INTEST CORP

Previous wording

•our failure to maintain a proper and effective system of disclosure controls and internal control over financial reporting;

Current wording

•our ability to effectively remediate the material weaknesses in our internal control over financial reporting that we have identified or our failure to develop and maintain a proper and effective system of disclosure controls and internal control over financial reporting;

Previous wording

34 - in the U.S., Canada, Italy and began limited manufacturing in Malaysia in the fourth quarter of 2025. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Italy, Germany, Singapore, Malaysia, and the U.K. We have three reportable segments which are also our reporting units: Electronic Test, (which includes our semiconductor test 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

We are a global supplier of innovative test and process technology solutions for use in manufacturing and testing across a wide range of markets including Semi, Auto/EV, Defense/Aerospace, Industrial, Life Sciences, Safety/Security and Other. We operate our business worldwide, sell our products both domestically and internationally and manufacture our products in the U.S., Canada, Italy and began limited manufacturing in Malaysia in the fourth quarter of 2025. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Italy, Germany, Singapore, Malaysia, and the U.K. We have three reportable segments which are also our reporting units: Electronic Test, (which includes our semiconductor test 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

The Semi market is highly cyclical with recurring periods of oversupply, which often severely impact the Semi market's demand for the products we manufacture and sell into the market. This cyclicality can cause wide fluctuations in both our orders and revenue and, depending on our ability to react quickly to these shifts in demand, can significantly impact our results of operations. Market cycles are difficult to predict and, because they are generally characterized by sequential periods of growth or declines in orders and revenue during each cycle, year-over-year comparisons of operating results may not always be as meaningful as comparisons of periods at similar points in either up or down cycles. These periods of heightened or reduced demand can shift depending on various factors impacting both our customers and the markets that they serve. In addition, during both downward and upward cycles in the Semi market, in any given quarter, the trend in both our orders and revenue can be erratic. This can occur, for example, when orders are canceled or currently scheduled delivery dates are accelerated or postponed by a significant customer or when customer forecasts and general business conditions fluctuate during a quarter.

Current wording

The Semi market is highly cyclical with recurring periods of oversupply, which often severely impact the Semi market's demand for the products we manufacture and sell into the market. This cyclicality can cause wide fluctuations in both our orders and revenue and, depending on our ability to react quickly to these shifts in demand, can significantly impact our results of operations. Market cycles are difficult to predict and, because they are generally characterized by sequential periods of growth or declines in orders and revenue during each cycle, year-over-year comparisons of operating results may not always be as meaningful as comparisons of periods at similar points in either up or down cycles. These periods of heightened or reduced demand can shift depending on various factors impacting both our customers and the markets that they serve. In addition, during both downward and upward cycles in the Semi market, in any given quarter, the trend in both our orders and revenue can be erratic. This can occur, for example, when orders are canceled or currently

Previous wording

While a significant portion of our orders and revenue are derived from the Semi market, and our operating results generally follow the overall trend in the Semi market, in any given period we may experience anomalies that cause the trend in our revenue from the Semi market to deviate from the overall trend in the market. We believe that these anomalies may be driven by a variety of factors within the Semi market, including, for example, changing product requirements, longer periods between new product offerings by OEMs and changes in customer buying patterns. In addition, in recent periods, we have seen instances when demand within the Semi market is not consistent for each of our operating segments or for any given product within a particular operating segment. This inconsistency in demand can be driven by a number of factors but, in most cases, we have found that the primary reason is unique customer-specific changes in demand for certain products driven by the needs of their customers or markets served. Recently this has

Current wording

While a significant portion of our orders and revenue are derived from the Semi market, and our operating results generally follow the overall trend in the Semi market, in any given period we may experience anomalies that cause the trend in our revenue from the Semi market to deviate from the overall trend in the market. We believe that these anomalies may be driven by a variety of factors within the Semi market, including, for example, changing product requirements, longer periods between new product offerings by OEMs and changes in customer buying patterns. In addition, in recent periods, we have seen instances when demand within the Semi market is not consistent for each of our operating segments or for any given product within a particular operating segment. This inconsistency in demand can be driven by a number of factors but, in most cases, we have found that the primary reason is unique customer-specific changes in demand for certain products driven by the needs of their customers or markets served. Recently this has become more pronounced for our sales into the wafer production sector within the broader semiconductor market due to the limited market penetration we have into this sector and the variability of orders we have experienced from the few customers we support. These shifts in market practices and customer-specific needs have had, and may continue to have, varying levels of impact on our operating results and are difficult to quantify or predict from period to period. Management has taken, and will continue to take, such actions it deems appropriate to adjust our strategies, products and operations to counter such shifts in market practices as they become evident.

Previous wording

As noted in “Part I; Item 1; Financial Statements; Notes to Consolidated Financial Statements; Note (9) 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. The fixed charge coverage ratio is calculated over the trailing twelve months, so the net loss reported in the first, second and third quarters impacts our ability to meet this covenant in future periods notwithstanding our strong cash position. On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we are required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we had total debt of $2.8 million with M&T, held $2.8 million of restricted cash with M&T, and were in compliance with all covenants included in the Loan Agreement. By June 30, 2026 we project having less than $2.0 million total debt outstanding with M&T.

Current wording

As noted in “Part I; Item 1; Financial Statements; Notes to Consolidated Financial Statements; Note (9) 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. The fixed charge coverage ratio is calculated over the trailing twelve months, so the net loss reported in the first, second and third quarters impacts our ability to meet this covenant in future periods notwithstanding our strong cash position. On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. On May 4, 2026, we executed the Seventh Amendment to the Loan Agreement, effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.

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.

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

Previous wording

36 - supplier of capacitors for numerous induction companies, and currently there are no viable alternatives available. We have been in frequent contact with our supplier since the conflicts with Hamas and in Iran began and have been advised that their operations are currently uninterrupted. We maintain a two-to-three month safety stock on these items. As of March 31, 2026, our supplier has indicated that they have large stock available at more than one facility in Israel, so they believe they have redundancies in place that will help ensure that the supply chain to their customers is uninterrupted. We continue to monitor the situation closely and are staying in close contact with our supplier. However, there can be no assurance that the situation will not worsen which could impact our ability to ship certain of our induction heating products which could have a material impact on our future results of operations.

Current wording

In early October 2023, Hamas attacked Israel and Israel formally declared war in response to the attack. Although a cease-fire was declared in October 2025, hostilities continue. On February 28, 2026, the U.S. and Israel launched a coordinated military operation against Iran, and Iran has responded with attacks affecting certain Persian Gulf states as well as Israel. It is unclear when these continuing conflicts will end and these conflicts are likely to cause regional instability that could materially adversely affect global trade, regional economies and the global economy, which could materially adversely affect our financial condition and results of operations. Ambrell® has a sole source supplier of capacitors used in certain of our induction heating products that is located in Israel. This supplier is the sole source supplier of capacitors for numerous induction companies, and currently there are no viable alternatives available. We have been in frequent contact with our supplier since the conflicts with Hamas and in Iran began and have been advised that their operations are currently uninterrupted. We maintain a two-to-three month safety stock on these items. As of June 30, 2026, our supplier has indicated that they have large stock available at more than one facility in Israel, so they believe they have redundancies in place that will help ensure that the supply chain to their customers is uninterrupted. We continue to monitor the situation closely and are staying in close contact with our supplier. However, there can be no assurance that the situation will not worsen which could impact our ability to ship certain of our induction heating products which could have a material impact on our future results of operations.

Previous wording

We have qualified a new supplier for these materials and have a supply of these materials on hand to support new production. Our first system incorporating these new materials shipped to one of our customers at the end of the second quarter 2025.

Current wording

We qualified a new supplier for these materials in early 2025 and have a supply of these materials on hand to support new production. Our first system incorporating these new materials shipped to one of our customers at the end of the second quarter 2025.

Previous wording

Additionally, we have applied to the U.S Department of Treasury’s Office of Foreign Asset Control (“OFAC”) and Global Affairs Canada for permission to purchase materials from the Belarus supplier to support repairs and warranty claims for the existing units already in service with our customers. As of March 31, 2026, we have not yet received such permission from Global Affairs Canada. In December 2025, we received a license from OFAC allowing us to purchase a specified dollar amount of these parts from this supplier through June 30, 2026. Late in the first quarter of 2026, we determined that our license needed to be amended to include a director of this supplier who was also listed individually as a prohibited party by the U.S. government. We have requested this amendment as well as an extension of the license to allow purchases through the end of 2027. There can be no assurance that these amendments will be approved by OFAC or what the timing of any such approval would be.

Current wording

Additionally, we have applied to the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”) and Global Affairs Canada for permission to purchase materials from the Belarus supplier to support repairs and warranty claims for the existing units already in service with our customers. In December 2025, we received a license from OFAC allowing us to purchase a specified dollar amount of these parts from this supplier through June 30, 2026. Late in the first quarter of 2026, we determined that our license needed to be amended to include a director of this supplier who was also listed individually as a prohibited party by the U.S. government. We have requested this amendment as well as an extension of the license to allow purchases through the end of 2027. There can be no assurance that these amendments will be approved by OFAC or what the timing of any such approval would be. In June 2026, we received a permit from Global Affairs Canada. This permit is currently valid until June 15, 2028. However, because of the OFAC license expiration on June 30, 2026, we are still not able to enter into transactions with the Belarusian supplier until such time as the OFAC license is amended and extended.

Previous wording

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.

Current wording

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 the amended and extended license by OFAC in a timely manner or at all, or that if granted a license by OFAC that such supplier in Belarus will be willing or able to provide these parts on reasonable commercial terms or at all.

Previous wording

In addition, while the supply chain and logistics challenges that we encountered throughout 2022 have eased, uncertainty in the global trade environment remains. As a result, we expect that we may continue to experience increased prices, lack of availability and logistics delays from time to time for the foreseeable future. The actions we have taken and are continuing to take to mitigate these risks include qualifying new vendors as alternate sources in our supply chain, increasing our inventory of raw materials and ordering further in advance of when we expect to need materials than has been our practice in the past. We have also increased the prices that we charge our customers, where appropriate, and continue to work with our customers to find alternate options for the shipment of products where they control aspects of the logistics process. However, the environment in which we operate is dynamic and shifts rapidly at times, and the success of our efforts to mitigate and address the impacts on our business may not be successful. As a result, we could see increases in our costs or reduced revenues which would impact the level of our earnings in future periods.

Current wording

41 - raw materials and ordering further in advance of when we expect to need materials than has been our practice in the past. We have also increased the prices that we charge our customers, where appropriate, and continue to work with our customers to find alternate options for the shipment of products where they control aspects of the logistics process. However, the environment in which we operate is dynamic and shifts rapidly at times, and the success of our efforts to mitigate and address the impacts on our business may not be successful. As a result, we could see increases in our costs or reduced revenues which would impact the level of our earnings in future periods.

Previous wording

37 - experience and on appropriate and customary assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Some of these accounting estimates and assumptions are particularly sensitive because of their significance to our Consolidated Financial Statements and because of the possibility that future events affecting them may differ markedly from what had been assumed when the financial statements were prepared.

Current wording

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, long-lived assets, goodwill, identifiable intangibles, contingent consideration liabilities and deferred income tax valuation allowances. We base our estimates on historical experience and on appropriate and customary assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Some of these accounting estimates and assumptions are particularly sensitive because of their significance to our Consolidated Financial Statements and because of the possibility that future events affecting them may differ markedly from what had been assumed when the financial statements were prepared.

Previous wording

Compared with the prior-year period, revenue for the first quarter increased due primarily to growth in Defense/Aerospace, Life Sciences, Auto/EV and Semi, partially offset by a decrease in Other. Sequentially, revenue increased compared to the trailing fourth quarter, due primarily to increases in Semi and Auto/EV, offset partially by a decrease in Industrial following a stronger than normal fourth quarter.

Current wording

Compared with the prior-year period, revenue for the second quarter increased due primarily to growth in Auto/EV, as the electronics content of modern vehicles continues to increase, and likewise the testing of those components offset partially by the decreases primarily in Semi. Sequentially, revenue increased compared to the trailing first quarter, due primarily to increases in Auto/EV and Industrial, offset partially by sequential decreases primarily in Defense/Aerospace, Life Sciences and Semi.

Previous wording

At March 31, 2026, our backlog of unfilled orders for all products was $51.8 million compared to $38.2 million at March 31, 2025, and $53.9 million at December 31, 2025. 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, 2026, our backlog of unfilled orders for all products was $45.4 million compared to $37.9 million at June 30, 2025, and $53.9 million at December 31, 2025. 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

Gross margin increased 400 basis points in the three months ended March 31, 2026, compared to the same prior year period due to higher volume, favorable product mix and manufacturing efficiency initiatives.

Current wording

Gross margin decreased 210 basis points in the three months ended June 30, 2026, compared to the same prior year period due to changes in product mix.

Previous wording

Amortization of acquired intangible assets for the three months ended March 31, 2026, decreased compared to the prior year period due to the declining pattern of benefit for the assets, offset partially by the impact of changes in foreign exchange rates.

Current wording

Amortization of acquired intangible assets for the three months ended June 30, 2026, decreased compared to the prior year period due to the declining pattern of benefit for the assets and the May 2026 completion of amortization of intangible assets from the Ambrell® acquisition, offset partially by the impact of changes in foreign exchange rates.

Previous wording

Restructuring costs for the three months ended March 31, 2026, are primarily the costs associated with our CEO transition. The costs for the three months ended March 31, 2025 represent severance and retention accruals along with the payroll-related costs recognized for the Videology Consolidation of the Netherlands operations into our US operations in Mansfield, MA. See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (15) Restructuring” for further details.

Current wording

Restructuring costs for the three months ended June 30, 2026, are the residual facility related costs from the Videology Consolidation of the Netherlands operations into our US operations in Mansfield, MA. The restructuring costs for the three months ended June 30, 2025 represent severance and retention accruals along with the payroll-related costs recognized for the Videology Consolidation as well as costs related to the leadership transition in our Environmental Technologies division. See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (15) Restructuring” for further details.

Previous wording

On a quarterly basis, we record income tax expense or (benefit) based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses. For the three months ended March 31, 2026, we recorded a tax expense based on our pre-tax earnings and expected annualized rate, whereas in the comparable period we reported a pre-tax loss. The increase in the effective tax rate for the current year period is due to limitations on certain current year deductions related to the prior year's net operating loss carry-over applied to current year taxable income. There were no unusual tax adjustments recorded in either period.

Current wording

On a quarterly basis, we record income tax expense or (benefit) based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses. Due to the unusually large number of stock option exercises during the three months ended June 30, 2026, we recognized a discrete tax benefit in the period related to difference between the book and tax expense on those exercises, resulting in a net tax benefit for the quarter and year to date periods. There were no other unusual tax adjustments recorded in either period.

Previous wording

Compared with the prior-year period, orders for the first quarter increased primarily in Auto/EV and Defense/Aerospace partially offset by the decline in Semi. Sequentially, orders decreased primarily in Life Sciences, Semi, Other and Safety/Security.

Current wording

Compared with the prior-year period, orders for the six months ended June 30, 2026 increased primarily in Defense/Aerospace, Semi and Auto/EV and partially offset primarily by the decline in Safety/Security.

Previous wording

Selling expense for the three months ended March 31, 2026, declined compared to the prior year period due primarily to a decline in warranty expense.

Current wording

Selling expense for the six months ended June 30, 2026, increased compared to the prior year period due primarily to increases in commissions and payroll related merit increases offset partially by a decline in warranty expense.

Previous wording

Engineering and product development expense for the three months ended March 31, 2026, increased nominally compared to the prior year period due primarily to an increase in payroll and payroll related costs.

Current wording

Engineering and product development expense for the six months ended June 30, 2026, increased compared to the prior year period due primarily to an increase in payroll related merit increases and outside services.

Previous wording

Our primary historical source of liquidity and capital resources has been cash flow generated by our operations. In 2021, we also utilized our Credit Facility, which is discussed below, to fund our acquisitions. We manage our businesses to maximize operating cash flows as our primary source of liquidity for our short-term cash requirements, as discussed below. We use cash to fund growth in our operating assets, for new product research and development, for acquisitions

Current wording

Our primary historical source of liquidity and capital resources has been cash flow generated by our operations. In 2021, we also utilized our Credit Facility, which is discussed below, to fund our acquisitions. We manage our businesses to maximize operating cash flows as our primary source of liquidity for our short-term cash requirements, as discussed below. We use cash to fund growth in our operating assets, for new product research and development, for acquisitions and for stock repurchases. 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, our Credit Facility or by issuing equity.

Previous wording

On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we are required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we were holding $2.8 million of total debt with M&T. At March 31, 2026, we were in compliance with all of the covenants included in the Loan Agreement.

Current wording

On August 5, 2025, we executed the Sixth Amendment to the Loan Agreement, which formally waives the fixed charge coverage ratio financial covenant for periods ending June 30, 2025 through and including March 31, 2026. During the period of this waiver we were required to request consent from M&T if we wish to utilize our Revolving Facility and we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T.

Previous wording

At March 31, 2026, Alfamation™’s debt was $5.7 million, including $3.4 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, 2026, was 3.2%. At March 31, 2026, the weighted average interest rate payable on the bank issued term loans was 0.7% 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, 2026, Alfamation™’s debt was $4.5 million, including $2.5 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, 2026, was 3.5%. At June 30, 2026, the weighted average interest rate payable on the bank issued term loans was 0.6% for fixed rate debt and 4.2% for variable rate debt and the overall weighted average interest rate for the bank issued term loans was 3.5%.

Previous wording

Total interest expense for the three months ended March 31, 2026 and 2025, related to our various debt arrangements was $0.1 million and $0.2 million, respectively.

Current wording

Total interest expense for the six months ended June 30, 2026 and 2025, related to our various debt arrangements was $0.1 million and $0.3 million, respectively.

Previous wording

As of March 31, 2026, $9.7 million, or 76%, 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 (9) Debt” to our Consolidated Financial Statements in this Report.

Current wording

As of June 30, 2026, $10.3 million, or 47%, 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 (9) 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. As discussed above in “Credit Facility” and in “Note (9) Debt”, on August 5, 2025 we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. At March 31, 2026 we were holding $2.8 million of total debt with M&T. On May 4, 2026, we amended the Credit Facility,effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.

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 (9) Debt”, on August 5, 2025 we formally pledged a portion of our cash holdings equal to our total outstanding debt with M&T. The waiver has expired and at June 30, 2026, we were in compliance with all covenants included in the Loan Agreement. On May 4, 2026, we amended the Credit Facility, effective as of April 30, 2026, to extend our ability to draw on the Term Note through August 28, 2026.

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 Term Note or by issuing equity. The borrowing availability under the Term Note was expanded in September 2022 as discussed above and in “Note (9) Debt” to our Consolidated Financial Statements in this Report.

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 is discussed in further detail in “Note (9) Debt” to our Consolidated Financial Statements in this Report.

Previous wording

Operating Activities: Net cash used in operating activities for the three months ended March 31, 2026, was $3.3 million, an increased usage of $8.9 million compared to the prior year period. The increase was driven primarily by the changes in accounts receivable, driven by increased revenue outpacing the rate of collections period-over-period, along with the change in accounts payable, offset partially by the increase in net earnings from the comparative period and the increase in the change in domestic and foreign taxes payable.

Current wording

Operating Activities: Net cash provided by operating activities for the six months ended June 30, 2026, was $3.0 million, a decrease of $1.8 million compared to the prior year period. The decrease was driven primarily by the changes in accounts receivable, driven by increased revenue outpacing the rate of collections period-over-period, along with the

Previous wording

Investing Activities: Net cash used in investing activities for the three months ended March 31, 2026, was $0.6 million, an increased usage of $0.4 million compared to the prior year period. 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, 2026, was $1.0 million, an increased usage of $0.4 million compared to the prior year period due to increased capital expenditures.

Previous wording

Financing Activities: Net cash provided by financing activities for the three months ended March 31, 2026, was $1.7 million, whereas we reported a cash usage in financing activities of $3.4 million for the prior year period. During the three months ended March 31, 2026, we reported short term borrowings, net of repayments, of $2.2 million, which is related to the short-term variable financing used at Alfamation™. We did not have any stock repurchases under the March 5, 2025 renewal of the previously expired share repurchase plan in either the current year or prior year periods. As a result of our stock price increase between January 1, 2026 and March 31, 2026, we saw an increase in stock option exercise activity, which resulted in an increased cash inflow of $0.5 million compared to the prior year period.

Current wording

Financing Activities: Net cash provided by financing activities for the six months ended June 30, 2026, was $2.3 million, whereas we reported a cash usage in financing activities of $5.6 million for the prior year period. During the six months ended June 30, 2026, we reported short term borrowings, net of repayments, of $0.9 million, which is related to the short-term variable financing used at Alfamation™. We did not have any stock repurchases under the March 5, 2025 renewal of the previously expired share repurchase plan in either the current year or prior year periods. As a result of our stock price increase between January 1, 2026 and June 30, 2026, we saw an increase in stock option exercise activity, which resulted in an increased cash inflow of $3.4 million compared to the prior year period.

Previous wording

See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (2) Summary of Significant Accounting Policies and (t) Effect of Recently Issued Amendments to Authoritative Accounting Guidance Not Yet Adopted” for information concerning the implementation and impact of new or recently adopted accounting standards.

Current wording

See “Part I; Item 1. Financial Statements; Notes to Consolidated Financial Statements; Note (2) Summary of Significant Accounting Policies and (u) Effect of Recently Issued Amendments to Authoritative Accounting Guidance Not Yet Adopted” for information concerning the implementation and impact of new or recently adopted accounting standards.