MITQ 10-K & 10-Q changes, risk factors and insider trading

Demand for our products and services depends to a significant degree on spending in our markets. Commercial movie exhibitors generate revenues from consumer attendance at their theaters, which depends on the willingness of consumers to visit movie theaters and spend discretionary income at movie theaters. In the event of declining box-office and concession revenues, whether as a result of an economic downturn or political or other economic event, commercial exhibitors may be less willing to invest capital in building or refurbishing theaters. Worsening economic and market conditions, downside shocks, economic inflation or a return to recessionary economic conditions could serve to reduce demand for our products and services and adversely affect our operating results. However, the cinema industry has historically shown incredible resilience in such economic downturns, as it remains a regional and affordable out of homeout-of-home experience. These economic conditions may also impact the financial condition of one or more of our key suppliers, which could affect our ability to secure products to meet our customers’ demands. In addition, a downturn in the cinema market could impact the valuation and collectability of certain receivables held by us. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which we sell our products.

A significant portion of our revenue is generated from the distribution to the theater exhibition industry of digital cinema equipment and services manufactured or developed by third party OEMs or software developers. These OEMs include companies such as NEC, Barco, Christie, QSC, JBL, Dolby and Samsung. If we fail to maintain satisfactory relationships with these entities, or if these entities experience significant financial difficulties, we could experience difficulty in obtaining needed goods and services which would have an adverse effect on our business. Even if we are able to secure alternative arrangements with OEMs or software developers of similar products, products or software services sourced from alternative sources may not be as functional or desirable to potential customerscustomers, which could cause such customers to meet their digital cinema needs elsewhere.

With respect to those other products and components which we offer but do not manufacture in-house, the loss of, or substantial decrease in the availability of, products from our suppliers, or the loss of our key supplier agreements, could adversely impact our financial condition, operating results and cash flows. In addition, supply interruptions have arisen in the past arisen and could arise in the future from effects of shortages of raw materials, labor disputes or weather conditions affecting products or shipments, transportation disruptions, adjustments to our inventory levels or other factors within and beyond our control.

Short- and long-term disruptions in our supply chain would result in a need to maintain higher inventory levels as we replace similar product,product with a higher cost of product and ultimately a decrease in our net sales and profitability. A disruption in the timely availability of our products by our key suppliers would result in a decrease in our revenues and profitability. Although in many instances we have agreements with our suppliers, these agreements are generally terminable by either party on limited notice. Failure by our suppliers to continue to supply us with products on commercially reasonable terms, or at all, would put pressure on our operating margins and have a material adverse effect on our financial condition, operating results and cash flows. Short-term changes in the cost of these materials, some of which are subject to significant fluctuations, are sometimes, but not always passed on to our customers. Our inability to pass on material price increases to our customers could adversely impact our financial condition, operating results and cash flows.

In addition to our in-house sales force, we sell our products and services through distributors, dealers and resellers. As we do not have long-term contracts with most of them, these agreements may be cancelled at any time. Any changes to our current mix of distributors could adversely affect our gross margin and could negatively affect both our brand image and our reputation. If our distributors, dealers and resellers are not successful in selling our products, our revenue wouldwill decrease. In addition, our success in expanding and entering into new markets internationally will depend on our ability to establish relationships with new distributors. If we do not maintain our relationship with existing distributors or develop relationships with new distributors, dealers and reseller our ability to grow our business and sell our products and services could be adversely affected, and our business may be harmed.

We have experienced seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions that close in a particular quarter, which impacts our ability to grow revenue over the long term and plan and manage cash flows and other aspects of our business and cost structure. In addition, our operating results can vary from quarter to quarter as a result of seasonality in consumer spending and payment patterns. A large part of our business is concerned with new theater builds, which often see substantial delays due to weather, but also financing timing, permits and governmental delays, and other unpredictable problems often associated with large real estate projects. Also, our revenue growth generally is higher during the first and fourth quarters of the fiscal year as the weather improves, the digital cinema market becomes more active, and consumers begin new theater builds or remodels projects. During these periods, we tend to experience increased transaction volume. Conversely, our revenue growth generally slows during the second quarter of the fiscal year, as spending on new theater construction and theater improvement projects tends to slow leading up to the holiday season and through the winter months. As a result, growth in transaction volume also tends to slow during these periods. We expect this seasonality to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics. However, our seasonality trends may vary in the future as we introduce products to new industry verticals, and we become less concentrated in the new theater construction and improvement sector. If expectations for our business turn out to be inaccurate, our revenue growth may be adversely affected over time, and we may not be able to adjust our cost structure on a timely basisbasis, and our cash flows may suffer.

Our top ten customers accounted for approximately 44% and 45% of net revenues for the years ended June 30, 2025 and 2024, respectively. Trade accounts receivable from these customers represented approximately 41% and 62% of net receivables at June 30, 2025 and 2024, respectively. No individual customer accounted for more than 10% of the Company’s revenue for the year ended June 30, 20252026 or 2024.2025. While we believe our relationships with such customers are stable, most arrangements are made by purchase order and are terminable at will by either party. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which we sell our products.

Our business, results of operations and prospects depend, in part, on our ability to maintain the value of our brand and reputation for providing high qualityhigh-quality products and services. Maintaining, promoting, and positioning our brand depends largely on the success of our marketing efforts and our ability to provide consistent, high-quality products and services. Our brand could be harmed if we fail to achieve these objectives or if our public image or brand were to be tarnished by negative publicity. We also believe that our reputation and brand may be harmed if we fail to maintain a consistently high level of customer service. If we fail to successfully maintain, promote, and position our brand and protect our reputation or if we incur significant expenses in this effort, our business, financial condition and operating results may be adversely affected.

Our customers depend on our customer support teams to resolve technical and operational issues if and when they arise. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for customer support. Customer demand for support may also increase as we expand the features available in our products. Increased customer demand for customer support, without corresponding revenue, could increase costs and harm our results of operations. In addition, as we continue to expand our business customer base, we need to be able to provide efficient and effective customer support that meets our business customers’ needs and expectations globally at scale. The number of our business customers has grown significantly, which puts additional pressure on our support organization. If we are unable to provide efficient and effective customer support, our ability to growincrease our operations may be harmed and we may need to hire additional support personnel, which could harm our margins and the results of operations. Our sales are highly dependent on our business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could harm our reputation, our ability to sell our products and services to existing and prospective customers, our business, results of operations, and financial condition.

We rely in part on manufacturers and other suppliers to provide us with many of the products we sell and distribute. As we do not have direct control over the quality of the products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of the products we distribute and install. It is possible that inventory from a manufacturer or supplier could be sold to our customers and later be alleged to have had quality problems or to have caused personal injury, subjecting us to potential claims from customers or third parties. We have been subject to such claims in the past, which have been resolved without material financial impact. From time to time, we are involved in product liability claims relating to the products we distribute and manufacture and relating to products we have installed. In certain situations, we have undertaken to voluntarily remediate any defects, which can be a costly measure.

At June 30, 2025,2026, our sales backlog was approximately $7.52$6.96 million, with planned order shipments byoccurring Aprilduring 30,fiscal 2026.2027. We list signed contracts for theater construction or refurbishing for which revenue has not been recognized as sales backlog prior to the time of revenue recognition. The total value of the sales backlog represents all signed agreements that are expected to be recognized as revenue in the future and includes initial fees along with the value of fixed minimum ongoing fees due over the term, but excludes contingent fees in excess of fixed minimum ongoing fees that might be received in the future and maintenance and extended warranty fees. Notwithstanding the legal obligation to do so, not all of our customers with which we have signed contracts may complete theatrical construction or refurbishing systems that are included in our backlog. This could adversely affect our future revenues and cash flows. In addition, customers with obligations in backlog sometimes request that we agree to modify or reduce such obligations, which we have agreed to in the past under certain circumstances. Customer requested delays in the construction or refurbishing of theaters in backlog remain a recurring and unpredictable part of our business. Specifically, as a result of the effects of the COVID‑19 pandemic, a significant number of our customers had temporarily ceased operations and others have cancelled or pushed back the delivery of pending product orders and/or delayed the start of scheduled theater refurbishing and construction projects.

We have recently undertaken some new lines of business and intend to continue to opportunistically pursue new lines in the future. For example, Caddy’sthe DCS product line consists of products we had not previously offered to our customer base. These initiatives represent new areas of growth for us and could include the offering of new products and services that may not be accepted by the market. If any new business which we acquire, invest in or attempt to develop does not progress as planned, we may be adversely affected by investment expenses that have not led to the anticipated results, by the distraction of management from our core business or by damage to our brand or reputation.

Also, third parties may claim that our business operations infringe on their intellectual property rights. These claims may harm our reputation, cost us money to defend, distract the attention of our management and prevent us from offering some services. Confidential intellectual property is increasingly stored or carried on mobile devices, such as laptop computers, which increases the risk of inadvertent disclosure where the mobile devices are lost or stolen, and the information has not been adequately safeguarded or encrypted. This also makes it easier for someone with access to our systems, or someone who gains unauthorized access, to steal information and use it to our disadvantage. Advances in technology, which permit increasingly large amounts of information to be stored on mobile devices or on third-party “cloud” servers, may exacerbate these risks.

The occurrence of one or more other natural disasters, such as pandemics, fires, hurricanes, tornados, tsunamis, floods and earthquakes; geo-political events, such as civil unrest in a country in which our suppliers and/or customers are located or terrorist or military activities disrupting transportation, communication or utility systems; or other highly disruptive events, such as nuclear accidents, pandemics, unusual weather conditions or cyber-attacks, could adversely affect our operations and financial performance.

Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to sell our products to the motion pictures industry and the performance of such motion pictures in our markets. The most attended films are usually released during the summer and the year-end calendar year-end holidays, making our business seasonal. Poor performance of, or any disruption in the production of these motion pictures (including by reason of a strike or lack of adequate financing), a reduction in, or suspension of, the marketing efforts of the major motion picture studios, the choice by distributors to release fewer feature-length movies theatrically, or the choice to release feature-length movies directly to video streaming or Premium Video on Demand (PVOD) platforms in lieu of a theatrical release, could hurt our business and results of operations. Conversely, the successful performance of these motion pictures, particularly the sustained success of any one motion picture, or an increase in effective marketing efforts of the major motion picture studios and extension of the exclusive theatrical release windows, may generate positive results for our business and operations in a specific fiscal quarter or year that may not necessarily be indicative of, or comparable to, future results of operations.

We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares of Common Stock less attractive because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our shares of common stockstock, and the market price of such securities may be more volatile. We may take advantage of these reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five years. We will ceaseceased to be an “emerging growth company” uponin theJuly earliest of: (1) the last day of the fiscal year2026 following the fifth anniversary of our July 2021 initial public offering,offering. (2)Fiscal the2027 will be our last dayemerging ofgrowth thecompany firstfiling fiscal year in which our annual gross revenues are $1.235 billion or more, (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities, and (4) the date on which we are deemed to be a “large accelerated filer” as defined in the Exchange Act.year.

Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer and principal accounting officer), we performed an assessment of the Company’s significant processes and key controls. Based on this assessment, management concluded that our internal controls over financial reporting were not effective as of June 30, 20252026 due to the material weaknesses described below.in Item 9A.

Our failure to remediate the material weaknesses identified above or the identification of additional material weaknesses in the future,future could adversely affect our ability to report financial information, including our filing of quarterly or annual reports with the Commission on a timely and accurate basis. Moreover, our failure to remediate the material weakness identified above or the identification of additional material weaknesses could prohibit us from producing timely and accurate financial statements, which may adversely affect the market price of shares of our common stock, and we may be unable to maintain compliance with NYSE American listing requirements.

Investment in growth. Based on 20252026 losses, we will selectively invest inin,or expandingseek financing, to expand our operations. We expect our total operating expenses to decrease in the foreseeable future to meet our revenue and cost control objectives. We plan to invest in our sales and support operations to support our new product initiatives and budget goals.

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, and relying instead on a strategy of manufacturing or acquiring products based on orders placed by our customers.

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 compensationpayments 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.

Net revenues decreased 9.9%4.6% to $18.147$17.32 million for the year ended June 30, 20252026 from $20.139$18.15 million for the prior fiscal year primarily due to thelower protractedproject SAG/AFTRArevenues strike.despite first-time DCS revenue additions. Backlog at June 30, 20252026 was approximately $7.52$6.96 million, which represent orders currently planned for Aprilshipment 30,in 2026fiscal shipment.2027. Backlog at June 30, 20242025 was $5.93$7.52 million.million and was fulfilled in fiscal 2026.

Along withDespite the revenue decline for the year ended June 30, 2025,2026, gross profit dollars decreasedincreased 2.3%10.0% to $4.573$5.032 million or by $0.110$0.459 million for the year ended June 30, 20252026 from $4.683$4.573 million for the prior fiscal year. As a percentage of total revenues, gross margin increased to 25.2%29.1% for the year ended June 30, 20252026 from 23.3%25.2% for the prior year. Compared to the prior year, the increase in gross margin as a percentage of revenues was driven primarily by product mix,mix asfrom lowerselling higher margin seat revenues made up a larger percentage of total revenues in the year ended June 30, 2024.products.

The $74,000$17,000 decrease in research and development expense for the year ended June 30, 2026 was largely due to decreased compensation expense related to headcount reduction compared to the year ended June 30, 2024.2025.

20252026 Selling, General and Administrative expense decreased by $507,000$112,000 or 8%2.1% compared to 20242025 primarily due to higherlower credit losses, compensation costs, marketing and facility rentcosts offset by lowerhigher compensationlegal costs related to headcount reduction, lower marketing expense and lower public company compliance costs in 2025.fees.

Net loss of $(0.9480.297) million for the year ended June 30, 20252026 compared to a net loss of $(1.3720.948) million for the prior year and improved by $0.424$0.651 million. This net loss decrease was largely due to theselling staffa reductionsmix relatedof toproducts headcountwith reductionhigher gross margins and reduced marketing and G&A expenses in 2025.2026.

During the past several years, we have primarily met our working capital and capital resource needs from our operating cash flows and financing activities. WeThe believecash that our existing sourcesdecrease of liquidity,$2.522 includingmillion cashin andthe operatingyear cashended flow,June will30, be2026 sufficientcompared to meet our projected capital needs for the foreseeableyear future. Our cash balance atended June 30, 2025 was approximatelylargely $5.715 million, as compareddue to $5.278the DCS inventory purchase of $1.5 million atin October 2025 and subsequent DCS inventory purchases during the year ended June 30, 2024.2026.

NetWorking cashcapital provideddecreased by operating activities was $0.411$(2.686) million for year ended June 30, 2025, primarily due to $0.801 million in working capital increases along with the $(0.9480.297) million in net losses and offset by $0.558$0.516 million in other non-cash expenses. Additionally, accounts receivable decreased predominantly because of a decrease in sales in the fourth quarter of 2026 compared to the fourth quarter of 2025. Within the $0.801$2.686 million working capital increase,decrease, cash used by operations included inventory, prepaid expenses, accounts payable, accrued expenseexpense, customer deposits and unearnedlease warranty revenueliabilities and offset primarily by changes in accounts receivable, customer deposits and lease liabilities.receivable.

For the year ended June 30, 2024,2025, net cash usedprovided inby operating activities was $(0.80)$0.437 million for year ended June 30, 2024,2025, primarily due to $(0.60)$0.801 million in working capital decreasesincreases along with the $(1.370.948) million in net losses and offset by $1.17$0.584 million in other non-cash expenses. Within the $(0.60)$0.801 million working capital decrease,increase, cash used by operations included accounts receivable,inventory, prepaid expenses, customeraccounts deposits,payable, leaseaccrued liabilitiesexpense and unearned warranty revenue and offset primarily by changes in inventory, accounts payable,receivable, accruedcustomer expenses.deposits and lease liabilities.

For the year ended June 30, 2026, net cash used by investing activities was $(0.049) million for equipment purchases. For the year ended June 30, 2025, net cash usedprovided by investing activities was zero. For the year ended June 30, 2024, net cash provided by investing activities was $(0.012) for equipment purchases.

Our top ten customers accounted for approximately 44% and 45% of net revenues for the years ended June 30, 2025 and 2024, respectively. Trade accounts receivable from these customers represented approximately 41% and 62% of net receivables at June 30, 2025 and 2024, respectively. While we believe our relationships with such customers are stable, most arrangements are made by purchase order and are terminable at will by either party. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which we sell our products.

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 from those estimates. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Contract assets consist of conditional or unconditional rights to consideration. Accounts receivable representrepresents amounts billed to customers where the Company has an enforceable right to payment for performance completed to date (i.e., unconditional rights to consideration).

Due the Management’s continuing ability to obtain 90% of contract value in up-front customer deposits, MIT’s risk is only the remaining 10% of the customer’s contract value. The combined effect of up-front customer deposits, prompt collection of trade receivables and application of historical aging criteria has resulted in minimal bad debts and allowances for credit losses.

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

After overcoming the prior year Covid-19 impacts, basedBased on our current estimates of recovery, we believe we have, and will generate, sufficient cash to sustain operations.

Three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 20242025

Net sales increaseddecreased by 10.2%4.9% to $3.793$3.397 million for the three months ended DecemberMarch 31, 20252026 from $3.441$3.571 million for the three months ended DecemberMarch 31, 20242025 due to higherlower one-time project sales. Estimated quarterly recurring sales revenues are 2$2.0 million.

Gross profit dollars increased by $0.229$0.120 million or 24.5%11.3% to $1.165$1.183 million for the three months ended DecemberMarch 31, 20252026 from $0.936$1.063 million for the three months ended DecemberMarch 31, 2024.2025. As a percentage of total revenues, gross profit percentage increased to 30.7%34.8% from 27.2%29.8% due to higher marginDigital productSpeaker revenues.Series ("DCS") sales and its related higher margin. The Company realized approximately $0.065 million improvement in gross profit due to the purchase of DCS inventory at a discount from the initial October 2025 purchase.

Research and development expenses remaineddecreased theby same$0.004 million for both the three months ended DecemberMarch 31, 20252026 andcompared to the three months ended DecemberMarch 31, 2024.2025. This decrease is deemed immaterial.

The increasedecrease in selling, general and administrative expense of $0.076$0.012 million or 5.2%0.9% and was duevirtually to higher legal expense related the October 2025 DCS inventory purchase in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.unchanged.

Other Income was $0.020$0.012 million for the three months ended DecemberMarch 31, 20252026 compared to Other Income of $0.034$0.030 million for the three months ended DecemberMarch 31, 20242025 or ana increasedecrease of $0.014$0.018 million. The decrease was due to lower interest income on cash savings accounts in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025.

Net loss was $(0.3880.122) million for the three months ended DecemberMarch 31, 20252026 compared to a net loss of $(0.5270.240) million for the three months ended DecemberMarch 31, 20242025 or an improvement in loss reduction of $0.139$0.118 million. The improvement was due to a combination of higher gross margin of $0.229$0.120 million and lower operating expense of $0.016 million, offset by higher selling, general and administrative expenses of $0.076 million and lower other income of $0.014$0.018 million.

SixNine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 20242025

Net sales increased 7.8%4.1% to $9.375$12.771 million for the sixnine months ended DecemberMarch 31, 20252026 from $8.693$12.264 million for the sixnine months ended DecemberMarch 31, 20242025 due to higher one-time project sales.

Gross profit dollars increased by $0.532$0.651 million or 23.1%19.3% to $2.839$4.021 million for the sixnine months ended DecemberMarch 31, 20252026 from $2.307$3.370 million for the sixnine months ended DecemberMarch 31, 2024.2025. As a percentage of total revenues, gross profit percentage increased to 30.3%31.5% from 26.5%27.5% due to DCS higher margin product revenues.

Research and development expenses decreased by $(0.0140.017) million or 12.8%10.8% for the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 20242025 due to headcount reduction.

In the sixnine months ended DecemberMarch 31, 2025,2026, selling, general and administrative expense decreased by $(0.026)$0.039 million or 0.9% due largelyprimarily to costlower reductionspayroll enacted in August 2024 compared to the six months ended December 31, 2024.costs.

Other Income was $0.051$0.191 million for the sixnine months ended DecemberMarch 31, 20252026 compared to Other Income of $0.077$0.107 million for the sixnine months ended DecemberMarch 31, 20242025 or aan decreaseincrease of $0.026$0.084 million. The decreaseincrease was due to lowera interestone-time incomepayables on cash savings accountsextinguishment in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025.

Net income was $0.122$(0.001) million for the sixnine months ended DecemberMarch 31, 20252026 compared to a net loss of $(0.5520.792) million for the sixnine months ended DecemberMarch 31, 20242025 or an improvement in loss reduction of $0.674$0.791 million. The improvement was due to a combination of higher gross margin of $0.532$0.651 million, lower selling, general and lower operatingadministrative expenses of $0.040$0.039 million and lowerhigher other income of $0.026$0.084 million.

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. The cash balance at DecemberMarch 31, 20252026 was approximately $3.913$2.400 million, as compared to $5.715 million at June 30, 2025. The $1.802$3.352 million decrease was largely due to the DCS inventory purchase of $1.5 million in October 2025.2025 and subsequent DCS inventory purchases during the March quarter. On October 31, 2025, the Company entered into an Asset Purchase Agreement (the “APA”) with QSC, LLC (“QSC”) pursuant to which the Company purchased certain assets comprising QSC’s Digital Cinema Speaker Series (“DCS”) loudspeaker product line including, the DCS loudspeaker product line, including the SC, SR, SB, and RSM product families; intellectual property, including trademarks, designs, and trade secrets; inventory and raw materials; OEM supplier agreements; product technical documentation; and rights to service and support existing DCS customers, for a purchase price of $1.5 million.

Compared to DecemberMarch 31, 2024,2025, net cash used in operating activities decreasedincreased by $1.845$3.393 million in DecemberMarch 31, 20252026 due largely to the increased DCS inventory purchaseand payables of $1.500$2.200 million in October 2025.million. Net cash used in operating activities was $(1.8023.301) million for the sixnine months ended DecemberMarch 31, 2025, primarily due to $(2.687) million in working capital decreases2026, which were offset by $0.122$0.001 million in net incomeloss and $0.324$0.549 million in other non-cash expenses. Within the working capital change, cash used in operating activities included $(2.6873.872) million in inventory, accounts payable, customer deposits, accounts receivable, prepaids and lease liabilities and accrued expenses and offset by $0.434$0.022 million in accounts receivable and unearned warranty revenue.

For the sixnine months ended DecemberMarch 31, 2024,2025, net cash provided by operating activities was $0.038$0.091 million for the six months ended December 31, 2024,million, primarily due to 0.202$0.214 million in working capital increases along with $(0.5520.792) million in net losses and 0.388$0.669 million in other non-cash expenses. Within the working capital change, net cash provided included $1.518M$0.786 million in accounts receivable, inventory, prepaids, accruedpayables expense,and unearned warranty revenue offset by $(1.316)0.572 million in payables,inventory, accrued expenses, customer deposit declines and lease liabilities.

Net cash fromused in investing activities was $0.045 million for equipment purchases for the nine months ended March 31, 2026 and zero for the sixnine months ended DecemberMarch 31, 2025 and 2024.2025.

Net cash fromused in financing activities was $0.006 million for repurchase of shares for the nine months ended March 31, 2026 and zero for the sixnine months ended DecemberMarch 31, 2025 and 2024.31,2025.

For a discussion of the critical accounting policies and estimates, refer to the “Critical Accounting Policies and Estimates” section in Part II, Item 7 of our 2024 Form 10-K. There have been no material changes during the sixnine months ended DecemberMarch 31, 20252026 to the judgments, assumptions and estimates upon which our critical accounting estimates are based.