Sacks Parente Golf(SPGC) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales increased by $1,116,000, or 1,175$1,211,000 for the three months ended September 30, 2024, compared to $95,000 for the same period in 2023[93]. - Gross profit rose to$805,000 for the three months ended September 30, 2024, representing a 1,964% increase from $39,000 in the same period of 2023[92]. - Cost of goods sold increased to$406,000, up 625% from $56,000 for the three months ended September 30, 2023, resulting in a gross margin of 66$2.1 million, or 923%, to approximately $2.4 million for the nine months ended September 30, 2024, compared to$232,000 for the same period in 2023[102]. - Gross profit rose to $1.5 million for the nine months ended September 30, 2024, reflecting a 1,431$98,000 in 2023, with a gross margin of 63%[103]. Expenses - Research and development expenses surged to $201,000, a 1,240$15,000 in the same period of 2023, due to costs associated with the Newton Motion fairway wood shaft[97]. - Selling, general and administrative expenses increased by approximately $499,000 to$1.7 million for the three months ended September 30, 2024, compared to $1.2 million in the same period of 2023[96]. - Operating expenses totaled$5.0 million, a 79% increase from $2.8 million in 2023, driven by a 931$598,000[104][106]. Losses - Loss from operations decreased to $1,090,000 for the three months ended September 30, 2024, compared to$1,171,000 for the same period in 2023, reflecting improved net sales and gross profit[98]. - Loss from operations increased to $3.5 million for the nine months ended September 30, 2024, compared to$2.7 million in 2023, marking a 31% rise[107]. - Net loss decreased to $1,060,000 for the three months ended September 30, 2024, down from$1,197,000 in the same period of 2023[100]. - Net loss for the nine months ended September 30, 2024, was $3.4 million, a 22$2.8 million in 2023[109]. Cash Flow and Liquidity - Cash used in operating activities was $3.4 million for the nine months ended September 30, 2024, a decrease from$3.8 million in 2023[112]. - Cash and cash equivalents on hand as of September 30, 2024, amounted to $1.3 million, expected to last for at least the next 3 months[118]. - The company raised$11.6 million from its initial public offering in August 2023, which has contributed to its liquidity position[116]. - The company incurred net cash used in investing activities of $463,000 for the nine months ended September 30, 2024, compared to$101,000 in 2023[113]. - Interest income was $139,000 for the nine months ended September 30, 2024, compared to interest expense of$68,000 in 2023, reflecting a significant improvement[108]. Stock and Compliance - The company completed a secondary public offering on October 10, 2024, raising approximately $536,000 in net proceeds[81]. - The company received a deficiency letter from NASDAQ regarding the minimum bid price requirement, but successfully regained compliance by August 13, 2024, after a reverse stock split[84][86]. - The Company has never paid cash dividends and does not expect to do so in the foreseeable future, resulting in an expected dividend yield of zero[132]. - The Company is classified as a smaller reporting company and is not required to provide certain disclosures under the Securities Exchange Act[139]. Internal Controls and Reporting - As of September 30, 2024, the Company's disclosure controls and procedures were deemed effective, providing reasonable assurance for timely reporting as per SEC rules[135]. - There were no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2024, that materially affected its effectiveness[136]. - Management acknowledges inherent limitations in the effectiveness of controls, which may not prevent all errors or fraud[137]. Stock Options - The Company estimated the fair value of stock options using the Black-Scholes model, with expected stock volatility based on peer companies in the consumer products industry[132]. - The expected term of stock options granted to nonemployees is equal to the contractual term of the option award[132]. - The risk-free interest rate for stock options is based on the U.S. Treasury yield curve at the time of the award grant[132]. - The fair value of common stock was estimated using various methodologies, reflecting external market conditions and the likelihood of achieving a liquidity event[133]. Legal Matters - The Company has no pending legal proceedings that could materially affect its business or financial condition[139].