AIR INDUSTRIES GROUP
For the period ended Mar 31, 2026. Filed May 13, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 13, 2026
AIRI$2.80+5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001213900-25-110811
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001213900-26-055772
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 63 previous paragraphs and 56 current paragraphs.
21 unchanged; 22 reworded; 13 added; 14 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Recent Developments
Current report
On February 16, 2026, we and Transitory Air Sub LLC, our wholly owned subsidiary (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tenax Aerospace Acquisition, LLC, a Delaware limited liability company (“Tenax”). Upon consummation of the merger contemplated by the Merger Agreement (the “Merger”), Tenax will become a wholly owned subsidiary of AIR. Tenax is a leading provider of special mission aviation solutions that combine aircraft sourcing, financing and modification with aviation services including pilots, maintenance and other types of program support. Additionally, they have long standing relationships with key government customers.
Current report
Pursuant to the Merger Agreement, we will issue shares of our common stock (the “Merger Consideration”) to the holders of the membership interests of Tenax (the “Tenax Members”) at the closing of the merger. A portion of the Merger Consideration allocated in respect of membership interests of Tenax underlying certain Tenax warrants that remain unexercised as of the closing, if any, will be reserved by us for future issuance upon the exercise of such warrants. The number of shares of our common stock to be issued to the Tenax Members will be adjusted based on a calculation of AIR Net Indebtedness (as defined in the Merger Agreement). Based on the amount of Air Net Indebtedness as of March 31, 2026, the calculation would result in the issuance of approximately 122.6 million shares of AIR common stock. Consequently, based upon the calculation of the Merger Consideration as of March 31, 2026, following the closing of the Merger, the Tenax Members will collectively own approximately 96% of the outstanding shares of our common stock.
Current report
For a more complete description of the Merger Agreement, transactions to be consummated, actions to be taken and agreements entered into or to be entered in connection therewith, reference is made to the Current Report on Form 8-K filed February 17, 2026 and the full text of the Merger Agreement and the documents that are exhibits.
Current report
The closing of the merger is subject to risks and uncertainties and certain specified conditions, including, among other things: (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act, (b) the listing of the Merger Consideration on the NYSE American, and (c) other customary conditions for a transaction such as the Merger, such as the absence of any legal restraint prohibiting the consummation of the Merger and there not having occurred with respect to AIR or Tenax’s business a material adverse event, subject to certain customary exceptions.
Current report
Except where specifically noted, the discussion of our business, operations, management team and financial results contained herein, gives no effect to changes that would occur as a result of or subsequent to the consummation of the Merger.
Current report
The Current Credit Facility and Related Party Subordinated are classified as current liabilities on the condensed consolidated balance sheet as of March 31, 2026. As a result of the due dates of this debt, there is substantial doubt about our ability to continue as a going concern for the twelve months following the date of filing of these consolidated financial statements. In addition, we are in default under our Current Credit Facility due to our failure to meet the FCCR required for the period ended March 31, 2026. Webster Bank has advised us that it will not renew our Current Credit Facility. In addition to discussions with our lenders, as discussed in our Current Report on Form 8-K filed February 17, 2026, we entered into a Merger Agreement with Tenax.
Current report
If we are unable to close the merger with Tenax contemplated by the Merger Agreement or obtain a new lender to replace the Current Credit Facility we may not be able meet our financial obligations. As of March 31, 2026, we have borrowing capacity of approximately $787,000 under the Revolving Loan.
Current report
Our material cash requirements are for debt service, funding working capital and capital expenditures. We have historically met these requirements with funds provided by a combination of cash generated from operating activities and cash generated from equity and debt financing transactions. Based on our current revenue visibility, strength of our backlog, and availability under our Current Credit Facility, we believe that we have sufficient liquidity to meet our day-to-day cash requirements for our operations. However, we must pay or refinance large portions of our indebtedness prior to September 30, 2026. Further, as a condition to refinancing our Current Credit Facility prior to September 30, 2026, a new lender may require that the holders of our Related Party Notes extend or otherwise modify the subordination agreements they have given in favor of the lender.
Current report
If we do not close the contemplated Merger, it is unlikely we will be able to pay existing debt and will need to refinance our Current Credit Facility and Related Party Notes. We have engaged in discussions with Webster Bank and the holders of our Related Party Notes to explore potential extensions or refinancings of our obligations. Webster Bank has advised us that it will not extend our Current Credit Facility. Refinancing our indebtedness may require us to pay higher interest rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or new securities convertible into or exercisable or exchangeable for our common stock. Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on our business and financial condition.
Current report
Cash Flows
Current report
The investments made in 2026 and 2025 increased our production efficiency and speed, while maintaining closer tolerances. We intend to limit capital expenditures until such time as our debt situation is resolved.
Current report
Cash Provided by (Used in) Financing Activities
Removed paragraphs (14)
Previous report
Results of Operations for the three months ended September 30, 2025
Previous report
Interest Expense: Interest expense (which includes amortization of deferred financing costs) was $466,000 during the three months ended September 30, 2025, a decrease of $16,000 or 3.3% from $482,000 during the three months ended September 30, 2024. The decrease is primarily attributable to lower levels of subordinate debt during a portion of the period.
Previous report
Results of Operations for the nine months ended September 30, 2025
Previous report
The discussion which follows regarding our liquidity and capital resources should be read in light of our need to satisfy or refinance our existing debt in the foreseeable future and/or cure existing defaults under the Current Credit Facility.
Previous report
The Current Credit Facility and Related Party Subordinated are classified as current liabilities on the condensed consolidated balance sheet as of September 30, 2025. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the date of filing of these interim condensed consolidated financial statements. The Company is actively engaged in constructive discussions with all lenders regarding potential refinancing or extension of these obligations. While these discussions have been professional and remain ongoing, there can be no assurance that agreements will be reached with existing lenders or through alternative financing sources.
Previous report
As of September 30, 2025, the Company was in compliance with its minimum Fixed Coverage Charge ratio (“FCCR”) of 1.25x on a rolling 12-month basis but was in default of the requirement that fixed asset acquisitions during fiscal 2025 not exceed $2,500.000. Additionally, we have not yet obtained a waiver with respect to our default of a required minimum FCCR of 1.05x on a rolling 12-month basis, as of June 30, 2025, having only attained a ratio of 0.76x. All other financial and business covenants under the terms its Current Credit Facility were met as of September 30, 2025.
Previous report
Our material cash requirements are for debt service, capital expenditures and working capital. We have historically met these requirements with funds provided by a combination of cash generated from operating activities and cash generated from equity and debt financings. Although navigating the current business landscape remains challenging and it is difficult to predict period-to-period financial performance, based on the amounts recently raised pursuant to our ATM, our current revenue visibility and the strength of our backlog, we believe we have sufficient liquidity to meet our financial obligations for the next twelve months from the date of issuance of our condensed consolidated financial statements included in this Quarterly Report. Our ability to do so, however, is dependent upon our ability to continue to borrow under our Current Credit Facility and ultimately extend the maturity dates of the Current Credit Facility and our Related Party Notes. The lender under the Current Credit Facility will likely require that the holders of our Related Party Notes extend the terms of these Notes and agree that payment of the Related Party Notes remains subordinated to our obligations under the Current Credit Facility as the same may be amended.
Previous report
While we are focused on our business, we will explore our options to raise additional capital or borrow additional funds on terms which we believe are favorable and seek to obtain the agreement of our principal lender and the holders of the Related Party Notes to refinance the amounts due. Additional issuances of equity or convertible debt securities or increases in the rates of interest will likely result in dilution to our current shareholders. Further, as part of a refinancing we might be required to agree to more restrictive business or financial covenants. We could be required to issue equity securities at prices we believe are below what we believe to be the true value of our common stock which could cause the price of our common stock to decrease. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional borrowings would likely require the consent of our lender under the Current Credit Facility, could require that we grant the lenders a security interest or other rights that impede our ability to operate as we deem best for our shareholders.
Previous report
Our ability to obtain funds through the issuance of debt or equity is dependent upon the state of the financial markets at such time as we may seek to raise funds. The state of the capital markets may be adversely impacted by various risks and uncertainties, including, but not limited to future and current impacts of global events such as public health crises, ongoing or new conflicts, banking crises, increases in inflation, the imposition of tariffs and shifts in government alliances and other risks detailed in the risk factors detailed in our Annual Report on Form 10-K for the year ended December 31, 2024. Additional debt or equity financing may not be available upon acceptable terms, or at all and we may need to seek bankruptcy protection to restructure our debt.
Previous report
Management remains focused on enhancing profitability and improving cash flows through cost reductions, margin improvements, and long-term revenue growth. In the third quarter of 2025, the Company initiated cost-saving measures—including a workforce reduction—to better align operating expenses with anticipated production volumes. Additional adjustments may be considered as needed.
Previous report
Cash Flow
Previous report
During the balance of fiscal 2025, we will only make investments in capital equipment necessary to maintain our competitiveness or enhance our ability to produce products subject to funded orders. We expect to invest approximately an additional $350,000 during the remainder of 2025 principally for tooling required to produce product.
Previous report
Cash Provided by Financing Activities
Previous report
For the nine months ended September 30, 2025, cash provided by financing activities was $6,875,000. During this period, we increased borrowings under our Current Credit Facility by $3,826,000 (consisting of a net increase in Revolving Loan borrowings of $2,933,000 and a net increase in our Term Loan of $893,000). We also sold an aggregate of 1,213,593 shares of common stock to the public for gross proceeds of $4,869,000. During this period we also made payments of $166,000 pursuant to financing lease obligations and $7,000 on a loan payable.
Reworded paragraphs (22)
Previous wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Previous wording
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Form 10-Q and with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K, for the year ended December 31, 2024 (the “2024 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the various risk factors identified in this report and our 2024 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements.
Current wording
The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Form 10-Q and with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K, for the year ended December 31, 2025 (the “2025 Form 10-K”). This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the various risk factors identified in this report and our 2025 Form 10-K that could cause actual results to differ materially from those anticipated in these forward-looking statements. Further, although we believe we will not face a material increase in the price of raw materials due to tariffs that may be imposed, ongoing geopolitical conflicts could adversely impact our ability to manufacture our products, the markets for some of our products, and our ability to access debt or equity financing.
Previous wording
Our products include landing gear, flight controls, engine mounts and components for aircraft jet engines, helicopters and ground turbines and other complex machines. The ultimate end-user for most of our products is the U.S. government, foreign governments, and commercial global airlines. Whether it is a small individual component for assembly by others or complete assemblies we manufacture ourselves, our high quality and extremely reliable products are used in mission critical operations that are essential for safety of military personnel and civilians.
Current wording
Our products include landing gear, flight controls, engine mounts and components for aircraft jet engines and ground turbines and other complex machines. The ultimate end-user for most of our products is the U.S. government, international governments, and commercial global airlines. Whether it is a small individual component for assembly by others or complete assemblies we manufacture ourselves, our high quality and extremely reliable products are used in mission critical operations that are essential for safety of military personnel and civilians.
Previous wording
A substantial portion of our net sales are concentrated amongst a number of defense and aerospace prime contractors and we have cultivated long-standing relationships with a number of their subsidiaries and/or business units. Additionally, our net sales are generated across several high-profile platforms and programs including: the F-18 Hornet, the E-2 Hawkeye, the UH-60 Black Hawk Helicopters, Geared Turbo-Fan (“GTF”) Engines (used on smaller aircraft such as the Airbus A220 and Embraer E2), the CH-53 Helicopter, the F-35 Lighting II and the F-15 Eagle Tactical Fighter. In many cases, we are the sole or single supplier of certain parts and components and receive LTAs from our customers, both demonstrating their commitment to us.
Current wording
Although our net sales are concentrated amongst a number of defense and aerospace prime contractors, we have cultivated long-standing relationships with a number of their subsidiaries and/or business units. Additionally, our net sales are generated across several high-profile platforms and programs including: the F-18 Hornet, the E-2 Hawkeye, the UH-60 Black Hawk Helicopters, Geared Turbo-Fan (“GTF”) Engines (used on smaller aircraft such as the Airbus A220 and Embraer E2), the CH-53 Helicopter, the F-35 Lighting II and the F-15 Eagle Tactical Fighter. In many cases, we are the sole or single supplier of certain parts and components and receive LTAs from our customers, both demonstrating their commitment to us.
Previous wording
Winning a new contract award is highly competitive. Our ability to win new contract awards generally requires us to deliver superior quality products, more quickly and with lower pricing than our competitors. Accordingly, we must continually invest in process improvements and capital equipment. Recent investments in new equipment have improved the productive capacity of our employees, increased our efficiency and speed, and expanded the size of products we can manufacture. We strategically operate two state-of-the-art manufacturing centers in the U.S. This allows for rigorous oversight of production and the adherence to stringent quality standards. Although there is currently a shortage of skilled workers, we maintain a highly trained and close-knit team of over 150 professionals committed to driving excellence and precision in every aspect of our operations.
Current wording
Winning a new contract award is highly competitive. Our ability to win new contract awards generally requires us to deliver superior quality products, more quickly and with lower pricing than our competitors. Accordingly, we must continually invest in process improvements and capital equipment. Recent investments in new equipment have improved the productive capacity of our employees, increased our efficiency and speed, and expanded the size of products we can manufacture. We strategically operate two state-of-the-art manufacturing centers in the U.S. This allows for rigorous oversight of production and the adherence to stringent quality standards. Although there is currently a shortage of skilled workers, we maintain a highly trained and close- knit team of over 160 professionals committed to driving excellence and precision in every aspect of our operations.
Previous wording
For the past several years, despite facing significant financial and operational challenges, we have strategically invested substantial amounts in new capital equipment, tooling, and processes to bolster our competitive position. Additionally, we expanded our sales and marketing efforts, with a sharp focus on expanding relationships with existing customers and cultivating new ones.
Current wording
For the past several years, despite facing significant financial and operational challenges, we have strategically invested substantial amounts in new capital equipment, tooling, and processes to bolster our competitive position. Additionally, we expanded our sales and marketing efforts, with a sharp focus on expanding relationships with existing customers and cultivating new ones. Looking forward for the rest of fiscal 2026, we are focused on securing new contract awards, improving operations and successful completion of the Merger Agreement (as discussed below).
Previous wording
As a result of recent contract awards, as of September 30, 2025 we had total unfilled contract values amounting to $269.0 million (including our $131.8 million in backlog plus additional potential orders against LTA agreements previously awarded to us). Our backlog of firm orders, along with anticipated orders under existing LTA’s, provides a solid foundation for future growth, and improved profitability. However, due to extended lead times for raw material procurement and the complexity of manufacturing processes, meaningful increases in sales and profitability are not expected until fiscal 2026.
Current wording
As of March 31, 2026, we have total unfilled contract values amounting to $269.2 million (including our $134.7 million in backlog and all potential orders against LTA agreements previously awarded to us).
Previous wording
***Net Sales:***Net sales for the three months ended September 30, 2025 were $10,309,000, a decrease of $2,246,000, or 17.9%, compared with $12,555,000 that we achieved in the three months ended September 30, 2024. The period-over-period decrease in net sales was primarily due to timing and overall changes in the mix of products delivered in response to customer orders.
Current wording
***Net Sales:***Net sales for the three months ended March 31, 2026 were $11,606,000, a decrease of $529,000, or 4.4%, compared with $12,135,000 that we achieved in the three months ended March 31, 2025. The period-over-period decrease in net sales was primarily due to overall changes in the mix of products requested by customers, which are discussed further below.
Previous wording
The composition of customers that exceeded 10% of our net sales for the three months end 2025 and 2024 are shown below:
Current wording
The composition of customers that exceeded 10% of our net sales for the three months ended March 31, 2026 and 2025 are shown below:
Previous wording
***Gross Profit:***Gross profit for the three months ended September 30, 2025, was $2,295,000 as compared to $1,941,000 for the three months ended September 30, 2024. Our gross profit percentage for the three months ended September 30, 2025 increased to 22.3% from the 15.5% for the three months ended September 30, 2024. The increase in margin can be attributed to changes in the sales across our major platforms, shifts in product mix, and cost reductions implemented during the period.
Current wording
***Gross Profit:***Gross profit for the three months ended March 31, 2026, was $2,602,000 as compared to $2,034,000 for the three months ended March 31, 2025. Our gross profit percentage for the three months ended March 31, 2026 increased to 22.4% from the 16.8% for the three months ended March 31, 2025. The increase in margin can be attributable to changes in the sales across our major platforms, shifts in product mix, and overall operating efficiencies. During the second half of 2025, we implemented several cost reductions that benefited our gross profit during the three months ended March 31, 2026 that were not in place during the three months ended March 31, 2025.
Previous wording
Operating Expenses: Operating expenses were $6,779,000, for the nine months ended September 30, 2025, an increase of $848,000, from $5,931,000 for the nine months ended September 30, 2024. As a percentage of consolidated net sales, operating expenses increased to 19.3%, compared to the 14.8% incurred during the nine months ended September 30, 2024. The dollar increase was primarily driven by increases in stock compensation expense, our allowance for credit losses, professional fees, and costs associated with the continued improvement of our information technology system and hardening our cyber-security defense. We continue to look for ways to reduce our operating expenses.
Current wording
Operating Expenses: Operating expenses were $3,167,000, for the three months ended March 31, 2026, an increase of $387,000, from $2,780,000 for the three months ended March 31, 2025. As a percentage of consolidated net sales, operating expenses increased to 27.3%, compared to the 22.9% achieved during the three months ended March 31, 2025. The dollar increase was primarily driven by increases in stock-based compensation costs and professional fees as well as costs associated with the continued improvement of our information technology system and hardening our cyber-security defenses. We continue to look for ways to reduce our costs and improve our operating performance and financial results.
Previous wording
Interest Expense: Interest expense (which includes amortization of deferred financing costs) was $1,354,000 during the nine months ended September 30, 2025, a decrease of $64,000 or 4.5% from $1,418,000 during the nine months ended September 30, 2024. The decrease is primarily attributable to lower levels of subordinated debt during a portion of the period and a reduction in the average interest rate on outstanding debt pursuant to our Current Credit Facility which decreased to 6.84% in 2025 as compared to 7.83% in 2024.
Current wording
***Interest Expense:***Interest expense (which includes amortization of deferred financing costs) was $494,000 during the three months ended March 31, 2026, an increase of $50,000 or 11.2% from $444,000 during the three months ended March 31, 2025. The increase is primarily attributable to the higher loan balances under our Current Credit Facility. The average interest rate on outstanding debt pursuant to our Current Credit Facility which decreased to 6.10% in 2026 as compared to 6.85% in 2025.
Previous wording
***Net Loss:***Net loss for the three months ended September 30, 2025 was $44,000, compared to a net loss of $404,000 for the three months ended September 30, 2024, for the reasons discussed above.
Current wording
Net Loss: Net loss for the three months ended March 31, 2026 was $1,020,000, compared to a net loss of $988,000 for the three months ended March 31, 2025, for the reasons discussed above.
Previous wording
Under the terms of the Current Credit Facility, as amended, we are required to meet a prescribed Fixed Charge Coverage Ratio (as defined) that is determined at the end of each fiscal quarter. This ratio is a financial metric that we use to measure our ability to cover fixed charges such as interest and lease expenses as divided by EBITDA (as defined in the Current Credit Facility) which represents net income (loss) before interest, taxes, depreciation and amortization. We are also required to meet other business and financial covenants.
Current wording
Under the terms of the Current Credit Facility, as amended, we are required to meet a prescribed Fixed Charge Coverage Ratio (“FCCR”) (as defined) that is determined at the end of each fiscal quarter. This ratio is a financial metric that we use to measure our ability to cover fixed charges such as interest and lease expenses divided by EBITDA (as defined in the Current Credit Facility) which represents net income (loss) before interest, taxes, depreciation and amortization. As of March 31, 2026, the Company is required to meet a FCCR of 1.10x. As of March 31, 2026, we were not in compliance with this ratio having only attained a ratio of 0.93x. We are in compliance with all other required business and financial covenants.
Previous wording
The Company is currently in default of certain covenants under the Current Credit Facility and Webster Bank could choose to exercise its rights. For example, it could increase the rate of interest it charges us or refuse to make loans under the revolving portion of the Current Credit Facility. It could also keep funds remitted to the collection account. If the lender were to cease making new loans under the revolving facility or limit the amount of such loans, the Company would lack the funds to continue or expand operations and would need to seek immediate capital elsewhere. To date, the lender has chosen not to exercise any of its remedies, though we have agreed to place $3,930,000 of ATM proceeds in an interest bearing account to serve as additional security for the Company’s obligations under the Current Credit Facility.
Current wording
The Current Credit Facility expires on September 30, 2026. In addition, we are required to maintain a collection account with our lender into which substantially all cash receipts are remitted. As we are in to default under the Current Credit Facility, our lender could choose to increase the rate of interest or refuse to make loans under the revolving portion of the Current Credit Facility and keep the funds remitted to the collection account. If the lender were to raise the rate of interest, it would adversely impact our operating results. If the lender were to cease making new loans under the revolving facility, we would lack the funds to continue operations. The Current Credit Facility expiration date and the rights granted to the lender, combined with the reasonable possibility that we might fail to meet covenants in the future, raise substantial doubt about our ability to continue as a going concern for the one year commencing as of the date of filing this report. To date, the lender has chosen not to exercise any of its remedies, though we have agreed to place $3,930,000 of ATM proceeds in an interest bearing account to serve as additional security for the Company’s obligations under the Current Credit Facility.
Previous wording
To support current operations and strategic initiatives, the Company raised capital through public market sales of its common stock since December 2024, and believes it can continue to access equity markets in future periods. During the nine months ended September 30, 2025, the Company sold 1,213,593 shares of common stock and generated gross proceeds of $4,869,000 through an ATM Offering, of which approximately $3,930,000 is restricted for the benefit of the Current Credit Facility lender. Since initiating the ATM in December 2024, we have sold a total of 1,330,444 shares for gross proceeds of $5,375,000. In light of ongoing negotiations with all of our lenders, the Company has temporarily paused all equity raising activity while evaluating the most effective capital structure going forward.
Current wording
To support current operations and strategic initiatives, beginning in December 2024 we raised capital through public market sales of our common stock and believe we can continue to access equity markets in future periods, though there is no assurance as to our ability to do so or as to the price and terms under which we could issue equity securities. During the year ended December 31, 2025, the Company sold 1,213,593 shares of common stock in the public market and generated gross proceeds of $4,869,000, of which approximately $3,930,000 is restricted for the benefit of the Current Credit Facility lender. Since initiating the sales in December 2024, we have sold a total of 1,330,444 shares for gross proceeds of $5,375,000. In light of ongoing negotiations with our lenders and in accordance with the Merger Agreement with Tenax, we have temporarily paused all equity raising activity.
Previous wording
In addition to required Term Loan payments of approximately $262,000 for the remainder of fiscal 2025, we may have to make additional payments. For so long as the Term Loan under the Current Credit Facility remains outstanding, if Excess Cash Flow (as defined) is a positive amount for any fiscal year, we are obligated to pay an amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow and (ii) the outstanding principal balance of the Term Loan. Such payment shall be applied to the outstanding principal balance of the Term loan, on or prior to the April 15 immediately following such fiscal year. For the fiscal year ended December 31, 2024, based on the calculation, a payment was not required.
Current wording
In addition to required Term Loan payments we may have to make additional payments under the Current Credit Facility. For so long as the Term Loan under the Current Credit Facility remains outstanding, if Excess Cash Flow (as defined) is a positive amount for any fiscal year, we are obligated to pay an amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow and (ii) the outstanding principal balance of the Term Loan. Such payment shall be applied to the outstanding principal balance of the Term loan, on or prior to the April 15 immediately following such fiscal year. For the fiscal year ended December 31, 2025, based on the calculation there is no Excess Cash Flow payment required.
Previous wording
The following table summarizes our net cash flow from operating, investing and financing activities for the periods indicated below (in thousands):
Current wording
The following table summarizes our net cash flows from operating, investing and financing activities for the periods indicated (in thousands):
Previous wording
For the nine months ended September 30, 2025, we used $754,000 of cash in operations as compared to generating $508,000 for the nine months ended September 30, 2024. The reduction was due primarily to a significant increase in inventory partially offset by a decrease in accounts receivable.
Current wording
For the three months ended March 31, 2026, we used $1,298,000 in operations as compared to a cash flow provided of $1,525,000 for the three months ended March 31, 2025. The decrease was due primarily to increases in inventory and accounts receivable and a decrease in accounts payable partially offset by an increase in customer deposits.
Previous wording
For the nine months ended September 30, 2024, we generated cash of $508,000 from operations which was mainly attributable to reductions in accounts receivable and increases in accounts payable.
Current wording
For the three months ended March 31, 2025, we generated $1,525,000 from operations which was mainly attributable to a decrease in accounts receivable and the collection of contract costs receivable.
Previous wording
During the first nine months of 2025, we continued to make investments to enhance our competitiveness and market position. Cash used in investing activities of $2,818,000 and $1,493,000, during the nine months ended September 30, 2025 and 2024, respectively, was for new property and equipment. Investments in 2025 and 2024 increased our production efficiency and speed, while enabling us to maintain closer tolerances. They also expanded the size of products we can manufacture.
Current wording
During our most recent quarter, we continued to make investments to enhance our competitiveness and market position. Cash used in investing activities of $425,000 and $1,217,000, during the three months ended March 31, 2026 and 2025, respectively, was for new property and equipment.
Previous wording
For the nine months ended September 30, 2024, cash provided by financing activities was $825,000. During this period, we increased borrowings under our Current Credit Facility by $974,000 (consisting of a net increase in Revolving Loan borrowings of $633,000 and a net increase in our Term Loan of $341,000). We also made payments of $143,000 pursuant to financing lease obligations and $6,000 on a loan payable.
Current wording
For the three months ended March 31, 2026, cash provided by financing activities was $1,329,000. During this period, we increased borrowings under our Current Credit Facility by $1,403,000 (consisting of a net increase in Revolving Loan borrowings of $1,665,000 and a net decrease of $262,000 against the Term Loan). Additionally, we made payments of $59,000 pursuant to financing lease obligations, $13,000 on our Solar Credit Facility and $2,000 on a loan payable.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Operating Expenses: Operating expenses was $1,979,000, for the three months ended September 30, 2025, an increase of $105,000, from $1,874,000 for the three months ended September 30, 2024. As a percentage of consolidated net sales, operating expenses increased to 19.2%, compared to the 14.9% incurred during the three months ended September 30, 2024. The dollar increase was primarily driven by increases in our stock compensation expense, and the timing of certain professional fees offset in part by reductions in wages and rent expenses. We continue to look for ways to reduce our operating expenses.
Previous report — wording carried elsewhere
Net Sales: Consolidated net sales for the nine months ended September 30, 2025 were $35,111,000, a decrease of $5,077,000, or 12.6%, compared with $40,188,000 that we achieved in the nine months ended September 30, 2024. The period-over-period decrease in net sales was primarily due to timing and overall changes in the mix of products requested by delivered in response to customer orders.
Previous report — wording carried elsewhere
The composition of customers that exceeded 10% of our net sales for the nine months ended September 30, 2025 and 2024 are shown below:
Previous report — wording carried elsewhere
The composition of our net sales by platform or program profiles for the nine months ended September 30, 2025 and 2024 are shown below:
Previous report — wording carried elsewhere
***Gross Profit:***Gross profit for the nine months ended September 30, 2025, was $6,357,000 as compared to $6,491,000 for the nine months ended September 30, 2024. Our gross profit percentage for the nine months ended September 30, 2025 increased to 18.1% from the 16.2% for the nine months ended September 30, 2024. The increase in margin can be attributable to changes in sales across our major platforms, shifts in product mix, and cost reductions implemented during the period.
Previous report — wording carried elsewhere
***Net Loss:***Net Loss for the nine months ended September 30, 2025 was $1,454,000, compared to a net loss of $812,000 for the nine months ended September 30, 2024, for the reasons discussed above.