LATCH(LTCH) - 2023 Q1 - Quarterly Report

Financial Performance - Software revenue for Q1 2023 was $3,973,000, an increase of 46.8% compared to $2,707,000 in Q1 2022[218] - Total revenue for Q1 2023 was $11,150,000, a decrease of 17.7% from $13,556,000 in Q1 2022[218] - Net loss for Q1 2023 was $32,924,000, a reduction of 29.7% from a net loss of $46,832,000 in Q1 2022[218] - Adjusted EBITDA for Q1 2023 was $(24,444,000), improving by 38.3% from $(39,630,000) in Q1 2022[218] - Total revenue for the three months ended March 31, 2023, was $11.15 million, a decrease of $2.4 million (17.7%) compared to the same period in 2022[241] - Net loss for the three months ended March 31, 2023, was $32.924 million, a decrease of $13.908 million (29.7%) compared to the same period in 2022[241] Revenue Breakdown - Hardware revenue decreased by $3.943 million (42.5%) to $5.345 million, while software revenue increased by $1.266 million (46.8%) to $3.973 million[244] Expenses and Cost Management - Total operating expenses decreased by $22.219 million (42.0%) to $30.636 million, primarily due to significant reductions in research and development and sales and marketing expenses[241] - General and administrative expenses are expected to increase through at least 2024 due to ongoing investigations and remediation activities[236] - The company anticipates a decrease in R&D and sales and marketing expenses for the remainder of 2023 due to restructuring initiatives[234][235] Cash and Liquidity - The company had approximately $209.8 million in unrestricted cash and cash equivalents as of March 31, 2023[252] - The company expects to use its current cash and cash equivalents to fund operational cash requirements for at least 12 months from the date of the report[259] - The net change in cash and cash equivalents for the three months ended March 31, 2023, was $6.9 million, compared to $(33.8) million in the same period in 2022[269] - Net cash used in operating activities decreased by $18.0 million to $(25.7) million for the three months ended March 31, 2023, compared to $(43.7) million for the same period in 2022[269] - Net cash provided by investing activities increased by $20.5 million to $32.6 million for the three months ended March 31, 2023, from $12.1 million in the same period in 2022[270] Management and Strategy - The company appointed new interim management on January 11, 2023, following the resignation of the previous management team[212] - The company is focused on evolving its go-to-market strategy to achieve higher sales volumes at lower incremental costs[214] - Investments in research and development are critical for the company to innovate and enhance its product offerings[215] Financial Adjustments and Commitments - The company identified errors in revenue recognition practices, leading to a restatement of financial statements for Q1 2022[210] - The company incurred $8.6 million in restructuring costs during 2022 to align staffing and expenses with sales volumes[254] - The company has unfunded non-cancellable purchase commitments of approximately $5.8 million as of March 31, 2023[257] - The company anticipates significant professional fees related to ongoing investigations and litigation, impacting future capital requirements[255] Debt and Financing - In July 2023, the company issued $22.0 million in unsecured promissory notes as part of the HDW Acquisition, which accrued interest at 10% per annum[256] - The company issued a term loan of $6.0 million with an interest rate of the greater of the prime rate or 6.0%, maturing on July 15, 2029[264] - The company is required to maintain an operating account with Customers Bank to support monthly payments on the new loan[266] - The company is subject to various covenants under the loan agreement, including limitations on incurring additional indebtedness and asset dispositions[267] Accounting and Reporting - There have been no material changes to the company's critical accounting estimates as disclosed in the 2022 Annual Report[273] - There were no off-balance sheet arrangements as of March 31, 2023, that could materially affect the company's financial condition[272] - The company did not conduct any financing activities in the three months ended March 31, 2023, compared to $(2.2) million used in financing activities in the same period in 2022[271]