has, and will generate, sufficient cash to sustain operations for a period of 12 months from the issuance of these financial statements. Nonetheless, the COVID-19 pandemic has had, and continues to have, adverse effects on the Company’s business, results of operations, cash flows and financial condition.

Principles of Consolidation

Principles of Consolidation: The condensed consolidated financial statements include the accounts of MiT Inc., its wholly-owned subsidiary, MiT LLC, and MiT LLC’s wholly-owned subsidiary, Moving iMage Acquisition Co., (DBA “Caddy Products”). All significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

Basis of Presentation: The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Unaudited Interim Condensed Consolidated Financial Statements

Unaudited Interim Condensed Consolidated Financial Statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position and operating results have been included in these statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2022, and with the disclosures and risk factors presented therein. The June 30, 2022 condensed consolidated balance sheet has been derived from the audited consolidated financial statements. Operating results for the three months and six months ended December 31, 2022 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending June 30, 2023.

Segment Reporting

Segment Reporting: An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment.

Measurement of Fair Values

Measurement of Fair Values: The Company’s accounting policies and disclosures require the measurement of fair values for both financial and non-financial assets and liabilities on either a recurring or nonrecurring basis. When measuring the fair value of an asset or a liability, the Company uses observable market data to the extent such information is available. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

— Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

— Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

— Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	843	$	—	$	—	$	843
State and Municipal Debt Securities		880		—		—		880
Fixed Income Funds		2,715		—		—		2,715
Alternative Funds		—		256		—		256
Real Estate Funds		—		46		—		46
Subtotal								4,740
Less Long-term								(319)
Net Current							$	4,421

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):

	June 30, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	764	$	—	$	—	$	764
State and Municipal Debt Securities		889		—		—		889
Fixed Income Funds		2,687		—		—		2,687
Alternative Funds		—		300		—		300
Real Estate Funds		—		48		—		48
Subtotal								4,688
Less Long-term								(325)
Net Current							$	4,363

The carrying amounts of accounts receivable, accounts payable, and notes payable approximate fair value due to their short maturities.

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis - In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. There were no impairments recognized for the quarter ended December 31, 2022 or the year ended June 30, 2022.

Deferred Offering Costs

Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that were directly associated with its IPO and other financings as deferred offering costs (non-current) until such financings are consummated.

As of June 30, 2021, $1,116,000 of deferred offering costs were capitalized in other assets. After completion of the IPO in July 2021, these costs were recorded in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a reduction of proceeds received from the offering.

Use of Estimates

Use of Estimates: The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities (including sales returns, bad debts, inventory reserves, warranty reserves, purchase price allocation and asset impairments), disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Concentration of Cash

Concentration of Cash: The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on its cash balances.

Accounts Receivable

Accounts Receivable: Accounts receivable are carried at original invoice amount less allowance for bad debts. Management determines the allowance for bad debts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Accounts receivable are considered to be past due if any portion of the receivable balance is outstanding for more than 90 days past the customer’s granted terms. The Company does not charge interest on past due balances or require collateral on its accounts receivable. As of December 31, 2022 and June 30, 2022 the allowance for bad debts is approximately $121,000 and $138,000, respectively.

Inventories

Inventories: Inventories are stated at the lower of cost or net realizable value, with cost being determined on the first-in, first-out cost method of accounting. The Company purchases finished goods and materials to assemble kits in quantities that it anticipates will be fully used in the near term. Changes in operating strategy, customer demand, and fluctuations in market values can limit the Company’s ability to effectively utilize all products purchased and can result in finished goods with above-market carrying costs which may cause losses on sales to customers. The Company’s policy is to closely monitor inventory levels, obsolescence and lower market values compared to costs and, when necessary, reduce the carrying amount of its inventory to its net realizable value. As of December 31, 2022 and June 30, 2022, the inventory reserve was $401,000 and $434,000, respectively, and inventory on hand was comprised primarily of finished goods ready for sale.

Revenue Recognition

Revenue Recognition: The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue is recognized when control of the promised goods is transferred at the point of shipment to a customer, and when performance conditions are satisfied, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods as per the agreement with the customer. The Company generates all its revenue under agreements with customers. In case there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation and then evaluates how the services are transferred to the customer to determine the timing of revenue recognition.

The Company considers the U.S. GAAP criteria for determining whether to report revenue gross as a principal versus net as an agent. Factors considered include whether the Company is the primary obligor, has risks and rewards of ownership, and bears the risk that a customer may not pay for the products provided or services performed. If there are circumstances where the above criteria are not met, revenues recognized are presented net of cost of goods sold.

Contract assets consist of conditional or unconditional rights to consideration. Accounts receivable represent amounts billed to customers where the Company has an enforceable right to payment for performance completed to date (i.e., unconditional rights to consideration). The Company does not have contract assets that represent conditional rights to consideration.

Contract liabilities consist of refund and warranty liabilities, as well as deposits received in advance on sales to certain customers. Such deposits are reflected as customer deposits and recognized in revenue when control of the products is transferred or when performance conditions are satisfied per the agreement. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2022 included $2,571,000 for revenue recognized that was included in contract liability as of July 1, 2022. The change in contract liabilities (customer deposits and unearned warranty revenue) during the six months ended December 31, 2021 included $790,000 for revenue recognized that was included in contract liability as of July 1, 2021.

Cost of goods sold includes cost of inventory sold during the period, net of vendor discounts and allowances, and shipping and handling costs, and sales taxes. Taxes collected from customers are included in accounts payable on a net basis (excluded from revenues) until remitted to the government.

Deferred contract acquisition costs consist of sales commissions paid to the sales force, and the related employer payroll taxes, and are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined that sales commissions paid are an immaterial component of obtaining a customer’s contract and has elected to expense sales commissions when earned.

	For the Three		For the Three		For the Six		For the Six
	Months Ended		Months Ended		Months Ended		Months Ended
Disaggregation of Revenue (in 000’s):	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Equipment upon delivery (point in time)	$	4,717	$	3,355	$	10,431	$	6,788
Services (point in time)		108		64		234		105
Subscription and services (over time)		18		—		30		—
Total revenues	$	4,843	$	3,419	$	10,695	$	6,893

Revenue from the sale of equipment is recognized upon delivery of such equipment to customers and when performance conditions are satisfied.

Revenue from installation is recognized upon completion of the installation project and when the performance obligation is complete.

Subscription revenue for remote monitoring services is recognized on a straight-line basis over the term of the contract, usually one year. Services revenues are generally recognized over time as the contracts are performed.

Returns and Allowances

Returns and Allowances: The Company records allowances for discounts and product returns at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends.

Shipping and Handling Costs

Shipping and Handling Costs: Shipping and handling costs are included in cost of goods sold and are recognized as a period expense during the period in which they are incurred.

Advertising Costs

Advertising Costs: Advertising costs were approximately $3,900 and $11,600 for the three months ended December 31, 2022 and 2021, respectively, and $10,600 and $11,700 for the six months ended December 31, 2022 and 2021, respectively. Advertising costs are expensed as incurred within selling and marketing expenses.

Goodwill and Intangible Assets

Goodwill and Intangible Assets: Goodwill as of December 31, 2022 and June 30, 2022 represents the excess of the purchase price over the fair value of the net identifiable assets acquired in the 2019 Caddy Acquisition. Goodwill is reviewed for impairment at least annually, in June, or more frequently if a triggering event occurs between impairment testing dates. The Company operates as a single operating segment and as a single reporting unit for the purpose of evaluating goodwill impairment. On July 1, 2022, the Company adopted ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. As such, the Company’s goodwill impairment test includes a one-step qualitative impairment test whereby a goodwill impairment loss will be measured as the excess of a reporting units carrying amount over its fair value. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. If the fair value of the reporting unit exceeds its carrying value, then no impairment exists. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss would be recognized for the excess of the carrying value of the reporting unit over the fair value, not to exceed the carrying amount of goodwill.

Goodwill is at risk of future impairment in the event of significant unexpected changes in the Company’s forecasted future results and cash flows, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate, or if there is a decline in the stock price.

Intangible assets arising from business combinations, such as customer relationships, trade names, and/or intellectual property, are initially recorded at fair value. The Company amortizes these intangible assets over the determined useful life which generally ranges from 11 to 20 years. The Company reviews its intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be fully recoverable. There were no intangible asset impairments recognized for the three months and six months ended December 31, 2022 or 2021.

Business Combinations

Business Combinations: The Company includes the results of operations of the businesses that it acquires commencing on the respective dates of acquisition. The Company allocates the fair value of the purchase price of its acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Income Taxes

Income Taxes: The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The following table summarizes the components of deferred tax assets and deferred tax liabilities at June 30, 2022 and December 31, 2022 (in thousands):

	Deferred Tax
	Assets (Liabilities)
Inventory reserve	$	122
Accumulated depreciation		(6)
Accumulated goodwill amortization		(12)
Accumulated intangible amortization		8
Unrealized loss on investments		68
Deferred rent		6
Warranty reserve		5
Stock compensation		68
Net operating loss carryforward		594
Allowance for doubtful accounts		39
Net		892
Valuation allowance		(892)
Total June 30, 2022	$	—
Inventory reserve	$	112
Accumulated depreciation		(5)
Accumulated goodwill amortization		(15)
Accumulated intangible amortization		(9)
Unrealized gain on investments		(38)
Deferred rent		5
Warranty reserve		17
Stock compensation		68
Net operating loss carryforward		636
Capital loss carry over		40
Allowance for doubtful accounts		34
Net		845
Valuation allowance		(845)
Total December 31, 2022	$	—

Leases

Leases: On July 1, 2022 the Company adopted ASU 2016-02, Leases (Topic 842) which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. In accordance with ASC 842, on July 1, 2022 the Company recognized Right of Use Assets in the amount of $665,000 and lease liabilities of $681,000 for the leases associated with its executive office and warehouse space, as described in Note 11.

Product Warranty

Product Warranty: The Company’s digital equipment products are sold under various limited warranty arrangements ranging from one year to three years. Company policy is to establish reserves for estimated product warranty costs in the period when the related revenue is recognized. The Company has the right to return defective products it buys from third-party manufacturers, for up to three years, depending on the manufacturers’ individual policies. As of December 31, 2022 and June 30, 2022, the Company has established a warranty reserve of $50,000 and $55,000, respectively, which is included in accrued expenses in the accompanying condensed consolidated balance sheets.

The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands):

	Quarter Ended December 31,		Year Ended June 30,
	2022		2022
Product warranty liability, beginning of period	$	55	$	29
Accruals for warranties issued		61		60
Settlements made		(66)		(34)
Product warranty liability, end of period	$	50	$	55

Research and Development

Research and Development: The Company incurs costs to develop new products, as well as improve the appeal and functionality of its existing products. Research and development costs are charged to expense when incurred.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies, and as such the Company will adopt this standard on July 1, 2023. The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements.

Other pronouncements issued by FASB with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Dec. 31, 2022

BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of fair value leveling for investment securities on recurring basis

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	843	$	—	$	—	$	843
State and Municipal Debt Securities		880		—		—		880
Fixed Income Funds		2,715		—		—		2,715
Alternative Funds		—		256		—		256
Real Estate Funds		—		46		—		46
Subtotal								4,740
Less Long-term								(319)
Net Current							$	4,421

Following is the fair value leveling for investment securities that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):

	June 30, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities	$	764	$	—	$	—	$	764
State and Municipal Debt Securities		889		—		—		889
Fixed Income Funds		2,687		—		—		2,687
Alternative Funds		—		300		—		300
Real Estate Funds		—		48		—		48
Subtotal								4,688
Less Long-term								(325)
Net Current							$	4,363

Summary of disaggregation of Revenue

	For the Three		For the Three		For the Six		For the Six
	Months Ended		Months Ended		Months Ended		Months Ended
Disaggregation of Revenue (in 000’s):	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Equipment upon delivery (point in time)	$	4,717	$	3,355	$	10,431	$	6,788
Services (point in time)		108		64		234		105
Subscription and services (over time)		18		—		30		—
Total revenues	$	4,843	$	3,419	$	10,695	$	6,893

Summary of deferred tax assets and liabilities

The following table summarizes the components of deferred tax assets and deferred tax liabilities at June 30, 2022 and December 31, 2022 (in thousands):

	Deferred Tax
	Assets (Liabilities)
Inventory reserve	$	122
Accumulated depreciation		(6)
Accumulated goodwill amortization		(12)
Accumulated intangible amortization		8
Unrealized loss on investments		68
Deferred rent		6
Warranty reserve		5
Stock compensation		68
Net operating loss carryforward		594
Allowance for doubtful accounts		39
Net		892
Valuation allowance		(892)
Total June 30, 2022	$	—
Inventory reserve	$	112
Accumulated depreciation		(5)
Accumulated goodwill amortization		(15)
Accumulated intangible amortization		(9)
Unrealized gain on investments		(38)
Deferred rent		5
Warranty reserve		17
Stock compensation		68
Net operating loss carryforward		636
Capital loss carry over		40
Allowance for doubtful accounts		34
Net		845
Valuation allowance		(845)
Total December 31, 2022	$	—

Summary of warranty liabilities

The changes in the Company’s aggregate warranty liabilities were as follows for the following periods (in thousands):

	Quarter Ended December 31,		Year Ended June 30,
	2022		2022
Product warranty liability, beginning of period	$	55	$	29
Accruals for warranties issued		61		60
Settlements made		(66)		(34)
Product warranty liability, end of period	$	50	$	55

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INVESTMENTS (Tables)

6 Months Ended

Dec. 31, 2022

INVESTMENTS

Schedule of Company's cash, cash equivalents and marketable securities by significant investment category

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 31, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	1,575	$	—	$	—	$	1,575	$	1,575	$	—	$	—
Equities
Communication		25		—		(2)		23		—		23		—
Consumer Discretionary		58		—		(8)		50		—		50		—
Consumer Staples		22		1		—		23		—		23		—
Energy		9		1		—		10		—		10		—
Financials		44		—		(5)		39		—		39		—
Health Care		39		1		—		40		—		40		—
Industrials		27		—		(3)		24		—		24		—
Information Technology		124		—		(24)		100		—		100		—
Materials		11		—		—		11		—		11		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		4		—		—		4		—		4		—
Mutual Funds		524		—		(13)		511		—		511		—
										—
Subtotal		897		3		(57)		843		—		843		—
Fixed Income
State & Municipal Bonds		899		—		(19)		880		—		561		319
Fixed income funds		2,747		—		(32)		2,715		—		2,715		—
Subtotal		3,646		—		(51)		3,595		—		3,276		319
Alternative, real estate and other		313		—		(11)		302		—		302		—
Total	$	6,431	$	3	$	(119)	$	6,315	$	1,575	$	4,421	$	319

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 30, 2022 (amounts in 000’s):

											Current		Non-current
	Adjusted		Unrealized		Unrealized		Fair		Cash and		Marketable		Marketable
	Cost		Gains		Losses		Value		Cash Equivalents		Securities		Securities
Cash	$	2,340	$	—	$	—	$	2,340	$	2,340	$	—	$	—
Equities
Communication		50		—		(11)		39		—		39		—
Consumer Discretionary		69		—		(15)		54		—		54		—
Consumer Staples		19		—		—		19		—		19		—
Energy		9		—		(1)		8		—		8		—
Financials		44		—		(8)		36		—		36		—
Health Care		40		—		—		40		—		40		—
Industrials		27		—		(7)		20		—		20		—
Information Technology		133		—		(25)		108		—		108		—
Materials		10		—		(2)		8		—		8		—
Real Estate		10		—		(2)		8		—		8		—
Utilities		6		—		—		6		—		6		—
Mutual Funds		482		—		(64)		418		—		418		—
										—
Subtotal		899		—		(135)		764		—		764		—
Fixed Income
State & Municipal Bonds		906		—		(17)		889		—		564		325
Fixed income funds		2,759		—		(72)		2,687		—		2,687		—
Subtotal		3,665		—		(89)		3,576		—		3,251		325
Alternative, real estate and other		366		—		(18)		348		—		348		—
Total	$	7,270	$	—	$	(242)	$	7,028	$	2,340	$	4,363	$	325

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LOSS PER SHARE (Tables)

6 Months Ended

Dec. 31, 2022

LOSS PER SHARE

Schedule of basic and diluted earnings (loss) per share

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended		For the Six Months Ended
	December 31,	December 31,	December 31,		December 31,
	2022	2022	2021		2021
Numerator:
Net income (loss)(in 000s's)	46	(49)	$	(644)	$	(1,221)
Denominator:
Weighted average common shares outstanding, basic and diluted	10,958,398	10,943,561		10,636,278		10,445,482
Income (Loss) per share
Basic and diluted	0.00	(0.00)	$	(0.06)	$	(0.12)

Schedule of antidilutive securities excluded

	For the Three Months Ended	For the Six Months Ended	For the Three Months Ended	For the Six Months Ended
	December 31,	December 31,	December 31,	December 31,
	2022	2022	2021	2021
Options	150,000	150,000	150,000	150,000
Warrants	—	—	241,500	241,500
Total potentially dilutive shares	150,000	150,000	391,500	391,500

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PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Dec. 31, 2022

PROPERTY AND EQUIPMENT

Schedule of property and equipment

Property and equipment consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Production equipment	$	307	$	307
Leasehold improvements		213		213
Furniture and fixtures		45		45
Computer equipment		51		47
Other equipment		120		120
		736		732
Accumulated depreciation		(713)		(710)
Net property and equipment	$	23	$	22

Schedule of estimated useful lives of the assets

	Useful Lives
Leasehold improvements	5 years or remaining lease term
Furniture and fixtures	5 years
Production equipment	3 – 7 years
Computer equipment	3 years
Other equipment	3 – 7 years

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Dec. 31, 2022

GOODWILL AND INTANGIBLE ASSETS

Summary of intangible assets

The following table summarizes the Company’s intangible assets as of December 31, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	302	$	668
Patents	20 years		70		12		58
Trademark	20 years		78		13		65
		$	1,118	$	327	$	791

The following table summarizes the Company’s intangible assets as of June 30, 2022 (in thousands):

	Amortization	Gross Asset		Accumulated		Net Book
	Period	Cost		Amortization		Value
Customer relationships	11 years	$	970	$	257	$	713
Patents	20 years		70		10		60
Trademark	20 years		78		12		66
		$	1,118	$	279	$	839

Summary of estimated amortization expense related to intangible assets

Estimated amortization expense related to intangible assets subject to amortization at December 31, 2022 in each of the five years subsequent to December 31, 2022, and thereafter is as follows (amounts in thousands):

2023	$	48
2024		96
2025		96
2026		96
2027		96
Thereafter		359
Total	$	791

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ACCRUED EXPENSES (Tables)

6 Months Ended

Dec. 31, 2022

ACCRUED EXPENSES

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):

	December 31,		June 30,
	2022		2022
Employee compensation	$	155	$	468
Accrued warranty		50		55
Customer refund		150		51
Others		22		81
Total	$	377	$	655

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Dec. 31, 2022

STOCKHOLDERS' EQUITY

Summary of weighted average assumptions were used for option grants

The following weighted average assumptions were used for option grants during the six months ended December 31, 2021:

Risk-free interest rate	1.32	%
Expected volatility	61.0	%
Dividend yield	0	%
Expected option term in years	5.5

Summary of outstanding and exercisable stock option

The following table summarizes information about outstanding and exercisable stock options at December 31, 2022:

		Number		Wtd. Avg.
	Range of Exercise Price	Outstanding	Wtd. Avg, Life	Exercise Price
$	3.00	150,000	8.5 years	$	3.00

Stock option

STOCKHOLDERS' EQUITY

Summary of stock options and stock warrants changes

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2022	150,000	$	3.00
Granted during the period	—		—
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2022	150,000	$	3.00

		Wtd. Avg.
		Exercise
	Options	Price
Balance, July 1, 2021	—	$	—
Granted during the period	150,000		3.00
Exercised during the period	—		—
Terminated/Expired during the period	—		—
Balance, December 31, 2021	150,000	$	3.00

Stock warrants

STOCKHOLDERS' EQUITY

Summary of stock options and stock warrants changes

		Wtd. Avg.
		Exercise
	Warrants	Price
Balance, July 1, 2021	236,667	$	2.76
Granted during the period	241,500		3.75
Exercised during the period	(139,611)		2.76
Terminated/Expired during the period	(97,056)		2.76
Balance, December 31, 2021	241,500	$	3.75

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LEASE COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Dec. 31, 2022

LEASE COMMITMENTS AND CONTINGENCIES

Summary of future minimum lease payments

Future minimum lease payments at December 31, 2022 under these arrangements are as follows:

	(in thousands)
	Total
Operating leases	Payments
2023	$	148
2024		302
2025		154
Total undiscounted operating lease payments	$	604
Less imputed interest (at 8%)		(43)
Present value of operating lease payments	$	561

Schedule of ROU assets and operating lease liabilities

The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2022:

Assets		(in thousands)
ROU assets-net	$	543
Liabilities
Current operating lease liabilities	$	265
Long-term operating lease liabilities		296
Total ROU liabilities	$	561

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)			1 Months Ended		6 Months Ended		12 Months Ended
	Jul. 12, 2021	Jul. 07, 2021	Jul. 31, 2021	Jun. 30, 2020	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Impairments recognized					$ 0		$ 0
Deferred offering costs								$ 1,116,000
Common stock, outstanding					10,958,398		10,828,398
Warrants exercised for number of shares			139,611
Allowance for bad debts					$ 121,000		$ 138,000
Inventory reserve					401,000		$ 434,000
Revenue recognized included in opening balance					$ 2,571,000	$ 790,000
Initial public offering
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of shares issued	4,830,000
Share price	$ 3.00
Net proceeds	$ 12,360,000
Underwriting discounts, commissions and other expenses	2,130,000
Other assets to additional paid in capital	$ 1,116,000
Warrants exercised for number of shares	139,611
MiT LLC | MiT Inc
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of shares issued				2,000,000
Number of shares exchanged		2,350,000
Percentage of outstanding member unit exchanged		79.00%	41.40%
Common stock, outstanding		4,452,334
MiT Inc | Initial public offering
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Share price	$ 3.75
Warrants exercised for number of shares	241,500

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair vale on a recurring basis (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
Fair value, assets and liabilities measured on recurring basis
Subtotal	$ 4,740	$ 4,688
Less Long-term	(319)	(325)
Net Current	4,421	4,363
Equity Securities
Fair value, assets and liabilities measured on recurring basis
Subtotal	843	764
State and Municipal Debt Securities
Fair value, assets and liabilities measured on recurring basis
Subtotal	880	889
Fixed Income Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	2,715	2,687
Alternative Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	256	300
Real Estate Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	46	48
Level 1 | Equity Securities
Fair value, assets and liabilities measured on recurring basis
Subtotal	843	764
Level 1 | State and Municipal Debt Securities
Fair value, assets and liabilities measured on recurring basis
Subtotal	880	889
Level 1 | Fixed Income Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	2,715	2,687
Level 2 | Alternative Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	256	300
Level 2 | Real Estate Funds
Fair value, assets and liabilities measured on recurring basis
Subtotal	$ 46	$ 48

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total revenues	$ 4,843	$ 3,419	$ 10,695	$ 6,893
Equipment upon delivery | Point in time
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total revenues	4,717	3,355	10,431	6,788
Services | Point in time
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total revenues	108	$ 64	234	$ 105
Subscription and services | Over time
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total revenues	$ 18		$ 30

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs, Goodwill and Intangible Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Advertising costs	$ 3,900	$ 11,600	$ 10,600	$ 11,700
Impairment on intangible assets	$ 0	$ 0	$ 0	$ 0
Maximum
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amortization period			20 years
Minimum
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amortization period			11 years

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred assets and liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventory reserve	$ 112	$ 122
Accumulated depreciation	(5)	(6)
Accumulated goodwill amortization	(15)	(12)
Accumulated intangible amortization		8
Accumulated intangible amortization	(9)
Unrealized loss (gain) on investments	(38)	68
Deferred rent	5	6
Warranty reserve	17	5
Stock compensation	68	68
Net operating loss carryforward	636	594
Capital loss carry over	40
Allowance for doubtful accounts	34	39
Net	845	892
Valuation allowance	$ (845)	$ (892)

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) - USD ($)	Dec. 31, 2022	Jun. 30, 2022
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Right-of-use asset	$ 543,000
Lease liabilities	$ 561,000
ASU 842 | Adjustment
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Right-of-use asset		$ 665,000
Lease liabilities		$ 681,000

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BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Warranty liabilities (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2022	Jun. 30, 2022
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Period of right to return defective products		3 years
Product warranty liability, beginning of period	$ 55,000	$ 55,000	$ 29,000
Accruals for warranties issued	61,000		60,000
Settlements made	(66,000)		(34,000)
Product warranty liability, end of period	$ 50,000	$ 50,000	$ 55,000
Maximum
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Warranty period		3 years
Minimum
BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Warranty period		1 year

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INVESTMENTS - Cash, cash equivalents and marketable securities by significant investment category (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2022
Net investment income
Adjusted Cost	$ 6,431	$ 7,270
Unrealized Gains	3
Unrealized Losses	(119)	(242)
Fair Value	6,315	7,028
Cash and Cash Equivalents	1,575	2,340
Current Marketable Securities	4,421	4,363
Non-current Marketable Securities	319	325
Cash
Net investment income
Adjusted Cost	1,575	2,340
Fair Value	1,575	2,340
Cash and Cash Equivalents	1,575	2,340
Equities
Net investment income
Adjusted Cost	897	899
Unrealized Gains	3
Unrealized Losses	(57)	(135)
Fair Value	843	764
Current Marketable Securities	843	764
Communication
Net investment income
Adjusted Cost	25	50
Unrealized Losses	(2)	(11)
Fair Value	23	39
Current Marketable Securities	23	39
Consumer Discretionary
Net investment income
Adjusted Cost	58	69
Unrealized Losses	(8)	(15)
Fair Value	50	54
Current Marketable Securities	50	54
Consumer Staples
Net investment income
Adjusted Cost	22	19
Unrealized Gains	1
Fair Value	23	19
Current Marketable Securities	23	19
Energy
Net investment income
Adjusted Cost	9	9
Unrealized Gains	1
Unrealized Losses		(1)
Fair Value	10	8
Current Marketable Securities	10	8
Financials
Net investment income
Adjusted Cost	44	44
Unrealized Losses	(5)	(8)
Fair Value	39	36
Current Marketable Securities	39	36
Health Care
Net investment income
Adjusted Cost	39	40
Unrealized Gains	1
Fair Value	40	40
Current Marketable Securities	40	40
Industrials
Net investment income
Adjusted Cost	27	27
Unrealized Losses	(3)	(7)
Fair Value	24	20
Current Marketable Securities	24	20
Information Technology
Net investment income
Adjusted Cost	124	133
Unrealized Losses	(24)	(25)
Fair Value	100	108
Current Marketable Securities	100	108
Materials
Net investment income
Adjusted Cost	11	10
Unrealized Losses		(2)
Fair Value	11	8
Current Marketable Securities	11	8
Real Estate
Net investment income
Adjusted Cost	10	10
Unrealized Losses	(2)	(2)
Fair Value	8	8
Current Marketable Securities	8	8
Utilities
Net investment income
Adjusted Cost	4	6
Fair Value	4	6
Current Marketable Securities	4	6
Mutual Funds
Net investment income
Adjusted Cost	524	482
Unrealized Losses	(13)	(64)
Fair Value	511	418
Current Marketable Securities	511	418
Fixed Income
Net investment income
Adjusted Cost	3,646	3,665
Unrealized Losses	(51)	(89)
Fair Value	3,595	3,576
Current Marketable Securities	3,276	3,251
Non-current Marketable Securities	319	325
State & Municipal Bonds
Net investment income
Adjusted Cost	899	906
Unrealized Losses	(19)	(17)
Fair Value	880	889
Current Marketable Securities	561	564
Non-current Marketable Securities	319	325
Fixed income funds
Net investment income
Adjusted Cost	2,747	2,759
Unrealized Losses	(32)	(72)
Fair Value	2,715	2,687
Current Marketable Securities	2,715	2,687
Alternative, real estate and other
Net investment income
Adjusted Cost	313	366
Unrealized Losses	(11)	(18)
Fair Value	302	348
Current Marketable Securities	$ 302	$ 348

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LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Numerator:
Net income (loss)	$ 46	$ (644)	$ (49)	$ (1,221)
Denominator:
Weighted average common shares outstanding, basic	10,958,398	10,636,278	10,943,561	10,445,482
Weighted average common shares outstanding, diluted	10,958,398	10,636,278	10,943,561	10,445,482
Income (Loss) per share
Income (Loss) per share, basic	$ 0.00	$ (0.06)	$ 0.00	$ (0.12)
Income (Loss) per share, diluted	$ 0.00	$ (0.06)	$ 0.00	$ (0.12)

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LOSS PER SHARE - Antidilutive shares (Details) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive shares	150,000	391,500	150,000	391,500
Options
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive shares	150,000	150,000	150,000	150,000
Warrants
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive shares		241,500		241,500

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 736	$ 732
Accumulated depreciation	(713)	(710)
Net property and equipment	23	22
Production equipment
PROPERTY AND EQUIPMENT
Property and equipment, gross	307	307
Leasehold improvements
PROPERTY AND EQUIPMENT
Property and equipment, gross	213	213
Furniture and fixtures
PROPERTY AND EQUIPMENT
Property and equipment, gross	45	45
Computer equipment
PROPERTY AND EQUIPMENT
Property and equipment, gross	51	47
Other equipment
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 120	$ 120

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PROPERTY AND EQUIPMENT - Depreciation expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
PROPERTY AND EQUIPMENT
Depreciation			$ 3,000	$ 13,000
Property and equipment
PROPERTY AND EQUIPMENT
Depreciation	$ 1,000	$ 0	3,000	13,000
Cost of goods sold
PROPERTY AND EQUIPMENT
Depreciation	0	0	0	9,000
General and administrative expense
PROPERTY AND EQUIPMENT
Depreciation	$ 1,000	$ 0	$ 3,000	$ 4,000

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PROPERTY AND EQUIPMENT - Useful lives (Details)	6 Months Ended
	Dec. 31, 2022
Leasehold improvements
PROPERTY AND EQUIPMENT
Estimated useful life	5 years
Furniture and fixtures
PROPERTY AND EQUIPMENT
Estimated useful life	5 years
Production equipment | Maximum
PROPERTY AND EQUIPMENT
Estimated useful life	7 years
Production equipment | Minimum
PROPERTY AND EQUIPMENT
Estimated useful life	3 years
Computer equipment
PROPERTY AND EQUIPMENT
Estimated useful life	3 years
Other equipment | Maximum
PROPERTY AND EQUIPMENT
Estimated useful life	7 years
Other equipment | Minimum
PROPERTY AND EQUIPMENT
Estimated useful life	3 years

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GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2022
Intangible assets
Gross Asset Cost	$ 1,118	$ 1,118
Accumulated Amortization	327	279
Total	$ 791	$ 839
Customer relationships
Finite-lived intangible assets
Amortization Period	11 years	11 years
Intangible assets
Gross Asset Cost	$ 970	$ 970
Accumulated Amortization	302	257
Total	$ 668	$ 713
Patents
Finite-lived intangible assets
Amortization Period	20 years	20 years
Intangible assets
Gross Asset Cost	$ 70	$ 70
Accumulated Amortization	12	10
Total	$ 58	$ 60
Trademark
Finite-lived intangible assets
Amortization Period	20 years	20 years
Intangible assets
Gross Asset Cost	$ 78	$ 78
Accumulated Amortization	13	12
Total	$ 65	$ 66

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GOODWILL AND INTANGIBLE ASSETS - Amortization expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Finite-lived intangible assets
Amortization expense			$ 48,000	$ 48,000
General and administrative expense
Finite-lived intangible assets
Amortization expense	$ 24,000	$ 24,000	$ 48,000	$ 48,000

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GOODWILL AND INTANGIBLE ASSETS - Estimated amortization expense related to intangible assets subject to amortization (Details) - USD ($)	Dec. 31, 2022	Jun. 30, 2022
Amortization expense related to intangible assets
2023	$ 48,000
2024	96,000
2025	96,000
2026	96,000
2027	96,000
Thereafter	359,000
Total	791,000	$ 839,000
Goodwill	$ 287,000	$ 287,000

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ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
ACCRUED EXPENSES
Employee compensation	$ 155	$ 468
Accrued warranty	50	55
Customer refund	150	51
Others	22	81
Total	$ 377	$ 655

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DEBT - Line of Credit and Notes Payable (Details) - USD ($)	1 Months Ended
	Aug. 31, 2021	Oct. 31, 2019	Jul. 31, 2021
DEBT
Number of shares for which warrants exercised			139,611
Line of credit			$ 590,000
Caddy promissory note
DEBT
Repayments of notes payable	$ 1,241,000
Line of Credit
DEBT
Maximum borrowing capacity		$ 1,000,000.0
Number of shares for which warrants exercised		94,723
Amount of proceeds from loan used to pay business combination		$ 400,000

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DEBT - Paycheck Protection Program (Details) - USD ($)			1 Months Ended
	Mar. 13, 2021	May 06, 2020	Apr. 30, 2022	May 31, 2021	Dec. 31, 2022	Jun. 30, 2022
DEBT
Outstanding debt					$ 0	$ 0
PPP loan
DEBT
Proceeds from loan	$ 698,000	$ 694,000
Debt forgiven			$ 698,000	$ 694,000

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STOCKHOLDERS' EQUITY (Details) - USD ($)			1 Months Ended	3 Months Ended			6 Months Ended
	Jul. 12, 2022	Jul. 07, 2021	Jul. 31, 2021	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
STOCKHOLDERS' EQUITY
Maximum stock based awards available for issuance				1,500,000			1,500,000
Share based payment award option outstanding				1,220,000			1,220,000
Options granted			150,000
Exercise price, granted			$ 3.00
Vesting period			1 year
Option expiration period			10 years
Aggregate grant date fair value			$ 244,200
Grant-date fair value								$ 1.63
Compensation expense for stock option				$ 62,000		$ 0	$ 118,000	$ 0
Total unrecognized compensation				0			0
Value of shares issued					$ 153,000
Warrants exercised for number of shares			139,611
Employees
STOCKHOLDERS' EQUITY
Number of shares issued	130,000
Value of shares issued	$ 153,000
Warrants
STOCKHOLDERS' EQUITY
Warrants outstanding				$ 0			$ 0
MiT LLC | MiT Inc
STOCKHOLDERS' EQUITY
Shares of common stock issued for acquiring members unit			2,350,000
Percentage of outstanding member unit exchanged		79.00%	41.40%

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STOCKHOLDERS' EQUITY - Weighted average assumptions (Details)	6 Months Ended
	Dec. 31, 2021
STOCKHOLDERS' EQUITY
Risk-free interest rate	1.32%
Expected volatility	61.00%
Dividend yield	0.00%
Expected option term in years	5 years 6 months

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STOCKHOLDERS' EQUITY - Stock options and stock warrants (Details) - $ / shares	1 Months Ended	6 Months Ended
	Jul. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
STOCKHOLDERS' EQUITY
Granted during the period	150,000
Weighted Average Exercise Price, Granted during the period	$ 3.00
Stock option
STOCKHOLDERS' EQUITY
Beginning balance		150,000
Granted during the period		0	150,000
Ending balance		150,000	150,000
Weighted Average Exercise Price, Beginning balance		$ 3.00
Weighted Average Exercise Price, Granted during the period		0	$ 3.00
Weighted Average Exercise Price, Ending balance		$ 3.00	$ 3.00
Stock warrants
STOCKHOLDERS' EQUITY
Beginning balance	236,667		236,667
Granted during the period			241,500
Exercised during the period			(139,611)
Terminated/Expired during the period			(97,056)
Ending balance			241,500
Weighted Average Exercise Price, Beginning balance	$ 2.76		$ 2.76
Weighted Average Exercise Price, Granted during the period			3.75
Weighted Average Exercise Price, Exercised during the period			2.76
Weighted Average Exercise Price, Terminated/Expired during the year			2.76
Weighted Average Exercise Price, Ending balance			$ 3.75

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STOCKHOLDERS' EQUITY - Outstanding and exercisable stock (Details)	6 Months Ended
	Dec. 31, 2022 $ / shares shares
STOCKHOLDERS' EQUITY
Number Outstanding | shares	150,000
Wtd. Avg, Life	8 years 6 months
Exercise Price	$ 3.00
Exercise Price $3.00
STOCKHOLDERS' EQUITY
Exercise Price	$ 3.00

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RELATED PARTY TRANSACTIONS (Details)	1 Months Ended
	Jul. 31, 2021 USD ($)
RELATED PARTY TRANSACTIONS
Discretionary payment to the related parties for personal guarantees provided in conjunction with financing company debt	$ 50,000

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CUSTOMER AND VENDOR CONCENTRATIONS - Customer concentrations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
CUSTOMER AND VENDOR CONCENTRATIONS
Outstanding receivables	$ 1,419,000		$ 1,419,000		$ 1,762,000
Sales | Customer concentration | Customer one
CUSTOMER AND VENDOR CONCENTRATIONS
Concentration risk percentage	17.00%	20.00%	17.00%	23.00%
Sales | Customer concentration | Customer two
CUSTOMER AND VENDOR CONCENTRATIONS
Concentration risk percentage	10.00%	18.00%		10.00%
Sales | Customer concentration | Customer three
CUSTOMER AND VENDOR CONCENTRATIONS
Concentration risk percentage				10.00%
Outstanding receivable | Customer concentration
CUSTOMER AND VENDOR CONCENTRATIONS
Outstanding receivables	$ 265,000	$ 240,000	$ 265,000	$ 240,000

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CUSTOMER AND VENDOR CONCENTRATIONS - Vendor concentrations (Details) - Purchases - Supplier concentration	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Vendor one
CUSTOMER AND VENDOR CONCENTRATIONS
Concentration risk percentage	17.00%	21.00%	26.00%	33.00%
Vendor two
CUSTOMER AND VENDOR CONCENTRATIONS
Concentration risk percentage	13.00%		13.00%

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LEASE COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
LEASE COMMITMENTS AND CONTINGENCIES
Operating lease expense	$ 73,000	$ 70,000	$ 141,000	$ 141,000
Imputed interest rate percentage	8.00%		8.00%
Weighted average remaining lease term for operating leases (in years)	2 years		2 years

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LEASE COMMITMENTS AND CONTINGENCIES - Future minimum lease payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Operating leases
2023	$ 148
2024	302
2025	154
Total undiscounted operating lease payments	604
Less imputed interest (at 8%)	(43)
Present value of operating lease payments	$ 561

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LEASE COMMITMENTS AND CONTINGENCIES - ROU assets and operating lease liabilities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Assets
ROU assets-net	$ 543
Liabilities
Current operating lease liabilities	265
Long-term operating lease liabilities	296
Total ROU liabilities	$ 561