What changed in this filing

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Item 1. Financial Statements

2024-08-12 compared with 2024-05-09 · 143 added, 111 removed, 488 unchanged (34% of the section changed)

3 unchanged sentences

Consolidated Condensed Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited, Amounts in thousands, except per share data)

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

4 unchanged sentences

Amortization of intangible assets 40 63 121 187

Loss on disposal of operating assets 3 14 3 3

Operating loss ( 525 ) ( 2,206 ) ( 3,410 ) ( 4,275 )

(Gain) loss on disposal of operating assets — ( 3 ) 3 —

Operating profit (loss) 1,344 30 ( 2,066 ) ( 4,245 )

Interest expense, net 1,078 305 2,471 919

Foreign currency exchange loss, net 3 12 7 9

Other expense (income), net 52 ( 218 ) 105 ( 35 )

Loss before income tax expense ( 1,543 ) ( 2,339 ) ( 4,915 ) ( 4,863 )

Foreign currency exchange (gain) loss, net ( 1 ) 1 6 11

Other expense, net 139 323 244 287

Income (loss) before income tax expense 128 ( 599 ) ( 4,787 ) ( 5,462 )

Income tax expense 56 35 153 128

Net loss $ ( 1,590 ) $ ( 2,367 ) $ ( 5,013 ) $ ( 4,956 )

Net loss per share

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Net income (loss) per share

Basic $ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

5 unchanged sentences

and Subsidiaries

Consolidated Condensed Statements of Comprehensive Loss

(Amounts in thousands)

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited, Amounts in thousands)

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net loss $ ( 1,590 ) $ ( 2,367 ) $ ( 5,013 ) $ ( 4,956 )

Other comprehensive loss:

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Other comprehensive income (loss):

Foreign currency translation (loss) gain, net of tax ( 73 ) 20 52 436

1 unchanged sentence

Other ( 5 ) — ( 5 ) 1

Comprehensive loss $ ( 1,675 ) $ ( 2,219 ) $ ( 4,801 ) $ ( 4,387 )

Comprehensive income (loss) $ 98 $ ( 461 ) $ ( 4,703 ) $ ( 4,848 )

See notes to unaudited consolidated condensed financial statements.

27 unchanged sentences

Accounts payable 14,965 13,497

Accrued liabilities ($ 760 is related party)

Contract liabilities 3,880 1,150

Accrued liabilities (Related party is $ 880 at June 30, 2024 and $ 0 at September 30, 2023)

Total current liabilities 55,432 40,952

5 unchanged sentences

Shareholders’ equity:

Serial preferred shares, no par value, authorized 1,000 shares;

0 shares issued and outstanding at March 31, 2024 and September 30, 2023

Common shares, par value $ 1 per share, authorized 10,000 shares;

issued and outstanding shares 6,190 at March 31, 2024 and 6,105 at September 30, 2023

Serial preferred shares, no par value, 1,000 shares authorized;

0 shares issued and outstanding at June 30, 2024 and September 30, 2023

Common shares, par value $ 1 per share, 10,000 shares authorized;

issued and outstanding shares 6,180 at June 30, 2024 and 6,105 at September 30, 2023

Additional paid-in capital 11,745 11,626

8 unchanged sentences

(Unaudited, Amounts in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

18 unchanged sentences

Accounts payable 1,449 585

Contract liabilities 2,730 96

Other accrued liabilities 372 ( 253 )

5 unchanged sentences

Purchase of short-term investments ( 2,395 ) —

Maturity of short-term investments 648 —

Net cash used for investing activities ( 3,790 ) ( 1,892 )

26 unchanged sentences

(Unaudited, Amounts in thousands )

Six Months Ended

March 31, 2024

Nine Months Ended

June 30, 2024

Common Additional

8 unchanged sentences

Share transactions under equity-based plans 75 75 ( 124 ) — — ( 49 )

Balance - March 31, 2024 6,190 $ 6,190 $ 11,663 $ 18,252 $ ( 6,449 ) $ 29,656

Balance - June 30, 2024 6,180 $ 6,180 $ 11,745 $ 18,324 $ ( 6,423 ) $ 29,826

Three Months Ended

6 unchanged sentences

Shares Amount

Balance - December 31, 2023 6,160 $ 6,160 $ 11,609 $ 19,842 $ ( 6,364 ) $ 31,247

Balance - March 31, 2024 6,190 $ 6,190 $ 11,663 $ 18,252 $ ( 6,449 ) $ 29,656

Comprehensive loss — — — 72 26 98

1 unchanged sentence

Share transactions under equity-based plans ( 10 ) ( 10 ) 10 — — —

Balance - March 31, 2024 6,190 $ 6,190 $ 11,663 $ 18,252 $ ( 6,449 ) $ 29,656

Six Months Ended

March 31, 2023

Balance - June 30, 2024 6,180 $ 6,180 $ 11,745 $ 18,324 $ ( 6,423 ) $ 29,826

Nine Months Ended

June 30, 2023

Common Additional

8 unchanged sentences

Share transactions under equity-based plans 67 67 ( 138 ) — — ( 71 )

Balance - March 31, 2023 6,108 $ 6,108 $ 11,455 $ 27,000 $ ( 8,124 ) $ 36,439

Balance - June 30, 2023 6,107 $ 6,107 $ 11,541 $ 26,366 $ ( 7,951 ) $ 36,063

Three Months Ended

March 31, 2023

June 30, 2023

Common Additional

4 unchanged sentences

Shares Amount

Balance - December 31, 2022 6,072 $ 6,072 $ 11,406 $ 29,367 $ ( 8,272 ) $ 38,573

Balance - March 31, 2023 6,108 $ 6,108 $ 11,455 $ 27,000 $ ( 8,124 ) $ 36,439

Comprehensive (loss) income — — — ( 634 ) 173 ( 461 )

1 unchanged sentence

Share transactions under equity-based plans ( 1 ) ( 1 ) — — — ( 1 )

Balance - March 31, 2023 6,108 $ 6,108 $ 11,455 $ 27,000 $ ( 8,124 ) $ 36,439

Balance - June 30, 2023 6,107 $ 6,107 $ 11,541 $ 26,366 $ ( 7,951 ) $ 36,063

See notes to unaudited consolidated condensed financial statements.

33 unchanged sentences

Three Months Ended

March 31, 2024 Six Months Ended

March 31, 2024

June 30, 2024 Nine Months Ended

June 30, 2024

Opening allowance for credit losses $ ( 131 ) $ ( 242 )

3 unchanged sentences

Total allowance for credit losses $ ( 124 ) $ ( 124 )

Net Loss per Share

The Company’s net loss per basic share has been computed based on the weighted-average number of common shares outstanding.

Net Income (Loss) per Share

The Company’s net income (loss) per basic share has been computed based on the weighted-average number of common shares outstanding.

During a period of net loss, zero restricted and performance shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net loss $ ( 1,590 ) $ ( 2,367 ) $ ( 5,013 ) $ ( 4,956 )

Net income (loss) $ 72 $ ( 634 ) $ ( 4,940 ) $ ( 5,590 )

Weighted-average common shares outstanding (basic and diluted) 6,009 5,940 5,991 5,925

Net loss per share – basic and diluted $ ( 0.26 ) $ ( 0.40 ) $ ( 0.84 ) $ ( 0.84 )

Effect of dilutive securities:

Restricted shares 78 — — —

Performance shares 18 — — —

Weighted-average common shares outstanding (diluted) 6,105 5,940 5,991 5,925

Net income (loss) per share – basic:

$ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

Net income (loss) per share – diluted:

$ 0.01 $ ( 0.11 ) $ ( 0.82 ) $ ( 0.94 )

Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 151 211 251 187

9 unchanged sentences

As a result of this condition, there is substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to evaluate available financial alternatives, including obtaining acceptable alternative financing.

The Company continues to evaluate available financial alternatives, including obtaining acceptable alternative financing and the sale of its Maniago location.

The Company cannot provide assurances that it will be successful in restructuring the existing debt obligations, obtaining capital or entering into a strategic alternative transaction which provides sufficient funding for the refinancing of its outstanding indebtedness prior to the maturity date of its obligations under the Credit Agreement.

See Note 7 , Debt.

See Note 7 , Debt and Note 14 , Subsequent Events.

Recent Accounting Standards Adopted

6 unchanged sentences

The estimate of expected credit losses should consider historical information, current information and reasonable and supportable forecasts, including estimates of prepayments.

Financial instruments with similar risk characteristics should be grouped together when estimating expected credit losses.

instruments with similar risk characteristics should be grouped together when estimating expected credit losses.

ASU 2016-13 does not prescribe a specific method to make the estimate, so its application will require significant judgment.

1 unchanged sentence

However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years after December 15, 2022, including interim periods within those fiscal years.

Because SIFCO is considered a SRC, this ASU is effective for the

Company beginning October 1, 2023.

Because SIFCO is considered a SRC, this ASU is effective for the Company beginning October 1, 2023.

The effect of adopting this ASU did not have an impact to the Company's results within the consolidated condensed statements of operations and financial condition.

Recent Accounting Standards Not Yet Adopted

In July 2023, the FASB issued ASU 2023-03, " Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)" , to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No.

In July 2023, the FASB issued ASU 2023-03, " Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)" , to amend various SEC paragraphs in the Accounting Standards Codification (the "Codification") to reflect the issuance of SEC Staff Accounting Bulletin No.

120, among other things.

9 unchanged sentences

The amendments in ASU 2023-07 do not change or remove those disclosure requirements.

The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The amendments in ASU 2023-07 also do not change how a public entity identifies its operating segments, aggregates those operating segments into reportable segments, or applies the quantitative thresholds to determine its reportable segments.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

16 unchanged sentences

In March 2024, the FASB issued ASU 2024-02 “ Codification Improvements ” (“ASU 2024-02”) amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification.

The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance.

The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are

extraneous and not required to understand or apply the guidance.

Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities and is effective or fiscal years beginning after December 15, 2024.

6 unchanged sentences

GAAP for reporting ERCs, the Company adopted International Accounting Standards (“IAS”) 20 – Accounting for Government Grants and Disclosure of Government Assistance which permits the recording and presentation of either the gross amount as other income or netting the credit against related expense.

The ERC will be recognized as a reduction in other manufacturing and selling, general and administrative expenses and allocated to the financial statement categories from which the payroll taxes were originally incurred.

For the three and six months ended March 31, 2024 and 2023, there was no income or expense recorded.

For the three and nine months ended June 30, 2024, there was no income or expense recorded.

In the same periods of the prior year, the Company recorded a gross benefit of $ 1,772 , which represented $ 1,688 claimed as refund and $ 84 in interest income.

The ERC was recognized as a reduction in other manufacturing and selling, general and administrative expenses and allocated to the financial statement categories from which the payroll taxes were originally incurred.

The Company recorded benefits to cost of goods sold of $ 1,452 , selling, general and administrative expense of $ 236 and interest income $ 84 , respectively and recorded selling, general and administrative expense of $ 354 for professional fees related to the tax credit in the consolidated condensed statements of operations during the three and nine months ended June 30, 2023.

The Company received $ 1,246 of refunds on May 9, 2023 and recorded $ 526 in accounts receivable on the consolidated condensed balance sheets as of June 30, 2023.

Reclassification

Certain amounts in prior years have been reclassified to conform to the fiscal 2024 consolidated condensed statement presentation.

In fiscal 2024, the Company revised its classification within the consolidated condensed balance sheets by moving a prior year amount of $ 1,150 of contract liabilities from accrued liabilities to contract liabilities to conform to current period presentation.

The Company revised its classification within the consolidated condensed statements of cash flows by moving a prior year amount of $ 96 , of contract liabilities from other accrued liabilities to conform to current period presentation.

Inventories consist of:

5 unchanged sentences

For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method.

Approximately 34 % and 19 % of the Company’s inventories at March 31, 2024 and September 30, 2023, respectively, use the LIFO method.

Approximately 31 % and 19 % of the Company’s inventories at June 30, 2024 and September 30, 2023, respectively, use the LIFO method.

An actual valuation of inventory under the LIFO method is made at the end of each fiscal year based on the inventory levels and costs existing at that time.

2 unchanged sentences

The first-in, first-out ("FIFO") method is used for the remainder of the inventories, which are stated at the lower of cost or net realizable value ("NRV").

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $ 9,985 and $ 9,634 higher than reported at March 31, 2024 and September 30, 2023, respectively.

If the FIFO method had been used for the inventories for which cost is determined using the LIFO method, inventories would have been $ 10,460 and $ 9,634 higher than reported at June 30, 2024 and September 30, 2023, respectively.

Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

The Company estimates net realizable value, excess and obsolescence and shrink reserves for its inventory based upon historical experience, historical and projected sales trends and the age of inventory on hand.

As of March 31, 2024 and September 30, 2023, our inventory valuation allowances were $ 3,883 and $ 4,049 , respectively.

As of June 30, 2024 and September 30, 2023, our inventory valuation allowances were $ 3,849 and $ 4,049 , respectively.

Long-lived Assets

4 unchanged sentences

The Company continuously monitors for indicators of impairment to determine if further testing is necessary.

In the second quarter of fiscal 2024, the Company evaluated potential triggering events and did not identify any indicators that the asset groups might be impaired.

In the third quarter of fiscal 2024, certain qualitative factors, including operating results, at the Orange, California ("Orange") location, triggered a recoverability test.

The results indicated that the long-lived assets were recoverable and did not require further review for impairment.

The Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired.

In the second quarter of fiscal 2024, the Company evaluated potential triggering events and determined interim testing was not required.

In the third quarter of fiscal 2024, the Company evaluated potential triggering events and determined interim testing was not required.

Accumulated Other Comprehensive Loss

7 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

6 unchanged sentences

The following table presents the impact of leasing on the consolidated condensed balance sheet.

Classification in the consolidated condensed balance sheets March 31,

Classification in the consolidated condensed balance sheets June 30,

2024 September 30,

10 unchanged sentences

Supplemental cash flow and other information related to leases were as follows:

2024 March 31,

2024 June 30,

Other Information

12 unchanged sentences

Operating leases 5.9 % 5.9 %

Future minimum lease payments under non-cancellable leases at March 31, 2024 were as follows:

Future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows:

Finance Leases Operating Leases

Year ending September 30,

2024 (excluding the six months ended March 31, 2024) $ 33 $ 842

2024 (excluding the nine months ended June 30, 2024) $ 16 $ 420

2025 36 1,696

11 unchanged sentences

Finance lease obligations 96 142

unamortized debt issuance cost - ($ 617 is related party)

unamortized debt issuance cost - (Related party is $ 387 )

Other, net of unamortized debt issuance costs $ 0 and $( 9 ), respectively

18 unchanged sentences

and (ii) delay the maturity date to October 4, 2024, or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms thereof.

The total collateral at March 31, 2024 and September 30, 2023 was $ 23,223 and $ 21,089 , respectively, and the revolving commitment was $ 26,000 and $ 30,000 , respectively.

Total availability at March 31, 2024 and September 30, 2023 was $ 3,711 and $ 2,830 , respectively, which exceeds both the collateral and total commitment threshold.

The Company entered into the Tenth Amendment (the "Tenth Amendment") to the Credit Agreement and the Fifth Amendment (the "Fifth Amendment") to the Export Credit Agreement with its lender on May 21, 2024.

The Tenth and Fifth Amendments amend the Credit Agreement and the Export Credit Agreement to, among other things, to:

(i) increase the Revolving Commitment, less the Availability Block, if applicable, (y) the Borrowing Base, and (z) in combination with the Export Revolving Loans under the Export Credit Agreement, (i) $ 18,000 through September 30, 2023, (ii) $ 19,000 from and including October 1, 2023 through May 14, 2024, and (iii) $ 22,000 thereafter until, and reducing to zero and terminating on, the Maturity Date;

(ii) modify the definition of Borrowing Base Reserves to $ 1,500 or such other amount, if any, as may be determined in writing by the Lender in its Permitted Discretion (which may be by email from the Lender);

and (iii) required the execution and delivery of the First Amendment of the Silk Guaranty discussed below.

The total collateral at June 30, 2024 and September 30, 2023 was $ 24,576 and $ 21,089 , respectively, and the revolving commitment was $ 26,000 and $ 30,000 , respectively.

Total availability at June 30, 2024 and September 30, 2023 was $ 2,912 and $ 2,830 , respectively, which exceeds both the collateral and total commitment threshold.

The Credit Agreement contains affirmative and negative covenants and events of default.

Since the availability exceeded the $ 1,500 reserve minimum as of March 31, 2024 and September 30, 2023, no covenant calculations were required.

The Company has a letter of credit balance of $ 1,970 as of March 31, 2024 and September 30, 2023, respectively.

The revolving credit agreement (or "revolver"), as amended, has a rate based on SOFR plus a 2.75 % spread, which was 8.2 % at March 31, 2024 and a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at September 30, 2023.

The Export Credit Agreement as amended has a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at March 31, 2024 and a rate based on SOFR plus a 1.75 % spread, which was 7.2 % at September 30, 2023.

Since the availability exceeded the $ 1,500 reserve minimum as of June 30, 2024 and September 30, 2023, no covenant calculations were required.

The Company had a letter of credit balance of $ 1,970 as of June 30, 2024 and September 30, 2023, respectively.

The revolving credit agreement (or "revolver"), as amended, has a rate based on SOFR plus a 2.75 % spread, which was 8.2 % at June 30, 2024 and a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at September 30, 2023.

The Export Credit Agreement as amended has a rate based on SOFR plus a 2.25 % spread, which was 7.7 % at June 30, 2024 and a rate based on SOFR plus a 1.75 % spread, which was 7.2 % at September 30, 2023.

The Company also has a commitment fee of 0.50 % under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

Debt issuance costs - revolver

The Company incurred new debt issuance costs of $ 117 in the first quarter of fiscal 2024 as it pertains to the new amendments entered into, which are included in the consolidated condensed balance sheet as a deferred charge in other current assets, net of amortization of $ 44 at March 31, 2024.

The Company previously had debt issuance costs of $ 86 , which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $ 86 and $ 78 at March 31, 2024 and September 30, 2023, respectively.

Subordinated Promissory Note and Guarantee

The Company, in connection with the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc., a California corporation owned and controlled by Mark J.

Silk ("GHI") (Mr.

The Company previously had debt issuance costs of $ 86 , which were included in the consolidated condensed balance sheets as a deferred charge in other current assets, net of amortization of $ 86 and $ 78 at June 30, 2024 and September 30, 2023, respectively.

Subordinated Promissory Note and Guaranty

The Company, in connection with the Ninth Amendment and the Fourth Amendment, incurred a secured subordinated loan from Garnet Holdings, Inc.

("GHI"), a California corporation owned and controlled by Mark J.

Silk ("Silk") (Mr.

Silk is a member of the Board of Directors of the Company and considered a related party), in the original principal amount of $ 3,000 (the "Subordinated Loan") on the terms and subject to the conditions of a Subordinated Secured Promissory Note (the "Subordinated Promissory Note").

2 unchanged sentences

The Company agreed to pay to Mr.

Silk a fully earned and non-refundable fee in an amount equal to $ 150 , which fee shall be due and payable in full on, and subject to the occurrence of the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof.

Silk a fully earned and non-refundable fee in an amount equal to $ 150 , which fee shall be included in the carrying value of the promissory note, due and payable in full on, and subject to the occurrence of, the Maturity Date or such earlier date on which the Company’s obligations under the Subordinated Promissory Note are accelerated pursuant to the terms thereof.

Borrower’s obligations under the Subordinated Promissory Note are secured by a first priority lien, subject to any liens granted to Lender as described in the Subordination Agreement, on all of borrowers’ accounts, deposit accounts, contract rights, documents, equipment, general intangibles, instruments, inventory, investment property, commercial tort claims, all other goods and personal property whether tangible or intangible and wherever located, and all proceeds of the foregoing.

The Subordinated Promissory note carrying value was $ 3,256 and $ 0 at March 31, 2024 and September 30, 2023, respectively.

The Subordinated Promissory Note interest rate was 14 % and 0 % at March 31, 2024 and September 2023, respectively.

The Ninth Amendment was also subject to including, but not limited to, the execution and delivery by Mark.

Silk, a member of the Board of Directors of the Company ("Silk"), of a Guaranty Agreement (the "Guaranty") in favor of Lender pursuant to which Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement.

The Fee Letter

requires the borrowers to pay Silk a fee (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $ 760 , which was included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities.

The Guaranty Fee becomes due and payable on the maturity date.

The Subordinated Promissory note carrying value was $ 3,366 and $ 0 at June 30, 2024 and September 30, 2023, respectively.

The Subordinated Promissory Note interest rate was 14 % and 0 % at June 30, 2024 and September 2023, respectively.

The Ninth Amendment was also subject to the satisfaction of certain conditions, including, but not limited to, the execution and delivery by Silk, of a Guaranty Agreement (the "Guaranty") in favor of Lender pursuant to which Silk guarantees the obligations of borrowers under the Credit Agreement and Export Credit Agreement.

The Fee Letter requires the borrowers to pay Silk a fee (the "Guaranty Fee") in consideration for his agreement to execute and deliver the Guaranty in an amount equal to $ 760 , which was included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities.

The Tenth Amendment was subject to the execution and delivery of the First Amendment of the Guaranty and an amendment to the Fee Letter, which required the borrowers to pay Silk an incremental fee of $ 120 in consideration for his agreement to execute and deliver the First Amendment to the Guaranty.

Guaranty fees were included in the consolidated condensed balance sheets as a deferred charge in accrued liabilities and become due and payable on the maturity date.

Foreign subsidiary borrowings in USD

15 unchanged sentences

A second loan with a term of 1 year, 6 months was obtained in the amount of $ 1,104 .

The proceeds from this loan will be for working capital purposes.

The proceeds from this loan were used for working capital purposes.

In the third quarter, the Company increased three of its credit and factoring lines with existing lenders to support working capital needs.

The Company factors receivables from one of its customers.

2 unchanged sentences

This estimated effective rate is used in providing for income taxes on a year-to-date basis.

The Company’s effective tax rate through the first six months of fiscal 2024 was ( 2.0 )%, compared with ( 1.9 )% for the same period of fiscal 2023.

The Company’s effective tax rate through the first nine months of fiscal 2024 was ( 3.2 )%, compared with ( 2.3 )% for the same period of fiscal 2023.

The decrease in the effective rate was primarily attributable to changes in jurisdictional mix of income in fiscal 2024 compared with the same period of fiscal 2023.

5 unchanged sentences

federal jurisdiction, Ireland, Italy, and various state and local jurisdictions.

As of the second quarter of fiscal 2024, the Company maintains a full valuation allowance on the net deferred tax assets in the U.S., Ireland and Italy.

As of the third quarter of fiscal 2024, the Company maintains a full valuation allowance on the net deferred tax assets in the U.S., Ireland and Italy.

Retirement Benefit Plans

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

3 unchanged sentences

Amortization of net loss 44 77 130 230

Settlement cost 60 78 60 78

Net periodic pension cost $ 159 $ 158 $ 356 $ 319

During the six months ended March 31, 2024 and 2023, the Company made $ 18 and $ 13 in cash contributions, and $ 86 and $ 0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans.

During the nine months ended June 30, 2024 and 2023, the Company made $ 32 and $ 13 in cash contributions, and $ 87 and $ 0 in non-cash contributions utilizing carryover balance, respectively, to its defined benefit pension plans.

The Company anticipates making $ 42 in cash contributions to fund its defined benefit pension plans for the balance of fiscal 2024, and will use carryover balances from previous periods that have been available for use as a credit to reduce the amount of cash contributions that the Company is required to make to certain defined benefit plans in fiscal 2024.

3 unchanged sentences

The Company has outstanding equity awards under the Company's 2007 Long-Term Incentive Plan (the "2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan"), and awards performance and restricted shares under the 2016 Plan.

In the first six months of fiscal 2024, the Company granted 120 shares under the 2016 Plan to certain key employees.

In the first nine months of fiscal 2024, the Company granted 120 shares under the 2016 Plan to certain key employees.

The awards were split into two tranches, comprised of 46 performance-based shares and 74 time-based restricted shares, with a grant date fair value of $ 3.60 per share.

The awards vest over three years .

There were 19 shares forfeited during the six month period ended March 31, 2024.

In the first six months of fiscal 2024, the Company granted its non-employee directors 39 restricted shares under the 2016 Plan, with a grant date fair value of $ 3.08 per share, which vest over one year .

There were 66 shares forfeited during the nine month period ended June 30, 2024.

In the first nine months of fiscal 2024, the Company granted its non-employee directors 39 restricted shares under the 2016 Plan, with a grant date fair value of $ 3.08 per share, which vest over one year .

One award for 38 restricted shares vested in January 2024.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 280 shares that remain available for award at March 31, 2024.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 327 shares that remain available for award at June 30, 2024.

If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to a maximum of 150 % of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was $ 171 and $ 207 during the first six months of fiscal 2024 and 2023, respectively.

As of March 31, 2024, there was $ 573 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

Stock-based compensation under the 2016 Plan was $ 243 and $ 292 during the first nine months of fiscal 2024 and 2023, respectively.

As of June 30, 2024, there was $ 421 of total unrecognized compensation cost related to the performance shares and restricted shares awarded under the 2016 Plan.

The Company expects to recognize this cost over the next 1.5 years.

11 unchanged sentences

As a result of control transferring over time for these products, revenue is recognized based on progress toward completion of the performance obligation.

The selection of the method to measure progress towards completion requires judgment and is

based on the nature of the products to be provided.

The Company elected to use the cost to cost input method of progress based on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided.

The Company elected to use the cost to cost input method of progress based

on costs incurred for these contracts because it best depicts the transfer of goods to the customer based on incurring costs on the contracts.

Under this method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

Net Sales 2024 2023 2024 2023

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

Net Sales 2024 2023 2024 2023

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Total $ 29,259 $ 21,853 $ 76,854 $ 62,394

In addition to the disaggregated revenue information provided above, approximately 40 % and 49 % of total net sales for the six months ended March 31, 2024 and 2023, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

In addition to the disaggregated revenue information provided above, approximately 39 % and 47 % of total net sales for the nine months ended June 30, 2024 and 2023, respectively, was recognized on an over-time basis because of the continuous transfer of control to the customer, with the remainder recognized at a point in time.

Contract Balances

The following table contains a roll forward of contract assets and contract liabilities for the period beginning October 1, 2023 and ended March 31, 2024 compared to period beginning October 1, 2022 and ended March 31, 2023:

2024 March 31,

The following table contains a roll forward of contract assets and contract liabilities for the period beginning October 1, 2023 and ended June 30, 2024 compared to period beginning October 1, 2022 and ended June 30, 2023:

2024 June 30,

Contract assets - Beginning balance $ 10,091 $ 10,172

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Contract assets - Ending balance $ 10,055 $ 9,019

2024 March 31,

Contract liabilities (included within Accrued liabilities) - Beginning balance $ ( 1,150 ) $ ( 807 )

2024 June 30,

Contract liabilities - Beginning balance $ ( 1,150 ) $ ( 807 )

Payments received in advance of performance obligations ( 4,369 ) ( 1,531 )

Performance obligations satisfied 1,639 1,435

Contract liabilities (included within Accrued liabilities) - Ending balance $ ( 1,399 ) $ ( 1,216 )

Accounts receivable were $ 16,515 and $ 17,395 at September 30, 2022 and March 31, 2023, respectively.

There were no impairment losses recorded on contract assets as of March 31, 2024 and September 30, 2023.

Contract liabilities - Ending balance $ ( 3,880 ) $ ( 903 )

Accounts receivable were $ 16,515 and $ 20,197 at September 30, 2022 and June 30, 2023, respectively.

There were no impairment losses recorded on contract assets as of June 30, 2024 and September 30, 2023.

Remaining performance obligations

As of March 31, 2024, the Company has $ 137,771 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months .

As of June 30, 2024, the Company has $ 139,203 of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months .

Commitments and Contingencies

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The Company maintains $ 3,000 of cybersecurity insurance coverage to limit our exposure to losses such as those related to the Cyber Incident.

The Company recorded expense of $ 23 to selling, general, and administrative expenses in the six months ended March 31, 2024.

The Company recorded expense of $ 977 to selling, general, and administrative expenses and recorded costs of $ 110 to other expense (income), net related to loss on insurance recovery in the six months ended March 31, 2023.

At March 31, 2024 and September 30, 2023, the Company recorded $ 827 and $ 965 , respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.

The Company has incurred, and may continue to incur, certain expenses related to this attack.

The Company will accrue these costs as incurred.

The Company recorded a benefit of $ 605 to selling, general, and administrative expenses in the third quarter of fiscal 2024 due to credit of third party restoration fees related to last year's cybersecurity incident.

The Company recorded expense of $ 1,209 to selling, general, and administrative expenses and recorded costs of $ 60 to other expense (income), net related to loss on insurance recovery in the nine months ended June 30, 2023.

At June 30, 2024 and September 30, 2023, the Company recorded $ 197 and $ 965 , respectively, related to the Cyber Incident in accounts payable on the consolidated condensed balance sheets.

Related Party Transactions

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Silk, a member of the Board of Directors of the Company and considered a related party.

The Company has recorded interest expense of $ 106 for the three and six month periods ending March 31, 2024, which was included in the consolidated condensed balance sheets in the Promissory note - related party line.

The Company has recorded interest expense of $ 110 and $ 216 for the three and nine month periods ending June 30, 2024, which was included in the consolidated condensed balance sheets in the Promissory note - related party line.

Additionally, Mr.

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See Note 7, Debt for further information.

Subsequent Events

On August 1, 2024, the Company's Board of Directors approved, and management executed, a Share Purchase Agreement ("SPA") with TB2 S.r.l.

("Buyer"), under which the Buyer agreed to acquire 100 % of the share capital of the Company’s Maniago, Italy location (C Blade S.p.A.

Forging & Manufacturing).

The SPA, among other things, is contingent upon meeting customary conditions, delivering required documents, and obtaining governmental authorization under the Golden Power rules of Italian law.

Additionally, the SPA is subject to a Material Adverse Condition (“MAC”) clause.

The Company committed to the plan to sell in August 2024, and the Maniago location is considered as held and used as of June 30, 2024.

The Company expects to consummate the sale in the fourth quarter of fiscal 2024, however, the Company cannot provide assurances that all closing conditions will be satisfied.

Maniago's total assets were $ 23,657 and total liabilities were $ 16,498 on the consolidated condensed balance sheets at June 30, 2024.

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