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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 


 

FORM 10-Q/A

(Amendment No. 1)

 


 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023 or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

 

Commission File Number 1-36117

inTEST Corporation
(Exact Name of Registrant as Specified in its Charter)

 

Delaware
(State or other jurisdiction of incorporation or organization)

22-2370659
(I.R.S. Employer Identification Number)

 

804 East Gate Drive, Suite 200
Mt. Laurel, New Jersey 08054
(Address of principal executive offices, including zip code)

(856) 505-8800
(Registrant's Telephone Number, including Area Code)

 

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

 

Title of Each Class
Common Stock, par value $0.01 per share

Trading Symbol

INTT

Name of Each Exchange on Which Registered
NYSE American

 

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 ☒

 

Number of shares of Common Stock, $0.01 par value, outstanding as of the close of business on March 1, 2024:   12,164,698

 

 

 

 

inTEST CORPORATION

 

TABLE OF CONTENTS

 

 

Page

  

EXPLANATORY NOTE

1

  

PART I.

FINANCIAL INFORMATION

 
   

Item 1.

Financial Statements (Unaudited and as restated)

 
   
 

Consolidated Balance Sheets as of September 30, 2023 (Unaudited and as restated) and December 31, 2022

2

 

Unaudited Consolidated Statements of Operations for the three months and nine months ended September 30, 2023 (as restated) and 2022

3

 

Unaudited Consolidated Statements of Comprehensive Earnings for the three months and nine months ended September 30, 2023 (as restated) and 2022

4

 

Unaudited Consolidated Statements of Stockholders' Equity for the three months and nine months ended September 30, 2023 (as restated) and 2022

5

 

Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 (as restated) and 2022

7

 

Notes to Consolidated Financial Statements (as restated)

8

   

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations (as restated)

28
   

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36
   

Item 4.

Controls and Procedures (as restated)

37
   

PART II.

OTHER INFORMATION

38
   

Item 1.

Legal Proceedings

38
   

Item 1A.

Risk Factors (as restated)

38
   

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39
   

Item 3.

Defaults Upon Senior Securities

39
   

Item 4.

Mine Safety Disclosures

39
   

Item 5.

Other Information

39
   

Item 6.

Exhibits (as restated)

40
  

SIGNATURES

41

 

 

 
 

 

Explanatory Note

 

inTEST Corporation (the “Company”) is filing this Amendment No.1 on Form 10-Q/A for the quarter ended September 30, 2023 (this “Form 10-Q/A”).

 

This Form 10-Q/A amends the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, as filed with the Securities and Exchange Commission (“SEC”) on November 9, 2023 (the “Original Filing”). This Form 10-Q/A is being filed to restate the Company’s unaudited consolidated financial statements for the three and nine months ended September 30, 2023. The restatement reflects the reversal of revenue related to the sale of discontinued material/components purchased on behalf of customers where the associated materials/components were still physically located with the Company and the materials/components are expected to be applied to future product orders for these customers. These transactions were all fully paid for and legal title has transferred to the customer. However, these facts alone are not sufficient for revenue recognition under accounting principles generally accepted in the United States of America ("U.S. GAAP") for such an arrangement. These adjustments were evaluated by management in accordance with SEC Staff Accounting Bulletin Topic 1M, "Materiality" and management determined the effects of the restatement to be material. See Note 3 to the unaudited consolidated financial statements included in this Form 10-Q/A for further information regarding the restatement.

 

The Company is filing this Form 10-Q/A to amend and restate the Original Filing with modification as necessary to reflect the restatement. The following items have been amended to reflect the restatement:

 

 

Part I, Item1:

Financial Information

 

Part I, Item2:

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

 

Part I, Item4:

Controls and Procedures

 

Part II, Item1A.:

Risk Factors

 

Part II, Item6:

Exhibits

 

In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this Form 10-Q/A (Exhibits 31.1, 31.2, 32.1 and 32.2).

 

Except as otherwise described above and as otherwise set forth in this Form 10-Q/A, this Form 10-Q/A does not amend, modify or update any other information contained in the Original Filing. This Form 10-Q/A does not purport to reflect any information or events subsequent to the Original Filing, except as expressly described herein. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Filing. Among other things, forward-looking statements and risk factor disclosure in the Original 10-Q have not been revised to reflect events that occurred or facts that became known to the Company after the filing of the Original Filing, and such forward-looking statements and risk factors should be read in their historical context.

 

-1-

 
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS

inTEST CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

 

  

September 30,

  

December 31,

 
  

2023

  

2022

 
  

(Unaudited)

     
  

As Restated

     

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $41,685  $13,434 

Restricted cash

  -   1,142 

Trade accounts receivable, net of allowance for credit losses of $499 and $496, respectively

  20,710   21,215 

Inventories

  22,156   22,565 

Prepaid expenses and other current assets

  2,006   1,695 

Total current assets

  86,557   60,051 

Property and equipment:

        

Machinery and equipment

  6,829   6,625 

Leasehold improvements

  3,581   3,242 

Gross property and equipment

  10,410   9,867 

Less: accumulated depreciation

  (7,267)  (6,735)

Net property and equipment

  3,143   3,132 

Right-of-use assets, net

  4,755   5,770 

Goodwill

  21,578   21,605 

Intangible assets, net

  16,959   18,559 

Deferred tax assets

  1,381   280 

Restricted certificates of deposit

  100   100 

Other assets

  945   569 

Total assets

 $135,418  $110,066 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities:

        

Current portion of Term Note

 $4,100  $4,100 

Current portion of operating lease liabilities

  1,730   1,645 

Accounts payable

  7,296   7,394 

Accrued wages and benefits

  4,030   3,907 

Accrued professional fees

  1,188   884 

Customer deposits and deferred revenue

  4,398   4,498 

Accrued sales commissions

  1,176   1,468 

Domestic and foreign income taxes payable

  1,119   1,409 

Other current liabilities

  1,557   1,564 

Total current liabilities

  26,594   26,869 

Operating lease liabilities, net of current portion

  3,501   4,705 

Term Note, net of current portion

  8,967   12,042 

Contingent consideration

  1,002   1,039 
Deferred revenue, net of current portion  1,033   - 

Other liabilities

  397   455 

Total liabilities

  41,494   45,110 

Commitments and Contingencies

          

Stockholders' equity:

        

Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding

  -   - 

Common stock, $0.01 par value; 20,000,000 shares authorized; 12,237,070 and 11,063,271 shares issued, respectively

  122   111 

Additional paid-in capital

  53,960   31,987 

Retained earnings

  40,741   32,854 

Accumulated other comprehensive earnings

  2   218 

Treasury stock, at cost; 75,758 and 34,308 shares, respectively

  (901)  (214)

Total stockholders' equity

  93,924   64,956 

Total liabilities and stockholders' equity

 $135,418  $110,066 

 

See accompanying Notes to Consolidated Financial Statements. 

 

-2-

 
 

 

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

(Unaudited)

 

   

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

 
   

2023

   

2022

   

2023

   

2022

 
   

As Restated

           

As Restated

         
                                 

Revenue

  $ 30,941     $ 30,771     $ 95,418     $ 84,423  

Cost of revenue

    16,494       16,873       50,889       45,964  

Gross profit

    14,447       13,898       44,529       38,459  
                                 

Operating expenses:

                               

Selling expense

    4,295       4,009       13,411       11,498  

Engineering and product development expense

    1,802       1,866       5,689       5,649  

General and administrative expense

    5,882       4,864       16,099       14,623  

Total operating expenses

    11,979       10,739       35,199       31,770  
                                 

Operating income

    2,468       3,159       9,330       6,689  

Interest expense

    (168 )     (179 )     (526 )     (457 )

Other income

    423       59       678       32  
                                 

Earnings before income tax expense

    2,723       3,039       9,482       6,264  

Income tax expense

    446       515       1,595       1,047  
                                 

Net earnings

  $ 2,277     $ 2,524     $ 7,887     $ 5,217  
                                 

Earnings per common share - basic

  $ 0.19     $ 0.24     $ 0.70     $ 0.49  
                                 

Weighted average common shares outstanding - basic

    11,886,005       10,695,867       11,294,306       10,655,469  
                                 

Earnings per common share - diluted

  $ 0.19     $ 0.23     $ 0.68     $ 0.48  
                                 

Weighted average common shares and common share equivalents outstanding - diluted

    12,212,317       10,864,540       11,665,850       10,840,644  

 

See accompanying Notes to Consolidated Financial Statements.

 

-3-

 
 

 

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)

(Unaudited)

 

   

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

 
   

2023

   

2022

   

2023

   

2022

 
   

As Restated

           

As Restated

         
                                 

Net earnings

  $ 2,277     $ 2,524     $ 7,887     $ 5,217  
                                 

Unrealized gain (loss) on interest rate swap agreement

    (44 )     169       (115 )     578  

Foreign currency translation adjustments

    (424 )     (935 )     (101 )     (1,774 )
                                 

Comprehensive earnings

  $ 1,809     $ 1,758     $ 7,671     $ 4,021  

 

See accompanying Notes to Consolidated Financial Statements

 

-4-

 
 

 

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands, except share data)

(Unaudited)

 

  

Nine Months Ended September 30, 2023

 
                  

Accumulated

         
          

Additional

      

Other

      

Total

 
  

Common Stock

  

Paid-in

  

Retained

  

Comprehensive

  

Treasury

  

Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

Earnings

  

Stock

  

Equity

 

Balance, January 1, 2023

  11,063,271  $111  $31,987  $32,854  $218  $(214) $64,956 
                             

Net earnings

  -   -   -   2,817   -   -   2,817 

Other comprehensive earnings

  -   -   -   -   71   -   71 

Amortization of deferred compensation related to stock-based awards

  -   -   474   -   -   -   474 

Issuance of unvested shares of restricted stock

  90,588   1   (1)  -   -   -   - 

Forfeitures of unvested shares of restricted stock

  (13,271)  -   -   -   -   -   - 

Stock options exercised

  25,200   -   165   -   -   -   165 

Shares issued under Employee Stock Purchase Plan

  2,292   -   48   -   -   -   48 

Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards

  -   -   -   -   -   (33)  (33)

Balance, March 31, 2023

  11,168,080   112   32,673   35,671   289   (247)  68,498 
                             

Net earnings

  -   -   -   2,793   -   -   2,793 

Other comprehensive earnings

  -   -   -   -   181   -   181 

Amortization of deferred compensation related to stock-based awards

  -   -   605   -   -   -   605 

Issuance of unvested shares of restricted stock

  6,873   -   -   -   -   -   - 

Stock options exercised

  86,600   1   734   -   -   -   735 

Shares issued under Employee Stock Purchase Plan

  1,870   -   49   -   -   -   49 

Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards

  -   -   -   -   -   (41)  (41)

Shares issued pursuant to At-the-Market Offering

  921,797   9   19,235   -   -   -   19,244 

Balance, June 30, 2023

  12,185,220   122   53,296   38,464   470   (288)  92,064 
                             

Net earnings

  -   -   -   2,277   -   -   2,277 

Other comprehensive loss

  -   -   -   -   (468)  -   (468)

Amortization of deferred compensation related to stock-based awards

  -   -   544   -   -   -   544 

Issuance of additional shares of restricted stock related to performance-based awards which vested in the period

  40,557   -   -   -   -   -   - 

Forfeiture of unvested shares of restricted stock

  (4,220)  -   -   -   -   -   - 

Stock options exercised

  12,750   -   78   -   -   -   78 

Shares issued under Employee Stock Purchase Plan

  2,763   -   42   -   -   -   42 

Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards

  -   -   -   -   -   (613)  (613)

Balance, September 30, 2023, As Restated

  12,237,070  $122  $53,960  $40,741  $2  $(901) $93,924 

 

-5-

 

 

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Continued)
(In thousands, except share data)

(Unaudited)

 

   

Nine Months Ended September 30, 2022

 
                                   

Accumulated

                 
                   

Additional

           

Other

           

Total

 
   

Common Stock

   

Paid-in

   

Retained

   

Comprehensive

   

Treasury

   

Stockholders'

 
   

Shares

   

Amount

   

Capital

   

Earnings

   

Earnings (loss)

   

Stock

   

Equity

 

Balance, January 1, 2022

    10,910,460     $ 109     $ 29,931     $ 24,393     $ 594     $ (204 )   $ 54,823  
                                                         

Net earnings

    -       -       -       577       -       -       577  

Other comprehensive earnings

    -       -       -       -       173       -       173  

Amortization of deferred compensation related to stock-based awards

    -       -       372       -       -       -       372  

Issuance of unvested shares of restricted stock

    79,489       1       (1 )     -       -       -       -  

Shares issued under Employee Stock Purchase Plan

    5,245       -       56       -       -       -       56  

Balance, March 31, 2022

    10,995,194       110       30,358       24,970       767       (204 )     56,001  
                                                         

Net earnings

    -       -       -       2,116       -       -       2,116  

Other comprehensive loss

    -       -       -       -       (603 )     -       (603 )

Amortization of deferred compensation related to stock-based awards

    -       -       551       -       -       -       551  

Issuance of unvested shares of restricted stock

    44,044       -       -       -       -       -       -  

Shares surrendered by employees to satisfy tax liability at vesting of stock-based awards

    -       -       -       -       -       (10 )     (10 )

Shares issued under Employee Stock Purchase Plan

    9,470       -       65       -       -       -       65  

Balance, June 30, 2022

    11,048,708       110       30,974       27,086       164       (214 )     58,120  
                                                         

Net earnings

    -       -       -       2,524       -       -       2,524  

Other comprehensive loss

    -       -       -       -       (766 )     -       (766 )

Amortization of deferred compensation related to stock-based awards

    -       -       450       -       -       -       450  

Forfeiture of unvested shares of restricted stock

    (5,944 )     -       -       -       -       -       -  

Stock options exercised

    8,060       -       38       -       -             38  

Shares issued under Employee Stock Purchase Plan

    7,034       1       54       -       -       -       55  

Balance, September 30, 2022

    11,057,858     $ 111     $ 31,516     $ 29,610     $ (602 )   $ (214 )   $ 60,421  

 

See accompanying Notes to Consolidated Financial Statements

 

-6-

 
 

 

inTEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

(Unaudited)

 

   

Nine Months Ended
September 30,

 
   

2023

   

2022

 
   

As Restated

         

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net earnings

  $ 7,887     $ 5,217  

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

               

Depreciation and amortization

    3,515       3,674  

Provision for excess and obsolete inventory

    385       307  

Foreign exchange loss

    17       107  

Amortization of deferred compensation related to stock-based awards

    1,623       1,373  

Discount on shares sold under Employee Stock Purchase Plan

    21       28  

Loss on disposal of property and equipment

    164       45  

Deferred income tax benefit

    (1,101 )     (1,162 )

Adjustment to contingent consideration liability

    (358 )     -  

Changes in assets and liabilities:

               

Trade accounts receivable

    480       (4,900 )

Inventories

    (9 )     (8,549 )

Prepaid expenses and other current assets

    (313 )     (907 )

Other assets

    (492 )     (1 )

Operating lease liabilities

    (1,275 )     (1,064 )

Accounts payable

    (100 )     3,947  

Accrued wages and benefits

    125       (527 )

Accrued professional fees

    305       (153 )

Customer deposits and deferred revenue

    (105 )     (827 )

Accrued sales commissions

    (292 )     310  

Domestic and foreign income taxes payable

    (292 )     (672 )

Other current liabilities

    320       35  
Deferred revenue, net of current portion     1,033       -  

Other liabilities

    (17 )     61  

Net cash provided by (used in) operating activities

    11,521       (3,658 )
                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Refund of final working capital adjustment related to Acculogic

    -       371  

Purchase of property and equipment

    (983 )     (1,043 )

Purchase of short-term investments

    -       (3,494 )

Net cash used in investing activities

    (983 )     (4,166 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Net proceeds from public offering of common stock

    19,244       -  

Repayments of Term Note

    (3,075 )     (2,933 )

Proceeds from shares sold under Employee Stock Purchase Plan

    118       148  

Proceeds from stock options exercised

    978       38  

Settlement of employee tax liabilities in connection with treasury stock transaction

    (687 )     (10 )

Net cash provided by (used in) financing activities

    16,578       (2,757 )
                 

Effects of exchange rates on cash

    (7 )     (576 )
                 

Net cash provided by (used in) all activities

    27,109       (11,157 )

Cash, cash equivalents and restricted cash at beginning of period

    14,576       21,195  

Cash and cash equivalents at end of period

  $ 41,685     $ 10,038  
                 

Cash payments for:

               

Domestic and foreign income taxes

  $ 2,988     $ 2,926  

 

See accompanying Notes to Consolidated Financial Statements.

 

-7-

 

 

inTEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)

 

 

(1)

NATURE OF OPERATIONS

 

We are a global supplier of innovative test and process technology solutions for use in manufacturing and testing across a wide range of markets including automotive, defense/aerospace, industrial, life sciences, security and semiconductor. We have three operating segments which are also our reportable segments and reporting units: Electronic Test, Environmental Technologies and Process Technologies.

 

The consolidated entity is comprised of inTEST Corporation and our wholly-owned subsidiaries. We manufacture our products in the U.S., Canada and the Netherlands. Marketing and support activities are conducted worldwide from our facilities in the U.S., Canada, Germany, Singapore, the Netherlands and the U.K. We operate our business worldwide and sell our products both domestically and internationally.

 

All of our operating segments have multiple products that we design, manufacture and market to our customers. Due to a number of factors, our products have varying levels of gross margin. The mix of products we sell in any period is ultimately determined by our customers’ needs. Therefore, the mix of products sold in any given period can change significantly from the prior period. In addition, we sell our products to a variety of different types of customers with varying levels of discounts and commission expense. As a result of changes in both the mix of products sold as well as customer mix in any given period, our consolidated gross margin can vary significantly from period to period.

 

The semiconductor market (“semi” or the “semi market”) which includes both the broader semiconductor market, as well as the more specialized automated test equipment (“ATE”) and wafer production sectors within the broader semiconductor market, has historically been the largest single market in which we operate. The semi market is characterized by rapid technological change, competitive pricing pressures and cyclical as well as seasonal market patterns. The semi market is also subject to periods of significant expansion or contraction in demand. In addition to the semi market, we sell into a variety of other markets. Our intention is to continue diversifying our markets, our product offerings within the markets we serve and our customer base across all of our markets with the goal of reducing our dependence on any one market, product or customer. In particular, we are seeking to reduce the impact of volatility in the semi market on our results of operations.

 

Our Electronic Test segment sells its products to semiconductor manufacturers and third-party test and assembly houses (end user sales) and to ATE manufacturers (original equipment manufacturer (“OEM”) sales), who ultimately resell our equipment with theirs to both semiconductor manufacturers and third-party test and assembly houses. These sales all fall within the ATE sector of the semi market. With the acquisition of Acculogic Inc. and its affiliates (“Acculogic”) in December 2021, our Electronic Test segment also sells its products to customers in markets outside the semi market including the automotive, defense/aerospace, industrial and life sciences markets. Our Environmental Technologies segment sells its products to end users and OEMs within the ATE sector of the semi market. It also sells its products to customers in a variety of other markets other than the semi market, including the automotive, defense/aerospace, industrial and life sciences markets. Our Process Technologies segment sells its products to customers in the wafer production sector within the semi market. It also sells its products to customers in a variety of other markets other than the semi market, including the automotive, defense/aerospace, industrial, life sciences and security markets.

 

Our financial results are affected by a wide variety of factors, including, but not limited to, general economic conditions worldwide and in the markets in which we operate, economic conditions specific to the semi market and the other markets we serve, downward pricing pressures from customers, our reliance on a relatively few number of customers for a significant portion of our sales and our ability to safeguard patented technology and intellectual property in a rapidly evolving market. In addition, we are exposed to the risk of obsolescence of our inventory depending on the mix of future business and technological changes within the markets that we serve. Part of our strategy for growth includes potential acquisitions that may cause us to incur substantial expense in reviewing and evaluating potential transactions. We may or may not be successful in locating suitable businesses to acquire and in closing acquisitions of businesses we pursue. In addition, we may not be able to successfully integrate any business we do acquire with our existing business and we may not be able to operate the acquired business profitably. As a result of these or other factors, we may experience significant period-to-period fluctuations in future operating results.

 

On May 11, 2023, we entered into an At-the-Market Issuance Sales Agreement (the "Sales Agreement") pursuant to which we issued and sold 921,797 shares of our common stock having an aggregate offering price of $20,000 between May 11, 2023 and May 31, 2023. We received net proceeds from the sale of these shares of $19,244 after payment of commissions of 3.0% of the gross proceeds and other fees related to the sale of these shares.

 

- 8-

 
 
 

(2)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements include our accounts and those of our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain of our accounts, including contingent consideration, inventories, long-lived assets, goodwill, identifiable intangibles and deferred tax assets and liabilities, including related valuation allowances, are particularly impacted by estimates.

 

In the opinion of management, the accompanying unaudited, restated consolidated financial statements include all adjustments necessary to present fairly the financial position, results of operations, and changes in cash flows for the interim periods presented. Except as disclosed elsewhere in this Form 10-Q/A, all such adjustments are of a normal and recurring nature. Certain footnote information has been condensed or omitted from these consolidated financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) filed on March 22, 2023 with the Securities and Exchange Commission.
 

Reclassification

Certain prior period amounts have been reclassified to be comparable with the current period's presentation. 

 

Subsequent Events

We have made an assessment of our operations and determined that there were no material subsequent events requiring adjustment to, or disclosure in, our consolidated financial statements for the nine months ended September 30, 2023.

 

Business Combinations

Acquired businesses are accounted for using the purchase method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Fair values of intangible assets are estimated by valuation models prepared by our management and third-party advisors. The assets purchased and liabilities assumed have been reflected in our consolidated balance sheets, and the operating results are included in the consolidated statements of operations and consolidated statements of cash flows from the date of acquisition. Any change in the fair value of acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, will be recognized in the consolidated statement of operations in the period of the estimated fair value change. Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred in general and administrative expense in the consolidated statements of operations.

 

Cash, Cash Equivalents and Restricted Cash

 

Short-term investments that have maturities of three months or less when purchased are considered to be cash equivalents and are carried at cost, which approximates fair value. Our cash balances, which are deposited with highly reputable financial institutions, at times may exceed the federally insured limits. We have not experienced any losses related to these cash balances and believe the credit risk to be minimal.

 

Restricted cash at December 31, 2022 represented amounts deposited at our bank in the Netherlands to support a bank guarantee which one of the customers of our Process Technologies segment required as a condition of paying a deposit on a large order they placed with us in 2022. The related order was Euro denominated. The amount of the deposit and related guarantee declined as shipments were made against the order. At September 30, 2023 this deposit had been fully utilized and the bank guarantee had therefore lapsed. At December 31, 2022, the amount of the deposit, and, accordingly, the guarantee, was EUR 1,067, or $1,142.

 

- 9-

 
 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets and the consolidated statements of cash flows:

 

  

September 30,

2023

  

December 31,

2022

 

Cash and cash equivalents

 $41,685  $13,434 

Restricted cash

  -   1,142 
         

Total cash, cash equivalents and restricted cash

 $41,685  $14,576 

 

Trade Accounts Receivable and Allowance for Credit Losses

 

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We grant credit to customers and generally require no collateral. To minimize our risk, we perform ongoing credit evaluations of our customers' financial condition. As discussed below under “Effect of Recently Adopted Amendments to Authoritative Accounting Guidance”, effective January 1, 2023, we follow the guidance in Accounting Standards Codification (“ASC”) Topic 326 (Financial Instruments – Credit Losses) in developing our estimate of the allowance for credit losses related to our accounts receivable. The allowance for credit losses is our best estimate of the amount of expected credit losses in our existing accounts receivable. In establishing the amount of allowance for credit losses, we consider all information available as of the reporting date including information related to past events, such as historical loss rates and actual incurred losses, as well as current conditions that may indicate future risk of loss and any other factors of which we are aware, that we believe could impact the ultimate collectability of the related receivables in future periods.

 

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We do not have any significant off-balance sheet credit exposure related to our customers. Cash flows from accounts receivable are recorded in operating cash flows.

 

For the nine months ended September 30, 2023, there were no significant changes in the amount of the allowance for credit losses. During the nine months ended September 30, 2023, we recorded a bad debt recovery of $79. This amount had been fully written off prior to our acquisition of Acculogic and was no longer in our accounts receivable balance. There was no bad debt expense or recovery recorded during the nine months ended September 30, 2022.

 

Fair Value of Financial Instruments

 

Our financial instruments include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable, accrued expenses, our credit facility, interest rate swaps and our liabilities for contingent consideration. Our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at cost which approximates fair value, due to the short maturities of the accounts. Our short-term investments are classified as held-to-maturity and carried at amortized cost. Our credit facility and our interest rate swap are discussed further below and in Note 10. Our liabilities for contingent consideration are accounted for in accordance with the guidance in ASC Topic 820 (Fair Value Measurement). ASC Topic 820 establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). Our contingent consideration liabilities are measured at fair value on a recurring basis using Level 3 inputs which are inputs that are unobservable and significant to the overall fair value measurement. These unobservable inputs reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. See Note 4 for further disclosures related to the fair value of our liabilities for contingent consideration.

 

Goodwill, Intangible and Long-Lived Assets

We have three reportable segments which are also our reporting units: Electronic Test, Environmental Technologies and Process Technologies.

 

We account for goodwill and intangible assets in accordance with ASC Topic 350 (Intangibles - Goodwill and Other). Finite-lived intangible assets are amortized over their estimated useful economic life and are carried at cost less accumulated amortization. Goodwill is assessed for impairment annually at the beginning of the fourth quarter on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. Goodwill is considered to be impaired if the fair value of a reporting unit is less than its carrying amount. As a part of the goodwill impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the reporting unit is greater than its carrying amount, a quantitative goodwill impairment test is not required. However, if, as a result of our qualitative assessment, we determine it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or, if we choose not to perform a qualitative assessment, we are required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized. 

 

- 10-

 

The quantitative goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The goodwill impairment assessment is based upon the income approach, which estimates the fair value of our reporting units based upon a discounted cash flow approach. This fair value is then reconciled to our market capitalization at year end with an appropriate control premium. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.

 

Indefinite-lived intangible assets are assessed for impairment annually at the beginning of the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. As a part of the impairment assessment, we have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, as a result of our qualitative assessment, we determine that it is more-likely-than-not that the fair value of the indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required; otherwise, no further testing is required. The quantitative impairment test consists of a comparison of the fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

 

Long-lived assets, which consist of finite-lived intangible assets, property and equipment and right-of-use (“ROU”) assets, are assessed for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows to the recorded value of the asset group. If impairment is indicated, the asset group is written down to its estimated fair value. The cash flow estimates used to determine the impairment, if any, contain management's best estimates using appropriate assumptions and projections at that time. 

 

Revenue Recognition

We recognize revenue in accordance with the guidance in ASC Topic 606 (Revenue from Contracts with Customers). We recognize revenue for the sale of products or services when our performance obligations under the terms of a contract with a customer are satisfied and control of the product or service has been transferred to the customer. Generally, this occurs when we ship a product or perform a service. In certain cases, recognition of revenue is deferred until the product is received by the customer or at some other point in the future when we have determined that we have satisfied our performance obligations under the contract. Our contracts with customers may include a combination of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In addition to the sale of products and services, we also lease certain of our equipment to customers under short-term lease agreements. We recognize revenue from equipment leases on a straight-line basis over the lease term.

 

Revenue is recorded in an amount that reflects the consideration we expect to receive in exchange for those products or services. We do not have any material variable consideration arrangements, or any material payment terms with our customers other than standard payment terms which generally range from net 30 to net 90 days. We generally do not provide a right of return to our customers. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

 

Nature of Products and Services

 

We are a global supplier of innovative test and process technology solutions for use in manufacturing and testing in targeted markets including automotive, defense/aerospace, industrial, life sciences, security and semiconductor. We sell thermal management products including ThermoStreams, ThermoChambers, process chillers, refrigerators and freezers, which we sell under our Temptronic, Sigma, Thermonics and North Sciences product lines, and Ambrell Corporation’s (“Ambrell”) precision induction heating systems, including EKOHEAT® and EASYHEATTM products. As a result of the acquisition of Videology, we sell industrial-grade circuit board mounted video digital cameras and related devices, systems and software. We sell semiconductor ATE interface solutions which include manipulators, docking hardware and electrical interface products. As a result of the acquisition of Acculogic, we sell robotics-based electronic production test equipment. We provide post-warranty service and support for the equipment we sell. We sell semiconductor ATE interface solutions and certain thermal management products to the semi market. We also sell many of our products to various other markets including the automotive, defense/aerospace, industrial, life sciences and security markets.

 

- 11-

 

We lease certain of our equipment under short-term leasing agreements with original lease terms of six months or less. Our lease agreements do not contain purchase options. Occasionally we procure and sell materials/components on behalf of and to our customers.

 

Types of Contracts with Customers

 

Our contracts with customers are generally structured as individual purchase orders which specify the exact products or services being sold or equipment being leased along with the selling price, service fee or monthly lease amount for each individual item on the purchase order. Payment terms and any other customer-specific acceptance criteria are also specified on the purchase order. We generally do not have any customer-specific acceptance criteria, other than that the product performs within the agreed upon specifications. We test substantially all products manufactured as part of our quality assurance process to determine that they comply with specifications prior to shipment to a customer.

 

Contract Balances

 

We record accounts receivable at the time of invoicing. Accounts receivable, net of the allowance for credit losses, is included in current assets on our consolidated balance sheets. In certain instances, we also receive customer deposits in advance of invoicing and recording of accounts receivable. Customer deposits are included in current liabilities on our consolidated balance sheets. To the extent that we do not recognize revenue at the same time as we invoice, we record a liability for deferred revenue. Deferred revenue estimated to be recognized within the next twelve months is included in current liabilities.  Deferred revenue that we estimate will be recognized beyond twelve months is recorded in Other Liabilities on our consolidated balance sheets.  Any non-inventoriable costs associated with deferred revenue are also deferred and recorded in Prepaid Expenses and Other Current Assets or Other Assets on our consolidated balance sheets, depending on when the related deferred revenue is expected to be recognized.

 

As discussed above, we follow the guidance in ASC Topic 326 in developing our estimate of the allowance for credit losses related to our accounts receivable. The allowance for credit losses is our best estimate of the amount of expected credit losses in our existing accounts receivable. We monitor the collectability of accounts receivable on an ongoing basis and record charges for bad debt expense in the period when we determine that a loss is expected to occur based on our assessment.

 

Costs to Obtain a Contract with a Customer

 

The only costs we incur associated with obtaining contracts with customers are sales commissions that we pay to our internal sales personnel or third-party sales representatives. These costs are calculated based on set percentages of the selling price of each product or service sold. Commissions are considered earned by our internal sales personnel at the time we recognize revenue for a particular transaction. Commissions are considered earned by third-party sales representatives at the time that revenue is recognized for a particular transaction. We record commission expense in our consolidated statements of operations at the time the commission is earned. Commissions earned but not yet paid are included in current liabilities on our balance sheets.

 

Product Warranties

 

In connection with the sale of our products, we generally provide standard one- or two-year product warranties which are detailed in our terms and conditions and communicated to our customers. Our standard warranties are not offered for sale separately from our products; therefore, there is not a separate performance obligation related to our standard warranties. We record estimated warranty expense for our standard warranties at the time of sale based upon historical claims experience. We offer customers an option to separately purchase an extended warranty on certain products. In the case of extended warranties, we recognize revenue in the amount of the sale price for the extended warranty on a straight-line basis over the extended warranty period. We record costs incurred to provide service under an extended warranty at the time the service is provided. Warranty expense is included in selling expense in our consolidated statements of operations.

 

See Notes 6 and 14 for further information about our revenue from contracts with customers.

 

Inventories

 

Inventories are valued at cost on a first-in, first-out basis, not in excess of net realizable value. Cash flows from the sale of inventories are recorded in operating cash flows. On a quarterly basis, we review our inventories and record excess and obsolete inventory charges based upon our established objective excess and obsolete inventory criteria. Our criteria identify excess material as the quantity of material on hand that is greater than the average annual usage of that material over the prior three years. Our criteria identify obsolete material as material that has not been used in a work order during the prior twenty-four months. In certain cases, additional excess and obsolete inventory charges are recorded based upon current market conditions, anticipated product life cycles, new product introductions and expected future use of the inventory. The excess and obsolete inventory charges we record establish a new cost basis for the related inventories.

 

- 12-

 

Leases

 

We account for leases in accordance with ASC Topic 842 (Leases). We determine if an arrangement is a lease at inception. A lease contract is within scope if the contract has an identified asset (property, plant or equipment) and grants the lessee the right to control the use of the asset during the lease term. The identified asset may be either explicitly or implicitly specified in the contract. In addition, the supplier must not have any practical ability to substitute a different asset and would not economically benefit from doing so for the lease contract to be in scope. The lessee’s right to control the use of the asset during the term of the lease must include the ability to obtain substantially all of the economic benefits from the use of the asset as well as decision-making authority over how the asset will be used. Leases are classified as either operating leases or finance leases based on the guidance in ASC Topic 842. Operating leases are included in operating lease ROU assets and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment and financing lease liabilities. We do not currently have any financing leases.

 

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. None of our leases provide an implicit rate; therefore, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease. We include these options in the determination of the amount of the ROU asset and lease liability when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain of our operating leases contain predetermined fixed escalations of minimum rentals and rent holidays during the original lease terms. Rent holidays are periods during which we have control of the leased facility but are not obligated to pay rent. For these leases, our ROU asset and lease liability are calculated including any rent holiday in the determination of the life of the lease.

 

We have lease agreements which contain both lease and non-lease components, which are generally accounted for separately. In addition to the monthly rental payments due, most of our leases for our offices and warehouse facilities include non-lease components representing our portion of the common area maintenance, property taxes and insurance charges incurred by the landlord for the facilities which we occupy. These amounts are not included in the calculation of the ROU assets and lease liabilities as they are based on actual charges incurred in the periods to which they apply.

 

Operating lease payments are included in cash outflows from operating activities on our consolidated statements of cash flows. Amortization of ROU assets is presented separately from the change in operating lease liabilities and is included in Depreciation and Amortization on our consolidated statements of cash flows.

 

We have made an accounting policy election not to apply the recognition requirements of ASC Topic 842 to short-term leases (leases with a term of one year or less at the commencement date of the lease). Lease expense for short-term lease payments is recognized on a straight-line basis over the lease term.

 

See Note 9 for further disclosures regarding our leases.

 

Interest Rate Swap Agreement

 

We are exposed to interest rate risk on our floating-rate debt. We have entered into an interest rate swap agreement to effectively convert our floating-rate debt to a fixed-rate basis for a portion of our floating rate debt, as discussed further in Notes 4 and 10. The principal objective of this agreement is to eliminate the variability of the cash flows for interest payments associated with our floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows. We have elected to apply the hedge accounting rules in accordance with ASC Topic 815 (Derivatives and Hedging). Further, we have determined that this agreement qualifies for the shortcut method of hedge accounting. Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of accumulated other comprehensive earnings (loss) within stockholders’ equity and are amortized to interest expense over the term of the related debt. 

 

- 13-

 

Contingent Liability for Repayment of State and Local Grant Funds Received

 

In connection with leasing a facility in Rochester, New York, which our subsidiary, Ambrell, occupied in May 2018, we entered into agreements with the city of Rochester and the state of New York under which we received grants totaling $550 to help offset a portion of the cost of the leasehold improvements we made to this facility. The final payment of $87 was received during the three months ended March 31, 2022. In exchange for the funds we received under these agreements, we are required to create and maintain specified levels of employment in this location through various dates ending in 2024. If we fail to meet these employment targets, we may be required to repay a proportionate share of the proceeds. At September 30, 2023, $193 of the total proceeds received could still be required to be repaid if we do not meet the targets. We have recorded this amount as a contingent liability which is included in other liabilities on our consolidated balance sheet. Those portions of the proceeds which are no longer subject to repayment are reclassified to deferred grant proceeds and amortized to income on a straight-line basis over the remaining lease term for the Rochester facility. Deferred grant proceeds are included in other current liabilities and other liabilities on our balance sheet and totaled $259 at September 30, 2023. At September 30, 2023, we were in compliance with the employment targets as specified in the grant agreement with the city of Rochester. 

 

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718 (Compensation - Stock Compensation) which requires that employee share-based equity awards be accounted for under the fair value method and requires the use of an option pricing model for estimating fair value of stock options, which is then amortized to expense over the service periods. See further disclosures related to our stock-based compensation plans in Note 11.

 

Income Taxes

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carryforwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.

 

Earnings Per Common Share

Earnings per common share - basic is computed by dividing net earnings by the weighted average number of common shares outstanding during each period. Earnings per common share - diluted is computed by dividing earnings by the weighted average number of common shares and common share equivalents outstanding during each period. Common share equivalents represent unvested shares of restricted stock and stock options and are calculated using the treasury stock method. Common share equivalents are excluded from the calculation if their effect is anti-dilutive.

 

The table below sets forth, for the periods indicated, a reconciliation of weighted average common shares outstanding - basic to weighted average common shares and common share equivalents outstanding - diluted and the average number of potentially dilutive securities that were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Weighted average common shares outstanding - basic

  11,886,005   10,695,867   11,294,306   10,655,469 

Potentially dilutive securities:

                

Unvested shares of restricted stock and employee stock options

  326,312   168,673   371,544   185,175 

Weighted average common shares and common share equivalents outstanding - diluted

  12,212,317   10,864,540   11,665,850   10,840,644 
                 

Average number of potentially dilutive securities excluded from calculation because their effect was anti-dilutive during the period

  107,666   518,145   119,585   491,014 

 

- 14-

 

Effect of Recently Adopted Amendments to Authoritative Accounting Guidance

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued amendments to the guidance for accounting for credit losses. In November 2019, the FASB deferred the effective date of these amendments for certain companies, including smaller reporting companies. As a result of the deferral, the amendments were effective for us for reporting periods beginning after December 15, 2022. The amendments replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The amendments require a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We adopted the amendments when they became effective for us on January 1, 2023. The adoption of these amendments did not have any impact on our consolidated financial statements.

 

 

(3)

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

 

We have restated our consolidated financial statements as of and for the three and nine months ended September 30, 2023.

 

Errors were discovered during the course of management’s review of our financial statements in the process of closing the year ended December 31, 2023 and in conjunction with the year-end audit. The errors were related to revenue recognized for the three and nine months ended September 30, 2023. The restatement reflects the reversal of revenue related to the sale of discontinued material/components purchased on behalf of customers where the associated materials/components were still physically located with us and the materials/components are expected to be applied to future product orders for these customers. These transactions were all fully paid for and legal title of the materials/components has transferred to the customer. However, these facts alone are not sufficient for revenue recognition under U.S. GAAP for such an arrangement. The restatement also reflects the reversal of the related costs of these material/components along with adjustments to commissions earned and income tax expense for the affected periods.

 

Regarding our previously reported unaudited consolidated balance sheet as of September 30, 2023, the following table presents an increase to deferred revenue of $1,722, of which $689 was a current liability and $1,033 was a non-current liability, an increase to deferred costs of $835, of which $334 was a current asset and $591 was a non-current asset, a reduction of accrued sales commission of $72 and a reduction of domestic and foreign taxes payable of $126.

 

- 15-

 

UNAUDITED CONSOLIDATED BALANCE SHEET

(In thousands, except share and per share data)

 

  

September 30, 2023

 
  

As Previously

Reported

  

Adjustments

  

As Restated

 
             

ASSETS

            

Current assets:

            

Cash and cash equivalents

 $41,685  $-  $41,685 

Restricted cash

  -   -   - 

Trade accounts receivable, net of allowance for credit losses of $499 and $496, respectively

  20,710   -   20,710 

Inventories

  22,156   -   22,156 

Prepaid expenses and other current assets

  1,672   334   2,006 

Total current assets

  86,223   334   86,557 

Property and equipment:

            

Machinery and equipment

  6,829   -   6,829 

Leasehold improvements

  3,581   -   3,581 

Gross property and equipment

  10,410   -   10,410 

Less: accumulated depreciation

  (7,267)  -   (7,267)

Net property and equipment

  3,143   -   3,143 

Right-of-use assets, net

  4,755   -   4,755 

Goodwill

  21,578   -   21,578 

Intangible assets, net

  16,959   -   16,959 

Deferred tax assets

  1,381   -   1,381 

Restricted certificates of deposit

  100   -   100 

Other assets

  444   501   945 

Total assets

 $134,583  $835  $135,418 
             

LIABILITIES AND STOCKHOLDERS' EQUITY

            

Current liabilities:

            

Current portion of Term Note

 $4,100  $-  $4,100 

Current portion of operating lease liabilities

  1,730   -   1,730 

Accounts payable

  7,296   -   7,296 

Accrued wages and benefits

  4,030   -   4,030 

Accrued professional fees

  1,188   -   1,188 

Customer deposits and deferred revenue

  3,709   689   4,398 

Accrued sales commissions

  1,248   (72)  1,176