[The Merger](index=7&type=section&id=ARTICLE%20I%20THE%20MERGER) This article outlines the merger process, including transaction structure, closing, and effects on equity and operations [The Merger](index=7&type=section&id=Section%201.01%20The%20Merger) Merger Sub will merge into the Company, which will survive as a wholly owned subsidiary of Parent - Merger Sub will merge into the Company, with the Company surviving as a wholly owned subsidiary of Parent[18](index=18&type=chunk) [The Closing](index=7&type=section&id=Section%201.02%20The%20Closing) The merger closing will occur remotely on the second business day after all conditions are met or waived - The closing will take place remotely no later than the second business day after all conditions are satisfied or waived[19](index=19&type=chunk) [Effective Time](index=7&type=section&id=Section%201.03%20Effective%20Time) The merger becomes effective upon filing the Certificate of Merger with the Delaware Secretary of State - The merger's effective time is established by the filing of the Certificate of Merger with the Delaware Secretary of State[20](index=20&type=chunk) [Effects of Merger](index=7&type=section&id=Section%201.04%20Effects%20of%20Merger) The Surviving Company will assume all assets, rights, debts, and liabilities of both the Company and Merger Sub - Post-merger, the Surviving Company assumes all assets and liabilities of both the Company and Merger Sub[21](index=21&type=chunk) [Certificate of Formation and Operating Agreement](index=7&type=section&id=Section%201.05%20Certificate%20of%20Formation%20and%20Operating%20Agreement) The Surviving Company will adopt Merger Sub's operating agreement and an amended certificate of formation, named "Melinta Therapeutics, LLC" - The Surviving Company will adopt Merger Sub's operating agreement and an amended certificate of formation, and its name will be "Melinta Therapeutics, LLC"[22](index=22&type=chunk)[23](index=23&type=chunk) [Manager and Officers](index=8&type=section&id=Section%201.06%20Manager%20and%20Officers) Merger Sub's management team will become the manager and initial officers of the Surviving Company - Merger Sub's existing management team will assume leadership roles in the Surviving Company[24](index=24&type=chunk)[25](index=25&type=chunk) [Closing Deliveries](index=8&type=section&id=Section%201.07%20Closing%20Deliveries) This section details the specific documents and actions required from both Parent and the Company at or before the closing - Parent is required to deliver executed copies of the Escrow, Contingent Payment, and Registration Rights Agreements, along with evidence of Parent Share issuance[26](index=26&type=chunk)[27](index=27&type=chunk) - The Company must deliver executed payoff letters for all Closing Debt, the executed Certificate of Merger, and Option Treatment Agreements covering at least 85% of underlying shares from options and promised equity grants[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Effect on Equity Interests and Company Options](index=10&type=section&id=Section%201.08%20Effect%20on%20Equity%20Interests%20and%20Company%20Options) This section specifies the treatment of all equity at the merger's effective time, including share conversion and option cancellation - Each Company Share converts into the right to receive a portion of the Merger Consideration as defined in the Allocation Schedule[34](index=34&type=chunk) - All outstanding Company Options will be canceled. Holders who sign an Option Treatment Agreement will receive their portion of the Closing Cash Consideration and potential future payments from milestones and net sales[35](index=35&type=chunk) - Unvested Company Options for current employees will be fully accelerated immediately prior to closing[35](index=35&type=chunk) - The Company Equity Plan will be terminated at the Effective Time[38](index=38&type=chunk) [Payment of Merger Consideration](index=11&type=section&id=Section%201.09%20Payment%20of%20Merger%20Consideration) This section details the payment mechanics at closing, including cash, share issuance, and escrow deposits - At closing, Parent will pay the Closing Cash Consideration to Equityholders and issue the Closing Share Consideration to Consenting Company Members[39](index=39&type=chunk) - Parent will deposit the **$4,000,000** Adjustment Escrow Amount with the Escrow Agent and the Members' Representative Reserve with the Members' Representative[40](index=40&type=chunk)[41](index=41&type=chunk)[319](index=319&type=chunk) - Payments to Company Optionholders that are considered compensation will be processed through payroll systems, subject to tax withholding[44](index=44&type=chunk) [Post-Closing Adjustment](index=13&type=section&id=Section%201.10%20Post-Closing%20Adjustment) This section outlines the process for a post-closing true-up of the merger consideration based on final financial calculations - Within 75 days post-closing, Parent will provide a Closing Statement with final calculations of key financial metrics[51](index=51&type=chunk) - The Members' Representative has a 30-day Objection Period to dispute the Closing Statement. Unresolved disputes are submitted to an Independent Expert for a final and binding decision[52](index=52&type=chunk)[53](index=53&type=chunk) - If the final Adjusted Closing Cash Consideration is higher than the estimate, Parent pays the excess; if lower, the shortfall is paid to Parent from the Adjustment Escrow Fund. Adjustments under **$50,000** are disregarded[55](index=55&type=chunk)[56](index=56&type=chunk) [Members' Representative](index=15&type=section&id=Section%201.13%20Members'%20Representative) Deerfield Private Design Fund IV, L.P. is appointed as the exclusive agent for all Equityholders with broad authority - Deerfield Private Design Fund IV, L.P. is appointed as the Members' Representative with exclusive authority to act on behalf of all Equityholders[61](index=61&type=chunk) - The representative is authorized to manage post-closing adjustments, tax matters, contingent payments, and any disputes[61](index=61&type=chunk) - The Members' Representative is indemnified by the Equityholders for costs and is not liable for actions taken in good faith. Expenses are paid from the Members' Representative Reserve[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [Representations and Warranties of the Company](index=18&type=section&id=ARTICLE%20II%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20THE%20COMPANY) This article details the Company's assurances regarding its capital structure, financial health, contracts, and regulatory compliance [Capital Structure](index=18&type=section&id=Section%202.02%20Capital%20Structure) The Company represents its authorized and outstanding membership interests, including preferred shares and options Company Capital Structure (as of Agreement Date) | Security Type | Authorized | Issued and Outstanding | | :--- | :--- | :--- | | **Company Preferred Shares** | 50,000,000 | 50,000,000 | | **Company Common Shares** | 8,825,000 | 0 | | **- Reserved for Equity Plan** | 8,825,000 | N/A | | **- Options Outstanding** | N/A | 8,338,000 (underlying shares) | | **- Available for Future Grants** | N/A | 487,000 (underlying shares) | [Financial Statements; Undisclosed Liabilities](index=22&type=section&id=Section%202.06%20Financial%20Statements%3B%20Undisclosed%20Liabilities) The Company warrants its financial statements comply with GAAP and confirms no undisclosed liabilities exist - The Company has provided audited financial statements for the fiscal year ended December 31, 2024, and unaudited statements for the six-month period ended June 30, 2025[94](index=94&type=chunk) - The Company asserts it has no liabilities of any nature other than those reflected on its June 30, 2025 balance sheet, incurred in the ordinary course since that date, or related to the transaction[95](index=95&type=chunk) [Employee Benefits](index=27&type=section&id=Section%202.10%20Employee%20Benefits) The Company represents its employee benefit plans comply with laws and the merger will not trigger new benefits or parachute payments - All company benefit plans are listed and have been administered in material compliance with ERISA and the Code[125](index=125&type=chunk)[127](index=127&type=chunk) - The merger itself will not trigger any new compensation, accelerated vesting, or other benefits for any Company service provider[131](index=131&type=chunk) - The transaction will not result in any "excess parachute payments" as defined by Section 280G of the tax code[133](index=133&type=chunk) [Material Contracts](index=30&type=section&id=Section%202.12%20Material%20Contracts) The Company has provided a list of its material contracts, warranting their validity and absence of default - Material contracts include those with payments or receipts exceeding **$300,000** in 2024 or 2025[138](index=138&type=chunk) - Contracts with restrictive clauses, such as non-compete or "most favored nations" provisions, are also classified as material[138](index=138&type=chunk) - The Company represents that all listed Material Contracts are in full force and effect, and no party is in material default[141](index=141&type=chunk) [Regulatory Matters](index=33&type=section&id=Section%202.15%20Regulatory%20Matters) The Company represents compliance with Health Laws, proper clinical trials, and manufacturing practices, with a key trial completion date - The Company and its products are in material compliance with all applicable Health Laws, including those from the FDA[147](index=147&type=chunk) - All clinical trials have been conducted in compliance with Good Clinical Practices, and manufacturing adheres to Good Manufacturing Practices[149](index=149&type=chunk)[152](index=152&type=chunk) - Enrollment in the phase III trial of Rezzayo for prophylaxis of certain infections in transplant patients is expected to be complete on or before **October 31, 2025**[164](index=164&type=chunk) [Intellectual Property](index=38&type=section&id=Section%202.17%20Intellectual%20Property) The Company warrants sole ownership of its IP, non-infringement, and protection of trade secrets - The Company asserts sole ownership of all Company Owned IP, free and clear of liens (other than Permitted Liens)[171](index=171&type=chunk) - The Company's business does not infringe on third-party IP, and to its knowledge, no third party is infringing on the Company's material IP[172](index=172&type=chunk) - The merger will not result in the loss, impairment, or required transfer of any Company IP rights[181](index=181&type=chunk) [Top Customers; Top Suppliers](index=43&type=section&id=Section%202.27%20Top%20Customers%3B%20Top%20Suppliers) The Company has provided lists of top customers and suppliers, confirming stable relationships - A list of the top 20 customers and top 20 suppliers for the 12 months ended December 31, 2024, has been provided[196](index=196&type=chunk) - The Company represents that no top customer or supplier has terminated or indicated an intent to terminate their business relationship in the last 12 months[197](index=197&type=chunk) [Representations and Warranties of Parent and Merger Sub](index=44&type=section&id=ARTICLE%20III%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20PARENT%20AND%20MERGER%20SUB) This article details Parent's assurances regarding its capital structure, financial solvency, and SEC compliance [Capital Structure](index=44&type=section&id=Section%203.02%20Capital%20Structure) Parent represents its capital structure, including authorized and outstanding stock, and confirms valid issuance of merger shares Parent Capital Structure (as of August 5, 2025) | Security Type | Authorized | Issued and Outstanding | | :--- | :--- | :--- | | **Parent Common Shares** | 160,000,000 | 74,648,992 | | **Parent Preferred Stock** | 2,000,000 | 91,623 (Series C-3 and E) | - The Parent Shares to be issued as Closing Share Consideration are duly authorized and will be validly issued, fully paid, and non-assessable[203](index=203&type=chunk) [Solvency; Financing](index=46&type=section&id=Section%203.09%20Solvency%3B%20Financing) Parent warrants its solvency and confirms sufficient funds for the merger, with financing not a closing condition - Parent represents it is solvent and will remain so after the merger[212](index=212&type=chunk) - Parent has secured sufficient funds for the transaction through a **$150,000,000** convertible note offering and cash on hand[214](index=214&type=chunk) - The receipt of financing is not a condition precedent to Parent's obligations under the agreement[214](index=214&type=chunk) [SEC Filings](index=47&type=section&id=Section%203.11%20SEC%20Filings) Parent represents its SEC filings are timely, compliant, and free of material misstatements, and its shares are Nasdaq-listed - Parent's SEC reports filed since January 1, 2023, are materially compliant with SEC regulations and do not contain untrue statements of material fact[216](index=216&type=chunk) - Parent is in compliance with Nasdaq listing rules and is not aware of any pending action to delist its shares[216](index=216&type=chunk) [Covenants Relating to Conduct of Business](index=49&type=section&id=ARTICLE%20IV%20COVENANTS%20RELATING%20TO%20CONDUCT%20OF%20BUSINESS) This article outlines the Company's operational restrictions and non-solicitation obligations during the pre-closing period [Conduct of Business of the Company Group](index=49&type=section&id=Section%204.01%20Conduct%20of%20Business%20of%20the%20Company%20Group) The Company must conduct business in the ordinary course and is restricted from certain actions without Parent's consent - The Company must operate in the ordinary course of business between signing and closing[225](index=225&type=chunk) - Key restrictions on the Company without Parent's consent include: - Declaring dividends or repurchasing equity - Issuing new shares or options - Amending its Certificate of Formation or Operating Agreement - Making capital expenditures over **$100,000** - Granting significant increases in employee compensation or benefits[226](index=226&type=chunk)[227](index=227&type=chunk) [No Solicitation](index=54&type=section&id=Section%204.04%20No%20Solicitation) The Company agrees not to solicit or engage in discussions regarding alternative acquisition proposals - The Company is prohibited from soliciting or negotiating any alternative "Acquisition Proposal"[233](index=233&type=chunk) - The Company must immediately cease all existing discussions with other parties and terminate their access to any data rooms[233](index=233&type=chunk) [Additional Agreements](index=54&type=section&id=ARTICLE%20V%20ADDITIONAL%20AGREEMENTS) This article covers mutual efforts for regulatory approvals, employee matters, indemnification, and specific pre-closing distributions [Filings; Other Actions; Notification](index=55&type=section&id=Section%205.04%20Filings%3B%20Other%20Actions%3B%20Notification) Both parties will use best efforts for regulatory approvals, including HSR, and Parent may undertake divestitures - Both parties will use reasonable best efforts to obtain all necessary regulatory approvals, including under the HSR Act[239](index=239&type=chunk) - Parent agrees to undertake Remedy Actions, such as asset sales, to gain antitrust clearance, unless such actions would create a Burdensome Condition[240](index=240&type=chunk) [Employee Matters](index=57&type=section&id=Section%205.05%20Employee%20Matters) Parent commits to comparable employee compensation and benefits for one year post-closing, honoring severance and bonuses - For one year post-closing, Company employees will receive a base salary, bonus opportunities, and benefits no less favorable than what they had prior to the merger[252](index=252&type=chunk) - Parent will honor the Company Severance Plan and the Equity Value Recognition Bonus Plan[253](index=253&type=chunk) - If not paid prior to closing, 2025 annual bonuses will be paid by Parent no later than **March 15, 2026**[254](index=254&type=chunk) [Director and Officer Indemnification](index=60&type=section&id=Section%205.09%20Director%20and%20Officer%20Indemnification) The Surviving Company will assume existing indemnification rights, and the Company will purchase a six-year D&O tail policy - All rights to indemnification for the Company's directors and officers for pre-closing acts will survive the merger for a period of six years[263](index=263&type=chunk) - The Company will purchase a six-year "tail" D&O liability insurance policy, with the cost included as a Transaction Expense[264](index=264&type=chunk) [R&W Policy](index=65&type=section&id=Section%205.14%20R%26W%20Policy) Parent will maintain the R&W insurance policy as the sole recourse for breaches, waiving subrogation except for fraud - Parent will maintain the R&W Policy, which will be the sole recourse for breaches of the Company's representations and warranties post-closing[279](index=279&type=chunk)[311](index=311&type=chunk) - The R&W insurer will waive subrogation rights against Equityholders, except in the case of actual fraud[279](index=279&type=chunk) [Pre-Closing Distribution](index=65&type=section&id=Section%205.16%20Pre-Closing%20Distribution) The Company will distribute its rights to the Feptanbli Product and License Agreement to its members before closing - The Company will assign its rights to the Feptanbli Product and License Agreement to its members before the merger closes[281](index=281&type=chunk) [Conditions Precedent to the Merger](index=65&type=section&id=ARTICLE%20VI%20CONDITIONS%20PRECEDENT%20TO%20THE%20MERGER) This article outlines the mutual and individual conditions that must be satisfied for the merger to close [Conditions to Each Party's Obligation](index=65&type=section&id=Section%206.01%20Conditions%20to%20Each%20Party's%20Obligation) Mutual closing conditions include no legal restraints, Company Member Approval, and HSR Act waiting period expiration - Mutual closing conditions include: - No legal prohibitions on the merger - Company Member Approval has been obtained - HSR Act waiting period has expired or been terminated[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) [Additional Conditions to Obligations of the Company](index=66&type=section&id=Section%206.02%20Additional%20Conditions%20to%20Obligations%20of%20the%20Company) The Company's closing obligation depends on Parent's representations remaining true, covenant compliance, and no Parent Material Adverse Effect - The Company is not obligated to close if Parent has breached its representations or covenants in a material way[288](index=288&type=chunk) - A Parent Material Adverse Effect that is continuing would relieve the Company of its obligation to close[289](index=289&type=chunk) [Additional Conditions to the Obligations of Parent](index=66&type=section&id=Section%206.03%20Additional%20Conditions%20to%20the%20Obligations%20of%20Parent) Parent's closing obligation depends on the Company's representations, covenant compliance, Feptanbli distribution, and no Company Material Adverse Effect - Parent is not obligated to close if the Company has breached its representations or covenants in a material way[292](index=292&type=chunk) - The Pre-Closing Distribution of the Feptanbli asset must have occurred[294](index=294&type=chunk) - A Company Material Adverse Effect that is continuing would relieve Parent of its obligation to close[294](index=294&type=chunk) [Termination, Amendment and Waiver](index=67&type=section&id=ARTICLE%20VII%20TERMINATION%2C%20AMENDMENT%20AND%20WAIVER) This article details the conditions under which the merger agreement can be terminated by either party [Termination](index=67&type=section&id=Section%207.01%20Termination) The agreement can be terminated by mutual consent, if closing is delayed past the Outside Date, or due to material breach - The agreement can be terminated by either party if the merger does not close by the Outside Date of **November 3, 2025**[296](index=296&type=chunk) - Termination is also possible due to a final, non-appealable legal prohibition or an uncured material breach by the other party[297](index=297&type=chunk) - Parent may terminate if the Company fails to deliver the required member approval within 12 hours of signing[297](index=297&type=chunk) [Effect of Termination](index=68&type=section&id=Section%207.02%20Effect%20of%20Termination) Termination voids the agreement, but liability for fraud or willful material breach prior to termination survives - Upon termination, the agreement becomes void, but liability for fraud or a willful and material breach prior to termination survives[299](index=299&type=chunk) [General Provisions](index=69&type=section&id=ARTICLE%20VIII%20GENERAL%20PROVISIONS) This article covers the survival of covenants, governing law, and specific enforcement rights for the agreement [Survival; Non-Recourse](index=69&type=section&id=Section%208.01%20Survival%3B%20Non-Recourse) Representations and warranties do not survive closing, with the R&W policy as Parent's sole recourse for breaches - All representations and warranties made by both parties in the agreement do not survive the closing[304](index=304&type=chunk)[305](index=305&type=chunk) - Parent's sole recourse for any breach of the Company's representations and warranties after closing is limited to claims under the R&W Policy[311](index=311&type=chunk) [Governing Law](index=89&type=section&id=Section%208.08%20Governing%20Law) The agreement and related disputes will be governed by the laws of the State of Delaware - The governing law for the agreement is the State of Delaware[431](index=431&type=chunk) [Specific Enforcement; Jurisdiction](index=89&type=section&id=Section%208.10%20Specific%20Enforcement%3B%20Jurisdiction) Parties agree to seek specific performance and submit to the exclusive jurisdiction of Delaware courts for disputes - Parties are entitled to seek specific performance to enforce the terms of the agreement, as monetary damages are considered inadequate[433](index=433&type=chunk) - All legal proceedings related to the agreement must be brought exclusively in the courts of the State of Delaware[434](index=434&type=chunk) [Exhibits](index=95&type=section&id=Exhibits) This article contains supplementary documents detailing contingent payments, registration rights, and warrant terms [Exhibit E: Form of Contingent Payment Agreement](index=99&type=section&id=EXHIBIT%20E%20Form%20of%20Contingent%20Payment%20Agreement) This exhibit outlines terms for future milestone and net sales payments to former Company members for specific products Rezzayo Product Milestone Payments | Milestone Event | Payment Amount | | :--- | :--- | | FDA approval includes Candida | $20,000,000 | | FDA approval includes Aspergillus | $2,500,000 | | FDA approval includes Pneumocystis | $2,500,000 | - Net Sales Payments will be made quarterly based on a tiered percentage of U.S. Net Sales for the Rezzayo Product and a flat percentage for the Minocin Product[492](index=492&type=chunk) - Parent is obligated to use Commercially Reasonable Efforts to achieve the milestones and to commercialize, promote, and sell each Product[528](index=528&type=chunk)[531](index=531&type=chunk) [Exhibit F: Form of Registration Rights Agreement](index=126&type=section&id=EXHIBIT%20F%20Form%20of%20Registration%20Rights%20Agreement) This agreement grants registration rights for shares received in the merger and includes lock-up provisions - The Company must file a resale registration statement on Form S-3 covering all Registrable Securities[610](index=610&type=chunk) - A Lock-Up Period of up to **120 days** applies to certain "Restricted Shares," with releases scheduled at **60 days** and **120 days** post-closing[656](index=656&type=chunk) - The Company is responsible for all expenses related to the registration, including up to **$35,000** in fees for the Holders' legal counsel per registration[643](index=643&type=chunk) [Exhibit M: Form of Closing Share Warrants](index=156&type=section&id=EXHIBIT%20M%20Form%20of%20Closing%20Share%20Warrants) This exhibit provides the form for pre-funded warrants to purchase Parent's common stock, detailing exercise and limitations - The warrants are pre-funded with a remaining exercise price of only **$0.001** per share[707](index=707&type=chunk) - Warrants can be exercised on a cash or cashless basis at the holder's option[708](index=708&type=chunk)[709](index=709&type=chunk)[710](index=710&type=chunk) - An exercise limitation prevents the holder from beneficially owning more than a specified percentage (e.g., **4.9%**) of the Company's outstanding common stock[729](index=729&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of August 2025 Commission File No.: 000-30668 NOVA LTD. (Translation of registrant's name into English) 5 David Fikes Street, Rehovot, Israel (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F ☒ Fo ...

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This section provides the basic identification details for the quarterly report, including the registrant's name, filing period, stock symbol, and filer status [General Information](index=1&type=section&id=General%20Information) This section details the registrant's identification, filing type, period, stock information, and filer status for the quarterly report - Registrant: **NORTECH SYSTEMS INCORPORATED**[1](index=1&type=chunk) - Filing Type: **Quarterly Report on Form 10-Q**[1](index=1&type=chunk) - Period Ended: **June 30, 2025**[1](index=1&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :----------------------------------------| | Common Stock, par value $.01 per share | NSYS | NASDAQ Capital Market | - Filer Status: **Non-accelerated Filer and Smaller Reporting Company**[3](index=3&type=chunk) - Common Stock Outstanding as of July 31, 2025: **2,786,134 shares**[3](index=3&type=chunk) [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the organizational structure of the Form 10-Q, detailing the main parts and items, along with their corresponding page numbers, to facilitate navigation through the financial and other information [Report Structure](index=3&type=section&id=Report%20Structure) This section details the Form 10-Q's two main parts, financial and other information, and their respective items for navigation - The report is divided into two main parts: **PART I – FINANCIAL INFORMATION** and **PART II – OTHER INFORMATION**[4](index=4&type=chunk) - PART I includes Financial Statements, Management's Discussion and Analysis, Quantitative and Qualitative Disclosures About Market Risk, and Controls and Procedures[4](index=4&type=chunk) - PART II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, Defaults on Senior Securities, Mine Safety Disclosures, Other Information, and Exhibits[4](index=4&type=chunk) [PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls and procedures [Item 1 - Financial Statements](index=4&type=section&id=Item%201%20-%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including the statements of operations, balance sheets, cash flows, and shareholders' equity, along with comprehensive notes providing detailed explanations and disclosures [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) show a significant increase in net income for the three months ended June 30, 2025, compared to the prior year, while the six-month period reflects a net loss, primarily due to decreased net sales and higher operating expenses Net Sales and Profitability (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $30,675 | $33,891 | $57,570 | $68,106 | | Gross profit | $4,837 | $4,617 | $7,915 | $10,065 | | Income (loss) from operations | $742 | $344 | $(871) | $1,499 | | Net income (loss) | $313 | $157 | $(1,003) | $922 | | Basic EPS | $0.12 | $0.06 | $(0.36) | $0.34 | | Diluted EPS | $0.12 | $0.05 | $(0.36) | $0.32 | | Comprehensive income (loss), net of tax | $437 | $(18) | $(873) | $564 | - Net sales decreased by **9.5%** for the three months and **15.5%** for the six months ended June 30, 2025, compared to the prior year[6](index=6&type=chunk) - Net income for the three months ended June 30, 2025, more than doubled to **$313 thousand** from **$157 thousand** in the prior year, while the six-month period shifted from a net income of **$922 thousand** to a net loss of **$(1,003) thousand**[6](index=6&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets show an increase in total assets and total liabilities as of June 30, 2025, compared to December 31, 2024, while total shareholders' equity experienced a slight decrease Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total assets | $74,825 | $72,435 | | Total liabilities | $41,437 | $38,430 | | Total shareholders' equity | $33,388 | $34,005 | | Cash | $652 | $916 | | Accounts receivable, net | $17,810 | $14,875 | | Inventories, net | $18,628 | $21,638 | | Long-term line of credit | $11,615 | $8,634 | - Total assets increased by **$2,390 thousand**, driven by higher accounts receivable and contract assets, partially offset by a decrease in inventories[9](index=9&type=chunk) - Total liabilities increased by **$3,007 thousand**, primarily due to an increase in the long-term line of credit[9](index=9&type=chunk) - Total shareholders' equity decreased by **$617 thousand**, mainly due to the net loss for the six months ended June 30, 2025[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows indicate increased cash usage in operating activities and decreased cash usage in investing activities for the six months ended June 30, 2025, compared to the prior year, with financing activities providing more cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,773) | $(1,458) | | Net cash used in investing activities | $(358) | $(1,011) | | Net cash provided by financing activities | $2,858 | $2,343 | | Net change in cash | $(264) | $(133) | - Cash used in operating activities increased by **$1,315 thousand**, primarily due to changes in accounts receivable and contract assets, partially offset by cash provided by inventory[11](index=11&type=chunk) - Cash used in investing activities decreased by **$653 thousand**, mainly due to lower purchases of property and equipment[11](index=11&type=chunk) - Cash provided by financing activities increased by **$515 thousand**, driven by higher net proceeds from the line of credit[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) The Condensed Consolidated Statements of Shareholders' Equity show a decrease in total shareholders' equity for the six months ended June 30, 2025, primarily due to a net loss, partially offset by foreign currency translation adjustments and stock-based compensation Shareholders' Equity Changes (in thousands) | Metric | Balance as of Dec 31, 2024 | Net Loss (6M 2025) | Foreign Currency Translation (6M 2025) | Stock Option Exercises (6M 2025) | Stock-Based Awards (6M 2025) | Balance as of June 30, 2025 | | :-------------------------------- | :------------------------- | :------------------- | :------------------------------------- | :------------------------------- | :----------------------------- | :-------------------------- | | Preferred Stock | $250 | - | - | - | - | $250 | | Common Stock | $28 | - | - | - | - | $28 | | Additional Paid-In Capital | $17,329 | - | - | $21 | $235 | $17,585 | | Accumulated Other Comprehensive Loss | $(977) | - | $130 | - | - | $(847) | | Retained Earnings | $17,375 | $(1,003) | - | - | - | $16,372 | | Total Shareholders' Equity | $34,005 | $(1,003) | $130 | $21 | $235 | $33,388 | - Total shareholders' equity decreased from **$34,005 thousand** at December 31, 2024, to **$33,388 thousand** at June 30, 2025[15](index=15&type=chunk) - The net loss of **$(1,003) thousand** for the six months ended June 30, 2025, was the primary driver of the decrease in retained earnings[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The Notes to Condensed Consolidated Financial Statements provide essential context and detailed breakdowns for the financial figures, covering accounting policies, credit risk, sales, financing, leases, stock awards, income taxes, segment information, restructuring, related party transactions, and subsequent events [NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%201.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation, principles of consolidation, use of estimates, and recently issued accounting standards, emphasizing compliance with U.S. GAAP and the evaluation of new ASUs and tax legislation - Financial statements are prepared in accordance with **U.S. GAAP** for interim financial information and **SEC rules**[17](index=17&type=chunk) - The Company adopted **ASU 2023-07 (Segment Reporting)** in Q4 2024 and is evaluating **ASU 2023-09 (Income Taxes)** and **ASU 2024-03 (Expense Disaggregation Disclosures)** for future impact[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted in July 2025, makes permanent key elements of the Tax Cuts and Jobs Act of 2017, and the Company is evaluating its potential effects[23](index=23&type=chunk) Inventories, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $18,570 | $21,122 | | Work in process | $802 | $892 | | Finished goods | $1,053 | $1,070 | | Reserves | $(1,797) | $(1,446) | | **Inventories, net** | **$18,628** | **$21,638** | - The Blue Earth manufacturing facility and related land were classified as **held for sale** as of June 30, 2025, and the sale was completed in July 2025 for **$500 thousand**[28](index=28&type=chunk) [NOTE 2. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS](index=10&type=section&id=NOTE%202.%20CONCENTRATION%20OF%20CREDIT%20RISK%20AND%20MAJOR%20CUSTOMERS) This note highlights the company's exposure to credit risk, particularly concerning cash balances held in foreign banks and significant customer concentrations in net sales, accounts receivable, and contract assets - As of June 30, 2025, **$573 thousand** of the **$652 thousand** cash balance was held at banks in China and **$5 thousand** in Mexico[30](index=30&type=chunk) Major Customers' Contribution to Net Sales | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer A | 31% | 26% | 31% | 25% | | Customer B | 10% | -% | 10% | -% | | **Total** | **41%** | **26%** | **41%** | **25%** | Major Customers' Contribution to Accounts Receivable and Contract Assets | Category | Customer | June 30, 2025 | December 31, 2024 | | :--------------- | :--------- | :-------------- | :---------------- | | Accounts Receivable | Customer A | 22% | 23% | | | Customer C | 10% | 13% | | | **Total** | **32%** | **36%** | | Contract Assets | Customer A | 30% | 33% | | | Customer D | 16% | 12% | | | **Total** | **46%** | **45%** | [NOTE 3. NET SALES](index=12&type=section&id=NOTE%203.%20NET%20SALES) This note details the company's revenue recognition, with contract manufacturing agreements recognized over time accounting for a significant portion of net sales, and provides a breakdown of net sales by market segment - Revenue recognized over time from contract manufacturing agreements accounted for **75%** of net sales for both the three and six months ended June 30, 2025[34](index=34&type=chunk) Net Sales by Market (in thousands) | Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Medical Device | $7,550 | $9,689 | $15,620 | $19,893 | | Medical Imaging | $9,664 | $8,182 | $18,252 | $17,083 | | Industrial | $8,516 | $9,385 | $15,461 | $18,977 | | Aerospace and Defense | $4,945 | $6,635 | $8,237 | $12,153 | | **Total net sales** | **$30,675** | **$33,891** | **$57,570** | **$68,106** | - Contract assets, representing unbilled amounts for revenue recognized over time, increased from **$13,792 thousand** at December 31, 2024, to **$14,984 thousand** at June 30, 2025[39](index=39&type=chunk) [NOTE 4. FINANCING ARRANGEMENTS](index=14&type=section&id=NOTE%204.%20FINANCING%20ARRANGEMENTS) This note details the company's $15,000 thousand Senior Secured Revolving Line of Credit, including multiple amendments made in 2025 to waive covenant non-compliance, adjust compliance thresholds, modify EBITDA requirements, and extend the expiration date - The Company has a **$15,000 thousand Senior Secured Revolving Line of Credit** with Bank of America, expiring on **August 31, 2026**, following the Third Amendment[40](index=40&type=chunk)[43](index=43&type=chunk) - The Revolver requires maintaining a leverage ratio of no more than **2.5 times** and a minimum fixed charges coverage ratio of at least **1.25 times**, with compliance deferred until Q4 2025[41](index=41&type=chunk)[42](index=42&type=chunk) - Minimum adjusted EBITDA requirements are set at **$1,000 thousand** for Q2 2025, **$1,300 thousand** for Q3 2025, and **$1,600 thousand** for Q4 2025 and thereafter[42](index=42&type=chunk) - The borrowing rate increased by **100 basis points** with the First Amendment and an additional **25 basis points** with the Second Amendment[41](index=41&type=chunk)[42](index=42&type=chunk) Revolver Borrowings and Availability (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Outstanding borrowings | $11,615 | $8,695 | | Weighted-average interest rate | 7.8% | 7.7% | | Unused availability | $3,385 | N/A | [NOTE 5. LEASES](index=16&type=section&id=NOTE%205.%20LEASES) This note provides a breakdown of lease expenses, assets, and liabilities for both operating and finance leases, along with future payment obligations and weighted-average lease terms and discount rates Total Lease Cost (in thousands) | Lease Cost Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $564 | $581 | $1,129 | $1,177 | | Finance lease interest cost | $9 | $6 | $15 | $12 | | Finance lease amortization expense | $33 | $129 | $85 | $129 | | **Total lease cost** | **$606** | **$716** | **$1,229** | **$1,318** | Leased Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Finance lease assets | $878 | $411 | | Operating lease assets | $7,563 | $8,139 | | **Total leased assets** | **$8,441** | **$8,550** | | Current operating lease liabilities | $1,237 | $1,175 | | Current finance lease liabilities | $229 | $143 | | Long-term operating lease obligations | $7,145 | $7,773 | | Long-term finance lease obligations | $781 | $311 | | **Total lease liabilities** | **$9,392** | **$9,402** | Future Annual Lease Payments (in thousands) | Year | Operating Leases | Finance Leases | Total | | :---------------- | :--------------- | :------------- | :------ | | Remainder of 2025 | $925 | $144 | $1,069 | | 2026 | $1,864 | $320 | $2,184 | | 2027 | $1,571 | $212 | $1,783 | | 2028 | $1,569 | $212 | $1,781 | | 2029 | $986 | $197 | $1,183 | | Thereafter | $4,669 | $67 | $4,736 | | **Total lease payments** | **$11,584** | **$1,152** | **$12,736** | | Less: imputed interest | $(3,202) | $(142) | $(3,344) | | **Present value of lease liabilities** | **$8,382** | **$1,010** | **$9,392** | [NOTE 6. STOCK BASED AWARDS](index=18&type=section&id=NOTE%206.%20STOCK%20BASED%20AWARDS) This note details the stock-based compensation expense, stock option activity, and restricted stock unit (RSU) activity, including grants, exercises, forfeitures, and unrecognized compensation Stock-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Three months ended June 30 | $117 | $126 | | Six months ended June 30 | $235 | $206 | - **43,382 service-based stock options** were granted during the six months ended June 30, 2025, with a weighted average grant date fair value of **$5.21**[51](index=51&type=chunk) - As of June 30, 2025, there was **$764 thousand** of unrecognized compensation related to stock options, to be recognized over **2.66 years**[51](index=51&type=chunk) - **43,664 RSUs** were granted during the six months ended June 30, 2025, at an average grant price of **$8.73**[53](index=53&type=chunk) - As of June 30, 2025, total unrecognized compensation expense related to RSUs was **$356 thousand**, vesting over **1.8 years**[53](index=53&type=chunk) [NOTE 7. NET INCOME (LOSS) PER SHARE DATA](index=20&type=section&id=NOTE%207.%20NET%20INCOME%20(LOSS)%20PER%20SHARE%20DATA) This note details the calculation of basic and diluted net income (loss) per common share, including the weighted-average number of shares outstanding and the impact of potential common stock equivalents Weighted Average Shares Outstanding | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average shares outstanding | 2,773,598 | 2,760,052 | 2,767,263 | 2,751,330 | | Diluted weighted average shares outstanding | 2,954,765 | 2,935,671 | 2,767,263 | 2,922,113 | - For the six months ended June 30, 2025, **504,194 restricted stock units and stock options** were excluded from diluted EPS computation as their inclusion would be anti-dilutive due to the net loss[56](index=56&type=chunk) [NOTE 8. INCOME TAXES](index=20&type=section&id=NOTE%208.%20INCOME%20TAXES) This note discusses the company's effective tax rates for the three and six months ended June 30, 2025 and 2024, highlighting changes in pretax income (loss) and foreign entity taxes as primary drivers Effective Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Three months ended | 35% | 12% | | Six months ended | 25% | 21% | - The primary drivers of the increase in effective tax rate were changes in pretax (loss) income and taxes on foreign entities[59](index=59&type=chunk) [NOTE 9. SEGMENT INFORMATION](index=21&type=section&id=NOTE%209.%20SEGMENT%20INFORMATION) This note clarifies that the company operates as a single operating and reporting segment, Contract Manufacturing, within the EMS industry, and provides a geographical breakdown of net sales and long-lived tangible assets - The Company operates as a **single operating and reporting segment: Contract Manufacturing** within the EMS industry[60](index=60&type=chunk) - Over **50% of net sales** come from medical-related markets (Medical Device and Medical Imaging)[60](index=60&type=chunk) Net Sales by Geography (in thousands) | Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $18,005 | $22,480 | $34,315 | $46,009 | | Mexico | $7,895 | $7,571 | $14,475 | $14,357 | | China | $4,775 | $3,840 | $8,780 | $7,740 | | **Total net sales** | **$30,675** | **$33,891** | **$57,570** | **$68,106** | Long-Lived Tangible Assets by Geography (in thousands) | Location | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | United States | $9,326 | $10,429 | | Mexico | $2,195 | $2,445 | | China | $1,485 | $1,497 | | **Total** | **$13,006** | **$14,371** | [NOTE 10. RESTRUCTURING CHARGES](index=21&type=section&id=NOTE%2010.%20RESTRUCTURING%20CHARGES) This note details the restructuring charges incurred during the six months ended June 30, 2025, related to the closure and consolidation of the Blue Earth, Minnesota facility and additional staff reductions - The Company incurred **$266 thousand** in restructuring charges during the six months ended June 30, 2025, related to the Blue Earth facility and staff reductions[62](index=62&type=chunk) - No restructuring charges were recorded in the three months ended June 30, 2025[62](index=62&type=chunk) Restructuring Activity (Six Months Ended June 30, 2025, in thousands) | Category | Facility Consolidation | Workforce Reductions | Total | | :-------------------- | :--------------------- | :------------------- | :------ | | December 31, 2024 | $154 | - | $154 | | Charges | $31 | $235 | $266 | | Cash payments | $(185) | $(235) | $(420) | | **June 30, 2025** | **-** | **-** | **-** | [NOTE 11. RELATED PARTY TRANSACTIONS](index=22&type=section&id=NOTE%2011.%20RELATED%20PARTY%20TRANSACTIONS) This note describes transactions with related parties, including the write-off of receivables from Abilitech Medical and a grant collaboration with Marpe Technologies, where the Company will receive exclusive manufacturing rights - Accounts receivable related to Abilitech Medical, Inc (minority-owned by the Chairman) were written off in **2024** as Abilitech ceased operations[65](index=65&type=chunk) - The Company collaborated with Marpe Technologies (minority-owned by the Chairman) to secure a **$1,000 thousand BIRD Foundation grant**, with each party receiving **$500 thousand** and contributing a matching **$500 thousand**[66](index=66&type=chunk) - The Company's contribution to Marpe Technologies was through services at cost or no cost, in exchange for a **10-year exclusive right** to manufacture Marpe's products[66](index=66&type=chunk) [NOTE 12. SUBSEQUENT EVENTS](index=22&type=section&id=NOTE%2012.%20SUBSEQUENT%20EVENTS) This note reports two significant events that occurred after the reporting period: the sale of the Blue Earth facility and the Third Amendment to the Revolver line of credit agreement - On **July 24, 2025**, the Blue Earth facility was sold for **$500 thousand**[67](index=67&type=chunk) - On **July 29, 2025**, the Revolver line of credit agreement was amended (Third Amendment) to extend its expiration to **August 31, 2026**[67](index=67&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including detailed analysis of sales, expenses, cash flows, and liquidity, along with forward-looking statements and associated risks [Overview](index=23&type=section&id=Overview) The company operates as a full-service global EMS contract manufacturer in Medical Device, Medical Imaging, Aerospace and Defense, and Industrial markets, focusing on complex electromedical and electromechanical products, with strategic investments aimed at growth and efficiency - Nortech Systems is a **Minnesota-based global EMS contract manufacturer** specializing in complex electromedical and electromechanical products[68](index=68&type=chunk) - Key markets include **Medical Device, Medical Imaging, Aerospace and Defense, and Industrial**[68](index=68&type=chunk) - Strategic focus areas include expanding and diversifying the customer base, lean manufacturing, quality improvements, and capitalizing on growth opportunities in medical markets[69](index=69&type=chunk)[70](index=70&type=chunk) [Restructuring Activities](index=23&type=section&id=Restructuring%20Activities) The company initiated a restructuring plan in fiscal year 2024, involving the closure of its Blue Earth, MN facility and staff reductions, incurring total charges of $837 thousand, with $266 thousand recorded in the first six months of 2025 - Restructuring plan initiated in **fiscal year 2024** related to the closure of the Blue Earth, MN facility[72](index=72&type=chunk) - Total restructuring charges amounted to **$837 thousand**, with **$266 thousand** incurred in the six months ended June 30, 2025[72](index=72&type=chunk) - No restructuring charges were recorded in the three months ended June 30, 2025[72](index=72&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) The company experienced a decline in net sales for both the three and six-month periods ended June 30, 2025, primarily due to customer approval delays, manufacturing inefficiencies, and inventory re-balancing, impacting overall profitability despite some gross margin improvements [Net Sales](index=23&type=section&id=Net%20Sales) Net sales decreased by 9.5% for the three months and 15.5% for the six months ended June 30, 2025, primarily due to delays in Aerospace and Defense customer approvals, manufacturing inefficiencies from plant consolidation, and inventory re-balancing in Medical Device Net Sales by Market (in thousands) | Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Medical Device | $7,550 | $9,689 | $(2,139) | (22.1)% | | Medical Imaging | $9,664 | $8,182 | $1,482 | 18.1% | | Industrial | $8,516 | $9,385 | $(869) | (9.3)% | | Aerospace and Defense | $4,945 | $6,635 | $(1,690) | (25.5)% | | **Total net sales** | **$30,675** | **$33,891** | **$(3,216) | (9.5)%** | Net Sales by Market (Six Months Ended June 30, in thousands) | Market | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Medical Device | $15,620 | $19,893 | $(4,273) | (21.5)% | | Medical Imaging | $18,252 | $17,083 | $1,169 | 6.8% | | Industrial | $15,461 | $18,977 | $(3,516) | (18.5)% | | Aerospace and Defense | $8,237 | $12,153 | $(3,916) | (32.2)% | | **Total net sales** | **$57,570** | **$68,106** | **$(10,536) | (15.5)%** | - Medical Device sales decreased due to **inventory re-balancing** and lower productivity from facility consolidation[78](index=78&type=chunk) - Medical Imaging sales increased due to **higher sales to existing customers**[78](index=78&type=chunk) - Aerospace and Defense sales decreased significantly due to **delays in customer approvals** following business consolidation into the Bemidji facility[78](index=78&type=chunk) [Backlog](index=24&type=section&id=Backlog) The 90-day shipment backlog slightly decreased, while the total order backlog increased by 14.7% from the beginning of the quarter and 6.9% year-over-year, primarily driven by large medical device orders - 90-day shipment backlog as of June 30, 2025, was **$26,592 thousand**, a **0.6% decrease** from the beginning of the quarter and an **11.6% decrease** from June 30, 2024[75](index=75&type=chunk) - Total order backlog as of June 30, 2025, was **$78,351 thousand**, a **14.7% increase** from the beginning of the quarter and a **6.9% increase** year-over-year, driven by large medical device orders[76](index=76&type=chunk) Backlog by Market (in thousands) | Market | 90 Day Backlog (June 30, 2025) | Total Backlog (June 30, 2025) | 90 Day Backlog (June 30, 2024) | Total Backlog (June 30, 2024) | | :-------------------- | :----------------------------- | :---------------------------- | :----------------------------- | :---------------------------- | | Medical Device | $7,897 | $32,222 | $8,130 | $23,497 | | Medical Imaging | $5,101 | $7,584 | $7,776 | $10,953 | | Industrial | $6,010 | $9,349 | $6,398 | $11,423 | | Aerospace and Defense | $7,584 | $29,196 | $7,791 | $27,423 | | **Total backlog** | **$26,592** | **$78,351** | **$30,095** | **$73,296** | [Operating Costs and Expenses](index=25&type=section&id=Operating%20Costs%20and%20Expenses) Operating costs and expenses showed mixed trends, with gross margin improving quarterly but declining year-to-date, selling expenses increasing due to realignment, and general and administrative expenses decreasing due to lower incentive compensation [Gross profit and gross margins](index=25&type=section&id=Gross%20profit%20and%20gross%20margins) Gross profit as a percentage of net sales increased for the three months ended June 30, 2025, due to improved plant utilization and favorable sales mix, but decreased for the six-month period due to lower net sales and reduced manufacturing efficiencies Gross Profit and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $4,837 | $4,617 | $7,915 | $10,065 | | Gross margin percentage | 15.8% | 13.6% | 13.7% | 14.8% | - Quarterly gross margin increased by **220 basis points**, while year-to-date gross margin decreased by **110 basis points**[80](index=80&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) [Selling expenses](index=26&type=section&id=Selling%20expenses) Selling expenses, as a percentage of net sales, increased for both the three and six-month periods ended June 30, 2025, primarily due to the realignment of customer-facing managers from operations to business development and the impact of fixed costs on a lower revenue base Selling Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling expenses | $1,204 | $909 | $2,388 | $1,714 | | % of Net sales | 3.9% | 2.7% | 4.1% | 2.5% | - Selling expenses increased by **$295 thousand (32.5%)** quarterly and **$674 thousand (39.3%)** year-to-date[80](index=80&type=chunk)[82](index=82&type=chunk) [General and administrative expenses](index=26&type=section&id=General%20and%20administrative%20expenses) General and administrative expenses decreased for both the three and six-month periods ended June 30, 2025, primarily due to lower incentive compensation accruals General and Administrative Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $2,589 | $2,982 | $5,504 | $6,152 | | % of Net sales | 8.4% | 8.8% | 9.6% | 9.0% | - General and administrative expenses decreased by **$393 thousand (13.2%)** quarterly and **$648 thousand (10.5%)** year-to-date[80](index=80&type=chunk)[82](index=82&type=chunk) [Research and development](index=25&type=section&id=Research%20and%20development) Research and development expenses remained relatively stable for both the three and six-month periods ended June 30, 2025 Research and Development Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $302 | $291 | $628 | $609 | | % of Net sales | 1.0% | 0.9% | 1.1% | 0.9% | [Restructuring charges](index=26&type=section&id=Restructuring%20charges) Restructuring charges were $0 for the three months ended June 30, 2025, but $266 thousand for the six-month period, primarily due to severance charges for staff reductions and expenses related to the closed Blue Earth facility Restructuring Charges (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restructuring charges | $0 | $91 | $266 | $91 | | % of Net sales | 0.0% | 0.2% | 0.5% | 0.2% | - The six-month charges included **$235 thousand** for severance and **$31 thousand** for Blue Earth facility expenses[87](index=87&type=chunk) [Operating (loss) income](index=26&type=section&id=Operating%20(loss)%20income) Operating income increased for the three months ended June 30, 2025, driven by improved gross margin and lower incentive compensation, but the six-month period resulted in an operating loss due to decreased net sales and gross margin Operating (Loss) Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating (loss) income | $742 | $344 | $(871) | $1,499 | | % of Net sales | 2.4% | 1.0% | (1.5)% | 2.3% | - Quarterly operating income increased by **$398 thousand (115.7%)**, while year-to-date operating income shifted to a loss of **$(871) thousand** from a **$1,499 thousand** income[80](index=80&type=chunk)[82](index=82&type=chunk)[88](index=88&type=chunk) [Interest expense](index=26&type=section&id=Interest%20expense) Interest expense increased for both the three and six-month periods ended June 30, 2025, primarily due to higher borrowings under the line of credit arrangement Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $257 | $165 | $471 | $332 | - Interest expense increased by **$92 thousand** quarterly and **$139 thousand** year-to-date[89](index=89&type=chunk) [Income taxes](index=26&type=section&id=Income%20taxes) The effective tax rate for the three and six months ended June 30, 2025, increased compared to the prior year, primarily driven by changes in pretax (loss) income and taxes on foreign entities Effective Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :--------------- | :-------------- | :-------------- | | Three months ended | 35% | 12% | | Six months ended | 25% | 21% | - The **One Big Beautiful Bill Act (OBBBA)**, enacted in July 2025, makes permanent key elements of the Tax Cuts and Jobs Act of 2017, and the Company is evaluating its potential effects[91](index=91&type=chunk) [Cash Flow Operating Results](index=26&type=section&id=Cash%20Flow%20Operating%20Results) Cash used in operating activities increased significantly for the six months ended June 30, 2025, primarily due to changes in accounts receivable and contract assets, while investing activities used less cash and financing activities provided more cash from the line of credit Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(2,773) | $(1,458) | | Investing activities | $(358) | $(1,011) | | Financing activities | $2,858 | $2,343 | | Effect of exchange rates on changes in cash and cash equivalents | $9 | $(7) | | **Net change in cash and cash equivalents** | **$(264)** | **$(133)** | - Cash used in operating activities increased by **$1,315 thousand**, mainly due to **$4,034 thousand** cash used by accounts receivable and contract assets[92](index=92&type=chunk) - Cash provided by inventory was **$2,714 thousand** in 2025, compared to cash used of **$1,288 thousand** in 2024, reflecting inventory reduction efforts[92](index=92&type=chunk) - Cash used in investing activities decreased by **$653 thousand**, primarily due to lower capital expenditures[93](index=93&type=chunk) - Cash provided by financing activities increased by **$515 thousand**, driven by line of credit advances for working capital[93](index=93&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company believes its existing financing arrangements and anticipated cash flows will be sufficient for the next twelve months, despite past non-compliance with credit covenants that required multiple amendments to its revolving line of credit - Management believes existing financing, anticipated cash flows, and cash on hand will be sufficient for working capital, capital expenditures, and debt repayments for the next twelve months[94](index=94&type=chunk) - The **$15,000 thousand Senior Secured Revolving Line of Credit (Revolver)** was amended three times in 2025 to waive past covenant non-compliance, defer future compliance, adjust EBITDA requirements, and extend the expiration to **August 31, 2026**[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - As of June 30, 2025, outstanding borrowings on the Revolver were **$11,615 thousand** with **$3,385 thousand** unused availability, subject to a minimum liquidity requirement of **$2,500 thousand**[99](index=99&type=chunk)[97](index=97&type=chunk) - The company has implemented plant optimization activities and cost-cutting initiatives to address losses and reduce borrowings in the remainder of 2025[101](index=101&type=chunk) [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has not engaged in any off-balance sheet arrangements as defined by SEC regulations - The Company has not engaged in any off-balance sheet activities[102](index=102&type=chunk) [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, highlighting various unpredictable factors that could cause actual results to differ materially from expectations, and disclaims any obligation to update such statements - Statements in the report that are not historical facts are forward-looking statements made pursuant to the safe-harbor provisions of the **Private Securities Litigation Reform Act of 1995**[103](index=103&type=chunk) - Factors that could cause actual results to differ include market volatility, sufficiency of financing, supply chain disruptions, human resource availability, increased competition, facility reliability, raw material costs, regulatory compliance, and general economic conditions[103](index=103&type=chunk) - The Company undertakes no obligation to update publicly any forward-looking statement[104](index=104&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reporting period - This item is not applicable[106](index=106&type=chunk) [Item 4 - Controls and Procedures](index=29&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the most recently completed fiscal quarter [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Disclosure controls and procedures were evaluated by management, with **CEO and CFO participation**[107](index=107&type=chunk) - Conclusion: **Disclosure controls and procedures were effective**[107](index=107&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[108](index=108&type=chunk) [PART II – OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, defaults on senior securities, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings and claims that arise in the ordinary course of its business operations - The Company is subject to various legal proceedings and claims in the ordinary course of business[110](index=110&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors, specifically highlighting the risks associated with non-compliance with credit agreement covenants, which required multiple amendments and waivers, and the potential for future impairment charges on long-lived assets - The Company was not in compliance with financial covenants related to Mexican operating expense contributions in **Q1 and Q2 2024**, and received a waiver[112](index=112&type=chunk) - Multiple amendments (First, Second, Third) to the Revolver were signed in **2025** to waive non-compliance with leverage and fixed charge ratios, modify EBITDA levels, and extend the Revolver's duration[113](index=113&type=chunk) - Failure to comply with future covenants could lead to inability to secure additional financing or acceleration of debt repayment[114](index=114&type=chunk) - As of June 30, 2025, no long-lived asset impairment was required, but future declines in fair value could lead to impairment losses[116](index=116&type=chunk) [Item 2 - Unregistered Sales of Equity Securities, Use of Proceeds](index=30&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - None[117](index=117&type=chunk) [Item 3 - Defaults on Senior Securities](index=30&type=section&id=Item%203%20-%20Defaults%20on%20Senior%20Securities) This section indicates that there were no defaults on senior securities to report for the period - None[118](index=118&type=chunk) [Item 4 - Mine Safety Disclosures](index=30&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Not applicable[120](index=120&type=chunk) [Item 5 - Other Information](index=31&type=section&id=Item%205%20-%20Other%20Information) This section indicates that there is no other information to report for the period - None[121](index=121&type=chunk) [Item 6 - Exhibits](index=31&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and XBRL formatted financial statements - Exhibits include certifications of the **CEO and CFO (31.1, 31.2, 32)**[123](index=123&type=chunk) - Financial statements from the quarterly report are provided in **XBRL format (101, 104)**[123](index=123&type=chunk) [SIGNATURES](index=32&type=section&id=SIGNATURES) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the submission of the quarterly report on behalf of Nortech Systems Incorporated [Report Signatures](index=32&type=section&id=Report%20Signatures) This section presents the official signatures of the CEO and CFO, certifying the quarterly report submission for Nortech Systems Incorporated - The report is signed by **Jay D. Miller, Chief Executive Officer and President**, and **Andrew D. C. LaFrence, Chief Financial Officer and Senior Vice President of Finance**[125](index=125&type=chunk) - Signatures are dated **August 7, 2025**[125](index=125&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-41971 SUNRISE REALTY TRUST, INC. (Exact name of registrant as specified in its charter) Maryland 93-3168928 (State or ot ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number 001-37553 REGENXBIO Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 47-1851754 (State ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number: 001-39411 Vital Farms, Inc. (Exact name of registrant as specified in its charter) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 2025 OR WASHINGTON, D.C. 20549 Securities register ...

FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number: 001-39871 SAB BIOTHERAPEUTICS, INC. (Mark One) (Exact Name of Registrant as Specified in its Charter) Del ...

THE TILE SHOP REPORTS SECOND QUARTER 2025 RESULTS Exhibit 99.1 MINNEAPOLIS – August 7, 2025 – Tile Shop Holdings, Inc. (Nasdaq: TTSH) (the "Company"), a specialty retailer of natural stone, man-made and luxury vinyl tiles, today announced results for its second quarter ended June 30, 2025. Second Quarter 2025 Summary Net Sales Decreased 3.4% Comparable Store Sales Decreased 3.5% Gross Margin of 64.4% Net Income of $0.4 Million and Adjusted EBITDA of $4.9 Million No Debt Outstanding and $27.8 million of Cash ...

For the quarterly period ended June 30, 2025 OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _____________________ Commission File Number: 001-42121 Rapport Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter ...

Second-Quarter 2025 Detailed Supplemental Information | | | | 2024 | | | | 2025 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Full Year | 1st Qtr | 2nd Qtr | 3rd Qtr 4th Qtr | YTD | | $ Millions, Except as Indicated | | | | | | | | | | | CONSOLIDATED INCOME STATEMENT | | | | | | | | | | | Revenues and Other Income | | | | | | | | | | | Sales and other operating revenues | 13,848 | 13,620 | 13,041 | 14,236 | 54,745 | 16,517 | 14,004 | | 30,521 ...