iti-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________________

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-08762

ITERIS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

1250 S. Capital of Texas Hwy., Building 1, Suite 330

Austin, Texas

(Address of principal executive office)

95-2588496

(I.R.S. Employer

Identification No.)

78746

(Zip Code)

(512) 382-9669

(Registrant’s telephone number, including area code)

(Former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.10 par value

ITI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of November 3, 2023, there were 42,822,803 shares of our common stock outstanding.


PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS	1

	UNAUDITED CONDENSED BALANCE SHEETS AT SEPTEMBER 30, 2023 AND MARCH 31, 2023	1

	UNAUDITED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	2

	UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	3

	UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	4

	NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS	5

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30

ITEM 4.	CONTROLS AND PROCEDURES	30

PART II.	OTHER INFORMATION	31

ITEM 1.	LEGAL PROCEEDINGS	31

ITEM 1A.	RISK FACTORS	31

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	31

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	31

ITEM 4.	MINE SAFETY DISCLOSURES	32

ITEM 5.	OTHER INFORMATION	32

ITEM 6.	EXHIBITS	32


	September 30, 2023		March 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	20,161	$	16,587
Restricted cash	449		140
Trade accounts receivable, net of allowance for doubtful accounts of $360 and $357 at September 30, 2023 and March 31, 2023, respectively	24,929		23,809
Unbilled accounts receivable	8,562		8,349
Inventories	10,781		10,841
Prepaid expenses and other current assets	4,079		3,128
Total current assets	68,961		62,854
Property and equipment, net	1,325		1,297
Right-of-use assets	7,509		8,345
Intangible assets, net	9,968		10,190
Goodwill	28,340		28,340
Other assets	502		768
Total assets	$	116,605	$	111,794
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	14,942	$	12,943
Accrued payroll and related expenses	10,837		12,923
Accrued liabilities	5,654		5,453
Deferred revenue	7,322		6,720
Total current liabilities	38,755		38,039
Lease liabilities	6,560		7,641
Deferred income taxes	463		422
Unrecognized tax benefits	37		79
Other long-term liabilities	3,224		2,707
Total liabilities	49,039		48,888
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $1.00 par value:
Authorized shares — 2,000
Issued and outstanding shares — none	—		—
Common stock, $0.10 par value:
Authorized shares - 70,000 at September 30, 2023 and March 31, 2023
Issued and outstanding shares — 42,823 at September 30, 2023 and 42,808 at March 31, 2023	4,283		4,282
Treasury stock	(9)		(891)
Additional paid-in capital	192,037		190,082
Accumulated deficit	(128,745)		(130,567)
Total stockholders' equity	67,566		62,906
Total liabilities and stockholders' equity	$	116,605	$	111,794


	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022

Product revenues	$	23,398	$	20,788	$	47,056	$	37,169
Service revenues	20,165		18,471		40,052		35,757
Total revenues	43,563		39,259		87,108		72,926
Cost of product revenues	13,086		20,026		25,190		31,683
Cost of service revenues	14,213		12,682		28,851		24,533
Cost of revenues	27,299		32,708		54,041		56,216
Gross profit	16,264		6,551		33,067		16,710
Operating expenses:
General and administrative	6,344		4,978		12,145		11,405
Sales and marketing	6,236		5,674		12,526		10,872
Research and development	2,565		2,173		4,673		4,309
Amortization of intangible assets	651		651		1,302		1,319
Restructuring charges	—		—		—		707
Total operating expenses	15,796		13,476		30,646		28,612
Operating income (loss)	468		(6,925)		2,421		(11,902)
Non-operating income (expense):
Other income, net	48		117		247		94
Interest income (expense), net	2		(300)		70		(332)
Income (loss) before income taxes	518		(7,108)		2,738		(12,140)
Benefit from (provision for) income taxes	33		(289)		(62)		(122)



Net income (loss)	$	551	$	(7,397)	$	2,676	$	(12,262)

Net income (loss) per common share
Basic net income (loss) per share	$	0.01	$	(0.17)	$	0.06	$	(0.29)
Diluted net income (loss) per share	$	0.01	$	(0.17)	$	0.06	$	(0.29)

Shares used in basic per share calculations	42,742		42,288		42,654		42,334
Shares used in diluted per share calculations	43,713		42,288		43,677		42,334


	THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2023
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2023	42,808	$	4,282	369	$	(891)	$	190,082	$	(130,567)	$	62,906
Stock option exercises	60	6		—	—		251		—		257
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	1	—		—	—		(6)		—		(6)
Stock-based compensation	—	—		—	—		525		—		525

Net income	—	—		—	—		—		2,125		2,125
Balance at June 30, 2023	42,869	$	4,288	369	$	(891)	$	190,852	$	(128,442)	$	65,807
Stock option exercises	44	4		—	—		83		—		87
Issuance of shares pursuant to Employee Stock Purchase Plan	92	9		—	—		259		—		268
Stock-based compensation	—	—		—	—		871		—		871
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	78	8		—	—		(12)		—		(4)
Issuance of shares pursuant to vesting of performance stock units, net of payroll withholding taxes	40	4		—	—		(18)		—		(14)
Treasury stock retirement	(300)	(30)		(300)	884		—		(854)		—
Deferred shares held within rabbi trust	—	—		22	(2)		2		—		—
Net income	—	—		—	—		—		551		551
Balance at September 30, 2023	42,823	$	4,283	91	$	(9)	$	192,037	$	(128,745)	$	67,566


	September 30,
	2023		2022
	(In thousands)
Cash and cash equivalents	$	20,161	$	7,991
Restricted cash	449		141
	$	20,610	$	8,132