BNB Standard Corp
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
BNC$4.87+6.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001493152-24-045783
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001641172-25-010831
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 76 current paragraphs.
41 unchanged; 24 reworded; 11 added; 20 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Recent Developments – Acquisition of Fat Panda
Current report
We have entered into an acquisition agreement to acquire a group of Manitoba corporations that own all the assets used in the business of Fat Panda Ltd. (“Fat Panda”). Fat Panda is engaged in the manufacture, distribution and retail sale of e-cigarettes, vape devices and e-liquids and related products through multiple retail locations in the provinces of Manitoba, Ontario, and Saskatchewan, Canada, as well as through its online e-commerce site.
Current report
Fat Panda, we believe, is central Canada’s largest retailer and manufacturer of e-cigarettes, vape devices and e-liquids, with a market share exceeding 50% in the region. Fat Panda operates 33 retail locations, including 29 Fat Panda stores and four Electric Fog vape outlets. Fat Panda also serves a wide range of customers through its online e-commerce platform. Its retail footprint is complemented by a comprehensive portfolio of products, including its own line of premium e-liquids manufactured in-house, along with a robust portfolio of trademarks and intellectual property.
Current report
The acquisition will include all the assets of Fat Panda, including among other things, the leases for the retail outlets, intellectual property, inventory, government licenses and permits, franchise agreements, manufacturing facilities and supply agreements, which are necessary for the ongoing manufacturing and retail operations of Fat Panda. The acquisition will continue the employment of the current management and of the production and retail staff, for the uninterrupted, continuous operations of the business. The sellers will enter into non-competition agreements at closing. Certain of the senior management persons will enter into employment agreements for their continued employment after the closing of the acquisition.
Current report
The purchase price is CAD$18,000,000 (approximately, US$12,600,000), payable in cash, securities and seller loans. The Company also expects to borrow part of the cash portion of the purchase price, in an amount yet to be determined, which will be secured by the assets of Fat Panda. The purchase price includes an initial cash payment of CAD$13,900,000, issuance of 39,000 shares of the common stock of the Company with an agreed aggregate value of CAD$700,000 (approximately CAD$18.00 per share), and issuance of notes to the sellers in the aggregate principal amount of CAD$2,060,000, and release of a CAD$100,000 due diligence deposit. The Company is also agreeing to pay certain financial statement audit expenses of the selling parties. Of the notes to be issued by Fat Panda to the selling parties, one of the notes in the principal amount of CAD$1,030,000, is convertible into the common stock of the Company at a conversion rate of USD$19.00 per share. At closing the following will occur: first, a portion of the cash purchase price in the amount of CAD$1,375,000 will be held in a joint escrow account for 120 days after closing as a working capital adjustment escrow; second, the sum of CAD$1,240,000, will be paid into escrow for possible indemnity claims to be held for 18 months; and third, the purchase price will be reduced by CAD$112,500 and the sum of CAD$112,500 will be paid into escrow to be held for 18 months, both in relation to employee obligation claims under Canadian employment law.
Current report
Completion of the acquisition is subject to a number of conditions, which include the preparation and delivery of the Fat Panda companies audited consolidated financial statements and unaudited interim consolidated financial statements, satisfaction of the financial condition of Fat Panda, completion of due diligence by the Company, receipt of all necessary government approvals and licenses, and continuation and reformation of the various retail location leases. Completion is also subject to the Company obtaining financing for a portion of the cash purchase price. The acquisition agreement also provides for the selling persons to make representations and warranties and undertake certain covenants about many aspects of the business of Fat Panda that shall be true and correct and performed at or prior to closing. The representations, warranties and covenants are those that are typical in relation to the acquisition of an operating business. The Company has also made certain representations, warranties and covenants, the principal one of which is to obtain financing for a part of the purchase price, which if not obtained will permit the Company to terminate the purchase agreement.
Current report
CEA Industries Inc. (“Company”) has received preliminary unaudited financial information about Fat Panda Ltd. (“Fat Panda”) that is a condition to the completion of its acquisition of Fat Panda. Based on preliminary, unaudited financial data, in its fiscal year ended April 30, 2024 Fat Panda generated CAD $38.5 million (USD $28.5 million) in revenue with 39% gross margins and CAD $8.4 million (USD $6.2 million) in adjusted EBITDA. Both revenue and adjusted EBITDA grew over 10% from fiscal year ended April 30, 2023, while gross margin declined by 15% from fiscal year 2023. The Company continues to expect to complete the acquisition in the first half of 2025, subject to fulfillment of customary closing conditions which includes completion of the audit of Fat Panda’s financial statements.
Current report
The Company continues to expect to complete the acquisition in the first half of 2025, subject to fulfillment of customary closing conditions.
Current report
Changes to United States tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
Current report
The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations. As the Peoples Republic of China (“PRC”) is a particular focus of the tariffs and trade policies, and the Company uses products from the PRC in its product offerings, we expect that there will be disruption in that aspect of our business. We are in the process of searching for alternative suppliers, but there is no assurance that we will be able to find other suppliers at a price that will be reasonable.
Current report
Revenue for the three months ended March 31, 2025 was $713,000, compared to $235,000 for the three months ended March 31, 2024, representing an increase of $478,000, or 203%. The increase was primarily due to higher bookings for the current and previous quarter for each year.
Removed paragraphs (20)
Previous report
Impact of the COVID-19 Pandemic on Our Business
Previous report
The impact of the government and the business economic response to the COVID-19 pandemic affected demand across the majority of our markets and disrupted workflow and completion schedules on projects. We believe we continue to have adverse effects on our sales, project implementation, supply chain infrastructure, operating margins, costs, and working capital, as a result of the pandemic. Due to this uncertainty, we continue to monitor costs and continue to take actions to reduce costs in order to mitigate the long-term impact of the COVID-19 pandemic to the best of our ability. However, these actions may not be sufficient in the long run to avoid reduced sales, increased losses, and reduced operating cash flows in our business. During the year ended December 31, 2023, and the nine months ended September 30, 2024, the Company experienced delays in the receipt of equipment it had ordered to meet its customer orders due to disruption and delays in its supply chain. Consequently, our revenue recognition of some customer sales has been delayed until future periods when the shipment of orders can be completed.
Previous report
Our backlog has significantly declined since the January 1, 2023 backlog of $5,578,000. The primary reason for the decline has been fewer new order bookings and contract cancellations.
Previous report
Revenue for the three months ended September 30, 2024 was $391,000, compared to $914,000 for the three months ended September 30, 2023, representing a decrease of $523,000, or 57%. The decrease was primarily due to lower bookings and a reduced backlog over the past 18 months.
Previous report
Our decrease in SG&A expenses for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, was primarily due to: (i) a decrease of $133,000 in salaries and benefits (including stock-based compensation) and other employee related costs, (ii) a decrease for investor relations expense of $11,000, and (iii) a decrease of $9,000 for facility and office expense, partially offset by (iv) an increase of $134,000 for accounting and other professional fees, (v) a $7,000 increase for insurance, (vi) an increase in sales related expenses of $4,000 due to outside sales referral fees, and (vii) an increase of $3,000 for business taxes and licenses.
Previous report
Overall, we recognized a net loss of $740,000 for the three months ended September 30, 2024, as compared to a net loss of $799,000 for the three months ended September 30, 2023, a decrease of $59,000 or 7%. The net loss for the three months ended September 30, 2024 included $4,000 of depreciation expense, compared to $15,000 of non-cash, stock-based compensation, and $7,000 of depreciation expense for the three months ended September 30, 2023. Excluding these non-cash items, our operating loss decreased by $41,000.
Previous report
Comparison of the Nine Months Ended September 30, 2024 and September 30, 2023
Previous report
Revenue for the nine months ended September 30, 2024 was $2,386,000, compared to $6,660,000 for the nine months ended September 30, 2023, representing a decrease of $4,274,000, or 64%. The decrease was primarily due to a decrease in bookings in the last 18 months. We believe the lower bookings are due to the delay of capital expenditures in the cannabis market environment as a result of the prolonged effects of pricing and inflationary pressure, in addition to a reduced sales effort by the Company.
Previous report
Cost of revenue decreased by $3,401,000 or 58%, from $5,832,000 for the nine months ended September 30, 2023, to $2,431,000 for the nine months ended September 30, 2024. The decrease was primarily due to a decrease in revenue, along with a decrease in fixed and other variable costs, as discussed below.
Previous report
Our gross loss for the nine months ended September 30, 2024 was $45,000 compared to a gross profit of $828,000 for the nine months ended September 30, 2023, a decrease of $873,000 or 105%. Our gross profit margin decreased by 14 percentage points from 12% for the nine months ended September 30, 2023, to a gross loss margin of 2% for the nine months ended September 30, 2024, primarily due to lower revenue and an increase in fixed and other variable costs as a percentage of revenue, as described below. Additionally, total revenue in the nine months ended September 30, 2024 and September 30, 2023 included $44,000 and $234,000, respectively, from forfeited, non-refundable deposits from former customers on previously cancelled contracts.
Previous report
Our variable costs (which include the cost of equipment, outside engineering costs, shipping and handling, travel and warranty costs) totaled $1,788,000, or 75% of total revenue, during the nine months ended September 30, 2024, as compared to $4,830,000, or 73% of total revenue, in the nine months ended September 30, 2023. The decrease in variable costs was primarily due to: (i) a decrease in equipment costs of $2,664,000 driven by lower revenue and lower equipment margins, (ii) a decrease in warranty expense of $193,000 due to a reduction in the warranty accrual as a result of lower revenue during the past 18 months, (iii) a decrease of $74,000 in excess and obsolete inventory expense, (iv) a decrease of $45,000 for travel expenses, and (v) reduced outside engineering services expense of $44,000, and (vi) a decrease in shipping and handling and other variable costs of $22,000.
Previous report
Operating Expenses
Previous report
Operating expenses decreased to $2,103,000 for the nine months ended September 30, 2024, from $2,786,000 for the nine months ended September 30, 2023, a decrease of $683,000, or 25%. The operating expense decrease consisted of: (i) a decrease in selling, general and administrative expenses (“SG&A expenses”) of $363,000, (ii) a decrease in advertising and marketing expenses of $243,000, and (iii) a decrease in product development of $77,000. These decreases are the result of our cost-cutting measures.
Previous report
The decrease in advertising and marketing expenses was primarily due to (i) a decrease in salaries and benefits (including stock compensation) of $133,000, (ii) a decrease in advertising and promotion of $94,000, (iii) a decrease in outside services and other marketing expenses of $14,000, and (iv) a reduction in trade show related costs of $2,000.
Previous report
The decrease in product development costs was due to (i) a decrease in salaries and benefits (including stock-based compensation) of $70,000, (ii) a decrease of $4,000 for materials and other R&D costs, and (iii) a decrease in travel of $2,000.
Previous report
Operating Loss
Previous report
We recognized an operating loss of $2,148,000 for the nine months ended September 30, 2024, as compared to an operating loss of $1,958,000 for the nine months ended September 30, 2023, an increase of $190,000 or 10%. The operating loss for the nine months ended September 30, 2024 included $69,000 of non-cash, stock-based compensation, and $14,000 of depreciation expense, compared to $177,000 of non-cash, stock-based compensation, and $20,000 of depreciation expense for the nine months ended September 30, 2023. Excluding these non-cash items, our operating loss increased by $303,000. This increase in operating loss was primarily due to a significant decrease in revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 as well as an increase in fixed and variable costs as a percent of revenue.
Previous report
Other Income (Expense)
Previous report
We recognized other income (net) of $20,000 for the nine months ended September 30, 2024, compared to other income (net) of $34,000 for the nine months ended September 30, 2023. Other income for the nine months ended September 30, 2024 consisted of interest income on our money market account. Other income for nine months ended September 30, 2023 primarily consisted of interest income on a money market account of $26,000 and an adjustment to our ERC credit and unclaimed property of $8,000.
Reworded paragraphs (24)
Previous wording
During the three months ended September 30, 2024, we executed new sales contracts with a total contract value of $516,000. During this same period, we had no change orders or cancellations. Consequently, our net bookings in the three months ended September 30, 2024 were $516,000, representing a decrease of $924,000 (or 64%) from net bookings of $1,440,000 in the second quarter of 2024.
Current wording
During the three months ended March 31, 2025, we executed new sales contracts with a total contract value of $1,045,000. During this same period, we had positive change orders of $1,000 and cancellations of $4,000. Consequently, our net bookings in the three months ended March 31, 2025 were $1,042,000, representing an increase of $532,000 (or 104%) from net bookings of $510,000 in the fourth quarter of 2024.
Previous wording
Our backlog at September 30, 2024 was $352,000, an increase of $125,000, or 55%, from our backlog of $227,000 at June 30, 2024. The increase in backlog is primarily the result of bookings in the third quarter that have not yet been fulfilled. While we expect to recognize all the revenue from the remaining backlog in 2024, there is significant uncertainty regarding the timing of the Company’s recognition of revenue on its remaining performance obligations, and there is no certainty that these will result in actual revenues. Therefore, investors should not view backlog as earned revenue.
Current wording
Our backlog at March 31, 2025 was $844,000, an increase of $354,000, or 72%, from our backlog of $490,000 at December 31, 2024. The increase in backlog is primarily the result of increased bookings in the first quarter that have not yet been fulfilled. While we expect to recognize all the revenue from the remaining backlog in 2025, there is significant uncertainty regarding the timing of the Company’s recognition of revenue on its remaining performance obligations, and there is no certainty that these will result in actual revenues. Therefore, investors should not view backlog as earned revenue.
Previous wording
Our recognized revenue for the quarters ended September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024, and September 30, 2024, in the table below, excludes $29,000, $0, $31,000, $12,000, and $0, respectively, in revenue arising from the forfeiture of non-refundable deposits from former customers on previously cancelled contracts. The contracts were removed from the backlog at the time of cancellation.
Current wording
Our recognized revenue for the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024, and March 31, 2025, in the table below, excludes $31,000, $12,000, $0, $46,000, and $25,000 respectively, in revenue arising from the forfeiture of non-refundable deposits from former customers on previously cancelled contracts. The contracts were removed from the backlog at the time of cancellation.
Previous wording
Cost of revenue decreased by $557,000 or 55%, from $1,018,000 for the three months ended September 30, 2023 to $461,000 for the three months ended September 30, 2024. The decrease was primarily due to a decrease in revenue, along with a decrease in fixed and other variable costs, as discussed below.
Current wording
Cost of revenue increased by $285,000 or 73%, from $389,000 for the three months ended March 31, 2024 to $674,000 for the three months ended March 31, 2025. The increase was primarily due to an increase in revenue, along with a decrease in fixed costs, offset by an increase in variable costs, as discussed below.
Previous wording
During the three months ended September 30, 2024, we recognized a gross loss of $70,000 compared to a gross loss of $104,000 for the three months ended September 30, 2023, a decrease of $34,000 or 33%. Our gross loss margin increased by 7 percentage points from 11% for the three months ended September 30, 2023 to 18% for the three months ended September 30, 2024 primarily due to lower revenue, an increase in fixed costs as a percent of revenue, offset by lower variable costs, as described below. Additionally, total revenue in the three months ended September 30, 2024 and September 30, 2023 included $0 and $29,000, respectively, from forfeited, non-refundable deposits from former customers on previously cancelled contracts.
Current wording
During the three months ended March 31, 2025, we recognized a gross profit of $39,000 compared to a gross loss of $154,000 for the three months ended March 31, 2024, an increase in profit of $193,000 or 125%. Our gross margin increased by 71 percentage points from a gross loss margin of 66% for the three months ended March 31, 2024 to a gross profit margin of 6% for the three months ended March 31, 2025 primarily due to higher revenue, a decrease in fixed costs as a percent of revenue, offset by higher variable costs as a percent of revenue, as described below. Additionally, total revenue in the three months ended March 31, 2025 and March 31, 2024 included $25,000 and $31,000, respectively, from forfeited, non-refundable deposits from former customers on previously cancelled contracts.
Previous wording
Our fixed costs (which include engineering, service, manufacturing and project management salaries and benefits and manufacturing overhead) totaled $183,000, or 47% of total revenue, for the three months ended September 30, 2024, as compared to $292,000, or 32% of total revenue, for the three months ended September 30, 2023. The decrease of $109,000 was due to a decrease in salaries and benefits of $91,000 and a decrease in fixed overhead of $18,000.
Current wording
Our fixed costs (which include engineering, service, manufacturing and project management salaries and benefits and manufacturing overhead) totaled $88,000, or 12% of total revenue, for the three months ended March 31, 2025, as compared to $254,000, or 108% of total revenue, for the three months ended March 31, 2024. The decrease of $166,000 was due to a decrease in salaries and benefits of $159,000 and a decrease in fixed overhead of $7,000.
Previous wording
Our variable costs (which include the cost of equipment, outside engineering costs, shipping and handling, travel and warranty costs) totaled $278,000, or 71% of total revenue, during the three months ended September 30, 2024, as compared to $726,000, or 80% of total revenue, in the three months ended September 30, 2023. The decrease in variable costs was primarily due to: (i) a decrease in equipment costs of $240,000 driven by lower revenue, (ii) a decrease of $70,000 for outside engineering services, (iii) a decrease in warranty expense of $56,000, due to a reduction in the warranty accrual as a result of lower revenue during the past 18 months, (iv) a decrease in excess and obsolete inventory expense of $52,000, (v) a reduction in travel of $22,000, and (vi) lower shipping and handling and other expenses of $8,000.
Current wording
Our variable costs (which include the cost of equipment, outside engineering costs, shipping and handling, travel and warranty costs) totaled $586,000, or 82% of total revenue, during the three months ended March 31, 2025, as compared to $135,000, or 58% of total revenue, in the three months ended March 31, 2024. The decrease in variable costs was primarily due to: (i) an increase in equipment costs of $409,000 driven by higher revenue, (ii) a decrease in the reduction of the warranty accrual of $87,000, (iii) a decrease in excess and obsolete inventory expense of $53,000, (iv) a reduction in outside engineering services $12,000, offset by (v) increased expense for third party site visits of $18,000.
Previous wording
Operating expenses decreased to $677,000 for the three months ended September 30, 2024, from $703,000 for the three months ended September 30, 2023, a decrease of $26,000, or 4%. The operating expense decrease consisted of: (i) a decrease in selling, general and administrative expenses (“SG&A expenses”) of $5,000, and (ii) a decrease in advertising and marketing expenses of $21,000. These decreases are the result of our cost-cutting measures.
Current wording
Operating expenses increased to $1,113,000 for the three months ended March 31, 2025, from $769,000 for the three months ended March 31, 2024, an increase of $344,000, or 45%. The operating expense increase consisted of: (i) an increase in selling, general and administrative expenses (“SG&A expenses”) of $350,000, offset by (ii) a decrease in advertising and marketing expenses of $6,000. The increase is primarily due to higher professional fees in relation to a potential acquisition.
Previous wording
Our decrease in SG&A expenses for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to: (i) a decrease of $465,000 in salaries and benefits (including stock-based compensation) and other employee related costs, (ii) a decrease in facilities and offices expenses of $42,000, (iii) a decrease in bad debt expense of $38,000, (iv) a reduction in commissions and other sales related expenses of $17,000, (v) a decrease of $7,000 for travel, and (vi) a decrease in depreciation expense of $5,000. These decreases were offset by (i) an increase of $151,000 for accounting and other professional fees, (ii) an increase of $30,000 in business taxes and licenses primarily due to an increase for real estate taxes, (iii) an increase in investor relations expense of $17,000, and (iv) an increase for loss on the disposal of fixed assets of $12,000.
Current wording
Our increase in SG&A expenses for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to: (i) and increase of $361,000 for accounting and other fees, (ii) an increase in investor relations costs of $59,000, (iii) an increase in bad debt expense of $35,000 (due to Q1 2024 including collections on previously reserved receivables), (iv) increased insurance expense of $6,000, (v) higher business taxes and licenses of $6,000, and (vi) miscellaneous other expenses of $5,000. The increases were offset by(i) a decrease in salaries and benefits (including stock compensation) of $92,000, (ii) lower losses on asset disposals of $13,000, (iii) a decrease in facilities and office supplies of $11,000, and (iv) a decrease in depreciation of $6,000.
Previous wording
The decrease in advertising and marketing expenses was primarily due to (i) a decrease in advertising and promotion of $20,000, and (ii) a decrease of $1,000 for outside services and web development.
Current wording
The decrease in advertising and marketing expenses was primarily due to (i) a decrease in advertising and promotion and trade show related expense of $9,000, offset by (ii) an increase of $3,000 for web development.
Previous wording
We recognized an operating loss of $747,000 for the three months ended September 30, 2024, as compared to an operating loss of $807,000 for the three months ended September 30, 2023, a decrease of $60,000 or 7%. The operating loss for the three months ended September 30, 2024 included $4,000 of depreciation expense, compared to $15,000 of non-cash, stock-based compensation, and $7,000 of depreciation expense for the three months ended September 30, 2023. Excluding these non-cash items, our operating loss decreased by $42,000.
Current wording
We recognized an operating loss of $1,074,000 for the three months ended March 31, 2025, as compared to an operating loss of $924,000 for the three months ended March 31, 2024, an increase of $150,000 or 16%. The operating loss for the three months ended March 31, 2025 included $78,000 of non-cash, stock-based compensation and $1,000 in depreciation, compared to $77,000 in non-cash stock-based compensation and $6,000 of depreciation expense for the three months ended March 31, 2024. Excluding these non-cash items, our operating loss increased by $155,000.
Previous wording
We recognized other income (net) of $6,000 for the three months ended September 30, 2024, compared to other income (net) of $8,000 for the three months ended September 30, 2023. Other income for both periods consisted of interest income from a money market account.
Current wording
We recognized other income of $5,000 for the three months ended March 31, 2025, compared to other income of $7,000 for the three months ended March 31, 2024. Other income for both periods consisted of interest income from a money market account.
Previous wording
Overall, we recognized a net loss of $2,127,000 for the nine months ended September 30, 2024, as compared to a net loss of $1,924,000 for the nine months ended September 30, 2023, an increase of $203,000 or 11%. The net loss for the nine months ended September 30, 2024 included $69,000 of non-cash, stock-based compensation, and $14,000 of depreciation expense, compared to $177,000 of non-cash, stock-based compensation, $20,000 of depreciation expense for the nine months ended September 30, 2023. Excluding these non-cash items, our net loss increased by $317,000. This increase in net loss was primarily due to a significant decrease in revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 along with an increase in fixed and variable costs as a percent of revenue.
Current wording
Overall, we recognized a net loss of $1,069,000 for the three months ended March 31, 2025, as compared to a net loss of $917,000 for the three months ended March 31, 2024, an increase of $152,000 or 17%. The net loss for the three months ended March 31, 2025 included $78,000 of non-cash stock-related compensation and $1,000 in depreciation, compared to $77,000 in non-cash stock-related compensation and $6,000 of depreciation expense for the three months ended March 31, 2024. Excluding these non-cash items, our net loss increased by $157,000.
Previous wording
As of September 30, 2024, we had cash and cash equivalents of $10,295,000, compared to cash and cash equivalents of $12,508,000 as of December 31, 2023. The $2,213,000 decrease in cash and cash equivalents during the nine months ended September 30, 2024, was the result of cash used in operations. Our cash is held in bank depository accounts in a financial institution. During the nine months ended September 30, 2024, we held deposits in this financial institution that exceeded the federally insured amount.
Current wording
As of March 31, 2025, we had cash and cash equivalents of $8,707,000, compared to cash and cash equivalents of $9,453,000 as of December 31, 2024. The $745,000 decrease in cash and cash equivalents during the three months ended March 31, 2025, was the result of cash used in operations. Our cash is held in bank depository accounts in a financial institution. During the three months ended March 31, 2025, we held deposits in this financial institution that exceeded the federally insured amount.
Previous wording
As of September 30, 2024, we had accounts receivable (net of allowance for doubtful accounts) of $71,000, contract assets (net of allowance for doubtful accounts) of $224,000, inventory (net of excess and obsolete allowance) of $25,000, and prepaid expenses and other assets of $421,000 (including $128,000 in advance payments on inventory purchases). While we typically require advance payment before we commence engineering services or ship equipment to our customers, we have made exceptions requiring us to record accounts receivable, which carry a risk of non-collectability especially since most of our customers are funded on an as-needed basis to complete facility construction.
Current wording
As of March 31, 2025, we had accounts receivable (net of allowance for doubtful accounts) of $57,000, contract assets (net of allowance for doubtful accounts) of $234,000, inventory (net of excess and obsolete allowance) of $20,000, and prepaid expenses and other assets of $179,000. While we typically require advance payment before we commence engineering services or ship equipment to our customers, we have made exceptions requiring us to record accounts receivable, which carry a risk of non-collectability especially since most of our customers are funded on an as-needed basis to complete facility construction.
Previous wording
As of September 30, 2024, we had total accounts payable and accrued expenses of $364,000, deferred revenue of $469,000, and the current portion of operating lease liability of $133,000. As of September 30, 2024, we had working capital of $10,071,000, compared to working capital of $12,110,000 as of December 31, 2023. The decrease in our working capital was primarily related to (i) a decrease in cash of $2,213,000, (ii) a decrease in inventory (net) of $272,000, partially offset by (iii) a decrease in accounts payable and accrued liabilities of $261,000, (iv) an increase in prepaid expenses and other assets of $108,000, (v) an increase in accounts receivable of $53,000, and (v) a decrease in deferred revenue of $31,000.
Current wording
As of March 31, 2025 we had total accounts payable and accrued expenses of $515,000, deferred revenue of $475,000, and the current portion of operating lease liability of $138,000. As of March 31, 2025, we had working capital of $8,071,000, compared to working capital of $9,064,000 as of December 31, 2024. The decrease in our working capital was primarily related to (i) a decrease in cash of $745,000, (ii) a decrease in prepaid and other expenses of $187,000, (iii) an increase in deferred revenue of $131,000, and (iv) a decrease in the current portion of our right-of-use asset of $28,000, (v) an increase in accounts receivable (net) of $44,000, and (vi) a decrease in accounts payable and accrued liabilities of $36,000.
Previous wording
The following summarizes our approximate cash flows for the nine months ended September 30, 2024 and September 30, 2023:
Current wording
The following summarizes our approximate cash flows for the three months ended March 31, 2025 and March 31, 2024:
Previous wording
We incurred a net loss for the nine months ended September 30, 2024 of $2,127,000 and have an accumulated deficit of $39,318,000 as of September 30, 2024.
Current wording
We incurred a net loss for the three months ended March 31, 2025 of $1,069,000 and have an accumulated deficit of $41,405,000 as of March 31, 2025.
Previous wording
Cash used in operations for the nine months ended September 30, 2024 was $2,213,000 compared to cash used in operating activities of $5,294,000 for the nine months ended September 30, 2023, a decrease of $3,081,000.
Current wording
Cash used in operations for the three months ended March 31, 2025 was $745,000 compared to cash used in operating activities of $909,000 for the three months ended March 31, 2024, a decrease of $164,000.
Previous wording
The decrease in cash used in operating activities during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to: (i) a decrease in cash used to fund working capital of $3,496,000, (ii) an increase in net loss of $203,000, and (iii) a decrease in non-cash operating charges of $211,000.
Current wording
The decrease in cash used in operating activities during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was primarily attributable to: (i) a decrease in cash used to fund working capital of $351,000, (ii) an increase in net loss of $152,000, and (iii) a decrease in non-cash operating charges of $35,000.
Previous wording
The decrease in our working capital was primarily related to (i) a decrease in cash of $2,213,000, (ii) a decrease in inventory (net) of $272,000, partially offset by (iii) a decrease in accounts payable and accrued liabilities of $261,000, (iv) an increase in prepaid expenses and other assets of $108,000, (v) an increase in accounts receivable of $53,000, and (v) a decrease in deferred revenue of $31,000.
Current wording
The decrease in our working capital was primarily related to (i) a decrease in cash of $745,000, (ii) a decrease in prepaid and other expenses of $186,000, (iii) an increase in deferred revenue of $131,000, and (iv) a decrease in the current portion of our right-of-use asset of $28,000, (v) an increase in accounts receivable (net) of $44,000, and (vi) a decrease in accounts payable and accrued liabilities of $36,000.
Previous wording
There were no cash flows from investing activities during the nine months ended September 30, 2024. Cash provided by investing activities during the nine months ended September 30, 2023 was less than $1,000.
Current wording
There were no cash flows from investing activities during the three months ended March 31, 2025 or the three months ended March 31, 2024.
Previous wording
There were no cash flows from financing activities during the nine months ended September 30, 2024 and September 30, 2023.
Current wording
There were no cash flows from financing activities during the three months ended March 31, 2025 and March 31, 2024.
Previous wording
We are required to disclose any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. As of September 30, 2024, we had no off-balance sheet arrangements. During the nine months ended September 30, 2024, we did not engage in any off-balance sheet financing activities other than those included in the “Contractual Payment Obligations” discussed above and those reflected inNote 6 of our condensed consolidated financial statements.
Current wording
We are required to disclose any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. As of March 31, 2025, we had no off-balance sheet arrangements. During the three months ended March 31, 2024, we did not engage in any off-balance sheet financing activities other than those included in the “Contractual Payment Obligations” discussed above and those reflected inNote 6 of our condensed consolidated financial statements.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Revenues and Cost of Goods Sold
Previous report — wording carried elsewhere
Our fixed costs (which include engineering, service, manufacturing and project management salaries and benefits and manufacturing overhead) totaled $643,000, or 27% of total revenue, for the nine months ended September 30, 2024, as compared to $1,002,000, or 15% of total revenue, for the nine months ended September 30, 2023. The decrease of $359,000 was due to a decrease in salaries and benefits (including stock-based compensation) of $310,000 and a decrease in fixed overhead of $49,000.