(

)

Restatement of Previously Reported Financial Statements

Subsequent to

March 31, 2019,

misstatements were identified in our previously filed unaudited interim financial statements which required restatement. The misstatements arose as a result of the implementation of a new ERP system at our Sypris Electronics segment effective

January 1, 2019.

Due to data entry processing errors following this transition to the new ERP system, certain vendor invoices related to raw material inventory receipts in the

first

quarter of

2019

for the Sypris Electronics segment were incorrectly recorded in the

second

quarter of

2019.

These errors resulted in an understatement of accounts payable and cost of sales of approximately

$786,000

as of and for the quarter ended

March

31,

2019.

Promptly upon identifying the error, the Company undertook a review of its systems and processes related to the transition to the new ERP system, as well as a review of certain accounting entries in the

first

quarter. The Company also corrected other immaterial accounting errors affecting the

first

quarter of

2019

discovered through this review related to the ERP system transition. To correct all misstatements as reflected in this Form

-Q/A, the Company recognized incremental net loss of

$731,000

for the

three

months ended

March 31, 2019.

As a result, our reported net loss increased from

$2,305,000

$3,036,000

and net loss per share increased from

$0.11

$0.15

for the

three

months ended

March

31,

2019.

Cash flows from operating activities did

not

change as a result of the restatement.

The following tables summarize the effects of the restatement on the specific items presented in the Company’s consolidated financial statements as of

March

31,

2019:

Unaudited Consolidated Statement of Operations as of

March

31,

2019:

	Previously Reported			Adjustment			Restated
Net revenue	$	19,564		$	0		$	19,564
Cost of sales		17,973			731			18,704
Gross profit		1,591			(731	)		860

Selling, general and administrative		3,454			0			3,454
Severance, equipment relocation and other costs		98			0			98
Operating loss		(1,961	)		(731	)		(2,692	)

Interest expense, net		217			0			217
Other expense (income), net		51			0			51
Loss before taxes		(2,229	)		(731	)		(2,960	)

Income tax expense		76			0			76
Net loss	$	(2,305	)	$	(731	)	$	(3,036	)

Loss per share:
Basic		(0.11	)		(0.04	)		(0.15	)
Diluted		(0.11	)		(0.04	)		(0.15	)

Selected Unaudited Consolidated Balance Sheet Information as of

March

31,

2019:

	Previously
	Reported			Adjustment			Restated
Inventory	$	21,209		$	(100	)	$	21,109
Total current assets		41,877			(100	)		41,777
Total assets		65,676			(100	)		65,576
Accounts payable		11,670			631			12,301
Total current liabilities		27,999			631			28,630
Total liabilities		51,518			631			52,149
Accumulated deficit		(115,789	)		(731	)		(116,520	)
Total stockholders’ equity		14,158			(731	)		13,427
Total liabilities and stockholders’ equity		65,676			(100	)		65,576