Genasys (GNSS) - 2024 Q4 - Annual Report

Financial Performance - Revenues decreased by $22,655, or 48.6$26,196 and software revenue up $3,541 compared to fiscal year 2023[111]. - Gross profit for fiscal year 2024 was$10,189, a decrease of $11,573 from the prior year, resulting in a gross margin of 42.4$31,730, an increase of $13,334 compared to the net loss of$18,396 in fiscal year 2023[114]. - Adjusted EBITDA for fiscal year 2024 was $(22,135), compared to$(6,786) in fiscal year 2023, indicating a significant decline in core operating performance[114]. - Operating loss was $11,818 in fiscal year 2024, compared to operating income of$3,240 in fiscal year 2023, attributed to decreased revenue and increased expenses[117]. Revenue Recognition and Accounting Policies - Revenue recognition is based on ASC 606, which outlines a five-step model for recognizing revenue from contracts with customers[106]. - Product revenue is recognized when products are tendered to a carrier for delivery, marking the point when the customer obtains control[107]. - Warranty and maintenance revenues are recognized on a straight-line basis over the warranty period, with other services recognized upon completion[108]. - The company has identified critical accounting policies that significantly impact its financial results, including revenue recognition and inventory valuation[106]. Expenses and Costs - Selling, general and administrative expenses increased by $2,640, or 10.7$1,517, or 18.7%, attributed to an increase in engineering staff and Evertel software development activities[113]. - Other expense, net, increased by $5,409, primarily due to professional service expenses related to a secured term loan agreement[113]. Cash Flow and Financing Activities - Net cash used in operating activities was$19,454 for the year ended September 30, 2024, primarily due to a net loss of $31,730[120]. - Net cash used in investing activities was$8,666, mainly due to $16,206 in purchases of marketable securities and$908 for the Evertel acquisition[120]. - Net cash provided by financing activities was $23,873, driven by$13,698 in net proceeds from a Term Loan and $10,449 from a stock offering[121]. - The company completed a public offering of 5,750,000 shares at$2.00 per share, generating gross proceeds of approximately $11,500[117]. - The company has a share buyback program authorized for up to$5,000, extended through December 31, 2024[118]. Assets and Liabilities - As of September 30, 2024, the company established a full valuation allowance for deferred tax assets, indicating it is not likely to be realized[109]. - The fair value of the term loan and warrant liabilities is measured at each reporting date, with changes recognized in other income (expense)[109]. - The company accounts for business combinations using the acquisition method, recording assets and liabilities at fair value as of the acquisition date[109]. - As of September 30, 2024, the company had aggregate deferred revenue and prepayments from customers of $5,618, reflecting uneven order receipts due to government budget cycles[112]. - Cash and cash equivalents as of September 30, 2024, were$4,945, down from $8,665 as of September 30, 2023[117]. - As of September 30, 2024, the company had$7,945 in short-term marketable securities, up from $1,481 in the previous year[117]. - The principal of the Term Loan is$15,000, payable upon maturity on May 13, 2026, with compliance to all financial covenants as of September 30, 2024[118]. Market and Operational Challenges - The company has been impacted by price increases from suppliers and logistics, as well as inflationary factors such as increased salary, labor, and overhead costs[106]. - The company regularly reviews and adjusts sales prices to offset inflationary impacts, which may affect future gross margins and operating expenses[106]. - Hardware segment revenue decreased by $26,196, or 61.1$16,668, a decrease of $26,196, or 61.1$42,864 in fiscal year 2023[116]. - Software segment revenue increased by $3,541, or 93.2%, driven by a 114.4% rise in recurring revenue, despite a 20.4% decrease in professional services revenue[116].