Financial Data and Key Metrics Changes - For the second quarter, revenue increased slightly to $5,160,000 compared to $5,130,000 in the previous quarter, marking the sixth consecutive quarter of revenue over $5,000,000 [20][29] - Net income for the quarter increased 27% to $431,000 compared to $340,000 last year, reflecting higher gross profit and lower operating expenses [20][33] - For the first half of fiscal year 2026, total sales reached a record $10,300,000, up from $10,190,000 in the previous year, with net income increasing 36% to $917,000 [23][37] Business Line Data and Key Metrics Changes - Medical market sales increased by 150% year over year to $1,000,000, driven by balloon coating systems shipped to the U.S., Europe, and China [19][22] - Integrated Coatings Systems sales decreased by 24% to $1,530,000, primarily due to a customer-requested delivery delay [21] - OEM sales increased by 92% to $394,000, driven by strong shipments to Fluxer OEMs and new optics-related OEM wins [21] Market Data and Key Metrics Changes - U.S.-Canada sales decreased by 22% year over year, driven by slowing momentum in the clean energy industry [20] - Sales in Asia increased by 153% year over year, with major growth in China and other parts of Asia [20] - EMEA sales increased by 25%, while Latin America sales decreased by $74,000 [21] Company Strategy and Development Direction - The company has shifted to offering larger, more complex systems, which has broadened its addressable market and increased average unit selling prices [9][16] - The diversification strategy has shown momentum in the medical device industry, offsetting declines in clean energy orders [14][27] - Investments in R&D and application engineering are aimed at enhancing customer partnerships and driving long-term growth [64][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, supported by a solid backlog of $11,200,000 and a strong balance sheet with $10,600,000 in cash and no debt [15][26] - The company anticipates modest revenue growth for the full fiscal year, balancing caution with expected demand from the medical device industry [15][27] - Management noted that the clean energy sector is expected to decline this year, but diversification efforts are expected to mitigate this impact [14][27] Other Important Information - The company reported a gross profit margin increase to 50% for the second quarter, attributed to a favorable product mix and reduced costs [29][30] - The company has invested $1,300,000 in R&D for the first half of fiscal year 2026, compared to $1,400,000 in the previous year [26][34] - The company maintains a strong cash position with no outstanding debt, allowing for continued investment in growth initiatives [37] Q&A Session Summary Question: Insights on medical device strength and Chinese exposure - Management noted that despite challenges in the Chinese market, significant orders have been captured due to superior quality compared to local competitors [42][45] Question: Details on new optics-related OEMs - Management indicated that these new partnerships are significant for long-term market entry, although immediate revenue impact may be limited [76] Question: Semiconductor market outlook - Management reported strong interest from customers at a recent trade show, indicating potential growth in the semiconductor sector [79] Question: Backlog revenue recognition timeframe - The majority of recent large orders will be recognized in FY 2027, with some expected to ship in the current fiscal year [87] Question: Projections for second half sales - Management expects Q3 to be slightly higher than Q4 due to a system shipment delay [90]

Group 1 - The core achievement of the "14th Five-Year Plan" is the significant increase in the export of high-tech products, with the "new three samples" expected to grow 2.6 times by 2024 compared to 2020 [1] - The transition from traditional exports like clothing and furniture to high-tech products such as electric vehicles, lithium batteries, and solar cells indicates a structural optimization in China's foreign trade [2] - The cultural "new three samples," including online literature, web series, and video games, are gaining popularity overseas, showcasing China's growing influence in global consumption [2] Group 2 - The development of the "new three samples" reflects a shift from quantity and price competition to quality and innovation, highlighting the strengthening core competitiveness of China's foreign trade [2] - The robust supply chain and production capabilities support the high-quality and innovative demands of consumers, aided by customs protection measures for intellectual property [3] - Customs efforts in intercepting counterfeit products demonstrate China's commitment to protecting both domestic and foreign intellectual property rights, enhancing the overall business environment [3]