What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-13 compared with 2024-08-13 · 160 added, 160 removed, 184 unchanged (63% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

Discussion and Analysis of Financial Condition and Results of Operations.

for historical information contained herein, this “Management’s Discussion and Analysis of Financial Condition and Results

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as to our future profitability;

as to the general state of the silicon carbibe wafer end market;

in our existing and potential future product lines of business, including our PVT150 / PVT200 systems;

as to our ability to develop new products for the high power electronics market

including our plan to develop a PVT200 to grow silicon carbide crystals for 200 mm wafers;

as to our ability to identify and develop new products for growth markets;

ability to obtain financing on acceptable terms if and when needed;

ability to attract and retain key personnel and employees;

as to our ability to adequately obtain raw materials and on commercially reasonable

as to our ability to adequately obtain raw materials and on commercially reasonable terms.

factors and assumptions not identified above were also involved in the derivation of these forward-looking statements and the failure

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and manufactures a broad range of chemical vapor deposition, gas control, and other state-of-the-art equipment and process solutions

used to develop and manufacture materials and coatings for industrial applications and research.

used to develop, produce and grow materials and coatings for commercial applications and research.

To learn more about CVD’s systems

and offerings, visit www.cvdequipment.com.

the three and six months ended June 30, 2024 and 2023:

increased by $1.3 million or 25.2% for the second quarter as compared to the prior year period

due to increases in revenues from aerospace contracts in progress and our SDC segment offset

in part by lower revenues for PVT150 systems and spare parts.

margin increased by $0.2 million or 15.9% in the second quarter as compared to the prior

period quarter due to higher revenues that was offset by lower gross profit margins on contracts

bookings for the second quarter of 2024 were approximately $3.2 million as compared to $13.0

million in the prior year period.

bookings for the first half of 2024 were $16.9 million as compared to $15.8 million in the

first half of 2023.

in 2024 included a $10.0 million multisystem order from an industrial customer that will

be used to deposit a silicon carbide protective coating on OEM components.

in 2023 included $8.7 million of multiple systems orders from an aerospace customer and a

battery nanomaterial production system of $1.8 million.

the first quarter of 2024, we received an order from an additional customer for our

new PVT200 system that will be used to grow silicon carbide crystals for the manufacture of 200 mm wafers.

our backlog from $18.4 million at December 31, 2023 to $24.0 million at June

balance at June 30, 2024 was $10.0 million as compared to $14.0 million at December 31, 2023

core strategy is to focus on growth market applications in end markets related to the “electrification of everything,” aerospace

the three and nine months ended September 30, 2024 and 2023:

increased by $2.0 million or 31.4% for the third quarter as compared to the prior year period due to increases in revenues from aerospace

contracts in progress, our SDC segment and final sales by our MesoScribe subsidiary partially offset by lower revenues of spare parts.

margin increased by $0.2 million or 14.8% in the third quarter as compared to the prior period quarter due to higher revenues and

improved margins on contracts in process offset by a $1.0 million non-cash charge to reduce certain PVT inventory to net realizable

bookings for the third quarter of 2024 were approximately $4.1 million as compared to $4.4 million in the prior year period.

bookings for the nine months ended September 30, 2024 were $21.0 million as compared to $15.8 million in the prior year period.

in 2024 included a $10.0 million multisystem order from an industrial customer that will be used to deposit a silicon carbide protective

coating on OEM components.

in 2023 included $8.7 million of multiple systems orders from an aerospace customer and a battery nanomaterial production system

of $1.8 million.

the first quarter of 2024, we received an order from an additional customer for our new PVT200 system that will be used to grow silicon

carbide crystals for the manufacture of 200 mm wafers.

This unit was shipped to the customer in the third quarter of 2024.

backlog increased from $18.4 million at December 31, 2023 to $19.8 million at September 30, 2024.

balance at September 30, 2024 was $10.0 million as compared to $14.0 million at December 31, 2023

core strategy is to focus on growth end markets in applications related to aerospace, the “electrification of everything,”

and industrial applications.

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.

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 contributing to the decarbonization of that

current strategy yielded multisystem orders of PVT150 equipment in 2023 and 2022 that was delivered to one company that manufactures

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.

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.

current strategy yielded multisystem orders of PVT150 equipment in 2023 and 2022 that were delivered to one company that manufactures

silicon carbide wafers.

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lower-than-anticipated industrywide electric vehicle adoption rates which may reduce demand for silicon carbide and impact sales of our

In addition, the recent global over capacity of 150 mm silicon carbide wafers has reduced the market for 150 mm silicon

carbide growth systems.

February 2024, we received an order from an additional customer for our new PVT200 system used to grow silicon carbide crystals for the

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for potential additional purchases of PVT equipment.

We have also received orders from OneD Battery Materials in 2023, a company that

is engaged in providing battery nanomaterials.

We shipped this unit to the customer in the third quarter of 2024.

have also received orders from OneD Battery Materials in 2023, a company that is engaged in providing battery nanomaterials.

technologies are essential for the support of the EV market.

These systems should provide us with standard product offering to continue

These systems should provide us with standard product offerings to continue

to support the EV focused market as well as energy storage, power conversion and power transmission.

We plan to expand our product offerings

in the power electronics market to build off the introduction of the PVT150 and PVT200 systems.

We are also evaluating our ability to

provide other equipment used in the manufacturing process of silicon carbide wafers.

We plan to evaluate opportunities

to expand our product offerings in the power electronics market to build off the introduction of the PVT150 and PVT200 systems.

also evaluating our ability to provide other equipment used in the manufacturing process of silicon carbide wafers.

2022, we also received an order from an aerospace company for a production chemical vapor infiltration (CVI) system that will be used

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In 2023, we received an order from the same aerospace company for an additional three

CVI systems and in November 2024 we received an order for an additional CVI system.

February 2024, we received a multisystem order from an industrial customer for approximately $10.0 million that will be used for depositing

a silicon carbide protective coating on OEM components.

have generally gained new customers through our industry reputation, as well as limited print advertising and trade show attendance.

We have increased the number of trade shows and industry conferences.

In addition, we added to our sales and marketing team in 2022 and

expanded our sales team in early 2023.

have generally gained new customers through our industry reputation, as well as print advertising and trade show attendance.

increased the number of trade shows and industry conferences we attend.

Historically,

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of Operations

Months Ended June 30, 2024 and 2023

Months Ended September 30, 2024 and 2023

following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the three

months ended June 30, 2024 and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands, except

percentages).

Three months ended

months ended September 30, 2024 and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands,

except percentages).

Cost of revenue

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General and administrative

Loss on disposition of Tantaline

Impairment charge

on sale of equipment

Total operating expenses

Operating loss

Operating income (loss)

Other income (expense):

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Interest expense

Foreign exchange income

Other income (expense)

Total other income, net

Loss before income taxes

Total other income,

Income (loss) before income taxes

Income tax expense

Revenue (net of intersegment sales)

CVD Equipment

Net income (loss)

Not meaningful

CVD Materials

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Not meaningful

revenue for the three months ended June 30, 2024 was $6.3 million compared to $5.1 million for the three months ended June 30, 2023,

revenue for the three months ended September 30, 2024 was $8.2 million compared to $6.2 million for the three months ended September

30, 2023, an increase of 31.4%.

increase in revenue versus the prior year period was primarily attributable to higher revenue of $0.9 million from our CVD Equipment

segment, a $0.5 million increase in revenue from our SDC segment, offset by a $0.3 million decrease from our CVD Materials segment.

from one aerospace customer for the three months ended June 30, 2024 represented 35.2% of our total revenues and 54.3% of CVD Equipment

segment revenues.

revenue contributed by the CVD Equipment segment for the three months ended June 30, 2024 of $4.1 million represented 64.8% of overall

revenue as compared to $3.1 million or 61.8% of overall revenue for the three months ended June 30, 2023.

The increase in revenues of

$1.0 million or 31.0%% resulted principally due to increases in revenues from aerospace contracts in progress offset in part by lower

segment, a $0.4 million increase in revenue from our SDC segment, and a $0.6 million increase from our CVD Materials segment.

Revenue from one aerospace customer for the three months ended September 30, 2024 represented 29.1% of our total revenues and 42.0%

of CVD Equipment segment revenues.

revenue contributed by the CVD Equipment segment for the three months ended September 30, 2024 of $5.7 million represented 69.3% of overall

revenue as compared to $4.8 million or 76.3% of overall revenue for the three months ended September 30, 2023.

The increase in revenues

of $0.9 million or 18.5% resulted principally from increases in revenues from aerospace contracts in progress offset in part by lower

revenue for PVT150/200 systems and spare parts.

revenue contributed by the SDC segment for the three months ended June 30, 2024 of $2.3 million represented 36.5% of overall revenue

as compared to $1.8 million or 35.4% of overall revenue for the three months ended June 30, 2023.

were certain customer contracts in 2023 where the revenue was to be recognized at the point in time when the equipment is

transferred to the customer based on contract terms.

These contracts were modified during the three months ended September 30, 2023

such that the revenue under these contracts is now being recognized over time using the input method.

The Company and CVD Equipment

segment revenues for the three months ended September 30, 2023 include $0.8 million of revenue that was deferred as of June 30, 2023

and recognized on the date of the contract modification.

revenue contributed by the SDC segment for the three months ended September 30, 2024 of $2.0 million represented 22.6% of overall revenue

as compared to $1.6 million or 22.3% of overall revenue for the three months ended September 30, 2023.

Revenue for our SDC segment increased

by $0.5 million or 30.0% due to higher demand for SDC’s gas and chemical delivery system products as compared to the prior period.

revenue contributed by the CVD Materials segment for the three months ended June 30, 2024 of $55,000 represented 0.9% of our overall

revenue as compared to $0.3 million or 6.7% of overall revenue for the three months ended June 30, 2023.

The decrease of $0.3 million

or 83.9% was principally due to the disposition of Tantaline in May 2023 and the wind down of MesoScribe’s operations.

order backlog at June 30, 2024 was approximately $24.0 million as compared to December 31, 2023 of $18.4 million.

Our backlog at June

30, 2024 consists of approximately $21.6 million related to remaining performance obligations of contracts in progress and not yet started

that will be recognized over time with the balance of approximately $2.4 million representing other orders received from customers.

Historically,

our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing process that impact

the timing of revenue recognition.

Accordingly, orders received from customers and revenue recognized may fluctuate from quarter to quarter.

profit for the three months ended June 30, 2024 was $1.6 million, with a gross profit margin of 25.4%, compared to a gross profit of

$1.4 million and a gross profit margin of 27.4% for the three months ended June 30, 2023.

The increase in gross profit of $0.2 million

was primarily due to higher revenues that was offset by a contract mix with lower gross margins as compared to the prior period.

by $0.4 million or 27.5% due to higher demand for gas delivery system products as compared to the prior period.

revenue contributed by the CVD Materials segment for the three months ended September 30, 2024 of $0.6 represented 8.1% of our overall

revenue as compared to $0.1 million or 1.4% of overall revenue for the three months ended September 30, 2023.

The increase of $0.6 million

was due to the final sales to an aerospace company and MesoScribe ceased operations as of September 30, 2024.

order backlog at September 30, 2024 was approximately $19.8 million as compared to December 31, 2023 of $18.4 million.

Our backlog at

September 30, 2024 consists of approximately $17.0 million related to remaining performance obligations of contracts in progress and

not yet started that will be recognized over time with the balance of approximately $2.8 million representing other orders received from

Historically, our revenues and orders have fluctuated based on changes in order rate as well as other factors in our manufacturing

process that impact the timing of revenue recognition.

Accordingly, orders received from customers and revenue recognized may fluctuate

from quarter to quarter.

profit for the three months ended September 30, 2024 was $1.8 million, with a gross profit margin of 22.4%, compared to a gross profit

of $1.6 million and a gross profit margin of 25.6% for the three months ended September 30, 2023.

The increase in gross profit of $0.2

million was primarily due to higher revenues as well as improved margins on CVD contracts in progress and final MesoScribe sales that

was partially offset by a $1.0 million non-cash charge to reduce certain PVT inventory to net realizable value.

and Development

the three months ended June 30, 2024, research and development expenses were $0.7 million, or 10.5% of revenue as compared to $0.6 million,

or 11.0% for the three months ended June 30, 2023, an increase of $0.1 million or 18.9%.

The increase in 2024 was due principally to

a reduction of bonus accruals in the prior period quarter and a recruitment fee for a new engineer in the current

the three months ended September 30, 2024, research and development expenses were $0.6 million, or 7.9% of revenue as compared to

$0.7 million, or 11.3% of revenue for the three months ended September 30, 2023, a decrease of $0.1 million or 8.5%.

The decrease in

2024 was due to more engineering time being charged to cost of revenue based on contracts in progress.

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.

expenses were $0.4 million or 6.7% of the revenue for the three months ended June 30, 2024 as compared to $0.4 million or 8.4% for

the three months ended June 30, 2023.

There were no significant changes in selling expenses as compared to the prior period

General engineering support and expenses are charged to costs of revenue when

work is performed directly on a customer order.

expenses were $0.4 million or 5.2% of the revenue for the three months ended September 30, 2024 as compared to $0.4 million or 7.0% for

the three months ended September 30, 2023.

There were no significant changes in selling expenses as compared to the prior period quarter.

and Administrative

and administrative expenses for the three months ended June 30, 2024 were $1.4 million or 22.3% of revenue compared to $1.4 million

or 26.8% of revenue for the three months ended June 30, 2023, an increase of $56,000 or 5.7%.

The increase in 2024 was due

principally to a reduction of bonus accruals in the prior period quarter offset by increases in consulting and recruitment fees in

the current quarter.

the three months ended June 30, 2023, the Company revised its estimated bonus accrual.

This resulted in an adjustment of $0.2 million

to reverse a portion of the 2024 bonus that was accrued as of March 31, 2023.

The impact of this reversal on general administrative expense

was a reduction of $0.1 million.

The impact of this reversal also resulted in reductions of expenses for cost of revenue of $41,000,

research and development of $56,000 and selling expenses of $24,000 during the three months ended June 30, 2023.

on Disposition of Tantaline

item represents the net loss on the sale of our Tantaline subsidiary including professional fees in the three months ended June 30, 2023.

item represents the loss on the impairment of certain assets of MesoScribe based on the decision at June 30, 2023 to dispose of the subsidiary.

and administrative expenses for the three months ended September 30, 2024 were $1.3 million or 16.1% of revenue compared to $1.4 million

or 23.3% of revenue for the three months ended September 30, 2023.

The decrease in 2024 was due principally to a reduction of employee

compensation and lower professional fees as compared to the prior year quarter.

on Sale of Equipment

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.

Income (Expense), Net

income (expense), net was $0.1 million for both the three months ended June 30, 2024 and 2023.

Other income is principally interest income

on treasury bills.

income (expense), net was $0.1 million and $0.2 million for three months ended September 30, 2024 and 2023, respectively.

is principally interest income on treasury bills.

Interest income was lower than the prior period due to less amounts invested and lower

interest rates.

continue to evaluate the potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, by

reviewing our economic models, including projections of future operating results.

Months Ended June 30, 2024 versus June 30, 2023

following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the six months

ended June 30, 2024 and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

Six months ended

Months Ended September 30, 2024 versus September 30, 2023

following table presents revenue and expense line items reported in our condensed consolidated statements of operations for the nine

months ended September 30, 2024 and 2023 and the period-over-period dollar and percentage changes for those line items (in thousands,

except percentages).

Cost of revenue

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General and administrative

Loss on disposition of Tantaline

Impairment charge

Gain on sale of equipment

Loss on disposition of

Total operating expenses

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Foreign exchange income

Total other income, net

Total other income,

Loss before income taxes

Income tax expense

Revenue (net of intersegment sales)

Not meaningful

CVD Equipment

2 unchanged sentences

Not meaningful

revenue for the six months ended June 30, 2024 was $11.3 million compared to $13.8 million for the six months ended June 30, 2023, a

decrease of 18.1%.

revenue for the nine months ended September 30, 2024 was $19.5 million compared to $20.0 million for the nine months ended September

30, 2023, a decrease of 2.7%.

decrease in revenue versus the prior year period was primarily attributable to lower revenues of $1.0 million from our CVD Equipment

segment and $0.9 million from our CVD Materials segment, offset by a $0.1 million increase in revenue from our SDC segment,

from one aerospace customer for the six months ended June 30, 2024 represented 32.8% of our total revenues and 52.3% of CVD Equipment

segment and $0.3 million from our CVD Materials segment, offset in part by a $0.6 million increase in revenue from our SDC segment.

from one aerospace customer for the nine months ended September 30, 2024 represented 31.2% of our total revenues and 47.7% of CVD Equipment

segment revenues.

revenue contributed by the CVD Equipment segment for the six months ended June 30, 2024 of $7.1 million represented 62.6% of overall

revenue as compared to $9.0 million or 65.2% of overall revenue for the six months ended June 30, 2023.

The decrease in revenues of $1.9

million or 21.4%% resulted principally due to lower PVT150 systems and revenue from spares and parts offset by increases in revenues

revenue contributed by the CVD Equipment segment for the nine months ended September 30, 2024 of $12.7 million represented 65.2% of overall

revenue as compared to $13.8 million or 68.4% of overall revenue for the nine months ended September 30, 2023.

The decrease in revenues

of $1.0 million or 7.5% resulted principally from lower PVT150 systems and revenue from spares and parts offset by increases in revenues

from aerospace contracts in progress.

revenue contributed by the SDC segment for the six months ended June 30, 2024 of $4.2 million represented 37.7% of overall revenue as

compared to $4.1 million or 29.8% of overall revenue for the six months ended June 30, 2023.

Revenue for our SDC segment increased by

$0.1 million or 3.4% due to slightly higher demand for SDC’s gas and chemical delivery system products as compared to the prior

revenue contributed by the CVD Materials segment for the six months ended June 30, 2024 of $0.1 million represented 1.0% of our overall

revenue as compared to $1.0 million or 7.3% of overall revenue for the six months ended June 30, 2023.

The decrease of $0.9 million was

principally due to the disposition of Tantaline in May 2023 and the wind down of MesoScribe’s operations.

profit for the six months ended June 30, 2024 was $2.5 million, with a gross profit margin of 21.9%, compared to a gross profit of $3.8

million and a gross profit margin of 27.8% for the six months ended June 30, 2023.

The decrease in gross profit of $1.4 million was primarily

the result of lower revenue and a contract mix with lower gross margins as compared to the prior period.

revenue contributed by the SDC segment for the nine months ended September 30, 2024 of $6.3 million represented 30.6% of overall revenue

as compared to $5.7 million or 26.1% of overall revenue for the nine months ended September 30, 2023.

Revenue for our SDC segment increased

by $0.6 million or 10.1% due to higher demand for gas delivery system products as compared to the prior period.

revenue contributed by the CVD Materials segment for the nine months ended September 30, 2024 of $0.8 million represented 4.0% of our

overall revenue as compared to $1.1 million or 5.5% of overall revenue for the nine months ended September 30, 2023.

The decrease of

$0.3 million was principally due to the disposition of Tantaline in May 2023 and the wind down of MesoScribe’s operations.

profit for the nine months ended September 30, 2024 was $4.3 million, with a gross profit margin of 22.1%, compared to a gross profit

of $5.4 million and a gross profit margin of 27.1% for the nine months ended September 30, 2023.

The decrease in gross profit of $1.1

million was primarily the result of lower revenue and lower gross margins on CVD Equipment contracts and a $1.0 million non-cash charge

to reduce certain PVT inventory to net realizable value partially offset by improved in gross margins on SDC revenues and final MesoScribe

and Development

the six months ended June 30, 2024, research and development expenses were $1.4 million, or 12.5% of revenue as compared to $1.2 million,

or 8.4% for the six months ended June 30, 2023, an increase of $0.2 million or 21.4%.

The increase in 2024 was the result of lower costs

allocated to cost of revenue and a recruitment fee for a new engineer in the current year period.

the nine months ended September 30, 2024, research and development expenses were $2.1 million, or 10.6% of revenue as compared to $1.9

million, or 9.3% for the nine months ended September 30, 2023, an increase of $0.2 million or 10.2%.

The increase in 2024 was the result

of lower costs allocated to cost of revenue and a recruitment fee for engineering staff.

engineering support and expenses related to the development of more standardized products and value-added development of existing products

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when work is performed directly on a customer order.

expenses were $0.8 million or 7.5% of the revenue for the six months ended June 30, 2024 as compared to $0.8 million or 6.2% for the

six months ended June 30, 2023.

expenses were $1.3 million or 6.5% of revenue for the nine months ended September 30, 2024 as compared to $1.3 million or 6.4% for the

nine months ended September 30, 2023.

There were no significant changes in selling expenses as compared to the prior period.

and Administrative

and administrative expenses for the six months ended June 30, 2024 were $2.7 million or 24.3% of revenue compared to $3.0 million or

21.5% of revenue for the six months ended June 30, 2023, a decrease of $0.2 million.

The decrease in expenses was principally due to

lower salaries of $0.1 million due to sale of Tantaline, lower bonuses and commissions of $0.1 million and lower professional fees of

$0.1 million, offset by higher stock-based compensation expense of $0.1 million.

and administrative expenses for the nine months ended September 30, 2024 were $4.1 million or 20.8% of revenue compared to $4.4 million

or 22.1% of revenue for the nine months ended September 30, 2023, a decrease of $0.4 million.

The decrease in expenses was principally

due to lower salaries of $0.1 million due to sale of Tantaline, lower bonuses and commissions of $0.1 million and lower professional

fees of $0.1 million, offset by higher stock-based compensation expense of $0.1 million.

on Sale of Equipment

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.

on disposition of Tantaline

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Income (Expense), Net

income (expense), net was $0.3 million for both six month periods ended June 30, 2024 and 2023.

Other income is principally interest

income on treasury bills.

income (expense), net was $0.4 million and $0.5 million for the nine month periods ended September 30, 2024 and 2023, respectively.

Other income is principally interest income on treasury bills.

The reduction in other income, net was due to foreign exchange gain

recorded and interest income on the employee retention credit received in 2023.

continue to evaluate the potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, by

1 unchanged sentence

and Capital Resources

of June 30, 2024, aggregate working capital was $12.7 million as compared to aggregate working capital of $14.3 million at December 31,

Cash and cash equivalents at June 30, 2024 and December 31, 2023 were $10.0 million and $14.0 million, respectively.

cash used in operating activities for the six months ended June 30, 2024 was $3.8 million.

This decrease was principally due to the net

loss of $2.2 million, an increase in accounts receivable of $3.0 million, offset by an increase in accounts payable of $0.4 million and

non-cash items of $0.8 million.

cash used in investing activities for the three months ended June 30, 2024 consisted of capital expenditures of $0.2 million related

of September 30, 2024, aggregate working capital was $13.3 million as compared to aggregate working capital of $14.3 million at December

Cash and cash equivalents at September 30, 2024 and December 31, 2023 were $10.0 million and $14.0 million, respectively.

cash used in operating activities for the nine months ended September 30, 2024 was $3.7 million.

This decrease was principally due to

the net loss of $2.0 million, an increase in accounts receivable of $3.2 million, reduction in contract liabilities of $1.6 million offset

by a reduction in inventory of $0.6 million and non-cash items of $2.5 million including a provision for excess and obsolete inventory

of $1.0 million..

cash used in investing activities for the three months ended September 30, 2024 consisted of capital expenditures of $0.2 million related

to purchases of equipment, building improvements and software.

cash used in financing activities for the three months ended June 30, 2024 consisted of repayments of $40,000 for an equipment loan.

cash used in financing activities for the three months ended September 30, 2024 consisted of repayments of $0.1 million for an equipment

believe that our cash and cash equivalent positions and our projected cash flow from operations will be sufficient to meet our working

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charge could be material to our results of operations and financial condition.

Quantitative and Qualitative Disclosures About Market Risk

and Qualitative Disclosures About Market Risk

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis