What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-15 · 81 added, 81 removed, 184 unchanged (47% of the section changed)

65 unchanged sentences

and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its various generations of military display generators and flight control computers to repair, overhaul, manufacture, sell, import, export and distribute certain products to the Company for consideration of $14.2 million in cash.

Following the acquisition of Honeywell’s military display generators and flight control computers business, Honeywell has continued to manufacture these products and maintain related inventory at its facilities under the September 2024 Honeywell Agreement.

Revenue and costs from this production are attributed to and reported by the Company;

however, the Company relies on Honeywell for access to the operational and financial data needed to prepare its financial statements.

The Company has limited ability to oversee the operations or verify the data received from Honeywell, making it difficult to predict revenues and gross margins.

Over the coming months, the production of the military display generators and flight control computers business will cease at Honeywell facilities and transition to the Company’s facilities.

During this transition process, production will be temporarily halted while the Company ramps up its production and inventory at its facilities.

In anticipation of the transition, Honeywell is expected to accelerate its production of these products in the short term.

We anticipate this will lead to a spike in revenues in the short term followed by a temporary dip in revenues before revenues are normalized.

On March 27, 2026, the Compan y entered into and closed the transactions contemplated by that certain Asset Purchase and License Agreement (the “Honeywell Autopilot Agreement”) with Honeywell.

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Pursuant to the Generators Agreement, Honeywell sold, assigned or licensed certain assets related to its electronic generator and generator control unit for the F-15 and 767 tanker/freight platforms, including a sale of certain inventory, equipment and customer-related documents; an assignment of certain contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its electronic generator and generator control unit for the F-15 and 767 tanker/freight platforms to repair, overhaul, manufacture, sell, import, export and distribute certain products to the Company for consideration of $8.0 million in cash.

As a result, the Company anticipates revenues related to the above Honeywell transactions will continue to fluctuate significantly over the next few quarters.

The Company anticipates revenues related to the above Honeywell transactions will continue to fluctuate significantly over the next few quarters.

The transition of the business from Honeywell to the Company’s facilities will involve certain risks that may adversely impact operational performance and reported results.

Cost of sales related to product and service sales comprises materials, components and third-party avionics purchased from suppliers, direct labor and overhead costs.

Cost of sales related to product and service sales comprise materials, components and third-party avionics purchased from suppliers, direct labor and overhead costs.

Many of the components are standard, although certain parts are manufactured to meet the Company’s specifications.

The overhead portion of cost of sales are primarily comprised of salaries and benefits, building occupancy costs, supplies and outside service costs related to production, purchasing, material control and quality control.

The overhead portion of cost of sales are primarily comprise salaries and benefits, building occupancy costs, supplies and outside service costs related to production, purchasing, material control and quality control.

Cost of sales also includes warranty costs.

Cost of sales related to EDC sales comprises engineering labor, consulting services and other costs associated with specific design and development projects.

These costs are incurred pursuant to contractual arrangements and are accounted for typically as contract costs

within cost of sales, with reimbursement accounted for as a sale in accordance with the percentage-of-completion method or completed contract method of accounting.

These costs are incurred pursuant to contractual arrangements and are accounted for typically as contract costs within cost of sales, with reimbursement accounted for as a sale in accordance with the percentage-of-completion method or completed contract method of accounting.

Company funded R&D expenditures relate to internally funded efforts for the development of new products and the improvement of existing products.

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The Company also plans to enhance its focus on the environmental impact of its operations.

Derivative Financial Instruments

On June 30, 2026, we entered into a $53.7 million interest rate swap agreement.

This interest rate swap is used to manage the risk associated with interest rate fluctuations on our $53.7 million variable rate term loans.

Under this agreement, we pay interest to financial institutions at a fixed rate of 4.057 percent.

In exchange, the financial institutions pay us at a variable rate, which approximates the variable rate on the debt, excluding the credit spread.

These swaps qualify for hedge accounting treatment pursuant to ASC 815, Derivatives and Hedging.

This swap expires in July 2030.

While this interest rate swap is intended to mitigate the impact of rising interest rates on our variable rate indebtedness, it does not fully eliminate interest rate risk.

Additionally, the fair value of the swap is subject to fluctuation based on changes in interest rates and market conditions, and any changes to interest rates and market conditions may adversely impact our results of operations, financial condition, and cash flows.

Critical Accounting Policies and Estimates

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The Annual Report on Form 10-K for the fiscal year ended September 30, 2025 contains a discussion of these critical accounting policies.

See also Note 1 to the unaudited condensed consolidated financial statements for the three and six months ended March 31, 2026 included in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED

MARCH 31, 2026 AND 2025

See also Note 1 to the unaudited condensed consolidated financial statements for the three and nine months ended June 30, 2026 included in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED

JUNE 30 2026 AND 2025

The following table sets forth the statements of operations data expressed as a percentage of total net sales for the periods indicated (some items may not add due to rounding):

Three Months Ended March 31,

Six Months Ended March 31,

Three Months Ended June 30,

Nine Months Ended June 30,

Total net sales

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Income tax expense

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Net sales for the three months ended March 31, 2026, increased by 2.0% to $22.4 million, up from net sales of $21.9 million for the three months ended March 31, 2025.

The increase in net sales principally reflects an increase of $4.3 million in commercial aftermarket product sales and an increase of $1.1 million in business aviation, partially offset by a decrease of $4.4 million in military product sales, primarily due to the transition of F-16 production into the Exton facility.

Services sales for the three months ended March 31, 2026, decreased $0.7 million, or 8.0%, compared to Services sales for the three months ended March 31, 2025, of $8.8 million.

The decrease in Services sales primarily reflects a decrease in service volumes related to the IRUs and radio product lines acquired in 2023 and 2024 of $0.6 million and a $0.1 million decrease in legacy customer service revenue.

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

Net sales for the three months ended June 30, 2026 increased by 10.7% to $26.7 million, up from net sales of $24.1 million for the three months ended June 30, 2025.

The increase in net sales principally reflects an increase of $4.0 million in commercial aftermarket product sales, an increase of $2.1 million in business aviation and the contribution from recent acquisitions, partially offset by a decrease of $4.9 million in military product sales primarily as a result of a decline in F-16 revenues from elevated levels in the prior period.

Services sales for the three months ended June 30, 2026 increased $1.3 million, or 17.2%, compared to Services sales for the three months ended June 30, 2025, of $8.8 million.

The increase in Services sales primarily reflects an increase in service volumes related to the IRUs, radio, and autopilot product lines acquired in 2023, 2024, and 2026 of $1.3 million, an increase in engineering project revenue of $0.8 million, and a $0.2 million increase in legacy customer service revenue, partially offset by a $1.0 million decrease in F-16 service revenue.

Cost of sales .

Cost of sales was $10.9 million, or 48.9% of net sales, for the three months ended March 31, 2026 compared to $10.7 million, or 48.6% of net sales, for the three months ended March 31, 2025.

The change in cost of sales for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 principally reflects product mix, with net sales growth of $4.3 million in commercial aftermarket sales while OEM and military net sales decreased by $4.4 million and net service sales decreased by $0.7 million.

Gross profit was $11.4 million, or 51.1% of net sales, for the three months ended March 31, 2026 compared to $11.3 million, or 51.4% of net sales, for the three months ended March 31, 2025.

The slight decrease in gross margin principally reflects the higher amortization expense for intangible and other long-term assets, partially offset by improved absorption of fixed costs due to the increase in net sales.

Cost of sales was $12.9 million, or 48.3% of net sales, for the three months ended June 30, 2026 compared to $15.6 million, or 64.4% of net sales, for the three months ended June 30, 2025.

The change in cost of sales for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 principally reflects product mix, with net sales growth of $4.0 million in commercial aftermarket sales, $2.1 million in business aviation sales, and $1.3 million in net service sales, while military net sales decreased by $4.9 million.

Gross profit was $13.8 million, or 51.7% of net sales, for the three months ended June 30, 2026 compared to $8.6 million, or 35.5% of net sales, for the three months ended June 30, 2025.

The increase in gross margin principally reflects the increase in commercial and business aviation sales, which have higher margins than military sales.

Research and development .

R&D expense increased $0.9 million, or 106.3%, to $1.8 million for three months ended March 31, 2026 from $0.9 million for the three months ended March 31, 2025.

As a percentage of net sales, R&D expenses increased to 8.0% of net sales for the three months ended March 31, 2026 from 4.0% of net sales for the three months ended March 31, 2025.

The increase in R&D expenses as a percentage of revenues in the quarter was primarily the result of additional headcount to support the development of future products.

For the three months ended March 31, 2026 and 2025, $0.4 million of R&D expense was recharacterized as cost of sales related to the EDC sales, which was offset by $0.6 million in additional engineering staffing to support the Company’s development programs.

SG&A expenses increased $1.3 million or 38.7%, to $4.7 million for the three months ended March 31, 2026 from $3.4 million for the three months ended March 31, 2025.

The increase in SG&A expense for the three months ended March 31, 2026 was primarily the result of increases in employee-related costs of $0.7 million, and one-time charges of $0.8 million related to the three acquisitions that closed during the quarter.

As a percentage of net sales, SG&A expenses were 21.0% for the three months ended March 31, 2026 compared to 15.6% for the three months ended March 31, 2025.

R&D expense increased $1.0 million, or 104.8%, to $1.9 million for three months ended June 30, 2026 from $0.9 million for the three months ended June 30, 2025.

As a percentage of net sales, R&D expenses increased to 7.0% of net sales for the three months ended June 30, 2026 from 4.8% of net sales for the three months ended June 30, 2025.

The increase in R&D expenses as a percentage of revenues in the quarter was primarily the result of additional headcount to drive long-term growth for the next-gen capabilities that support multiple platforms and end markets.

For the three months ended June 30, 2026, $0.7 million of R&D expense was recharacterized as cost of sales related to the EDC sales, which was offset by $0.7 million in additional engineering staffing to support the next generation or products.

SG&A expenses increased $1.8 million or 42.2%, to $5.9 million for the three months ended June 30, 2026 from $4.2 million for the three months ended June 30, 2025.

The increase in SG&A expense for the three months ended June 30, 2026 was primarily the result of increases in employee-related costs of $0.6 million, and $1.2 million in costs largely related to new business from completed acquisitions that did not exist during the previous quarter.

As a percentage of net sales, SG&A expenses were 22.1% for the three months ended June 30, 2026 compared to 17.2% for the three months ended June 30, 2025.

Interest expense.

Interest expense was $0.5 million for the three months ended March 31, 2026, an increase of $0.1 million from $0.4 million for the three months ended March 31, 2025.

The change was due to approximately $0.1 million in amortization of deferred financing fees.

Interest expense was $1.0 million for the three months ended June 30, 2026, an increase of $0.6 million from $0.4 million for the three months ended June 30, 2025.

The change was due to interest paid on new borrowings to finance acquisitions.

Interest income.

Interest income was negligible for the three months ended March 31, 2026 and 2025, respectively.

Interest income was negligible for the three months ended June 30, 2026 and 2025, respectively.

Other income.

Other income was $0 for the three months ended March 31, 2026 and $0 for the three months ended March 31, 2025.

Other income was $0 for the three months ended June 30, 2026 and $0 for the three months ended June 30, 2025.

Income taxes.

Income tax expense was $1.0 million for the three months ended March 31, 2026 compared to income tax expense of $1.3 million for the three months ended March 31, 2025.

The effective tax rate for the three months ended March 31, 2026 was 22.5% as compared to 19.2% for the three months ended March 31, 2025.

The increases in income tax expense and the effective tax rate were primarily due to the unfavorable effects of state income taxes, tax credits, temporary and permanent tax differences related to stock-based compensation and certain non-deductible expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

As a result of the factors described above, the Company’s net income for the three months ended March 31, 2026 was $3.4 million compared to net income of $5.3 million for the three months ended March 31, 2025.

On a fully diluted basis, net income per share was $0.19 for the three months ended March 31, 2026, compared to a net income of $0.30 per share for the three months ended March 31, 2025.

Six Months Ended March 31, 2026 Compared to the Six Months Ended March 31, 2025

Net sales for the six months ended March 31, 2026, increased by 16.5% to $44.2 million, up from net sales of $37.9 million for the six months ended March 31, 2025.

The increase in net sales principally reflects an increase of $9.9 million in commercial aftermarket product sales and an increase of $,0.6 million in business aviation, partially offset by a decrease of $5.9 million in military product sales, primarily due to the transition of F-16 production into the Exton facility.

Services sales for the six months ended March 31, 2026, increased $1.6 million, or 10.6% to $16.3 million, compared to Services sales for the six months ended March 31, 2025, of $14.7 million.

The increase in Services sales primarily reflects growth in service volumes related to the IRUs and radio product lines acquired in 2023 and 2024 of $1.7 million, partially offset by a $0.1 million decrease in legacy customer service revenue.

Income tax expense was $0.5 million for the three months ended June 30, 2026 compared to income tax expense of $0.7 million for the three months ended June 30, 2025.

The effective tax rate for the three months ended June 30, 2026 was 10.5% as compared to 21.5% for the three months ended June 30, 2025.

The decreases in income tax expense and the effective tax rate were primarily due to the effect of temporary and permanent tax differences related to stock-based compensation and favorable return to provision adjustments.

As a result of the factors described above, the Company’s net income for the three months ended June 30, 2026 was $4.5 million compared to net income of $2.4 million for the three months ended June 30, 2025.

On a fully diluted basis, net income per share was $0.25 for the three months ended June 30, 2026, compared to a net income of $0.14 per share for the three months ended June 30, 2025.

Nine Months Ended June 30, 2026 Compared to the Nine Months Ended June 30, 2025

Net sales for the nine months ended June 30, 2026 increased by 12.5% to $70.9 million, up from net sales of $62.0 million for the nine months ended June 30, 2025.

The increase in net sales principally reflects an increase of $14.3 million in commercial aftermarket product sales and an increase of $2.7 million in business aviation, partially offset by a decrease of $10.8 million in military and product sales, primarily as a result by a decline in F-16 revenues from elevated levels in the prior period.

Services sales for the nine months ended June 30, 2026, increased $2.8 million, or 12.6% to $25.2 million, compared to Services sales for the nine months ended June 30, 2025, of $22.4 million.

The increase in Services sales primarily reflects growth in service volumes related to the IRUs, radio and autopilot product lines acquired in 2023, 2024, and 2026 of $5.5 million, an increase in engineering product revenue of $0.7 million and a $0.3 million increase in legacy customer service revenue, partially offset by a $3.7 million decrease in F-16 service revenue.

Cost of sales .

Cost of sales was $20.9 million, or 47.2% of net sales, for the six months ended March 31, 2026 compared to $20.0 million, or 52.8% of net sales, for the six months ended March 31, 2025.

The change in cost of sales for the six months ended March 31, 2026 compared to the six months ended March 31, 2025 principally reflects product mix with net sales growth of $9.9 million in commercial aftermarket sales and $0.6 million in business aviation while OEM and military net sales decreased by $5.9 million.

Gross profit was $23.3 million, or 52.8% of net sales, for the six months ended March 31, 2026 compared to $17.9 million, or 47.2% of net sales, for the six months ended March 31, 2025.

The increase in gross margin principally reflects the previously mentioned net sales growth, a more favorable product mix within our commercial aftermarket product line, and a higher proportion of commercial aftermarket revenue, which by nature has higher gross margins as compared to military and OEM business.

Cost of sales was $33.8 million, or 47.6% of net sales, for the nine months ended June 30, 2026 compared to $35.6 million, or 57.3% of net sales, for the nine months ended June 30, 2025.

The change in cost of sales for the nine months ended June 30, 2026 compared to the nine months ended June 30, 2025 principally reflects product mix with net sales growth of $14.3 million in commercial aftermarket sales, $2.8 million in net service sales, and $2.7 million in business aviation sales, while military net sales decreased by $10.8 million.

Gross profit was $37.1 million, or 52.4% of net sales, for the nine months ended June 30, 2026 compared to $35.6 million, or 42.6% of net sales, for the nine months ended June 30, 2025.

The increase in gross margin principally reflects the previously mentioned net sales growth, a more favorable product mix within our commercial aftermarket product line and a higher proportion of commercial aftermarket revenue, which by nature has higher gross margins as compared to military business.

Research and development .

R&D expense increased $1.1 million, or 57.8%, to $3.1 million for the six months ended March 31, 2026 from $2.0 million for the six months ended March 31, 2025.

As a percentage of net sales, R&D expenses increased to 7.0% of net sales for the six months ended March 31, 2026 from 5.3% of net sales for the six months ended March 31, 2025.

The increase in R&D expenses as a percentage of revenues in the quarter was primarily the result of additional headcount to support the development of future products.

For the six months ended March 31, 2026 and 2025, $1.0 million of R&D expense was recharacterized as cost of sales related to the EDC sales, which was offset by $0.8 million in additional engineering staffing to support the Company’s development programs.

SG&A expenses increased $1.4 million, or 18.4%, to $9.0 million for the six months ended March 31, 2026 from $7.6 million for the six months ended March 31, 2025.

The increase in SG&A expense for the six months ended March 31, 2026 was primarily the result of increases in employee-related costs of $1.4 million and an increase in one-time charges of $0.5 million related to three acquisitions that closed during the six months ended March 31, 2026.

As a percentage of net sales, SG&A expenses were 20.3% for the six months ended March 31, 2026 compared to 20.0% for the six months ended March 31, 2025.

R&D expense increased $2.1 million, or 72.7%, to $5.0 million for the nine months ended June 30, 2026 from $2.9 million for the nine months ended June 30, 2025.

As a percentage of net sales, R&D expenses increased to 7.0% of net sales for the nine months ended June 30, 2026 from 4.7% of net sales for the nine months ended June 30, 2025.

For the nine months ended June 30, 2026, $1.6 million of R&D expense was recharacterized as cost of sales related to the EDC sales, which was offset by $1.3 million in additional engineering staffing to support the Company’s the next generation products.

SG&A expenses increased $3.1 million, or 27.0%, to $14.9 million for the nine months ended June 30, 2026 from $11.7 million for the nine months ended June 30, 2025.

The increase in SG&A expense for the nine months ended June 30, 2026 was primarily the result of increases in employee-related costs of $2.0 million and $1.2 million in costs largely related to new business from completed acquisitions that did not exist during the previous period.

As a percentage of net sales, SG&A expenses were 21.0% for the nine months ended June 30, 2026 compared to 18.9% for the nine months ended June 30, 2025.

Interest expense.

Interest expense was $1.0 million for the six months ended March 31, 2026, an increase of $0.2 million from $0.8 million for the six months ended March 31, 2025.

The change was due to approximately $0.1 million in amortization of deferred financing fees.

Interest expense was $2.0 million for the nine months ended June 30, 2026, an increase of $0.8 million from $1.2 million for the nine months ended June 30, 2025.

The change was due to interest paid on new borrowings to finance acquisitions.

Interest income.

Interest income was negligible for the six months ended March 31, 2026 and 2025, respectively.

Interest income was negligible for the nine months ended June 30, 2026 and 2025, respectively.

Other income.

Other income was negligible for the six months ended March 31, 2026 and 2025, respectively.

Other income was negligible for the nine months ended June 30, 2026 and 2025, respectively.

Income taxes.

Income tax expense was $2.8 million for the six months ended March 31, 2026 as compared to income tax expense of $1.5 million for the six months ended March 31, 2025.

The effective tax rate for the six months ended March 31, 2026 was 27.3% as compared to 19.2% for the six months ended March 31, 2025.

The increases in income tax expense and the effective tax rate were primarily due to an increase in income before income taxes as well as the unfavorable effects of state income taxes, tax credits, temporary and permanent tax differences related to stock-based compensation and certain non-deductible expenses for the six months ended March 31, 2026, compared to the six months ended March 31, 2025.

As a result of the factors described above, the Company’s net income for the six months ended March 31, 2026 was $7.5 million compared to net income of $6.1 million for the six months ended March 31, 2025.

On a fully diluted basis, net income per share was $0.42 for the six months ended March 31, 2026, compared to a net income of $0.34 per share for the six months ended March 31, 2025.

Income tax expense was $3.3 million for the nine months ended June 30, 2026 as compared to income tax expense of $2.1 million for the nine months ended June 30, 2025.

The effective tax rate for the nine months ended June 30, 2026 was 21.8% as compared to 19.9% for the nine months ended June 30, 2025.

The increases in income tax expense and the effective tax rate were primarily due to an increase in income before income taxes as well as the unfavorable effects of state income taxes, tax credits, temporary and permanent tax differences related to stock-based compensation and certain non-deductible expenses for the nine months ended June 30, 2026, compared to the nine months ended June 30, 2025.

As a result of the factors described above, the Company’s net income for the nine months ended June 30, 2026 was $12.0 million compared to net income of $8.5 million for the nine months ended June 30, 2025.

On a fully diluted basis, net income per share was $0.66 for the nine months ended June 30, 2026, compared to a net income of $0.48 per share for the nine months ended June 30, 2025.

Liquidity and Capital Resources

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Current ratio (2)

Six Months Ended March 31,

Nine Months Ended June 30,

Cash flow activities:

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See footnote 9.

Loan Agreement to the unaudited condensed consolidated financial statements for the three and six months ended March 31, 2026 included in this Quarterly Report on Form 10-Q for additional disclosures related to the 2025 Credit Agreement.

Loan Agreement to the unaudited condensed consolidated financial statements for the three and nine months ended June 30, 2026 included in this Quarterly Report on Form 10-Q for additional disclosures related to the 2025 Credit Agreement.

Stifel Sales Agreement

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Sales of the shares of the Company’s common stock, if any, under the ATM Sales Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act, including sales made directly on or through Nasdaq or any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices and/or any other method permitted by law.

During the fiscal years ended September 30, 2024 and September 30, 2025, and during the three and six months ended March 31, 2026, we did not sell any shares of common stock under the ATM Sales Agreement.

During the fiscal years ended September 30, 2024 and September 30, 2025, and during the three and nine months ended June 30, 2026, we did not sell any shares of common stock under the ATM Sales Agreement.

Future Funding Requirements

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Apart from what has been disclosed above, management is not aware of any trends, events or uncertainties that have had or are likely to have a material impact on our liquidity, financial condition and capital resources.

The Company did not pay cash dividends in fiscal years 2024 or 2025, or in the three and six months ended March 31, 2026.

The Company did not pay cash dividends in fiscal years 2024 or 2025, or in the three and nine months ended June 30, 2026.

The Company currently intends to retain future earnings, if any, to finance the development and growth of its business and does not anticipate paying any cash dividends in the foreseeable future.

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Operating activities

Net cash provided by operating activities was $10.5 million for the six months ended March 31, 2026 and consisted primarily of funding from net income of $7.5 million and changes in working capital.

Net cash provided by operating activities was $3.1 million for the six months ended March 31, 2025 and consisted primarily of funding from net income of $6.1 million and changes in working capital.

Net cash provided by operating activities was $15.55 million for the nine months ended June 30, 2026 and consisted primarily of funding from net income of $12.0 million and changes in working capital.

Net cash provided by operating activities was $10.3 million for the nine months ended June 30, 2025 and consisted primarily of funding from net income of $8.5 million and changes in working capital.

Investing activities

Net cash used in investing activities was $35.7 million for six months ended March 31, 2026 and was primarily due to the $22.0 million acquisition for the Honeywell Autopilot Agreement, $8.0 million for the Honeywell Generators Agreement and $3.5 for the S-TEC ® acquisition.

Net cash used in investing activities was $36.2 million for the nine months ended June 30, 2026 and was primarily due to the $22.0 million acquisition for the Honeywell Autopilot Agreement, $8.0 million for the Honeywell Generators Agreement and $3.5 for the S-TEC ® acquisition.

In addition, the Company spent $1.3 million for the purchase of an Eclipse business jet for research and development and $1.9 million for additions and improvements in the Company’s facilities and the purchases of equipment.

Net cash used in investing activities was $1.8 million for the six months ended March 31, 2025 and consisted of expenditures related to additions and improvements in the Company’s facilities and purchases of equipment and computer hardware.

Net cash used in investing activities was $5.5 million for the nine months ended June 30, 2025 and consisted of expenditures related to additions and improvements in the Company’s facilities, purchases of equipment and computer software investment related to the Company’s ERP (“Enterprise Resource Planning”) implementation.

Financing activities

Net cash provided by financing activities was $29.3 million for the six months ended March 31, 2026 and consisted of proceeds of $32.0 million from the delayed draw term loan to fund acquisitions offset by payments against the Company’s term loan of $1.3 million and $1.4 million for the tax payments of vested equity award shares withheld for taxes.

Net cash used in financing activities was $0.6 million for the six months ended March 31, 2025 and consisted of payments against the Company’s line of credit.

Net cash provided by financing activities was $28.7 million for the nine months ended June 30, 2026 and consisted of proceeds of $32.0 million from the delayed draw term loan to fund acquisitions offset by payments against the Company’s term loan of $1.9 million and $1.5 million for the tax payments of vested equity award shares withheld for taxes.

Net cash used in financing activities was $4.8 million for the nine months ended June 30, 2025 and consisted of payments against the Company’s line of credit.

Future capital requirements depend upon numerous factors, including market acceptance of the Company’s products, the timing and rate of expansion of business, acquisitions, joint ventures and other factors.

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Three Months Ended

Six Months Ended

March 31, 2026

Nine Months Ended

June 30, 2026

Backlog, beginning of period

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The backlog includes committed purchases and excludes potential future sole-source production orders under our current OEM contracts, including the Pilatus PC-24, the Boeing KC-46A and the Textron King Air 360 and King Air 260 ThrustSense® Autothrottle programs.

At March 31, 2026, our backlog was $87.0 million compared with $77.4 million at September 30, 2025.

At June 30, 2026, our backlog was $82.9 million compared with $77.4 million at September 30, 2025.

Backlog is converted into sales in future periods as work is performed or deliveries are made.

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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