What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-05-14 · 227 added, 178 removed, 99 unchanged (80% of the section changed)

1 unchanged sentence

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

of Operations” contains forward – looking statements within the meaning of Section 27A of the Securities Act of 1933,

as amended and Section 21E of the Securities Exchange Act of 1934, as amended.

of Operations” contains forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended

and Section 21E of the Securities Exchange Act of 1934, as amended.

Readers are cautioned not to place undue reliance on forward-looking

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as to the receipt of and timing of future orders for our equipment;

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 acceptance of our equipment launched

in 2024 and 2025;

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 PVT 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 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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factors affecting such forward-looking statements.

Past performance is no guarantee of future results.

Past performance is no guaranty of future results.

should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made.

When used with this

Report, the words “ believes ” , “ anticipates ” , “ expects ” ,

“ estimates ” , “ plans ” , “ intends ” , “ will ”

and similar expressions are intended to identify forward-looking statements.

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.

Report, the words “believes” “anticipates”, “expects”, “estimates”, “plans”,

“intends”, “will” and similar expressions are intended to identify forward-looking statements.

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.

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.

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.

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 and continued 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.

transformation strategy also includes the exploration of strategic alternatives for remaining business and product lines,

including the potential sale, divestiture or acquisition of assets or business lines.

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 $17.4 million in cash, subject to customary purchase price adjustments.

The transaction closed

on April 1, 2026.

The transaction closed on

April 1, 2026.

net cash proceeds from the sale of SDC we received in April 2026, after payment of transaction costs and employee related

liabilities, were $15.7 million.

Following the sale of SDC, CVD Equipment has approximately $23 million in cash and no long-term

We expect to use the proceeds from the transaction to enhance financial flexibility and support initiatives aimed

at creating shareholder value.

retained ownership of our Saugerties, New York facility, which will be leased to the acquiring company for an initial term of two

The Company expects to pay approximately $0.7 million in estimated income taxes related to the

gain on the sale of SDC in the third quarter of 2026.

Following the sale of SDC, the Company has $23.5 million in cash

and no long-term debt as of June 30, 2026.

We expect to use the proceeds from the transaction to enhance our financial flexibility as we continue to

evaluate strategic opportunities for the CVD Equipment business, its product lines, and our facilities and possible acquisition of

other product lines or businesses

retained ownership of our Saugerties, New York facility following the sale of SDC, which is leased to the acquiring company for an initial term of two

years at fair market value.

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.

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.

from continuing operations during the quarter ended March 31, 2026 included:

decreased by $4.5 million or 70.9% as compared to the prior period quarter due lower systems revenue due to reduced system bookings.

margin decreased by $1.6 million or 91.5% as compared to the prior period quarter due to the lower system revenues and lower

absorption of fixed manufacturing costs.

in revenue and gross margin for the quarter ended March 31, 2026 from lower system bookings were partially offset by a $0.3 million

benefit from a contract modification.

bookings for the first quarter of 2026 were approximately $1.8 million as compared to bookings of $0.8 million in the first quarter

of 2025 due to higher non-system orders for spare parts.

was $4.7 million at both December 31, 2025 and March 31, 2026.

and cash equivalents at March 31, 2026 were $8.2 million.

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.

The Company filed a Form 8-K on April 7, 2026 that included pro forma financial information.

Equipment division that manufactures chemical vapor deposition, physical vapor transport and thermal process 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.

the quarter ended June 30, 2026 (from continuing operations):

Revenue decreased by $1.4

million or 42.6% as compared to the second quarter of 2025 from lower systems revenue due to reduced system bookings.

Gross profit decreased

by $0.2 million or 31.6% as compared to the second quarter of 2025 due to the lower system revenues.

Total bookings for the

second quarter of 2026 were approximately $1.2 million as compared to bookings of $1.5 million in the second quarter of 2025.

for the second quarter of 2026 included one system order for $0.8 million with the balance consisting of non-system orders.

Total bookings for the

first half of 2026 were approximately $2.9 million as compared to bookings of $2.3 million in the first half of 2025.

Backlog declined from $4.6

million at March 31, 2026 to $3.9 million at June 30, 2026 due to lower system orders.

and cash equivalents at June 30, 2026 were $23.5 million as compared to $8.7 million at December 31, 2025 as a result of the receipt

of proceeds from the divestiture of SDC in April 2026.

Subsequent to quarter-end, the customer that

placed the approximately $0.8 million system order filed a prepackaged Chapter 11 bankruptcy proceeding.

The customer’s public disclosures

indicate that general unsecured trade creditors are expected to be unimpaired under the proposed plan of reorganization;

however, there

can be no assurance that the customer will proceed with the purchase as originally contemplated or that the bankruptcy process will not

adversely affect the order.

The Company will be monitoring the proceedings and evaluating the potential impact, if any, on its backlog,

financial position, results of operations, and cash flows.

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

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coatings for advanced high temperature environments.

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.

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.

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.

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

We intend to continue to focus on leading customers and strategic opportunities within this evolving market.

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.

operate in a challenging and uncertain global economic environment.

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.

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

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

continue to 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.

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.

factors contributing to economic uncertainty include inflationary pressures, elevated interest rates, disruptions in global logistics,

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of Operations

Ended March 31, 2026 and 2025

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.

Months Ended June 30, 2026 and 2025

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

months ended June 30, 2026 and 2025 and the period-over-period dollar and percentage changes for those line items (in thousands, except

percentages).

Three months ended June 30

Cost of revenue

Gross profit percentage

Operating expenses:

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General and administrative

Total operating expenses

Operating loss from continuing operations

Other income (expense):

Interest income

Interest expense

Rental income, net of expenses

Total other income, net

Loss from continuing operations before

Income tax expense

Net loss from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

Not meaningful

revenue for the three months ended June 30, 2026 was $2.0 million compared to $3.4 million for the three months ended June 30, 2025,

a decrease of $1.4 million or 42.6%.

decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings being partially

offset by an increase in non-system revenues.

Revenue from two customers represented 50.9% and 24.3% of our revenues, respectively.

order backlog at June 30, 2026 was approximately $3.9 million as compared to $4.6 million at March 31, 2026.

Our order backlog at

June 30, 2026 consists of approximately $2.7 million related to remaining performance obligations of contracts in progress and the

balance of approximately $1.1 million represents other orders received from customers.

As of June 30, 2026, one aerospace customer

represented 36.0% 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, 2026 was $0.3 million, with a gross margin of 16.8%, compared to a gross profit of $0.5 million

and a gross margin of 14.1% for the three months ended June 30, 2025.

The decrease in gross profit of $0.2 million was principally due

to lower system revenues partially offset by an increase in non-system revenues.

and Development

the three months ended June 30, 2026, research and development expenses were $0.7 million, or 35.1% of revenue as compared to $0.6 million,

or 18.8% of revenue for the three months ended June 30, 2025, an increase of $46,000 or 7.2%.

The increase in 2026 was the result of

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

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 $0.2 million or 11.9% of the revenue for the three months ended June 30, 2026 as compared to $0.3 million or 8.4% of revenue

for the three months ended June 30, 2025, a decrease of $50,000 or 17.7%.

The decrease was the result of a reduction in personnel.

and Administrative

and administrative expenses for the three months ended June 30, 2026 were $1.0 million or 49.7% of revenue compared to $0.9 million or

27.4% of revenue for the three months ended June 30, 2025, an increase of $40,000 or 4.3%.

The increase in 2026 was due principally to

higher professional fees.

Income (Expense), Net

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

treasury securities and increased as the result of investment of the

proceeds from the divestiture of SDC.

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.

Operations – SDC

from discontinued operations for the second quarter consists solely of the gain on the divestiture of the SDC of $13.9 million, net of

income tax expense of $0.7 million.

We incurred $0.4 million of transaction costs in the first quarter of 2026 resulting

in a total net gain of $13.5 million on the divestiture of SDC.

Months Ended June 30, 2026 versus June 30, 2025

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).

Six months ended June 30

Cost of revenue

Operating expenses:

Research and development

General and administrative

Gain on sale of equipment

4 unchanged sentences

Interest expense

Rental income, net of expenses

Total other income, net

Loss from continuing operations before income taxes

Loss from continuing operations before

Income tax expense

Net loss from continuing operations

Discontinued operations:

Income from discontinued operations

Transaction costs on disposal of discontinued

Income from discontinued operations, net of taxes

Income from discontinued operations, net of income taxes

Net income (loss)

Not meaningful

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

revenue for the six months ended June 30, 2026 was $3.8 million compared to $9.7 million for the six months ended June 30, 2025, a decrease

of $5.9 million or 61.0%.

The decrease was partially offset by $0.3 million benefit from a contract modification during the six months ended

June 30, 2026.

decrease in revenue versus the prior year period was primarily attributable to lower system revenue due to lower bookings.

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.

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.

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.

during the quarter ended March 31, 2026, benefited by $0.3 million from a contract modification.

three customers represented 39.4%, 20.9% and 14.3% of our revenues, respectively.

profit for the six months ended June 30, 2026 was $0.5 million, with a gross margin of 12.6%, compared to a gross profit of $2.3 million

and a gross margin of 23.5% for the six months ended June 30, 2025.

The decrease in gross profit of $1.8 million was principally due

to lower system revenues.

and Development

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.

the six months ended June 30, 2026, research and development expenses were $1.4 million, or 37.2% of revenue as compared to $1.4 million,

or 14.1% of revenue for the six months ended June 30, 2025, an increase of $40,000 or 2.9%.

The increase in 2026 was the result of less

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

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.

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.

General engineering support and expenses are charged to costs of goods sold

when work is performed directly on a customer order.

expenses were $0.5 million or 12.4% of the revenue for the six months ended June 30, 2026 as compared to $0.6 million or 6.7% of revenue

for the six months ended June 30, 2025, a decrease of $0.2 million or 27.3%.

The decrease was the result of a reduction in personnel.

and Administrative

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.

and administrative expenses for the six months ended June 30, 2026 were $2.0 million or 52.4% of revenue compared to $2.0 million or

20.1% of revenue for the six months ended June 30, 2025, an increase of $38,000 or 1.9%.

The increase was principally due to higher professional

on Sales of Equipment

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.

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

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.

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

recognized a gain of $46,000 on the sale of equipment that was no longer necessary for our business during the first quarter of 2026.

Income (Expense), Net

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

treasury securities and increased as the result of investment of the

proceeds from the divestiture of SDC.

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.

Operations – SDC

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.

costs associated with the sale of SDC consisted of legal and investment banking fees of $0.4 million for the quarter ended March 31,

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.

from discontinued operations consists of $0.5 million from the operations of SDC during the first quarter of 2026 and the gain on the

sale of the divestiture of SDC of $13.5 million.

The gain is net of related income tax expense of $0.7 million.

and Capital Resources

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

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.

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.

cash used in financing activities for the quarter ended March 31, 2026 consisted of the full repayment of an equipment loan in the amount

As of March 31, 2026, we have no outstanding debt.

of June 30, 2026, aggregate working capital was $25.8 million as compared to aggregate working capital of $14.1 million at December 31,

Cash and cash equivalents at June 30, 2026 and December 31, 2025 were $23.5 million and $8.7 million, respectively.

cash used in operating activities for the six months ended June 30, 2026 was $1.3 million.

This use of net cash was principally due to

the net loss from continuing operations of $3.1 million, a $0.9 million increase in accounts receivable and a $0.3 million reduction

in accounts payable.

These decreases were partially offset by non-cash expense items of $0.7 million, decrease in contract assets of

$1.7 million, and a decrease in inventory of $0.4 million.

cash provided by investing activities for the six months ended June 30, 2026 principally consisted of net proceeds from the

divestiture of SDC of $15.6 million and proceeds from the sale of assets held for sale and equipment of $0.6 million.

expects to pay approximately $0.7 million in estimated income taxes related to the gain on the sale of SDC in the third quarter of

cash used in financing activities for the six months ended June 30, 2026 consisted of the full repayment of an equipment loan in the

amount of $181,000.

As of June 30, 2026, we have no outstanding debt.

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 condensed consolidated financial statements

included in this Form 10-Q.

We will continue to assess our operations and take actions anticipated to maintain our operating cash to

support the working capital needs.

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

statements included in this Form 10-Q.

We will continue to assess our operations and take actions anticipated to maintain our operating

cash to support the working capital needs.

Accounting Estimates

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.

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.

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,

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.

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.

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.

9 unchanged sentences

incurred to date to the total estimated costs at completion of the performance obligations.

costs include all direct material and labor costs, and those indirect costs related to contract performance, such as indirect labor,

supplies, tools, repairs and depreciation costs.

Contract material costs are included in incurred costs when the project materials have

been purchased or moved to work-in-process as required by the project’s engineering design.

Cost based input methods of revenue

recognition require us to make estimates of costs to complete the projects.

In making such estimates, significant judgment is required

to evaluate assumptions related to the costs to complete the projects, including materials, labor, and other system costs.

If the estimated

total costs on any contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss

becomes known and can be reasonably estimated.

costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies,

tools, repairs and depreciation costs.

Contract material costs are included in incurred costs when the project materials have been purchased

or moved to work-in-process as required by the project’s engineering design.

Cost based input methods of revenue recognition require

us to make estimates of costs to complete the projects.

In making such estimates, significant judgment is required to evaluate assumptions

related to the costs to complete the projects, including materials, labor, and other system costs.

If the estimated total costs on any

contract are greater than the net contract revenues, we recognize the entire estimated loss in the period the loss becomes known and

can be reasonably estimated.

have been engaged in the production and delivery of goods on a continual basis under contractual arrangements for many years.

15 unchanged sentences

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.

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.

Quantitative 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