What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2026-03-26 compared with 2025-03-31 · 67 added, 47 removed, 112 unchanged (50% of the section changed)

Systems Incorporated, (“the Company”, “we”, “our”) organized in December 1990, is a provider of engineering

Systems Incorporated, (“the Company”, “we”, “our”) organized in 1990, is a provider of engineering

design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies and components headquartered

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and Suzhou, China.

All dollar amounts herein, excluding incorporated by reference documents, are in thousands

of US Dollars.

offer a full range of value-added engineering, technical and manufacturing services and support including project management, designing,

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Most of our net sales are derived from products built to the customer’s unique design specifications.

Our quality systems and processes are based on ISO standards with all facilities certified to at least one of the following:

ISO 13485 or AS9100.

These certifications and registrations provide our customers assurance of our capabilities and proven processes.

quality systems and processes are based on ISO standards with all facilities certified to at least one of the following:

ISO 9001, ISO

13485 or AS9100.

Additionally, our facility in Monterrey, Mexico is now certified in AS9100:D.

These certifications and registrations

provide our customers assurance of our capabilities and proven processes.

Our Milaca operation is a U.S.

Food and Drug Administration (“FDA”) registered facility, and our Suzhou operation is a China

National Medical Imaging Administration certified facility.

In addition to industry standard certifications, we actively manage quality

metrics throughout product life cycle at all levels of the organization to provide real-time, pro-active support to our customers and

their projects.

Process validation is performed through the strict phases of installation qualification, operation qualification and

performance qualification.

Company operates in the Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets with over 50% of its net

sales coming from the medical-related markets.

All of our operations fall under the Contract Manufacturing segment within the

Food and Drug Administration

(“FDA”) registered facility, and our Suzhou operation is National Medical Products Administration certified for class II

medical devices.

In addition to industry standard certifications, we actively manage quality metrics throughout product life cycle at

all levels of the organization to provide real-time, pro-active support to our customers and their projects.

Process validation is performed

through the strict phases of installation qualification, operation qualification and performance qualification.

Company operates in the Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets with over 50% of its net sales

coming from the medical-related markets.

Substantially all of our operations fall under the Contract Manufacturing segment within the

Electronic Manufacturing Services (“EMS”) industry.

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facilities based on a number of considerations to best meet our customers’ needs.

Our plants generate net sales over several

of the markets the Company serves.

We share resources for sales, marketing, engineering, supply chain, information services, human

resources, payroll, and all corporate accounting functions.

Our financial information is evaluated regularly on a consolidated basis

by the chief operating decision maker in assessing performance and allocating resources.

Our plants generate net sales over several of

the markets the Company serves.

We share resources for sales, marketing, engineering, supply chain, information services, human resources,

payroll, and all corporate finance functions.

Our financial information is evaluated regularly on a consolidated basis by the chief operating

decision maker in assessing performance and allocating resources.

EMS industry has evolved into a dynamic, high-tech, regulated global electronics contract services industry.

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at our facilities.

We have also invested in fiber optic technologies to provide a lighter weight, data-driven and environmentally cleaner solution

to our customers.

We are committed to continuous improvement and have invested in training our people to identify and act on improvement

opportunities.

We maintain a diversified customer base and expand into other capabilities and services when there is a fit with our core

competencies and strategic vision.

We have also invested in fiber optic technologies to provide a lighter weight, data-driven and environmentally cleaner

solution to our customers.

We are committed to continuous improvement and have invested in training our people to identify and act on

improvement opportunities.

We maintain a diversified customer base and expand into other capabilities and services when there is a fit

with our core competencies and strategic vision.

concentrate our marketing efforts in the Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets.

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Our expertise helps our customers save time and money

and also reduces their risks.

and reduces their risks.

The breadth of our manufacturing, supply chain, engineering services and complete turnkey solutions assist

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changes to our procurement strategies and inventory investments.

We attempt to overcome these changes through advanced supply chain solutions

we develop in partnership with our customers, a commitment to strong supplier partnerships and risk management tools.

customer individually, accounted for at 27.7% of net sales for the year ended December 31, 2024, and two customers, individually, accounted

for 25.7% and 10.3%, respectively, of net sales for the year ended December 31, 2023.

We seek to develop, in partnership with our customers, a commitment

to strong supplier partnerships and risk management tools through advanced supply chain solutions.

customer individually accounted for 32.2% of net sales for the year ended December 31, 2025 and 27.7% of net sales for the year ended

December 31, 2024.

success depends on our technical expertise, trade secrets, supply chain and manufacturing skills.

During the normal course of business,

we obtain or develop proprietary product requiring licensing, patent, copyright or trademark protection.

we obtain or develop proprietary products requiring licensing, patent, copyright or trademark protection.

contract manufacturing EMS industry’s competitive makeup includes small closely held contract manufacturing companies, large global

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and Development

perform research and development for customers on an as requested, project and program basis for development of conceptual

engineering and design activities as well as products moving into production.

We spent approximately $1.2 million on product

research and development in each of the years ended December 31, 2024 and 2023.

perform research and development (“R&D”) for customers on an as requested, project and program basis for development

of conceptual engineering and design activities as well as products moving into production.

We spent $1,172 and $1,191 on

product research and development in the years ended December 31, 2025 and 2024, respectively.

We continue to explore opportunities

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technologies.

addition to customer directed R&D, we invest in strategic initiatives to expand our technical capabilities and support long-term

Our efforts include advancing fiber-optic interconnect technologies, which are becoming increasingly important in the EMS market

as customers require higher-speed data transmission, improved signal integrity, and greater bandwidth.

These initiatives are designed

to strengthen our position in markets rapidly adopting optical solutions, including industrial automation, medical devices, defense communication

platforms, and other high reliability connectivity applications.

Environmental

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a medical device manufacturer, we have additional compliance requirements.

We are required to register with the FDA and are subject to

periodic inspection by the FDA for compliance with the FDA’s Quality Management System Regulation (“QMSR”) requirements,

which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation

Compliance with applicable regulatory requirements is subject to continual review and is rigorously monitored through periodic

inspections and product field monitoring by the FDA.

To support the quality requirements of our Aerospace and Defense market customers,

all our US locations are International Traffic in Arms Regulations (“ITAR”) compliant.

We are required to register with the FDA and are subject

to periodic inspection by the FDA for compliance with the FDA’s Quality Management System Regulation (“QMSR”)

requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control

and documentation procedures.

Compliance with applicable regulatory requirements is subject to continual review and is rigorously

monitored through periodic inspections and product field monitoring by the FDA.

In January 2024, the FDA finalized its transition to

the new QMSR, which became effective February 2, 2026.

The new QMSR incorporates ISO 13485:2016 by reference and replaces most prior

Quality System Regulation (“QSR”) requirements, retaining only select U.S.-specific expectations such as labeling and

complaint handling.

As part of this shift, the FDA adopts the ISO defined Medical Device File structure in place of traditional QSR

documentation while emphasizing a risk-based approach consistent with ISO 13485 and ISO 14971 principles.

We believe our ISO

certified facilities position us well for this transition, and we continue to review and enhance our systems to ensure full

support the quality requirements of our Aerospace and Defense market customers, all our US locations are International Traffic in Arms

Regulations (“ITAR”) compliant.

Capital Resources

have 685 full-time and 28 part-time/temporary employees as of December 31, 2025, none which are covered by union agreements.

Manufacturing

personnel, including direct, indirect support and sales functions, comprise 657 employees, while general administrative employees total

employees, manufacturing personnel, including direct, indirect support and sales functions, comprise 642 employees, while general administrative

employees total 43.

Operations and Export Sales from Our Domestic Operations

have leased manufacturing facilities in Monterrey, Mexico and Suzhou, China.

Monterrey, Mexico has approximately $687,000 and $747,000

in long-term assets, and $1,758,000 and $2,123,000 of net operating lease assets as of December 31, 2024 and 2023, respectively.

Monterrey, Mexico has approximately $607 and $687 in long-term assets, and $1,408 and $1,758 of net operating lease assets as of December 31, 2025 and 2024, respectively.

China has approximately $953 and $812 in long-term assets, and $375 and $685 of net operating lease assets as of December

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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-K

Item 1. Business