Statement Regarding Forward Looking Disclosure

? our reliance on individual purchase orders, rather than long-term contracts, to

? our ability to balance the composition of our revenues and effectively control

external factors, including the COVID-19 pandemic, Russia's invasion of

? Ukraine, high inflation and increasing interest rates, that may be outside of

? the impacts of the COVID-19 pandemic and government-imposed lockdowns in

? the availability of appropriate financing facilities impacting our operations,

financial condition and/or liquidity;

? our ability to receive contract awards through competitive bidding processes;

? our ability to maintain standards to enable us to manufacture products to

? our ability to enter new markets for our services;

? our reliance on a small number of customers for a significant percentage of our

? competitive pressures in the markets we serve;

? changes in the availability or cost of raw materials and energy for our

? restrictions in our ability to operate our business due to our outstanding

? pricing and business development difficulties;

? changes in government spending on national defense;

? our ability to make acquisitions and successfully integrate those acquisitions

? our failure to maintain effective internal controls over financial reporting;

? general industry and market conditions and growth rates;

? unexpected costs, charges or expenses resulting from the recently completed

those risks discussed in "Item 1A. Risk Factors" and elsewhere in our Annual

? Report on Form 10-K, as well as those described in any other filings which we

Critical Accounting Policies and Estimates

See Note 17, Accounting Standards Update, in the Notes to the Unaudited Condensed Consolidated Financial Statements under "Item 1. Financial Statements", for a discussion of recently adopted new accounting guidance and new accounting guidance not yet adopted.

Percentages in the following tables and throughout this "Results of Operations" section may reflect rounding adjustments.

Three Months Ended June 30, 2022 and 2021

The following table presents net sales, gross profit and gross margin, consolidated and by reportable segment:

Gross Profit and Gross Margin

Selling, General and Administrative (SG&A) Expenses

Ranor - Advisory fees, travel expenses and other office costs increased by approximately $0.1 million due to a return to pre-pandemic travel and business activity.

Ranor - Operating income was $0.9 million higher compared to same period prior year, due primarily to significantly improved operating throughput.

Stadco - New project startups and related production activities resulted in unfavorable throughput, and higher unabsorbed overhead that resulted in an operating loss of $1.5 million.

Corporate and unallocated - Corporate expenses were higher for the three months ended June 30, 2022, primarily due to a return to pre-pandemic travel and business activity.

Other expense, net, in the table above, includes an expense accrual for contingent consideration of $33,474 in connection with the Stadco acquisition. Other income for the three months ended June 30, 2021, includes a return of $10,000 for a retainer fee previously paid for outside advisory fees in connection with a class action settlement in March 2021.

Paycheck Protection Program (PPP) Loan Forgiveness

The next table summarizes changes in cash by primary component in the cash flows statements for the three months ended:

Net (decrease) increase in cash $ (479) $ 106 $ (585)

The following contractual obligations associated with our normal business activities are expected to result in cash payments in future periods, and include the following material items at June 30, 2022:

We enter into various commitments with suppliers for the purchase of raw

materials and work supplies. In accordance with U.S. GAAP, these purchase

obligations are not reflected in the accompanying consolidated balance sheets.

? Our outstanding unconditional contractual commitments, including for the

purchase of raw materials and supplies goods, totaled $6.2 million, all of it

due to be paid in fiscal 2023. These purchase commitments are in the normal

Our long-term debt obligations, including fixed and variable-rate debt, totaled

? $6.2 million, with $3.2 million due over the next twelve months, and

approximately $0.6 million due annually for each of the next five years.

Our lease obligations, including imputed interest, totaled $7.4 million for

? buildings and equipment through 2030, with approximately $0.9 million due

annually for each of the next eight years.

There are no off-balance sheet arrangements as of June 30, 2022.

(1) Includes amortization of debt issue costs.

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