RICHARDSON ELECTRONICS, LTD.

Previous wording

Results of Operations – an analysis and comparison of our consolidated results of operations for the three month and six month periods ended November 29, 2025 and November 30, 2024, as reflected in our Unaudited Consolidated Statements of Comprehensive (Loss) Income.

Current wording

Results of Operations – an analysis and comparison of our consolidated results of operations for the three month and nine month periods ended February 28, 2026 and March 1, 2025, as reflected in our Unaudited Consolidated Statements of Comprehensive Income (Loss).

Previous wording

Liquidity, Financial Position and Capital Resources – a discussion of our primary sources and uses of cash for six month periods ended November 29, 2025 and November 30, 2024, and a discussion of changes in our financial position.

Current wording

Liquidity, Financial Position and Capital Resources – a discussion of our primary sources and uses of cash for nine month periods ended February 28, 2026 and March 1, 2025, and a discussion of changes in our financial position.

Previous wording

The impact of these changes in trade policies will depend on various factors, including (i) when trade measures are implemented, (ii) the ultimate amount, scope, nature, and duration of tariffs and other trade measures, and (iii) the extent to which the Company can mitigate impacts and pass on any increased costs associated with these changes. In addition, the impact of trade disruptions on general economic conditions and demand for electronic components is difficult to predict.

Current wording

The extent to which of these changes in trade policies may impact our business will depend on various factors, including (i) when trade measures are implemented, (ii) the ultimate amount, scope, nature, and duration of tariffs and other trade measures, and (iii) the extent to which the Company can mitigate impacts and pass on any increased costs associated with these changes. In addition, the impact of trade disruptions on general economic conditions and demand for electronic components is difficult to predict.

Previous wording

The recent tariff modifications did not materially impact our results for the first six months of fiscal 2026. However, it is possible that further tariffs may be imposed on imports of our products, including by other countries, or that our business will be impacted by changing trade relations among countries. Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers’ markets. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.

Current wording

Our results for the first nine months of fiscal 2026 were not materially impacted by the changes in trade policies implemented by the U.S. However, it is possible that further tariffs may be imposed on imports of our products, including by other countries, or that our business will be impacted by changing trade relations among countries. Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers’ markets, including with respect to tariff refund claims. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.

Previous wording

Power and Microwave Technologies ("PMT")combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. After the sale of certain assets to DirectMed, the Company continues to manufacture and repair certain CT tubes and sells them exclusively to DirectMed pursuant to a supply agreement.

Current wording

Power and Microwave Technologies ("PMT")combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. After the sale of certain assets to DirectMed, the Company continues to repair certain CT tubes and sells them exclusively to DirectMed pursuant to a supply agreement.

Previous wording

The second quarter of fiscal 2026 and fiscal 2025 both contained 13 weeks.

Current wording

The third quarter of fiscal 2026 and fiscal 2025 both contained 13 weeks.

Previous wording

Net sales during the second quarter of fiscal 2026 were $52.3 million, an increase of 5.7%, compared to net sales of $49.5 million during the second quarter of fiscal 2025.

Current wording

Net sales during the third quarter of fiscal 2026 were $55.5 million, an increase of 3.1%, compared to net sales of $53.8 million during the third quarter of fiscal 2025.

Previous wording

Gross margin decreased to 30.8% during the second quarter of fiscal 2026 compared to 31.0% during the second quarter of fiscal 2025.

Current wording

Gross margin increased to 31.9% during the third quarter of fiscal 2026 compared to 31.0% during the third quarter of fiscal 2025.

Previous wording

Operating income during the second quarter of fiscal 2026 was $0.1 million compared to an operating loss of $0.7 million during the second quarter of fiscal 2025.

Current wording

Operating income during the third quarter of fiscal 2026 was $1.5 million compared to an operating loss of $2.7 million during the third quarter of fiscal 2025.

Previous wording

The first six months of fiscal 2026 and fiscal 2025 both contained 26 weeks.

Current wording

The first nine months of fiscal 2026 and fiscal 2025 both contained 39 weeks.

Previous wording

Net sales during the first six months of fiscal 2026 were $106.9 million, an increase of 3.6%, compared to net sales of $103.2 million during the first six months of fiscal 2025.

Current wording

Net sales during the first nine months of fiscal 2026 were $162.4 million, an increase of 3.4%, compared to net sales of $157.0 million during the first nine months of fiscal 2025.

Previous wording

Gross margin increased to 30.9% during the first six months of fiscal 2026 compared to 30.8% during the first six months of fiscal 2025.

Current wording

Gross margin increased to 31.2% during the first nine months of fiscal 2026 compared to 30.8% during the first nine months of fiscal 2025.

Previous wording

Operating income during the first six months of fiscal 2026 was $1.1 million compared to an operating loss of $0.4 million during the first six months of fiscal 2025.

Current wording

Operating income during the first nine months of fiscal 2026 was $2.6 million compared to an operating loss of $3.1 million during the first nine months of fiscal 2025.

Previous wording

Net sales by segment and percentage change during the second quarter and first six months of fiscal 2026 and fiscal 2025 were as follows (in thousands):

Current wording

Net sales by segment and percentage change during the third quarter and first nine months of fiscal 2026 and fiscal 2025 were as follows (in thousands):

Previous wording

During the second quarter of fiscal 2026, consolidated net sales increased 5.7% compared to the second quarter of fiscal 2025. Sales for PMT decreased 4.0%, sales for GES increased 39.0% and sales for Canvys increased 28.1%. The decrease in PMT was mainly due to a decline in Electron Device and Healthcare products partially offset by higher RF and Microwave products. The increase in GES was mainly due to sales of Power Management products. The increase in Canvys was attributable to higher sales in the North American markets.

Current wording

During the third quarter of fiscal 2026, consolidated net sales increased 3.1% compared to the third quarter of fiscal 2025. Sales for PMT increased 9.7%, sales for GES decreased 5.4% and sales for Canvys decreased 13.5%. The increase in PMT was primarily due to increases in both our semiconductor equipment and RF/Microwave component segments The decrease in GES was mainly due to a decrease in legacy tube customers offset by increase in market share through new products and territory expansion. The decrease in Canvys was attributable to lower sales in the North American markets.

Previous wording

During the first six months of fiscal 2026, consolidated net sales increased 3.6% compared to the first six months of fiscal 2025. Sales for PMT decreased 0.5%, sales for GES increased 10.7% and sales for Canvys increased 17.7%. The decrease in PMT was mainly due to a decline in Electron Device and Healthcare products partially offset by higher semiconductor and RF and Microwave products. The increase in GES was mainly due to sales of Power Management products. The increase in Canvys was attributable to higher sales in the North American and European markets.

Current wording

During the first nine months of fiscal 2026, consolidated net sales increased 3.4% compared to the first nine months of fiscal 2025. Sales for PMT increased 2.8%, sales for GES increased 4.3% and sales for Canvys increased 5.6%. The increase in PMT was primarily due to increases in both our semiconductor equipment and RF/Microwave component segments. The increase in GES was mainly due to an increase in market share through current and new products with territory expansion. The increase in Canvys was attributable to increased sales in the European markets.

Previous wording

Gross profit by segment and percentage of net sales for the second quarter and first six months of fiscal 2026 and fiscal 2025 were as follows (in thousands):

Current wording

Gross profit by segment and percentage of net sales for the third quarter and first nine months of fiscal 2026 and fiscal 2025 were as follows (in thousands):

Previous wording

Consolidated gross profit increased to $16.1 million during the second quarter of fiscal 2026 compared to $15.3 million during the second quarter of fiscal 2025. Consolidated gross margin as a percentage of net sales during the second quarter of fiscal 2026 decreased to 30.8% when compared to 31.0% during the second quarter of fiscal 2025. This margin decrease was mainly due to product mix and lower manufacturing absorption in PMT, product mix in GES and favorable product mix in Canvys.

Current wording

Consolidated gross profit increased to $17.7 million during the third quarter of fiscal 2026 compared to $16.7 million during the third quarter of fiscal 2025. Consolidated gross margin as a percentage of net sales during the third quarter of fiscal 2026 increased to 31.9% when compared to 31.0% during the third quarter of fiscal 2025. This margin increase was mainly due to favorable product mix and improved manufacturing absorption in PMT, unfavorable product mix in GES, and unfavorable manufacturing absorption and higher freight costs in Canvys.

Previous wording

Consolidated gross profit increased to $33.0 million during the first six months of fiscal 2026 compared to $31.8 million during the first six months of fiscal 2025. Consolidated gross margin as a percentage of net sales during the first six months of fiscal 2026 increased to 30.9% when compared to 30.8% during the first six months of fiscal 2025. This margin increase was mainly due to favorable product mix in PMT, unfavorable product mix in GES and unfavorable product mix and higher freight costs in Canvys.

Current wording

Consolidated gross profit increased to $50.7 million during the first nine months of fiscal 2026 compared to $48.4 million during the first nine months of fiscal 2025. Consolidated gross margin as a percentage of net sales during the first nine months of fiscal 2026 increased to 31.2% when compared to 30.8% during the first nine months of fiscal 2025. This margin increase was mainly due to favorable product mix in PMT, unfavorable product mix in GES and unfavorable product mix and higher freight costs in Canvys.

Previous wording

PMT net sales decreased 0.5% to $74.3 million during the first six months of fiscal 2026 from $74.7 million during the first six months of fiscal 2025. The decrease was due primarily to a decline in the Electron Device and Healthcare products partially offset by increases in semiconductors and strong growth in our RF and Microwave products. The decline in Healthcare sales, which only included CT tubes, was due to the sale of assets to DirectMed in the third quarter of fiscal 2025. Gross margin as a percentage of net sales increased to 30.9% during the first six months of fiscal 2026 as compared to 30.4% during the first six months of fiscal 2025 due to product mix.

Current wording

PMT net sales increased 2.8% to $113.0 million during the first nine months of fiscal 2026 from $110.0 million during the first nine months of fiscal 2025. The increase was due primarily to increases in both our semiconductor equipment and RF/Microwave component segments. Gross margin as a percentage of net sales increased to 31.3% during the first nine months of fiscal 2026 as compared to 30.2% during the first nine months of fiscal 2025 due to product mix.

Previous wording

GES net sales increased 39.0% to $8.3 million during the second quarter of fiscal 2026 from $6.0 million during the second quarter of fiscal 2025. The increase reflected the strong adoption in the market of Power Management products. Gross margin as a percentage of net sales decreased to 30.3% during the second quarter of fiscal 2026 as compared to 32.0% during the second quarter of fiscal 2025 due to product mix.

Current wording

GES net sales increased 4.3% to $24.4 million during the first nine months of fiscal 2026 from $23.3 million during the first nine months of fiscal 2025. The increase reflected an increase in market share through current and new products with territory expansion. Gross margin as a percentage of net sales decreased to 30.3% during the third quarter of fiscal 2026 as compared to 31.4% during the third quarter of fiscal 2025 due to product mix.

Previous wording

Canvys net sales increased 28.1% to $8.8 million during the second quarter of fiscal 2026 from $6.9 million during the second quarter of fiscal 2025, primarily due to higher sales in the North American markets. Gross margin as a percentage of net sales increased to 32.6% during the second quarter of fiscal 2026 from 31.7% during the second quarter of fiscal 2025 primarily due to a favorable product mix.

Current wording

Canvys net sales decreased 13.5% to $8.0 million during the third quarter of fiscal 2026 from $9.2 million during the third quarter of fiscal 2025, primarily due to lower sales in the North American markets. Gross margin as a percentage of net sales decreased to 32.2% during the third quarter of fiscal 2026 from 33.2% during the third quarter of fiscal 2025 primarily due to unfavorable manufacturing absorption and higher freight costs.

Previous wording

Canvys net sales increased 17.7% to $17.0 million during the first six months of fiscal 2026 from $14.5 million during the first six months of fiscal 2025, due to higher sales in both North American and European markets. Gross margin as a percentage of net sales decreased to 31.8% during the first six months of fiscal 2026 from 33.1% during the first six months of fiscal 2025 primarily due to product mix and higher freight costs.

Current wording

Canvys net sales increased 5.6% to $25.0 million during the first nine months of fiscal 2026 from $23.7 million during the first nine months of fiscal 2025, due to increased sales in the European markets. Gross margin as a percentage of net sales decreased to 31.9% during the first nine months of fiscal 2026 from 33.1% during the first nine months of fiscal 2025 primarily due to product mix and higher freight costs.

Previous wording

Selling, general and administrative expenses (“SG&A”) decreased to $15.9 million for the second quarter of fiscal 2026 when compared to $16.0 million for the year ago quarter due to lower travel expenses. Expressed as a percentage of net sales, SG&A was 30.5% for the second quarter of fiscal 2026 compared to 32.3% in the second quarter of fiscal 2025.

Current wording

Selling, general and administrative expenses (“SG&A”) increased to $16.2 million for the third quarter of fiscal 2026 when compared to $14.5 million for the year ago quarter mainly due to increased salaries, medical benefits, travel, and higher incentives due to sales growth. Expressed as a percentage of net sales, SG&A was 29.2% for the third quarter of fiscal 2026 compared to 26.9% in the third quarter of fiscal 2025.

Previous wording

SG&A decreased to $31.9 million for the first six months of fiscal 2026 when compared to $32.1 million for the first six months of fiscal 2025 primarily as a result of lower travel expenses. Expressed as a percentage of net sales, SG&A was 29.8% for the first six months of fiscal 2026 compared to 31.1% in the first six months of fiscal 2025.

Current wording

SG&A increased to $48.1 million for the first nine months of fiscal 2026 when compared to $46.6 million for the first nine months of fiscal 2025 mainly due to increased salaries, legal expenses, and higher incentives due to sales growth. Expressed as a percentage of net sales, SG&A was 29.6% for the first nine months of fiscal 2026 compared to 29.7% in the first nine months of fiscal 2025.

Previous wording

Other income and expense includes interest income, foreign exchange gains and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.

Current wording

Other income and expense primarily includes interest income, foreign exchange gains and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.

Previous wording

Other expense during the second quarter of fiscal 2026 totaled $0.3 million compared to other expense of $0.4 million for second quarter of fiscal 2025. The decrease from the year ago quarter was mainly due to higher interest income.

Current wording

Other expense during the third quarter of fiscal 2026 totaled $0.3 million compared to other expense of $0.3 million for third quarter of fiscal 2025.

Previous wording

Other income during the first six months of fiscal 2026 totaled $1.0 million, compared to other expense of $0.1 million when compared to the first six months of fiscal 2025.The increase from fiscal 2025 was mainly due to a non-recurring gain of $0.9 million.

Current wording

Other income during the first nine months of fiscal 2026 totaled $0.7 million, compared to other expense of $0.4 million for the first nine months of fiscal 2025.The increase from fiscal 2025 was mainly due to a non-recurring gain of $0.9 million.

Previous wording

We recorded an income tax benefit of $0.1 million and $0.3 million for the second quarter of fiscal 2026 and the second quarter of fiscal 2025, respectively. The effective income tax benefit rate during the second quarter of fiscal 2026 was 38.3% as compared to 28.8% during the second quarter of fiscal 2025. The difference in rate during the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025 reflects changes in our geographical distribution of income (loss). The 38.3% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the utilization of the U.S. research and development credit.

Current wording

We recorded an income tax provision of $0.3 million and an income tax benefit of $1.0 million for the third quarter of fiscal 2026 and the third quarter of fiscal 2025, respectively. The effective income tax rate during the third quarter of fiscal 2026 was a tax provision of 25.3% as compared to a tax benefit of 33.4% during the third quarter of fiscal 2025. The difference in rate during the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025 reflects changes in our geographical distribution of income (loss) and the nonrecurring healthcare asset sale loss in the third quarter of fiscal 2025. The 25.3% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the impact of permanent items.

Previous wording

We recorded an income tax provision of $0.3 million and an income benefit of $0.2 million for the first six months of fiscal 2026 and the first six months of fiscal 2025, respectively. The effective income tax rate during the first six months of fiscal 2026 was a tax provision of 16.2% as compared to a tax benefit of 60.4% during the first six months of fiscal 2025. The difference in rate during the first six months of fiscal 2026 as compared to the first six months of fiscal 2025 reflects changes in our geographical distribution of income (loss). The 16.2% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the utilization of the U.S. research and development credit.

Current wording

We recorded an income tax provision of $0.6 million and an income tax benefit of $1.3 million for the first nine months of fiscal 2026 and the first nine months of fiscal 2025, respectively. The effective income tax rate during the first nine months of fiscal 2026 was a tax provision of 19.5% as compared to a tax benefit of 36.5% during the first nine months of fiscal 2025. The difference in rate during the first nine months of fiscal 2026 as compared to the first nine months of fiscal 2025 reflects changes in our geographical distribution of income (loss) and the nonrecurring healthcare asset sale loss in the third quarter of fiscal 2025. The 19.5% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the impact of permanent items.

Previous wording

The Company's reserve for uncertain tax positions totaled $0.3 million as of November 29, 2025, and May 31, 2025. We record interest related to uncertain tax positions in the income tax expense line item within the Consolidated Statements of Comprehensive (Loss) Income. Accrued interest was included within the related tax liability line in the Consolidated Balance Sheets. We have recorded a liability of less than $0.1 million for interest as of November 29, 2025 and May 31, 2025.

Current wording

The Company's reserve for uncertain tax positions totaled $0.3 million as of February 28, 2026, and May 31, 2025. We record interest related to uncertain tax positions in the income tax expense line item within the Consolidated Statements of Comprehensive Income (Loss). Accrued interest was included within the related tax liability line in the Consolidated Balance Sheets. We have recorded a liability of less than $0.1 million for interest as of February 28, 2026 and May 31, 2025.

Previous wording

The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $2.9 million as of November 29, 2025, and $2.8 million as of May 31, 2025. The valuation allowance relates to state NOLs ($1.7 million) and deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($1.2 million). The amount of the deferred tax asset is not considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

Current wording

The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $2.9 million as of February 28, 2026, and $2.8 million as of May 31, 2025. The valuation allowance relates to state NOLs ($1.7 million) and deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($1.2 million). The amount of the deferred tax asset that is not considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

Previous wording

We have considered the impact of the One Big Beautiful Bill Act (“OBBBA”) on the Company’s annual effective tax rate. The impact of OBBBA on the annual effective tax rate includes the reduction in the research and development credit from the Section 280c election. These changes did not have a significant impact to the annual effective tax rate. However, the enactment of the OBBBA introduced several significant tax law modifications that, while not affecting the annual effective tax rate, do have other implications for the Company. The OBBBA makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing pursuant to IRC §174 for fiscal year beginning after December 31, 2024. The Company is currently evaluating the future impact of OBBBA on its financial position.

Current wording

We have considered the impact of the One Big Beautiful Bill Act (“OBBBA”) on the Company’s annual effective tax rate. The impact of OBBBA on the annual effective tax rate includes the reduction in the research and development credit from the Section 280c election. These changes did not have a significant impact to the annual effective tax rate. However, the enactment of the OBBBA introduced several significant tax law modifications that, while not affecting the annual effective tax rate, do have other implications for the Company. The OBBBA makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing pursuant to IRC §174 for fiscal year beginning after December 31, 2024. The Company has reflected the change in tax law in its annual effective tax rate through the reduction of its research and development credit under IRC Section 41 through the IRC Section 280C(c)(2) election. The Company will evaluate other OBBBA-related items at year end as part of determining taxable income, including bonus depreciation, domestic research cost expensing pursuant to IRC §174, and any other applicable elections available under OBBBA.

Previous wording

Net loss during the second quarter of fiscal 2026 was $0.1 million, or $.01 per diluted common share and $.01 per Class B diluted common share as compared to a net loss of $0.8 million during the second quarter of fiscal 2025 or $0.05 per diluted common share and $0.05 per Class B diluted common share.

Current wording

Net income during the third quarter of fiscal 2026 was $0.9 million, or $0.07 per diluted common share and $0.06 per Class B diluted common share as compared to a net loss of $2.1 million during the third quarter of fiscal 2025 or $0.15 per diluted common share and $0.13 per Class B diluted common share.

Previous wording

Net income during the first six months of fiscal 2026 was $1.8 million, or $0.12 per diluted common share and $0.11 per Class B diluted common share as compared to a net loss of $0.2 million during the first six months of fiscal 2025 or $0.01 per diluted common share and $0.01 per Class B diluted common share.

Current wording

Net income during the first nine months of fiscal 2026 was $2.7 million, or $0.19 per diluted common share and $0.17 per Class B diluted common share as compared to a net loss of $2.2 million during the first nine months of fiscal 2025 or $0.16 per diluted common share and $0.14 per Class B diluted common share.

Previous wording

Cash and cash equivalents were $33.1 million at November 29, 2025. Cash and cash equivalents by geographic area on November 29, 2025 consisted of $10.5 million in North America, $12.5 million in Europe, $0.8 million in Latin America and $9.3 million in Asia/Pacific. No cash was repatriated to the United States in the first six months of fiscal 2026. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes.

Current wording

Cash and cash equivalents were $29.5 million at February 28, 2026. Cash and cash equivalents by geographic area on February 28, 2026 consisted of $11.2 million in North America, $9.7 million in Europe, $0.8 million in Latin America and $7.8 million in Asia/Pacific. No cash was repatriated to the United States in the first nine months of fiscal 2026. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes.

Previous wording

Operating activities generated $1.3 million of cash during the first six months of fiscal 2026. We had a net income of $1.8 million during the first six months of fiscal 2026, which included non-cash share-based compensation expense of $1.0 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.2 million, unrealized foreign exchange gain of $0.2 million, depreciation and amortization expense of $1.9 million associated with our property, plant and equipment and intangible assets. Changes in our operating assets and liabilities utilized $3.4 million in cash during the first six months of fiscal 2026, net of foreign currency exchange gains and losses, included an increase in accounts receivable of $3.2 million, an increase in inventories of $1.5 million, an increase in prepaid expenses and other assets of $2.9 million and an increase in accounts payable and accrued liabilities of $4.4 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

Current wording

Operating activities used $1.4 million of cash during the first nine months of fiscal 2026. We had a net income of $2.7 million during the first nine months of fiscal 2026, which included non-cash share-based compensation expense of $1.3 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.3 million, unrealized foreign exchange gain of $0.4 million, and depreciation and amortization expense of $2.9 million associated with our property, plant and equipment and intangible assets. Changes in our operating assets and liabilities utilized $8.2 million in cash during the first nine months of fiscal 2026, net of foreign currency exchange gains and losses, included an increase in accounts receivable of $2.5 million, an increase in inventories of $3.0 million, an increase in prepaid expenses and other assets of $2.9 million and an increase in accounts payable and accrued liabilities of $0.8 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

Previous wording

Operating activities generated $5.9 million of cash during the first six months of fiscal 2025. We had a net loss of $0.2 million during the first six months of fiscal 2025, which included non-cash stock-based compensation expense of $0.9 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.2 million, unrealized foreign exchange gain of $0.2 million and depreciation and amortization expense of $2.1 million associated with our property, plant and equipment and intangible assets. Changes in our operating assets and liabilities generated $3.2 million in cash during the first six months of fiscal 2025, net of foreign currency exchange gains and losses, included an increase in accounts payable and accrued liabilities of $5.2 million, an increase in accounts receivable of $1.1 million and an increase in inventories of $1.7 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

Current wording

Operating activities generated $10.5 million of cash during the first nine months of fiscal 2025. We had a net loss of $2.2 million during the first nine months of fiscal 2025, which included non-cash stock-based compensation expense of $1.2 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.3 million, unrealized foreign exchange loss of $0.4 million, depreciation and amortization expense of $3.0 million associated with our property, plant and equipment and intangible assets and the disposal loss on Healthcare assets of $4.9 million. Changes in our operating assets and liabilities generated $2.8 million in cash during the first nine months of fiscal 2025, net of foreign currency exchange gains and losses, included an increase in accounts payable and accrued liabilities of $3.1 million, an increase in accounts receivable of $1.5 million and a decrease in inventories of $1.1 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

Previous wording

Cash used in investing activities of $2.6 million during the first six months of fiscal 2026 was due to capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the PMT and GES segments.

Current wording

Cash used in investing activities of $3.4 million during the first nine months of fiscal 2026 was due to capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the PMT and GES segments.

Previous wording

Cash used in investing activities of $1.4 million during the first six months of fiscal 2025 was due to capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the PMT and GES segments.

Current wording

Cash provided in investing activities of $5.0 million during the first nine months of fiscal 2025 was due to the $7.0 million of proceeds from the disposal of the Healthcare assets and $2.0 million offset for capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the PMT and GES segments.