The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, the audited consolidated financial statements and the notes thereto, and our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission

Cautionary Note About Forward-Looking Statements

This report includes forward-looking statements that, although based on assumptions that we consider reasonable, are subject to risks and uncertainties, which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements. You should read this report and the documents that we reference in this report and have filed as exhibits to this report entirely and understand that our actual future results may be materially different from what we expect. You should also review the factors and risks we describe in reports we will file or submit from time to time with the SEC after this report's date. We qualify all of our forward-looking statements by these cautionary statements.

Overview of COVID-19 Effects

The ongoing global health crisis (including resurgences) resulting from the pandemic has and continues to disrupt the normal operations of many businesses, including the temporary closure or scale-back of business operations and/or the imposition of either quarantine or remote work or meeting requirements for employees, either by government order or voluntarily. In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic, and worldwide governmental authorities have taken extraordinary steps to contain and combat the impact of the coronavirus. While the outbreak recently appeared to be trending downward, notably as vaccination rates increased, new variants of COVID-19 continue emerging, including the Delta variant and the highly transmissible Omicron variant and subsequent variants, spreading throughout the United States and globally and causing significant uncertainty.

The global economy, our markets, and our business have been and may continue to be materially and adversely affected by COVID-19. Mounting omicron infections have forced firms to scramble, threatening economic recovery, and many employers vow to stay open but struggle as employees fall sick or quarantined. The recovery remains vulnerable to the coronavirus's unpredictable trajectory.

The COVID-19 pandemic in generating cases worldwide affects air and sea cargo shippers, factory shutdowns, and closures, creating global supply-chain bottlenecks, shortages of components, and surging prices of critical raw materials, squeezing manufacturers globally. We cannot foresee if worldwide governments can effectively contain the outbreak of COVID-19 on a sustained basis, nor can we predict the severity and duration of its impact. We cannot predict the effect of the Delta or Omicron variant or other new, more contagious, or lethal variants that may emerge, the effectiveness of COVID-19 vaccines against the Delta or Omicron variant or such different variants, and the related responses by governments, including reinstated government-imposed lockdowns or other measures.

The Company closely monitors the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact business partners. The Company continues to experience supply chain shortages and delays in obtaining specific inventory items. The Company's operations team is mitigating the risk by increasing inventory levels in its purchase management of these components. The execution of this policy has improved our ability to ship products.

It is unclear how such restrictions will contribute to a general slowdown in the global economy, and it is difficult to isolate the impact of the pandemic on our business, the results of operations, financial condition, and our future strategic plans. Further, while many companies have survived the past year, and some have thrived, as the pandemic endures, we cannot predict how the global economy will respond to the return to normalcy or whether it will continue to sustain steadily.

In addition, the Company is uncertain of the total effect the pandemic will have on it in the long term since the scope and duration of the pandemic is unknown. The protocol followed in distributing effective vaccines across the world, and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta, Omicron, and other variants, will impact the stability of economic recovery and growth. The extent to which the operations of the Company, and the operations of its customers and supply chain, may be adversely impacted by the COVID-19 pandemic will depend mainly on these future developments. The Company may experience long-term disruptions to its operations resulting from government policy or guidance; quarantines of employees, customers, and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business or supply chains. The Company is actively monitoring and will continue to monitor the pandemic and the potential impact on its operations, financial condition, liquidity, suppliers, industry, and workforce.



27





Ukraine/Russian Conflict

The Company does not generate revenue from the Russian or Ukrainian countries, nor do we have a physical presence, employees, or contractors in these areas. The Russian government's invasion of Ukraine and the resultant sanctions imposed by the U.S. and other governments-designed to inflict severe consequences on the Russian economy-are impacting business continuity, liquidity, and asset values in Ukraine and Russia, agitating markets worldwide. It is difficult to estimate the impact of the ongoing invasion on the global economy, including increased inflation and higher energy and transportation costs; the invasion of Ukraine could adversely impact our financial results. Although we do not presently foresee risks that may affect our Company's liquidity, operating results, and financial reporting, we monitor developments in Ukraine to assess direct material adverse effects on our business, financial condition, or results of operations.

Climate Change-Related Effects

Climate change is an important global issue that presents opportunities and challenges for our Company, partners, and communities. Climate change matters for our Company are likely to be driven by changes in physical climate parameters, regulations and/or public policy, and changes in technology and product demand.

While we seek to mitigate the risks associated with climate change, we recognize inherent climate-related risks regardless of where we conduct our businesses. Any of our locations may be vulnerable to the adverse effects of climate change. Climate-related events can potentially disrupt our business, including our customers, and cause us to experience higher attrition, losses, and additional costs to resume operations. Access to clean water and reliable energy in the communities where we operate our Company is a priority.

Overview

Vislink, incorporated in Delaware in 2006, is a global technology business specializing in collecting, delivering, and managing high-quality, live video and associated data from the action scene to the viewing screen. Vislink provides solutions for collecting live news, sports, and entertainment events for the broadcast markets. Vislink also furnishes the surveillance and defense markets with real-time video intelligence solutions using various tailored transmission products. The Vislink team also provides professional and technical services utilizing a staff of technology experts with decades of applied knowledge and real-world experience in the terrestrial microwave, satellite, fiber optic, surveillance, and wireless communications systems delivering a broad spectrum of customer solutions.

Live Broadcast:

Vislink delivers an extensive portfolio of solutions for live news, sports, and entertainment industries. These solutions include video collection, transmission, management, and distribution via microwave, satellite, cellular, I.P. (Internet Protocol), MESH, and bonded cellular/5G networks. We also provide solutions that utilize A.I. (Artificial Intelligence) technologies to provide automated coverage of news and sporting events. With over 50 years in operation, Vislink has the expertise and technology portfolio to deliver fully integrated, seamless, end-to-end solutions.

Industry-wide contributors acknowledge Vislink's live broadcast solutions. The transmission of a vast majority of all outside wireless broadcast video content uses our equipment, with over 200,000 systems installed worldwide. We work closely with the majority of the world's broadcasters. Vislink wireless cameras and ultra-compact encoders help bring many of the world's most prestigious sporting and entertainment events to life. Recent examples include globally watched international sporting contests, award shows, racing events, and annual music and cultural events.

Military And Government:

Building on our knowledge of live video delivery, Vislink has developed high-quality solutions to meet surveillance and defense markets' operational and industry challenges. Vislink solutions are specifically designed with interagency cooperation, utilizing the internationally-recognized I.P. platform and a web interface for video delivery. Vislink provides comprehensive video, audio, and data communications solutions to law enforcement and the public safety community, including Airborne, Unmanned Systems, Maritime, and Tactical Mobile Command Posts. These solutions may include airborne downlinks, terrestrial point-to-point, tactical mobile command, maritime, UAV, and personal portable products that meet the demands of field operations, command centers, and central receiving sites. Short-range and long-range solutions are available in areas including established infrastructure and exceptionally remote regions, making valuable video intelligence available regardless of location. Vislink public safety and surveillance solutions are deployed worldwide, including throughout the U.S., Europe, and the Middle East, at the local, regional, and federal levels of operation, a criminal investigation, crisis management, mobile command posts, and field operations.

Satellite Communications:

Over 30 years of technical expertise supports Vislink's satellite solutions. These solutions ensure robust, secure communications while delivering low transmission costs for any organization that needs high-quality, reliable satellite transmission. We offer turnkey solutions that begin with state-of-the-art coding, compression, and engine modulation and end with our robust, lightweight antenna systems. Vislink Satellite solutions focus heavily on being the smallest, lightest, and most efficient in their categories, making transportation and ease of use a key driver in the customer experience. Vislink offers an extensive range of satellite designs that allow customers to optimize bit rate, size, weight, and total cost. Our satellite systems are used extensively globally, with over 2,000 systems deployed by governments, militaries, and broadcasters.

Connected Edge Solutions:

Vislink offers the hardware and software solutions needed to acquire, produce, contribute, and deliver video overall private and public networks with the Mobile Viewpoint acquisition. Connected edge solutions aid the video transport concept of utilizing ubiquitous IP networks and cloud-scale compute across 5G, WiFi6, Mesh, and COFDM-enabled networks. These solutions include:



  ? Live video encoding, stream adaptation, decode, and production solutions
  ? Remote production workflows
  ? Wireless cameras
  ? AI-driven automated production
  ? Ability to contribute video over:



  ? Bonded cellular (3G and 4G)
  ? Satellite
  ? Fiber
  ? Emerging networks, including 5G and Starlink



28





Results of Operations

Comparison for the three months ended March 31, 2022, and 2021

Revenues

Revenues for the three months ended March 31, 2022, were $7.2 million compared to $4.0 million for the three months ended March 31, 2021, representing an increase of $3.2 million or 80%. The increase in revenues is predominantly due to three factors (1) an increase in live event-related sales attributable to the return of these activities to pre-pandemic levels. (2) an increase in military/government sales and (3) the recognition of additional revenue from the August 16, 2021 acquisition of MVP.

Cost of Revenue and Operating Expenses

Cost of Components and Personnel

The cost of components and personnel for the three months ended March 31, 2022, was $3.4 million compared to $2.2 million for the three months ended March 31, 2021, representing an increase of $1.2 million or 55%. The increase in the cost of components and personnel is predominately twofold: (1) an increase in expenditures associated with the upsurge in production, including labor necessary to yield the growth in the sale of products during the year, and (2) additional costs of components and personnel incurred resulting from the August 16, 2021 acquisition of MVP.

General and Administrative Expenses

General and administrative expenses are the expenses of operating the business daily and include salary and benefit expenses, including stock-based compensation and payroll taxes, as well as the costs of trade shows, marketing programs, promotional materials, professional services, facilities, general liability insurance, travel and other operating expenses associated with being a public company.

General and administrative expenses for the three months ended March 31, 2022, were $4.9 million compared to $3.6 million for the three months ended March 31, 2021, representing an increase of $1.3 million or 36%. The increase is mainly attributable to an increase in $0.7 million in stock-based compensation, $0.4 million in salaries and benefits, and $0.2 million in consulting fees; and offset by a decrease in $0.2 million in legal fees, $0.2 million in rent and utilities, and $0.2 million in miscellaneous costs for operating a public company.

Research and Development Expenses

Research and development expenses consist primarily of salary and benefit expenses, including stock-based compensation, payroll taxes, prototypes, facilities, and travel costs.

Research and development expenses for the three months ended March 31, 2022, were $1.1 million compared to $0.6 million for the three months ended March 31, 2021, representing an increase of $0.5 million or 83%. The increase is mainly attributable to an increase in:$0.3 million in salaries and benefits and $0.2 million in miscellaneous research costs.

Amortization and Depreciation

Amortization and depreciation expenses for the three months ended March 31, 2022, were $0.5 million compared to $0.3 million for the three months ended March 31, 2021, representing an increase of $0.2 million or 67%. The increase is attributable to additional amortizable intangible assets costs incurred in acquiring MVP on August 16, 2021.

Other

Gain on settlement of debt

Gain on settlement of debt for the three months ended March 31, 2022, was $-0- million, compared to $0.2 million for the three months ended March 31, 2021, representing a decrease of $0.2 million or 100%. This decrease is attributable to a non-recurring debt settlement transaction in the fiscal year 2022.

Net Loss

For the three months ended March 31, 2022, the Company had a net loss of $2.8 million, compared to a net loss of $2.7 million for the three months ended March 31, 2021, or an increase of $0.1 million or 4%. The reduction in net loss is primarily attributable to recognizing additional stock-based compensation, salaries, benefits, and consulting fees offset by a decrease in legal fees, rent and utilities, and miscellaneous costs of operating a public company. The acquisition of MVP on August 16, 2021, contributed to the factors mentioned earlier.



29

Liquidity and Capital Resources

The Company incurred a loss from operations of approximately $2.9 million and cash used in operating activities of $4.9 million for the three months ended March 31, 2022. The Company had $48.6 million in working capital, $289.3 million in accumulated deficits, and $31.0 million of cash on hand as of March 31, 2022.

The enduring effect of the COVID-19 pandemic, including the advent of Delta and Omicron variants, plus the uncertainty of possible future variants, may subject the Company to particular challenges in its business, financial condition, results of operations, and cash flows. The unpredictability of the pandemic's scope, severity, duration, and actions implemented to alleviate its direct and indirect economic effects and containment measures provide no assurances that the pandemic will not have material adverse repercussions on the Company's operations, liquidity, financial condition, and any residual unfavorable consequences to global economics.

The Company bases its evaluation on possibilities that may prove wrong and could exhaust our available capital resources sooner than we expect. Developments may take place, including those beyond our control, that would cause us to consume our available capital more quickly, including but not limited to those relating to the markets in which we compete or wish to enter, strategic acquisitions, our market strategy, our research and development activities, regulatory matters, and technology and product innovations. Notwithstanding these risks and uncertainties, based on management's liquidity preservation program and proactive spending reductions implemented in the fiscal year 2020, as well as previous capital injections, the Company believes it will have sufficient funds to continue its operations for at least twelve months from the date of these financial statements.

Critical Accounting Policies

As of the date of the filing of this quarterly report, we believe there have been no material changes to our critical accounting policies during the three months ended March 31, 2022, compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 31, 2022. The location of additional information about these critical accounting policies is in the "Management's Discussion & Analysis of Financial Condition and Results of Operations" section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Cash Flows

The following table sets forth the significant components of our cash flows data statements for the periods presented.



                       For the Three Months Period Ended
                                 (In Thousands)

                                                      March 31, 2022      March 31, 2021
Net cash used in operating activities                 $        (4,879 )   $        (4,344 )
Net cash used in investing activities                            (209 )               (46 )
Net cash provided by (used) in financing activities               (99 )            59,068
Effect of exchange rate changes on cash                           (21 )                 9
Net (decrease) increase in cash                       $        (5,208 )   $        54,687

Operating Activities

Net cash used in operating activities of approximately $4.9 million during the three months ended March 31, 2022, was principally attributable to an increase in - a net loss of $2.8 million, $2.2 million in inventory, $0.7 million in stock-based compensation, a decrease in - $0.5 million in deferred revenue and customer deposits, $0.4 million in prepaid expenses and other current assets, and $0.3 million of accrued expenses and interest expense.

Net cash used in operating activities of approximately $4.3 million during the three months ended March 31, 2021, was principally attributable to an increase of $2.4 million in inventory, a decrease in - $1.2 million in accounts payable, $1.1 million in accounts receivable, $0.8 million in deferred revenue and customer deposits, and $0.4 million in prepaid expenses.

Investing Activities

Net cash used by investing activities for the three months ended March 31, 2022, and 2021 were $.2 million and $0.1 million, respectively, and principally related to the capital expenditures for furniture and computer equipment.

Financing Activities

Net cash used in financing activities of approximately $.1 million during the three months ended March 31, 2022, was principally attributable to principal payments made towards D & O policy premiums.

Net cash provided by financing activities of approximately $59.1 million during the three months ended March 31, 2021, was principally attributable to net proceeds from equity raises and common stock warrants' exercise.

30

© Edgar Online, source Glimpses