Financial Performance - Net revenue for the second quarter of 2020 was $3,492,349, down 17.0% from $4,210,393 in the same quarter of 2019[16]. - Gross profit for Q2 2020 was $731,349, a decrease of 49.6% compared to $1,447,792 in Q2 2019[16]. - The net loss for Q2 2020 was $1,551,830, compared to a net income of $139,615 in Q2 2019[16]. - For the six months ended June 30, 2020, the net loss was $1,551,830 compared to a net loss of $760,580 for the same period in 2019[23]. - Revenue for the three months ended June 30, 2020 was $1,682,000, a decrease of $2,528,000, or 60% compared to $4,210,000 for the same period in 2019[163]. - Operating loss for the three months ended June 30, 2020 was $606,000, compared to an operating income of $136,000 for the same period in 2019, an increase of $742,000, or 544%[172]. - Net loss for the three months ended June 30, 2020 was $614,000, compared to a net income of $140,000 for the same period in 2019, an increase of $753,000, or 539%[174]. - Revenue for the six months ended June 30, 2020 was $3,492,000, a decrease of $2,490,000, or 42% compared to $5,982,000 for the same period in 2019[176]. - Operating loss for the six months ended June 30, 2020, was $1,552,000, an increase of 98% compared to a loss of $786,000 for the same period in 2019[186]. - Net loss for the six months ended June 30, 2020, was $1,552,000, representing an increase of 104% from a net loss of $761,000 in the prior year[188]. Assets and Liabilities - Total assets decreased from $4,047,318 in December 31, 2019 to $2,606,989 in June 30, 2020, representing a decline of approximately 35.6%[13]. - Cash and cash equivalents decreased significantly from $922,177 in December 31, 2019 to $235,438 in June 30, 2020, a drop of 74.5%[13]. - Total current liabilities decreased from $3,998,740 in December 31, 2019 to $2,918,683 in June 30, 2020, a reduction of 27.1%[13]. - Total noncurrent liabilities rose to $863,970 in June 30, 2020 from $404,209 in December 31, 2019, an increase of 113.0%[13]. - The accumulated deficit increased to $(27,236,757) as of June 30, 2020, compared to $(25,684,927) at the end of 2019[13]. - Working capital deficit increased to $1,599,000 as of June 30, 2020, from $1,437,000 at the end of 2019[191]. - The company has an accumulated deficit of $27,237,000 as of June 30, 2020[195]. Cash Flow - Cash provided by operating activities for the six months ended June 30, 2020 was $(1,240,739), a decrease from $1,672,293 in the prior year[23]. - Cash used in operating activities was $1,241,000 for the six months ended June 30, 2020, compared to cash provided by operations of $1,672,000 in the same period of 2019, indicating an increase in cash usage of $2,913,000[195]. - The total cash at the end of the period was $235,438, down from $1,925,680 at the end of June 30, 2019[23]. Revenue Recognition and Backlog - For the three months ended June 30, 2020, the company recognized total revenue of $1,682,424, a decrease from $4,210,393 for the same period in 2019, representing a decline of approximately 60%[55]. - For the six months ended June 30, 2020, total revenue was $3,492,349, down from $5,981,623 in the same period of 2019, indicating a decrease of about 42%[55]. - As of June 30, 2020, the company's remaining performance obligations, or backlog, amounted to $5,592,000, with 54% ($3,024,000) attributed to engineering only paid contracts[52]. - The company's backlog as of June 30, 2020, was $5.6 million, a decrease of $3.3 million (or 37%) from March 31, 2020, primarily due to lower net bookings and contract cancellations[154]. - Estimated revenue recognition for the Q2 2020 backlog is approximately 44%, or $2.4 million, expected to be recognized during the remainder of 2020[161]. Operational Challenges - The company has experienced recurring losses since its inception and expects to incur additional losses and cash outflows in the foreseeable future[28]. - Management believes that cash balances and cash flow from operations will be insufficient to fund operations for the next 12 months[28]. - Management expressed substantial doubt about the company's ability to continue as a going concern without raising additional capital[200]. - The company has implemented cost-cutting measures in response to the COVID-19 pandemic, including workforce reductions and salary cuts for executives[133]. Shareholder and Stock Information - The weighted average number of common shares outstanding increased to 233,794,550 in Q2 2020 from 227,635,539 in Q2 2019[16]. - The company issued 6,750,000 shares to settle restricted stock units with a former employee, which mitigated potential tax liabilities[94][101]. - As of June 30, 2020, there were 16,123,100 non-qualified stock options outstanding with a weighted average exercise price of $0.086[105]. - The total unrecognized compensation expense for unvested non-qualified stock options and RSUs was $55,265, expected to be recognized over approximately 1 year[102]. - Effective June 24, 2020, the company issued 2 million non-qualified stock options to newly appointed directors with an exercise price of $0.029[111]. Future Outlook - The company anticipates needing to raise additional funding within the next six months to continue operations and achieve growth targets[202]. - The company aims to reduce reliance on new build facility projects and increase emphasis on retrofit and expansion projects, which typically provide a more predictable revenue stream[147]. - The company plans to broaden its product line to include lower- and mid-cost products to increase its addressable market and sales[138].
CEA Industries(CEAD) - 2020 Q2 - Quarterly Report