What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-12 · 226 added, 151 removed, 145 unchanged (72% of the section changed)

13 unchanged sentences

to differ materially from those in the forward-looking statements, include, but are not limited to:

as to our future growth and return to consistent profitability;

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

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

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 changes to international trade policies including the imposition of tariffs;

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

uncertainty as to the future growth and return to consistent profitability;

uncertainty as to our ability to execute on our transformation strategy;

uncertainty as to the general state of the silicon carbide wafer end market;

competition in our existing and potential future product lines of business, including our aerospace

equipment and PVT150 / PVT200 systems;

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

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

our ability to attract and retain key personnel and employees;

uncertainty as to changes to international trade policies including the imposition of tariffs;

uncertainty as to the impact of the current U.S.

Government shutdown;

uncertainty 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

18 unchanged sentences

and (iii) MesoScribe that provided products related to advanced materials and coatings.

The operations of MesoScribe were closed

down during 2024.

the quarter ended June 30, 2025:

decreased by $1.2 million or 19.4% as compared to the second quarter of 2025 due to lower system revenues at both our CVD Equipment

and SDC segments.

profit decreased by $0.5 million or 30.4% due to lower revenues.

bookings for the second quarter of 2025 were approximately $4.5 million as compared to bookings of $3.2 million in the second

quarter of 2024.

bookings for the first half of 2025 were approximately $7.3 million as compared to bookings of $16.9 million in the first half of

declined from $13.8 million at March 31, 2025 to $13.2 million at June 30, 2025 due to lower orders in our CVD Equipment

and cash equivalents at June 30, 2025 was $7.0 million as compared to $12.6 million at December 31, 2024.

The operations of MesoScribe were ceased

the three months ended September 30, 2025 and 2024:

decreased by $0.8 million or 9.6% as compared to the third quarter of 2024 due

principally to lower MesoScribe revenue of $0.7 million which ceased operations in 2024.

profit increased by $0.7 million or 37.2% due to more profitable contract mix at

CVD Equipment segment partially offset by lower MesoScribe revenues.

bookings for the third quarter of 2025 were approximately $2.2 million as compared

to bookings of $4.1 million in the third quarter of 2024.

bookings for the nine months ended September 30, 2025 were approximately $9.5 million as

compared to bookings of $21.0 million in the nine months ended September 30, 2024.

declined from $13.2 million at June 30, 2025 to $8.0 million at September 30, 2025 due principally

to lower orders in our CVD Equipment segment.

and cash equivalents at September 30, 2025 were $8.4 million as compared to $12.6 million

at December 31, 2024.

This decrease was principally due to the net loss during the period

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.

core strategy is to focus on growth end markets in applications related to aerospace, microelectronics including markets related to the

5 unchanged sentences

buildings, electric vehicles (“EVs”), and many other applications.

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.

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.

transformation strategy also includes the exploration of strategic alternatives for businesses and product lines, including the potential

sale or divestiture of assets or business lines.

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.

October 2025, we received 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.

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.

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.

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.

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.

PVT150 / PVT200 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.

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.

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 and the units are expected to be delivered over 18 to 24 months period.

July 2025, we shipped the first of the CVD4000™ SiC coating reactor systems to our industrial customer.

November 2024, we received a follow-on order from an aerospace company for an additional CVI 3500 system that will be used by our customer

to produce ceramic matrix composite materials.

We shipped this unit to the customer in the third quarter of 2024 and it continues to be evaluated.

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

9 unchanged sentences

and related inflationary effects.

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.

July 4, 2025, “An Act to Provide for Reconciliation Pursuant to Title II of the H.

14” (the Act) was enacted.

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

Historically,

2 unchanged sentences

The order rate as well as other factors in our manufacturing

process ultimately impacts 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.

process ultimately impacts on the timing of revenue recognition, whether accounted for over time or at a point in time.

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

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.

of Operations

Months Ended June 30, 2025 and 2024

Months Ended September 30, 2025 and 2024

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

months ended June 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except

percentages).

months ended June 30

months ended September 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands,

except percentages).

ended September 30

Cost of revenue

Operating expenses:

and development

and administrative

operating expenses

Research and development

General and administrative

on sale of equipment

Total operating expenses

Operating income

Other income (expense):

income (expense)

Interest income

other income, net

Loss before income taxes

Not meaningful

months ended June 30

sales elimination

revenue for the three months ended June 30, 2025 was $5.1 million compared to $6.3 million for the three months ended June 30, 2024,

Income before income taxes

Income tax expense

CVD Equipment

Intersegment sales elimination

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%.

decrease in revenue versus the prior year period was primarily attributable to lower revenue of $0.7 million from our CVD Equipment segment

and lower revenue of $0.6 million from our SDC segment.

Revenue from one industrial customer for the quarter ended June 30, 2025 represented

23.4% of our total revenues and 35.2% of CVD Equipment segment revenues.

Revenue from one aerospace customer for the quarter ended June

30, 2025 represented 17.7% of our total revenues and 26.6% of CVD Equipment segment revenues.

revenue contributed by our CVD Equipment segment for the quarter ended June 30, 2025 of $3.4 million (net of intersegment revenue of

$8,000) represented 66.4% of overall revenue as compared to $4.1 million (net of intersegment revenue of $0) or 64.7% of overall revenue

for the quarter ended June 30, 2024.

The decrease in revenues of $0.7 million or 17.4% resulted principally from lower revenues from

system contracts in progress of $1.1 million offset by an increase in non-system revenue of $0.4 million.

revenue contributed by our SDC segment for the quarter ended June 30, 2025 of $1.7 million (net of intersegment sales of $27,000) represented

33.4% of overall revenue as compared to $2.2 million (net of intersegment sales of $132,000) or 34.4% of overall revenue for the year

quarter ended June 30, 2025.

SDC segment revenue decreased by $0.6 million or 25.1% due to less contracts in progress during the quarter.

order backlog at June 30, 2025 was approximately $13.2 million as compared to $13.8 million at March 31, 2025.

Our order backlog at June

30, 2025 consists of approximately $12.0 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 June 30, 2025, one industrial

customer represented 25.6% of our backlog and one aerospace customer represented 25.7% 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 impacts 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, 2025 was $1.1 million, with a gross margin of 20.9%, compared to a gross profit of

$1.6 million and a gross margin of 24.3% for the three months ended June 30, 2024.

The decrease in gross profit of $0.5 million

was principally due to lower system revenues in our CVD Equipment and SDC segments offset by higher non-system revenues in our CVD Equipment

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.

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.

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.

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

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

and Development

the three months ended June 30, 2025, research and development expenses were $0.7 million, or 13.1% of revenue as compared to $0.7 million,

or 10.5% of revenue for the three months ended June 30, 2024, an increase of $21,000 or 3.1%.

The increase in 2025 was the result of

less hours being charged to cost of revenue for contracts in progress offset by a reduction in personnel.

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.

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

2 unchanged sentences

when work is performed directly on a customer order.

expenses were $0.3 million or 6.8% of the revenue for the three months ended June 30, 2025 as compared to $0.4 million or 6.7% of revenue

for the three months ended June 30, 2024, a decrease of $0.1 million or 18.1%.

The decrease was the result of a reduction in personnel.

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.

and Administrative

and administrative expenses for the three months ended June 30, 2025 were $1.2 million or 24% of revenue compared to $1.4 million or

23.0% of revenue for the three months ended June 30, 2024, a decrease of $0.2 million or 12.7%.

The decrease in 2025 was due principally

to a lower professional costs.

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.

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) consist principally of interest income on U.S.

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.

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, 2025 versus June 30, 2024

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

ended June 30, 2025 and 2024 and the period-over-period dollar and percentage changes for those line items (in thousands, except percentages).

months ended June 30

less funds available for investment and lower interest rates.

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.

Months Ended September 30, 2025 versus September 30, 2024

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).

ended September 30

Cost of revenue

Operating expenses:

and development

and administrative

operating expenses

Research and development

General and administrative

on sale of equipment

Total operating expenses

Operating loss

Other income (expense):

other income, net

Interest income

Interest expense

Total other income, net

Loss before income taxes

Not meaningful

months ended June 30

sales elimination

revenue for the six months ended June 30, 2025 was $13.4 million compared to $11.3 million for the six months ended June 30, 2024, an

increase of $2.2 million or 19.2%.

Income tax expense

ended September 30

CVD Equipment

Intersegment sales elimination

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%.

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 $0.4 million from our SDC segment.

Revenue from one industrial customer for the six months ended

June 30, 2025 represented 34.3% of our total revenues and 47.6% of CVD Equipment segment revenues.

Revenue from one aerospace customer

for the six months ended June 30, 2025 represented 15.4% of our total revenues and 21.4% of CVD Equipment segment revenues.

revenue contributed by the CVD Equipment segment for the six months ended June 30, 2025 of $9.7 million (net of intersegment revenue

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.

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 six months ended June 30, 2024.

The increase in revenues of $2.6 million or 37.8% resulted principally due higher contract

revenues from contracts in progress of $1.7 million and higher non-system revenues of $1.0 million.

revenue contributed by the SDC segment for the six months ended June 30, 2025 of $3.7 million (net of intersegment revenue of $0.2 million)

represented 27.5% of overall revenue as compared to $4.2 million (net of intersegment revenue of $0.1 million) or 36.4% of overall revenue

for the six months ended June 30, 2024.

Revenue for our SDC segment decreased by $0.4 million or 8.7% due to due to less contracts in

progress during the period.

profit for the six months ended June 30, 2025 was $3.7 million, with a gross margin of 28.1%, compared to a gross profit of $2.3

million and a gross margin of 20.7% for the six months ended June 30, 2024.

The increase in gross profit of $1.4 million was principally

due to higher system and non-system revenues in our CVD Equipment segment offset by lower revenues in our SDC segment.

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.

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.

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.

and Development

the six months ended June 30, 2025, research and development expenses were $1.4 million, or 10.9% of revenue as compared to $1.4 million,

or 12.5% of revenue for the six months ended June 30, 2024, an increase of $57,000 or 4%.

The increase in 2025 was the result of less

hours being charged to cost of revenue for contracts in progress offset by a reduction in personnel.

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.

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

2 unchanged sentences

when work is performed directly on a customer order.

expenses were $0.7 million or 5.7% of the revenue for the six months ended June 30, 2025 as compared to $0.8 million or 7.4% of revenue

for the six months ended June 30, 2024, a decrease of $0.1 million or 8.9%.

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.

and Administrative

and administrative expenses for the six months ended June 30, 2025 were $2.4 million or 18.2% of revenue compared to $2.6 million or

23% of revenue for the six months ended June 30, 2024, a decrease of $0.2 million or 4.4%.

The decrease in expenses was principally due

lower professional fees and lower bonus accrual.

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.

on Sale of Equipment

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.

Income (Expense), Net

income (expense) consist principally of interest income on U.S.

treasury securities and was lower than the prior year quarter due to

less funds available for investment.

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.

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.

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.

and Capital Resources

of June 30, 2025, aggregate working capital was $13.9 million as compared to aggregate working capital of $13.8 million at December 31,

Cash and cash equivalents at June 30, 2025 and December 31, 2024 were $7.0 million and $12.6 million, respectively.

cash used in operating activities for the six months ended June 30, 2025 was $5.4 million.

This decrease was principally due to the net

loss of $0.7 million, an increase in accounts receivable of $2.8 million, an increase in contract assets of $1.5 million and a decrease

in contract liabilities of $1.1 million offset by non-cash items of $0.9 million.

cash used in investing activities for the six months ended June 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.

cash used in financing activities for the six months ended June 30, 2025 consisted of repayments of $43,000 for an equipment loan.

of September 30, 2025, aggregate working capital was $14.6 million as compared to aggregate working capital of $13.8 million at December

Cash and cash equivalents at September 30, 2025 and December 31, 2024 were $8.4 million and $12.6 million, respectively.

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.

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

cash used in financing activities for the nine months ended September 30, 2025 consisted of repayments of $65,000 for an equipment loan.

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

capital and capital expenditure requirements for the next twelve months from the filing of these financial condensed consolidated financial

capital and capital expenditure requirements for the next twelve months from the filing of these condensed consolidated financial

statements included in this Form 10-Q.

55 unchanged sentences

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