What changed in Genasys Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Genasys Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+295 added−250 removedSource: 10-K (2023-12-07) vs 10-K (2022-12-16)
Top changes in Genasys Inc.'s 2023 10-K
295 paragraphs added · 250 removed · 197 edited across 2 sections
- Item 1A. Risk Factors+177 / −151 · 118 edited
- Item 6. [Reserved]+118 / −99 · 79 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
118 edited+59 added−33 removed151 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
118 edited+59 added−33 removed151 unchanged
2022 filing
2023 filing
Biggest changeTowns, Cities, Counties GEM’s scalable notification software is used in communities of all sizes to reach residential populations quickly and directly. GEM is used to issue emergency alerts, provide important instructions, and receive community feedback. IMNS serves communities by providing digital communications through SMS, email, social media, and other channels, and broadcasting audible messages through Genasys speaker system installations.
Biggest changeUsing ALERT command-and- control software, safety warnings can be delivered campus-wide across several channels, or to specific areas and student populations using select channels. Towns, Cities, Counties Genasys Protect’s scalable ALERT notification software is used by communities of all sizes to issue emergency warnings, provide important instructions, and receive community feedback quickly and directly.
Because of the poor intelligibility and limited broadcast range of bullhorns and vehicle PA systems, SWAT team members often had to closely engage with suspects, putting themselves, suspects, and bystanders in harm's way. 5 Many SWAT teams now use LRAD for serving high risk warrants, during hostage and barricaded suspect negotiations, active shooter situations, and other SWAT operations.
Because of the poor intelligibility and limited broadcast range of bullhorns and vehicle PA systems, SWAT team members often had to closely engage with suspects, putting themselves, suspects, and bystanders in harm's way. 5 Many SWAT teams now use LRAD for serving high risk warrants, and during hostage and barricaded suspect negotiations, active shooter situations, and other SWAT operations.
Whether we will be able to sell more of our products will depend on a number of factors, including: • our ability to design and manufacture reliable products that have the features that are required by our customers; • the global economy; • our ability to expand relationships with existing customers and to develop relationships with new customers that will lead to additional orders for our products; 14 • our ability to develop and expand new markets for directed sound products, mobile mass messaging services, and integrated solutions; and • our ability to develop international product distribution directly or through strategic partners.
Whether we will be able to sell more of our products will depend on a number of factors, including: ● our ability to design and manufacture reliable products that have the features that are required by our customers; ● the global economy; ● our ability to expand relationships with existing customers and to develop relationships with new customers that will lead to additional orders for our products; ● our ability to develop and expand new markets for directed sound products, mobile mass messaging services, and integrated solutions; and 14 ● our ability to develop international product distribution directly or through strategic partners.
The process of integrating an acquired business involves risks, including but not limited to: • demands on management related to changes in the size and possible locations of our businesses and employees; • diversion of management's attention from the management of daily operations; • difficulties in the assimilation of different corporate cultures, employees and business practices; • difficulties in conforming the acquired businesses’ accounting policies to ours; • retaining the loyalty and business of the employees or customers of acquired businesses; • retaining employees that may be vital to the integration of acquired businesses or to the future prospects of the combined businesses; • difficulties and unanticipated expenses related to the integration of departments, information technology systems, including accounting systems, technologies, books and records, and procedures, and maintaining uniform standards, such as internal accounting controls, procedures, and policies; • costs and expenses associated with any undisclosed or potential liabilities; • the use of more cash or other financial resources on integration and implementation activities than we expect; and • our ability to avoid labor disruptions in connection with any integration, particularly in connection with any headcount reduction.
The process of integrating an acquired business involves risks, including but not limited to: ● demands on management related to changes in the size and possible locations of our businesses and employees; ● diversion of management's attention from the management of daily operations; ● difficulties in the assimilation of different corporate cultures, employees and business practices; ● difficulties in conforming the acquired businesses’ accounting policies to ours; ● retaining the loyalty and business of the employees or customers of acquired businesses; ● retaining employees that may be vital to the integration of acquired businesses or to the future prospects of the combined businesses; ● difficulties and unanticipated expenses related to the integration of departments and information technology systems, including accounting systems, technologies, books and records, procedures, and maintaining uniform standards, such as internal accounting controls, procedures, and policies; ● costs and expenses associated with any undisclosed or potential liabilities; ● the use of more cash or other financial resources on integration and implementation activities than we expect; and ● our ability to avoid labor disruptions in connection with any integration, particularly in connection with any headcount reduction.
We intend to continue making strategic acquisitions, particularly in the SaaS industry. ● Team Expansion : Along with new businesses, we intend to invest in new engineering, sales, marketing, production, and quality assurance talent to support Genasys’ expected growth. ● Market Expansion : By acquiring Zonehaven and Amika Mobile and adding new sales and marketing personnel with connections to previously untapped markets and locations, we expect our critical communications suite to experience significant sales growth. 2 ● Facilities : Genasys’ research and development offices, located in North America and Europe, feature state-of-the art equipment and facilities that help fuel innovation.
We intend to continue making strategic acquisitions, particularly in the SaaS industry. 2 ● Team Expansion : Along with new businesses, we intend to invest in new engineering, sales, marketing, production, and quality assurance talent to support Genasys’ expected growth. ● Market Expansion : By acquiring Evertel, Zonehaven and Amika Mobile and adding new sales and marketing personnel with connections to previously untapped markets and locations, we expect our critical communications suite to experience significant sales growth. ● Facilities : Genasys’ research and development offices, located in North America and Europe, feature state-of-the art equipment and facilities that help fuel innovation.
Furthermore, there can be no assurance that the Genasys Spain, Amika Mobile and Zonehaven businesses or any other acquired business, product, or technology will be profitable or achieve anticipated revenues and income. Our failure to manage our acquisition and integration strategy successfully could have a material adverse effect on our business, results of operations, and financial condition.
Furthermore, there can be no assurance that the Genasys Spain, Amika Mobile, Zonehaven and Evertel businesses or any other acquired business, product, or technology will be profitable or achieve anticipated revenues and income. Our failure to manage our acquisition and integration strategy successfully could have a material adverse effect on our business, results of operations, and financial condition.
In addition, the acquisition of Genasys Spain, Amika Mobile, Zonehaven and any future businesses could result in the incurrence of additional debt and related interest expense, contingent liabilities, and amortization expenses related to intangible assets, as well as the issuance of our common stock, which could have a material adverse effect on our financial condition, operating results, and cash flow.
In addition, the acquisition of Genasys Spain, Amika Mobile, Zonehaven, Evertel and any future businesses could result in the incurrence of additional debt and related interest expense, contingent liabilities, and amortization expenses related to intangible assets, as well as the issuance of our common stock, which could have a material adverse effect on our financial condition, operating results, and cash flow.
In 2000, he was named Senior Vice President of Raytheon Aircraft Company’s Commercial Aircraft Business division, where he led a staff of 370 sales, marketing and customer service personnel. Mr. Danforth holds a Bachelor of Science in Industrial Technology from the University of Massachusetts Lowell and a Masters in Engineering Management from Western New England College. 11 Dennis D.
In 2000, he was named Senior Vice President of Raytheon Aircraft Company’s Commercial Aircraft Business division, where he led a staff of 370 sales, marketing and customer service personnel. Mr. Danforth holds a Bachelor of Science in Industrial Technology from the University of Massachusetts Lowell and a Masters in Engineering Management from Western New England College. Dennis D.
Our ability to successfully implement our business plan and achieve targeted financial results and other benefits including, among other things, greater market presence and development, and enhancements to our product portfolio and customer base, is dependent on our ability to successfully identify, consummate and integrate acquisitions, including Genasys Spain, Amika Mobile and Zonehaven, as well as other businesses we may acquire in the future.
Our ability to successfully implement our business plan and achieve targeted financial results and other benefits including, among other things, greater market presence and development, and enhancements to our product portfolio and customer base, is dependent on our ability to successfully identify, consummate and integrate acquisitions, including Genasys Spain, Amika Mobile, Zonehaven and Evertel, as well as other businesses we may acquire in the future.
These agreements may not prevent disclosure of confidential information or provide adequate remedies for any breach. Research and Development The software and sound reproduction markets are subject to rapid changes in technology and design with frequent improvements and new product introductions, as well as customized solutions for specific customer applications.
These agreements may not prevent disclosure of confidential information or provide adequate remedies for any breach. 10 Research and Development The software and sound reproduction markets are subject to rapid changes in technology and design with frequent improvements and new product introductions, as well as customized solutions for specific customer applications.
Similarly, we offer a variety of software notification suites, each with unique capabilities. This extensive catalog enables us to provide customized solutions designed to meet our clients' specific needs. ● Global Presence : Genasys has physical offices in North America, Europe, Asia, and the Middle East.
Similarly, we offer a variety of software notification suites, each with unique capabilities. This extensive catalog enables us to provide customized solutions designed to meet our clients' specific needs. ● Global Presence : Genasys has physical offices in North America, Europe, and the Middle East.
These systems are used by government emergency services, schools, universities, and businesses to send emergency information and instructions to people at risk before, during, and after public safety and enterprise threats. Today, the fastest most direct way to share vital information is often through cell phones and computers.
These systems are used by government emergency services, schools, universities, and businesses to send emergency information and instructions to people at risk before, during, and after public safety and enterprise threats. 1 Today, the fastest most direct way to share vital information is often through cell phones and computers.
We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security and critical infrastructure.
We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, enterprise safety, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security and critical infrastructure.
Failure to successfully integrate Genasys Spain, Amika Mobile, Zonehaven or any other acquired business in the future may result in reduced levels of anticipated revenue, earnings, or operating efficiency than might have been achieved if we had not acquired such businesses.
Failure to successfully integrate Genasys Spain, Amika Mobile, Zonehaven, Evertel, or any other acquired business in the future may result in reduced levels of anticipated revenue, earnings, or operating efficiency than might have been achieved if we had not acquired such businesses.
A regional presence enables Genasys' sales and support teams to develop close relationships with customers to best meet their needs while conducting business professionally and efficiently. ● Proven Quality and Support : All Genasys products are rigorously tested and required to meet our exacting standards.
A regional presence enables Genasys' sales and support teams to develop close relationships with customers to best meet their needs while conducting business professionally and efficiently. ● Proven Quality and Support : All Genasys products are rigorously tested to meet our exacting standards.
There can be no assurance that we will be able to successfully integrate the Genasys Spain, Amika Mobile or Zonehaven businesses or any other acquired businesses, products or technologies without substantial expenses, delays or other operational or financial problems.
There can be no assurance that we will be able to successfully integrate the Genasys Spain, Amika Mobile, Zonehaven or Evertel businesses or any other acquired businesses, products or technologies without substantial expenses, delays or other operational or financial problems.
Risks related to global economic instability, including global supply chain issues, inflation, labor costs, and fuel and energy costs, may affect the Company ’ s business. The increasingly volatile global economic environment has created market uncertainty.
Risks related to global economic instability, including global supply chain issues, inflation, labor costs, and fuel and energy costs, may affect the Company ’ s business. The volatile global economic environment has created market uncertainty.
Acquisitions, including our acquisition of Genasys Spain, Amika Mobile and Zonehaven, involve a number of risks, some or all which could have a material adverse effect on our acquired businesses, products or technologies.
Acquisitions, including our acquisition of Genasys Spain, Amika Mobile, Zonehaven and Evertel, involve a number of risks, some or all which could have a material adverse effect on our acquired businesses, products or technologies.
We may not realize the intended benefits of the Genasys Spain, Amika Mobile or Zonehaven acquisitions or the acquisition of other businesses in the future as rapidly as, or to the extent, anticipated by our management.
We may not realize the intended benefits of the Genasys Spain, Amika Mobile, Zonehaven or Evertel acquisitions, or the acquisition of other businesses in the future as rapidly as, or to the extent, anticipated by our management.
Automated integrations include fire system, access control, IPAWS, mobile and desktop panic buttons. Output channels include 2-way SMS, email, pop-ups, callouts, PA speakers, and land mobile radio outputs. IMNS can be used by state, local, or national agencies to deliver emergency alerts and life safety information to residents in certain areas, regionally, or countrywide.
Automated integrations include fire system, access control, IPAWS, and mobile and desktop panic buttons. Output channels include 2-way SMS, email, pop-ups, callouts, PA speakers, and land mobile radio outputs. ALERT can be used by state, local, or national agencies to deliver emergency alerts and life safety information to residents in certain areas, regionally, or countrywide.
Klahn, age 64, was appointed Chief Financial Officer in September 2017. Mr. Klahn has more than 30 years of accounting, finance and operations experience, which includes serving as Controller or CFO at publicly traded companies. He was most recently a Group Controller at Teledyne RD Instruments, a subsidiary of Teledyne Technologies Incorporated, between 2011 and August 2017.
Klahn, age 65, was appointed Chief Financial Officer in September 2017. Mr. Klahn has more than 30 years of accounting, finance and operations experience, which includes serving as Controller or CFO at publicly traded companies. He was most recently a Group Controller at Teledyne RD Instruments, a subsidiary of Teledyne Technologies Incorporated, between 2011 and August 2017.
In fiscal 2023, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments and agencies that desire to integrate our communication technologies into their homeland security and public safety systems.
In fiscal 2024, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments and agencies that desire to integrate our communication technologies into their homeland security and public safety systems.
The Company’s LRAD systems broadcast audible alert tones and exceptionally intelligible voice messages in a focused 30° beam over long distances to specific targets. LRADs were quickly embraced by the U.S. Navy and then other domestic military branches, federal agencies, and police departments, and then throughout the world.
Genasys LRAD systems broadcast audible alert tones and exceptionally intelligible voice messages in a focused 30° beam over long distances to specific targets. LRADs were quickly embraced by the U.S. Navy and then other domestic military branches, federal agencies, and police departments, and then throughout the world.
IMNS alert tones and voice messages cut though mechanical and ambient background noise to be clearly heard and understood, before, during, and in the aftermath of emergency events. LRAD systems enhance the perimeter security by providing a vital first response capability missing from observe-only integrated security installations.
ACOUSTICS alert tones and voice messages cut though mechanical and ambient background noise to be clearly heard and understood, before, during, and in the aftermath of emergency events. LRAD systems enhance perimeter security by providing a vital first response capability missing from observe-only integrated security installations.
These notifications can be delivered throughout a facility or only to areas affected by industrial accidents, hazmat incidents, unauthorized entries, and other life-safety threats. Defense LRADs broadcast audible warning tones and voice messages with exceptional clarity from close range to 5,500 meters.
These notifications can be delivered throughout a facility or only to areas affected by industrial accidents, hazmat incidents, unauthorized entries, and other worker safety threats. Defense LRADs broadcast audible warning tones and voice messages with exceptional clarity from close range to 5,500 meters.
Notable features include hardware and software development laboratories, an acoustic testing chamber, and mechanical design and manufacturing facilities. ● Continued Software Development : Increased software development and new acquisitions have expanded Genasys’ SaaS portfolio. In fiscal year 2023 and beyond, we are focused on the expansion and proliferation of our unified software and hardware platform.
Notable features include hardware and software development laboratories, an acoustic testing chamber, and mechanical design and manufacturing facilities. ● Continued Software Development : Increased software development and new acquisitions have expanded Genasys’ SaaS portfolio. In fiscal year 2024 and beyond, we are focused on the expansion and proliferation of our unified software and hardware platform.
Our Zonehaven software tracks wildfires and other natural or man-made disasters and models how a disaster is expected to move and develop in the critical minutes, hours or days that follow. ● Customized and Focused : Genasys can send specific alerts, pertinent information and instructions to at-risk individuals or populations based on geographic location, group status, and other classifications. ● Multiplatform Redundancy : Alerts can be distributed using text messages, emails, voice calls, push notifications, social media, speaker systems, and other delivery channels, allowing critical communications to reach a greater number of people possible. ● Reach and Clarity : Alerts and notifications transmitted through Genasys speaker systems have unprecedented reach and clarity.
Our evacuation software tracks wildfires and other natural or man-made disasters and models how a disaster is expected to move and develop in the critical minutes, hours or days that follow. ● Customized and Focused : Genasys can send specific alerts, pertinent information and instructions to at-risk individuals or populations based on geographic location, group status, and other classifications. ● Multiplatform Redundancy : Alerts can be distributed using text messages, emails, voice calls, push notifications, social media, speaker systems, and other delivery channels, allowing critical communications to reach the greatest number of people possible. ● Reach and Clarity : Alerts and notifications transmitted through Genasys speaker systems have unprecedented reach and clarity.
While the software and hardware mass notification markets are more mature with many established manufacturers and suppliers, we believe that our advanced technology and unified platform provides opportunities to succeed in the large and growing public safety, emergency warning and critical communications markets.
While the software and hardware mass notification markets are more mature with many established manufacturers and suppliers, we believe that our advanced technology and unified platform provides opportunities to succeed in the large and growing public safety, emergency warning, and Protective Communications markets.
Our operations and those of our suppliers are subject to disruption for a variety of reasons, including COVID-19-related supplier plant shutdowns or slowdowns, transportation delays, work stoppages, labor relations, labor shortages, price inflation, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as supplier bankruptcy, information technology failures, and hazards such as fire, earthquakes, flooding, or other natural disasters.
Our operations and those of our suppliers are subject to disruption for a variety of reasons, including pandemic related supplier plant shutdowns or slowdowns, transportation delays, work stoppages, labor relations, labor shortages, price inflation, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as supplier bankruptcy, information technology failures, and hazards such as fire, earthquakes, flooding, or other natural disasters.
We also sell extended repair and maintenance contracts with terms ranging from one to several years, which provide repair and maintenance services after expiration of the original limited warranty. As of September 30, 2022, we had a warranty reserve of $0.1 million.
We also sell extended repair and maintenance contracts with terms ranging from one to several years, which provide repair and maintenance services after expiration of the original limited warranty. As of September 30, 2023, we had a warranty reserve of $0.1 million.
This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While our management has concluded that our internal control over financial reporting was effective as of September 30, 2022, it is possible that material weaknesses will be identified in the future.
This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While our management has concluded that our internal control over financial reporting was effective as of September 30, 2023, it is possible that material weaknesses will be identified in the future.
Partnering with national governments and mobile telecom networks, NEWS delivers CBC alerts and geo-targeted SMS notifications that can be sent to anyone, anywhere, with no recipient opt-in, registration, or download required. LRAD systems enhance the safety and security of government-owned critical infrastructure including dams, power plants, water treatment plants, and government facilities.
Partnering with national governments and mobile telecom networks, Genasys Protect delivers CBC alerts and geo-targeted SMS notifications that can be sent to anyone, anywhere, with no recipient opt-in, registration, or download required. LRAD systems enhance the safety and security of government-owned critical infrastructure including dams, power plants, water treatment plants, and government facilities.
Genasys emergency management systems constantly receive and analyze new information as a crisis unfolds, leveraging sensor data, dynamic maps, and first responder feedback to deliver notifications that reflect the most up-to-date information.
Genasys emergency management systems are designed to constantly receive and analyze new information as a crisis unfolds, leveraging sensor data, dynamic maps, and first responder feedback to deliver notifications that reflect the most up-to-date information.
GEM can be operated and controlled via a single dashboard that includes two-way polling, duress buttons, field check-ins and recipient locations. GEM enterprise solutions integrate with data sources, including active directories, human resources, visitor management and building control systems to find and reach employees, staff, contractors, temporary workers and visitors.
Genasys Protect can be operated and controlled via a single dashboard that includes two-way polling, duress buttons, field check-ins and recipient locations. Genasys Protect enterprise solutions integrate with data sources, including active directories, human resources, visitor management and building control systems to find and reach employees, staff, contractors, temporary workers and visitors.
Looking Forward: Growth Company ● Acquisitions : In fiscal 2021 we completed acquisitions of Zonehaven, a software-based evacuation and repopulation management platform, and the assets of Amika Mobile (subsequently renamed “Genasys Communications Canada ULC”), a Physical Security Information Management (PSIM) company. These acquisitions, along with the January 2018 addition of Genasys Spain, expanded Genasys’ strong suite of software solutions.
In fiscal 2021, we completed acquisitions of Zonehaven, a software-based evacuation and repopulation management platform, and the assets of Amika Mobile (subsequently renamed “Genasys Communications Canada ULC”), a Physical Security Information Management (PSIM) company. These acquisitions, along with the January 2018 addition of Genasys Spain, expanded Genasys’ strong suite of software solutions.
This includes building on fiscal 2022 domestic defense sales by pursuing further U.S. military opportunities. We also plan to pursue emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.
This includes building on fiscal 2023 domestic defense sales by pursuing further U.S. military opportunities. We also plan to pursue both domestic and international emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.
Realizing that integrating software with the mass notification speakers would provide further technology options and additional functionality, Company engineers developed Genasys' Emergency Management (“GEM”) command-and-control software.
Realizing that integrating software with the mass notification speakers would provide further technology options and additional functionality, Company engineers developed the Genasys Emergency Management (“GEM”) command-and-control software.
In response to a world where communication methods are becoming increasingly digital and mobile, Genasys recently expanded its GEM platform to include multiple software-as-a-service (“SaaS”) solutions.
In response to a world where communication methods are becoming increasingly digital and mobile, Genasys expanded its platform to include multiple software-as-a-service (“SaaS”) solutions.
GEM delivers notifications to employees, contractors, visitors, and guests in corporate offices and at field sites. When integrated with human resources systems, GEM provides employee notifications, guest management systems for contractors and visitors, auto discovery alerts to anyone present on-site, and SMS opt-in for temporary enrollment to receive alerts and notifications.
Genasys Protect delivers notifications to employees, contractors, visitors, and guests in corporate offices and at field sites. When integrated with human resources systems, Genasys Protect provides employee notifications, guest management systems for contractors and visitors, auto discovery alerts to anyone present on-site, and SMS opt-in for temporary enrollment to receive alerts and notifications.
Our reliable, fast, and intuitive solution for sending warnings and information via location-based SMS, CBC, mobile push, text, email, social media, TV, radio, digital displays, sirens and speaker arrays, and our platform’s compatibility with major emergency warning protocols, including IPAWS, WEA, and others, provide additional competitive advantages.
Our reliable, fast, and intuitive solution for sending warnings and information via location-based SMS, CBC, mobile push, text, email, social media, TV, radio, digital displays, sirens and speaker arrays, and our platform’s compatibility with major emergency warning protocols, including IPAWS, Wireless Emergency Alerts (“WEA”), and others, provide additional competitive advantages.
These solutions include Zonehaven® evacuation resources, Integrated Mass Notification System (“IMNS”) networks that feature advanced mass notification powered by GEM command-and-control software, and the Company's National Emergency Warning System (“NEWS”) solution, a software application that works with mobile carriers to send emergency communications to the public with no opt-in required.
These solutions include Zonehaven® evacuation resources, Integrated Mass Notification System (“IMNS”) networks that feature advanced mass notification powered by Genasys’ command-and-control software, and the Company's National Emergency Warning System (“NEWS”) solution that works with mobile carriers to send emergency communications to the public with no opt-in required.
First Response Police and fire departments can use LRAD systems in everyday duties and elevated risk operations to issue warnings, commands, and notifications that are clearly heard and understood above crowd and background noise. Rugged, reliable, and easy to operate, LRAD systems resolve uncertain situations, safeguard the public, and protect first responders.
First Response Police and fire departments are using LRAD systems in everyday duties and elevated risk operations to issue warnings, commands, and notifications that are clearly heard and understood above crowd, engine and background noise. Rugged, reliable, and easy to operate, LRAD systems resolve uncertain situations, safeguard the public, and protect first responders.
Principal factors that could affect the availability of our internally generated funds include: • failure of sales to government, military and commercial markets to meet planned projections; • government spending levels impacting sales of our products; • political uncertainty; • foreign currency fluctuations; • working capital requirements to support business growth; • our ability to control spending; • our ability to integrate future acquisitions; • management of new business opportunities; • introduction of new competing technologies; • product mix and effect on margins; • acceptance of our existing and future products in existing and new markets; and • impact of COVID-19 on global market conditions.
Principal factors that could affect the availability of our internally generated funds include: ● failure of sales to government, military and commercial markets to meet planned projections; ● government spending levels impacting sales of our products; ● political uncertainty; ● foreign currency fluctuations; ● working capital requirements to support business growth; ● our ability to control spending; ● our ability to integrate future acquisitions; ● management of new business opportunities; ● introduction of new competing technologies; ● product mix and effect on margins; and ● acceptance of our existing and future products in existing and new markets.
Our margins could be impacted as we expand into the emergency response and mass notification market. Our sales strategy for fiscal year 2023 and beyond is to increase our share of the growing emergency response and mass notification market with our critical communications solutions. A number of large companies currently have a substantial share of the market.
Our margins could be impacted as we expand into the emergency response and mass notification market. Our sales strategy for fiscal year 2024 and beyond is to increase our share of the growing emergency response and mass notification market with our Protective Communications solutions. A number of large companies currently have a substantial share of the market.
In addition to providing real-time safety alerts and notifications through multiple channels, GEM can provide service outage, system maintenance, and other utility customer communications. IMNS is being used for emergency warning, industrial safety notification, and facility public address. IMNS can be integrated with gas detection and other sensors to provide automated alerts that protect workers and minimize infrastructure damage.
In addition to providing real-time safety alerts and notifications through multiple channels, Genasys Protect provides service outage, system maintenance, and other utility customer communications. ACOUSTICS is being used for emergency warning, industrial safety notification, and facility public address. ACOUSTICS can be integrated with gas detection and other sensors to provide automated alerts that protect workers and minimize infrastructure damage.
IMNS gives operators the ability to send critical alerts and notifications from emergency operations centers, and authorized computers or smart phones. Emergency alerts and information can be sent via individual, grouped or networked IMNS installations, text messages, emails, IPAWS, desktop alerts, television, voice calls, and social media.
ACOUSTICS gives operators the ability to send critical alerts and notifications from emergency operations centers, and authorized computers or smart phones. Emergency alerts and information can be sent via individual, grouped or networked ACOUSTICS installations, text messages, emails, IPAWS, desktop alerts, TV, voice calls, and social media.
In fiscal year 2022, direct and indirect sales to the U.S. government accounted for approximately 71% of our total net sales, compared with 68% of our total net sales in fiscal year 2021, and 64% in fiscal year 2020. Changes in defense spending could have an adverse effect on our current and future revenues.
In fiscal year 2023, direct and indirect sales to the U.S. government accounted for approximately 59% of our total net sales, compared with 71% of our total net sales in fiscal year 2022, and 68% in fiscal year 2021. Changes in defense spending could have an adverse effect on our current and future revenues.
We have previously experienced, and may in the future experience, reductions in sales of older generation products as customers delay or defer purchases in anticipation of new product introductions. We have established reserves for slow moving or obsolete inventory of $0.9 million as of September 30, 2022.
We have previously experienced, and may in the future experience, reductions in sales of older generation products as customers delay or defer purchases in anticipation of new product introductions. We have established reserves for slow moving or obsolete inventory of $0.8 million as of September 30, 2023.
GEM Public Safety Case Study In fiscal 2022, cities and counties in Arizona, Arkansas, California, Colorado, Indiana, Mississippi, Missouri, Oklahoma, Pennsylvania, and Texas selected GEM to help safeguard millions of residents during severe storms, tornadoes, wildfires, flooding, debris flows, tsunamis, active shooter incidents, epidemics, civil unrest, and other disasters and life safety threats.
ALERT Public Safety Case Study In fiscal 2023, cities and counties in Arizona, Arkansas, California, Colorado, Indiana, Mississippi, Missouri, Oklahoma, Pennsylvania, South Carolina, and Texas selected GEM to help safeguard millions of residents during severe storms, tornadoes, wildfires, flooding, debris flows, tsunamis, active shooter incidents, epidemics, civil unrest, and other disasters and life safety threats.
LRAD systems are portable and adaptable in most any situation to provide clear voice broadcasts over long distances. By effectively communicating from safe standoff distances, LRAD helps resolve uncertain situations, safeguards operators and protects the public. Applications Government GEM provides state, local, and federal agencies a feature-rich system that combines physical security integrations with multichannel emergency alerting.
LRAD systems are portable and adaptable in most any situation to provide clear voice broadcasts over long distances. By effectively communicating from safe standoff distances, LRAD helps resolve uncertain situations, safeguards operators, and protects the public. End Markets Government Genasys Protect provides state, local, and federal agencies with a feature-rich system that combines physical security integrations with multichannel emergency alerting.
Wildlife & Assets Certain facilities and infrastructure face challenges from wildlife that can threaten assets or pose health risks to employees and/or local populations. LRADs are easily programmed to broadcast a near infinite variety of tones and predator calls to safely deter and protect wildlife from potential hazards and help prevent habituation.
Wildlife & Assets Certain facilities and infrastructure face wildlife challenges that can threaten assets or pose health risks to employees and/or local populations. LRADs are easily programmed to broadcast a near infinite variety of tones and predator calls to help prevent habituation, safely deter and protect wildlife from potential hazards, and humanely move wildlife away from critical assets and people.
In fiscal years 2022 and 2021, revenues outside of the U.S. accounted for approximately 15% and 19% of net revenues, respectively. The risks inherent in international trade may reduce our international sales and harm our business and the businesses of our customers and our suppliers.
In fiscal years 2023 and 2022, revenues outside of the U.S. accounted for approximately 22% and 15% of net revenues, respectively. The risks inherent in international trade may reduce our international sales and harm our business and the businesses of our customers and our suppliers.
We intend to invest engineering resources to enhance our GEM, Zonehaven, and NEWS software solutions to compete for larger emergency warning and critical communications business opportunities. We are also configuring alternative solutions to achieve lower price points to meet the needs of certain customers or applications.
We intend to invest engineering resources to enhance our Genasys Protect software solutions to compete for larger emergency warning and critical communications business opportunities. We are also configuring alternative solutions to achieve lower price points to meet the needs of certain customers or applications.
Our research and development strategy includes incorporating further innovations and capabilities into our GEM, IMNS, Zonehaven, NEWS and LRAD products, systems, and solutions to meet the needs of our target markets. Our GEM, Zonehaven and NEWS software solutions are more complex offerings. We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities.
Our research and development strategy includes incorporating further innovations and capabilities into our Genasys Protect and LRAD products, systems, and solutions to meet the needs of our target markets. Our Genasys Protect software solutions are more complex offerings. We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities.
We have historically had a high concentration of revenues from a limited number of customers. We expect to continue to be dependent on a limited number of customers. In fiscal year 2022, one customer that accounted for 68% of revenues and no other customers accounted for more than 10% of revenues.
We have historically had a high concentration of revenues from a limited number of customers. We expect to continue to be dependent on a limited number of customers. In fiscal year 2023, one customer accounted for 54% of revenues and no other customers accounted for more than 10% of revenues.
By providing the only SaaS platform that unifies sensors and IoT inputs with multichannel, multiagency alerting and notifications, Genasys seeks to deliver reliable, fast, and intuitive solutions for creating and disseminating geolocation-targeted warnings, information and instructions before, during, and after public safety and ennterprise threats.
By providing the only SaaS platform that unifies sensors and IoT inputs with geographically-specific multichannel, multiagency alerting and notifications, Genasys seeks to deliver reliable, fast, and intuitive solutions for creating and disseminating warnings, information and instructions before, during, and after public safety and enterprise threats.
Customer Concentration For the fiscal year ended September 30, 2022, one customer accounted for 68% of revenues, with no other single customer accounting for more than 10% of revenues. For the fiscal year ended September 30, 2021, one customer accounted for 58% of revenues, with no other single customer accounting for more than 10% of revenues.
Customer Concentration For the fiscal year ended September 30, 2023, one customer accounted for 54% of revenues, with no other single customer accounting for more than 10% of revenues. For the fiscal year ended September 30, 2022, one customer accounted for 68% of revenues, with no other single customer accounting for more than 10% of revenues.
Zonehaven emergency services include notifications, alerts, and instructions sent directly to community members through several channels, including SMS, email, Waze, and more. Industrial Facilities When integrated with software and/or hardware sensors, IMNS provides facility managers actionable data and information to either remotely or automatically initiate critical safety notifications.
Genasys Protect emergency services include notifications, alerts, and instructions sent directly to community members through several channels, including SMS, email, Waze, and more. Industrial Facilities When integrated with software and/or hardware sensors, ACOUSTICS provide facility managers actionable data and information to either remotely or automatically initiate critical safety notifications.
Zonehaven is used by communities and counties to create disaster response plans, track emergency events, and execute timely emergency evacuations and orderly repopulations. Zonehaven allows emergency services to effectively collaborate across jurisdictions to respond quickly and efficiently to disasters.
EVAC is used by communities and counties to create disaster response plans, track emergency events, and execute timely emergency evacuations and orderly repopulations. CONNECT and EVAC allow emergency services to effectively collaborate across jurisdictions to respond quickly and efficiently to disasters.
(“Genasys Spain”), on October 2, 2020, we acquired substantially all of the assets and business of Amika Mobile Corporation (“Amika Mobile”) and on June 7, 2021, we completed the acquisition of Zonehaven Inc. (“Zonehaven”).
(“Genasys Spain”), on October 2, 2020, we acquired substantially all of the assets and business of Amika Mobile Corporation (“Amika Mobile”), on June 7, 2021, we completed the acquisition of Zonehaven Inc. (“Zonehaven”) and on October 4, 2023, we completed the acquisition of Evertel Technologies (“Evertel”).
IMNS Case Study Faced with wildfires, flooding, debris flows, earthquakes, tsunamis, severe weather and other public safety threats, a California beach city selected IMNS to deliver emergency alerts and notifications to its 23,000 residents and 6 million annual visitors. 21 IMNS installations are in place throughout the city with more installations planned.
ACOUSTICS Case Study Faced with wildfires, flooding, debris flows, earthquakes, tsunamis, severe weather and other public safety threats, the city of Laguna Beach, California, selected ACOUSTICS to deliver emergency alerts and notifications to its 23,000 residents and 6 million annual visitors. More than 20 ACOUSTICS installations are in place throughout the city with more installations planned.
Our products, systems and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments. Genasys has developed a global market and an increased demand for LRADs and advanced mass notification speakers. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility and product reliability.
Our products, systems and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments. 7 Genasys has developed a global market and an increasing demand for LRAD communications systems. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility and product reliability.
We intend to increase the use of our trademarks throughout our product distribution chain and believe growing brand awareness will assist in expanding our business. We believe our reputation for technological expertise, quality products, and strong service and support provide us competitive advantages.
We actively promote our brands and products through our website, trade shows, and advertising. We intend to increase the use of our trademarks throughout our product distribution chain and believe growing brand awareness will assist in expanding our business. We believe our reputation for technological expertise, quality products, and strong service and support provide us competitive advantages.
LRAD systems are being used for commercial security applications at large data centers, publicly-owned critical infrastructure, and other enterprise facilities. Gas, Oil, Utilities GEM integrates with a variety of industrial technologies, including gas leak sensors, 'man down' alarms, access control systems, and badge scanners for workforce safety and accountability.
LRAD systems are being used for commercial security applications at large data centers, manufacturing plants, and other enterprise facilities. Gas, Oil, Utilities Genasys Protect integrates with a variety of industrial technologies, including gas leak sensors, 'man down' alarms, access control systems, and badge scanners for workforce safety and accountability.
As of September 30, 2022, the exercise prices for the options ranged from $1.31 to $8.03 per share.
As of September 30, 2023, the exercise prices for the options ranged from $1.51 to $8.03 per share.
GEM provides full redundancy and high resilience in workforce safety and messaging during everyday duties and critical business events.
Enterprise Genasys Protect provides full redundancy and high resilience in workforce safety and messaging during everyday duties and critical business events.
Similar issues apply to sales to international governments. We have no assurance that military interest in communication devices to minimize unnecessary use of force will continue or will provide future growth opportunities for our business. The conflict between Russia and Ukraine and the related implications may negatively impact our operations. In February 2022, Russia invaded Ukraine.
Similar issues apply to sales to international governments. We have no assurance that military interest in communication devices to minimize unnecessary use of force will continue or will provide future growth opportunities for our business. Worldwide armed conflicts and the related implications may negatively impact our operations.
We continue to implement rigorous manufacturing and quality processes to track production and field failures. We also perform third-party testing and certification of our products to ensure that they meet rigorous military and commercial specifications. We implement design and component changes periodically to reduce our product costs and improve product reliability and manufacturability.
We also perform third-party testing and certification of our products to ensure that they meet rigorous military and commercial specifications. We implement design and component changes periodically to reduce our product costs and improve product reliability and manufacturability.
Genasys speakers attained a score of 0.95 out of 1.0 on the Speech Transmission Index, considered excellent by the International Electrotechnical Commission. ● Reliable and Resilient : Genasys’ hardware products are made with military-grade material and undergo extensive laboratory testing to ensure reliability and durability in any environment, no matter the conditions. ● Extensive Catalog : Genasys offers multiple acoustic device and mass notification speaker options of varying ranges, sizes, weights, and colors.
Genasys speakers attained an STI score of 0.95 out of 1.0, considered excellent by the International Electrotechnical Commission. ● Reliable and Resilient : Genasys’ hardware products are made with military-grade materials and undergo extensive laboratory testing seeking to ensure reliability and durability in most any environment, regardless of the conditions. ● Extensive Catalog : Genasys offers multiple acoustic device and mass notification speaker options of varying ranges, sizes, weights, and colors.
For the fiscal years ended September 30, 2022 and 2021, we spent approximately $7.0 million and $4.9 million, respectively, on company-sponsored research and development.
For the fiscal years ended September 30, 2023 and 2022, we spent approximately $8.1 million and $7.0 million, respectively, on company-sponsored research and development.
LRAD systems have since become the de facto standard of the AHD industry. Genasys continues to develop life safety communication solutions by innovating and enhancing the critical communication industry's only unified software and hardware platform.
LRAD systems have since become the de facto standard of the AHD industry. Genasys continues to develop life safety communication solutions by innovating and enhancing the emergency warning and mass notification industry's only unified Protective Communications platform.
Danforth, age 63, was appointed Chief Executive Officer in August 2016. Mr. Danforth formed the strategic business consulting firm, RsD Aero, Ltd., in 2014, which provided consulting services for the Defense, Aerospace, Space and Transportation sectors, with an emphasis on M&A and Transatlantic trade.
Danforth formed the strategic business consulting firm, RsD Aero, Ltd., in 2014, which provided consulting services for the Defense, Aerospace, Space and Transportation sectors, with an emphasis on M&A and Transatlantic trade.
Department of Commerce export controls, local government regulations and procurement policies and practices (including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings). We maintain controls and procedures to comply with laws and regulations associated with our international operations.
Department of Commerce export controls, local government regulations and procurement policies and practices (including regulations relating to import-export control, investments, exchange controls, and repatriation of earnings). We maintain controls and procedures to comply with laws and regulations associated with our international operations. If we are unable to remain compliant with such laws and regulations, our business may be adversely affected.
Risks Related to Our Capital Stock Sales of common stock issuable on the exercise of outstanding options, may depress the price of our common stock. As of September 30, 2022, we had outstanding options granted to our employees, consultants, advisors, and directors to purchase 3,940,899 shares of our common stock and we had 343,175 restricted stock units outstanding.
Risks Related to Our Capital Stock Sales of common stock issuable on the exercise of outstanding options, may depress the price of our common stock. As of September 30, 2023, we had outstanding options granted to our employees, consultants, advisors, and directors to purchase 2,904,522 shares of our common stock and we had 379,597 restricted stock units outstanding.
We believe our LRAD product line has demonstrated acceptance, has performed extremely well in harsh environments, and can continue to compete on the basis of technical features, performance, ease of use, quality and cost. As we continue to grow this market, future competitors may enter, which could impact our competitiveness.
We believe our LRAD product line has demonstrated acceptance, has performed extremely well in harsh environments, and can continue to compete on the basis of technical features, performance, ease of use, quality and cost.
Our revenues to date have relied on a few major customers. The loss of any customer could have a materially adverse effect on our financial condition, results of operations, and cash flows.
Our revenues to date have relied on a few major customers. The loss of any customer could have a materially adverse effect on our financial condition, results of operations, and cash flows. We have made progress diversifying our revenues and expect to continue to do so in future periods.
During wildfires, flooding, tornadoes, hurricanes and other emergencies, power and telecom outages frequently disrupt legacy emergency warning systems. Genasys’ speaker systems are made with rugged, military-grade materials that can withstand the elements, and feature solar power, satellite connectivity, and battery backup that enable emergency services personnel to disseminate critical information even when power and telecommunications infrastructure goes down.
Genasys’ ACOUSTICS systems are made with rugged, military-grade materials that can withstand the elements, and feature solar power, satellite connectivity, and battery backup options that enable emergency services personnel to disseminate critical information even when power and telecommunications infrastructure goes down.
Human Capital As of September 30, 2022, we employed a total of 172 full-time employees, of which 94 were located in the United States and 78 were located internationally. Our full-time employees include, 93 in engineering, 22 in production, quality assurance and materials control, 18 in general and administrative and 39 in sales and marketing.
Human Capital As of September 30, 2023, we employed a total of 187 full-time employees, of which 105 were located in the United States and 82 were located internationally. Our full-time employees include; 90 in engineering, 27 in production, quality assurance and materials control, 20 in general and administrative and 50 in sales and marketing.
Background Genasys entered the critical communications arena following the October 2000 attack on the USS Cole, which led to the development of the Long Range Acoustic Device® (“LRAD®”), an Acoustic Hailing Device (“AHD”) capable of communicating to and determining the intent of potential threats from a safe distance.
Background Genasys entered the Protective Communications market following the October 2000 attack on the USS Cole, which led to the development of the LRAD, an AHD capable of communicating to and determining the intent of potential threats from a safe distance.
Enterprise GEM provides full redundancy and high resilience in workforce safety and messaging during everyday duties and critical business events. GEM’s accountability and real-time situational awareness translates to effective communications that can be delivered via voice calls, SMS messages, emails, desktop alerts, WhatsApp, and other corporate communication channels to reach workers, on-premises visitors, and contractors with no opt-in required.
Genasys Protect’s accountability and real-time situational awareness translates to effective communications that can be delivered via voice calls, SMS messages, emails, desktop alerts, WhatsApp, and other corporate communication channels to reach workers, on-premises visitors, and contractors with no opt-in required.
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Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
79 edited+39 added−20 removed70 unchanged
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
79 edited+39 added−20 removed70 unchanged
2022 filing
2023 filing
Biggest changeYears ended September 30, 2022 September 30, 2021 % of % of Total Total Fav(Unfav) Amount Revenue Amount Revenue Amount % Revenues: Product sales $ 48,637 90.0 % $ 41,602 88.5 % $ 7,035 16.9 % Contract and other 5,398 10.0 % 5,401 11.5 % (3 ) (0.1 %) Total revenues 54,035 100.0 % 47,003 100.0 % 7,032 15.0 % Cost of revenues 27,693 51.3 % 23,577 50.2 % (4,116 ) (17.5 %) Gross Profit 26,342 48.7 % 23,426 49.8 % 2,916 12.4 % Operating expenses Selling, general and administrative 21,688 40.1 % 17,424 37.1 % (4,264 ) (24.5 %) Goodwill impairment 13,162 24.4 % - 0.0 % (13,162 ) (100.0 %) Research and development 7,023 13.0 % 4,918 10.5 % (2,105 ) (42.8 %) Total operating expenses 41,873 77.5 % 22,342 47.5 % (19,531 ) (87.4 %) (Loss) income from operations (15,531 ) (28.7 %) 1,084 2.3 % (16,615 ) (1532.7 %) Other income, net 60 0.1 % 54 0.1 % 6 11.1 % (Loss) income before income taxes (15,471 ) (28.6 %) 1,138 2.4 % (16,609 ) (1459.5 %) Income tax expense 741 1.4 % 434 0.9 % (307 ) (70.7 %) Net loss $ (16,212 ) (30.0 %) $ 704 1.5 % $ (16,916 ) (2402.8 %) Net revenues Hardware $ 50,938 94.3 % $ 44,233 94.1 % 6,705 15.2 % Software 3,097 5.7 % 2,770 5.9 % 327 11.8 % Total net revenues $ 54,035 100.0 % $ 47,003 100.0 % $ 7,032 15.0 % Revenues Revenues increased $7.0 million, or 15%, in the fiscal year ended September 30, 2022.
Biggest changeYears Ended September 30, 2023 September 30, 2022 % of % of Total Total Fav(Unfav) Amount Revenue Amount Revenue Amount % Revenues: Product revenue $ 40,128 86.0 % $ 48,637 90.0 % $ (8,509 ) (17.5 %) Contract and other 6,535 14.0 % 5,398 10.0 % 1,137 21.1 % Total revenues 46,663 100.0 % 54,035 100.0 % (7,372 ) (13.6 %) Cost of revenues 24,901 53.4 % 26,759 49.5 % 1,858 6.9 % Gross Profit 21,762 46.6 % 27,276 50.5 % (5,514 ) (20.2 %) Operating expenses Selling, general and administrative 24,621 52.8 % 22,635 41.9 % (1,986 ) (8.8 %) Impairment of goodwill - 0.0 % 13,162 24.4 % 13,162 100.0 % Research and development 8,127 17.4 % 7,010 13.0 % (1,117 ) (15.9 %) Total operating expenses 32,748 70.2 % 42,807 79.2 % 10,059 23.5 % Loss from operations (10,986 ) (23.5 %) (15,531 ) (28.7 %) 4,545 (29.3 %) Other(expense) income, net (10 ) (0.0 %) 60 0.1 % (70 ) (116.7 %) Loss before income taxes (10,996 ) (23.6 %) (15,471 ) (28.6 %) 4,475 (28.9 %) Income tax expense 7,400 15.9 % 741 1.4 % (6,659 ) (898.7 %) Net loss $ (18,396 ) (39.4 %) $ (16,212 ) (30.0 %) $ (2,184 ) 13.5 % Net revenue Hardware $ 42,864 91.9 % $ 50,938 94.3 % (8,074 ) (15.9 %) Software 3,799 8.1 % 3,097 5.7 % 702 22.7 % Total net revenue $ 46,663 100.0 % $ 54,035 100.0 % $ (7,372 ) (13.6 %) Revenues Revenues decreased $7,372 in the fiscal year ended September 30, 2023, compared with the prior year.
The Company is party to an employment agreement with our chief executive officer that provides for severance benefits, including twelve months’ salary and health benefits, a pro-rata share of his annual cash bonus for the fiscal year in which the termination occurs to which he would have become entitled had he remained employed through the end of the fiscal year, and vesting of a portion of stock options held by at the time of termination.
The Company is party to an employment agreement with our chief executive officer that provides for severance benefits, including twelve months’ salary and health benefits, a pro-rata share of his annual cash bonus for the fiscal year in which the termination occurs to which he would have become entitled had he remained employed through the end of the fiscal year, and vesting of a portion of stock options held by the employee at the time of termination.
We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security, and critical infrastructure.
We believe we have strong market opportunities for our product offerings throughout the world in the defense, public safety, emergency warning, mass notification, critical event management, enterprise safety, and law enforcement sectors as a result of increasing threats to government, commerce, law enforcement, homeland security, and critical infrastructure.
Information requested by this Item is not included as we are electing scaled disclosure requirements available to Smaller Reporting Companies. Item 8. Financial Statements and Supplementary Data. The financial statements required by this item begin on page F-1 with the index to financial statements followed by the consolidated financial statements. Item 9.
Information requested by this Item is not included as we are electing scaled disclosure requirements available to Smaller Reporting Companies. Item 8. Financial Statements and Supplementary Data. The financial statements required by this item begin on page F-1 with the index to financial statements followed by the consolidated financial statements. 35 Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There have been no disagreements or any reportable events requiring disclosure under Item 304(b) of Regulation S-K. 34 Item 9A. Controls and Procedures.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There have been no disagreements or any reportable events requiring disclosure under Item 304(b) of Regulation S-K. Item 9A. Controls and Procedures.
Our products, systems, and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments. 25 Genasys has developed a global market and an increased demand for LRADs and advanced mass notification speakers. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility, and product reliability.
Our products, systems, and solutions also have many applications within the fire rescue, maritime, asset protection, and wildlife control and preservation business segments. 26 Genasys has developed a global market and an increased demand for LRADs and advanced mass notification speakers. We have a reputation for producing quality products that feature industry-leading broadcast area coverage, vocal intelligibility, and product reliability.
The proliferation of natural and man-made disasters, emergency events, and civil unrest require technologically advanced, multi-channel solutions to deliver clear and timely critical communications to help keep people safe during crisis situations. Businesses are also incorporating critical communication and emergency management systems that locate and help safeguard employees when crises occur.
The proliferation of natural and man-made disasters, crisis situations, and civil unrest require technologically advanced, multi-channel solutions to deliver clear and timely protective communications to help keep people safe during critical events. Businesses are also incorporating protective communication and emergency management systems that locate and help safeguard employees and infrastructure when crises occur.
In general, elements in such arrangements are also sold on a stand-alone basis and stand-alone selling prices are available. 27 Revenue is allocated to each deliverable based on the fair value of each individual element and is recognized when the revenue recognition criteria described above are met, except for time-based licenses, which are not unbundled.
In general, elements in such arrangements are also sold on a stand-alone basis and stand-alone selling prices are available. 28 Revenue is allocated to each deliverable based on the fair value of each individual element and is recognized when the revenue recognition criteria described above are met, except for time-based licenses, which are not unbundled.
In fiscal 2023, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments and agencies that desire to integrate our communication technologies into their homeland security and public safety systems.
In fiscal 2024, we intend to continue pursuing domestic and international business opportunities with the support of business development consultants, key representatives, and resellers. We plan to grow our revenues through increased direct sales to governments and agencies that desire to integrate our communication technologies into their homeland security and public safety systems.
This includes building on fiscal 2022 domestic defense sales by pursuing further U.S. military opportunities. We also plan to pursue emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.
This includes building on fiscal 2023 domestic defense sales by pursuing further U.S. military opportunities. We also plan to pursue domestic and international emergency warning, enterprise and critical event management, government, law enforcement, fire rescue, homeland and international security, private and commercial security, border security, maritime security, and wildlife preservation and control business opportunities.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2022, based on the guidelines established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2023, based on the guidelines established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Actual results may differ from these estimates under different assumptions or conditions. 26 Revenue Recognition Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), outlines a, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance, including industry-specific guidance.
Actual results may differ from these estimates under different assumptions or conditions. 27 Revenue Recognition Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance, including industry-specific guidance.
Changes in Internal Controls There have been no changes in our internal control over financial reporting since September 30, 2021, in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Changes in Internal Controls There have been no changes in our internal control over financial reporting since September 30, 2022, in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Although we do not believe that inflation has had a material impact on our financial results through September 30, 2022, sustained or increased inflation in the future may have a negative effect on our ability to achieve certain expectations in gross margin and operating expenses.
Although we do not believe that inflation has had a material impact on our financial results through September 30, 2023, sustained or increased inflation in the future may have a negative effect on our ability to achieve certain expectations in gross margin and operating expenses.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2022 and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023 and, based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.
A large number of components and sub-assemblies manufactured by outside suppliers within our supply chain are produced within 50 miles of our facility. We do not source component parts from suppliers in China. It is likely that some of our suppliers source parts in China.
A large number of LRAD and ACOUSTICS components and sub-assemblies manufactured by outside suppliers within our supply chain are produced within 50 miles of our facility. We do not source component parts from suppliers in China. It is likely that some of our suppliers source parts in China.
Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2022. This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2023. This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Because of these and other limitations, you should consider adjusted EBITDA alongside our other U.S. GAAP-based financial performance measures, net income, and our other U.S. GAAP financial results. 31 The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable U.S.
Because of these and other limitations, you should consider adjusted EBITDA alongside our other U.S. GAAP-based financial performance measures, net income, and our other U.S. GAAP financial results. 32 The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable U.S.
Refer to Note 18, Segment Information, in our consolidated financial statements for further discussion. 29 Comparison of Results of Operations for Fiscal Years Ended September 30, 2022 and 2021 The following table provides for the periods indicated certain items of our consolidated statements of operations expressed in thousands of dollars and as a percentage of net sales.
Refer to Note 18, Segment Information, in our consolidated financial statements for further discussion. 30 Comparison of Results of Operations for Fiscal Years Ended September 30, 2023 and 2022 The following table provides for the periods indicated certain items of our consolidated statements of operations expressed in thousands of dollars and as a percentage of net sales.
For reporting units where we perform the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value. An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit. Derivatives.
For reporting units where we perform the quantitative goodwill impairment test, an impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair value. An impairment loss cannot exceed the total amount of goodwill allocated to the reporting unit. Accrued Expenses.
Other than cash and expected future cash flows from operating activities in subsequent periods and the line of credit, we have no other unused sources of liquidity at this time. 32 Principal factors that could affect the availability of our internally generated funds include: • ability to meet sales projections; • government spending levels; • introduction of competing technologies; • product mix and effect on margins; • ability to reduce and manage inventory levels; and • product acceptance in new markets.
Other than cash, proceeds from the underwritten public offering, and expected future cash flows from operating activities in subsequent periods, we have no other unused sources of liquidity at this time. 33 Principal factors that could affect the availability of our internally generated funds include: ● ability to meet sales projections; ● government spending levels; ● introduction of competing technologies; ● product mix and effect on margins; ● ability to reduce and manage inventory levels; and ● product acceptance in new markets.
The information with respect to our executive officers is set forth in the section entitled “Executive Officers” in Part I of this Annual Report on Form 10-K.
Directors, Executive Officers and Corporate Governance. The information with respect to our executive officers is set forth in the section entitled “Executive Officers” in Part I of this Annual Report on Form 10-K.
In December 2018, the Board of Directors approved a share buyback program beginning January 1, 2019 and expiring on December 31, 2020, under which the Company was authorized to repurchase up to $5 million of its outstanding common shares. In December 2020, the Board of Directors extended the buyback program until December 31, 2022.
In December 2018, the Board of Directors approved a share buyback program beginning January 1, 2019 and expiring on December 31, 2020, under which the Company was authorized to repurchase up to $5,000 of its outstanding common shares. In December 2022, the Board of Directors extended the Company’s share buyback program through December 31, 2024.
In December 2018, the Board of Directors approved a share buyback program beginning January 1, 2019, under which the Company is authorized to repurchase up to $5 million of its outstanding common shares. In December 2020, the Board of Directors extended the buyback program until December 31, 2022.
In December 2018, the Board of Directors approved a share buyback program beginning January 1, 2019, under which the Company is authorized to repurchase up to $5,000 of its outstanding common shares. In December 2022, the Board of Directors extended the Company’s share buyback program through December 31, 2024.
We use the recognition criteria of ASC 450-20, “Loss Contingencies” to estimate the bonus amount when it becomes probable a bonus liability will be incurred and we recognize expense ratably over the service period.
We evaluate the adequacy of this reserve each reporting period. 29 We use the recognition criteria of ASC 450-20, “Loss Contingencies” to estimate the bonus amount when it becomes probable a bonus liability will be incurred and we recognize expense ratably over the service period.
Cash provided by operating activities reflected a $0.2 million increase in accounts payable and a $4.6 million decrease in accrued and other liabilities, which included customer deposits, accrued payroll, deferred revenue, and operating lease liabilities.
Cash provided by operating activities reflected a $199 increase in accounts payable and a $4,570 decrease in accrued and other liabilities, which included customer deposits, accrued payroll, deferred revenue, and operating lease liabilities.
Included in R&D expenses for the year ended September 30, 2022 was $70 thousand of non-cash share-based compensation expenses, compared to $40 thousand for the year ended September 30, 2021. Other Income, net Other income, net, increased by $6 thousand due to changes in interest income and realized gains and losses on foreign currency translation.
Included in R&D expenses for the year ended September 30, 2023 was $103 of non-cash share-based compensation expenses, compared to $70 for the year ended September 30, 2022. Other (Expense) Income, net Other expense, net, decreased by $70 due to changes in interest income and realized gains and losses on foreign currency translation.
Our GEM, Zonehaven, and NEWS software solutions are more complex offerings. We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities. We intend to invest engineering resources to enhance our GEM, Zonehaven, and NEWS software solutions to compete for larger emergency warning and critical communications business opportunities.
We are pursuing certain certifications, which are often required when bidding on government and mass notification opportunities. We intend to invest engineering resources to enhance our ALERT, EVAC, and CONNECT software solutions to compete for larger emergency warning and critical communications business opportunities.
During the years ended September 30, 2022 and 2021, the Company recorded $1.7 million and $2.6 million, respectively, in bonus expense, and related payroll tax expense in connection with the bonus plans. Bonus related expense is included in “Accrued liabilities” on the Consolidated Balance Sheet.
During the years ended September 30, 2023 and 2022, the Company recorded $194 and $1,733, respectively, in bonus expense, and related payroll tax expense in connection with the bonus plans. Bonus related expense is included in “Accrued liabilities” on the Consolidated Balance Sheet.
The items that are non-cash include depreciation and amortization expense and stock-based compensation. Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding allocation of capital, and invest in initiatives that are focused on cultivating new markets for our solutions.
Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding allocation of capital, and invest in initiatives that are focused on cultivating new markets for our solutions.
Cash used for capital expenditures was $0.4 million and $0.2 million in the fiscal years ended September 30, 2022 and 2021, respectively. We anticipate additional expenditures for capital expenditures in fiscal year 2023 as we continue to invest in new products and technologies.
Cash used for capital expenditures was $239 and $381 in the fiscal years ended September 30, 2023 and 2022, respectively. We anticipate additional expenditures for capital expenditures in fiscal year 2024 as we continue to invest in new products and technologies.
We incurred non-cash share-based compensation expenses allocated to selling, general and administrative expenses for fiscal 2022 and 2021 of $2.1 million and $1.3 million, respectively. We may expend additional resources on the marketing and selling of our products in future periods as we identify ways to optimize potential business opportunities.
We incurred non-cash share-based compensation expenses allocated to selling, general and administrative expenses for fiscal 2023 and 2022 of $1,428 and $2,080, respectively. We may expend additional resources on the marketing and selling of our products in future periods as we identify ways to optimize potential business opportunities. Commission expense will fluctuate based on the nature of our sales.
Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process. Item 9B. Other Information. None Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process. Item 9B. Other Information.
Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs, and anticipated rates of warranty claims. Warranty expense is recorded in cost of revenues. We evaluate the adequacy of this reserve each reporting period.
Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs, and anticipated rates of warranty claims. Warranty expense is recorded in cost of revenues.
Terms with individual customers vary greatly. We often offer net thirty-day terms to our customers. Our receivables can vary dramatically due to overall sales volume and quarterly variations in sales and timing of shipments to and receipts from large customers. As of September 30, 2022 and 2021, our working capital was $20.2 million and $18.0 million, respectively.
We often offer net thirty-day terms to our customers. Our receivables can vary dramatically due to overall sales volume and quarterly variations in sales and timing of shipments to and receipts from large customers. As of September 30, 2023 and 2022, our working capital was $13,949 and $20,197, respectively.
This reflects a 427.3% increase in recurring revenue in the Americas offset by a 41.8% decrease in professional services and licensing revenue compared to the prior fiscal year.
This reflects a 43.8% increase in recurring revenue offset by a 32.9% decrease in professional services and licensing revenue compared to the prior fiscal year.
Investing Activities In the fiscal year ended September 30, 2022, we used $6.8 million of cash to purchase short and long-term marketable securities, compared with using $5.1 million to purchase short and long-term marketable securities in the fiscal year ended September 30, 2021.
Investing Activities In the fiscal year ended September 30, 2023, we used $3,641 of cash to purchase short and long-term marketable securities, compared with using $6,830 to purchase short and long-term marketable securities in the fiscal year ended September 30, 2022.
This was partially offset by a $0.2 million decrease in prepaid expenses and other, which includes deposits paid on inventory purchases, prepaid rent and prepaid insurance, and a $0.8 million decrease in accounts receivable.
This was partially offset by a $1,671 decrease in prepaid expenses and other, which includes deposits paid on inventory purchases, prepaid rent and prepaid insurance, and an $827 decrease in accounts receivable.
GAAP measure, for each of the periods indicated (in thousands): Years ended September 30, 2022 2021 Net (loss) income $ (16,212 ) $ 704 Other income, net (60 ) (54 ) Income tax (benefit) expense 741 434 Depreciation and amortization 2,556 1,597 Impairment of goodwill 13,162 - Stock-based compensation 2,227 1,424 Adjusted EBITDA $ 2,414 $ 4,105 Segment Results Segment results include net sales and operating income by segment.
GAAP measure, for each of the periods indicated (in thousands): Years ended September 30, 2023 2022 Net loss (18,396 ) (16,212 ) Other income (expense), net 10 (60 ) Income tax expense (benefit) 7,400 741 Depreciation and amortization 2,558 2,556 Impairment of goodwill - 13,162 Stock-based compensation 1,642 2,227 Adjusted EBITDA $ (6,786 ) $ 2,414 Segment Results Segment results include net sales and operating income by segment.
Gross margin as a percentage of sales was 48.7% this year, compared to 49.8% in the prior year. Our products have varying gross margins, so product mix may affect gross profits. In addition, our margins vary based on the sales channels through which our products are sold in a given period.
Gross margin as a percentage of sales was 46.6% in fiscal year 2023, compared with 50.5% in the prior year. Our products have varying gross margins, so product mix may affect gross profits. In addition, our margins vary based on the sales channels through which our products are sold in a given period.
Cash Flows Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the table below (in thousands): Years ended September 30, 2022 2021 Cash provided by (used in): Operating activities $ 468 $ 6,150 Investing activities (89 ) (15,554 ) Financing activities (1,063 ) 13 Operating Activities Net loss of $16.2 million for the fiscal year ended September 30, 2022, included a $13.2 million goodwill impairment charge and $6.7 million of other non-cash items including share-based compensation expense, deferred income taxes, operating right of use lease amortization, depreciation and amortization, inventory obsolescence, and a provision for warranty.
Cash Flows Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the table below (in thousands): Years ended September 30, 2023 2022 Cash provided by (used in): Operating activities $ (9,593 ) $ 468 Investing activities 5,538 (89 ) Financing activities (114 ) (1,063 ) Operating Activities Net loss of $18,396 for the fiscal year ended September 30, 2023, included $12,732 of other non-cash items including deferred income taxes, share-based compensation expense, operating right of use lease amortization, depreciation and amortization, inventory obsolescence, and a provision for warranty.
We do not believe that historical gross profit margins should be relied upon as an indicator of future gross profit margins. 30 Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $4.3 million, or 24.5%.
We do not believe that historical gross profit margins should be relied upon as an indicator of future gross profit margins. 31 Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $1,986, or 8.8%.
See Note 5, Fair Value Measurements for further discussion. 28 Accrued Expenses. We establish a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. This reserve requires us to make estimates regarding the amount and costs of warranty repairs we expect to make over a period of time.
We establish a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. This reserve requires us to make estimates regarding the amount and costs of warranty repairs we expect to make over a period of time.
In addition to the matters above, we are authorized for the performance of services and provision of goods pursuant to Delaware General Corporation Law. Our research and development strategy involves incorporating further innovations and capabilities into our GEM, Zonehaven, NEWS, IMNS and LRAD products, systems, and solutions to meet the needs of our target markets.
In addition to the matters above, we are authorized for the performance of services and provision of goods pursuant to Delaware General Corporation Law. Our research and development strategy involves incorporating further innovations and capabilities into our Genasys Protect platform to meet the needs of our target markets. Our Genasys Protect software solutions are more complex offerings.
For more information, refer to Note 2, Basis of Presentation and Significant Accounting Policies and Note 8, Goodwill and Intangible Assets. Research and Development Expenses R&D expenses increased by $2.1 million, or 42.8%, primarily due to a $2.0 million increase in employee-related costs associated with our growth in staffing from 79 to 96.
For more information, refer to Note 2, Basis of Presentation and Significant Accounting Policies and Note 8, Goodwill and Intangible Assets. Research and Development Expenses R&D expenses increased by $1,117 primarily due to increased employee-related costs associated with our 7% growth in engineering personnel.
For additional details, refer to Note 13, Income Taxes, in our consolidated financial statements. Other Metrics We monitor a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Other Metrics We monitor a number of financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions, including the following key metrics.
Financing Activities In the years ended September 30, 2022 and 2021, we received proceeds from the exercise of stock options of $0.3 million and $0.2 million, respectively.
Financing Activities In the years ended September 30, 2023 and 2022, we received proceeds from the exercise of stock options of $138 and $282, respectively.
Our other business metrics may be calculated in a manner different than similar other business metrics used by other companies (in thousands): Adjusted EBITDA Adjusted EBITDA represents our net income before other income, net, income tax expense (benefit), depreciation and amortization expense and stock-based compensation. We do not consider these items to be indicative of our core operating performance.
Our other business metrics may be calculated in a manner different than similar other business metrics used by other companies (in thousands): Adjusted EBITDA Adjusted EBITDA represents our net income before other income, net, income tax expense (benefit), depreciation and amortization expense, stock-based compensation and goodwill impairment.
The previous program expired on December 31, 2018. During the year ended September 30, 2022, 259,310 shares were repurchased for $1.0 million. There were no shares repurchased during the year ended September 30, 2021. As of September 30, 2022, all repurchased shares were retired. As of September 30, 2022, $3.0 million was available for share repurchase under this program.
The previous program expired on December 31, 2018. During the year ended September 30, 2023, there were no shares repurchased. During the year ended September 30, 2022, 259,310 shares were repurchased for $1,000. There were no shares repurchased during the year ended September 30, 2023. As of September 30, 2023, all repurchased shares were retired.
Cash provided by operating activities reflected a $0.6 million increase in accounts payable and a $4.9 million increase in accrued and other liabilities, which included customer deposits, accrued payroll, deferred revenue, and operating lease liabilities.
Cash used in operating activities reflected a $425 increase in accounts payable and a $6,064 decrease in accrued and other liabilities, which included customer deposits, accrued payroll, deferred revenue, and operating lease liabilities.
Not Applicable 35 PART III Certain information required by this Part III is omitted from this report and is incorporated by reference to our Definitive Proxy Statement to be filed with the SEC in connection with the Annual Meeting of Stockholders to be held in 2023 (the “Proxy Statement”). Item 10. Directors, Executive Officers and Corporate Governance.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not Applicable 36 PART III Certain information required by this Part III is omitted from this report and is incorporated by reference to our Definitive Proxy Statement to be filed with the SEC in connection with the Annual Meeting of Stockholders to be held in 2024 (the “Proxy Statement”). Item 10.
Utilization of the net operating loss (“NOL”) carryforwards in future years could be substantially limited due to restrictions imposed under federal and state laws upon a change in ownership or control.
Utilization of the net operating loss (“NOL”) carryforwards in future years could be substantially limited due to restrictions imposed under federal and state laws upon a change in ownership or control. In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments.
These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. Overview Genasys is a global provider of critical communications hardware and software solutions designed to alert, inform, and protect people.
These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. 23 Overview We are a global provider of Protective Communications solutions including our Genasys Protect software platform and Genasys LRAD.
On this basis, the amount of the embedded maintenance is separated from the fee for the perpetual license and is recognized on a straight-line basis over the period to which the maintenance relates.
In addition, the Company sells maintenance services on a stand-alone basis and is therefore capable of determining their fair value. On this basis, the amount of the embedded maintenance is separated from the fee for the perpetual license and is recognized on a straight-line basis over the period to which the maintenance relates.
Commitments We are committed for our facility lease through August 30, 2028, as more fully described in Note 12, Leases, in our consolidated financial statements.
As of September 30, 2023, $3,000 was available for share repurchase under this program. Commitments We are committed for our facility lease through August 30, 2028, as more fully described in Note 12, Leases, in our consolidated financial statements.
We communicate with our suppliers regarding measures to alleviate ongoing worldwide supply chain issues. We have been affected by price increases from our suppliers and logistics as well as other inflationary factors such as increased salary, labor, and overhead costs. We regularly review and adjust the sales price of our finished goods to offset these inflationary factors.
Negative impacts on our supply chain could have a material adverse effect on our business. We communicate with our suppliers regarding measures to alleviate ongoing worldwide supply chain issues. We have been affected by price increases from our suppliers and logistics as well as other inflationary factors such as increased salary, labor, and overhead costs.
Net income of $0.7 million for the fiscal year ended September 30, 2021, included $4.6 million of non-cash items including share-based compensation expense, deferred income taxes, operating right of use lease amortization, unrealized loss on a foreign currency forward contract, depreciation and amortization, inventory obsolescence, and a provision for warranty.
Net loss of $16,212 for the fiscal year ended September 30, 2022, included a $13,162 goodwill impairment charge and $6,736 of other non-cash items including share-based compensation expense, deferred income taxes, operating right of use lease amortization, depreciation and amortization, inventory obsolescence, and a provision for warranty.
Projecting alert tones and audible voice messages with exceptional vocal clarity in a 30° beam from close range to 5,500 meters, LRADs are used throughout the world in multiple applications and circumstances to safely hail, warn, inform, direct, prevent misunderstandings, determine intent, establish large safety zones, resolve uncertain situations, and save lives.
LRADs are used throughout the world in multiple applications and circumstances to safely hail, warn, inform, direct, prevent misunderstandings, determine intent, establish large safety zones, resolve uncertain situations, and save lives.
Operated and controlled via a single dashboard that includes two-way polling, duress buttons, field check-ins and recipient locations, GEM Enterprise solutions integrate with data sources, including active directories, human resources, visitor management, and building control systems to find and deliver safety alerts and notifications to employees, staff, contractors, temporary workers, and visitors.
Operated and controlled via a single dashboard that includes two-way polling, duress buttons, field check-ins and recipient locations, ALERT integrates with various data sources, including sensors, emergency services, active directories, human resources, visitor management, and building control systems to find and deliver safety alerts and notifications to residents, employees, staff, contractors, temporary workers, and visitors. 24 ALERT sends targeted messages based on geographic location, permitting relevant information and instructions to be sent to the appropriate populations.
LRADs have been deployed on military vehicles, at corporate headquarters, in hostage negotiations, aboard private yachts, and in numerous other situations where clear and intelligible voice communications are essential.
LRADs have been deployed on military vehicles, at corporate headquarters, in hostage negotiations, aboard private yachts, and in numerous installations and applications where clear and intelligible voice communications are essential. Several LRAD models are available in varying audio outputs, communication coverage areas, sizes, and functionalities.
Commission expense will fluctuate based on the nature of our sales. Goodwill Impairment As a result of the annual goodwill impairment analysis, we recognized a $13.2 million non-cash goodwill impairment charge in our Software segment for the year ended September 30, 2022.
Goodwill Impairment As a result of the annual goodwill impairment analysis, we recognized a $13,162 non-cash goodwill impairment charge in our Software segment for the year ended September 30, 2022. There was no impairment charge recorded for the year ended September 30, 2023.
The increase was primarily due to $1.9 million of additional employee related costs, largely associated with our 13% increase in sales and administration personnel over the prior year to support software revenue growth opportunities. In addition, amortization expense increased $1.0 million, and marketing related, and travel expenses increased $1.2 million over the prior year.
The increase was due to $940 of additional employee-related costs, largely associated with our 18% increase in sales and administration personnel over the prior year to support software revenue growth opportunities. In addition, professional services, including rebranding and recruitment costs, increased $878 and commission expense increased $288 over the prior year.
GEM acts as both a communications input and output, receiving information from state-of-the-art sensors and emergency services, and quickly relaying notifications, alerts, and instructions to at-risk populations and first responders. GEM customers can create and send critical, verified, and secure notifications and messages using emails, voice calls, text messages, panic buttons, desktop alerts, television, social media, and more.
ALERT acts as both a communications input and output, receiving information from state-of-the-art sensors and emergency services, and quickly relaying notifications, alerts, and instructions to at-risk populations and first responders.
Our customers do not have a right to return product unless the product is found defective and therefore our estimate for returns has historically been insignificant Perpetual licensed software The sale and/or license of software products is deemed to have occurred when a customer either has taken possession of, or has the ability to take immediate possession of, the software and the software key.
Our customers do not have a right to return product unless the product is found defective and therefore our estimate for returns has historically been insignificant.
Genasys' advanced mass notification systems feature the industry's highest STI, large directional and omni-directional broadcast coverage areas, and an array of options that enable the systems to continue to operate when power and telecommunications infrastructure goes down. 24 LRAD The LRAD is the world’s leading AHD.
Most legacy mass notification systems are sirens with limited, if any, voice broadcast capability. ACOUSTICS systems feature the industry's highest STI, large directional and omni-directional broadcast coverage areas, and an array of options including solar power, battery backup, and satellite connectivity that enable the systems to continue to operate when power and telecommunications infrastructure goes down.
The Genasys critical communications platform uses this information to create and disseminate alerts, warnings, notifications, and instructions to at-risk individuals and populations through multiple channels before, during, and after public safety and enterprise threats, critical events, and other crisis situations.
Our unified software platform receives information from a wide variety of sensors and IoT inputs to collect real-time information on developing and active emergency situations. Genasys uses this information to create and disseminate alerts, warnings, notifications, and instructions through multiple channels before, during, and after public safety and enterprise threats, critical events, and other crisis situations.
The receipt of orders is often uneven due to the timing of government budgets or approvals. The increase in software revenue in this fiscal year is largely due to growth in SaaS revenue, partially offset by lower professional services revenue on new software contracts.
Hardware revenue decreased $8,074, partially offset by a $702 increase in software revenue compared with the prior fiscal year. Lower hardware revenue was largely due to low backlog at the start of the fiscal year and lower fiscal year 2023 hardware orders. The receipt of orders is often uneven due to the timing of government budgets or approvals.
Software Hardware Years ended September 30, Years ended September 30, 2022 2021 $ % 2022 2021 $ % Revenue $ 3,097 $ 2,771 $ 326 11.8 % $ 50,938 $ 44,232 $ 6,706 15.2 % Operating (loss) income (24,791 ) (6,787 ) (18,004 ) 265.3 % 9,260 7,871 1,389 17.6 % Reconciliation of GAAP to Non-GAAP Goodwill impairment 13,162 - 13,162 100.0 % - - - 0.0 % Depreciation and amortization 2,176 1,222 954 78.1 % 380 375 5 1.3 % Stock-based compensation 244 110 134 121.8 % 1,983 1,314 669 50.9 % Adjusted EBITDA $ (9,209 ) $ (5,455 ) $ (3,754 ) 68.8 % $ 11,623 $ 9,560 $ 2,063 21.6 % Software Segment Software segment revenue increased 11.8% over the prior fiscal year.
Software Hardware Years ended Years ended September 30, Fav (Unfav) September 30, Fav (Unfav) 2023 2022 $ % 2023 2022 $ % Revenue $ 3,799 $ 3,097 $ 702 22.7 % $ 42,864 $ 50,938 $ (8,074 ) (15.9 %) Operating (loss) income (14,226 ) (24,791 ) 10,565 (42.6 %) 3,240 9,260 (6,020 ) (65.0 %) Reconciliation of GAAP to Non-GAAP Goodwill impairment - 13,162 (13,162 ) (100.0 %) - - - 0.0 % Depreciation and amortization 2,160 2,176 (16 ) (0.7 %) 398 380 18 4.7 % Stock-based compensation 333 244 89 36.5 % 1,309 1,983 (674 ) (34.0 %) Adjusted EBITDA $ (11,733 ) $ (9,209 ) $ (2,524 ) 27.4 % $ 4,947 $ 11,623 $ (6,676 ) (57.4 %) Software Segment Software segment revenue increased 22.7% over the prior fiscal year.
Zonehaven Zonehaven is a multipronged SaaS application that serves both first responders and the jurisdictions they protect. Emergency services agencies can prepare for natural or man-made disasters by developing evacuation plans that map routes, shelters, traffic control locations, and road closures using Zonehaven's extensive public safety resources and mapped zones.
Emergency managers can prepare for natural or man-made disasters by developing evacuation plans that map routes, shelters, traffic control locations, and road closures using ALERT’s extensive public safety resources and mapped zones. This information is easily shared with the public and reduces the time it takes to execute emergency evacuations and conduct orderly repopulations.
This was partially offset by a $1.6 million increase in prepaid expenses and other, which includes deposits paid on inventory purchases, prepaid rent and prepaid insurance, a $2.1 million increase in accounts receivable that resulted from higher current year fiscal fourth quarter shipments, and a $0.8 million increase in inventory. 33 We had accounts receivable of $6.7 million and $7.7 million as of September 30, 2022 and 2021, respectively.
This was partially offset by a $242 decrease in prepaid expenses and other, which includes deposits paid on inventory purchases, prepaid rent and prepaid insurance, and a $836 decrease in accounts receivable. 34 We had accounts receivable of $5,952 and $6,744 as of September 30, 2023 and 2022, respectively. Terms with individual customers vary greatly.
Army order ● Received and shipped orders for the new LRAD 950NXT, the Company’s next generation remotely operated long-range communications system Business Outlook Our products, systems, and solutions continue to gain worldwide awareness and recognition through media exposure, product demonstrations, and word of mouth as a result of positive responses and increased acceptance.
At the time of booking, this was the largest Genasys Protect multi-year order in the Company’s history. Business Outlook Our products, systems, and solutions continue to gain worldwide awareness and recognition through increased marketing efforts, product demonstrations, and word of mouth as a result of positive responses and increased acceptance.
In addition, we had $6.4 million in short-term marketable securities as of September 30, 2022, compared with $5.7 million as of September 30, 2021, and long-term marketable securities of $0.8 million and $1.9 million as of September 30, 2022 and 2021, respectively.
Liquidity and Capital Resources Cash and cash equivalents as of September 30, 2023, were $8,665, compared with $12,736 as of September 30, 2022. In addition, we had $1,481 in short-term marketable securities as of September 30, 2023, compared with $6,397 as of September 30, 2022.
In the fiscal year ended September 30, 2022, we had proceeds from maturities of available for sale marketable securities of $7.1 million, compared with $5.6 million in fiscal year 2021.
In the fiscal year ended September 30, 2023, we had proceeds from maturities of available for sale marketable securities of $9,418, compared with $7,122 in fiscal year 2022. We also used cash in investing activities for the purchase of product tooling, computer equipment, and leasehold improvements for our operating facilities.
As of September 30, 2022, we had aggregate deferred revenue and prepayments from customers in advance of product shipment of $6.8 million. The receipt of orders will often be uneven due to the timing of customers’ approval or budget cycles.
The receipt of orders will often be uneven due to the timing of customers’ approval or budget cycles. Gross Profit Gross profit for the year ended September 30, 2023, decreased $5,514 compared with fiscal year 2022, primarily due to lower sales volume and higher product costs in fiscal year 2023.
Pretax income in fiscal year 2022 was $16.9 million less than the prior year primarily due to a $13.2 million goodwill impairment charge and $3.5 million increase in operating expenses. Income tax expense increased in fiscal year 2022 primarily due to a $1.0 million non-cash charge related to a valuation allowance against deferred tax assets.
Pretax loss in fiscal year 2023 was $4,475 less than the prior year primarily due to the $13,162 goodwill impairment charge in fiscal year 2022 offset by a $5,514 decrease in gross profit and increased operating expense of $3,103. Refer to Note 13, Income Taxes, in our consolidated financial statements for additional information on changes to the deferred tax asset.
GEM Enterprise GEM Enterprise empowers businesses and organizations to send critical communications to at-risk employees, contractors, visitors, or groups based on geographic location or team status.
IPAWS is the federal public notification platform for the United States, which ALERT customers can use to deliver critical communications in multiple languages to specific populations. Similarly, enterprise customers are able to send critical communications to at-risk employees, contractors, visitors, or groups based on geographic location or team status.
Operating loss increased $18.0 million in the current fiscal year due to a $13.2 million goodwill impairment charge, $1.0 million in additional intangible asset amortization, the inclusion of a full year of Zonehaven operations, and increases in payroll and benefits costs due to increased hiring to support software development and sales.
Operating loss decreased $10,565 in the current fiscal year due to a $13,162 goodwill impairment charge in fiscal 2022, and higher gross profit this year, offset by higher operating expenses including increases in payroll and benefit costs due to increased hiring to support software development and sales. Hardware Segment Hardware segment revenue decreased $8,074, or 15.9%, over the prior year.
Hardware Segment Hardware segment revenue increased $6.7 million, or 15.2%, over the prior year. The increase was largely due to the higher backlog at the start of this fiscal year compared to the prior year amount.
The decrease was largely due to low backlog at the start of the fiscal year and lower hardware orders received compared to the prior year. Operating income decreased $6,020 in the current fiscal year due to the decreased revenue and lower gross profit.
Our unified critical communications platform includes: Software GEM Public Safety GEM Public Safety is an interactive, cloud-based SaaS solution that enables State, Local and Education (“SLED”) customers to send critical information to at-risk individuals or groups when an emergency occurs.
Network Effect: Implementation in neighboring municipalities as well as across public- and private-sector organizations within the same municipality extends coverage and enables greater precision when notifying people of threats. Genasys Protect ALERT ALERT is an interactive, cloud-based SaaS solution that enables SLED and enterprise customers to send critical information to at-risk individuals or groups when an emergency occurs.
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Our unified software/hardware platform receives information from a wide variety of sensors and Internet-of-Things (IoT) inputs to collect real-time information on developing and active emergency situations.
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