Executive Summary

Q3 revenue grew 39% year over year to $2.02M, but total gross margin compressed to 30% (vs 40% LY) as component shortages, inflation and tariffs lifted product cost of goods; operating loss improved vs LY on lower SG&A but widened sequentially from Q2’s small profit .
Product revenue strength was broad-based (Hospitality +21% YoY; Education +706% YoY; International +228% YoY), while recurring revenue rose 15% YoY; backlog remained healthy at ~$3.3M exiting Q3 (down from ~$3.9M in Q2) .
Cash fell to $3.72M with YTD cash used in operations of ($3.12M); credit facility had $0 drawn and ~$1.0M availability at quarter-end, providing liquidity flexibility .
Management highlighted supply-chain execution improvements and a European launch of occupancy-based EMS solutions; however, no formal guidance was issued and material weaknesses in internal controls persisted .

What Went Well and What Went Wrong

What Went Well
- Broad-based top-line acceleration: total revenue +39% YoY to $2.02M; product revenue +42% YoY; recurring +15% YoY .
- Mix/motion improved: Education revenue +706% YoY to ~$0.32M; Hospitality +21% YoY to ~$1.44M; International +228% YoY, aided by channel partners .
- Operating discipline: SG&A fell 15% YoY and total operating expenses declined 12% YoY, improving operating loss vs LY .
- CEO tone: “Despite the global components shortage, we were able to provide service and fulfill customer orders on time… building business efficiencies, controlling operating expenses and leveraging the organization” .
What Went Wrong
- Margin compression: total gross margin fell to 30% (from 40% LY); product gross margin dropped to 25% (from 34% LY) on higher material costs, tariffs, logistics, and purchase price variance amid chip shortages and inflation .
- Sequential deterioration vs Q2: revenue improved vs Q2, but gross margin fell sharply vs Q2’s unusually strong 70% (mix and cost dynamics), and operating swung back to a loss vs Q2’s modest profit .
- Cash burn and controls: YTD operating cash outflow ($3.12M); internal control material weaknesses remain (revenue recognition over time, period-end close, IT access/segregation of duties) .

Metric	Q3 2021	Q1 2022	Q2 2022	Q3 2022
Revenue ($)	$1,454,068	$2,150,705	$1,938,370	$2,017,334
Gross Profit ($)	$588,549	$986,035	$1,364,229	$613,070
Gross Margin (%)	40%	46%	70%	30%
Operating Income ($)	$(891,283)	$(505,471)	$22,435	$(693,799)
Net Income ($)	$17,240	$(517,828)	$8,747	$(697,572)
Diluted EPS ($)	$0.00	$0.00	$0.00	$0.00
Adjusted EBITDA ($)	$(879,122)	$(494,203)	$(137,418)	$(683,282)

Segment/Industry revenue mix (Product only)

Recurring revenue by industry (subset shown)

Recurring Revenue by Industry	Q3 2021	Q3 2022
Hospitality ($)	$96,211	$165,540
Education ($)	$67,468	$22,840
Total Recurring ($)	$163,679	$188,380

KPIs and balance sheet/lending (quarter-end)

KPI	Q1 2022 (3/31)	Q2 2022 (6/30)	Q3 2022 (9/30)
Backlog (approx.)	~$3.2M	~$3.9M	~$3.3M
Cash & Equivalents ($)	$5,878,897	$4,964,495	$3,721,024
Credit Facility Outstanding ($)	$436,136	$628,412	$0
Available Borrowing Capacity (approx.)	~$514,000	~$321,000	~$1,000,000
Total Gross Margin (%)	46%	70%	30%
Operating Expenses ($)	$1,491,506	$1,341,794	$1,306,869

Non-GAAP reconciliation (company-reported)

Non-GAAP	Q3 2021	Q3 2022
Adjusted EBITDA ($)	$(879,122)	$(683,282)

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY/Q4 2022	None	None provided in Q3 press release or 10-Q	Maintained (no formal guidance)

Note: No Q3 2022 earnings call transcript was available in filings; themes below are drawn from Q1–Q3 10-Q MD&A and the Q3 press release .

Topic	Previous Mentions (Q1 & Q2 2022)	Current Period (Q3 2022)	Trend
Supply chain/chip shortages, logistics, inflation	Q1: Material surcharges, logistics and subcontractors pressured product COGS; tariffs ~5% margin headwind . Q2: COGS drivers persisted but margins improved QoQ; tariffs ~4% impact .	Product COGS up on material costs, logistics, tariffs, purchase price variance; product GM 25%; total GM 30% . CEO cites improved supply-chain management execution .	Pressures persist; execution improving .
Tariffs/inflation	Q1: ~5% gross margin impact . Q2: ~4% impact .	~5% gross margin impact in Q3 .	Persistent headwind .
Market mix: Hospitality/Education	Q1: Education +644% YoY; Hospitality +40% YoY . Q2: Education strength continued (YTD +984%); Hospitality +9% YTD .	Education +706% YoY; Hospitality +21% YoY .	Education momentum sustained .
International expansion	Q1: International revenue decreased 45% YoY . Q2: International down 31% YTD .	International +228% YoY; European EMS launch announced .	Turning positive; new EU catalyst .
Internal controls	Material weaknesses disclosed (revenue over time, close, IT, SOD) .	Material weaknesses persist .	Unchanged .

Strategic focus and execution: “Despite the global components shortage, we were able to provide service and fulfill customer orders on time… We are following our turnaround path building business efficiencies, controlling operating expenses and leveraging the organization” — Piercarlo Gramaglia, CEO .
European growth initiative: Company “lands in Europe and launches its new occupancy-based Energy Management Solutions (EMS) in the European market,” positioning for retrofit opportunities with WiFi-capable products .
Mix commentary from MD&A: Product revenues driven by increased volumes from existing hospitality customers; Education up sharply; international growth +228% YoY, supported by channel partners .

No Q3 2022 earnings call transcript or Q&A was available in filings; management commentary in this recap is derived from the 8-K press release and 10-Q MD&A .

We attempted to pull S&P Global consensus for Q3 2022 (revenue, EPS, EBITDA), but estimates were unavailable at the time of retrieval, so beats/misses versus Street are not assessed here. The company did not provide formal financial guidance in the Q3 materials .

Growth with margin pressure: Revenue rose 39% YoY to $2.02M, but gross margin fell to 30% on higher material/logistics/tariffs and chip shortages; product GM was 25% vs 34% LY .
Broad demand signals: Hospitality (+21% YoY), Education (+706% YoY) and International (+228% YoY) drove product growth; recurring revenue +15% YoY, supporting a more durable revenue base .
Liquidity adequate near term: $3.72M cash, $0 drawn on the line, and ~$1.0M availability offer flexibility to fund operations amidst ($3.12M) YTD operating cash burn .
Sequential normalization after an unusually strong Q2 margin: total GM retrenched from 70% in Q2 to 30% in Q3, reflecting mix/cost dynamics; operating income swung back to a loss .
Execution and expansion catalysts: Management cites better supply-chain execution and launched EMS in Europe, which could support international growth and retrofit demand .
Risk flags: Persistent internal control material weaknesses, cost inflation/tariffs, and component availability continue to pressure margins and add operational execution risk .
Watch backlog conversion and mix: Backlog remained solid at ~$3.3M (down from ~$3.9M in Q2); sustained Education/international momentum and improving costs are key to margin recovery and cash burn moderation into coming quarters .