INTEST CORP

Previous wording

•general economic conditions both domestically and globally; and

Current wording

•changes in U.S. and/or foreign trade policy and/or general economic conditions both domestically and globally; and

Previous wording

34 - equipment, flying probe and in-circuit testers), Environmental Technologies (which includes our thermal test, process and storage products) and Process Technologies (which includes our induction heating and video imaging products).

Current wording

37 - equipment, flying probe and in-circuit testers), Environmental Technologies (which includes our thermal test, process and storage products) and Process Technologies (which includes our induction heating and video imaging products).

Previous wording

As noted in “Part I; Item 1; Financial Statements; Notes to Consolidated Financial Statements; Note (10) Debt,” our Loan Agreement with M&T Bank (“M&T”) contains financial covenants, including a fixed charge coverage ratio of not less than 1.25 to 1.0. At March 31, 2025, we were in compliance with all of the covenants included in the Loan Agreement except for the fixed charge coverage ratio, which was 0.99 to 1.0, for which we obtained a waiver from M&T.

Current wording

As noted in “Part I; Item 1; Financial Statements; Notes to Consolidated Financial Statements; Note (10) Debt,” our Loan Agreement with M&T Bank (“M&T”) contains financial covenants, including a fixed charge coverage ratio of not less than 1.25 to 1.0. At June 30, 2025, we were in compliance with all of the covenants included in the Loan Agreement except for the fixed charge coverage ratio, which was 0.80 to 1.0.

Previous wording

We continue to monitor recent macroeconomic factors, including but not limited to changes in global trade policy, tariffs and related reciprocal or retaliatory trade actions announced by the U.S., China and other countries. The degree to which changes in global trade policy, tariffs and other related actions will impact our business, financial condition and results of operations depends on future developments, which are uncertain. Changes in global trade policies, tariffs and other related actions may negatively impact demand, pricing and cost for our products and technologies, contribute to the inherent uncertainties in estimating future customer demand and increase our material costs, any of which could negatively impacting our results of operations and cash flows. See “Part II; Item 1A. Risk Factors” in this Report, including the risk factor title “U.S. tariff policies and potential global retaliatory countermeasures could increase our cost, disrupt our supply chain or affect customer purchasing activities, any of which could negatively impact our results of operations.”

Current wording

We continue to monitor recent macroeconomic factors, including but not limited to changes in global trade policy, tariffs and related reciprocal or retaliatory trade actions announced by the U.S., China and other countries. The degree to which changes in global trade policy, tariffs and other related actions will impact our business, financial condition and results of operations depends on future developments, which are uncertain. Changes in global trade policies, tariffs and other related actions may negatively impact demand, pricing and cost for our products and technologies, contribute to the inherent uncertainties in estimating future customer demand and increase our material costs, any of which could negatively impacting our results of operations and cash flows.

Previous wording

Acculogic Inc. (“Acculogic”) purchases certain parts from a key sole-source supplier in Belarus, which is bordered by Russia to the east and northeast and Ukraine to the south. As a result of the ongoing war between Russia and Ukraine, in August 2024, the United States, Canada and the European Union added additional sanctions on Belarus, which included adding this supplier to a list of prohibited entities. We have not received materials from this supplier since the issuance of Executive Order 14038. Our remaining supply of these materials is significantly depleted and will be exhausted after the end of the second quarter of 2025. We have recently qualified a new supplier for these materials and have started receiving this new supply of materials. Testing is still ongoing, and we have not yet shipped systems incorporating these new materials to our customers but expect to do so before the end of the second quarter. Additionally, we have applied to the Office of Foreign Asset Control (“OFAC”) to obtain permission for additional purchases from the Belarus supplier through December 31, 2025, but have not yet received the Office’s response and are uncertain of when that response may be received. Additionally, we are applying to Global Affairs Canada for similar permission, now that this supplier has been placed on a restricted parties list in Canada, as well. There can be no assurance that we will be granted a license by OFAC or Global Affairs Canada in a timely manner or at all, or that if granted a license by OFAC or Global Affairs Canada that such supplier in Belarus will be willing or able to provide these parts on reasonable commercial terms or at all.

Current wording

Additionally, we have applied to the Office of Foreign Asset Control (“OFAC”) to obtain permission for additional purchases from the Belarus supplier through December 31, 2025, but have not yet received the Office’s response and are uncertain of when that response may be received. We also applied to Global Affairs Canada for similar permission, now that this supplier has been placed on a restricted parties list in Canada, as well. A significant portion of the additional purchases from the Belarus supplier are intended to support spare parts used for repairs and warranty claims for the existing units already in service with our customers. Those specific parts from the new supplier are not compatible with those existing units. There can be no assurance that we will be granted a license by OFAC or Global Affairs Canada in a timely manner or at all, or that if granted a license by OFAC or Global Affairs Canada that such supplier in Belarus will be willing or able to provide these parts on reasonable commercial terms or at all.

Previous wording

Sequentially, the decrease in orders was partially the result of customer delays during economic uncertainty, especially in the semi market where orders declined $6.0 million. Additionally, demand from defense/aerospace and life sciences slowed during the first quarter outweighing gains in demand from life sciences, auto/EV and safety/security markets.

Current wording

Sequentially, while overall orders increased, there remains economic uncertainty, especially in the semi market where orders declined $2.3 million.

Previous wording

At March 31, 2025, our backlog of unfilled orders for all products was $38.2 million compared to $55.5 million at March 31, 2024, and $39.5 million at December 31, 2024. Our backlog includes customer orders that we have accepted, substantially all of which we expect to deliver in the next twelve months. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.

Current wording

At June 30, 2025, our backlog of unfilled orders for all products was $37.9 million compared to $47.7 million at June 30, 2024, and $38.2 million at December 31, 2024. Our backlog includes customer orders that we have accepted, substantially all of which we expect to deliver in the next twelve months. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.

Previous wording

Restructuring costs for the three months ended March 31, 2025, represent the costs recognized for the Videology Consolidation of the Netherlands operations into our US operations in Mansfield, MA. These costs were for severance and retention accruals along with the payroll-related costs. See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (16) Restructuring” for further details. There were no restructuring programs in the prior year period.

Current wording

Restructuring costs for the three months ended June 30, 2025, represent the costs recognized for the Videology Consolidation of the Netherlands operations into our US operations in Mansfield, MA as well as the leadership transition in our Environmental Technologies division. These costs were for severance and retention accruals along with the payroll-related costs. See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (16) Restructuring” for further details. There were no restructuring programs in the prior year period.

Previous wording

Gross margin declined 230 basis points in the three months ended March 31, 2025, compared to the same prior year period due to the absorption of fixed costs on lower volumes along with an unfavorable product sales mix. The current year period also includes a full quarter’s worth of Alfamation™ activity.

Current wording

Gross margin declined 10 basis points in the six months ended June 30, 2025, compared to the same prior year period due to the absorption of fixed costs on lower volumes offset partly by cost reduction initiatives. The current year period also includes the full six months impact of Alfamation™ activity.

Previous wording

Selling expense for the three months ended March 31, 2025, declined slightly compared to the prior year period, but not at the rate of the revenue decline. Sales commissions, payroll and payroll related costs decreased, however, we recognized an increase in warranty expense compared to the prior year period. The full quarter impact of Alfamation™ was inconsequential.

Current wording

Selling expense for the six months ended June 30, 2025, declined slightly compared to the prior year period, but not at the rate of the revenue decline. Sales commissions, payroll, payroll related costs and advertising decreased, however, we recognized an increase in warranty expense compared to the prior year period. The full six month impact of Alfamation™ was inconsequential.

Previous wording

General and administrative expense for the three months ended March 31, 2025, increased compared to the prior year period due to the full quarter impact of Alfamation™, partially offset by decreases in acquisition-related costs and a decrease in bonus expense. During the first quarter of 2025, we disaggregated the amortization of intangible assets and restructuring costs from general and administrative expenses in all periods presented.

Current wording

General and administrative expense for the six months ended June 30, 2025, decreased compared to the prior year period due primarily to decreases in acquisition-related costs and bonus expense. Early in 2025 we also refocused on controlling discretionary spending and reducing non-strategic expenses. During the first quarter of 2025, we disaggregated the amortization of intangible assets and restructuring costs from general and administrative expenses in all periods presented.

Previous wording

Amortization of acquired intangible assets for the three months ended March 31, 2025, increased compared to the prior year period due to the full quarter impact of the additional finite-lived intangible assets acquired in the Alfamation™ acquisition.

Current wording

Amortization of acquired intangible assets for the six months ended June 30, 2025, increased compared to the prior year period due to the full six months impact of the additional finite-lived intangible assets acquired in the Alfamation™ acquisition.

Previous wording

As discussed more fully in the “Overview” section above, our business and results of operations are substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for ATE makes estimates of future revenues, results of operations and net cash flows difficult.

Current wording

As discussed more fully in the “Overview” section above, our business and results of operations are substantially dependent upon the demand for ATE and wafer production equipment by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for this equipment makes estimates of future revenues, results of operations and net cash flows difficult.

Previous wording

As discussed in “Note (10) Debt” to our consolidated financial statements in this Report, on October 15, 2021, we entered into an Amended and Restated Loan and Security Agreement with M&T which, was subsequently amended on October 28, 2021, December 30, 2021, September 20, 2022, May 2, 2024, and December 18, 2024 (as amended, the “Loan Agreement”). The Loan Agreement includes a $50.5 million non-revolving delayed draw term note (the “Term Note”) and a $10.0 million revolving credit facility (the “Revolving Facility” and together with the Term Note, the “Credit Facility”). The Credit Facility has a five-year contract period that began on the October 15, 2021, and, as amended, expires on May 2, 2031, and draws under the Term Note,as amended, are permissible until May 2, 2026.

Current wording

As discussed in “Note (10) Debt” to our consolidated financial statements in this Report, on October 15, 2021, we entered into an Amended and Restated Loan and Security Agreement with M&T which, was subsequently amended on October 28, 2021, December 30, 2021, September 20, 2022, May 2, 2024, and December 18, 2024 (as amended, the “Loan Agreement”). The Loan Agreement includes a $50.5 million non-revolving delayed draw term note (the “Term Note”) and a $10.0 million revolving credit facility (the “Revolving Facility” and together with the Term Note, the “Credit Facility”). The Credit Facility has a five-year contract period that began on October 15, 2021, and, as amended, expires on May 2, 2031, and draws under the Term Note,as amended, are permissible until May 2, 2026.

Previous wording

At March 31, 2025, we have not borrowed any amounts under the $10.0 million Revolving Facility. Our borrowings under the Term Note are discussed below and our available drawing capacity under the Term Note at March 31, 2025, was $30.0 million. The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0

Current wording

At June 30, 2025, we have not borrowed any amounts under the $10.0 million Revolving Facility. Our borrowings under the Term Note are discussed below and our available drawing capacity under the Term Note at June 30, 2025, was $30.0 million. The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0 and a fixed charge coverage ratio of not less than 1.25 to 1.0. Our obligations under the Loan Agreement are secured by liens on substantially all of our tangible and intangible assets. At June 30, 2025, we were in compliance with all of the covenants included in the Loan Agreement, except for the fixed charge coverage ratio financial covenant which was 0.80 to 1.0 for the quarter ended June 30, 2025.

Previous wording

On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At March 31, 2025, it was 6.5% based on current leverage.

Current wording

On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At June 30, 2025, it was 6.6% based on current leverage.

Previous wording

At March 31, 2025, Alfamation™’s debt was valued at $4.9 million, including $1.1 million that is backed by Alfamation™’s accounts receivable. The reduction since the acquisition date represents repayments of short-term instruments and principal payments on long-term debt, net of new borrowings that are backed by Alfamation™’s accounts receivable. The short-term variable financing rate at March 31, 2025, was 3.5%. At March 31, 2025, the weighted average interest rate payable on the bank issued term loans was 1.1% for fixed rate debt and 4.0% for variable rate debt and the overall weighted average interest rate for the bank issued term loans was 3.3%.

Current wording

At June 30, 2025, Alfamation™’s debt was valued at $4.2 million, including $0.7 million that is backed by Alfamation™’s accounts receivable. The reduction since the acquisition date represents repayments of short-term instruments and principal payments on long-term debt, net of new borrowings that are backed by Alfamation™’s accounts receivable. The short-term variable financing rate at June 30, 2025, was 3.1%. At June 30, 2025, the weighted average interest rate payable on the bank issued term loans was 1.1% for fixed rate debt and 3.7% for variable rate debt and the overall weighted average interest rate for the bank issued term loans was 3.2%.

Previous wording

Total interest expense for the three months ended March 31, 2025 and 2024, related to our various debt arrangements was $0.2 million and $0.1 million, respectively.

Current wording

Total interest expense for the six months ended June 30, 2025 and 2024, related to our various debt arrangements was $0.3 million and $0.4 million, respectively.

Previous wording

As of March 31, 2025, $12.0 million, or 55%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our Revolving Facility is discussed in “Note (10) Debt” to our consolidated financial statements in this Report.

Current wording

As of June 30, 2025, $8.6 million, or 45%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our Revolving Facility is discussed in “Note (10) Debt” to our consolidated financial statements in this Report.

Previous wording

Our material short-term cash requirements include payments due under our various lease agreements, recurring payroll and benefits obligations to our employees, purchase commitments for materials that we use in the products we sell and principal and interest payments on our debt. We estimate that our short-term working capital requirements currently range between $8.0 million and $10.0 million. We expect our current cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations to be sufficient to support these additional investments as well as our current short-term cash requirements.

Current wording

Our material short-term cash requirements include payments due under our various lease agreements, recurring payroll and benefits obligations to our employees, purchase commitments for materials that we use in the products we sell and principal and interest payments on our debt. We estimate that our short-term working capital requirements currently range between $8.0 million and $10.0 million. We expect our current cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations to be sufficient to support these additional investments as well as our current short-term cash requirements. As discussed above in “Credit Facility” and in “Note (10) Debt”, on August 5, 2025 we formally pledged a portion of our cash holdings equal to our total open debt with M&T. At June 30, 2025 we were holding $5.9 million of total debt with M&T.

Previous wording

Our current strategy for growth includes pursuing acquisition opportunities for complementary businesses, technologies or products. As previously discussed, we currently anticipate that any additional long-term cash requirements related to our strategy would be funded through a combination of our cash and cash equivalents, the remaining availability under the

Current wording

Our current strategy for growth includes pursuing acquisition opportunities for complementary businesses, technologies or products. As previously discussed, we currently anticipate that any additional long-term cash requirements related to our strategy would be funded through a combination of our cash and cash equivalents, the remaining availability under the Term Note or by issuing equity. The borrowing availability under the Term Note was expanded in September 2022 as discussed above and in “Note (10) Debt” to our consolidated financial statements in this Report.

Previous wording

Operating Activities: Net cash provided by operating activities for the three months ended March 31, 2025, was $5.5 million, an increase of $3.5 million compared to the prior year period. The increase was driven by increased collections of our accounts receivable, offset partially by the decrease in net earnings from the comparative period as a result of the net loss during the three months ended March 31, 2025, decreases in accounts payable, accrued expenses and other liabilities. Non-cash adjustments to net (loss) earnings increased primarily due to increased depreciation and amortization resulting from the full-quarter impact of Alfamation™.

Current wording

Operating Activities: Net cash provided by operating activities for the six months ended June 30, 2025, was $4.8 million, an increase of $7.9 million compared to the prior year period. The increase was driven primarily by decreased revenues and collections of our accounts receivable, offset partially by the decrease in net earnings from the comparative period as a result of the net loss during the six months ended June 30, 2025, and increases in prepaids and other assets. Non-cash adjustments to net (loss) earnings increased primarily due to increased depreciation and amortization resulting from the full six month impact of Alfamation™.

Previous wording

Investing Activities: Net cash used in investing activities for the three months ended March 31, 2025, was $0.2 million, a decreased usage of $19.0 million compared to the prior year period. During the three months ended March 31, 2024, we used $18.9 million of cash to acquire Alfamation™, whereas in the current year period we did not have any acquisitions. Capital expenditures for property and equipment were consistent in both periods.

Current wording

Investing Activities: Net cash used in investing activities for the six months ended June 30, 2025, was $0.7 million, a decreased usage of $18.7 million compared to the prior year period. During the six months ended June 30, 2024, we used $18.7 million of cash to acquire Alfamation™, whereas in the current year period we did not have any acquisitions. Capital expenditures for property and equipment were consistent in both periods.

Previous wording

Financing Activities: Net cash used in financing activities for the three months ended March 31, 2025, was $3.4 million, an increased usage of $2.5 million compared to the prior year period. The increase is due to the repayments of short-term borrowings used in the Alfamation™ operations.

Current wording

Financing Activities: Net cash used in financing activities for the six months ended June 30, 2025, was $5.6 million, an increased usage of $3.8 million compared to the prior year period. The increase is due to the repayments of short-term borrowings used in the Alfamation™ operations along with repayments of our long-term debt.