IEH Corp quarterly revenue rises 51.2% to $10.7M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
IEH Corporation reported quarterly revenue of $10,700,084, up 51.2% from $7,077,592 a year earlier, and net income of $1,363,414 versus a $26,861 net loss. For the six months ended September 30, 2026, revenue was $20,721,530, up 54.8%, and net income was $2,017,880 versus a $681,479 loss. IEH attributed quarterly revenue growth mainly to defense and medical orders, while space revenue declined. The quarter included an income-tax benefit of $262,109, including a $485,068 benefit from releasing part of the deferred-tax valuation allowance.
Operating cash flow was $511,634, compared with $1,372,909 used in the prior-year period. Order backlog was approximately $53,751,351 at September 30, 2026, and is expected to ship over 6–24 months, depending on customer requirements and product availability. IEH reported $10,003,700 in cash, cash equivalents and restricted cash. Management believes existing cash and cash generated from operations will meet anticipated requirements in fiscal 2027 and into fiscal 2028.
Management concluded that financial-reporting and disclosure controls were ineffective because of a material weakness involving information technology general controls and management review controls. Remediation planning and implementation are underway.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue rose 51.2% for the quarter and 54.8% for six months.
- Moderate pointSix-month net income was $2,017,880, versus a $681,479 loss.
- Moderate pointOperating cash flow was $511,634, versus $1,372,909 used.
Negative
- Major pointMaterial weakness left financial-reporting and disclosure controls ineffective at September 30, 2026.
Filing Explained
At quarter-end, option exercises had increased the reported share count, reducing existing holders’ percentage ownership absent offsets.
This unaudited quarterly report says IEH Corporation's amended revolving line allows up to
During the quarter, the company recorded option exercises for
The line matures on
Key Figures
Key Terms
Hyperboloid contact design technical
fixed charge coverage ratio financial
deferred tax asset valuation allowance financial
restricted cash and cash equivalents financial
performance obligations financial
Information Technology General Controls technical
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was IEHC's revenue for the September 2026 quarter?
Did IEHC make a profit in the first six months of fiscal 2027?
What drove IEHC revenue growth in the September 2026 quarter?
What is IEHC's order backlog and when is it expected to ship?
What internal-control weakness did IEHC identify?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from ____________ to ____________
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
| OTCQX |
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.
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).
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 definition 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 | ☐ |
| ☒ | 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 November 12, 2026, the registrant had
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | 1 | |
| Item 1. | Financial Statements | 1 |
| Condensed Balance Sheets as of September 30, 2026 (unaudited) and March 31, 2026 | 1 | |
| Condensed Statements of Operations for the three and six months ended September 30, 2026 and 2025 (unaudited) | 2 | |
| Condensed Statements of Changes in Stockholders’ Equity for the three and six months ended September 30, 2026 and 2025 (unaudited) | 3 | |
| Condensed Statements of Cash Flows for the six months ended September 30, 2026 and 2025 (unaudited) | 4 | |
| Notes to Unaudited Condensed Financial Statements | 5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 22 |
| Item 4. | Controls and Procedures | 22 |
| PART II – OTHER INFORMATION | 23 | |
| Item 1. | Legal Proceedings | 23 |
| Item 1A. | Risk Factors | 23 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 23 |
| Item 3. | Defaults Upon Senior Securities | 23 |
| Item 4. | Mine Safety Disclosures | 23 |
| Item 5. | Other Information | 23 |
| Item 6. | Exhibits | 24 |
| EXHIBIT INDEX | 24 | |
| SIGNATURES | 25 | |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Any statements contained in this report on Form 10-Q that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “plans,” “estimates,” “expects,” “believes,” “should,” “could,” “may,” “will” and similar expressions, we are identifying forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future financial events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Forward-looking statements involve risks and uncertainties described under “Risk Factors” in Part II, Item 1A, and elsewhere in this Quarterly Report on Form 10-Q, and as set forth in Part 1, Item 1A, “Risk Factors”, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 12, 2026. Forward-looking statements may include statements related to, among other things: macroeconomic factors, including inflationary pressures, supply shortages and recessionary pressures; impact of tariff ruling by the U.S. Supreme Court on sourcing of raw materials; accounting estimates and assumptions; pricing pressures on our products caused by competition; the risk that our products will not gain market acceptance; our ability to obtain additional financing; our ability to operate our accounting systems effectively; our ability to protect our intellectual property; and our ability to attract and retain key employees. No forward-looking statement is a guarantee of future performance and you should not place undue reliance on any forward-looking statement. Our actual results may differ materially from those projected in forward-looking statements, as they will depend on many factors about which we are unsure, including many factors beyond our control.
Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:
| ● | changes in the market acceptance of our products and services; | |
| ● | increased levels of competition; | |
| ● | changes and uncertainties in political, economic or regulatory conditions generally and in the markets in which we operate, including, but not limited to, changes and uncertainties around tariffs and supply chain constraints; | |
| ● | our relationships with our key customers; | |
| ● | adverse conditions in the industries in which our customers operate; | |
| ● | our ability to retain and attract senior management and other key employees; | |
| ● | our ability to quickly and effectively respond to new technological developments; | |
| ● | our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on our proprietary rights; and | |
| ● | other risks, including those described in the “Risk Factors” section of this Quarterly Report on Form 10-Q. |
ii
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
IEH CORPORATION
CONDENSED BALANCE SHEETS
| As of | ||||||||
| September 30, 2026 |
March 31, 2026 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash and cash equivalents | - | |||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Corporate income taxes receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred income tax assets, net | - | |||||||
| Security deposit | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Customer advance payments | ||||||||
| Operating lease liabilities | ||||||||
| Equipment financing line of credit | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-Current liabilities: | ||||||||
| Operating lease liabilities, net of current | ||||||||
| Equipment financing line of credit, net of current | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 11) | ||||||||
| Stockholders’ Equity | ||||||||
| Common Stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
IEH CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
| For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of products sold | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Other income, net: | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Total other income, net | ||||||||||||||||
| Income (loss) before benefit from income taxes | ( | ) | ( | ) | ||||||||||||
| Benefit from income taxes | - | - | ||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted-average number of common and common equivalent shares: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
IEH CORPORATION
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock | Additional Paid-in |
Retained | Total Stockholders’ |
|||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Stock-based compensation | - | - | - | |||||||||||||||||
| Exercise of stock options | - | |||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
| Common Stock | Additional Paid-in |
Retained | Total Stockholders’ |
|||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||
| Stock-based compensation | - | - | - | |||||||||||||||||
| Exercise of stock options | ( | ) | - | - | ||||||||||||||||
| Net income | - | - | - | |||||||||||||||||
| Balance at June 30, 2026 | ||||||||||||||||||||
| Exercise of stock options | - | |||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
IEH CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Inventory obsolescence provision | ||||||||
| Deferred income taxes, net | ( | ) | - | |||||
| Operating lease right-of-use assets | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Corporate income taxes receivable | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Customer advance payments | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property, plant and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| (Repayment) advances of equipment financing loan | ( | ) | ||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, and restricted cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents, and restricted cash and cash equivalents - end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | - | |||||
| Income Taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 1 | DESCRIPTION OF BUSINESS: |
Overview
IEH Corporation (hereinafter referred to as “IEH” or the “Company”) began operations in New York, New York in 1941 and was incorporated as a New York corporation in March, 1943, when Louis Offerman founded L. Offerman Tool & Die with his two sons, Bernard and Seymour.
The Company designs and manufactures Hyperboloid connectors that not only accommodate, but exceed military and aerospace specification standards.
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
Basis of Presentation
The accompanying condensed financial statements and the related disclosures as of September 30, 2026 and for the three and six months ended September 30, 2026 and 2025 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States, (“U.S. GAAP”), and the rules and regulations of the SEC for interim financial statements. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim condensed financial statements should be read in conjunction with the audited financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2026, filed with the SEC on June 12, 2026. The balance sheet as of March 31, 2026 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2026 and March 31, 2026 and its results of operations for the three and six months ended September 30, 2026 and 2025. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the fiscal year ending March 31, 2027, or any other interim period or future year or period.
Revenue Recognition
The core principle underlying Accounting Standards Codification (“ASC”) ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”), is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASC 606 sets out the following steps for an entity to follow when applying the core principle to its revenue generating transactions:
| ● | Identify the contract with a customer | |
| ● | Identify the performance obligations in the contract | |
| ● | Determine the transaction price | |
| ● | Allocate the transaction price to the performance obligations | |
| ● | Recognize revenue when (or as) each performance obligation is satisfied |
5
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): |
Revenue Recognition - Continued
The Company recognizes revenue and the related cost of products sold when the performance obligations are satisfied. The performance obligations are typically satisfied upon shipment of physical goods. In addition to the satisfaction of the performance obligations, the following conditions are required for revenue recognition: an arrangement exists, there is a fixed price, and collectability is reasonably assured.
The Company does not offer any discounts, credits or other sales incentives. Historically, the Company has not had an issue with uncollectible accounts receivable.
The Company will accept a return of defective products within one year from shipment for repair or replacement at the Company’s option. If the product is repairable, the Company at its own cost, will repair and return it to the customer. If unrepairable, the Company will provide a replacement at its own cost. Historically, returns and repairs have not been material.
The Company’s disaggregated revenue by geographical location is as follows:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Domestic | $ | $ | $ | $ | ||||||||||||
| International | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Company’s disaggregated revenue by industry as a percentage of total revenue is provided below:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Industry | % | % | % | % | ||||||||||||
| Defense | ||||||||||||||||
| Commercial Aerospace | ||||||||||||||||
| Space | ||||||||||||||||
| Other | ||||||||||||||||
6
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): |
Restricted Cash and Cash Equivalents
As of September 30, 2026 and March 31 2026, the Company maintained cash balances of $
The following table provides a reconciliation of cash and cash equivalents, and restricted cash and cash equivalents in the balance sheets to the total amount shown in the statements of cash flows:
| As of | ||||||||
| September 30, 2026 | March 31, 2026 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash and cash equivalents | - | |||||||
| $ | $ | |||||||
Inventories
Inventories are comprised of raw materials, work-in-process and finished goods, and are stated at cost, on an average basis, which does not exceed net realizable value. The Company manufactures products pursuant to specific technical and contractual requirements.
The Company reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience is made to inventory in recognition of this impairment. The Company’s allowance for obsolete inventory was $
Income Taxes
The Company’s provision for income taxes for interim accounting purposes recognizes income taxes using an estimated annual effective income tax rate. This estimated annual effective income tax rate is based upon its estimated annual taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary and permanent differences resulting from different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible. Should management determine that it is more likely than not that some portion of the deferred tax assets would not be realized, a valuation allowance against the deferred tax assets would be established in the period such determination was made.
Uncertain Tax Positions
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for unrecognized tax benefits is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. The Company’s policy is to record expense in the statement of operations.
7
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): |
Net Income (Loss) Per Share
The Company accounts for earnings per share pursuant to ASC Topic 260, “Earnings per Share”, which requires disclosure on the financial statements of “basic” and “diluted” earnings per share. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive).
Basic and diluted net income (loss) per common share is calculated as follows:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average number of common shares outstanding- basic | ||||||||||||||||
| Dilutive effect of options to the extent that such options are determined to be in the money for the period | - | - | ||||||||||||||
| Weighted average number of common shares outstanding-fully diluted | ||||||||||||||||
Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net income (loss) per share because the effect of their inclusion would have been anti-dilutive.
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Potentially dilutive options to purchase common shares | - | - | ||||||||||||||
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. The Company utilizes estimates with respect to determining the useful lives of fixed assets, the fair value of stock-based instruments, the calculation of inventory obsolescence, as well as determining the amount of the valuation allowance for deferred income tax assets, net. Actual amounts could differ from those estimates.
8
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): |
Segment Information
The Company identifies its operating segments in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 280, “Segment Reporting”. Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
The Company’s CODM reviews the segment net income (loss) that also is reported on the income statement as net income (loss) on a monthly basis, and reviews revenues by industry on a quarterly basis. The measure of segment assets is reported on the balance sheet as total assets.
Depreciation and Amortization
The Company provides for depreciation and amortization on a straight-line basis over the estimated useful lives (
Stock-Based Compensation
Compensation expense for stock options granted to directors, officers and key employees is based on the fair value of the award on the measurement date, which is the date of the grant. The expense is recognized ratably over the service period of the award. The fair value of stock options is estimated using the Black-Scholes valuation model. The fair value of any other stock awards is generally the market price of the Company’s common stock on the date of the grant. It is the Company’s policy that any unrecognized stock-based compensation cost would be adjusted for actual forfeitures as they occur.
The Company determined the fair value of the stock option grants based upon the assumptions as provided below.
| For the Six Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted average stock price | $ | $ | ||||||
| Expected life (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Dividend yield | - | % | - | % | ||||
| Weighted average risk-free interest rate, per annum | % | % | ||||||
9
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): |
Recent Accounting Standard Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, – Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as disclosures about selling expenses. The standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company will evaluate the full extent of the adoption of ASU 2024-03, but believes it will not have a material impact on its financial statements and disclosures
Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
| Note 3 | INVENTORIES: |
Inventories are comprised of the following:
| As of | ||||||||
| September 30, 2026 | March 31, 2026 | |||||||
| Raw materials | $ | $ | ||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Allowance for obsolete inventory | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| Note 4 | OTHER CURRENT LIABILITIES: |
Other current liabilities are comprised of the following:
| As of | ||||||||
| September 30, 2026 | March 31, 2026 | |||||||
| Payroll and vacation accruals | $ | $ | ||||||
| Sales commissions | ||||||||
| Other current liabilities | ||||||||
| $ | $ | |||||||
10
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 5 | LEASES: |
Under ASC Topic 842, “Leases”, lease expense is recognized as a single lease cost on a straight-line basis over the lease term. The lease term consists of non-cancelable periods and may include options to extend or terminate the lease term, when it is reasonably certain such options will be exercised.
The Company enters into contracts in the normal course of business and assesses whether any such contracts contain a lease. The Company determines if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration. The Company classifies leases as operating or financing in nature and records the associated lease liability and right-of-use asset on its balance sheet. The lease liability represents the present value of future lease payments, net of lease incentives, discounted using an incremental borrowing rate, which is a management estimate based on the information available at the commencement date of a lease arrangement. With respect to operating lease arrangements, the Company accounts for lease components, and non-lease components that are fixed, as a single lease component. Non-lease components that are variable are expensed as incurred as in the statement of operations. The Company recognizes costs associated with lease arrangements having an initial term of
Balance sheet information related to our leases is presented below:
| As of | ||||||||||
| Balance Sheet Location | September 30, 2026 | March 31, 2026 | ||||||||
| Operating leases: | ||||||||||
| Right-of-use assets | Operating lease right-of-use assets | $ | $ | |||||||
| Right-of-use liability, current | Operating lease liabilities | $ | $ | |||||||
| Right-of-use lease liability, long-term | Operating lease liabilities, non-current | $ | $ | |||||||
The lease expense for the three months ended September 30, 2026 and 2025 was $
11
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 5 | LEASES (Continued): |
The basic minimum annual rental payments remaining on these leases was $
The weighted-average remaining lease term and the weighted average discount rate for operating leases were:
| As of | ||||||||
| September 30, 2026 | March 31, 2026 | |||||||
| Other information | ||||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
| Weighted-average remaining lease term – operating lease (in years) | ||||||||
The total remaining operating lease payments included in the measurement of lease liabilities on the Company’s condensed balance sheet as of September 30, 2026 was as follows:
| For the years ended March 31, | Operating Lease Payments | |||
| (Six months ending) March 31, 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | - | |||
| Total gross operating lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total lease liabilities, reflecting present value of future minimum lease payments | $ | |||
| Note 6 | REVOLVING LINE OF CREDIT: |
On August 26, 2025, and amended on September 2, 2026 (effective July 31, 2026) the Company entered into a revolving line of credit agreement (“Revolving Line of Credit”) with JPMorgan Chase Bank, N.A. (“Chase Bank”) for up to $
12
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 7 | EQUIPMENT FINANCING LINE OF CREDIT: |
On September 8, 2025, the Company entered into a $
| Note 8 | INCOME TAXES: |
The effective income tax rate for the three months ended September 30, 2026 was a benefit of $
The effective income tax rate for the six months ended September 30, 2026 was a benefit of $
As of September 30, 2026, based on the relevant weight of positive and negative evidence, including the amount of taxable income earned during the six months ended September 30, 2026, the Company’s customer order backlog and the consideration of our expected future taxable earnings, the Company concluded that it is more likely than not that $
The effective income tax rate for the three and six months ended September 30, 2025 was a provision
The Company has previously recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. At September 30, 2026, the amount included in corporate income taxes receivable is a liability of $
13
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 8 | INCOME TAXES (Continued): |
The One Big Beautiful Bill Act (the “Act”) was signed into law on July 4, 2025. The Act contains significant tax law changes with various effective dates affecting business taxpayers. Among the tax law changes that may impact the Company relate to the timing of certain tax deductions including depreciation expense, research and development expenditures and interest expense. Based upon the Company’s preliminary analysis, we do not anticipate a material effect on the financial statements for the fiscal year ending March 31, 2027.
| Note 9 | EQUITY INCENTIVE PLANS: |
2020 Equity Incentive Plan
On November 18, 2020, the Board of Directors approved the Company’s 2020 Equity Based Compensation Plan (the “2020 Plan”) for submission to shareholders at the 2020 annual meeting of shareholders. On December 16, 2020, the Company’s shareholders approved the adoption of the 2020 Plan, which provides for the grant of stock options and restricted stock awards to purchase up to
Options granted to employees under both the 2011 Plan and the 2020 Plan (together the “Plans”) may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).
Under the Plans, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (
Exercise prices of non-incentive stock options may not be less than the fair market value of the Company’s common stock.
The aggregate fair market value of shares subject to options granted to a participant(s), which are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $
Stock-based compensation expense
Stock-based compensation expense is recorded in selling, general and administrative expenses included in the condensed statements of operations. For the three months ended September 30, 2026 and 2025, stock-based compensation expense was $
As of September 30, 2026, there was no unrecognized compensation expense related to unamortized stock options. It is the Company’s policy that any unrecognized stock-based compensation cost would be adjusted for actual forfeitures as they occur.
14
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 9 | EQUITY INCENTIVE PLANS (Continued): |
Stock-based compensation expense - Continued
The following table provides the stock option activity for the six months ended September 30, 2026:
| Shares | Weighted Avg. Exercise Price | Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Balance as of April 1, 2026 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeited or Expired | - | - | ||||||||||||||
| Balance as of September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable as of September 30, 2026 | $ | $ | ||||||||||||||
The weighted average grant date fair value per share was $
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in-the-money options on those dates.
| Note 10 | CASH BONUS PLAN: |
In 1987, the Company adopted a cash bonus plan (the “Cash Bonus Plan”) for non-union, management and administration staff. Unless otherwise approved by the Company’s Compensation Committee of the Board of Directors, contributions to the Cash Bonus Plan will only be funded by the Company for payment of bonuses with respect to any fiscal year, when the Company is profitable for such fiscal year. As of September 30, 2026, and March 31, 2026, the Company’s accrued bonus was $
| Note 11 | COMMITMENTS AND CONTINGENCIES: |
Leases
The Company maintains its operations in facilities located in both New York and Pennsylvania.
On December 1, 2020, the Company entered into a 120-month extension of its lease agreement for an industrial building in Brooklyn, NY, expiring
15
IEH CORPORATION
Notes to Unaudited Condensed Financial Statements
| Note 11 | COMMITMENTS AND CONTINGENCIES (Continued): |
Leases - Continued
On January 29, 2021, the Company entered into an 87-month lease agreement for an industrial building in Allentown, Pennsylvania, expiring
Multi-Employer Plan
The Company has a collective bargaining multi-employer pension plan (“Multi-Employer Plan”) with the United Auto Workers of America, Local 259 (ID No. 136115077). The Multi-Employer Plan is covered by a collective bargaining agreement with the Company, which expires on March 31, 2027.
The total contributions charged to operations under the provisions of the Multi-Employer Plan were $
| Note 12 | CONCENTRATIONS: |
During the three months ended September 30, 2026, two customers accounted for
During the six months ended September 30, 2026, one customer accounted for
During the three months ended September 30, 2025, two customers accounted for
During the six months ended September 30, 2025, two customers accounted for
As of September 30, 2026, three customers accounted for
During the three months ended September 30, 2026, three vendors accounted for
During the six months ended September 30, 2026, three vendors accounted for
During the three months ended September 30, 2025, three vendors accounted for
During the six months ended September 30, 2025, three vendors accounted for
As of September 30, 2026, three vendors accounted for
16
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Statements contained in this report, which are not historical facts, may be considered forward-looking information with respect to plans, projections, or future performance of the Company as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. The words “anticipate”, “believe”, “estimate”, “expect”, “objective”, and “think” or similar expressions used herein are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the performance of the Company’s business, actions of competitors, changes in laws and regulations, including accounting standards, employee relations, customer demand, prices of purchased raw materials and parts, domestic economic conditions, and foreign economic conditions, including currency rate fluctuations.
The following discussion and analysis should be read in conjunction with our condensed financial statements and related footnotes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which provide additional information concerning the Company’s financial activities and condition.
Overview of Business:
The Company designs, develops and manufactures printed circuit board connectors and custom interconnects for high performance applications.
All of our connectors utilize the Hyperboloid contact design, a rugged, high-reliability contact system ideally suited for high-stress environments.
Our customers consist of OEMs and distributors who resell our products to OEMs. We sell our products directly and through 20 independent sales representatives and distributors located in all regions of the United States, Canada, Europe, Southeast Asia, Central Asia and the Middle East.
The customers we service are in the defense, aerospace, space, medical, oil and gas, industrial, test equipment and commercial electronics markets. We appear on the Military DLA Qualified Product Listing (“QPL”) MIL-DTL-55302 and supply customer requested modifications to this specification.
The customers we service by industry as a percentage of total revenue is provided below:
| For the Three Months Ended September 30, | For the Six Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Industry | % | % | % | % | ||||||||||||
| Defense | 70.5 | 62.2 | 72.9 | 59.1 | ||||||||||||
| Commercial Aerospace | 19.3 | 28.3 | 19.5 | 31.5 | ||||||||||||
| Space | 1.3 | 6.7 | 1.5 | 5.8 | ||||||||||||
| Other | 8.9 | 2.8 | 6.1 | 3.6 | ||||||||||||
| 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||
17
Financial Overview
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, valuation of inventories, accounting for income taxes and stock-based compensation expense.
Our financial position, results of operations and cash flows are impacted by the accounting policies we have adopted. In order to get a full understanding of our financial statements, one must have a clear understanding of the accounting policies employed. It is important that the discussion of our operating results that follow be read in conjunction with these critical accounting policies which have been disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 filed with the SEC on June 12, 2026.
Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025:
| For the Three Months Ended September 30, | Period-to- Period | |||||||||||
| 2026 | 2025 | Change | ||||||||||
| Revenue | $ | 10,700,084 | $ | 7,077,592 | $ | 3,622,492 | ||||||
| Operating expenses: | ||||||||||||
| Cost of products sold | 7,672,605 | 5,459,638 | 2,212,967 | |||||||||
| Selling, general and administrative | 1,772,555 | 1,536,041 | 236,514 | |||||||||
| Depreciation and amortization | 208,428 | 186,293 | 22,135 | |||||||||
| Total operating expenses | 9,653,588 | 7,181,972 | 2,471,616 | |||||||||
| Operating income (loss) | 1,046,496 | (104,380 | ) | 1,150,876 | ||||||||
| Other income, net: | ||||||||||||
| Interest income, net | 54,809 | 77,519 | (22,710 | ) | ||||||||
| Total other income, net | 54,809 | 77,519 | (22,710 | ) | ||||||||
| Income (loss) before benefit from income taxes | 1,101,305 | (26,861 | ) | 1,128,166 | ||||||||
| Benefit from income taxes | 262,109 | - | 262,109 | |||||||||
| Net income (loss) | $ | 1,363,414 | $ | (26,861 | ) | $ | 1,390,275 | |||||
18
Revenue for the three months ended September 30, 2026 was $10,700,084, reflecting an increase of $3,622,492, or 51.2%, as compared to $7,077,592 for the three months ended September 30, 2025. The increase in revenue for the period was principally on account of a 71% increase in defense revenue which continues to witness unprecedented demand for our parts given the geopolitical situations in various parts of the world and a 373% increase in medical revenue offset by a 70% reduction in revenue from the space industry quarter over quarter.
Cost of products sold for the three months ended September 30, 2026 was $7,672,605, reflecting an increase of $2,212,967, or 40.5%, as compared to $5,459,638 for the three months ended September 30, 2025. The increase in our cost of products sold is principally attributable to the 51.2 % increase in revenue.
Selling, general and administrative expenses for the three months ended September 30, 2026 was $1,772,555, reflecting an increase of $236,514, or 15.4%, as compared to $1,536,041 for the three months ended September 30, 2025. The increase was primarily attributable to the increase in sales commissions related to the increase in sales revenue.
Depreciation and amortization for the three months ended September 30, 2026 was $208,428, reflecting an increase of $22,135, or 11.9%, as compared to $186,293 for the three months ended September 30, 2025.
Total other income for the three months ended September 30, 2026 was income of $54,809, reflecting a decrease of $22,710, as compared to income of $77,519 for the three months ended September 30, 2025. The decrease was principally attributable to a decrease in interest income earned on our cash.
Provision (benefit) for income taxes was ($262,109) and $0 for the three months ended September 30, 2026 and 2025. The benefit for income taxes for the three months ended September 30, 2026 was principally attributable to a federal and state tax provision of $38,149, (net of utilization of net operation loss and tax credit carryforwards utilized during the period) and a true-up of state refunds receivable in the amount of $184,810, offset by a benefit of $485,068 for the release of a portion of the Company’s net deferred tax asset valuation allowance. The provision for income taxes for the three months ended September 30, 2025 was principally attributable to the loss before income taxes for the period and the impact of recording a full valuation allowance on the Company’s deferred tax assets, net.
Comparison of the Six Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended September 30, 2026 and 2025:
| For the Six Months Ended September 30, | Period-to-Period | |||||||||||
| 2026 | 2025 | Change | ||||||||||
| Revenue | $ | 20,721,530 | $ | 13,385,747 | $ | 7,335,783 | ||||||
| Costs and expenses: | ||||||||||||
| Cost of products sold | 14,377,462 | 10,638,489 | 3,738,973 | |||||||||
| Selling, general and administrative | 4,216,892 | 3,229,979 | 986,913 | |||||||||
| Depreciation and amortization | 415,878 | 376,965 | 38,913 | |||||||||
| Total operating expenses | 19,010,232 | 14,245,433 | 4,764,799 | |||||||||
| Operating income (loss) | 1,711,298 | (859,686 | ) | 2,570,984 | ||||||||
| Other income: | ||||||||||||
| Interest income | 108,677 | 178,207 | (69,530 | ) | ||||||||
| Total other income | 108,677 | 178,207 | (69,530 | ) | ||||||||
| Income (loss) before benefit from income taxes | 1,819,975 | (681,479 | ) | 2,501,454 | ||||||||
| Benefit from income taxes | 197,905 | - | 197,905 | |||||||||
| Net income (loss) | $ | 2,017,880 | $ | (681,479 | ) | $ | 2,699,359 | |||||
19
Revenue for the six months ended September 30, 2026 was $20,721,530, reflecting an increase of $7,335,783, or 54.8%, as compared to $13,385,747 for the six months ended September 30, 2025. The increase in revenue for the period was principally on account of a 91% increase in defense revenue and a 146% increase in medical revenue offsetting a 60% decrease in space revenue. Defense continues to see an unprecedented rise in demand from the sale of our parts, medical revenue rose due to significant orders from key medical customers and space revenue declined due to a few key orders being executed later than anticipated.
Cost of products sold for the six months ended September 30, 2026 was $14,377,462, reflecting an increase of $3,738,973, or 35.2%, as compared to $10,638,489 for the six months ended September 30, 2025. The increase in our cost of products sold is attributable to a 54.8% increase in revenue and higher material costs in the form of gold and freight.
Selling, general and administrative expenses for the six months ended September 30, 2026 was $4,216,892 reflecting an increase of $986,913, or 30.6%, as compared to $3,229,979 for the six months ended September 30, 2025. The increase was principally due to an increase in stock compensation expense for stock options granted and an increase in sales commission fees offset by a decrease in legal fees.
Depreciation and amortization for the six months ended September 30, 2026 was $415,878, reflecting a increase of $38,913, or 10.3%, as compared to $376,965 for the six months ended September 30, 2025. The increase was principally attributable to increase in investment for fixed assets in light of growing demand for parts.
Total other income for the six months ended September 30, 2026 was income of $108,677, reflecting a decrease of $69,530, as compared to income of $178,207 for the six months ended September 30, 2025. The decrease was attributable to a decrease in interest income earned on our cash and increase in interest expense on equipment line of credit.
Provision (benefit) for income taxes was ($197,905) and $0 for the six months ended September 30, 2026 and 2025. The benefit for income taxes for the six months ended September 30, 2026 consisted principally of a federal and state provision of $102,353, (net of utilization of net operation loss and tax credit carryforwards utilized during the period) and a true-up of state refunds receivable in the amount $184,810, , offset by a benefit of $485,068, for the release of a portion of the Company’s net deferred tax asset valuation allowance. The provision for income taxes for the six months ended September 30, 2025 was principally attributable to the loss before income taxes for the period and the impact of recording a full valuation allowance on the Company’s deferred tax assets, net.
Liquidity and Capital Resources:
Our primary requirements for liquidity and capital are working capital, inventory, capital expenditures, and general corporate needs. We expect these needs to continue as we further develop and grow our business. For the six months ended September 30, 2026, our primary source of liquidity came from our operating cash flows. Based on our current plans and business conditions, we believe that existing cash, together with cash generated from operations will be sufficient to satisfy our anticipated cash requirements in fiscal year 2027 and into fiscal year 2028, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into additional credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflationary pressures and the conflicts in Eastern Europe and the Middle East, may result in significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.
As of September 30, 2026, and March 31, 2026, the Company’s cash, cash equivalents, and restricted cash was $10,003,700 and $9,647,698, respectively. The Company has recorded net income of $2,017,880 and net loss of $681,479 for the six months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, and March 31, 2026, the Company had working capital of $21,389,638 and $18,937,744 and stockholders’ equity of $24,927,922 and $22,358,492, respectively.
Our principal source of liquidity has been from cash flows generated by operating activities and our cash reserves.
20
Cash Flow Activities for the Six Months Ended September 30, 2026 Compared to the Six Months Ended September 30, 2025
The following table summarizes our sources and uses of cash for the six months ended September 30, 2026 and 2025:
| For the Six Months Ended September 30, | Period-to- Period | |||||||||||
| 2026 | 2025 | Change | ||||||||||
| Net cash provided by (used in): | ||||||||||||
| Operating activities | $ | 511,634 | $ | (1,372,909 | ) | $ | 1,884,543 | |||||
| Investing activities | (151,716 | ) | (64,747 | ) | (86,969 | ) | ||||||
| Financing activities | $ | (3,916 | ) | $ | 240,860 | $ | (244,776 | ) | ||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 356,002 | $ | (1,196,796 | ) | $ | 1,552,798 | |||||
Net cash provided by (used in) operating activities was $511,634 and ($1,372,909) for the six months ended September 30, 2026 and 2025, respectively. The period over period increase in cash provided by operating activities of $1,884,543 was primarily due to the $2,699,359 increase in net income, and the $1,083,050 increase in customer advance payments offset by $1,020,371 increase in inventories purchased and the $658,524 increase in accounts receivable.
Net cash used in investing activities was $151,716 and $64,747 for the six months ended September 30, 2026 and 2025, respectively. The increase in cash used in investing activities during the six months ended September 30, 2026 was principally due to continuing investments in purchase of machinery and equipment primarily for Allentown location to help meet unprecedented demand for parts.
Net cash (used in) provided by financing activities was ($3,916) and $240,860 for the six months ended September 30, 2026 and 2025, respectively. This decrease is attributable to the decrease in proceeds from the exercise of stock options and the equipment financing line of credit.
Revolving Line of Credit
On August 26, 2025, and amended on September 2, 2026 (effective July 31, 2026) the Company entered into a revolving line of credit agreement (“Revolving Line of Credit”) with JPMorgan Chase Bank, N.A. (“Chase Bank”) for up to $1.0 million, bearing interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.15%. The Revolving Line of Credit contains certain financial covenants, including a fixed charge coverage ratio (the “FCCR”) of at least 1.20, tested annually. The amended Revolving Line of Credit matures on July 31, 2027. As of March 31, 2026, the Company’s FCCR was below the covenant requirement. Effective for the fiscal year ended March 31, 2026, Chase Bank waived the covenant exception. As of September 30, 2026, there was no outstanding borrowing under the Revolving Line of Credit. The Revolving Line of Credit is collateralized by a first-priority security interest in all property of the Company and an assignment to Chase Bank of the Company’s bank account
Equipment Financing Line of Credit
On September 8, 2025, the Company entered into a $450,000 equipment financing arrangement with Chase Bank, bearing interest at a fixed rate of 5.51%, to be repaid over a 60-month period (“Equipment Financing Line of Credit”). The Equipment Financing Line of Credit is expected to be utilized to purchase machine tools for production. Funding is on an equipment project basis, and once a project is fully funded, the obligation for that project is to be repaid by the execution of term note payable to Chase Bank. The Equipment Financing Line of Credit contains certain financial covenants, tested annually, consistent with the requirements under the Revolving Line of Credit. As of March 31, 2026, the Company’s FCCR was below the covenant requirement for the Equipment Financing Line of Credit. Effective for the fiscal year ended March 31, 2026, Chase Bank waived the covenant exception. As of September 30, 2026 and March 31, 2026, the Company had an outstanding draw of $381,958 and $415,924, respectively, of which $77,450 and $256,257, respectively, is reflected within equipment financing line of credit on the balance sheet and $304,508 and $159,667, respectively, is reflected within equipment financing line of credit, net of current on the balance sheet. The borrowings under the Equipment Financing Line of Credit are collateralized by a first lien on the related equipment financed under the arrangement.
21
Backlog of Orders
The backlog of orders for the Company’s products amounted to approximately $53,751,351 on September 30, 2026 as compared to approximately $18,400,810 on September 30, 2025. The orders in backlog on September 30, 2026 are expected to ship over the next 6 - 24 months depending on customer requirements and product availability.
Inflation
In the opinion of management, inflation has continued to impact the costs of our operations and depending upon the current duration and degree of higher inflation levels, is expected to have an impact upon our operations in the future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
| Item 3. | Qualitative and Quantitative Disclosures about Market Risk |
Not applicable.
| Item 4. | Controls and Procedures |
Management’s Evaluation of our Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2026.
Material Weakness in Internal Control over Financial Reporting
Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate the effectiveness of our internal control over financial reporting. The following material weakness has been identified:
The Company has not established an effective control environment due to the ineffective design and implementation of Information Technology General Controls (“ITGC”). The Company’s ITGC deficiencies included improperly designed controls pertaining to change management and user access rights over systems that are critical to the Company’s system of financial reporting. The ITGC deficiencies, combined with a lack of properly designed management review controls to compensate for these deficiencies, represent a material weakness in the Company’s internal control over financial reporting.
As of September 30, 2026, our Chief Executive Officer and our Chief Financial Officer concluded that our internal control over financial reporting and disclosure controls and procedures were not effective based upon the identified material weakness noted above.
Management has been actively engaged in the planning for and implementation of remediation efforts to address the identified material weakness. The remediation plan includes improvements in the design and implementation of enhanced monitoring and user access and change management within the ITGC environment.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control over financial reporting that occurred during the three months ended September 30, 2026 that materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
22
PART II – OTHER INFORMATION
| Item 1. | Legal Proceedings |
There are no legal proceedings that have occurred within the past year concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.
| Item 1A. | Risk Factors |
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2026, filed with the SEC on June 12, 2026, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common and capital stock. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
| Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
None.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
None.
| Item 5. | Other Information |
From time to time, our officers (as defined in Rule 16a–1(f) of the Exchange Act) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the six months ended September 30, 2026, none of our officers or directors
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| Item 6. | Exhibits |
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.
EXHIBIT INDEX
| Exhibit No. | Description | |
| 3.1 | Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit C-4 to Current Report on Form 8-K, dated February 27, 1991). | |
| 3.2 | By-Laws of the Company (filed as Exhibit 3.2 on Annual Report on Form 10-KSB for the fiscal year ended March 27, 1994). | |
| 4.1 | Form of Common Stock Certificate of the Company (filed as Exhibit 4.1 on Annual Report on Form 10-KSB for the fiscal year ended March 27, 1994). | |
| 4.2 | Description of Securities (filed as Exhibit 4.2 on June 22, 2023 - Annual Report on Form 10-K for the fiscal year ended March 31, 2022). | |
| 10.1(†) | 2011 Equity Incentive Plan (filed as Exhibit A to definitive Proxy Statement dated August 31, 2011). | |
| 10.2(†) | 2020 Equity Stock Based Compensation Plan (filed as Annex A to definitive Proxy Statement dated November 23, 2020). | |
| 10.3(†) | Employment Agreement between the Company and Subrata Purkayastha dated as of November 1, 2023 and effective as of November 1, 2023 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 7, 2023 and incorporated by reference herein). | |
| 10.4(†) | Executive Employment Agreement, effective as of January 1, 2025, by and between the Registrant and David Offerman (filed as Exhibit 10.1 on December 31, 2024 - Current Report on Form 8-K). | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certifications by Chief Executive Officer and Principal Financial Officer, pursuant to 17 CFR 240.13a-14(b) or 17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.1* | The following information from IEH Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, formatted in Inline XBRL (Extensible Business Reporting language) and filed electronically herewith: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Stockholders’ Equity; (iv) the Statements of Cash Flow; and (v) the Notes to Financial Statements. | |
| 101.INS* | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”) | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| * | Exhibits filed herewith. |
| ** | Exhibits furnished herewith. |
| † | Indicates management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements 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.
| IEH CORPORATION | ||
| Dated: November 12, 2026 | By: | /s/ David Offerman |
| David Offerman | ||
| Chairman of the Board, President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| /s/ Subrata Purkayastha | ||
| Subrata Purkayastha, Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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