What changed in this filing

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Item 1. Financial Statements

2026-08-12 compared with 2026-05-13 · 245 added, 145 removed, 363 unchanged (52% of the section changed)

5 unchanged sentences

THREE MONTHS ENDED

SIX MONTHS ENDED

Cost of goods sold

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Interest expense, net

Loss before income taxes

Income tax benefit

Net loss per common share:

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) per common share:

Basic (in dollars per share)

8 unchanged sentences

CONSOLIDATED BALANCE SHEETS

OF MARCH 31, 2026 AND DECEMBER 31, 2025

OF JUNE 30, 2026 AND DECEMBER 31, 2025

THOUSANDS, EXCEPT SHARE DATA)

10 unchanged sentences

Other intangible assets, net

Deferred line of credit issuance costs

Deferred line of credit issuance costs, net

LIABILITIES AND SHAREHOLDERS’ EQUITY

1 unchanged sentence

Lines of credit

Current portion of term loan

Current portion of term loan, net of debt issuance costs

Accounts payable

6 unchanged sentences

Long-term liabilities:

Term loan, net of debt issuance costs

Long-term operating lease obligations

18 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED

SIX MONTHS ENDED

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

13 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property and equipment

Purchases of property and equipment

5 unchanged sentences

Payments of debt issuance costs

Proceeds from notes payable

Principal payments on term loan

Principal payments on financing leases

5 unchanged sentences

Cash and restricted cash - end of period

Reconciliation of cash and restricted cash reported within the condensed

consolidated balance sheets:

Reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets:

Restricted cash

Total cash and restricted cash reported in the condensed consolidated statements

of cash flows

Total cash and restricted cash reported in the condensed consolidated statements of cash flows

SYSTEMS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED

SIX MONTHS ENDED

Supplemental disclosure of cash flow information:

3 unchanged sentences

Property and equipment purchases in accounts payable

Conversion of notes payable to finance leases

Accompanying Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

Shareholders’

Balance as of December 31, 2024

Balance as of March 31, 2025

Foreign currency translation adjustment

1 unchanged sentence

Compensation on stock-based awards

Balance as of June 30, 2025

Balance as of March 31, 2026

Foreign currency translation adjustment

Stock award exercises

Compensation on stock-based awards

Balance as of June 30, 2026

Balance as of December 31, 2024

Foreign currency translation adjustment

Stock option exercises

Compensation on stock-based awards

Balance as of March 31, 2026

Balance as of June 30, 2025

Balance as of December 31, 2025

Net income (loss)

Foreign currency translation adjustment

Stock award exercises

Compensation on stock-based awards

Balance as of June 30, 2026

Accompanying Notes to Condensed Consolidated Financial Statements.

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of 1962, effective February 24, 2026, for a 150-day period.

new tariffs apply broadly to manufactured goods and component parts.

The Company is evaluating the potential impact of these tariff actions

on future material costs and sourcing decisions.

The Company is actively seeking reimbursement of IEEPA tariffs from the federal government and the Company’s

tariffs apply broadly to manufactured goods and component parts purchased by the Company.

Management is evaluating the impact of these

tariff actions on future product costs and sourcing strategies.

The Company is also pursuing reimbursement and recovery of previously

paid IEEPA-related tariffs from the federal government and certain vendors.

As of June 30, 2026, no amounts have been recognized related

to potential recoveries.

The Company is evaluating and pursuing potential refund claims;

however, the timing and amount of any recoveries remain uncertain.

In July 2026, following the expiration of the Section 122 tariffs, the U.S.

Trade Representative implemented new tariffs under Section

301 of the Trade Act of 1974 on imports from certain countries, with rates generally ranging from 10% to 12.5%.

Management is continuing

to evaluate the potential impact of these tariffs on the Company’s future product costs, supply chain, and sourcing strategies.

Issued New Accounting Standards

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this ASU allows for early adoption.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements

The Company is currently evaluating the impact of this ASU on its consolidated financial statement

of New Accounting Standard

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adopted this ASU and it did not have a material impact on the consolidated financial statements.

Cash classified as restricted cash on our consolidated

balance sheets relates to contractual cash dominion provisions under the Company’s financing arrangements, which at March 31, 2026

were governed by the new Associated Bank facility.

As of March 31, 2026 and December 31, 2025, we had restricted cash of $244 and $0,

respectively.

The restricted cash balance at March 31, 2026 primarily

represents customer deposits that are temporarily restricted due to timing at period end and are subject to the cash dominion provisions

of the financing arrangement.

These customer deposits are applied against the Company’s line of credit on the next business day.

Restricted cash on our consolidated balance sheets relates to contractual cash dominion provisions under the Company’s

financing arrangements, which at June 30, 2026 were governed by the new Associated Bank facility.

As of June 30, 2026 and December 31,

2025, we had restricted cash of $ 294 and $ 0 , respectively.

restricted cash balance at June 30, 2026 primarily represents customer deposits that are temporarily restricted due to timing at period

end and are subject to the cash dominion provisions of the financing arrangement.

These customer deposits are applied against the Company’s

line of credit on the next business day.

are as follows:

SCHEDULE OF INVENTORIES

OF INVENTORIES

Raw materials

3 unchanged sentences

Intangible Assets

intangible assets as of March 31, 2026 and December 31, 2025 are as follows:

SCHEDULE OF OTHER INTANGIBLE ASSETS

intangible assets as of June 30, 2026 and December 31, 2025 are as follows:

OF OTHER INTANGIBLE ASSETS

Balances as of December 31, 2025

Balances as of March 31, 2026

Balances as of June 30, 2026

assets are amortized on a straight-line basis over their estimated useful lives.

1 unchanged sentence

our intangible assets is 3.6 years.

Of the patents’ value as of March 31, 2026, $ 67 are being amortized and $ 84 are in process

and a patent has not yet been issued.

expense of finite life intangible assets for the three months ended March 31, 2026 and 2025 was $ 5 and $ 5 , respectively.

of March 31, 2026, estimated future annual amortization expense related to these assets is as follows:

SCHEDULE OF ESTIMATED FUTURE ANNUAL AMORTIZATION EXPENSE

Of the patents’ value as of June 30, 2026, $ 62 are being amortized and $ 85 are in process and

a patent has not yet been issued.

expense of finite life intangible assets for both the three months ended June 30, 2026 and 2025 was $ 4 .

Amortization expense of finite

life intangible assets for both the six months ended June 30, 2026 and 2025 was $ 9 .

of June 30, 2026, estimated future annual amortization expense related to these assets is as follows:

OF ESTIMATED FUTURE ANNUAL AMORTIZATION EXPENSE

Remainder of 2026

Property and Equipment

The Company reviews long-lived assets for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

At March 31, 2026, the Company determined that no triggering events existed that would require an impairment assessment.

and Equipment

Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an

asset group may not be recoverable.

At June 30, 2026, the Company determined that no triggering events existed that would require an

impairment assessment.

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

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The Company’s $ 1,380 cash balance

as of March 31, 2026, included approximately $ 612 and $ 78 that was held at banks located in China and Mexico, respectively.

as of June 30, 2026, included approximately $ 1,047 and $ 146 that was held at banks located in China and Mexico, respectively.

credit to customers in the normal course of business and generally do not require collateral on our accounts receivable.

1 unchanged sentence

asset balances individually represented 10% or more of gross accounts receivable.

who represent 10% or more of net sales for the three months ended March 31, 2026 and 2025 are as follows:

who represent 10% or more of net sales for the three and six months ended June 30, 2026 and 2025 are as follows:

OF NET SALES CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

Three Months Ended

who represent 10% or more of accounts receivable and contract assets for the periods ended March 31, 2026 and December 31, 2025 are as

Six Months Ended

who represent 10% or more of accounts receivable and contract assets for the periods ended June 30, 2026 and December 31, 2025 are as

OF ACCOUNTS RECEIVABLE CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

3 unchanged sentences

sales from the U.S.

represented approximately 3 % and 2 % of net sales for the three months ended March 31, 2026 and 2025, respectively.

under contract manufacturing agreements that was recognized over time, excluding noncash consideration, accounted for 75 %

of net sales for the three months ended March 31, 2026 and 2025, respectively.

The following tables summarize our net sales by

market for the three months ended March 31, 2026 and 2025, respectively:

SCHEDULE OF NET SALES BY MARKET

Three Months Ended March 31, 2026

represented approximately 3 % of net sales for both the three and six months ended June 30, 2026.

Export sales from

represented approximately 2 % of net sales for both the three and six months ended June 30, 2025.

under contract manufacturing agreements that was recognized over time, excluding noncash consideration, accounted for 68 % and 71 % of

net sales for the three and six months ended June 30, 2026, respectively, and 75 % of net sales for both the three and six months ended

June 30, 2025.

The following tables summarize our net sales by market for the three and six months ended June 30, 2026 and 2025, respectively:

OF NET SALES BY MARKET

Three Months Ended June 30, 2026

Product/ Service Transferred

6 unchanged sentences

Total net sales

Three Months Ended June 30, 2025

Product/ Service Transferred

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Total Net Sales by Market

Three Months Ended March 31, 2025

Medical Device

Medical Imaging

Aerospace and Defense

Total net sales

Six Months Ended June 30, 2026

Product/ Service Transferred

6 unchanged sentences

Total net sales

Six Months Ended June 30, 2025

Product/ Service Transferred

Product Transferred at Point

Consideration 1

Total Net Sales by Market

Medical Device

Medical Imaging

Aerospace and Defense

Total net sales

consideration represents material provided by the customer used in the manufacturing of the product.

assets, recorded in the condensed consolidated balance sheets, consist of unbilled amounts related to revenue recognized over time.

changes in the contract assets balance during the three months ended March 31, 2026 were as follows:

SCHEDULE OF CONTRACT ASSETS

changes in the contract assets balance during the six months ended June 30, 2026 were as follows:

OF CONTRACT ASSETS

Balance as of December 31, 2025

3 unchanged sentences

Amounts invoiced during the period

Balance outstanding as of March 31, 2026

expect substantially all the remaining performance obligations for the contract assets recorded as of March 31, 2026 to be transferred

to receivables within 90 days, with any remaining amounts to be transferred within 180 days.

Balance outstanding as of June 30, 2026

We expect substantially all amounts recorded as contract assets as of June 30, 2026 to be billed and reclassified to accounts receivable

within 90 days, with any remaining amounts expected to be billed and reclassified within 180 days.

We bill our customers upon shipment with

payment terms of up to 120 days.

liabilities, recorded as customer deposits, were $ 4,672

at March 31, 2026 and December 31, 2025, respectively.

Contract liabilities primarily relate to customer prepayments, generally to

purchase customer-specific inventory, and billings in advance of the Company satisfying its performance obligations.

recognized during the three months ended March 31, 2026 that was included in the contract liability balance at January 1, 2026 was

Changes between periods represent the timing of customer deposits and the satisfaction of performance obligations.

liabilities, recorded as customer deposits, were $ 6,848 and $ 5,386 at June 30, 2026 and December 31, 2025, respectively.

Contract liabilities

primarily relate to customer prepayments, generally to purchase customer-specific inventory, and billings in advance of the Company satisfying

its performance obligations.

Revenue recognized during the three and six months ended June 30, 2026 that was included in the contract

liability balance at January 1, 2026 was $ 905 and $ 1,470 , respectively.

Changes between periods represent the timing of customer deposits

and the satisfaction of performance obligations.

FINANCING ARRANGEMENTS

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for letters of credit and is secured by substantially all of our assets in the United States of America.

The Associated Facility matures in March

The Company is required to pay a 25-basis point fee per annum, paid monthly, on the unused portion of the revolving credit

The Associated Facility

matures in March 2029.

The Company is required to pay a 25-basis point fee per annum, paid monthly, on the unused portion of the

revolving credit facility.

The term loan requires monthly principal payments of $ 37

3 unchanged sentences

revolving credit borrowings, and plus 2.25% in the case of the term loan.

At March 31, 2026, the revolving credit facility and term

loan accrued interest at 8.52% and 8.00%, respectively.

At March 31, 2026, there was $ 7,196

The revolving credit facility and term loan bear interest

at a weighted-average interest rate of 7.9% and 7.7%, respectively, for the three months ended June 30, 2026 .

At June 30, 2026, there was $ 7,573

outstanding under the revolving credit facility and $ 3,552

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The Company was in compliance with all covenants under the Associated

Facility as of March 31, 2026.

Facility as of June 30, 2026.

Associated Facility agreement includes broad and customary events of default such as non-payment of obligations, breaches of representations

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the collateral.

The Company incurred $ 290 of debt issuance costs related to the Associated Facility, of which $ 266 was classified

as a long-term asset as of March 31, 2026 as it is related to the revolving facility.

Company incurred $ 290 of debt issuance costs related to the Associated Facility, of which $ 244 was classified as a long-term asset as

of June 30, 2026 as it is related to the revolving facility.

table below reflects scheduled principal repayments of the term loan.

10 unchanged sentences

The BOA Revolver was fully repaid and terminated on March 20, 2026.

Financing Arrangement

Company entered into an equipment financing arrangement during the second quarter of 2026.

As of June 30, 2026, the equipment had not

been delivered and the financing had not been funded.

Accordingly, no related asset or financing obligation was recorded.

had made a required deposit, an initial payment, and paid closing costs under the arrangement totaling less than $ 3 as of June 30, 2026.

Funding Agreement

2 unchanged sentences

The equipment was received, and the lease agreements were finalized during the second quarter

As of March 31, 2026, we have no amounts outstanding on the interim funding agreement for equipment.

As of June 30, 2026, we have no amounts outstanding on the interim funding agreement for equipment.

Financing Agreement

China operation has a financing agreement with China Construction Bank which provides for a line of credit arrangement of 10

million Renminbi (RMB) (approximately $ 1,400

) that expires in August 2026.

The Company had $ 289

outstanding as of March 31, 2026 that is classified as current debt.

No amounts were outstanding under this financing arrangement as

of December 31, 2025.

The agreement does not include material cross-default provisions with the Associated Facility.

interest rate as of March 31, 2026 was approximately 4 %.

China operation has a financing agreement with China Construction Bank which provides for a line of credit arrangement of 10 million

Renminbi (RMB) (approximately $ 1,400 ) that expires in August 2026.

The Company had $ 295 outstanding as of June 30, 2026 that is classified

as current debt.

No amounts were outstanding under this financing arrangement as of December 31, 2025.

The agreement does not include

material cross-default provisions with the Associated Facility.

The variable interest rate as of June 30, 2026 was approximately 3 %.

have operating leases for certain manufacturing sites, office space, and equipment.

Most leases include the option to renew, with renewal

terms that can extend the lease term from one 1 to five 5 years or more.

Right-of-use lease assets and lease liabilities are recognized at

the commencement date based on the present value of the remaining lease payments over the lease term which includes renewal periods we

are reasonably certain to exercise.

Our leases do not contain any material residual value guarantees or material restrictive covenants.

terms that can extend the lease term from one 1

to five 5 years or more.

Right-of-use lease assets and lease

liabilities are recognized at the commencement date based on the present value of the remaining lease payments over the lease term which

includes renewal periods we are reasonably certain to exercise.

Our leases do not contain any material residual value guarantees or material

restrictive covenants.

We have financing leases for certain property and equipment used in the normal course of business.

1 unchanged sentence

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

Three Months Ended March 31,

Three Months Ended June 30,

Operating lease cost

2 unchanged sentences

Total lease cost

Six Months Ended June 30,

Operating lease cost

Finance lease interest cost

Finance lease amortization expense

Total lease cost

condensed consolidated balance sheet information related to leases was as follows:

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Current operating lease liabilities

Current portion of operating lease obligations

Current portion of operating leases

Current finance lease liabilities

1 unchanged sentence

Long-term operating lease liabilities

Long-term operating lease obligations, net of current portion

Long-term operating lease obligations

Long-term finance lease liabilities

Long-term finance lease obligations, net of current portion

Long-term finance lease obligations

Total lease liabilities

condensed consolidated statements of cash flows information for the three months ended March 31, 2026 and 2025 related to leases was

condensed consolidated statements of cash flows information for the six months ended June 30, 2026 and 2025 related to leases was as

SCHEDULE OF SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INFORMATION

1 unchanged sentence

Cash paid for amounts included in the measurement of lease liabilities

annual payments of lease liabilities as of March 31, 2026 were as follows:

Conversion of notes payable to finance leases

annual payments of lease liabilities as of June 30, 2026 were as follows:

SCHEDULE OF FUTURE PAYMENTS OF LEASE LIABILITIES

3 unchanged sentences

Present value of lease liabilities

lease term and discount rate as of March 31, 2026 and 2025 were as follows:

lease term and discount rate as of June 30, 2026 and 2025 were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

6 unchanged sentences

STOCK BASED AWARDS

compensation expense of $ 126 and $ 118 for the three months ended March 31, 2026 and 2025, respectively, was reported in the condensed

consolidated statements of operations within general and administrative expenses.

compensation expense of $ 194 and $ 117 for the three months ended June 30, 2026 and 2025, respectively, and $ 320 and $ 235 for the six

months ended June 30, 2026 and 2025, respectively, was reported in the condensed consolidated statements of operations within general

and administrative expenses.

the 2017 Stock Incentive Plan (“2017 Plan”), as amended, there are an aggregate of 775,000

shares authorized for issuance.

As of March 31, 2026, there

remaining authorized shares available for grant.

2026, the Company’s Board of Directors approved the 2026 Equity Incentive Plan (the “2026 Plan”), subject to shareholder

approval at the upcoming annual meeting in May 2026.

The 2026 Plan would succeed the Company’s 2017 Stock Incentive Plan and authorize

On March 18, 2026, the Company’s Board of Directors approved the 2026 Equity Incentive Plan

(the “2026 Plan”).

The shareholders approved the 2026 Plan on May 13, 2026.

The 2026 Plan succeeded the Company’s

2017 Plan and authorized 250,000

shares for various equity- and cash-based awards.

The Company granted 30,000 stock options

under the 2017 Plan which vest over 5 years.

Weighted average stock option fair value assumptions and the weighted average grant date

fair value of stock options granted were as follows:

The remaining available shares under the 2017 Plan are now

available for issuance under the 2026 Plan.

As of June 30, 2026, there were 253,890

remaining authorized shares available for grant under the 2026 Plan.

the six months ended June 30, 2026, the Company granted 30,000 stock options under the 2017 Plan which vest over 5 years and granted

60,800 stock options under the 2026 Plan which vest over 1 - 5 years .

Weighted average stock option fair value assumptions and the weighted

average grant date fair value of stock options granted were as follows:

SCHEDULE OF WEIGHTED AVERAGE GRANT DATE FAIR VALUE OF STOCK OPTIONS GRANTED

5 unchanged sentences

Weighted average grant date fair value of stock options granted

compensation expense related to stock options was $ 77 and $ 54 for the three months ended March 31, 2026, and 2025 respectively.

March 31, 2026, there was $ 1,035 of unrecognized compensation related to stock options which will be recognized over a weighted average

compensation expense related to stock options was $ 151 and $ 69 for the three months ended June 30, 2026, and 2025, respectively.

compensation expense related to stock options was $ 228 and $ 123 for the six months ended June 30, 2026, and 2025, respectively.

June 30, 2026, there was $ 990 of unrecognized compensation related to stock options which will be recognized over a weighted average

period of 2.0 years.

is a summary of stock option activity as of and for the three months ended March 31, 2026 and 2025:

is a summary of stock option activity as of and for the six months ended June 30, 2026 and 2025:

SCHEDULE OF OPTION ACTIVITY

Exercise Price

Intrinsic Value

Outstanding – December 31, 2024

Outstanding – March 31, 2025

Outstanding – June 30, 2025

Outstanding – December 31, 2025

Outstanding – March 31, 2026

Exercisable on March 31, 2026

compensation expense related to restricted stock units (“RSUs”) was $ 49 and $ 64 for the three months ended March 31, 2026

Outstanding – June 30, 2026

Exercisable on June 30, 2026

compensation expense related to restricted stock units (“RSUs”) was $ 43 and $ 48 for the three months ended June 30, 2026

and 2025, respectively.

No RSUs were granted during the three-month periods ended March 31, 2026 and 2025.

As of March 31, 2026, total

unrecognized compensation expense related to the 43,664 outstanding RSUs was $ 207 , which will vest over a weighted average period of

On March 18, 2026 these RSU’s were modified to allow full vesting upon a change of control, as defined in the amendment.

Management concluded that no incremental compensation cost was required, as the added change-in-control provision did not impact the

fair value of the awards at the modification date.

Total compensation expense related to restricted stock units (“RSUs”) was $ 92 and $ 112 for the six

months ended June 30, 2026 and 2025, respectively.

During the three- and six- month periods ended June 30, 2025, we granted 43,664 RSUs

at an average grant price per share of $ 8.73 to non-employee directors which vest over two years.

As of June 30, 2026, total unrecognized

compensation expense related to the outstanding RSUs was $ 134 , which will vest over a weighted average period of 1.0 years.

18, 2026 these RSU’s were modified to allow full vesting upon a change of control, as defined in the amendment.

Management concluded

that no incremental compensation cost was required, as the added change-in-control provision did not impact the fair value of the awards

at the modification date.

is a summary of RSU activity as of and for the six months ended June 30, 2026 and 2025:

OF RESTRICTED STOCK UNITS ACTIVITY

Intrinsic Value

Outstanding – December 31, 2024

Outstanding – June 30, 2025

Outstanding – December 31, 2025

Outstanding – June 30, 2026

NET INCOME (LOSS) PER SHARE DATA

4 unchanged sentences

SCHEDULE OF BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

Three Months Ended

Six Months Ended

Basic weighted average shares outstanding

effect of outstanding stock options and non-vested restricted stock units 1

Dilutive effect of outstanding stock options and non-vested restricted stock units 1

Diluted weighted average shares outstanding

following items were excluded from the computation of diluted weighted-average shares outstanding as their inclusion would be anti-dilutive:

the three months ended March 31, 2026, restricted stock units and stock options totaling 602,446 .

the three months ended March 31, 2025, restricted stock units and stock options totaling 472,941 .

the three and six months ended June 30, 2026, stock options totaling 26,331 and 96,875 , respectively.

the three months ended June 30, 2025, stock options totaling 89,927 .

For the six months ended June 30, 2025, restricted stock units and

stock options totaling 504,194 .

a quarterly basis, we estimate what our effective tax rate will be for the full fiscal year and record a quarterly income tax provision

1 unchanged sentence

As the year progresses, we refine our estimate based on the facts and circumstances, including discrete

effective tax rate for the three months ended March 31, 2026 was 84 %, compared to 28 % for the three months ended March 31, 2025.

primary drivers of the change in the effective tax rate are the differences in pretax book income (loss) by jurisdiction and taxes on

foreign entities.

events, by each tax jurisdiction.

effective tax rate for the three and six months ended June 30, 2026 was 26 % and ( 30 % ), respectively.

Our effective tax rate for the three

and six months ended June 30, 2025 was 35 % and 25 %, respectively.

The primary drivers of the change in the effective tax rate are the

differences in pretax book income (loss) by jurisdiction and taxes on foreign entities.

The Company’s effective tax rate differs

from the statutory federal rate primarily due to earnings in jurisdictions with tax rates that are different from the U.S.

federal statutory

rate and research and development credits.

Fluctuations in the geographic mix of income may cause variability in the Company’s

quarterly effective tax rate.

SEGMENT INFORMATION

results of operations for the three months ended March 31, 2026 and 2025 represent a single operating and reporting segment referred

to as Contract Manufacturing within the EMS industry.

The 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.

We strategically direct production between

our various manufacturing facilities based on several 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 chief operating decision maker (the “CODM”)

is the Company’s President and Chief Executive Officer.

The CODM regularly evaluates financial information prepared in accordance

GAAP on a consolidated basis to assess performance and allocate resources.

results of operations for the three and six months ended June 30, 2026 and 2025 represent a 1 single

operating and reporting segment referred to as Contract Manufacturing within the EMS industry.

The 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.

We strategically direct production between our various manufacturing facilities based on several

considerations to best meet our customers’ needs.

Our plants generate net sales over several of the markets the Company

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

corporate accounting functions.

Our chief operating decision maker (the “CODM”) is the Company’s President and

Chief Executive Officer.

The CODM regularly evaluates financial information prepared in accordance with U.S.

GAAP on a consolidated

Net income is the measure of segment profitability used by the CODM to assess performance and allocate resources.

Significant segment expenses reviewed by the CODM include those that are presented in the condensed consolidated statements of operations.

The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.

Company’s net sales were located as follows:

OF NET SALES WERE LOCATED

Three Months Ended

Six Months Ended

United States

10 unchanged sentences

Earth closure were accrued and paid in the first quarter of 2025.

During the three months ended March 31, 2025, the Company incurred

$ 266 of restructuring charges, in connection with activities related to the Blue Earth facility and additional staff reductions in the

first quarter of 2025.

following table summarizes the related activity for the three months ended March 31, 2025:

During the six months ended June 30, 2025, the Company incurred $ 266

of restructuring charges, in connection with activities related to the Blue Earth facility and additional staff reductions in the first

quarter of 2025.

We did not record any restructuring charges in the three months ended June 30, 2025.

following table summarizes the related activity for the six months ended June 30, 2025:

SCHEDULE OF RESTRUCTURING CHARGES

3 unchanged sentences

Cash payments

March 31, 2025

did not record any restructuring charges or restructuring charge activity in the three months ended March 31, 2026.

June 30, 2025

did not record any restructuring charges or restructuring charge activity in the three or six months ended June 30, 2026.

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 1. Financial Statements