M-tron Industries, Inc. (MPTI)

CIK: 0001902314. SIC: 3679 Electronic Components, NEC. Latest 10-K as of: 2026-03-26.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3679 Electronic Components, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1902314. Latest filing source: 0001437749-26-009844.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001902314.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001902314.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001437749-26-016784.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-13. Report date: 2026-03-31.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited Consolidated and Combined Financial Statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the "SEC") on March 26, 2026. The terms the "Company,", "Mtron," "MPTI," "we," "our," or "us" refer to M-tron Industries, Inc. and unless otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in our Condensed Consolidated Financial Statements and the notes thereto.

Unless otherwise stated, all dollar amounts are in thousands.

In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. See the Cautionary Note Concerning Forward-Looking Statements included in this Quarterly Report on Form 10-Q.

Overview

Mtron is engaged in the designing, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications. Mtron's primary markets are defense, aerospace, space, and avionics.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and all of its majority-owned subsidiaries.

Trends and Uncertainties

We are not aware of any material trends or uncertainties, other than national economic conditions affecting our industry generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than the one listed below and the risk factors disclosed in our Annual Report on Form 10-K, as filed with the SEC on March 26, 2026.

Tariffs

The current U.S. federal administration has imposed tariffs on certain products and materials entering the United States imported from other countries. Additionally, foreign governments have imposed retaliatory tariffs on products and materials exported from the United States. Following the Supreme Court’s February 2026 decision striking down certain tariffs, the Trump Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. To date, we have not seen an impact from tariffs on the demand for our products.

15

Table of Contents

Results of Operations

The following table presents our Condensed Consolidated Statements of Operations for the periods indicated:

Three Months Ended March 31,

(in thousands)

2026

2025

$ Change

% Change

Revenues

$

14,686

$

12,732

$

1,954

15.3

%

Costs and expenses:

Manufacturing cost of sales

8,092

7,326

766

10.5

%

Engineering, selling and administrative

3,984

3,393

591

17.4

%

Total costs and expenses

12,076

10,719

1,357

12.7

%

Operating income

2,610

2,013

597

29.7

%

Other income:

Interest income, net

370

111

259

233.3

%

Other expense, net

(122

)

(10

)

(112

)

1,120.0

%

Total other income, net

248

101

147

145.5

%

Income before income taxes

2,858

2,114

744

35.2

%

Income tax expense

470

484

(14

)

(2.9

%)

Net income

$

2,388

$

1,630

$

758

46.5

%

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Total Revenues

Total revenues increased $1,954, or 15.3%, from $12,732 for the three months ended March 31, 2025 to $14,686 for the three months ended March 31, 2026 primarily due to strong defense product shipments as well as higher avionics sector shipments.

Total Costs and Expenses

Total expenses increased $1,357, or 12.7%, from $10,719 for the three months ended March 31, 2025 to $12,076 for the three months ended March 31, 2026. The increase is primarily due to the following:

•

a $766, or 10.5%, increase in Manufacturing cost of sales from $7,326 for the three months ended March 31, 2025 to $8,092 for the three months ended March 31, 2026 driven by higher revenues partially offset by manufacturing efficiencies; and

•

a $591, or 17.4%, increase in Engineering, selling and administrative from $3,393 for the three months ended March 31, 2025 to $3,984 for the three months ended March 31, 2026 from higher research and development costs, higher sales commissions related to an increase in revenues, and an increase in corporate expenses consistent with the overall growth in the business.

Gross Margin

Gross margin (Revenues less Manufacturing cost of sales as a percentage of Revenues) increased 244 basis points from 42.5% for the three months ended March 31, 2025 to 44.9% for the three months ended March 31, 2026 reflecting higher revenues, product mix, and manufacturing efficiencies.

Total Other Income, Net

Total Other income, net increased $147, or 145.5%, from $101 for the three months ended March 31, 2025 to $248 for the three months ended March 31, 2026. The increase is primarily due to a $259, or 233.3%, increase in Interest income, net from $111 for the three months ended March 31, 2025 to $370 for the three months ended March 31, 2026 driven by higher balances invested in money market mutual funds.

The increase was partially offset by a $112, or 1,120.0%, decrease in Other income (expense), net from ($10) for the three months ended March 31, 2025 to ($122) for the three months ended March 31, 2026 primarily due to unfavorable currency movements related to our India production facility.

Income Tax Expense

Income tax expense decreased $14, or 2.9%, from $484 for the three months ended March 31, 2025 to $470 for the three months ended March 31, 2026 primarily due to temporary differences related to stock compensation partially offset by the increase in Income before incomes taxes.

Backlog

As of March 31, 2026, our order backlog was $76,834, an increase of $409, or 0.5%, from $76,425 as of December 31, 2025 and an increase of $21,333, or 38.4%, from $55,501 as of March 31, 2025. The increase in backlog from December 31, 2025 is primarily driven by orders in the aerospace and defense, avionics, and space sectors during the quarter. The nature of a program centric business model materially affects backlog based on the timing and size of the orders.

16

Table of Contents

Non-GAAP Financial Measures

To supplement our Condensed Consolidated Financial Statements presented on a GAAP basis, the Company presents its financial condition and results of operations in the way it believes will be most meaningful and representative of its business results. Some of the measurements the Company uses are "Non-GAAP financial measures" under SEC rules and regulations. The non-GAAP financial measures the Company presents are listed below and may not be comparable to similarly-named measures reported by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with GAAP.

The Company uses the following operating performance measure because the Company believes it provides both management and investors with a more complete understanding of the underlying operational results and trends and our marketplace performance as well as a more accurate view of the Company's ability to generate cash profits:

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") is derived by excluding the items set forth below from Income before income taxes. Excluded items include the following:

•

Interest income

•

Interest expense

•

Depreciation

•

Amortization

•

Non-cash stock-based compensation

•

Other discrete items that might have a significant impact on comparable GAAP measures and could distort the evaluation of our normal operating performance.

Reconciliation of GAAP Income Before Income Taxes to Non-GAAP Adjusted EBITDA

The following table presents a reconciliation of income before income taxes to Adjusted EBITDA, a non-GAAP measure:

Three Months Ended March 31,

(in thousands, except share data)

2026

2025

Income before income taxes

$

2,858

$

2,114

Adjustments:

Interest income

(370

)

(111

)

Depreciation

302

250

Amortization

—

—

Total adjustments

(68

)

139

EBITDA

2,790

2,253

Non-cash stock compensation

382

249

Adjusted EBITDA

$

3,172

$

2,502

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Adjusted EBITDA increased $670 from $2,502 for the three months ended March 31, 2025 to $3,172 for the three months ended March 31, 2026 primarily due to higher revenues and improved gross margins.

17

Table of Contents

Liquidity and Capital Resources

Overview

Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities.

Capital refers to our long-term financial resources available to support business operations and future growth.

Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the business, timing of cash flows, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.

As of March 31, 2026 and December 31, 2025, Cash and cash equivalents were $51,958 and $20,891, respectively.

Cash Flow Activity

The following table presents the cash flow activity for the periods indicated:

As of March 31,

(in thousands)

2026

2025

Cash and cash equivalents, beginning of period

$

20,891

$

12,641

Cash provided by operating activities

2,118

1,607

Cash used in investing activities

(452

)

(586

)

Cash provided by financing activities

29,401

—

Net change in cash and cash equivalents

31,067

1,021

Cash and cash equivalents, end of period

$

51,958

$

13,662

Operating Activities

Cash provided by operating activities was $2,118 for the three months ended March 31, 2026 compared to $1,607 for the three months ended March 31, 2025, an increase of $511, primarily due to the following:

•

Higher net income;

•

Higher non-cash adjustments, including:

•

Depreciation, which increased $52 from $250 for the three months ended March 31, 2025 to $302 for the three months ended March 31, 2026;

•

Stock-based compensation increased $133 from $249 for the three months ended March 31, 2025 to $382 for the three months ended March 31, 2026;

•

Working capital movements, including:

•

Accounts receivable, which increased $1,420 for the three months ended March 31, 2026 compared to a decrease of $124 for the three months ended March 31, 2025, reflecting the timing and mix of customer orders;

•

Inventories, net, which increased $677 for the three months ended March 31, 2026 compared to a decrease of $144 for the three months ended March 31, 2025, supporting anticipated growth in future sales;

•

Prepaid expenses and other assets, which decreased $222 for the three months ended March 31, 2026 compared to a decrease of $68

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-26. Report date: 2025-12-31.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our audited consolidated financial statements and the accompanying notes. This discussion contains forward-looking statements, including statements regarding our expected financial position, business and financing plans. These statements involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Report, particularly under the headings "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors."

Unless otherwise stated, all dollar amounts are in thousands.

Overview

Mtron is engaged in the designing, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications. Mtron’s primary markets are aerospace and defense, space, and avionics.

The accompanying consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries.

For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025, which is available free of charge on the SEC's website at https://www.sec.gov and on our website at ir.mtron.com.

Trends and Uncertainties

We are not aware of any material trends or uncertainties, other than the global economic conditions affecting our industry generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than those listed in Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K.

16

Table of Contents

Results of Operations

The following table presents our Consolidated Statements of Operations for the periods indicated:

Year Ended December 31,

(in thousands)

2025

2024

$ Change

% Change

Revenues

$

54,417

$

49,012

$

5,405

11.0

%

Costs and expenses:

Manufacturing cost of sales

30,269

26,372

3,897

14.8

%

Engineering, selling and administrative

13,857

13,246

611

4.6

%

Total costs and expenses

44,126

39,618

4,508

11.4

%

Operating income

10,291

9,394

897

9.5

%

Other income:

Interest income, net

539

243

296

121.8

%

Other income, net

124

138

(14

)

-10.1

%

Total other income, net

663

381

282

74.0

%

Income before income taxes

10,954

9,775

1,179

12.1

%

Income tax expense

2,507

2,139

368

17.2

%

Net income

$

8,447

$

7,636

$

811

10.6

%

2025 compared to 2024

Total Revenues

Total revenues increased $5,405, or 11.0%, from $49,012 in 2024 to $54,417 in 2025 primarily due to strong defense program product and solution shipments, as well as an increase in shipments in the avionics and industrials sectors. 

Total Costs and Expenses

Total costs and expenses increased $4,508, or 11.4%, from $39,618 in 2024 to $44,126 in 2025 primarily due to:

•

a $3,897, or 14.8%, increase in Manufacturing cost of sales from $26,372 in 2024 to $30,269 in 2025 driven by the increase in production of several new products, which result in higher initial manufacturing costs, as well as the impact of tariffs; and

•

a $611, or 4.6%, increase in Engineering, selling and administrative from $13,246 in 2024 to $13,857 in 2025 driven by continued investment in research and development; higher sales commissions consistent with the growth in revenues; higher stock-based compensation; higher sales and marketing costs; and an increase in administrative and corporate expenses consistent with the overall growth in the business.

The Company's total costs and expenses for 2024 included bonus expense of approximately $1.5 million, or 3.0% of revenues, which was not incurred in 2025.

Gross Margin

Gross margin (Revenues less Manufacturing cost of sales as a percentage of Revenues) decreased 180 basis points from 46.2% in 2024 to 44.4% in 2025 reflecting product mix and higher tariff-related costs.

Total Other Income, Net

Total other income, net increased $282, or 74.0%, from $381 in 2024 to $663 in 2025 primarily due to a $296 increase in Interest income, net from $243 in 2024 to $539 in 2025 driven by higher average balances invested in money market mutual funds.

Income Tax Expense

Income tax expense 
increased 
$368, or
17.2%, from 
$2,139 in 
2024 to 
$2,507 in 
2025 primarily due to the increase in Income before income taxes discussed above.

Backlog

As of December 31, 2025, our order backlog was $76,425, an increase of $29,186, or 61.8%, from $47,239 as of December 31, 2024. The increase in backlog from December 31, 2024 reflects the nature of a program centric business model, which can materially affect backlog based on the timing and size of these orders.

The backlog of unfilled orders includes amounts based on signed contracts and purchase orders, which are likely to be fulfilled substantially within the next 12 to 24 months. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost. We expect to fill the vast majority of our order backlog as of December 31, 2025 during 2026 and 2027, but cannot provide assurances as to what portion of the order backlog will be fulfilled in any given year.

17

Table of Contents

Non-GAAP Financial Measures

To supplement our Consolidated Financial Statements presented on a U.S. GAAP basis, the Company presents its financial condition and results of operations in the way it believes will be most meaningful and representative of its business results. Some of the measurements the Company uses are "Non-GAAP financial measures" under SEC rules and regulations. The non-GAAP financial measures the Company presents are listed below and may not be comparable to similarly-named measures reported by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with U.S. GAAP.

The Company uses the following operating performance measure because the Company believes it provides both management and investors with a more complete understanding of the underlying operational results and trends and our marketplace performance as well as a more accurate view of the Company's ability to generate profits:

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") is derived by excluding the items set forth below from Income before income taxes. Excluded items include the following:

•

Interest income

•

Interest expense

•

Depreciation

•

Amortization

•

Non-cash stock-based compensation

•

Other discrete items that might have a significant impact on comparable GAAP measures and could distort the evaluation of our normal operating performance.

Reconciliation of GAAP Income Before Income Taxes to EBITDA and Non-GAAP Adjusted EBITDA

The following table presents a reconciliation of income before income taxes to Adjusted EBITDA, a non-GAAP measure:

Three Months Ended December 31,

Year Ended December 31,

(in thousands, except share data)

2025

2024

2025

2024

Income before income taxes

$

4,082

$

2,758

$

10,954

$

9,775

Adjustments:

Interest income, net

(161

)

(104

)

(539

)

(243

)

Depreciation

286

251

1,086

968

Amortization

—

—

—

5

Total adjustments

125

147

547

730

EBITDA

4,207

2,905

11,501

10,505

Non-cash stock compensation

278

151

1,081

636

Adjusted EBITDA

$

4,485

$

3,056

$

12,582

$

11,141

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Adjusted EBITDA increased $1,429 from $3,056 for the three months ended December 31, 2024 to $4,485 for the three months ended December 31, 2025. The increase was primarily due to higher revenues and lower engineering, selling and administrative expenses partially offset by lower gross margin discussed above.

Year ended 2025 compared to Year ended 2024

Adjusted EBITDA increased $1,441 from $11,141 in 2024 to $12,582 in 2025. The increase was primarily due to higher revenues discussed above, continued operating leverage, and lower incentive compensation partially offset by lower gross margin discussed above. Adjusted EBITDA in 2024 included bonus expense of approximately 3.0% of revenues, which was not incurred in 2025.

18

Table of Contents

Liquidity and Capital Resources

Overview

Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities.

Capital refers to our long-term financial resources available to support business operations and future growth.

Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the business, timing of cash flows, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.

As of December 31, 2025 and 2024, Cash and cash equivalents were $20,891 and $12,641, respectively.

Cash Flow Activity

The following table presents the cash flow activity for the period indicated:

As of December 31,

(in thousands)

2025

2024

Cash and cash equivalents, beginning of year

$

12,641

$

3,913

Cash provided by operating activities

10,659

7,521

Cash used in investing activities

(2,551

)

(1,898

)

Cash provided by financing activities

142

3,105

Net change in cash and cash equivalents

8,250

8,728

Cash and cash equivalents, end of year

$

20,891

$

12,641

Operating Activities

Cash provided by operating activities was $10,659 in 2025 compared to $7,521 in 2024, an increase of $3,138 primarily due to the following:

•

Higher net income;

•

Higher non-cash adjustments, including:

◦

Stock-based compensation expense, which increased $445 from $636 in 2024 to $1,081 in 2025; 

◦

Deferred income tax provision, which decreased $1,268 from $212 in 2024 to $1,480 in 2025; 

•

Working capital movements, including:

◦

Accounts receivable, which decreased $186 in 2025 compared to an increase of $2,040 in 2024, reflecting shorter customer payment cycles;

◦

Inventories, net, which increased $164 in 2025 compared to $625 in 2024;

◦

Prepaid expenses and other assets, which increased $1,156 in 2025 compared to $165 in 2024, primarily due to higher income taxes receivable; and

◦

Accounts payable, accrued compensation and other expenses, and other liabilities, which increased $328 in 2025 compared to $889 in 2024, primarily due to the timing of goods received and services performed prior to period end and reflects normal fluctuations in operating activity.

Our working capital metrics were as follows:

As of December 31,

(in thousands)

2025

2024

Current assets

$

61,217

$

29,752

Less: Current liabilities

4,891

5,216

Working capital

$

56,326

$

24,536

Current ratio

12.5

5.7

Management continues to focus on efficiently managing working capital requirements to match operating activity levels and will seek to deploy the Company’s working capital where it will generate the greatest returns.

Investing Activities

Cash used in investing activities was $2,551 in 2025 compared to $1,898 in 2024, an increase of $653 primarily due to the purchase of equipment to support growth and next generation product development.

Financing Activities

Cash provided by financing activities was $142 in 2025 compared to $3,105 in 2024, a decrease of $2,963 primarily due to lower exercises of stock options awarded in December 2023.

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Capital Resources

We believe that existing cash and cash equivalents, marketable securities and cash generated from operations will provide sufficient liquidity to meet our ongoing working capital and capital expenditure requirements for the next 12 months from the date of this filing and for the foreseeable future. The Company’s management continues to strive for profitability both internally and through acquisition.

Our Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential acquisitions or other strategic ventures and stockholders' desire for capital appreciation of their holdings. No cash dividends are expected to be paid for the foreseeable future.

Contractual Obligations

The following table summarizes contractual obligations, in total, and by remaining maturity:

Payments due by Period

(in thousands)

Total Payments

2026

2027

2028

2029

2030

Leases

$

256

$

74

$

74

$

48

$

48

$

12

Revolving credit facility

—

—

—

—

—

—

Delayed draw facility

—

—

—

—

—

—

Total

$

256

$

74

$

74

$

48

$

48

$

12

Leases

Leases represent the future minimum lease payments under our operating leases. We believe that we maintain adequate financial resources to meet the actual required payments under these obligations.

Revolving Credit Facility and Delayed Draw Facility

On December 31, 2025, we entered into an amended and restated credit agreement (the "Credit Agreement") with Fifth Third Bank, National Association ("Fifth Third Bank"), replacing our prior credit facility with Fifth Third Bank (the "Previous Credit Agreement"). The Credit Agreement provides for a $10.0 million revolving credit facility (the "Revolving Facility") and a $10.0 million delayed draw term loan facility (the "Delayed Draw Facility"). Borrowings under the Revolving Facility and the Delayed Draw Facility bear interest at a rate based on the Secured Overnight Financing Rate ("SOFR") plus a margin ranging from 2.00% to 3.00%, determined by the Company's leverage ratio, with a SOFR floor of 0.00%. The Company will pay a fee on the average unused daily amount of the facilities at a rate ranging from 0.20% and 0.30%, determined by the Company's leverage ratio. Amounts outstanding under the Revolving Facility are due at maturity on December 31, 2028, and advances under the Delayed Draw Facility are available for a period of 36 months from the date of the Credit Agreement, with each advance maturing 36 months after funding and subject to quarterly amortization requirements. The Credit Agreement contains various affirmative and negative covenants that are customary for transactions of this type, including limitations on the incurrence of debt and liabilities, as well as financial reporting requirements. The Credit Agreement also imposes certain financial covenants based on the following criteria: (a) Leverage Ratio and (b) Fixed Charge Coverage Ratio (each as defined in the Credit Agreement). All loans pursuant to the Credit Agreement are secured by a first-priority lien on substantially all of the personal property of the Company. See Note 7 – Revolving Credit Agreement to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report for details of the Credit Agreement.

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Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Our significant accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report. Certain accounting policies require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, we evaluate our estimates and assumptions, and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary. The accounting policies described below are those that most frequently require us to make estimates and judgments and, therefore, are critical to understanding our results of operations.

Income Taxes

We account for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes ("ASC 740"), which requires an asset and liability approach for the financial accounting and reporting of income taxes. Under this method, deferred income taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. These balances are measured using the enacted tax rates expected to apply in the year(s) in which these temporary differences are expected to reverse. The effect of a change in tax rates on deferred income taxes is recognized in income in the period when the change is enacted.

Based on consideration of all available evidence regarding their utilization, we record net deferred tax assets to the extent that it is more likely than not that they will be realized. Where, based on the weight of all available evidence, it is more likely than not that some amount of a deferred tax asset will not be realized, we establish a valuation allowance for the amount that, in our judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. In reaching such conclusions, we consider available positive and negative evidence including past operating results, projections of future taxable income, the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Our projections of future taxable income include estimates and assumptions regarding our income and costs, as well as the timing and amount of reversals of taxable temporary differences.

The Company follows a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes. The Company's policy is to include interest and penalties related to uncertain tax positions in income tax expense.

Inventories

We account for inventories at the lower of cost or net realizable value using the FIFO (first-in, first-out) method.

Inventory reserves are determined based on estimated losses that result from inventory that becomes obsolete or for which the Company has excess inventory levels. In determining these estimates, the Company performs an analysis on current demand and usage for each inventory item over historical time periods. Based on that analysis, the Company reserves a percentage of the inventory amount within each time period based on historical demand and usage patterns of specific items in inventory. Actual experience could differ from the amounts estimated requiring adjustments to inventory valuation in future periods.

Recently Issued Accounting Pronouncements

For additional information on recently issued account pronouncements, refer to Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.