What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-01-31 compared with 2024-11-01 · 87 added, 84 removed, 83 unchanged (67% of the section changed)

9 unchanged sentences

Financial Results

The following table presents selected financial data for the three months ended September 30, 2024 and 2023:

The following table presents selected financial data for the three and six months ended December 31, 2024 and 2023:

Three Months Ended

Six Months Ended

Financial Performance Summary

Net sales (decrease) increase % from prior year period

Net sales increase % from prior year period

Gross profit as % of net sales

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Interest income

Loss before income tax provision

Loss before income tax provision as % of net sales

Income (loss) before income tax provision

Income (loss) before income tax provision as % of net sales

Income tax provision

Income tax provision as % of loss before income tax provision

Income tax provision as % of income (loss) before income tax provision

Fiscal 2025 Period Results Compared with Fiscal 2024 Period

(comments refer to the three-month periods ended September 30 unless otherwise noted)

Net sales for the three months ended September 30, 2024 were $3,201,868, down $172,070, or 5.1%, from $3,373,938 for the same three-month period in the prior year.

A sizable custom order in the prior year’s first quarter did not repeat, causing a decline in the current quarter.

Coupled with that, was an approximately 20% decline in sales to our U.S.

distributors.

Improved sales to our European markets and a near 18% increase in direct-to-consumer (“DTC”) sales did help to partially offset the decline.

In the domestic markets, net sales were down $435,794, or 16.7%, from $2,603,158 for the three months ended September 30, 2023 to $2,167,364 for the three months ended September 30, 2024.

The decrease was driven by a non-recurring custom order from the prior year, a shortfall in U.S.

distributor sales due to a missed shipment and timing of new orders.

Sales to the Education and Music markets also dropped by 55% versus the prior year, contributing to the overall decline.

The increase in DTC sales in the first quarter of fiscal year 2025 compared to the prior year moderately offset some of the domestic sales reduction.

Sales to the export markets were a highlight for the quarter as the Company’s two largest European distributors placed significant orders for a newly released product, resulting in an 86% increase over the sales to them in the first quarter of the prior year.

Sales to a Georgian distributor were also up 100% versus the prior year and a Canadian retail account returned with a respectable new order after discontinuing the Company’s product line.

As an offset to this favorability, the Ukrainian distributor has not yet reordered, thus resulting in a gap compared to the approximately $214,000 order received in the first quarter of fiscal year 2024.

Gross margins as a percentage of net sales of 36.6% for the three months ended September 30, 2024 was a 500-basis points improvement compared to 31.6% for the three months ended September 30, 2023.

A favorable sales mix, made up of a higher percentage of higher margin DTC sales plus the sales of the newly released product to our European distributors, was only slightly offset by a lower percentage of higher margin U.S.

distribution sales.

Also contributing to the increased margin performance was the freight expense offset related to the capitalization of freight costs into inventory for the stock purchased to ensure appropriate levels for the new product launches.

An increase to the excess and obsolete inventory reserve driven by inventory on some items in excess of two years’ sales had an adverse impact on the gross margins for the first quarter of fiscal year 2024.

Freight rates increased slightly throughout the quarter ended September 30, 2024, along with lead times, due to peak season and delays from the West Coast to the Midwest.

Sixty percent of the Company’s shipments shipped under lower fixed rates that are accessible via the Company’s partnership with a dedicated freight forwarder.

Market rates are expected to continue to rise into the next quarter due to increased U.S import demand during peak season and the significant challenges of shipping through the Red Sea and Suez Canal, causing major disruptions to global trade and increased costs.

The Company also continues to monitor the sustained conflicts in Eastern Europe and the Middle East and is prepared to react as necessary if faced with supply chain disruptions.

Selling, general and administrative expenses for the three months ended September 30, 2024 increased by $273,780, or 17.8% from $1,536,279 to $1,810,059.

The increase was almost entirely attributable to the increase in the deferred compensation liability as a result of the lower discount rates used in the calculation as well as an increase in expected payments due to an additional year of service.

An increase in engineering expenses, mainly for new product testing and certification costs, was offset by a similar decline in legal expenses.

Interest income of $220,358 was recorded during the three months ended September 30, 2024 mainly due to interest earned on the U.S.

Treasury investments held during the quarter in order to earn a return on the Company’s excess cash while maintaining a minimal risk profile.

This compares to $212,859 of interest income earned in the same period in the prior fiscal year from these securities.

As a result of minimal or no taxable income after utilization of net loss carryforwards, no federal income tax expense was recorded for either of the three-month periods ended September 30, 2024 and 2023.

State income tax expense of $2,760 was recorded for the three months ended September 30, 2024, reflecting the minimum required tax due plus a negligible net taxable income after considering NOLs.

A state income tax expense of $1,879 was recorded in the first quarter of fiscal year 2024, which represented only the minimum required tax amounts due given no taxable net income.

The effective tax rate was less than 1% for both three-month periods ending September 30, 2024 and 2023.

It is anticipated that the effective rate in the current year and future years will be reduced by utilization of a portion or all of the federal and state net operating loss carryforwards that existed as of June 30, 2024.

The Company’s remaining expected federal tax loss carryforward approximates $32,800,000 at the end of the first quarter of fiscal 2025.

The small state taxable income after considering net operating losses decreased the net operating loss carryforward deferred tax asset to approximately $8,500,000 as of September 30, 2024.

The valuation allowance was adjusted accordingly and still fully offsets the net deferred tax asset as there is sufficient negative evidence to support the maintaining of a full valuation allowance as, excluding unusual, infrequent items, a three-year cumulative tax loss occurred.

(comments refer to the three and six-month periods ended December 31, 2024 unless otherwise noted)

Net sales of $3,557,000 for the three months ended December 31, 2024 were $197,000, or 5.9%, ahead of sales for the same three-month period in the prior year.

A significant increase in sales to certain of our European distributors, along with a sizable custom headphone order from a new customer, was partially offset by shortfalls in sales to customers in the education segment, domestic distributors and e-tailers.

For the six months ended December 31, 2024, sales of $6,759,000 were just slightly ahead compared to $6,734,000 of sales for the first half of the prior fiscal year, driven by the same variances as sales to Europe and custom orders were offset by lower distribution, education and e-tailer sales.

Sales to the export markets for the three months ended December 31, 2024 were $1,376,000 compared to $693,000 for the same period in the prior year due almost entirely to increased sales to two of our largest European distributors.

New product sales to these European distributors exceeded our expectations, resulting in an over 90% increase in sales compared to the same period in the prior year.

Export sales for the six months ended December 31, 2024 was $2,410,000, a $947,000, or 64.7%, increase over the same period in the prior year.

Similar to the second quarter, sales to the two largest European distributors were 111% above the prior year, driven by the success of new product sales.

Overall sales to Europe grew by $1,241,000, or 61%, while sales to our Asian and Canadian markets rose by $95,000, or 30.1%.

There were no sales to our Russian distributor during the current fiscal year, nor have there been any since April 2022.

Domestic market sales declined by $486,000, or 18.2%, year over year for the three-month period ended December 31, 2024.

Sales to the largest customer in the company’s education segment were down by $338,000 and sales to a provider of therapeutic listening tools were down $110,000 compared to the prior year, both due to timing of repeat orders.

A $262,000 custom headphones order and a near 20% increase in direct-to-consumer (DTC) sales helped to offset the decline.

For the six months ended December 31, 2024, domestic sales were $4,349,000, down $922,000, or 17.5%, from sales of $5,271,000 for the first two quarters of the prior fiscal year.

Lower sales to the education market segment, domestic distributors and e-tailers were only partially offset by an approximately 19% increase in DTC sales for the six months ended December 31, 2024 compared to the same period in the prior year.

Gross profit as a percentage of net sales for the three months ended December 31, 2024 was 39.5%, compared to 33.0% for the three months ended December 31, 2023, an increase of 650 basis points.

Margins for the second quarter of the prior year were negatively impacted by working through the inventory investment made while freight costs were higher, along with an increase in the reserve for excess and obsolete inventory.

During the second quarter of the current fiscal year, inventory levels remained fairly constant, having little impact on margins as lower freight costs were capitalized into inventory.

Significant new product sales to Europe at higher margins combined with a higher volume of higher margin DTC sales also contributed to the increased gross margins for the three months ending December 31, 2024.

For the six months ended December 31, 2024, the gross margin was 38.1%, an increase of 580 basis points over the gross margin of 32.3% for the first half of the prior year.

A more favorable customer mix of sales, including increased higher margin DTC sales, new product sales to our European distributors at higher margins and a higher volume of higher margin sales to certain domestic distributors, drove the higher gross margin in the first half of fiscal year 2025.

This combined with the prior year’s adverse impact of the sell-through of inventory brought in at higher freight costs and resulted in the gap in margins year over year for the six months ended December 31, 2024.

While shipment costs slightly increased during the six months ended December 31, 2024, the Company expects them to increase more in the coming quarters due to general rate increases received at the end of December and into January.

Transit times increased as a result of labor disputes and other delays in the supply chain.

The Company’s partnership with a dedicated freight forwarder continues to help stabilize contract rates to limit the impact.

Selling, general and administrative expenses decreased only slightly year over year for the three months ended December 31, 2024, from $1,585,000 to $1,547,000, a decrease of $38,000, or 2.4%.

Income generated by the decrease in the deferred compensation liability as a result of the increase in the discount rates used to calculate the liability was mostly offset by an increase in legal expense during the second quarter of the current fiscal year as the result of the Company’s continued patent defense litigation, along with higher online advertising spend related to the new product launch in fiscal year 2025.

For the six months ended December 31, 2024, selling, general and administrative expenses of $3,357,000 were higher by $236,000, or 7.6%, compared to $3,121,000 for the six months ended December 31, 2023.

Increases in online advertising spend and new product certification testing related to new product development and launches, coupled with an increase in legal expense were somewhat offset by the reduction in stock based compensation expense as the remaining unvested stock options granted as part of the Koss Corporation 2012 Omnibus Incentive Plan (the “2012 Plan”) are nearly fully vested.

Also, an increase in the deferred compensation liability as of December 31, 2024, due mostly to the annual increase in the future payments earned under the arrangement due to an additional year of service completed, resulted in a corresponding increase to expense compared to the prior year.

As a result of minimal or no taxable income after utilization of the Company’s available net operating loss carryforwards (“NOLs”), no federal income tax expense was recorded for any of the three and six-month periods ended December 31, 2024 and 2023.

State income tax expense of $2,760 and $1,879 was recorded for the three months ended December 31, 2024 and 2023, respectively, and

$5,520 and $3,758 was recorded for the six months ended December 31, 2024 and 2023, respectively, reflecting the minimum required state tax due plus estimated tax due on negligible net taxable income after state NOL deductions.

The effective tax rate was 2.8% and 1.7% in the three and six months ended December 31, 2024, respectively.

The effective tax rate was less than 1% for the three and six months ended December 31, 2023.

It is anticipated that the effective rate in the current year and future years will continue to be reduced by utilization of a portion or all of the available federal and state net operating loss carryforwards that existed as of June 30, 2024.

The Company’s remaining expected federal tax loss carryforward approximates $32,900,000 at the end of the second quarter.

The small taxable gain for the first quarter of fiscal year 2025 decreased the net operating loss carryforward deferred tax asset by approximately $3,000 and the taxable loss in the second quarter increased it by approximately $14,000, resulting in a deferred tax asset of approximately $8,500,000 as of December 31, 2024.

The valuation allowance was adjusted accordingly to fully offset the net deferred tax asset as there is sufficient negative evidence to support the maintaining of a full valuation allowance as, excluding unusual, infrequent items, a three-year cumulative tax loss has occurred.

The Company maintains a program focused on enforcing its intellectual property and, in particular, certain of its patent portfolio.

The Company has enforced its intellectual property by filing complaints against certain parties alleging infringement on the Company’s

patents relating to its wireless headphone technology.

The Company has enforced its intellectual property by filing complaints against certain parties alleging infringement on the Company’s patents relating to its wireless headphone technology.

If efforts are successful, the Company may receive royalties, offers to purchase its intellectual property, or other remedies advantageous to its competitive position from time to time.

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The Company believes that its financial position remains strong.

The Company had $2.8 million of cash and cash equivalents, $9.1 million of short-term investments and available credit facilities of $5.0 million on September 30, 2024.

The Company had $2.5 million of cash and cash equivalents, $7.2 million of short-term investments and available credit facilities of $5.0 million on December 31, 2024.

Recent Trends

Recent and ongoing macroeconomic and geopolitical conditions have impacted, and will continue to impact, our business.

These include economic uncertainty from elevated inflation and interest rates, reduced consumer confidence, disruption in our supply chain and trade tensions with China, the ongoing crises in Eastern Europe, the continued conflict in the Middle East and increased risk of cyberattacks.

These include economic uncertainty from unexpected job growth, elevated inflation and interest rates, reduced consumer confidence, disruption in our supply chain and trade tensions with China, the ongoing crises in Eastern Europe, the continued conflict in the Middle East and increased risk of cyberattacks.

While the impact of these factors on our fiscal 2025 performance remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, or results of operations.

These and other uncertainties with respect to these recent events could result in changes to our current expectations.

Inflationary Cost Environment and Reduced Consumer Confidence - Inflation , higher interest rates and higher energy costs continue to impact consumers’ discretionary spending and, in turn, the Company’s sales volumes.

Inflation may impact customer demand for our products resulting from a slowdown in consumers’ willingness to spend as disposable income decreases due to rising prices of essential items, spend through of excess savings from earlier in the pandemic and leading indicators pointing to a softening in the labor market.

While inflation rates have come down since the prior year, the Company is still experiencing higher costs of commodities, packaging materials, and wages, along with higher energy and transportation costs.

Job Market and Inflationary Cost Environment and the Impact on Consumer Confidence - Inflation , higher interest rates and higher energy costs continue to impact consumers’ discretionary spending and, in turn, the Company’s sales volumes.

economy added 256,000 jobs in December 2024, surpassing expectations and marking the largest increase since March 2024.

The data indicates that, although consumers feel more optimistic about the economy, the increase in confidence is not reflected in their intent to spend.

Intent to spend, which measures whether consumers expect to spend on various products and services, held steady or decreased across most essential, discretionary, and semi-discretionary categories compared with last quarter, despite the holiday shopping season.

The current consumer landscape presents a paradox in which rising optimism coexists with restrained spending.

This trend highlights a collective shift toward financial prudence, reflecting a broader desire for economic security amid lingering uncertainties, though it could also reflect a shift among consumers toward more mindful consumption patterns.

While inflation rates have consistently decreased over the last few months, the Company is still experiencing higher costs for commodities, packaging materials, and wages, along with higher energy and transportation costs.

The Company continues to monitor costs and will react with pricing actions as it deems necessary.

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Many of the Company’s products are sourced from contract manufacturing facilities in the People’s Republic of China and Taiwan.

There has been increasing geopolitical tension between China and Taiwan that may affect future shipments from Taiwan-based suppliers.

There continues to be geopolitical tension between China and the United States, as well as geopolitical tension between China and Taiwan that may affect future shipments from Taiwan-based suppliers.

Any other adverse changes in the social, political, regulatory or economic conditions in the countries could materially increase the cost of the products we buy from our foreign suppliers or delay shipments of products.

There has also been increasing geopolitical tension between China and the United States.

Sustained uncertainty about, or worsening of, economic relations and further escalation of trade tensions between the United States and China, or any other country in which the Company conducts business, could result in retaliatory trade restrictions that restrict our ability to source products from China or continue business in such other country.

Sustained uncertainty about, or worsening of, economic relations and further escalation of trade tensions

between the United States and China, or any other country in which the Company conducts business, could result in retaliatory trade restrictions that restrict our ability to source products from China or continue business in such other country.

Any alterations to our business strategy or operations made in order to adapt to or comply with any such changes would be time-consuming and expensive, and the Company may not be able to pass along most increases in tariffs and freight charges to the Company’s customers, which would also directly affect profits.

On Monday, October 1, 2024, the International Longshoremen’s Association (the “ILA”) called a coast-wide strike, temporarily closing the U.S.

East Coast and Gulf Coast ports, affecting the movement of import and export containers .

On Thursday, October 3rd, the ILA and the United States Maritime Alliance, Ltd.

(USMX) reached a tentative agreement on wages and to extend the Master Contract until January 15, 2025, to return to the bargaining table to negotiate all other outstanding issues.

Work resumed at most ports along the US East and US Gulf coasts on Friday, October 4th.

While some residual delays may occur as port operations gradually return to full capacity , the Company is aware that a final agreement will not be concluded until the end of the second quarter of the fiscal year and could still have a significant impact on its operations in the second half of the fiscal year .

The Company will, however, continue to monitor this situation and others that may arise as the changes in the current labor landscape, the settlement of recent labor disputes, coupled with rising energy prices, could potentially exacerbate disruptions in the supply chain, delay product shipments and increase transportation costs.

President-elect Donald Trump intends to direct a good portion of his tariff escalation on products sourced from China.

Broad tariffs on Chinese exports encourage shifting supply chains out of China to other global regions and

the Americas, however, before the shift, tariffs could cause inflation to rise, potentially impacting the Company’s costs and consumer demand.

The Company will continue to monitor the situation and others that may arise as the changes in the current labor landscape, the settlement of recent labor disputes, coupled with rising energy prices, could potentially exacerbate disruptions in the supply chain, delay product shipments and increase transportation costs.

A potential crisis at United States East and Gulf Coast ports has been averted as the International Longshoremen’s Association (the “ILA”) and the United States Maritime Alliance reached a tentative six-year labor agreement, preventing what would have been the second strike in four months.

The agreement came just days before the January 15 deadline, when a temporary contract extension was set to expire.

Russia’s Invasion of Ukraine - Financial and credit markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022.

In response to the invasion, the United States, United Kingdom, and European Union, along with others, imposed significant sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

In accordance with Executive Order 14071 signed on April 6, 2022,

the Company suspended sales to Russia.

While there is a humanitarian crisis in Ukraine created by the war and the population continues to seek refuge in other countries, the Company did receive a sizable order from their Ukrainian distributor in the first quarter of fiscal year 2024 with potential for more orders in the current year.

During the three months ended September 30, 2024 and 2023, there were no sales to Russia.

In accordance with Executive Order 14071 signed on April 6, 2022, the Company suspended sales to Russia.

While there is a humanitarian crisis in Ukraine created by the war and the population continues to seek refuge in other countries, the Company did receive orders from their Ukrainian distributor in the first half of both fiscal year 2025 and 2024 with potential for more in the current year.

During the three and six months ended December 31, 2024 and 2023, there were no sales to Russia.

Cyberattacks - Cyberattacks are a growing geopolitical risk, becoming larger, more frequent, more sophisticated and more relentless as technology has evolved, resulting in privacy, security, and compliance concerns.

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Liquidity and Capital Resources

The following table summarizes cash flows from operating, investing and financing activities for the three months ended September 30, 2024 and 2023:

The following table summarizes cash flows from operating, investing and financing activities for the six months ended December 31, 2024 and 2023:

Total cash (used in) provided by:

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Operating Activities

The cash provided by operating activities during the three months ending September 30, 2024, was primarily a result of customer deposits for orders shipping in the next quarter.

Also contributing to the positive cash flow was the refund of $362,000 by the Company’s payroll vendor relating to employee payroll taxes on the gains from the disqualifying dispositions of incentive stock options as the Company has now chosen to issue the checks directly to the employees.

Cash outflow for the premium payments made for the annual renewal of the Company’s general insurance policies partially offset the cash that came in.

During the three months ended September 30, 2023, the cash used in operating activities was due to payment of bonuses earned in the prior year, general insurance premiums and state income tax payments.

The Company’s strict management of its inventory investment helped to retain some cash in the first quarter.

The cash used in operating activities during the six months ending December 31, 2024 was driven primarily by the net operating loss for the first half of the year, offset by improvements in working capital and the receipt of a partial refund of the employee and employer payroll taxes inappropriately withheld related to the gains from the disqualifying dispositions of incentive stock options.

During the six months ended December 31, 2023, the cash used in operating activities was primarily the payment of bonuses earned in the prior year and general insurance premiums.

Investing Activities

Cash used by investing activities for the three months ended September 30, 2024 was related mostly to fixed asset expenditures, namely the replacement of a second roof section of the building, and the payment of the premiums on the company-owned life insurance policies on two of its executives.

Proceeds of $5,034,000 received during the three months ended September 30, 2024 from the maturity of U.S.

Cash used by investing activities for the six months ended December 31, 2024 was related mostly to fixed asset expenditures, namely the replacement of a second roof section of the building for approximately $346,000, and the payment of the premiums on the company-owned life insurance policies on two of its executives.

Proceeds of $7,085,000 received during the six months ended December 31, 2024 from the maturity of U.S.

Treasury securities were mostly reinvested to purchase $7,059,000 of similar securities at a $61,000 discount.

Cash used by investing activities for the three months ended September 30, 2023 was also related to fixed asset expenditures, predominantly the replacement of a roof section of the building for approximately $300,000.

Cash used by investing activities for the six months ended December 31, 2023 was also related to fixed asset expenditures, predominantly the replacement of the first roof section of the building for approximately $300,000.

The Company also paid the premiums on the company-owned life insurance policies on two of its executives.

Proceeds of $7,223,000 from the maturity of U.S.

Treasury securities were received and utilized to purchase $7,177,000 of similar securities at a discount of $180,000.

Financing Activities

Cash from the exercise of stock options during the three months ended September 30, 2024 provided the only cash from financing activities.

Cash from the exercise of stock options during the six months ended December 31, 2024 provided the only cash from financing activities.

An aggregate of 76,000 shares of common stock were issued as a result of employee stock option exercises under grants still outstanding from the Company’s 2012 Omnibus Incentive Plan.

There were no stock option exercises in the first quarter of the prior fiscal year.

As of September 30, 2024 and June 30, 2024, the Company had no outstanding borrowings on its bank line of credit facility.

There were no purchases of common stock in the three months ended September 30, 2024 or 2023 under the stock repurchase program.

Employee stock option exercises provided the only cash from financing activities during the six months ended December 31, 2023.

An aggregate of 20,000 shares of common stock were issued as a result.

As of December 31, 2024 and June 30, 2024, the Company had no outstanding borrowings on its bank line of credit facility.

There were no purchases of common stock in the three and six months ended December 31, 2024 or 2023 under the stock repurchase program.

The Company believes its existing cash and cash equivalents, investments in short-term U.S.

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On May 14, 2019, the Company entered into a secured credit facility (“Credit Agreement”) with Town Bank (“Lender”).

The Credit Agreement provides for a $5,000,000 revolving secured credit facility for letters of credit for the benefit of the Company of up to a

sublimit of $1,000,000.

The Credit Agreement provides for a $5,000,000 revolving secured credit facility for letters of credit for the benefit of the Company of up to a sublimit of $1,000,000.

There are no unused line fees in the credit facility.

On January 28, 2021, the Credit Agreement was amended to extend the expiration date to October 31, 2022, and to change the interest rate to Wall Street Journal Prime less 1.50%.

A Third Amendment to the Credit Agreement effective October 30, 2022, extended the expiration date to October 31, 2024.

A Fourth Amendment to the Credit Agreement effective October 30, 2024, extends the maturity date to October 31, 2026, and removes one of the covenants requiring submission of annual financial performance projections to the Lender.

On January 28, 2021, the Credit Agreement was amended

to change the interest rate to Wall Street Journal Prime less 1.50%.

An amendment to the Credit Agreement effective October 30, 2024, extended the maturity date to October 31, 2026, and removed one of the covenants requiring submission of annual financial performance projections to the Lender.

The Company and the Lender also entered into a General Business Security Agreement dated May 14, 2019 under which the Company granted the Lender a security interest in substantially all of the Company’s assets in connection with the Company’s obligations under the Credit Agreement.

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The negative covenants include restrictions on other indebtedness, liens, fundamental changes, certain investments, disposition of assets, mergers and liquidations, among other restrictions.

As of September 30, 2024, the Company was in compliance with all covenants related to the Credit Agreement.

As of September 30, 2024 and June 30, 2024, there were no outstanding borrowings on the facility.

As of December 31, 2024, the Company was in compliance with all covenants related to the Credit Agreement.

As of December 31, 2024 and June 30, 2024, there were no outstanding borrowings on the facility.

Contractual Obligation

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Off-Balance Sheet Transactions

At September 30, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

At December 31, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

Quantitative and Qualitative Disclosures About Market Risk

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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