Financial Performance - Net revenue for the three months ended September 30, 2020, was $1,634,669, a decrease of 70.5% compared to $5,524,105 in the same period of 2019[16] - Gross profit for the three months ended September 30, 2020, was $525,911, down 66.7% from $1,580,347 in the same quarter of 2019[16] - The company reported a net loss of $270,439 for the three months ended September 30, 2020, compared to a net income of $222,023 in the same period of 2019[16] - Revenue for the nine months ended September 30, 2020, was $5,127,000, a decrease of $6,379,000, or 55% from $11,506,000 for the same period in 2019[187] - Gross profit for the nine months ended September 30, 2020, was $1,257,000, a decrease of 64% from $3,518,000 for the same period in 2019[188] - The company reported an operating loss of $283,000 for the three months ended September 30, 2020, compared to operating income of $277,000 for the same period in 2019, a decrease of $560,000, or 202%[184] - Net loss for the three months ended September 30, 2020, was $270,000, an increase of $492,000, or 222% compared to net income of $222,000 for the same period in 2019[186] - Operating loss for the nine months ended September 30, 2020, was $1,835,000, an increase of $1,326,000, or 261% compared to an operating loss of $508,000 for the same period in 2019[196] - Net loss for the nine months ended September 30, 2020, was $1,822,000, an increase of $1,283,000, or 238% compared to a net loss of $539,000 for the same period in 2019[199] Assets and Liabilities - Total assets increased to $4,656,238 from $4,047,318, representing a growth of 15.0% year-over-year[13] - Total current liabilities increased to $5,241,936 from $3,998,740, an increase of 31.1% year-over-year[13] - Shareholders' equity deficit widened to $(1,421,677) from $(355,631) year-over-year[13] - The company’s accumulated deficit increased to $(27,507,196) from $(25,684,927) year-over-year[13] - The balance of accumulated deficit as of September 30, 2020, was $(27,507,196), compared to $(24,884,918) at the end of the previous year[28] - The company had a working capital deficit of $1,793,000 as of September 30, 2020, compared to a deficit of $1,437,000 as of December 31, 2019[202] Cash Flow - Cash and cash equivalents rose to $2,072,312 from $922,177, an increase of 125.0%[13] - Total cash provided by operating activities for the nine months ended September 30, 2020, was $599,635, down from $1,750,121 in the prior year[28] - Cash provided by operating activities for the nine months ended September 30, 2020, was $600,000, a decrease of $1,150,000 compared to $1,750,000 for the same period in 2019[206] COVID-19 Impact - The company implemented workforce reductions and salary cuts in response to the COVID-19 pandemic, but later reinstated staff following the receipt of loan funds[31][32] - The company experienced disruptions in project implementation and demand due to the COVID-19 pandemic, which is expected to have ongoing adverse effects on sales and operating margins[30] - The company has taken steps to reduce costs and mitigate the impact of the COVID-19 pandemic, although long-term effects remain uncertain[33] - The COVID-19 pandemic has adversely affected demand and disrupted project work, with ongoing uncertainty regarding its long-term impact on the company's operations[143] - The company downsized operations in response to the COVID-19 pandemic, implementing workforce reductions and salary cuts to preserve cash resources[144] Revenue Recognition and Backlog - As of September 30, 2020, the Company's remaining performance obligations, or backlog, was $8,198,000, with 35% attributable to engineering only paid contracts[63] - Backlog at September 30, 2020 was $8,198,000, an increase of $2,606,000 or 29% from June 30, 2020[167] - The company expects to recognize approximately 42% of its Q3 2020 backlog, or $3.5 million, during the remainder of 2020[172] - The Company has significant uncertainty regarding the timing of revenue recognition on its remaining performance obligations due to various external factors[62] Shareholder Information - The Company has 44,007,500 and 61,054,000 potentially dilutive equity instruments outstanding as of September 30, 2020, and 2019, respectively[44] - The company had 22,296,500 outstanding warrants as of September 30, 2020, with a weighted average exercise price of $0.22 and a remaining life of 5 months[129] Going Concern - The company’s financial statements for Q3 2020 are presented on a going concern basis, indicating reliance on normal business operations for asset realization and liability satisfaction[212] - There is substantial doubt regarding the company's ability to continue as a going concern, as noted by the independent registered public accounting firm in its audit opinion for the year ended December 31, 2019[212] - The company's ability to continue as a going concern is contingent upon raising additional capital to fund operations and achieving future profitable operations[212] - There is no assurance that the company will be able to raise sufficient additional capital or generate positive cash flow from operations to meet cash flow needs[212] - Failure to generate positive cash flow or secure alternative cash sources could materially and adversely affect the business and shareholders[212] - The factors mentioned raise substantial doubt about the company's ability to continue as a going concern for one year from the issuance date of the Q3 2020 financial statements[212] - The financial statements do not include any adjustments that might result from the uncertainty regarding the company's going concern status[212]
CEA Industries(CEAD) - 2020 Q3 - Quarterly Report