IEHC 10-K & 10-Q changes, risk factors and insider trading

We manufacture PCB connector offerings for specialized applications and our customers include defense contractors, commercial aerospace equipment manufacturers, medical device manufacturers, oil and gas exploration firms, industrial equipment manufacturers and commercial space launch companies. Our products are typically a small part in a larger end product used by our customers. Supply shortages or other factors impacting third party suppliers that supply different parts to our customers for use in the same end product in which our product is used can impact demand for our products. In addition, due to the specialized nature of our products, we often manufacture limited quantities of our products. Since we are mostly producing customized products in smaller quantities, we are not able to achieve economies of scale, unable to obtain bulk discounts on our orders for raw materials and sometimes the fulfillment is delayed because our suppliers may prioritize larger orders. All of these factors may have an adverse impact on our business and results of operations.

During the year ended March 31, 2026, two customers accounted for 34.0% of the Company’s net revenues, each represented 23.5% and 10.5%, respectively. During the year ended March 31, 2025, two two customers accounted for 31.9% of the Company’s net revenues, each represented 17.8% and 14.1%, respectively. During the fiscal year ended March 31, 2024, two customers accounted for 29.9% of the Company’s net revenues, each represented 17.5% and 12.4%, respectively. We believe that the loss of one or more of our larger customers could have a material adverse effect on our financial position and results of operations. We have experienced significant concentrations of customers in prior years. Furthermore, factors that negatively impact the businesses of our major customers could materially and adversely affect us even if the customer represents a relatively small part of our net sales.

Although we have sufficient working capital in the short term, we may need to raise additional capital in connection with our continuing operations through the debt or equity markets in the future. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our business efforts. Any capital raising efforts would also be impacted by our ongoing administrative proceeding with the SEC pursuant to Section 12 (j) of the Exchange Act instituted on August 17, 2022, and whether the SEC suspends for up to twelve months, or revokes, the registration of our securities. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our business. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Additionally, market volatility resulting from macroeconomic conditions or other factors could also adversely impact our ability to access capital as and when needed. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our shareholders and may decrease our stock price. The incurrence of indebtedness could result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with partners or others and we may be required to relinquish rights to some of our intellectual property or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects. If we are unable to obtain funding on a timely basis, our business, financial condition and results of operations may be materially affected.

Our results of operations may be materially adversely impacted by difficulties in obtaining raw materials, supplies, power, labor and any other items needed for the production of our products, as well as by the effects of quality deviations in raw materials and the effects of significant fluctuations in the prices paid. Many of these materials and components are produced by a limited number of suppliers and their availability to us may be constrained by supplier capacity. In recent periods, we have seen the impactsimpact of inflation drive up costs of materials and labor significantly. Any material disruption to or continuing increases in prices of our raw materials and other resources could materially adversely affect our financial results. Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production, introduce technological innovations, or pass through cost increases to customers.

In the future, if we are unable to negotiate an acceptable new new agreement with the Union, upon expiration of anthe existing contract, we could experience a strike or work stoppage, which could seriously impact the profitability of our business. Contingency plans have been developed that would allow production to continue in the event of of a strike but we cannot guarantee the effectiveness of such plans.

We expect changes in policy positions and spending priorities from the newcurrent Administration.Administration could impact our business. Our U.S. Government programs must compete with programs managed by other government contractors and with other policy imperatives for consideration for limited resources and for uncertain levels of funding during the budget budget and appropriations process. Although multi-year contracts may be authorized and appropriated in connection with major procurements, Congress Congress generally appropriates funds on a U.S. Government fiscal year (“GFY”) basis. Procurement funds are typically disbursed over over the course of one to three years. Consequently, programs often initially receive only partial funding, and additional funds are obligated obligated only as Congress authorizes further appropriations. We cannot predict the extent to which total funding and/or funding for individual individual programs will be changed as part of the annual appropriations process ultimately approved by Congress and the President or in separate supplemental appropriations or continuing resolutions, as applicable. Budget and appropriations decisions made by the U.S. Government Government are outside of our control and may have long-term consequences for our business. U.S. Government spending priorities and levels remain remain uncertain and difficult to predict, especially with a new administration, and are affected by numerous factors, including the U.S. Government’s budget deficit and the national debt. A change in U.S. Government spending priorities or an increase in non-procurement spending at the expense of our programs, or a reduction in total U.S. Government spending on an absolute or inflation-adjusted basis, could have material adverse consequences on our current or future business. If Congress does not enact a full-year GFY 20252026 appropriations bill, the U.S. Government may not be able to fulfill its funding obligations, and there could be significant disruption to all discretionary programs and corresponding impacts on the entire defense industry, which could adversely affect our business, results of operations, financial condition and cash flow. Any inability of the U.S. Government to complete its budget process for any GFY and resulting operation on funding levels equivalent to its prior fiscal year pursuant to a Continuing Resolution (“CR”) or shut down, also could have material adverse consequences on our current or future business.

We arehave workingidentified steps to remediate the identified material weakness weakness in our ITGC. WeHowever, we may not be able to fully remediate this material weakness until these additional steps have been completed and have been operating effectively for a sufficient period of time. We cannot assure you that the measures we have taken to date and plan to take will be sufficient to remediate the material weaknesses we identified or avoid the identification of additional material weaknesses in the future. Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected and corrected on a timely basis, or at all.

We are also impacted by changes in trade policy. We have observed significant shifts in U.S. trade policy, with increased tariffs and the imposition of new tariffspolicy that could impact our supply chain and our business. While imposition of certain tariffs have been temporarily paused, it is hard to predict the direction of future trade policy. Changes to current policies by the U.S. or other governments could affect our business, including potentially through increased import tariffs and other influences on U.S. trade relations with other countries. The imposition of additional tariffs or other trade barriers could increase our costs in certain markets, and may cause our customers to find alternative sourcing. In addition, other countries may change their own policies on business and foreign investment in companies in their respective countries. Additionally, it is possible that U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations. Market volatility and currency exchange rate fluctuations could have a material adverse effect on our business, financial condition, results of operations or cash flows. As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s trading relationships.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, artificial intelligence related cyber-attacks, and telecommunication and electrical failures. The risk of a a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.operations or cause the release of highly sensitive confidential information.

We are exposed to and impacted by macroeconomic factors and and U.S.,federal state and local government policies. Current general economic conditions, including the current levels of inflationinflation, increased energy costs and increased tariffs,evolving tariff policies, have created uncertainties, resulting in market volatility. We have adopted particular measures to protect our employees at our manufacturing operations in Brooklyn, New York, and Allentown, Pennsylvania, and we expect to execute on our contracts through carefully designed arrangements.

Worldwide supply chain disruptions, which were initially brought about by the impact of the COVID-19 pandemic, have persisted despite the recovery in the global economy and financial markets. The Company has experienced longer lead times for raw materials and has experienced raw material cost increases compared to prior fiscal years. These and other issues resulting from worldwide supply chain disruptions, including tariffs and the impact of trade policies from the current United States government administration, as well as the conflicts in Eastern Europe,Europe and the Middle East and South Asia,East, are expected to continue into fiscal 20262027 and could continue to have a material adverse effect on the Company’s business, operating results and financial condition. The precise financial impact and duration, however, cannot be reasonably estimated at this time.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, valuation of inventories, accountingstock-based compensation expense and provision for income taxes and stock-basedalso compensation expense.for deferred tax assets and liabilities and any valuation allowances recorded against deferred tax asset.

We provide engineering services as part of the relationship with with itsour customers in developing the custom product. We are not obligated to provide such engineering service to itsour customers. We do not invoice its our customers separately for these services.

Our current provision for income taxes is based upon itsour estimated estimated taxable income in each of the jurisdictions in which itwe operates,operate, after considering the impact on taxable income of temporary and permanent differences resulting from different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income income in those periods in which temporary differences become deductible. Should management determine that it is more likely than not that some portion of the deferred tax assets will not be realized, a valuation allowance against the deferred tax assets would be established in in the period such determination was made.

Revenue for the fiscal year ended March 31, 20252026 was $28,783,861,$29,417,600, reflecting an increase of $7,259,317,$633,739, or 33.7%,2.2%, as compared to $21,524,544$28,783,861 for the fiscal year ended March 31, 2024.2025. The increase in revenues revenues was primarily due to an increase in orders from our defense customers for programs that IEH participates in. Fiscal 2025 also witnessed increases in revenue in commercial space exploration as space related programs continue to evolve and grow, offsetting the decline in revenue from commercial aerospace customers as the industry navigatescontinues throughto navigate away from various production, labor and regulatory related challenges related to a major airplane producer. Our defense revenue remained mostly flat year over year as we continued to see strong demand in the sector offsetting a decline in revenue from space related programs.

Cost of products sold for the fiscal year ended March 31, 20252026 was $21,309,983$23,866,707 reflecting an increase of $3,052,362,$2,556,724, or 16.7%,12.0%, as compared to $18,257,621$21,309,983 for the fiscal year ended March 31, 2024.2025. The increase was principally attributable to increaseincreases in revenueinput offsetcosts, byincluding moregold, effectivetariffs absorptionon imports of overheadparts infrom productionAsia and Europe, higher than expected health insurance premiums on account ofdirect labor and increases in unitdirect volumelabor sold.costs.

Selling, general and administrative expenses for the fiscal year ended March 31, 20252026 was $6,154,214,$6,410,508, reflecting aan decreaseincrease of $1,977,$256,294, or 4.2%, as compared to $6,156,191$6,154,214 for the fiscal year ended March March 31, 2024.2025. The increase was principally due to an increase in legal fees associated with the dismissal of the motion against IEH by the SEC and due to hiring of additional sales personnel dedicated to foreign markets.

Depreciation and amortization for the fiscal year ended March March 31, 20252026 was $744,802,$772,264, reflecting aan decreaseincrease of $126,817,$27,462, or 14.6%,3.7%, as compared to $871,619$744,802 for the fiscal year ended March 31, 2024. 2025. The decrease increase was principally attributable to reducedmachinery amortizationpurchased for the Allentown location in theorder currentto periodreduce reliance on foreign vendors for certainassembly fullyparts amortizedand assetscomponents. asThe we continueCompany continues to monitor and manage fixed assets investmentsinvestment closely.closely against a backdrop of bringing cost effective capabilities in-house for assembly parts.

Total interest income (expense), net for the fiscal year ended March 31, 20252026 was $425,291,$292,349, reflecting ana increasedecrease of $298,597,$132,942, as compared to $126,694$425,291 for the fiscal year ended March 31, 2024.2025. The increasedecrease was primarily attributable to an increasedecrease in interest income earned on taxes prepaid for federal, state and municipal jurisdictions. Interest income earned on cash and cash equivalents remained relatively flat year over year.

The provision for income taxes for the fiscal year ended March March 31, 20252026, was a provisiontax benefit of $1,115,$42,746, as compared to a benefitprovision of $717,291$1,115 for the fiscal year ended March 31, 2024.2025. The benefit for the fiscal year ended March 31, 2026 was principally attributable to adjustments to prior years’ federal, state and local income taxes. The provision for the fiscal year ended March 31, 2025 was due to a federal provision of $64,300, offset by an adjustment of $63,185 for state and local income taxes.

Our primary requirements for liquidity and capital are working capital, inventory, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. For the fiscal year ended March 31, 2025,2026, our primary sources of liquidity came from cash flows generated by operating activities and cash reserves. Based on our current plans and business conditions, we believe that existing cash,cash and cash equivalents, together with cash generated from operations will be sufficient to satisfy our anticipated cash requirements in fiscal year 2026 2027 and into fiscal year 2027,2028, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflationary pressures and the conflicts in Eastern Europe, Middle EastEurope and Souththe Asia,Middle andEast, any economic uncertainty as a result of the change in presidentialcurrent administration in the U.S. may result in significant disruption and volatility in the global financial markets, reducing our ability to access capital have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

As of March 31, 2025,2026, our cash and cash equivalents balance was $9,647,698. $10,539,828. For the fiscal year ended March 31, 2025,2026, we recorded net incomeloss of $999,038.$1,296,784. As of March 31, 2025,2026, we had working capital of $19,784,214.$18,937,744.

Net cash used in operating activities was $631,130 for the fiscal year ended March 31, 2026, as compared to net cash provided by operating activities wasof $4,883,619 for the fiscal year ended March 31, 2025,2025. asThe comparedincrease to netin cash used in operating activities of $1,914,265 for the fiscal year ended March 31, 2024. The period over period improvement in cash from operating activities of $6,797,884$5,514,749 was primarily due to the improvement increase in net incomeloss of $3,915,940, decrease in inventory purchases of $1,154,803, decrease$2,295,822, increase in accounts receivable of $1,624,952,$2,205,540, decreaseincrease in corporate tax receivable of $1,861,462,$1,040, 342, increase in inventory purchases of $1,371,313 offset by the decrease in customer advance payments of $1,571,337.$554,848 and decrease in accounts payable of $453,689.

Net cash used in investing activities was $532,364$953,094 for the fiscal year ended March 31, 2025,2026, an increase of $185,196,$420,730, as compared to use of $347,168$532,364 for the fiscal year ended March 31, 2024.2025. The increase in cash used in investing activities during the fiscal year ended March 31, 20252026 was primarily attributable to investmentan increase in investments in machinery for productassembly designs.parts.

Net cash provided by financing activities was $48,750$692,094 for the fiscal year ended March 31, 2025,2026, aan decreaseincrease of $7,800,$643,344, as compared to $56,550$48,750 for the fiscal year ended March 31, 2024.2025. This decrease isincrease was attributable to afinancing reductionproceeds inreceived theunder our equipment line of credit facility and proceeds from the exercise of stock options.

Our customers typically enter into supply arrangements for the purchase of our products which we will produce and deliver over time. On an as-needed basis, our customers place specific production orders, and these orders are generally filled and shipped within twelve weeks. Our backlog consists of supply arrangements where the anticipated anticipated unfulfilled shipping dates are within approximately twelve months. Because of the possibility of customer changes in delivery schedules schedules or the cancellation of orders, our backlog as of any particular date may not be indicative of revenue in any future period. The backlog amounted to approximately $27,782,000 at March 31, 2026 as compared to $12,445,000 at March 31, 2025 as compared to $18,285,600 at March 31, 2024.2025. The decreaseincrease in total backlog as of March 31, 20252026 compared with the previous year is primarily due to decreasesincrease in defense orders as the companyCompany awaitssees severalstrong growth in keythis customersector contractsin tolight beof executedcontinuing geopolitical uncertainty and duethe to sluggishcontinuing recovery in the commercial aerospace as the industry navigates through production, labor and regulatory issues related to a major airplane producer.industry.

All of our connectors utilize the Hyperboloid contact design, a rugged, high-reliability contact system ideally suited for high-stress environments. We believe we are the only independent producer of Hyperboloid printed circuit board connectors in the United States.

Comparison of the Three Months Ended DecemberJune 31,30, 20252026 and 20242025

The following table summarizes our results of operations for the three months ended DecemberJune 31,30, 20252026 and 20242025:

Revenue for the three months ended DecemberJune 31,30, 20252026 was $7,497,879, $10,021,446, reflecting an increase of $280,263,$3,713,291, or 3.9%,58.9%, as compared to $7,217,616$6,308,155 for the three months ended DecemberJune 31,30, 2024.2025. The increase in revenue for the period was principally on account of a 28% increase in commercial aerospace revenue and a 9%116% increase in defense revenues. revenues as we continue to witness unprecedented level of demand for parts in this industry. Our quarter over quarter spacecommercial aerospace revenues have decreased by 58%,11% driven principally by shiftingchanges in customer delivery schedules.schedules, however we continue to see robust demand from the commercial aerospace sector as well.

Cost of products sold for the three months ended December 31,June 202530, 2026 was $6,479,634,$6,704,857, reflecting an increase of $910,167,$1,526,006, or 16.3%,29.5%, as compared to $5,569,467$5,178,851 for the three months ended DecemberJune 31, 2024.30, 2025. The increase in our cost of products sold is principally attributable to tariffthe charges we faced from European imports and a continuous increase in goldrevenue prices.offset by more effective absorption of overhead in production on account of the increase in units sold and steady decrease in the cost of gold.

Selling, general and administrative expenses (“SG&A”) for the nine three months ended DecemberJune 31,30, 20252026 was $4,778,529$2,444,337, reflecting an increase of $122,657,$750,399, or 2.6%,44.3%, as compared to $4,655,872$1,693,938 for the ninethree months ended DecemberJune 31,30, 2024.2025. The increase was principallyprimarily dueattributable to an increase in salesstock personnelcompensation dedicatedexpense of $256,300 for stock options granted to international marketsemployees and an increase in legalcommission feesof $127,182 driven by increases in connectionrevenue. withSG&A ouras motiona percentage of summaryrevenue dismissalhas presenteddeclined to the24% SEC,from offset27% byquarter aover decrease in consulting and audit fees.quarter.

Depreciation and amortization for the ninethree months ended December 31,June 202530, 2026 was $570,104,$207,450, reflecting an increase of $12,413,$16,778, or 2.2%,8.8%, as compared to $557,691$190,672 for the ninethree months ended DecemberJune 31,30, 2024. The2025, increasereflecting wasadditional principallyinvestments attributablein to purchase of machinery for Allentown facility to drive down reliance on purchase of imported parts.machinery.

Total other income (expense),income, net for the ninethree months ended December 31,June 202530, 2026 was income of $241,365,$53,868, reflecting ana increasedecrease of $39,864,$46,820, as compared to income of $201,501$100,688 for the ninethree months ended December 31,June 2024.30, 2025. The increasedecrease was principally attributable to ana increasedecrease in interest income earned on our cash and interestcash income recognized on tax refunds received.equivalents.

Our primary requirements for liquidity and capital are working capital, inventory, capital expenditures, and general corporate needs. We expect these needs to continue as we further develop and grow our business. For the ninethree months ended DecemberJune 31,30, 20252026, our primary source of liquidity came from existing cash. Based on our current plans and business conditions, we believe that existing cash, together with cash generated from operations and will be sufficient to satisfy our anticipated cash requirements in fiscal year 20262027 and into fiscal year 2027,2028, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into additional credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflationary pressures and elevated interest rates, the continuing conflicts betweenin RussiaEastern Europe and Ukraine and in the Middle East, and any economic and geopolitical uncertainty as a result of the change in presidential administration in the U.S. may result in significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

As of DecemberJune 31,30, 2025,2026, and March 31, 2025,2026, the Company’s cash and cash equivalents was $9,042,923$9,360,045 and $10,539,828,$9,647,698, respectively. The Company has recorded anet income of $654,466 and net loss of $1,341,765 and net income of $577,590$654,618 for the nine three months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively. As of DecemberJune 31,30, 2025,2026, and March 31, 2025,2026, the Company had working capital of $18,896,884$20,406,113 and $19,784,214$ 18,937,744 and stockholders’ equity of $22,193,841$23,534,458and and $23,113,906,$22,358,492, respectively.

Cash Flow Activities for the NineThree Months Ended December 31,June 202530, 2026 Compared to the NineThree Months Ended DecemberJune 31,30, 20242025

The following table summarizes our sources and uses of cash for ninethe three months ended DecemberJune 31,30, 20252026 and 20242025:

Net cash (used in) provided by operating activities was ($1,411,965) and $3,114,787$212,763 for the ninethree months ended DecemberJune 31,30, 20252026, andcompared 2024to respectively.$424,024 for the three months ended June 30, 2025. The period over period decrease in cash providedused by in operating activities of $4,526,752$211,261 was primarily due to the$1,309,084 $1,919,355increase in net income and $332,572 increase in customer advance payments offset by $153,921 increase in accounts receivable, $680,450 increase in inventory purchases, decrease in netcorporate income,tax $1,303,656receivable reductionof $286,798 and decrease in cashaccounts receivedpayable from customersof and $975,519 increase in inventories purchased.$746,751.

Net cash used in investing activities was $487,360$59,616 and $213,443 $17,299 for the ninethree months ended DecemberJune 31,30, 20252026 and 2024,2025, respectively. The increase in cash used in investing activities during the nine three months ended DecemberJune 31,30, 20252026 was principally due to an increase in purchases of equipment.machinery to reduce reliance on foreign vendors for input materials.

On August 26, 2025, the Company entered into a revolving line of credit agreement (“Revolving Line of Credit”) with JPMorgan Chase Bank, N.A. (“Chase Bank”) for up to $1.0 million, bearing interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.15%. The Revolving Line of Credit contains certain financial covenants, including a fixed charge coverage ratio (the “FCCR”) of at least 1.20, tested annually, and matures on July 31, 2026. As of DecemberMarch 31, 2025,2026, the Company’s FCCR was below the covenant requirement. Effective for the fiscal year ended March 31, 2026, Chase Bank waived the covenant exception. As of June 30, 2026, there was no outstanding borrowing under the Revolving Line of Credit. The Revolving Line of Credit is collateralized by a first-priority security interest in all property of the Company.

On September 8, 2025, the Company entered into a $450,000 Equipment Financingequipment Linefinancing of Creditarrangement with Chase Bank, bearing interest at a fixed rate of 5.51%, to be repaid over a 60-month period.period (“Equipment Financing Line of Credit”). The Equipment Financing Line of Credit is expected to be utilized to purchase machine tools for production. Funding is on an equipment project basis, and once a project is fully funded, the obligation for that project is to be repaid by the execution of term note payable to Chase Bank. The Equipment Financing Line of Credit contains certain financial covenants, tested annually, consistent with the requirements under the Revolving Line of Credit. As of DecemberMarch 31, 2025,2026, the Company’s FCCR was below the covenant requirement for the Equipment Financing Line of Credit. Effective for the fiscal year ended March 31, 2026, Chase Bank waived the covenant exception. As of June 30, 2026 and March 31, 2026, the Company had an outstanding draw of $245,920,$400,650 and $415,924, respectively, of which $76,370 and $256,257, respectively is reflected within equipment financing line of credit on the condensedbalance sheet and $324,280 and $159,667, respectively is reflected within equipment financing line of credit, net of current on the balance sheet. The borrowings under the Equipment Financing Line of Credit are collateralized by a first lien on the related equipment financed under the arrangement.

The backlog of orders for the Company’s products amounted to approximately $18,360,000$38,561,000 aton DecemberJune 31,30, 20252026 as compared to approximately $12,830,000$13,023,000 aton DecemberJune 31,30, 2024.2025. The orders in backlog at Decemberon 31,June 202530, 2026 are expected to ship over the next 126 –- 1824 months depending on customer requirements and product availability.

Inflation and Tariffs

In the opinion of management, inflation has continued to impact the costs of our operations and depending upon the current duration and degree of higher inflation levels, is expected to have an impact upon our operations in the future. Management will continue to monitor inflation as well as tariffs developments and evaluate the possible future effects of inflation on our business and operations.