CVD EQUIPMENT CORP
For the period ended Mar 31, 2026. Filed May 14, 2026.
View on SEC.govAbout this filing
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 14, 2026
CVV$3.97+10.0%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 2025-11-10.
0001493152-25-021504
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001493152-26-023044
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 88 previous paragraphs and 70 current paragraphs.
25 unchanged; 20 reworded; 25 added; 39 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 3 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 (25)
Current report
On March 23, 2026, we entered into an asset purchase agreement with a third party to sell our SDC business division (“SDC”). The purchase price was approximately $16.9 million in cash, subject to customary purchase price adjustments. The transaction closed on April 1, 2026.
Current report
The net cash proceeds from the sale of SDC we received in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million. Following the sale of SDC, CVD Equipment has approximately $23 million in cash and no long-term debt. We expect to use the proceeds from the transaction to enhance financial flexibility and support initiatives aimed at creating shareholder value.
Current report
We retained ownership of our Saugerties, New York facility, which will be leased to the acquiring company for an initial term of two years.
Current report
With the sale of our SDC business and the cessation of our MesoScribe business in 2024, we have one reportable segment consisting of our CVD Equipment division that manufactures chemical vapor deposition, physical vapor transport and thermal process equipment.
Current report
Results from continuing operations during the quarter ended March 31, 2026 included:
Current report
Income from discontinued operations before transaction costs of our SDC business division declined from $0.6 million in the prior year quarter to $0.5 million in the current year quarter due to lower gross margins on higher revenues. Transaction costs associated with the sale of SDC consisted of legal and investment banking fees of $0.4 million for the quarter ended March 31, 2026. The total income from discontinued operations was $63,000 for the quarter ended March 31, 2026 as compared to $0.6 million for the prior year quarter due principally to the transaction costs incurred in connection with the sale of SDC.
Current report
The Company filed a Form 8-K on April 7, 2026 that included pro forma financial information.
Current report
As of December 31, 2025, we classified certain manufacturing equipment as held for sale with a fair value of $0.5 million based on an agreement we entered into in January 2026 with a third-party to sell the equipment for this amount. We received the proceeds from the sale in the first quarter of 2026 and also sold additional equipment for $46,000 that was no longer necessary for our business.
Current report
Our core strategy remains focused on serving key markets related to aerospace, microelectronics/power electronics and industrial applications.
Current report
A potentially emerging market for our business is the nuclear energy industry. We are currently focused on two potential applications within this market. The first involves SiC chemical vapor infiltration systems used in the production of SiC tubing intended to replace traditional zirconium alloy fuel cladding. The second involves coating systems used to apply protective coatings to nuclear fuel pellets. We believe demand for both applications is being driven primarily by the development and deployment of small modular reactors. We intend to continue to focus on leading customers and strategic opportunities within this evolving market.
Current report
We operate in a challenging and uncertain global economic environment. Recent and potential actions by the U.S. federal administration, including changes in trade policy, export controls, and tariffs on imports from various countries and regions, as well as retaliatory or responsive actions by other governments, may adversely affect our supply chain, costs, demand for our products, receipt of orders and results of operations. In addition, we face ongoing risks related to geopolitical instability, including conflicts and tensions in Europe, the Middle East, and Asia, which may further disrupt global economic conditions and financial markets.
Current report
Other factors contributing to economic uncertainty include inflationary pressures, elevated interest rates, disruptions in global logistics, labor market challenges, and potential changes in fiscal, tax, or regulatory policies. These conditions may impact customer spending decisions, order rates, project timing, and the availability and cost of materials and components used in our products.
Current report
While our management continuously evaluates these conditions and has taken, and may take, actions intended to mitigate the potential adverse effects on our business, there can be no assurance that such actions will be successful. We are unable to predict the ultimate impact of these risks and uncertainties on our future results of our operations, financial position, or cash flows.
Current report
Quarters Ended March 31, 2026 and 2025
Current report
Not meaningful
Current report
The decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings. The decrease was partially offset by $0.3 million benefit from a contract modification during the quarter. Revenue from three customers represented 227.2%, 21.7% and 17.3%, respectively, of our total revenues.
Current report
Gross profit for the quarter ended March 31, 2026, was $0.1 million, with a gross profit margin of 8.0%, compared to a gross profit of $1.7 million and a gross profit margin of 27.4% for the quarter ended March 31, 2025. The decrease in gross profit of $1.6 million was primarily the result of lower system revenue and lower absorption of fixed manufacturing costs. Gross profit during the quarter ended March 31, 2026, benefited by $0.3 million from a contract modification.
Current report
General and administrative expenses were $1.0 million or 55.4% of revenue for the quarter ended March 31, 2026 as compared to $1.0 million or 15.1% of revenue for the quarter ended March 31, 2025. The increase was due to higher personnel and building maintenance costs.
Current report
Gain on Sales of Equipment
Current report
During the quarter ended March 31, 2026, we recognized a gain of $46,000 on the sale of equipment that was no longer necessary for our business.
Current report
Other Income, Net
Current report
Discontinued Operations – SDC
Current report
Income from discontinued operations before transaction costs of our SDC business division was $0.5 million in the current quarter as compared to $0.6 million for the quarter ended March 31, 2025. This decrease was primarily due to lower gross margins on higher revenues. Transaction costs associated with the sale of SDC consisted of legal and investment banking fees of $0.4 million for the quarter ended March 31, 2026. The total income from discontinued operations was $63,000 for the quarter ended March 31, 2026 as compared to $0.6 million for the quarter ended March 31, 2025 due principally to the transaction costs incurred in connection with the sale of SDC.
Current report
As of March 31, 2026, aggregate working capital was $12.8 million. Cash and cash equivalents at March 31, 2026 were $8.2 million. The net cash proceeds from the sale of SDC received by us in April 2026, after payment of transaction costs and employee related liabilities, were $14.8 million, increasing our cash balance at the time to approximately $23 million.
Current report
Net cash used in financing activities for the quarter ended March 31, 2026 consisted of the full repayment of an equipment loan in the amount of $181,000. As of March 31, 2026, we have no outstanding debt.
Removed paragraphs (39)
Previous report
We conduct our business through three reportable segments: (i) CVD Equipment that designs and manufactures chemical vapor deposition, physical vapor transport and thermal process equipment; (ii) SDC that designs and manufactures ultra-high purity gas and chemical delivery control systems; and (iii) MesoScribe that provided products related to advanced materials and coatings. The operations of MesoScribe were ceased during 2024.
Previous report
During the three months ended September 30, 2025 and 2024:
Previous report
The phrase “electrification of everything” refers to the shift from fossil fuels to the use of electricity to power devices, buildings, electric vehicles (“EVs”), and many other applications.
Previous report
Key initiatives of the plan include a reduction in the CVD Equipment division’s workforce, expected to reduce annual operating costs by approximately $2.0 million; outsourcing of the fabrication operations for certain components; and implementation of a revised sales strategy utilizing distributors and outside sales representatives to supplement internal sales efforts. Our SDC division will not be impacted by these actions.
Previous report
We expect to complete the workforce reduction plan during the fourth quarter of 2025 and anticipate incurring approximately $0.1 million in severance and other charges. In connection with the transformation plan, we may incur non-cash impairment charges in future periods with respect to certain of our long-lived assets to the extent that any such assets are disposed of for amounts less than their book values.
Previous report
In February 2024, we received an order from a customer for our PVT200 system used to grow silicon carbide crystals for the manufacture of 200 mm wafers. We shipped this unit to the customer in the third quarter of 2024 and it continues to be evaluated.
Previous report
The global economy continues to confront the impacts of recent executive orders by the U.S. federal administration regarding tariffs on imports from various countries including the European Union, Canada, Mexico, and China and the potential impact of actions taken by other countries in response to the announced tariffs. Tariffs may make our products less cost competitive and reduce gross margins. The impact on our business related to these or any other tariffs that may be imposed, is uncertain and depends on multiple factors, including the duration and expansion of current tariffs, future changes to tariff rates, scope or enforcement, retaliatory measures by impacted trade partners, and related inflationary effects.
Previous report
On September 30, 2025, the continuing resolution (CR) allowing U.S. government departments and agencies to operate through the end of the government fiscal year expired and the U.S. government shut down most of its operations. As a result of the U.S. government shutdown, our business and results of operations may be impacted by the disruptions to federal government offices, workers, and operations, including disruptions relating to the funding of research activities to both universities and companies that may result in delays in new orders or the loss of orders. We may also experience similar impacts in the event of a series of short-term continuing resolutions rather than full-year fiscal year 2026 appropriations. Generally, the significance of these impacts will primarily be based on the length of the shutdown and timing of passage of a new CR or a full budget.
Previous report
On July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H. Con. Res. 14” (the Act) was enacted. The Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S. taxation on international earnings.
Previous report
Historically, our orders have fluctuated based on end user market conditions, adoption of our new products and acceptance of our products. The current economic uncertainty regarding tariffs may potentially affect our future order rate. The order rate as well as other factors in our manufacturing process ultimately impacts on the timing of revenue recognition, whether accounted for over time or at a point in time. Accordingly, orders received from customers and the corresponding revenue recognized may fluctuate from quarter to quarter. The sales cycle for our equipment is typically six months, but can range up to twelve to eighteen months, depending on the application and product stage of the equipment. The order cycle to manufacture and test a system also will vary from six to eighteen months for our CVD Equipment segment and two to twelve months for our SDC segment, depending on system complexity and magnitude of the system.
Previous report
Three Months Ended September 30, 2025 and 2024
Previous report
The decrease in revenue versus the prior year period was primarily attributable to lower revenue of $0.7 million from our MesoScribe segment which ceased operations in 2024. Revenue from three customers for the quarter ended September 30, 2025 represented 22.7%, 19.1% and 13.6%, respectively, of our total revenues and 29.7%, 24.9%, and 17.5%, respectively, of CVD Equipment segment revenues.
Previous report
The revenue contributed by our CVD Equipment segment for the quarter ended September 30, 2025 of $5.7 million (net of intersegment revenue of $2,000) represented 76.6% of overall revenue as compared to $5.7 million (net of intersegment revenue of $5,000) or 69.3% of overall revenue for the quarter ended September 30, 2024. Lower revenues from system contracts in progress were offset by revenue recognized on one contract that was modified during the third quarter of 2025 to allow revenue to be recognized over time. Revenue recognized from this contract was approximately $1.0 million during the third quarter ended September 30, 2025.
Previous report
The revenue contributed by our SDC segment for the quarter ended September 30, 2025 of $1.7 million (net of intersegment sales of $130,000) represented 23.3% of overall revenue as compared to $1.9 million (net of intersegment sales of $151,000) or 22.6% of overall revenue for the quarter ended September 30, 2024. SDC segment revenue decreased by $0.1 million or 7.3% due to less contracts in progress during the quarter.
Previous report
Gross profit for the three months ended September 30, 2025 was $2.4 million, with a gross margin of 32.7%, compared to a gross profit of $1.8 million and a gross margin of 21.5% for the three months ended September 30, 2024. The increase in gross profit of $0.7 million was principally due to more profitable contract mix at CVD Equipment segment partially offset by lower MesoScribe revenues. The gross profit of our CVD Equipment segment includes $0.6 million related to the revenue recognized as the result of a contract modification. The gross profit of our SDC segment was negatively impacted by $0.1 million of non-recurring equipment certification costs.
Previous report
For the three months ended September 30, 2025, research and development expenses were $0.6 million, or 8.0% of revenue as compared to $0.6 million, or 7.9% of revenue for the three months ended September 30, 2024, a decrease of $50,000 or 7.8%. The decrease in 2025 was the result of a reduction in personnel partially offset by less hours being charged to cost of revenue for contracts in progress.
Previous report
General and administrative expenses for the three months ended September 30, 2025 were $1.2 million or 16.1% of revenue compared to $1.2 million or 15.2% of revenue for the three months ended September 30, 2024, a decrease of $0.1 million or 4.3%. There were no significant changes in general and administrative expenses.
Previous report
Gain on Sale of Equipment
Previous report
During the three months ended September 30, 2024, we recognized a gain of $0.6 million on the sale of equipment related to our MesoScribe subsidiary representing the sale price of $0.8 million less the costs of the equipment sold of $0.2 million.
Previous report
Other Income (Expense), Net
Previous report
Nine Months Ended September 30, 2025 versus September 30, 2024
Previous report
Revenue
Previous report
Our revenue for the nine months ended September 30, 2025 was $20.8 million compared to $19.5 million for the nine months ended September 30, 2024, an increase of $1.4 million or 7.1%.
Previous report
The increase in revenue versus the prior year period was primarily attributable to higher revenues of $2.7 million from our CVD Equipment segment offset by lower revenues of $0.7 million from our MesoScribe segment and $0.5 million from our SDC segment. Revenue from two customers for the nine months ended September 30, 2025 represented 30.2% and 16.7%, respectively, of our total revenues and 41.0% and 22.7%, respectively, of CVD Equipment segment revenues.
Previous report
The revenue contributed by the CVD Equipment segment for the nine months ended September 30, 2025 of $15.4 million (net of intersegment revenue of $13,000) represented 73.6% of overall revenue as compared to $12.7 million (net of intersegment revenue of $5,000) or 65.4% of overall revenue for the nine months ended September 30, 2024. The increase in revenues of $2.7 million or 20.9% was principally due to higher contract revenues from contracts in progress of $1.6 million and higher non-system revenues of $1.0 million.
Previous report
The revenue contributed by the SDC segment for the nine months ended September 30, 2025 of $5.4 million (net of intersegment revenue of $0.3 million) represented 26.0% of overall revenue as compared to $5.9 million (net of intersegment revenue of $0.3 million) or 30.6% of overall revenue for the nine months ended September 30, 2024. Revenue for our SDC segment decreased by $0.5 million or 8.3% due to less contracts in progress during the period.
Previous report
Gross Profit
Previous report
Gross profit for the nine months ended September 30, 2025 was $6.2 million, with a gross margin of 29.7%, compared to a gross profit of $4.1 million and a gross margin of 21.0% for the nine months ended September 30, 2024. The increase in gross profit of $2.1 million was principally due to higher system and non-system revenues in our CVD Equipment segment offset by lower revenues in our SDC and MesoScribe segments. The gross profit of our CVD Equipment segment includes $0.6 million related to the revenue recognized as the result of a contract modification. The gross profit of our SDC segment was negatively impacted by $0.1 million of non-recurring equipment certification costs.
Previous report
Research and Development
Previous report
Selling
Previous report
Selling expenses were $1.1 million or 5.3% of revenue for the nine months ended September 30, 2025 as compared to $1.3 million or 6.5% of revenue for the nine months ended September 30, 2024, a decrease of $0.1 million or 13.5%. The decrease was the result of a reduction in personnel.
Previous report
General and Administrative
Previous report
General and administrative expenses for the nine months ended September 30, 2025 were $3.6 million or 17.3% of revenue compared to $3.8 million or 19.8% of revenue for the nine months ended September 30, 2024, a decrease of $0.2 million or 6.5%. The decrease in expenses was principally due to lower professional fees, lower bonus accrual and the cessation of MesoScribe’s operations.
Previous report
Gain on Sale of Equipment
Previous report
During the nine months ended September 30, 2024, we recognized a gain of $0.6 million on the sale of equipment related to our MesoScribe subsidiary representing the sale price of $0.8 million less the costs of the equipment sold of $0.2 million.
Previous report
Other Income (Expense), Net
Previous report
Income Taxes
Previous report
As of September 30, 2025, aggregate working capital was $14.6 million as compared to aggregate working capital of $13.8 million at December 31, 2024. Cash and cash equivalents at September 30, 2025 and December 31, 2024 were $8.4 million and $12.6 million, respectively.
Previous report
Net cash used in financing activities for the nine months ended September 30, 2025 consisted of repayments of $65,000 for an equipment loan.
Reworded paragraphs (20)
Previous wording
Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. We assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements. Past performance is no guaranty of future results.
Current wording
Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure of such assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. We assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements. Past performance is no guarantee of future results.
Previous wording
CVD has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York with our SDC division located in Saugerties, New York.
Current wording
CVD Equipment Corporation (“CVD” or the “Company”) has served the advanced materials markets with chemical vapor deposition, physical vapor transport and thermal process equipment for over 40 years. We are headquartered in Central Islip, New York.
Previous wording
On November 6, 2025, our Board of Directors approved a comprehensive strategy to transform our Company in response to the continued fluctuations in our order rates and the recent decline in the bookings of our CVD Equipment division. As part of this strategy, we intend to transition the operating model for our CVD Equipment business from vertically integrated fabrication to outsourced fabrication of certain components. These actions are expected to reduce our fixed operating costs.
Current wording
On November 6, 2025, our Board of Directors approved a comprehensive strategy to transform our Company in response to the continued fluctuations in our order rates and the recent decline in the bookings of our CVD Equipment division. As part of this strategy, we transitioned our operating model for our CVD Equipment business from vertically integrated fabrication to outsourced fabrication of certain components to reduce our fixed operating costs.
Previous wording
We design, develop, and manufacture a broad range of equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, aerospace, battery energy storage markets as well as advanced industrial applications including nuclear, and research.
Current wording
We design, develop, and manufacture a broad range of equipment used to develop and produce materials and coatings for the aerospace, compound semiconductor, semiconductor, battery energy storage markets as well as advanced industrial applications, and research.
Previous wording
Our core strategy is to focus on growth end markets in applications related to aerospace, microelectronics including markets related to the “electrification of everything,” and industrial applications. With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and to produce specialty coatings for advanced high temperature environments.
Current wording
With respect to aerospace, our systems are being used by our customers to produce ceramic matrix composite materials (“CMCs”) that will be used in next generation gas turbine jet engines with the objective of reducing jet fuel consumption and to produce specialty coatings for advanced high temperature environments.
Previous wording
Our PVT reactor design and control system architecture allows for precise process and temperature control enabling run-to-run repeatability and system-to-system matching. The PVT system platform is also being considered to process other WBG materials such as aluminum nitride (AlN) to support the development of emerging, high performance semiconductor materials.
Current wording
In microelectronics/power electronics, our PVT reactor design and control system architecture allows for precise process and temperature control enabling run-to-run repeatability and system-to-system matching. The PVT system platform is also being considered to process other WBG materials such as aluminum nitride (AlN) to support the development of emerging, high performance semiconductor materials.
Previous wording
In October 2025, wereceived an order for two PVT150™ Physical Vapor Transport Systems (PVT) from Stony Brook University (SBU) for their new semiconductor research center - onsemi Silicon Carbide Crystal Growth Center. The recently launched research center will enable SBU faculty, scientists, and students to conduct research on silicon carbide crystal growth and other wide band gap (WBG) materials and device-enabling technologies critical to improving energy efficiency in power semiconductors and foster the next generation of skilled professionals in this field.
Current wording
In October 2025, we sold two PVT150™ units to Stony Brook University (SBU) for their new semiconductor research center - onsemi Silicon Carbide Crystal Growth Center. The recently launched research center will enable SBU faculty, scientists, and students to conduct research on silicon carbide crystal growth and other wide band gap (WBG) materials and device-enabling technologies critical to improving energy efficiency in power semiconductors and foster the next generation of skilled professionals in this field.
Previous wording
Our PVT systems may provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission. In addition, SiC semiconductors specifically help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers. We plan to evaluate the market conditions and opportunities to expand our product offerings in the power electronics market.
Current wording
Our PVT systems may provide us with standard product offerings to continue to support the EV focused market as well as energy storage, power conversion and power transmission. In addition, silicon carbide (“SiC”)semiconductors specifically help address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers. We plan to evaluate the market conditions and opportunities to expand our product offerings in the power electronics market.
Previous wording
The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).
Current wording
The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the quarters ended March 31, 2026 and 2025 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages). Unless otherwise specified, our discussion below reflects continuing operations only. Prior period financial information related to discontinued operations has been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation.
Previous wording
Our revenue for the three months ended September 30, 2025 was $7.4 million compared to $8.2 million for the three months ended September 30, 2024, a decrease of $0.8 million or 9.6%.
Current wording
Our revenue for the quarter ended March 31, 2026, was $1.8 million compared to $6.3 million for the quarter ended March 31, 2025, a decrease of 70.9%.
Previous wording
Our order backlog at September 30, 2025 was approximately $8.0 million as compared to $13.2 million at June 30, 2025. Our order backlog at September 30, 2025 consists of approximately $6.8 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $1.2 million represents non-system orders received from customers. As of September 30, 2025, one industrial customer represented 23.8% of our backlog and one aerospace customer represented 24.7% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impact on the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.
Current wording
Our order backlog at March 31, 2026, was approximately $4.7 million as compared to December 31, 2025, of $4.7 million. Our order backlog at March 31, 2026, consists of approximately $2.6 million related to remaining performance obligations of contracts in progress and not yet started and the balance of approximately $2.0 million represents other orders received from customers. As of March 31, 2026, one industrial customer represented 14.7% of our backlog and one aerospace customer represented 32.8% of our backlog. Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impacts the timing of revenue recognition. Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.
Previous wording
For the nine months ended September 30, 2025, research and development expenses were $2.1 million, or 9.9% of revenue as compared to $2.1 million, or 10.6% of revenue for the nine months ended September 30, 2024, an increase of $6,000 or 0.3%. Reductions in personnel was offset by less hours being charged to cost of revenue for contracts in progress.
Current wording
For the quarter ended March 31, 2026, research and development expenses were $0.7 million, or 39.4% of revenue as compared to $0.7 million, or 11.6% of revenue for the quarter ended March 31, 2025. During the current quarter there was less time charged to contracts in progress that was offset by lower personnel costs.
Previous wording
General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to costs of goods sold when work is performed directly on a customer order.
Current wording
General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to cost of revenue when work is performed directly on a customer order.
Previous wording
Selling expenses were $0.3 million or 4.4% of the revenue for the three months ended September 30, 2025 as compared to $0.4 million or 5.2% of revenue for the three months ended September 30, 2024, a decrease of $0.1 million or 22.5%. The decrease was the result of a reduction in personnel.
Current wording
Selling expenses were $0.2 million or 13.0% of revenue for the quarter ended March 31, 2026 as compared to $0.4 million or 5.8% of revenue for the quarter ended March 31, 2025. The decrease was primarily due to lower personnel costs.
Previous wording
Other income (expense) consists principally of interest income on U.S. treasury securities and was lower than the prior year quarter due to less funds available for investment and lower interest rates.
Current wording
Other income, net was $70,000 for the quarter ended March 31, 2026, as compared to other income, net of $107,000 for the quarter ended March 31, 2025. Other income consists principally of interest earned on amounts invested in U.S. treasury securities and was lower than the prior period quarter due to less funds available for investment.
Previous wording
Net cash used in operating activities for the nine months ended September 30, 2025 was $4.1 million. This decrease was principally due to the net loss of $0.3 million, an increase in accounts receivable of $0.5 million, an increase in contract assets of $2.7 million and a decrease in contract liabilities of $2.4 million which was partially offset by non-cash expenses of $1.2 million.
Current wording
Net cash used in operating activities for the quarter ended March 31, 2026 was $0.9 million. This decrease was principally due to net loss of $1.6 million and a $0.3 million increase in contract assets due to revenue recognized on contracts in progress. These decreases were partially offset by non-cash expense items of $0.3 million, decrease in inventory of $0.3 million, a decrease in accounts receivable of $0.2 million and an increase of $0.3 million in accrued expenses.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2025 consisted of capital expenditures of $49,000 related to purchases of property and equipment and investment in a captive insurance company related to our self-insured health benefits program of $51,000.
Current wording
Net cash provided by investing activities for the quarter ended March 31, 2026 consisted of proceeds from the sale of assets held for sale and other equipment of $0.6 million partially offset by capital expenditures of $13,000 and an investment in a captive insurance company related to our health insurance program of $48,000.
Previous wording
This discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.
Current wording
This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.
Previous wording
In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Current wording
In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Previous wording
Long-lived assets consist primarily of property, plant and equipment. Long-lived assets are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists pursuant to the requirements of ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets.” If the asset is determined to be impaired, the impairment loss is measured on the excess of it carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.
Current wording
Long-lived assets consist primarily of property, plant and equipment. Long-lived assets are reviewed for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances arise, an estimate of the future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the asset’s carrying value to determine if impairment exists pursuant to the requirements of ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets.” If the asset is determined to be impaired, the impairment loss is measured on the excess of it carrying value over its fair value. Assets to be disposed of are reported at the lower of their carrying value or net realizable value. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the nine months ended September 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).
Previous report — wording carried elsewhere
General engineering support and expenses related to the development of more standardized products and value-added development of existing products are reflected as part of research and development expense. General engineering support and expenses are charged to costs of goods sold when work is performed directly on a customer order.
Previous report — wording carried elsewhere
Other income (expense) consists principally of interest income on U.S. treasury securities and was lower than the prior year period due to less funds available for investment and lower interest rates.
Previous report — wording carried elsewhere
We continue to evaluate the potential utilization of our net deferred tax asset, which has been fully reserved for, on a quarterly basis, by reviewing our economic models, including projections of future operating results.