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 ~~November~~March 301, ~~2024~~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: 0-12906

RICHARDSON ELECTRONICS, LTD.

(Exact name of registrant as specified in its charter)

     Delaware

     36-2096643

     (State or other jurisdiction of
     incorporation or organization)

     (I.R.S. Employer
     Identification No.)

40W267 Keslinger Road, P.O. Box 393

LaFox, Illinois 60147-0393

(Address of principal executive offices)

Registrant’s telephone number, including area code: (630) 208-2200

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.05 Par Value	RELL	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~January~~ 6April 7, 2025, there were 12,~~359~~361,~~370~~870 outstanding shares of Common Stock, $0.05 par value and 2,049,238 outstanding shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements	2
	Unaudited Consolidated Balance Sheets	2
	Unaudited Consolidated Statements of Comprehensive (Loss) Income	3
	Unaudited Consolidated Statements of Cash Flows	4
	Unaudited Consolidated Statement of Stockholders’ Equity	5
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2627
Item 4.	Controls and Procedures	2627
Part II.	Other Information
Item 1.	Legal Proceedings	2728
Item 1A.	Risk Factors	2728
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	2728
Item 3.	Defaults Upon Senior Securities	2728
Item 4.	Mine Safety Disclosures	2728
Item 5.	Other Information	2728
Item 6.	Exhibits	2829
Exhibit Index		2829
Signatures		2930

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Richardson Electronics, Ltd.

Consolidated Balance Sheets

(in thousands, except per share amounts)

	Unaudited			~~Audited~~
	November 30, 2024			June 1, 2024
	March 1, 2025			June 1, 2024
Assets
Current assets:
Cash and cash equivalents	$	2636,~~635~~675		$	24,263
Accounts receivable, less allowance for credit losses of $373 and $323, respectively		25,765			24,845
Accounts receivable, less allowance for credit losses of $240 and $323, respectively		24,932			24,845
Inventories, net		~~110~~98,~~687~~369			110,149
Prepaid expenses and other assets		23,~~441~~538			2,397
Total current assets		~~165~~163,~~528~~514			161,654
Non-current assets:
Property, plant and equipment, net		2018,~~166~~138			20,681
Intangible assets, net		~~1,521~~358			1,641
Right of use lease assets		2,~~321~~035			2,760
Deferred income tax assets		5,~~566~~565			5,500
Other non-current assets		~~123~~200			209
Total non-current assets		2926,~~697~~296			30,791
Total assets	$	~~195~~189,~~225~~810		$	192,445
Liabilities
Current liabilities:
Accounts payable	$	1922,~~978~~485		$	15,458
Accrued liabilities		1511,~~633~~268			15,404
Lease liabilities current		~~1,075~~986			1,169
Total current liabilities		3634,~~686~~739			32,031
Non-current liabilities:
Deferred income tax liabilities		7574			90
Lease liabilities non-current		1,~~246~~049			1,591
Other non-current liabilities		1,~~027~~048			781
Total non-current liabilities		2,~~348~~171			2,462
Total liabilities		3936,~~034~~910			34,493
Stockholders’ Equity
Common stock, $0.05 par value; 12,359 and 12,254 shares issued and outstanding on November 30, 2024 and June 1, 2024, respectively		618			613
Common stock, $0.05 par value; 12,362 and 12,254 shares issued and outstanding on March 1, 2025 and June 1, 2024, respectively		618			613
Class B common stock, convertible, $0.05 par value; 2,049 shares issued and outstanding on November 30, 2024 and June 1, 2024		102			102
Class B common stock, convertible, $0.05 par value; 2,049 shares issued and outstanding on March 1, 2025 and June 1, 2024		102			102
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		7374,~~793~~113			72,744
Retained earnings		8279,~~026~~117			83,729
Accumulated other comprehensive (loss) income		(~~348~~1,050	)		764
Total stockholders' equity		~~156~~152,~~191~~900			157,952
Total liabilities and stockholders’ equity	$	~~195~~189,~~225~~810		$	192,445

Refer to the Notes to Unaudited Consolidated Financial Statements in Part 1, Item 1.

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive (Loss) Income

(in thousands, except per share amounts)

	Three Months Ended						~~Six~~Nine Months Ended
	November 30, 2024			December 2, 2023			November 30, 2024			December 2, 2023
	March 1, 2025			March 2, 2024			March 1, 2025			March 2, 2024
Net sales	$	4953,~~491~~804		$	4452,~~130~~375		$	~~103~~157,~~216~~020		$	96149,~~711~~086
Cost of sales, exclusive of depreciation and amortization		34,165			31,588			71,464			66,905
Cost of sales		37,131			36,939			108,595			103,844
Gross profit		1516,~~326~~673			1215,~~542~~436			3148,~~752~~425			2945,~~806~~242
Selling, general and administrative expenses, inclusive of depreciation and amortization		15,995			14,488			32,107			30,280
Selling, general and administrative expenses		14,500			14,430			46,607			44,710
(Gain) loss on disposal of assets		(2	)		70			(4	)		70
(Gain) loss on disposal of property, plant and equipment		—			—			(4	)		70
Operating loss		(667	)		(2,016	)		(351	)		(544	)
Loss on disposal of healthcare assets and related charges		4,916			—			4,916			—
Operating (loss) income		(2,743	)		1,006			(3,094	)		462
Other expense (income):
Interest income		(4584	)		(8667	)		(~~103~~187	)		(~~157~~224	)
Foreign exchange loss		~~437~~456			~~343~~101			~~160~~616			~~246~~347
Other, net		(427	)		18(7	)		(128	)		5043
Total other expense		~~388~~345			~~275~~27			56401			~~139~~166
Loss before income taxes		(1,055	)		(2,291	)		(407	)		(683	)
(Loss) income before income taxes		(3,088	)		979			(3,495	)		296
Income tax benefit		(304	)		(494	)		(246	)		(113	)
Income tax (benefit) provision		(1,031	)		229			(1,277	)		116
Net loss		(751	)		(1,797	)		(161	)		(570	)
Net (loss) income		(2,057	)		750			(2,218	)		180
Foreign currency translation (loss) gain, net of tax		(~~1,748~~702	)		~~631~~(205	)		(1,~~112~~814	)		~~590~~385
Comprehensive (loss) income	$	(2,~~499~~759	)	$	~~(1,166~~545	)	$	(14,~~273~~032	)	$	20565
Net loss per share:
Net (loss) income per share:
Common shares - Basic	$	(0.0515	)	$	(0.1305	)	$	(0.0116	)	$	(0.0401	)
Class B common shares - Basic		(0.0513	)		(0.1205	)		(0.0114	)		(0.0401	)
Common shares - Diluted		(0.0515	)		(0.1305	)		(0.0116	)		(0.0401	)
Class B common shares - Diluted		(0.0513	)		(0.1205	)		(0.0114	)		(0.0401	)
Weighted average number of shares:
Common shares – Basic		12,~~315~~333			12,~~226~~227			12,~~258~~283			12,~~198~~208
Class B common shares – Basic		2,049			2,052			2,049			2,052
Common shares – Diluted		12,~~315~~333			12,~~226~~445			12,~~258~~283			12,~~198~~480
Class B common shares – Diluted		2,049			2,052			2,049			2,052

Refer to the Notes to Unaudited Consolidated Financial Statements in Part 1, Item 1.

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended						~~Six~~Nine Months Ended
	November 30, 2024			December 2, 2023			November 30, 2024			December 2, 2023
	March 1, 2025			March 2, 2024			March 1, 2025			March 2, 2024
Operating activities:
Net loss	$	(751	)	$	(1,797	)	$	(161	)	$	(570	)
Net (loss) income	$	(2,057	)	$	750		$	(2,218	)	$	180
Adjustments to reconcile net loss to cash provided by operating activities:
Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:
Unrealized foreign currency loss (gain)		~~141~~456			~~(268~~5	)		~~(241~~429	)		(~~305~~300	)
Depreciation and amortization		~~1,015~~978			1,~~116~~104			23,~~059~~037			23,~~114~~218
Inventory provisions		84123			~~192~~173			~~223~~346			~~277~~450
Share-based compensation expense		~~313~~320			~~283~~279			~~906~~1,226			~~766~~1,045
(Gain) loss on disposal of assets		(2	)		70			(4	)		70
(Gain) loss on disposal of property, plant and equipment		—			—			(4	)		70
Deferred income taxes		(213	)		51(4	)		(7982	)		4642
Loss on disposal of healthcare assets and related charges		4,916			—			4,916			—
Change in assets and liabilities:
Accounts receivable		~~4,721~~(333	)		1(5,~~790~~254	)		(1,~~137~~470	)		~~6,252~~998
Inventories		(12,~~617~~873	)		(3,~~069~~974	)		(1,~~741~~132	)		(62,~~220~~246	)
Prepaid expenses and other assets		67(382	)		~~(618~~151	)		38(344	)		(~~209~~58	)
Accounts payable		~~500~~2,585			1(4,~~233~~072	)		47,~~664~~249			(15,~~132~~204	)
Accrued liabilities		~~641~~(4,661	)		~~1,502~~247			~~546~~(4,115	)		~~378~~625
Other		~~374~~(214	)		~~315~~116			~~804~~376			~~348~~464
Net cash provided by operating activities		5,465			800			5,877			1,815
Net cash provided by (used in) operating activities		4,601			(2,531	)		10,478			(716	)
Investing activities:
Capital expenditures		(~~517~~549	)		(~~1,515~~401	)		(1,~~443~~992	)		(23,~~656~~057	)
Proceeds from sale of property, plant & equipment		—			—			7			—
Net cash used in investing activities		(517	)		(1,515	)		(1,436	)		(2,656	)
Proceeds from disposal of Healthcare assets		6,985			—			6,985			—
Net cash provided by (used in) investing activities		6,436			(401	)		5,000			(3,057	)
Financing activities:
Proceeds from issuance of common stock		~~163~~—			15—			307			342
Cash dividends paid on common and Class B common stock		(~~853~~852	)		(~~845~~844	)		(12,~~703~~555	)		(12,~~688~~532	)
Proceeds from revolving credit facility		—			—3,744			1,000			—3,744
Repayment of revolving credit facility		—			—(3,744	)		(1,000	)		—(3,744	)
Other		3—			—			(159	)		(119	)
Net cash used in financing activities		(~~687~~852	)		(~~830~~844	)		(12,~~555~~407	)		(12,~~465~~309	)
Effect of exchange rate changes on cash and cash equivalents		(~~661~~145	)		~~190~~(113	)		(~~514~~659	)		94(19	)
Increase (decrease) in cash and cash equivalents		310,~~600~~040			(13,~~355~~889	)		212,~~372~~412			(26,~~212~~101	)
Cash and cash equivalents at beginning of period		2326,~~035~~635			2422,~~124~~769			24,263			24,981
Cash and cash equivalents at end of period	$	2636,~~635~~675		$	2218,~~769~~880		$	2636,~~635~~675		$	2218,~~769~~880

Refer to the Notes to Unaudited Consolidated Financial Statements in Part 1, Item 1.

Richardson Electronics, Ltd.

Unaudited Consolidated Statement of Stockholders’ Equity

(in thousands, except per share amounts)

	Common Stock		Class BCommon Stock		ParValue		AdditionalPaid InCapital			RetainedEarnings			~~AccumulatedOtherComprehensiveIncome~~AccumulatedOtherComprehensive (Loss) Income			Total
Balance August 31, 2024		12,331		2,049	$	719	$	73,315		$	83,630		$	1,400		$	159,064
Balance November 30, 2024		12,359		2,049	$	720	$	73,793		$	82,026		$	(348	)	$	156,191
Comprehensive loss:
Net loss		—		—		—		—			(~~751~~2,057	)		—			(~~751~~2,057	)
Foreign currency translation, net of tax		—		—		—		—			—			(~~1,748~~702	)		(~~1,748~~702	)
Share-based compensation:
Restricted stock		—		—		—		178			—			—			178
Stock options		—		—		—		~~135~~142			—			—			~~135~~142
Common stock:
Options exercised		283		—		1—		~~165~~—			—			—			~~166~~—
Dividends paid to:
Common ($0.060 per share)		—		—		—		—			(742	)		—			(742	)
Class B Common ($0.054 per share)		—		—		—		—			(~~111~~110	)		—			(~~111~~110	)
Balance November 30, 2024		12,359		2,049	$	720	$	73,793		$	82,026		$	(348	)	$	156,191
Balance March 1, 2025		12,362		2,049	$	720	$	74,113		$	79,117		$	(1,050	)	$	152,900
Balance June 1, 2024		12,254		2,049	$	715	$	72,744		$	83,729		$	764		$	157,952
Comprehensive loss:
Net loss		—		—		—		—			(~~161~~2,218	)		—			(~~161~~2,218	)
Foreign currency translation, net of tax		—		—		—		—			161			(1,~~112~~814	)		(~~951~~1,653	)
Share-based compensation:
Restricted stock		—		—		—		~~602~~780			—			—			~~602~~780
Stock options		—		—		—		~~304~~446			—			—			~~304~~446
Common stock:
Options exercised		4548		—		2		305			—			—			307
Restricted stock issuance		60		—		3		(162	)		—			—			(159	)
Dividends paid to:
Common ($0.12 per share)		—		—		—		—			(1,481	)		—			(1,481	)
Common ($0.18 per share)		—		—		—		—			(2,223	)		—			(2,223	)
Class B Common ($0.108 per share)		—		—		—		—			(222	)		—			(222	)
Class B Common ($0.162 per share)		—		—		—		—			(332	)		—			(332	)
Balance November 30, 2024		12,359		2,049	$	720	$	73,793		$	82,026		$	(348	)	$	156,191
Balance March 1, 2025		12,362		2,049	$	720	$	74,113		$	79,117		$	(1,050	)	$	152,900

Refer to the Notes to Unaudited Consolidated Financial Statements in Part 1, Item 1.

	Common Stock		Class BCommon Stock		ParValue		AdditionalPaid InCapital			RetainedEarnings			AccumulatedOtherComprehensiveIncome (Loss)		Total
Balance September 2, 2023:		12,225		2,052	$	714	$	71,638		$	87,428		$	574	$	160,354
Comprehensive income (loss):
Net loss		—		—		—		—			(1,797	)		—		(1,797	)
Foreign currency translation, net of tax		—		—		—		—			—			631		631
Share-based compensation:
Restricted stock		—		—		—		172			—			—		172
Stock options		—		—		—		111			—			—		111
Common stock:
Options exercised		2		—		—		15			—			—		15
Dividends paid to:
Common ($0.060 per share)		—		—		—		—			(734	)		—		(734	)
Class B Common ($0.054 per share)		—		—		—		—			(111	)		—		(111	)
Balance December 2, 2023		12,227		2,052	$	714	$	71,936		$	84,786		$	1,205	$	158,641
Balance May 27, 2023:		12,140		2,052	$	710	$	70,951		$	87,044		$	615	$	159,320
Comprehensive income (loss):
Net loss		—		—		—		—			(570	)		—		(570	)
Foreign currency translation, net of tax		—		—		—		—			—			590		590
Share-based compensation:
Restricted stock		—		—		—		341			—			—		341
Stock options		—		—		—		425			—			—		425
Common stock:
Options exercised		50		—		2		340			—			—		342
Restricted stock issuance		37		—		2		(121	)		—			—		(119	)
Dividends paid to:
Common ($0.120 per share)		—		—		—		—			(1,466	)		—		(1,466	)
Class B Common ($0.108 per share)		—		—		—		—			(222	)		—		(222	)
Balance December 2, 2023		12,227		2,052	$	714	$	71,936		$	84,786		$	1,205	$	158,641

Richardson Electronics, Ltd.

Unaudited Consolidated Statement of Stockholders’ Equity

(in thousands, except per share amounts)


	Common Stock		Class B Common Stock		Par Value		Additional Paid In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance December 2, 2023:		12,227		2,052	$	714	$	71,936		$	84,786		$	1,205		$	158,641
Comprehensive income (loss):
Net income		—		—		—		—			750			—			750
Foreign currency translation, net of tax		—		—		—		—			—			(205	)		(205	)
Share-based compensation:
Restricted stock		—		—		—		172			—			—			172
Stock options		—		—		—		107			—			—			107
Dividends paid to:
Common ($0.060 per share)		—		—		—		—			(733	)		—			(733	)
Class B Common ($0.054 per share)		—		—		—		—			(111	)		—			(111	)
Balance March 2, 2024		12,227		2,052	$	714	$	72,215		$	84,692		$	1,000		$	158,621

Balance May 27, 2023:		12,140		2,052	$	710	$	70,951		$	87,044		$	615		$	159,320
Comprehensive income:
Net income		—		—		—		—			180			—			180
Foreign currency translation, net of tax		—		—		—		—			—			385			385
Share-based compensation:
Restricted stock		—		—		—		513			—			—			513
Stock options		—		—		—		532			—			—			532
Common stock:
Options exercised		50		—		2		340			—			—			342
Restricted stock issuance		37		—		2		(121	)		—			—			(119	)
Dividends paid to:
Common ($0.180 per share)		—		—		—		—			(2,199	)		—			(2,199	)
Class B Common ($0.162 per share)		—		—		—		—			(333	)		—			(333	)
Balance March 2, 2024		12,227		2,052	$	714	$	72,215		$	84,692		$	1,000		$	158,621

Refer to the Notes to Unaudited Consolidated Financial Statements in Part 1, Item 1.

RICHARDSON ELECTRONICS, LTD.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY

Richardson Electronics, Ltd. (the "Company," "we," "our") is a leading global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and related consumables; power conversion and RF and microwave components; ~~high-value~~including ~~replacement~~green ~~parts,~~energy solutions; tubes ~~and service training~~ for diagnostic imaging equipment; and customized display solutions. Approximately 50% of our products are manufactured ~~at our facilities located~~ in LaFox, Illinois, Marlborough, Massachusetts, ~~and~~or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. All our partners manufacture to our strict specifications and per our supplier code of conduct. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair through its global infrastructure.

Our products include electron tubes and related components, microwave generators, subsystems used in semiconductor manufacturing and visual technology solutions. These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, medical and communication applications.

The Company reports its financial performance for the following business segments: Power and Microwave Technologies ("PMT"), Green Energy Solutions ("GES"), Canvys and Healthcare. A description of the Company's business segments is provided in Note 1011, Segment and Geographic Information.

On January 24, 2025, the Company sold a substantial portion of the assets of its Healthcare business to DirectMed Imaging, LLC (“DirectMed”), a Delaware limited liability company, and entered into an exclusive 10-year global supply agreement in which Richardson will supply DirectMed with repaired Siemens CT X-ray tubes. Additionally, the Company will continue manufacturing ALTA CT X-ray tubes for DirectMed for approximately 12 to 18 months. A description of this transaction and other decisions associated with this transaction which resulted in a total loss of $4.9 million being recorded for the three month and nine month periods ended March 1, 2025 is provided in Note 10, Disposal of Healthcare Assets and Related Charges.

We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.

2. BASIS OF PRESENTATION

The accompanying ~~unaudited~~Unaudited ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements.

Our fiscal quarter ends on the Saturday nearest the end of the quarter-ending month. The ~~second~~third quarter of fiscal 2025 and fiscal 2024 both contained 13 weeks. The first ~~six~~nine months of fiscal 2025 contained 2639 weeks and the first ~~six~~nine months of fiscal 2024 contained 2740 weeks.

In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results of interim periods have been made. All inter-company transactions and balances have been eliminated. The ~~unaudited~~Unaudited ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements presented herein include the accounts of our wholly owned subsidiaries. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations. The results of our operations for the ~~six~~nine months ended ~~November~~March 301, ~~2024~~2025 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2025.

As described in Note 1, Description of the Company, the Company reports its financial performance based on four operating and reportable segments. The financial information contained in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 1, 2024, which was filed with the SEC on August 5, 2024.

3. RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to the current period reporting classifications. The reclassification was related to the unrealized foreign exchange gain (loss) on the Consolidated Statements of Cash Flows.

4. NEW ACCOUNTING PRONOUNCEMENTS - NOT YET ADOPTED

In ~~December~~November 2023, ~~the~~ Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2023-0907, ~~Income~~Segment ~~Taxes~~Reporting (Topic ~~740~~280): Improvements to ~~Income~~Reportable ~~Tax~~Segment Disclosures,. ~~which~~The ~~expands~~amendment ~~the~~requires disclosures ~~required~~of insignificant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit of loss, an ~~entity~~amount and description of its composition for other segment items, and interim disclosures of a reportable segment's ~~income~~profit ~~tax~~or ~~rate~~loss ~~reconciliation~~and ~~table~~assets. ~~and~~The new guidance also requires ~~disclosure~~that ofa ~~income~~public ~~taxes~~entity ~~paid~~that has a single reportable segment provide all the disclosures required by the amendments in ~~both~~this ~~U.S.~~update and ~~foreign~~all ~~jurisdictions~~existing segment disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Upon adoption, tothis guidance should be applied onretrospectively ato ~~prospective~~all ~~basis,~~prior ~~with~~periods ~~retrospective application permitted~~presented. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

7In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required in an entity's income tax rate reconciliation table and requires disclosure of income taxes paid in both U.S. and foreign jurisdictions. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-~~07,~~03 ~~Segment~~Income ~~Reporting~~Statement (Topic ~~280~~220): ~~Improvements~~Reporting toComprehensive ~~Reportable~~Income ~~Segment~~- ~~Disclosures.~~Expense ~~The~~Disaggregation ~~amendment~~Disclosures, which requires ~~disclosures~~an ofentity ~~significant segment expenses that are regularly provided~~ to ~~the~~disclose ~~chief~~on ~~operating decision maker ("CODM") and included within each reported measure of segment profit of loss,~~ an ~~amount~~annual and ~~description~~interim ~~of its composition for other segment items~~basis, ~~and~~disaggregated ~~interim~~information ~~disclosures~~about ofspecific aincome ~~reportable~~statement ~~segment's~~expense ~~profit or loss and assets~~categories. The ~~new~~ guidance ~~also~~should ~~requires~~be ~~that~~applied aprospectively ~~public~~with ~~entity that has a single reportable segment provide all~~ the ~~disclosures~~option ~~required~~to byapply the ~~amendments~~standard ~~in this update and all existing segment disclosures~~retrospectively. The ~~amendments~~standard ~~are~~becomes effective for ~~fiscal~~the ~~years~~annual ~~beginning~~period ~~after~~starting ~~December~~on ~~15,~~January ~~2023~~1, 2027 and ~~for~~ interim periods ~~within~~starting ~~fiscal~~on ~~years~~January ~~beginning after December 15~~1, ~~2024, with early adoption permitted~~2028. ~~Upon~~The ~~adoption,~~Company ~~this~~is ~~guidance~~in ~~should~~the beprocess ~~applied~~of ~~retrospectively~~analyzing tothe ~~all~~impact ~~prior~~that ~~periods~~the ~~presented.~~adoption ~~The~~of ~~Company is currently evaluating this~~ ASU to2024-03 ~~determine~~will ~~its~~have ~~impact~~ on ~~the~~its ~~Company's~~ disclosures.

5. SUMMARY OF ACCOUNTING POLICIES

Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $9482.61 million of finished goods, $11.67 million of raw materials and $4.56 million of work-in-progress as of ~~November~~March 301, ~~2024~~2025, as compared to approximately $93.9 million of finished goods, $12.2 million of raw materials and $4.0 million of work-in-progress as of June 1, 2024.

Provisions for obsolete or slow-moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. Inventory reserves were approximately $6.10 million as of ~~November~~March 301, ~~2024~~2025 and $6.0 million as of June 1, 2024.

Revenue Recognition: Our customers are generally not resellers, but rather businesses that incorporate our products into their processes, from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer. Revenue is recognized when control transfers since it is not always based on delivery of the goods. The Company’s revenue includes the following streams:

•

Manufacturing/assembly

•

Distribution

•

Services revenue

Manufacturing/assembly typically includes the products that are manufactured or assembled in our manufacturing facility. These products can either be built to the customer’s prints/designs or are products that we stock in our warehouse to sell to any customer that places an order. The manufacturing business does not include a separate service bundled with the product sold or sold in addition to the product. Our contracts for customized products generally include termination provisions if a customer cancels their order. However, we recognize revenue at a point in time because the termination provisions normally do not require, upon cancellation, the customer to pay fees that are commensurate with the work performed. Each purchase order explicitly states the goods or services that we promise to transfer to the customer. The promises to the customer are limited only to those goods or services. The performance obligation is our promise to deliver both goods that were produced by the Company and resale of goods that we purchase from our suppliers. Our shipping and handling activities for destination shipments are performed prior to the customer obtaining control. As such, they are not a separate promised service. The Company elects to account for shipping and handling as activities to fulfill the promise to transfer the goods. The goods we provide to our customers are distinct in that our customers benefit from the goods we sell them through use in their own processes.

Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers. The distribution business does not include a separate service bundled with the product sold or sold on top of the product. Revenue is recognized when control of the promised goods is transferred to our customers, which is simultaneous with the title transferring to the customer, in an amount that reflects the transaction price consideration that we expect to receive in exchange for those goods. Control refers to the ability of the customer to direct the use of and obtain substantially all the remaining benefits from the goods. Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration. Generally, our contracts require our customers to pay for goods after we deliver products to them. Terms are generally open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America subject to customary credit checks.

Repair, installation or training activities generate services revenue. The services we provide are relatively short in duration and are typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5% of the Company’s total revenues and is expected to continue at that level.

~~Contracts~~they ~~with~~are ~~customers:~~not ~~A revenue contract exists once~~ a ~~customer~~separate ~~purchase~~promised ~~order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or~~ service ~~as the Company's performance obligation~~. The ~~goods~~Company ~~include~~elects ~~standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added~~ to ~~them~~account infor ~~house prior to~~ shipping ~~to the customer~~ and ~~manufactured~~handling ~~products.~~as ~~Prior~~activities to ~~accepting~~fulfill ~~a customer purchase order, we review~~ the ~~credit~~promise ~~worthiness of the customer. Purchase orders are deemed~~ to ~~meet~~transfer the ~~collectability criterion once the customer’s credit is approved~~goods. The ~~Company~~goods ~~receives~~we ~~advance~~provide ~~payments~~to ~~or deposits from~~ our customers ~~before~~are ~~revenue~~distinct isin ~~recognized~~that ~~resulting~~our incustomers ~~contract~~benefit ~~liabilities.~~from ~~Contract~~the ~~liabilities~~goods ~~are~~we ~~included~~sell inthem ~~accrued~~through ~~liabilities~~use in ~~the~~their ~~unaudited~~own ~~consolidated balance sheets~~processes.

Repair, installation or training activities generate services revenue. The services we provide are relatively short in duration and are typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue accounts for less than 5% of the Company’s total revenues and is expected to continue at that level.

Contracts with customers: A revenue contract exists once a customer purchase order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or service as the Company's performance obligation. The goods include standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added to them in house prior to shipping to the customer and manufactured products. Prior to accepting a customer purchase order, we review the credit worthiness of the customer. Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved. The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the Unaudited Consolidated Balance Sheets.

On occasion, the Company enters into bill-and-hold arrangements. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (i) the reason for the bill-and-hold arrangement is substantive; (ii) the product is segregated from the Company’s other inventory items held for sale; (iii) the product is ready for shipment to the customer; and (iv) the Company does not have the ability to use the product or direct it to another customer.

We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Payment terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts.

Contract Balances: Contract balances were as follows (in thousands):

	November 30, 2024		June 1, 2024		May 27, 2023
	March 1, 2025		June 1, 2024		May 27, 2023
Accounts receivable	$	2524,~~765~~932	$	24,845	$	30,067
Contract liabilities		4,~~349~~545		4,520		3,283

During the three and ~~six~~nine months ended ~~November~~March 301, ~~2024~~2025 the Company recognized $1.2.3 million and $24.14 million, respectively, of revenue upon satisfaction of performance obligations related to amounts that were included in the contract liabilities balance as of June 1, 2024. During the three ~~and six~~ months ended ~~December~~March 2, ~~2023~~2024, the Company ~~recognized~~did ~~$1.4~~not ~~million~~recognize revenue upon satisfaction of performance obligations and during the nine months ended March 2, 2024 the Company recognized $2.9 million, ~~respectively,~~ of revenue upon satisfaction of performance obligations related to amounts that were included in the contract liabilities balance as of May 27, 2023. At March 1, 2025, the contract liability balance of $4.5 million includes $1.2 million of deferred revenue from the disposal of Healthcare assets, which will be recognized over the next 12 to 18 months.

~~See~~Refer to Note 1011, Segment &and Geographic Information for a disaggregation of revenue by reportable segment and geographic region, which represents how our chief operating decision maker reviews information internally to evaluate our financial performance and to make resource allocation and other decisions for the Company.

Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency.

Intangible Assets: Intangible assets are initially recorded at their fair market values determined by quoted market prices in active markets, if available, or by recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for customer relationships agreements acquired in connection with prior acquisitions. Technology represents the fair value acquired in connection with acquisitions and an exclusive license, manufacturing and distribution agreement. Intangible assets subject to amortization were as follows (in thousands):

	November 30, 2024		June 1, 2024
	March 1, 2025		June 1, 2024
Gross Amounts:
Customer Relationships	$	~~3,396~~893	$	3,396
Technology		~~380~~150		380
Total Gross Amounts	$	31,~~776~~043	$	3,776
Accumulated Amortization:
Customer Relationships	$	~~1,984~~626	$	1,886
Technology		~~271~~59		249
Total Accumulated Amortization	$	~~2,255~~685	$	2,135
Net Intangible Assets	$	~~1,521~~358	$	1,641

As described in Note 10, Disposal of Healthcare Assets and Related Charges, the Company sold certain assets related to Healthcare including intangible assets with a book value of $1.1 million.

The amortization expense associated with intangible assets subject to amortization for the next five years is presented in the following table (in thousands):

Fiscal Year	AmortizationExpense
Remaining 2025	$	~~120~~15
2026		~~206~~59
2027		~~194~~60
2028		~~185~~60
2029		~~174~~58
Thereafter		~~642~~106
Total amortization	$	~~1,521~~358

The weighted average number of years of amortization expense remaining is 107.1 years.

Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards.

Accrued Liabilities: Accrued liabilities consisted of the following (in thousands):

	November 30, 2024		June 1, 2024
	March 1, 2025		June 1, 2024
Compensation and payroll taxes	$	43,~~506~~638	$	3,495
Accrued severance		557		506
Professional fees		~~653~~628		487
Contract liabilities		4,~~349~~545		4,520
Other accrued expenses		51,~~568~~900		6,396
Accrued Liabilities	$	1511,~~633~~268	$	15,404

Warranties: We offer assurance type warranties for the limited number of specific products we manufacture. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our ~~consolidated~~Unaudited ~~statements~~Consolidated Statements of ~~comprehensive~~Comprehensive (~~loss~~Loss) ~~income~~Income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience.

Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our ~~unaudited~~Unaudited ~~consolidated~~Consolidated ~~balance~~Balance ~~sheets~~Sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $0.78 million as of ~~November~~March 301, ~~2024~~2025 and approximately $0.7 million as of June 1, 2024.

6. REVOLVING CREDIT FACILITY

The Company entered into a Credit Agreement (as amended by the First Amendment to the Credit Agreement dated April 9, 2025 the "Credit Agreement") for a three-year Revolving Credit Facility with PNC Bank N.A. on March 20, 2023 (the "Revolving Credit Facility"). The Revolving Credit Facility will mature on March 20, 2026. Borrowings under the Revolving Credit Facility, including the swingline loan and letter of credit sub-facility extended to the Company thereunder, are secured by (i) a continuing first priority lien on and security interest in and to substantially all of the assets of the Company and its domestic subsidiaries and (ii) a continuing first priority pledge of the Pledged Collateral of the Company and the Guarantors identified in the Security Agreement and the Pledge Agreement executed in connection with the Revolving Credit Facility. The combined maximum borrowings under the Revolving Credit Facility are $30 million. Proceeds of borrowings may be used for working capital and general corporate purposes. The Company utilized $1.0 million of the credit line to address short-term working capital needs and repaid that $1.0 million during the first quarter of fiscal 2025. There was no utilization of the credit line in the second quarter of fiscal 2025. As of November 30, 2024, no amount was outstanding under the Revolving Credit Facility.

The ~~Credit~~First ~~Agreement~~Amendment ~~provides~~to ~~that~~ the ~~Company~~Credit ~~must~~Agreement ~~maintain~~modified ~~compliance~~the ~~with~~definition aof ~~maximum~~“Consolidated ~~consolidated~~EBITDA” ~~leverage~~to ~~ratio~~take ~~covenant~~into ~~and~~account athe ~~minimum~~non-recurring ~~consolidated~~non-cash ~~fixed~~loss ~~charge coverage ratio, each as determined~~ in ~~accordance with~~ the ~~Credit~~amount ~~Agreement. The Credit Agreement also contains affirmative, negative and financial covenants customary for financings~~ of ~~this type~~$4, ~~including~~920,000 ~~among~~recognized ~~other~~by ~~things,~~the ~~limitations~~Company onin ~~certain~~connection ~~other~~with ~~indebtedness,~~the Asset ~~loans~~Purchase ~~and investments~~Agreement, ~~liens,~~dated ~~mergers,~~January ~~asset sales~~24, ~~and transactions with affiliates~~2025, asbetween ~~well~~the ~~as customary events of default for financings of this type. The~~ Company ~~was~~and inDirectMed ~~compliance with financial covenants under the Credit Agreement as of November 30~~Imaging, ~~2024~~LLC.

Borrowings under the Revolving Credit Facility, including the swingline loan and letter of credit sub-facility extended to the Company thereunder, are secured by (i) a continuing first priority lien on and security interest in and to substantially all of the assets of the Company and its domestic subsidiaries and (ii) a continuing first priority pledge of the Pledged Collateral of the Company and the Guarantors identified in the Security Agreement and the Pledge Agreement executed in connection with the Revolving Credit Facility. The combined maximum borrowings under the Revolving Credit Facility are $30 million. Proceeds of borrowings may be used for working capital and general corporate purposes. The Company utilized $1.0 million of the credit line and repaid that $1.0 million during the first quarter of fiscal 2025. There was no utilization of the credit line in the second or third quarter of fiscal 2025. As of March 1, 2025, no amount was outstanding under the Revolving Credit Facility.

The Credit Agreement provides that the Company must maintain compliance with a maximum consolidated leverage ratio covenant and a minimum consolidated fixed charge coverage ratio, each as determined in accordance with the Credit Agreement. The Credit Agreement also contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales, and transactions with affiliates, as well as customary events of default for financings of this type. The Company was in compliance with financial covenants under the Credit Agreement as of March 1, 2025.

Borrowings under the Revolving Credit Facility will bear interest at a rate per annum selected by the Company from the following options: (a) Term SOFR Rate (for the applicable Interest Period) plus the SOFR Adjustment (for the applicable Interest Period) plus 1.25%; (b) Base Rate plus 0.25% or (c) Daily Simple RFR (for Euros) plus the RFR Adjustment plus 1.25%. Letters of credit issued under the letter of credit sub-facility will have a letter of credit fee equal to 1.25% per annum. The fee for the unused portion of the credit line is 0.10%.

7. LEASE OBLIGATIONS

The Company leases real and personal property in the normal course of business under various operating leases. The Company uses operating leases for facility space and automobiles. Most of the leased facility space is for sales and general office use. Automobile leases are used throughout the Company.

Several leases include renewal clauses which vary in length and may not include specific rent renewal amounts. The Company will revise the value of the right of use assets and associated lease liabilities upon a remeasurement event.

The net assets and liabilities related to operating leases were as follows (in thousands):

Lease Type	~~November~~March 301, ~~2024~~2025		June 1, 2024
Right of use lease assets	$	2,~~321~~035	$	2,760
Lease liabilities current		~~1,075~~986		1,169
Lease liabilities non-current		1,~~246~~049		1,591

The components of lease costs were as follows (in thousands):

		Three Months Ended
		November 30, 2024		December 2, 2023
		March 1, 2025		March 2, 2024
Consolidated operating lease expense	Operating expenses	$	~~419~~386	$	~~417~~457

		Six Months Ended
		Nine Months Ended
		November 30, 2024		December 2, 2023
		March 1, 2025		March 2, 2024
Consolidated operating lease expense	Operating expenses	$	~~854~~1,240	$	~~871~~1,328

The approximate future minimum lease payments under operating leases at ~~November~~March 301, ~~2024~~2025 were as follows (in thousands):

Fiscal Year	Operating Leases
Remaining 2025	$	~~664~~293
2026		~~981~~1,015
2027		~~451~~476
2028		~~223~~228
2029		142
Total lease payments		2,~~461~~154
Less imputed interest		~~140~~119
Net minimum lease payments	$	2,~~321~~035

The weighted average remaining lease terms and interest rates of leases held by the Company as of ~~November~~March 301, ~~2024~~2025 and ~~December~~March 2, ~~2023~~2024 were as follows:

Operating Lease as of:	Weighted Average RemainingLease Term in Years	Weighted Average Interest Rate
November 30, 2024	4.8	4.8%
March 1, 2025	4.5	4.9%
December 2, 2023	2.3	4.2%
March 2, 2024	2.8	4.4%

The cash activities associated with our leases for the three month and ~~six~~nine month periods ended ~~November~~March 301, ~~2024~~2025 and ~~December~~March 2, ~~2023~~2024 were as follows (in thousands):

		Three Months Ended
Cash Flow Source	Classification	~~November~~March 301, ~~2024~~2025		~~December~~March 2, ~~2023~~2024
Operating cash flows from operating leases	Operating activities	$	~~343~~317	$	~~201~~354
		Six Months Ended
		Nine Months Ended
Cash Flow Source	Classification	~~November~~March 301, ~~2024~~2025		~~December~~March 2, ~~2023~~2024
Operating cash flows from operating leases	Operating activities	$	~~696~~1,013	$	~~312~~977

8. INCOME TAXES

We recorded an income tax benefit of $0.2 million and $0.1 million for the first six months of fiscal 2025 and the first six months of fiscal 2024, respectively. The effective income tax rate during the first six months of fiscal 2025 was a tax benefit of 60.4% as compared to a tax benefit of 16.5% during the first six months of fiscal 2024. The difference in rate during the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 reflects changes in the geographical distribution of income (loss), which is primarily driven by an increase in U.S. earnings for fiscal 2025 and the state income tax provision, as well as the impact of U.S. research and development credits. The 60.4% effective income tax rate differs from the federal statutory rate of 21% as a result of the geographical distribution of income (loss), as well as the utilization of the U.S. research and development credit.

In the normal course of business, we are subject to examination by taxing authorities throughout the world. Years prior to fiscal 2015 are closed for examination under the statute of limitation for U.S. federal, and U.S. state. In Netherlands, years prior to fiscal 2020 are closed for examination. We are under examination in Germany for fiscal years 2019 to 2022. We have no current open audits in the U.S.

~~We have historically determined that certain undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U~~8.S. INCOME The deferred tax liability on the outside basis difference is now primarily withholding tax on future dividend distributions. The deferred tax liability related to undistributed earnings of our foreign subsidiaries was less than $0.1 million as of November 30, 2024 and June 1, 2024.TAXES

~~The~~We ~~Company~~ recorded an income tax benefit of $01.3 million ~~for~~and ~~uncertain~~an income tax ~~positions~~provision asof $0.1 million for the first nine months of ~~November~~fiscal ~~30,~~2025 and for the first nine months of fiscal 2024, respectively. The effective income tax rate during the first nine months of fiscal 2025 was a tax benefit of 36.5% as compared to ~~$0.1~~a ~~million~~tax asprovision of ~~June~~39.2% 1,during ~~2024.~~the Wefirst ~~record~~nine ~~interest~~months ~~related~~of tofiscal ~~uncertain~~2024. ~~tax~~The ~~positions~~difference in rate during the ~~income~~first ~~tax~~nine ~~expense~~months ~~line~~of ~~item~~fiscal ~~within~~2025 as compared to the ~~Consolidated~~first ~~Statements~~nine months of ~~Comprehensive~~fiscal 2024 reflects changes in our geographical distribution of income (~~Loss~~loss) ~~Income.~~and ~~Accrued~~the ~~interest~~discrete ~~was~~item ~~included~~related ~~within~~to the ~~related~~sale ~~tax~~of ~~liability~~healthcare ~~line~~assets resulting in a loss in the ~~Consolidated~~third ~~Balance~~quarter ~~Sheets~~of fiscal 2025. WeThe ~~have~~36.5% ~~recorded~~effective income tax rate differs from the federal statutory rate of 21% as a ~~liability~~result of ~~less~~our ~~than~~geographical ~~$0.1~~distribution ~~million~~of ~~for~~income ~~interest~~(loss), ~~and~~as ~~penalties~~well as itthe ~~relates~~book toloss on the ~~reserve~~sale of ~~the~~healthcare ~~research~~assets and ~~development~~the ~~credit~~utilization as of ~~June~~the 1,U.S. ~~2024~~research and ~~November~~development ~~30, 2024~~credit.

~~The~~In ~~Company maintains a valuation allowance representing~~ the ~~portion~~normal course of ~~the~~business, ~~deferred~~we ~~tax~~are ~~asset~~subject ~~that~~to ~~management~~examination ~~does~~by ~~not~~taxing ~~believe~~authorities isthroughout ~~more~~the ~~likely~~world. ~~than~~Years ~~not~~prior to befiscal ~~realized.~~2015 ~~The~~are ~~valuation~~closed ~~allowance~~for ~~was~~examination ~~$2.2~~under ~~million~~the asstatute of ~~November~~limitation ~~30,~~for ~~2024~~U.S. federal, and ~~June~~U.S. ~~1, 2024~~state. ~~The~~In ~~current~~Netherlands, ~~valuation~~years ~~allowance~~prior isto ~~recorded~~fiscal on2020 ~~deferred~~are ~~tax~~closed ~~assets~~for inexamination. ~~foreign~~We ~~jurisdictions~~are ~~where~~under ~~historical~~examination ~~taxable~~in ~~losses~~Germany ~~have~~for ~~been~~fiscal ~~incurred~~years ~~($1.1~~2019 ~~million)~~to ~~and state NOLs ($1~~2022.1 ~~million).~~During ~~The amount of~~ the ~~deferred~~third ~~tax~~quarter ~~asset~~of ~~considered~~fiscal ~~realizable~~2025, ~~however,~~we ~~could~~received bea ~~adjusted~~notice iffrom ~~estimates~~the State of ~~future~~Illinois ~~taxable~~for an income ~~during~~tax audit covering the ~~carryforward~~ period ~~are~~from ~~increased,~~June or2021 ifto ~~objective~~May ~~negative~~2023. ~~evidence~~We inhave ~~the form of cumulative losses is~~ no ~~longer~~other ~~present~~current ~~and~~open ~~additional~~audits ~~weight~~in ~~may~~the ~~be given to subjective evidence such as our projections for growth~~U.S.

We have historically determined that certain undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S. The deferred tax liability on the outside basis difference is now primarily withholding tax on future dividend distributions. The deferred tax liability related to undistributed earnings of our foreign subsidiaries was less than $0.1 million as of March 1, 2025 and June 1, 2024.

The Company recorded $0.3 million for uncertain tax positions as of March 1, 2025 as compared to $0.1 million as of June 1, 2024. We record interest related to uncertain tax positions in the income tax expense line item within the Unaudited Consolidated Statements of Comprehensive (Loss) Income. Accrued interest was included within the related tax liability line in the Consolidated Balance Sheets. We have recorded a liability of less than $0.1 million for interest and penalties as it relates to the reserve of the research and development credit as of March 1, 2025 and June 1, 2024, respectively.

The Company maintains a valuation allowance representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized. The valuation allowance was $2.2 million as of March 1, 2025 and June 1, 2024. The current valuation allowance is recorded on deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($1.1 million) and state NOLs ($1.1 million). The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

9. EARNINGS PER SHARE

We have authorized 17,000,000 shares of common stock and 3,000,000 shares of Class B common stock. The Class B common stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the amount of common stock cash dividends.

Our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed (loss) earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of common stock cash dividends.

The allocation of undistributed (loss) earnings between common stock and Class B common stock is based on the relationship of the weighted shares outstanding for the respective stock class (common or Class B) to the total of the weighted shares outstanding for common stock and 90% of the weighted shares outstanding for Class B common stock. The adjustment to the number of outstanding Class B common stock shares reflects the limitation of Class B common stock dividends to 90% of common stock dividends.

The earnings per share (“EPS”) presented in our ~~unaudited~~Unaudited ~~consolidated~~Consolidated ~~statements~~Statements of ~~comprehensive~~Comprehensive (~~loss~~Loss) ~~income~~Income for the third quarter of fiscal 2025 and 2024 was based on the following amounts (in thousands, except per share amounts):

	Three Months Ended
	November 30, 2024						December 2, 2023
	March 1, 2025						March 2, 2024
	Basic			Diluted			Basic			Diluted
Numerator for Basic and Diluted EPS:
Net loss	$	(751	)	$	(751	)	$	(1,797	)	$	(1,797	)
Net (loss) income	$	(2,057	)	$	(2,057	)	$	750		$	750
Less dividends:
Common stock		742			742			~~734~~733			~~734~~733
Class B common stock		~~111~~110			~~111~~110			111			111
Undistributed loss	$	(12,~~604~~909	)	$	(12,~~604~~909	)	$	(~~2,642~~94	)	$	(~~2,642~~94	)
Common stock undistributed loss	$	(12,~~395~~531	)	$	(12,~~395~~531	)	$	(~~2,295~~82	)	$	(~~2,295~~82	)
Class B common stock undistributed loss		(~~209~~378	)		(~~209~~378	)		(~~347~~12	)		(~~347~~12	)
Total undistributed loss	$	(12,~~604~~909	)	$	(12,~~604~~909	)	$	(~~2,642~~94	)	$	(~~2,642~~94	)
Denominator for Basic and Diluted EPS:
Common stock weighted average shares		12,~~315~~333			12,~~315~~333			12,~~226~~227			12,~~226~~227
Effect of dilutive securities
Dilutive stock options					—						—218
Denominator for diluted EPS adjusted for weighted average shares and assumed conversion					12,~~315~~333						12,~~226~~445
Class B common stock weighted average shares and shares under if-converted method for diluted EPS		2,049			2,049			2,052			2,052
Net loss per share:
Net (loss) income per share:
Common stock	$	(0.0515	)	$	(0.0515	)	$	(0.1305	)	$	(0.1305	)
Class B common stock	$	(0.05	)	$	(0.05	)	$	(0.12	)	$	(0.12	)
	$	-
Class B common stock	$	(0.13	)	$	(0.13	)	$	0.05		$	0.05

Note: There were ~~249~~266 common stock options that were antidilutive and not included in the diluted earnings per share in the ~~second~~third quarter of fiscal 2025. There were ~~221~~no common stock options that were antidilutive and not included in the diluted earnings per share for the ~~second~~third quarter of fiscal 2024.

	Six Months Ended
	November 30, 2024						December 2, 2023
	Basic			Diluted			Basic			Diluted
Numerator for Basic and Diluted EPS:
Net loss	$	(161	)	$	(161	)	$	(570	)	$	(570	)
Less dividends:
Common stock		1,481			1,481			1,466			1,466
Class B common stock		222			222			222			222
Undistributed loss	$	(1,864	)	$	(1,864	)	$	(2,258	)	$	(2,258	)
Common stock undistributed loss	$	(1,620	)	$	(1,620	)	$	(1,961	)	$	(1,961	)
Class B common stock undistributed loss		(244	)		(244	)		(297	)		(297	)
Total undistributed loss	$	(1,864	)	$	(1,864	)	$	(2,258	)	$	(2,258	)
Denominator for Basic and Diluted EPS:
Common stock weighted average shares		12,258			12,258			12,198			12,198
Effect of dilutive securities
Dilutive stock options					—						—
Denominator for diluted EPS adjusted for weighted average shares and assumed conversion					12,258						12,198
Class B common stock weighted average shares and shares under if-converted method for diluted EPS		2,049			2,049			2,052			2,052
Net loss per share:
Common stock	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
Class B common stock	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)

The EPS presented in our Unaudited Consolidated Statements of Comprehensive (Loss) Income for the first nine months of fiscal 2025 and 2024 was based on the following amounts (in thousands, except per share amounts):

Note: There were 241 common stock options that were antidilutive and not included in the diluted earnings per share for the first six months of fiscal 2025. There were 297 common stock options that were antidilutive and not included in the diluted earnings per share for first six months of fiscal 2024.


	Nine Months Ended
	March 1, 2025						March 2, 2024
	Basic			Diluted			Basic			Diluted
Numerator for Basic and Diluted EPS:
Net (loss) income	$	(2,218	)	$	(2,218	)	$	180		$	180
Less dividends:
Common stock		2,223			2,223			2,199			2,199
Class B common stock		332			332			333			333
Undistributed loss	$	(4,773	)	$	(4,773	)	$	(2,352	)	$	(2,352	)

Common stock undistributed loss	$	(4,150	)	$	(4,150	)	$	(2,043	)	$	(2,049	)
Class B common stock undistributed loss		(623	)		(623	)		(309	)		(303	)
Total undistributed loss	$	(4,773	)	$	(4,773	)	$	(2,352	)	$	(2,352	)

Denominator for Basic and Diluted EPS:
Common stock weighted average shares		12,283			12,283			12,208			12,208
Effect of dilutive securities
Dilutive stock options					—						272
Denominator for diluted EPS adjusted for weighted average shares and assumed conversion					12,283						12,480
Class B common stock weighted average shares and shares under if-converted method for diluted EPS		2,049			2,049			2,052			2,052

Net (loss) income per share:
Common stock	$	(0.16	)	$	(0.16	)	$	0.01		$	0.01

Class B common stock	$	(0.14	)	$	(0.14	)	$	0.01		$	0.01

10Note: There were 249 common stock options that were antidilutive and not included in the diluted earnings per share for the first nine months of fiscal 2025. ~~SEGMENT~~ ~~AND~~There ~~GEOGRAPHIC~~were ~~INFORMATION~~no common stock options that were antidilutive and not included in the diluted earnings per share for first nine months of fiscal 2024.

10. DISPOSAL OF HEALTHCARE ASSETS AND RELATED CHARGES

On January 24, 2025, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with DirectMed. Pursuant to the terms and subject to the conditions of the Purchase Agreement, DirectMed purchased assets of the Company used in the operation of its International Medical Equipment and Service ("IMES") business as well as ALTA tube and related inventory (the “IMES Sale”). The IMES Sale transaction closed simultaneously with the execution of the Purchase Agreement on January 24, 2025.

Under the terms of the Purchase Agreement, the Company sold a substantial portion of the assets comprising its Healthcare reportable segment to DirectMed for an initial consideration of $8.2 million and entered into an exclusive 10-year global supply agreement in which Richardson will supply DirectMed with repaired Siemens CT X-ray tubes ("Siemens CT Supply Agreement"). Additionally, the Company will continue manufacturing ALTA CT X-ray tubes for DirectMed for approximately 12 to 18 months ("ALTA CT Supply Agreement").

Consideration received of $8.2 million from DirectMed was allocated between the asset sale and the ALTA CT Supply Agreement based on their respective fair values (measured using Level 3 inputs) as follows: $7.0 million allocated to the asset sale and $1.2 million allocated to the ALTA CT Supply Agreement. The consideration related to the ALTA CT Supply Agreement has been initially recorded as deferred revenue within Other Liabilities in the Consolidated Balance Sheets and will be recognized into income as ALTA tubes are sold. Deferred revenue as of March 1, 2025 was $1.2 million.

In conjunction with the IMES Sale, other non-cash charges were incurred relating to the write-down of CT tube component inventory not transferred to the buyer and not expected to be used by the Company of $1.4 million, and an impairment of specific property, plant and equipment of $0.5 million that will be used to satisfy the ALTA CT Supply Agreement, which are included in the total loss recorded for the three and nine month periods ended March 1, 2025.

A summary of the $4.9 million disposal loss and related charges is shown in the following table (in thousands):


Proceeds from IMES sale attributable to disposal of healthcare assets	$	6,985
Assets sold:
Accounts receivable		1,004
Inventories, net		7,123
Property, plant and equipment, net		264
Intangible assets, net		1,117
Transaction related costs		448
Loss on disposal of healthcare assets		(2,971	)
Other charges:
Loss on write-down of healthcare related inventory not disposed of		1,420
Impairment of property, plant and equipment, net to satisfy ALTA CT supply agreement		525
Total loss	$	(4,916	)

11. SEGMENT AND GEOGRAPHIC INFORMATION

As described in Note 1, Description of the Company, the Company reports its financial performance based on the operating and reportable segments which are defined as follows:

Power and Microwave Technologies ("PMT") combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies. As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment.

Green Energy Solutions ("GES") combines our key technology partners and engineered solutions capabilities to design and manufacture innovative products for the fast-growing energy storage market and power management applications. As a designer, manufacturer, technology partner and authorized distributor, GES’s strategy is to provide specialized technical expertise and engineered solutions using our core design engineering and manufacturing capabilities on a global basis. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair - all through our existing global infrastructure. GES’s focus is on products for numerous green energy applications such as wind, solar, hydrogen and electric vehicles, and other power management applications that support green solutions such as synthetic diamond manufacturing.

Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers. We offer long-term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms.

Healthcare manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery. After the January 2025 sale of assets to DirectMed, the Company only manufactures and repairs CT tubes and sells them to DirectMed under an exclusive supply agreement.

On January 24, 2025, the Company sold a substantial portion of its Healthcare assets to DirectMed and entered into an exclusive 10-year global supply agreement in which the Company will supply DirectMed with repaired Siemens CT X-ray tubes. Additionally, the Company will continue manufacturing ALTA CT X-ray tubes for DirectMed for approximately 12 to 18 months. Refer to Note 10, Disposal of Healthcare Assets and Related Charges, for additional detail.

The CEO, who is the chief operating decision maker, evaluates performance and allocates Company resources primarily based on the gross profit of each segment.

Operating results by segment are summarized in the following table (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

November 30, 2024

December 2, 2023

November 30, 2024

December 2, 2023

March 1, 2025

March 2, 2024

March 1, 2025

March 2, 2024

PMT

Net Sales

3433,~~397~~216

31,~~292~~163

68101,~~599~~815

6798,~~036~~199

Gross Profit

10,~~430~~243

8,~~905~~815

2030,~~632~~875

2029,~~416~~231

GES

Net Sales

59,~~974~~299

211,~~609~~531

1423,~~060~~359

718,~~003~~534

Gross Profit

13,~~914~~049

~~761~~3,070

47,~~288~~337

25,~~341~~411

Canvys

Net Sales

69,~~851~~195

76,~~291~~590

1423,~~489~~684

1723,~~180~~770

Gross Profit

23,~~171~~056

2,~~440~~265

47,~~792~~848

58,~~805~~070

Healthcare

Net Sales

2,~~269~~094

23,~~938~~091

68,~~068~~162

58,~~492~~583

Gross Profit

~~811~~325

~~436~~1,286

2,~~040~~365

12,~~244~~530

Geographic net sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Other.

Net sales and gross profit by geographic region are summarized in the following table (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

November 30, 2024

December 2, 2023

November 30, 2024

December 2, 2023

March 1, 2025

March 2, 2024

March 1, 2025

March 2, 2024

Net Sales

North America

2026,~~557~~325

1621,~~686~~456

4369,~~564~~889

3657,~~316~~772

Asia/Pacific

10,~~942~~772

1012,~~060~~116

2132,~~597~~369

2234,~~872~~988

Europe

1514,~~972~~498

1416,~~709~~081

3347,~~234~~732

3046,~~461~~542

Latin America

21,~~015~~981

2,~~703~~732

46,~~841~~822

58,~~505~~237

Other (1)

5228

(2810

)

~~(20~~208

)

1,~~557~~547

Total

4953,~~491~~804

4452,~~130~~375

~~103~~157,~~216~~020

96149,~~711~~086

Gross Profit

North America

710,~~955~~049

58,~~795~~362

1626,~~931~~980

1321,~~258~~620

Asia/Pacific

3,~~654~~503

32,~~172~~902

610,~~990~~493

710,~~315~~217

Europe

4,~~574~~204

4,~~422~~824

913,~~443~~647

914,~~281~~105

Latin America

~~798~~737

~~894~~1,018

12,~~787~~524

13,~~986~~004

Other (1)

(1,~~655~~820

)

(1,~~741~~670

)

(35,~~399~~219

)

(23,~~034~~704

)

Total

1516,~~326~~673

1215,~~542~~436

3148,~~752~~425

2945,~~806~~242

(1)

Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses.

1112. RISKS AND UNCERTAINTIES

Our business and the companies with which we do business are subject to risks and uncertainties caused by factors beyond our control. Such factors include economic pressures related to inflation, rising interest rates, economic weakness or recession, as well as geopolitical and public health, tightening labor markets, and pandemics. These and other similar conditions and events have in the past and could in the future disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The terms “may,” “should,” “could,” “anticipate," “believe,” “continue,” “estimate,” “expect,” “intend,” “objective,” “plan,” “potential," “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include; economic, labor and political conditions; global business disruption caused by the Russian - Ukraine and Israel - Hamas wars; currency exchange fluctuations; and the ability of the Company to manage its growth and the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on August 5, 2024. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.

In addition, while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them or any outside third party, any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any securities analyst or outside third party, irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist the reader in better understanding our business, results of operations, financial condition, changes in financial condition and significant developments. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes appearing elsewhere in this filing. This section is organized as follows:

•

Business Overview

•

Results of Operations – an analysis and comparison of our consolidated results of operations for the three month and ~~six~~nine month periods ended ~~November~~March 301, ~~2024~~2025 and ~~December~~March 2, ~~2023~~2024, as reflected in our ~~unaudited~~Unaudited ~~consolidated~~Consolidated ~~statements~~Statements of ~~comprehensive~~Comprehensive (~~loss~~Loss) ~~income~~Income.

•

Liquidity, Financial Position and Capital Resources – a discussion of our primary sources and uses of cash for the ~~six~~nine month periods ended ~~November~~March 301, ~~2024~~2025 and ~~December~~March 2, ~~2023~~2024, and a discussion of changes in our financial position.

Business Overview

Some of the Company's products are manufactured in China and imported into the United States. The Office of the United States Trade Representative ("USTR") instituted tariffs on the importation of a number of products into the United States from China. These tariffs are a response to what the USTR considers to be certain unfair trade practices by China. A number of the Company's products manufactured in China are subject to duties when imported into the United States.

Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.

We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.

On January 24, 2025, the Company sold a substantial portion of its Healthcare assets to DirectMed Imaging, LLC (“DirectMed”) and entered into an exclusive 10-year global supply agreement in which Richardson will supply DirectMed with repaired Siemens CT X-ray tubes. Additionally, the Company will continue manufacturing ALTA CT X-ray tubes for DirectMed for approximately 12 to 18 months. This transaction resulted in loss of $4.9 million. Refer to Note 10, Disposal of Healthcare Assets and Related Charges, in Part I, Item 1 for transaction details.

The Company reports its financial performance based on the operating and reportable segments defined as follows:

Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers. We offer long-term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services. Our volume commitments are lower than the large display manufacturers, making us the ideal choice for companies with very specific design requirements. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms.

Refer to Note 1011, Segment and Geographic Information, in Part I, Item 1 for a discussion of the operating results by segment and geographic area.

RESULTS OF OPERATIONS

Financial Summary – Three Months Ended ~~November~~March 301, ~~2024~~2025

•

The ~~second~~third quarter of fiscal 2025 and fiscal 2024 both contained 13 weeks.

•

Net sales during the ~~second~~third quarter of fiscal 2025 were $4953.58 million, an increase of 122.17%, compared to net sales of $4452.14 million during the ~~second~~third quarter of fiscal 2024.

•

Gross margin increased to 31.0% during the ~~second~~third quarter of fiscal 2025 compared to 2829.45% during the ~~second~~third quarter of fiscal 2024.

•

Selling, general and administrative expenses were $1614.05 million or 3226.39% of net sales during the ~~second~~third quarter of fiscal 2025 compared to $14.54 million or 3227.86% of net sales during the ~~second~~third quarter of fiscal 2024.

•

~~Operating~~The ~~loss~~disposal ~~during the second quarter~~ of ~~fiscal~~certain ~~2025~~Healthcare ~~was~~assets ~~$0.7~~generated ~~million~~a ~~compared to an operating~~ loss of $24.09 million ~~during~~for the ~~second~~third quarter of fiscal ~~2024~~2025.

•

~~Net~~Operating loss during the ~~second~~third quarter of fiscal 2025 was $02.87 million compared to aan ~~net~~operating ~~loss~~income of $1.80 million during the ~~second~~third quarter of fiscal 2024.

•

~~Financial~~Net ~~Summary~~loss –during ~~Six~~the ~~Months~~third ~~Ended~~quarter ~~November~~of ~~30,~~fiscal ~~2024~~2025 was $2.1 million compared to a net income of $0.8 million during the third quarter of fiscal 2024.

~~The~~Financial ~~first~~Summary ~~six~~– ~~months~~Nine ofMonths ~~fiscal~~Ended ~~2025~~March ~~contained~~1, 262025 ~~weeks and the first six months of fiscal 2024 contained 27 weeks.~~

•

~~Net~~The ~~sales during the~~ first ~~six~~nine months of fiscal 2025 ~~were~~contained ~~$103.2~~39 ~~million,~~weeks anand ~~increase of 6.7%, compared to net sales of $96.7 million during~~ the first ~~six~~nine months of fiscal 2024 contained 40 weeks.

•

~~Gross~~Net ~~margin~~sales ~~of 30.8%~~ during the first ~~six~~nine months of fiscal 2025 ~~was~~were ~~unchanged~~$157.0 million, an increase of 5.3%, compared to ~~the~~net 30sales of $149.8%1 million during the first ~~six~~nine months of fiscal 2024.

•

~~Selling,~~Gross ~~general~~margin ~~and~~of ~~administrative expenses were $32~~30.~~1 million or 31.1~~8% ~~of net sales~~ during the first ~~six~~nine months of fiscal 2025 increased compared to $30.3 ~~million or 31.3~~% ~~of net sales~~ during the first ~~six~~nine months of fiscal 2024.

•

~~Operating~~Selling, ~~loss~~general and administrative expenses were $46.6 million or 29.7% of net sales during the first ~~six~~nine months of fiscal 2025 ~~was~~compared to $044.47 million ~~compared~~or to30.0% ~~an operating loss~~ of ~~$0.5~~net ~~million~~sales during the first ~~six~~nine months of fiscal 2024.

•

~~Net~~The ~~loss~~disposal ~~during the first six months~~ of ~~fiscal~~certain ~~2025~~Healthcare ~~was~~assets ~~$0.2~~generated ~~million compared to~~ a ~~net~~ loss of $04.69 million ~~during~~for the first ~~six~~nine months of fiscal ~~2024~~2025.

•

Operating loss during the first nine months of fiscal 2025 was $3.1 million compared to an operating income of $0.5 million during the first nine months of fiscal 2024.

•

Net loss during the first nine months of fiscal 2025 was $2.2 million compared to a net income of $0.2 million during the first nine months of fiscal 2024.

Net Sales and Gross Profit Analysis

Net sales by segment and percentage change during the ~~second~~third quarter and first ~~six~~nine months of fiscal 2025 and fiscal 2024 were as follows (in thousands):

Three Months Ended

FY25 vs. FY24

November 30, 2024

December 2, 2023

% Change

March 1, 2025

March 2, 2024

% Change

PMT

3433,~~397~~216

31,~~292~~163

96.96

GES

59,~~974~~299

211,~~609~~531

~~129~~-19.04

Canvys

69,~~851~~195

76,~~291~~590

-639.05

Healthcare

2,~~269~~094

23,~~938~~091

-2232.83

Total

4953,~~491~~804

4452,~~130~~375

122.17

Six Months Ended

FY25 vs. FY24

Nine Months Ended

FY25 vs. FY24

November 30, 2024

December 2, 2023

% Change

March 1, 2025

March 2, 2024

% Change

PMT

68101,~~599~~815

6798,~~036~~199

2.3.7

GES

1423,~~060~~359

718,~~003~~534

~~100~~26.80

Canvys

1423,~~489~~684

1723,~~180~~770

-150.74

Healthcare

68,~~068~~162

58,~~492~~583

10-4.59

Total

~~103~~157,~~216~~020

96149,~~711~~086

65.73

During the ~~second~~third quarter of fiscal 2025, consolidated net sales increased 122.17% compared to the ~~second~~third quarter of fiscal 2024. Sales for PMT increased 96.96%, sales for GES ~~increased~~decreased ~~129~~19.04%, sales for Canvys ~~decreased~~increased 639.05% and sales for Healthcare decreased 2232.83%. The increase in PMT was mainly due to increased sales of ~~electron devices, RF and Microwave components and~~ engineered solutions for the semiconductor wafer fabrication market. The ~~increase~~decrease in GES was mainly due to ~~increased~~a ~~shipments~~large oforder ~~power~~in ~~management~~fiscal ~~products~~2024 ~~focused~~that did not repeat in fiscal 2025's third quarter and a shipping delay on ~~green~~an ~~energy~~EV ~~applications~~locomotive order. The ~~decrease~~increase in Canvys was attributable to ~~lower~~ sales in the ~~European~~North American markets. The decrease in Healthcare reflected ~~lower~~parts, service and equipment sales infor ~~all~~two ~~product~~months ~~lines.~~due to the January 2025 sale of the majority of Healthcare assets to DirectMed.

During the first ~~six~~nine months of fiscal 2025, consolidated net sales increased 65.73% compared to the first ~~six~~nine months of fiscal 2024. Sales for PMT increased 2.3.7%, sales for GES increased ~~100~~26.80%, sales for Canvys decreased 150.74% and sales for Healthcare ~~increased~~decreased 104.59%. The increase in PMT was mainly due to increased sales of ~~RF and Microwave components and~~ engineered solutions for the semiconductor wafer fabrication market. The increase in GES was mainly due to increased shipments of power management products focused on numerous green energy applications. The decrease in Canvys was attributable to lower sales in ~~both~~ the ~~North American and~~ European markets. The ~~increase~~decrease in Healthcare reflected ~~increases in~~ parts, service and CTequipment ~~tube~~ sales ~~with~~for aeight ~~partial~~months ~~offset~~due ~~for~~to ~~decreased~~the ~~equipment~~January ~~sales~~2025 sale of the majority of Healthcare assets to DirectMed.

Gross profit by segment and percentage of net sales for the ~~second~~third quarter and first ~~six~~nine months of fiscal 2025 and fiscal 2024 were as follows (in thousands):

	Three Months Ended
	November 30, 2024		% of Net Sales			December 2, 2023		% of Net Sales
	March 1, 2025		% of Net Sales			March 2, 2024		% of Net Sales
PMT	$	10,~~430~~243		30.38	%	$	8,~~905~~815		28.53	%
GES		13,~~914~~049		32.08	%		~~761~~3,070		2926.26	%
Canvys		23,~~171~~056		3133.72	%		2,~~440~~265		3334.54	%
Healthcare		~~811~~325		3515.75	%		~~436~~1,286		1441.86	%
Total	$	1516,~~326~~673		31.0	%	$	1215,~~542~~436		2829.45	%

	Six Months Ended
	Nine Months Ended
	November 30, 2024		% of Net Sales			December 2, 2023		% of Net Sales
	March 1, 2025		% of Net Sales			March 2, 2024		% of Net Sales
PMT	$	2030,~~632~~875		30.13	%	$	2029,~~416~~231		3029.58	%
GES		47,~~288~~337		3031.54	%		25,~~341~~411		3329.42	%
Canvys		47,~~792~~848		33.1	%		58,~~805~~070		3334.80	%
Healthcare		2,~~040~~365		3329.60	%		12,~~244~~530		2229.75	%
Total	$	3148,~~752~~425		30.8	%	$	2945,~~806~~242		30.83	%

Gross profit reflects the distribution and manufacturing product margin less manufacturing variances, inventory obsolescence charges, customer returns, scrap and cycle count adjustments, engineering costs and other provisions.

Consolidated gross profit increased to $1516.47 million during the ~~second~~third quarter of fiscal 2025 compared to $1215.54 million during the ~~second~~third quarter of fiscal 2024. Consolidated gross margin as a percentage of net sales during the ~~second~~third quarter of fiscal 2025 increased to 31.0% when compared to 2829.45% during the ~~second~~third quarter of fiscal 2024. This margin increase was mainly due to ~~the~~favorable product mix in PMT, ~~product~~and ~~mix~~GES inwith ~~GES~~a ~~and~~partial ~~improved~~offset ~~manufacturing~~from ~~absorption~~unfavorable inproduct ~~Healthcare~~mix ~~with~~in aCanvys ~~partial~~and ~~offset~~manufacturing ~~from~~under ~~the~~absorption and higher ~~freight~~component ~~costs~~scrap in ~~Canvys~~Healthcare.

Consolidated gross profit increased to $3148.84 million during the first ~~six~~nine months of fiscal 2025 compared to $2945.82 million during the first ~~six~~nine months of fiscal 2024. Consolidated gross margin as a percentage of net sales during the first ~~six~~nine months of fiscal 2025 ofwas 30.8% ~~was unchanged when~~ compared to 30.83% for the first ~~six~~nine months of fiscal 2024. ~~Product~~The ~~mix~~improved ~~and~~margin ~~manufacturing~~was ~~under~~mainly ~~absorption~~due to favorable product mix in PMT partially offset by manufacturing under absorption, favorable product mix in GES, unfavorable product mix and ~~higher~~increased freight costs in Canvys ~~were offset by favorable mix~~ and ~~improved~~higher ~~manufacturing~~component ~~absorption~~scrap in Healthcare.

Power and Microwave Technologies

PMT net sales increased 96.96% to $3433.42 million during the ~~second~~third quarter of fiscal 2025 from $31.32 million during the ~~second~~third quarter of fiscal 2024. The increase was due primarily to increased sales of ~~electron devices, RF and Microwave components and~~ engineered solutions for the semiconductor wafer fabrication market. Gross margin as a percentage of net sales increased to 30.38% during the ~~second~~third quarter of fiscal 2025 as compared to 28.53% during the ~~second~~third quarter of fiscal 2024 due to product mix.

PMT net sales increased 2.3.7% to $68101.68 million during the first ~~six~~nine months of fiscal 2025 from $6798.02 million during the first ~~six~~nine months of fiscal 2024. The increase was due primarily to increased sales of ~~RF and Microwave components and~~ engineered solutions for the semiconductor wafer fabrication market. Gross margin as a percentage of net sales ~~decreased~~increased to 30.13% during the first ~~six~~nine months of fiscal 2025 as compared to 3029.58% during the first ~~six~~nine months of fiscal 2024 due to favorable product mix ~~and~~partially offset by manufacturing under absorption.

Green Energy Solutions

GES net sales ~~increased~~decreased ~~129~~19.04% to $69.03 million during the ~~second~~third quarter of fiscal 2025 from $211.65 million during the ~~second~~third quarter of fiscal 2024. The ~~increase~~decrease reflected the project-based nature of this segment and was mainly due to ~~increased~~a ~~shipments~~large order in the third quarter of ~~power~~fiscal ~~management~~2024 ~~products~~that ~~focused~~did not repeat in fiscal 2025 and a shipping delay on ~~numerous~~an ~~green~~EV ~~energy~~Locomotive ~~applications~~order. Gross margin as a percentage of net sales increased to 32.08% during the ~~second~~third quarter of fiscal 2025 as compared to 2926.26% during the ~~second~~third quarter of fiscal 2024 due to product mix.

GES net sales increased ~~100~~26.80% to $1423.13 million during the first ~~six~~nine months of fiscal 2025 from $718.05 million during the first ~~six~~nine months of fiscal 2024. The increase ~~reflected the project-based nature of this segment and~~ was mainly due to increased shipments of power management products focused on numerous green energy applications. Gross margin as a percentage of net sales ~~decreased~~increased to 3031.54 % during the first ~~six~~nine months of fiscal 2025 as compared to 3329.42% during the first ~~six~~nine months of fiscal 2024 due to product mix.

Canvys

Canvys net sales ~~decreased~~increased 639.05% to $6.9.2 million during the ~~second~~third quarter of fiscal 2025 from $76.36 million during the ~~second~~third quarter of fiscal 2024, due to ~~lower~~higher sales in the ~~European~~North American markets. Gross margin as a percentage of net sales decreased to 3133.72% during the ~~second~~third quarter of fiscal 2025 from 3334.54% during the ~~second~~third quarter of fiscal 2024 primarily due to ~~increased~~product ~~freight costs~~mix.

Canvys net sales decreased 150.74% to $1423.57 million during the first ~~six~~nine months of fiscal 2025 from $1723.28 million during the first ~~six~~nine months of fiscal 2024, due to lower sales in ~~both~~ the ~~North American and~~ European markets. Gross margin as a percentage of net sales decreased to 33.1% during the first ~~six~~nine months of fiscal 2025 from 3334.80% during the first ~~six~~nine months of fiscal 2024 ~~primarily~~ due to ~~increased~~product mix and higher freight costs.

Healthcare

Healthcare net sales decreased 2232.83% to $2.31 million during the ~~second~~third quarter of fiscal 2025 from $23.91 million during the ~~second~~third quarter of fiscal 2024. ~~due~~With the sale to ~~decreases~~DirectMed inon ~~all~~January ~~Healthcare~~24, ~~product~~2025, ~~lines~~the third quarter sales for fiscal 2025 only reflected parts, service and equipment sales for two months. Gross margin as a percentage of net sales ~~increased~~decreased to 3515.75% during the ~~second~~third quarter of fiscal 2025 as compared to 1441.86% during the ~~second~~third quarter of fiscal 2024 primarily due to ~~improved~~ manufacturing under absorption resulting from equipment downtime and higher component scrap expense.

Healthcare net sales ~~increased~~decreased 104.59% to $68.12 million during the first ~~six~~nine months of fiscal 2025 from $58.56 million during the first ~~six~~nine months of fiscal 2024. ~~primarily~~With ~~due~~the sale to ~~increases~~DirectMed inon ~~parts~~January ~~and~~24, CT2025, ~~tube~~ sales, ~~partially~~for ~~offset~~first bynine amonths ~~decrease~~of infiscal 2025 only reflected parts, service and equipment sales for eight months. Gross margin as a percentage of net sales ~~increased~~decreased to 3329.60% during the first ~~six~~nine months of fiscal 2025 as compared to 2229.75% during the first ~~six~~nine months of fiscal 2024 primarily due to ~~improved~~higher ~~manufacturing~~component ~~absorption~~scrap ~~and product mix~~expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) increased to $16.0 million for the second quarter of fiscal 2025 when compared to $14.5 million for the year ago quarter. This increase of $1.5 million or 10.4% from the second quarter of fiscal 2024 mainly reflected higher incentives due to sales growth. Expressed as a percentage of net sales, SG&A was 32.3% for the second quarter of fiscal 2025 compared to 32.8% in the second quarter of fiscal 2024.

SG&A increased to $32.1 million for the first six months of fiscal 2025 when compared to $30.3 million for the first six months of fiscal 2024. This increase of $1.8 million or 6.0% from the first six months of fiscal 2024 mainly reflected higher incentives due to sales growth. Expressed as a percentage of net salesSelling, ~~SG&A~~General ~~was~~and ~~31.1%~~Administrative ~~for the first six months of fiscal 2025 compared to 31.3% for the first six months of fiscal 2024.~~ Expenses

Selling, general and administrative expenses (“SG&A”) increased to $14.5 million for the third quarter of fiscal 2025 when compared to $14.4 million for the year ago quarter. This increase of $0.1 million or less than 1% from the third quarter of fiscal 2024 mainly reflected higher incentives due to sales growth, partially offset by lower R&D and professional service expenses. Expressed as a percentage of net sales, SG&A was 26.9% for the third quarter of fiscal 2025 compared to 27.6% in the third quarter of fiscal 2024.

SG&A increased to $46.6 million for the first nine months of fiscal 2025 when compared to $44.7 million for the first nine months of fiscal 2024. This increase of $1.9 million or 4.2% from the first nine months of fiscal 2024 mainly reflected higher incentives due to sales growth, partially offset by lower R&D expenses. Expressed as a percentage of net sales, SG&A was 29.7% for the first nine months of fiscal 2025 compared to 30.0% for the first nine months of fiscal 2024.

Disposal of Healthcare Assets

A substantial portion of Healthcare assets were sold to DirectMed on January 24, 2025 that resulted in a total loss of $4.9 million for the third quarter and first nine months of fiscal 2025. The loss on assets sold to DirectMed totaled $3.0 million and the Company recorded an impairment charge of $1.9 million for inventory and fixed assets. Refer to Note 10, Disposal of Healthcare Assets and Related Charges, in Part I, Item 1 for more details.

Other Income/Expense

Other income and expense includes interest income, foreign exchange gains and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.

Other expense during the ~~second~~third quarter of fiscal 2025 totaled $0.43 million compared to less than a $0.31 million expense for the ~~second~~third quarter of fiscal 2024. This increase iswas due to a $0.13 million increase in foreign exchange losses.

Other expense during the first ~~six~~nine months of fiscal 2025 totaled $0.14 million, ~~unchanged when~~ compared to $0.2 million for the first ~~six~~nine months of fiscal 2024. This increase was primarily due to a $0.3 million increase in foreign exchange losses.

Income Tax Provision

We recorded an income tax benefit of $01.30 million and an income tax provision of $0.52 million for the ~~second~~third quarter of fiscal 2025 and the ~~second~~third quarter of fiscal 2024, respectively. The effective income tax rate during the ~~second~~third quarter of fiscal 2025 was 2833.84% as compared to 2123.63% during the ~~second~~third quarter of fiscal 2024. The difference in rate during the ~~second~~third quarter of fiscal 2025 as compared to the ~~second~~third quarter of fiscal 2024 reflects changes in ~~the~~our geographical distribution of income (loss), ~~which~~and isthe ~~primarily~~discrete ~~driven~~item byrelated anto ~~increase~~the insale ~~U.S.~~of ~~earnings~~healthcare ~~for~~assets ~~fiscal~~resulting ~~2025~~in ~~and~~a ~~the~~loss ~~state~~in ~~income tax provision, as well as~~ the ~~impact~~third quarter of ~~U.S.~~fiscal ~~research and development credits~~2025. The 2833.84% effective income tax rate differs from the federal statutory rate of 21% as a result of ~~the~~our geographical distribution of income (loss), as well as the book loss on the sale of healthcare assets and the utilization of the U.S. research and development credit.

We recorded an income tax benefit of $01.23 million and an income tax provision of $0.1 million for the first ~~six~~nine months of fiscal 2025 and for the first ~~six~~nine months of fiscal 2024, respectively. The effective income tax rate during the first ~~six~~nine months of fiscal 2025 was a tax benefit of 6036.45% as compared to a tax ~~benefit~~provision of 1639.52% during the first ~~six~~nine months of fiscal 2024. The difference in rate during the first ~~six~~nine months of fiscal 2025 as compared to the first ~~six~~nine months of fiscal 2024 reflects changes in ~~the~~our geographical distribution of income (loss), ~~which~~and isthe ~~primarily~~discrete ~~driven~~item byrelated anto ~~increase~~the insale ~~U.S.~~of ~~earnings~~healthcare ~~for~~assets ~~fiscal~~resulting ~~2025~~in ~~and~~a ~~the~~loss ~~state~~in ~~income tax provision, as well as~~ the ~~impact~~third quarter of ~~U.S.~~fiscal ~~research and development credits~~2025. The 6036.45% effective income tax rate differs from the federal statutory rate of 21% as a result of ~~the~~our geographical distribution of income (loss), as well as the book loss on the sale of healthcare assets and the utilization of the U.S. research and development credit.

The Company recorded $0.3 million for uncertain tax positions as of November 30, 2024 as compared to $0.1 million as of June 1, 2024. We record interest related to uncertain tax positions in the income tax expense line item within the Consolidated Statements of Comprehensive (Loss) Income. Accrued interest was included within the related tax liability line in the Consolidated Balance Sheets. We have recorded a liability of less than $0.1 million for interest and penalties as it relates to the reserve of the research and development credit as of June 1, 2024 and November 30, 2024.

Net Income and Per Share Data

Net loss during the second quarter of fiscal 2025 was $0.8 million, or $0.05 per diluted common share and $0.05 per Class B diluted common share as compared to a net loss of $1.8 million during the second quarter of fiscal 2024 or $0.13 per diluted common share and $0.12 per Class B diluted common share.

Net loss during the first six months of fiscal 2025 was $0.2 million, or $0.01 per diluted common share and $0.01 per Class B diluted common share as compared to a net loss of $0.6 million during the first six months of fiscal 2024 or $0.04 per diluted common share and $0.04 per Class B diluted common share.

Net (Loss) Income and Per Share Data

Net loss during the third quarter of fiscal 2025 was $2.1 million, or $0.15 per diluted common share and $0.13 per Class B diluted common share as compared to a net income of $0.8 million during the third quarter of fiscal 2024 or $0.05 per diluted common share and $0.05 per Class B diluted common share.

Net loss during the first nine months of fiscal 2025 was $2.2 million, or $0.16 per diluted common share and $0.14 per Class B diluted common share as compared to a net income of $0.2 million during the first nine months of fiscal 2024 or $0.01 per diluted common share and $0.01 per Class B diluted common share.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

Our operations and cash needs have been primarily financed through operations and cash on hand.

Cash and cash equivalents were $2636.67 million at ~~November~~March 301, ~~2024~~2025. Cash and cash equivalents by geographic area aton ~~November~~March 301, ~~2024~~2025 consisted of $820.53 million in North America, $8.93 million in Europe, $1.20 million in Latin America and $87.01 million in Asia/Pacific. No cash was repatriated to the United States in the first ~~six~~nine months of fiscal 2025. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes. The January 24, 2025 sale of certain Healthcare assets to DirectMed generated $8.2 million of cash which will be utilized to support opportunities in our Green Energy Solutions business. See Note 8, Income Taxes, of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for the fiscal year ended June 1, 2024, filed with the SEC on August 5, 2024, for further information.

Cash and cash equivalents were $24.3 million at June 1, 2024. Cash and cash equivalents by geographic area at June 1, 2024 consisted of $7.1 million in North America, $7.3 million in Europe, $1.1 million in Latin America and $8.8 million in Asia/Pacific. We repatriated $0.3 million to the United States in the second quarter of fiscal 2024 from our entity in Mexico.

Our short-term and long-term liquidity requirements primarily arise from: (i) working capital requirements, (ii) capital expenditure needs and (iii) cash dividend payments (if and when declared by our Board of Directors). Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.

Based on past performance and current expectations, we believe that the existing sources of liquidity, including current cash, will provide sufficient resources to meet known capital requirements and working capital needs through the next twelve months. Additionally, while our future capital requirements will depend on many factors, including, but not limited to, the economy and the outlook for growth in our markets, we believe our existing sources of liquidity as well as our ability to generate operating cash flows will satisfy our future obligations and cash requirements.

On March 20, 2023, the Company established a senior, secured revolving credit facility agreement with a three-year term in an aggregate principal amount not to exceed $30 million, including a swingline loan and a letter of credit sub-facility (collectively, the "Revolving Credit Facility") with PNC Bank. The Revolving Credit Facility is guaranteed by the Company's domestic subsidiaries. Proceeds of the borrowings under the Revolving Credit Facility are expected to be used for working capital and general corporate purposes of the Company and its subsidiaries. The Company utilized $1.0 million of the credit line ~~to address short-term cash requirements~~ and repaid that $1.0 million during the first quarter of fiscal 2025. There was no utilization of the credit line during the second ~~quarter~~and third quarters of fiscal 2025. As of the end of the ~~second~~third quarter for fiscal 2025 and the date of this report, no amounts were outstanding under the Revolving Credit Facility.

Cash Flows from Operating Activities

Cash flows from operating activities are primarily a result of our net income (loss) adjusted for non-cash items and changes in our operating assets and liabilities.

Operating activities generated $510.95 million of cash during the first ~~six~~nine months of fiscal 2025. We had a net loss of $02.2 million during the first ~~six~~nine months of fiscal 2025, which included non-cash stock-based compensation expense of $01.92 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.23 million, unrealized foreign exchange ~~gain~~loss of $0.24 million, ~~and~~ depreciation and amortization expense of $23.10 million associated with our property, plant and equipment and intangible assets and the disposal loss on Healthcare assets of $4.9 million. Changes in our operating assets and liabilities generated $3.2.8 million in cash during the first ~~six~~nine months of fiscal 2025, net of foreign currency exchange gains and losses, included an increase in accounts payable and accrued liabilities of $53.21 million, an increase in accounts receivable of $1.15 million and ana ~~increase~~decrease in inventories of $1.71 million. The increase in accounts receivable was primarily due to the higher level of sales. The changes in accounts payable and accrued liabilities were timing related.

2425

Operating activities ~~generated~~used $10.87 million of cash during the first ~~six~~nine months of fiscal 2024. We had a net ~~loss~~income of $0.62 million during the first ~~six~~nine months of fiscal 2024, which included non-cash stock-based compensation expense of $01.80 million associated with the issuance of stock option and restricted stock awards, inventory reserve provisions of $0.35 million and depreciation and amortization expense of $23.12 million associated with our property and equipment as well as amortization of our intangible assets. Changes in our operating assets and liabilities used $05.97 million in cash during the first ~~six~~nine months of fiscal 2024, net of foreign currency exchange gains and losses included an increase in inventory of $62.2 million, a decrease in accounts payable of $15.12 million and an increase in prepayments of $0.21 million. Partially offsetting the cash utilization was a decrease in receivables of $61.30 million and an increase in accrued liabilities of $0.46 million. The decrease in accounts receivable was primarily due to the lower level of sales across our operating segments in the current quarter. Most of the inventory increase supported the products for electron tubes and ~~GES~~Healthcare. The changes in accounts payable and accrued liabilities were timing related.

Cash Flows from Investing Activities

Cash ~~used~~provided inby investing activities of $15.40 million during the first ~~six~~nine months of fiscal 2025 was due to the $7.0 million of proceeds from the disposal of Healthcare assets and $2.0 million offset for capital expenditures. Capital expenditures were primarily related to our IT system and LaFox manufacturing and facilities. LaFox manufacturing primarily supports the Electron Device Group ~~("EDG")~~ and Green Energy Solutions ~~("GES")~~.

Cash used in investing activities of $23.71 million during the first ~~six~~nine months of fiscal 2024 was due to capital expenditures. Capital expenditures were primarily related to our IT system and the LaFox manufacturing and facilities renovation. LaFox manufacturing primarily supports the Electron Device Group ~~("EDG")~~ and Green Energy Solutions ~~("GES")~~.

Cash Flows from Financing Activities

Cash flows used in financing activities consist primarily of cash dividends and cash flows provided by financing activities consist primarily of the proceeds from the issuance of stock. All future dividend payments are at the discretion of the Board of Directors. Dividend payments depend on earnings, capital requirements, operating conditions and such other factors that the Board may deem relevant.

Cash used inby financing activities of $12.64 million during the first ~~six~~nine months of fiscal 2025 primarily resulted from $12.76 million of dividend payments to stockholders partially offset by $0.3 million of proceeds from the issuance of stock.

Cash used by financing activities of $12.53 million during the first ~~six~~nine months of fiscal 2024 primarily resulted from $12.75 million of dividend payments to stockholders partially offset by $0.3 million of proceeds from the issuance of stock.

Critical Accounting Estimates

There have been no material changes in our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended June 1, 2024, filed with the SEC on August 5, 2024. We are not aware of any specific events or circumstances that would require us to update our estimates, assumptions and judgments.

Impact of New Accounting Standards

For information about recently issued accounting pronouncements, see Note 4, New Accounting Pronouncements - Not Yet Adopted, included in Part 1, Item 1.

2526

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management and Market Sensitive Financial Instruments

We are exposed to many different market risks with the various industries we serve. The primary financial risk we are exposed to is foreign currency exchange, as certain of our operations, assets and liabilities are denominated in foreign currencies. We manage these risks through normal operating and financing activities.

The interpretation and analysis of these disclosures should not be considered in isolation since such variances in exchange rates would likely influence other economic factors. Such factors, which are not readily quantifiable, would likely also affect our operations. Additional disclosure regarding various market risks is set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 1, 2024 filed with the SEC on August 5, 2024.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~November~~March 301, ~~2024~~2025.

Disclosure controls and procedures are intended to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the ~~second~~third quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

2627

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended June 1, 2024, filed with the SEC on August 5, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF

OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

a) ~~Form~~First ~~8-K~~Amendment ~~disclosures~~to ~~for~~PNC ~~the~~Credit ~~quarter covered by this Form 10-Q: None.~~Agreement

On April 9, 2025, the Company and certain of its subsidiaries (collectively, the “Loan Parties”) entered into the First Amendment (the “First Amendment”) to the Credit Agreement, dated March 20, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Company, the Guarantors party thereto, the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent thereunder (“PNC”).

The First Amendment amends the Credit Agreement to modify the definition of “Consolidated EBITDA” to take into account the non-recurring non-cash loss in the amount of $4,920,000 recognized by the Company in connection with the consummation of the transactions contemplated by that certain Asset Purchase Agreement, dated January 24, 2025 (the “Purchase Agreement”), by and between the Company and DirectMed Imaging, LLC.

The effectiveness of the modifications to the Credit Agreement contemplated by the First Amendment is conditioned on the receipt by PNC of (a) the First Amendment duly executed by the Loan Parties, each Lender party thereto and the Administrative Agent; and (b) an executed copy of the Purchase Agreement, together with all schedules and exhibits thereto.

The foregoing description of the First Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the First Amendment, attached to this Form 10-Q as Exhibit 5.01, and incorporated herein by reference.

b) None.

c) 10b5-1 trading arrangements: None.

2728

ITEM 6. EXHIBITS

Exhibit Index

ExhibitNumber		Description
3.1		Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Annex III of the Proxy Statement dated August 22, 2014).
3.2		Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2017).
5.01		First Amendment to Credit Agreement, dated April 9, 2025, by and among the Company, the Guarantors party thereto, the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent.
31.1		Certification of Edward J. Richardson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Robert J. Ben pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following financial information from our Quarterly Report on Form 10-Q for the ~~second~~third quarter of fiscal 2025, filed with the SEC on ~~January~~April 910, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Comprehensive (Loss) Income, (iii) the Unaudited Consolidated Statements of Cash Flows, (iv) the Unaudited Consolidated Statement of Stockholders’ Equity and (v) Notes to Unaudited Consolidated Financial Statements.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

2829

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	RICHARDSON ELECTRONICS, LTD.
Date: January 10, 2025	By:	/s/ Robert J. Ben
Date: April 10, 2025	By:	/s/ Robert J. Ben
		Robert J. BenChief Financial Officer and Chief Accounting Officer (on behalf of the Registrant and as Principal Financial Officer)

2930

Filing Compare · RICHARDSON ELECTRONICS, LTD.