Financial Data and Key Metrics Changes - In Q3 2022, revenue totaled $35.3 million, representing a 19.8% increase from $29.5 million in Q3 2021 and over 8% growth from the previous quarter [19] - Year-to-date revenue for the first nine months of 2022 reached $98.5 million, a nearly 21% increase from $81.7 million in the same period of 2021 [19] - Adjusted EBITDA in Q3 was $2.4 million compared to $735,000 in Q3 2021, with year-to-date adjusted EBITDA at $4.7 million versus $149,000 last year [23] Business Line Data and Key Metrics Changes - Medical market revenue increased by $3.5 million or 21% year-over-year [20] - Industrial market revenue rose by $1.5 million or 16% compared to the prior year [20] - Aerospace and Defense markets saw a 26% increase, totaling $3.9 million [20] Market Data and Key Metrics Changes - The backlog was up more than 30% from prior year levels to $103 million, although it saw a slight sequential decline from $106 million at the end of Q2 2022 [18] - The largest customer in the Medical segment reported quarterly revenue growth in the mid-single digits, indicating solid spending trends on healthcare equipment, particularly in Europe and Asia [11] Company Strategy and Development Direction - The company is focused on strategic planning that emphasizes stakeholder value, including employee care and supplier partnerships [29] - Ongoing supply chain optimization activities are aimed at improving customer on-time delivery and product quality [30] - The company aims to leverage its unique capabilities and strategic fulfillment solutions to differentiate itself in the marketplace [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about finishing strong in 2022 and carrying momentum into 2023, with a healthy backlog and improved supply chain conditions [15] - The company is actively monitoring macroeconomic conditions and is encouraged by reports of fewer supply chain disruptions from customers [18] Other Important Information - Operating cash flow for the year-to-date was a $1 million source of cash, compared to a cash use of $2.9 million last year [24] - The company anticipates receiving $5.2 million in employee retention credit (ERC) funds, which will be used to reduce line of credit balance [26] Q&A Session Summary Question: Continued sequential revenue and margin growth into Q4 - Management expects solid Q4 performance and momentum to carry into 2023, while carefully monitoring macroeconomic conditions [34] Question: Initiatives for shareholder value recognition - Management acknowledges the importance of communicating results and plans to increase press releases and analyst coverage to enhance visibility [36] Question: Labor situation and staffing levels - The company is reasonably well-staffed, with some overtime but not to the point of burnout, while parts availability remains the primary bottleneck [38][40]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to NORTECH SYSTEMS INCORPORATED Commission file number 0-13257 State of Incorporation: Minnesota Indicate by check mark whether the registrant has submit ...

Nortech Systems Incorporated (NASDAQ:NSYS) Q2 2022 Earnings Conference Call August 10, 2022 5:00 PM ET Company Participants Jay Miller - President and Chief Executive Officer Chris Jones - Chief Financial Officer Conference Call Participants Paul Cooper - Private Investor Operator Good day, ladies and gentlemen, and welcome to Nortech???s Second Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your hosts, Jay Miller, President and Chief Executive Officer an ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to NORTECH SYSTEMS INCORPORATED Commission file number 0-13257 State of Incorporation: Minnesota IRS Employer Identification No. 41-1681094 Executive Offices: ...

Nortech Systems Incorporated (NASDAQ:NSYS) Q1 2022 Results Conference Call May 11, 2022 5:00 PM ET Company Participants Chris Jones - CFO Jay Miller - CEO Conference Call Participants Operator Good afternoon, ladies and gentlemen, and welcome to the Nortech First Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chris J ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201%20-%20Financial%20Statements) The company's Q1 2022 financials show a strong turnaround with a 38.9% sales increase and a return to profitability [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Net sales grew 38.9% to $30.7 million, driving a return to net income of $138 thousand from a prior-year loss Consolidated Statements of Operations (Unaudited, In Thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Sales** | $30,711 | $22,072 | 39.1% | | **Gross Profit** | $4,044 | $1,561 | 159.1% | | **Income (Loss) From Operations** | $169 | $(2,175) | N/A | | **Net Income (Loss)** | $138 | $(1,554) | N/A | | **Diluted EPS** | $0.05 | $(0.58) | N/A | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew slightly to $67.9 million, driven by an increase in inventories and shareholders' equity Consolidated Balance Sheet Highlights (In Thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $52,818 | $51,774 | | Inventories, Net | $21,187 | $19,434 | | **Total Assets** | **$67,911** | **$67,091** | | **Total Current Liabilities** | $24,713 | $22,306 | | **Total Liabilities** | **$41,576** | **$40,980** | | **Total Shareholders' Equity** | **$26,335** | **$26,111** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated $1.5 million in cash, a significant reversal from the prior year's use of cash Consolidated Cash Flow Summary (Unaudited, In Thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $1,491 | $(896) | | Net Cash Used In Investing Activities | $(514) | $(272) | | Net Cash Used In Financing Activities | $(1,585) | $(1,415) | | **Net Change in Cash and Cash Equivalents** | **$(608)** | **$(2,582)** | [Condensed Notes to Consolidated Financial Statements](index=9&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue recognition, significant customer concentration, a $5.2 million ERC receivable, and available credit - Revenue from contract manufacturing agreements recognized over time accounted for approximately **73% of total revenue** for the three months ended March 31, 2022[45](index=45&type=chunk) - One customer accounted for **23% of net sales** for Q1 2022; two customers represented approximately **35% of total accounts receivable** at March 31, 2022[41](index=41&type=chunk) - The company has a **$5.2 million receivable** for the Employee Retention Credit (ERC) as of March 31, 2022[64](index=64&type=chunk) - The company has a **$16 million line of credit** with Bank of America, with **$7.6 million outstanding** and **$8.0 million of unused availability** as of March 31, 2022[51](index=51&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk) - In Q1 2022, the company granted **74,000 stock options** and **21,000 restricted stock units (RSUs)**[22](index=22&type=chunk)[25](index=25&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Sales growth of 38.9% was driven by higher volume and pricing, with improved margins and a strong backlog [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 2022 net sales rose 38.9% to $30.7 million, with gross margin expanding to 13.2% and a return to operating income Net Sales by Market (in millions) | Market | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Medical | $15.2 | $12.3 | 23.6% | | Industrial | $8.7 | $6.2 | 40.3% | | Aerospace and Defense | $6.8 | $3.6 | 88.9% | | **Total Net Sales** | **$30.7** | **$22.1** | **38.9%** | - Gross profit as a percent of net sales **improved to 13.2%** in Q1 2022 from 7.1% in Q1 2021, driven by higher production volume and price increases[76](index=76&type=chunk) - The 90-day shipment backlog was **$35.4 million** as of March 31, 2022, a **13.8% increase** from March 31, 2021; the total shipment backlog was **$97.6 million**[74](index=74&type=chunk)[75](index=75&type=chunk) - The company reported **income from operations of $169 thousand** in Q1 2022, compared to a loss from operations of $2.3 million in Q1 2021[82](index=82&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Management confirms sufficient liquidity for the next twelve months, supported by cash flows and an $8.0 million available credit line - Management believes existing financing arrangements, cash flows from operations, and expected ERC funds will be **sufficient to satisfy working capital needs** for the next twelve months[86](index=86&type=chunk) - As of March 31, 2022, the company had **$8.0 million of unused availability** under its line of credit[92](index=92&type=chunk) - In Q1 2022, the credit agreement was amended to include the Employee Retention Credit Receivable as security, **improving unused availability**[92](index=92&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the reporting period - **Not applicable**[100](index=100&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2022[101](index=101&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[102](index=102&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201%20-%20Legal%20Proceedings) The company is subject to various legal proceedings and claims that arise in the ordinary course of business - The company is subject to various legal proceedings and claims that arise in the **ordinary course of business**[104](index=104&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risks, which include supply chain, competition, and raw material costs - There have been **no material changes** in the risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[105](index=105&type=chunk) - Key risks include: **supply chain disruption**, lack of sufficient human resources, increased competition, raw material cost instability, and outbreaks of contagious diseases[99](index=99&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds) The company's share repurchase program has expired with no remaining authorized amount for repurchases - The company's **share repurchase program has expired** as of March 31, 2022[106](index=106&type=chunk) [Exhibits](index=29&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and Inline XBRL data - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, as well as **Inline XBRL financial data**[111](index=111&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2021, revenue totaled $33.5 million, a 40% increase year-over-year from $23.8 million in Q4 2020, and a sequential increase of nearly 14% from $29.5 million in Q3 2021 [17][18] - Full year 2021 revenue was $115 million, up from $104 million in 2020, representing an increase of nearly 11% driven by rebounding customer demand [19] - Gross profit for Q4 2021 was $2.7 million (8% margin), compared to $1.7 million (7.3% margin) in Q4 2020; full year gross profit was $15.9 million (13.8% margin), up from $9.7 million (9.3% margin) in 2020 [20][21] Business Line Data and Key Metrics Changes - The company reported a backlog of $95 million at the end of 2021, which is nearly double the $49 million backlog from the previous year [7][45] - The consolidation of PCB operations in Mankato, Minnesota, was completed in Q3 2021, contributing to organizational efficiencies [12] Market Data and Key Metrics Changes - Rising material and labor costs are significant challenges in the electronics supply chain, with 90% of electronics manufacturers reporting increased material costs [33][34] - Semiconductor shortages continue to impact operations, with lead times extending from 28 to 52 weeks [35] Company Strategy and Development Direction - The company aims to optimize inventory investment and build a robust end-to-end supply chain fulfillment solution as a top strategic priority for 2022 [27] - There is a focus on operational excellence and innovation to create shareholder value, with an emphasis on regionalization in manufacturing [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth, expecting to grow top-line revenue and gross profit, with EBITDA anticipated to grow even faster [39][51] - The company is actively engaging with customers to pass on cost increases and explore more cost-effective production locations [40][58] Other Important Information - The company recognized $11.4 million in non-recurring income from CARES Act programs in 2021, which was essential for maintaining operations during the pandemic [24][31] - The Bank of America credit facility was extended until 2026, providing financial support for future growth [13][29] Q&A Session Summary Question: Future margin expectations and sales forecasts for 2022 - Management did not provide specific guidance but indicated expectations for continued revenue growth and improved gross margins [39] Question: Ability to pass on labor and material cost increases to customers - Management confirmed ongoing discussions with customers about passing on cost increases and exploring lower-cost production options [40][41] Question: Clarification on year-end backlog figures - Management confirmed the backlog increased from $49 million to $95 million, effectively doubling [45] Question: Revenue growth and backlog fulfillment - Management noted that the backlog increase is primarily due to customers placing orders earlier due to supply chain concerns [54] Question: Supply chain challenges and margin impacts - Management acknowledged rising costs from suppliers and ongoing discussions with customers to mitigate these increases [56][57]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2021 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ NORTECH SYSTEMS INCORPORATED (Exact name of registrant as specified in its charter) Commission file number 0-13257 State of Incorporation: Minnesota ...

Nortech Systems Incorporated (NASDAQ:NSYS) Q3 2021 Earnings Conference Call November 11, 2021 5:00 PM ET Company Participants Jay Miller - CEO Chris Jones - CFO Conference Call Participants Operator Good day, ladies and gentlemen, and welcome to the Q3 2021 Nortech Systems Inc. Earnings Conference Call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. [Operator instructions] At this time, it is my pleasure to turn the floor ov ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201-%20Financial%20Statements) This section presents Nortech Systems' unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, shareholders' equity, and detailed accounting notes for periods ended September 30, 2021 and 2020 Key Financial Highlights (in thousands) | Metric | Q3 2021 | Q3 2020 | % Change (QoQ) | 9M 2021 | 9M 2020 | % Change (YoY) | | :-------------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Net Sales | $29,452 | $26,362 | 11.7% | $81,706 | $80,263 | 1.8% | | Gross Profit | $8,041 | $1,962 | 309.8% | $13,187 | $7,927 | 66.4% | | Net Income | $3,557 | $1,971 | 80.5% | $2,188 | $1,985 | 10.2% | | Net Income Per Common Share - Basic | $1.33 | $0.74 | 79.7% | $0.82 | $0.75 | 9.3% | | Net Income Per Common Share - Diluted | $1.24 | $0.73 | 69.9% | $0.78 | $0.74 | 5.4% | Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | % Change | | :-------------------------- | :----------- | :----------- | :------- | | Total Assets | $66,513 | $57,634 | 15.4% | | Total Liabilities | $45,477 | $38,916 | 16.8% | | Total Shareholders' Equity | $21,036 | $18,718 | 12.4% | | Current Assets | $51,134 | $41,037 | 24.6% | | Current Liabilities | $32,881 | $19,536 | 68.3% | Cash Flow Highlights (in thousands) | Metric | 9M 2021 | 9M 2020 | Change | | :------------------------------------ | :------ | :------ | :----- | | Net Cash Used In Operating Activities | $(2,852) | $(99) | $(2,753) | | Net Cash (Used In) Provided By Investing Activities | $(621) | $5,597 | $(6,218) | | Net Cash Provided By (Used In) Financing Activities | $1,352 | $(4,464) | $5,816 | | Net Change in Cash | $(2,121) | $1,034 | $(3,155) | | Cash - Ending of Period | $1,443 | $1,694 | $(251) | - Employee Retention Credit (ERC): Recognized **$5,209k** related to ERC as a reduction of associated costs (cost of goods sold, selling, and general and administrative expenses) for the nine months ended September 30, 2021[27](index=27&type=chunk) - Intangible Asset Abandonment: Recognized a **$560k** loss on abandonment of the Devicix tradename in the three months ended September 30, 2021[32](index=32&type=chunk) - Customer Concentration: For Q3 2021, two customers accounted for **36%** of net sales, and at September 30, 2021, two customers represented approximately **36%** of total accounts receivable[42](index=42&type=chunk) - PPP Loan: Applied for forgiveness of the **$6,077k** Promissory Note under the Paycheck Protection Program in the third quarter of 2021[57](index=57&type=chunk) - Covenant Compliance: The company met all covenants under its credit agreement with **Bank of America** for the period ended September 30, 2021[55](index=55&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) [Condensed Notes to Consolidated Financial Statements](index=10&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) [NOTE 1. Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%201.%20Summary%20of%20Significant%20Accounting%20Policies) [NOTE 2. Concentration of Credit Risk and Major Customers](index=14&type=section&id=NOTE%202.%20Concentration%20of%20Credit%20Risk%20and%20Major%20Customers) [NOTE 3. Revenue](index=14&type=section&id=NOTE%203.%20Revenue) [NOTE 4. Financing Arrangements](index=16&type=section&id=NOTE%204.%20Financing%20Arrangements) [NOTE 5. Leases](index=18&type=section&id=NOTE%205.%20Leases) [NOTE 6. Income Taxes](index=19&type=section&id=NOTE%206.%20INCOME%20TAXES) [NOTE 7. Restructuring Charges](index=19&type=section&id=NOTE%207.%20RESTRUCTURING%20CHARGES) [NOTE 8. Related Party Transactions](index=20&type=section&id=NOTE%208.%20RELATED%20PARTY%20TRANSACTIONS) [Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations](index=21&type=section&id=Item%202-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, covering business overview, recent developments, operating performance, liquidity, capital resources, and critical accounting policies - Business Overview: Nortech Systems is a full-service **electronics manufacturing services (EMS)** contract manufacturer, providing wire and cable assemblies, PCB assemblies, and box builds, primarily serving the medical, aerospace and defense, and industrial equipment markets[72](index=72&type=chunk) - COVID-19 Impact: Operations continued with safety measures, but the full extent of the pandemic's impact on business, financial condition, and results remains uncertain due to ongoing **supply chain and workforce shortages**[73](index=73&type=chunk)[74](index=74&type=chunk) - Facility Consolidation: The closure of the **Merrifield, Minnesota** production facility was completed in Q1 2021, with manufacturing shifted to other Minnesota locations[76](index=76&type=chunk) - Government Aid: Applied for forgiveness of the **$6.1 million PPP Promissory Note** in Q3 2021 and expects to receive approximately **$5.2 million in Employee Retention Credits (ERC)** for Q1 and Q2 2021, which reduced payroll and benefit costs[77](index=77&type=chunk)[78](index=78&type=chunk) Net Sales by Market (in thousands) | Market | Q3 2021 | Q3 2020 | % Change (QoQ) | 9M 2021 | 9M 2020 | % Change (YoY) | | :-------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Medical | $16,978 | $14,218 | 19.4% | $45,389 | $42,753 | 6.2% | | Aerospace and Defense | $3,092 | $6,206 | (50.2)% | $10,540 | $15,509 | (32.0)% | | Industrial | $9,382 | $5,938 | 58.0% | $25,777 | $22,001 | 17.2% | | **Total Net Sales** | **$29,452** | **$26,362** | **11.7%** | **$81,706** | **$80,263** | **1.8%** | 90-day Shipment Backlog by Market (in thousands) | Market | Sep 30, 2021 | Jun 30, 2021 | Sep 30, 2020 | % Change (QoQ) | % Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | | Medical | $19,666 | $18,879 | $11,483 | 4.2% | 71.3% | | Aerospace and Defense | $8,568 | $5,981 | $6,764 | 43.3% | 26.7% | | Industrial | $10,657 | $9,874 | $4,860 | 7.9% | 119.3% | | **Total Backlog** | **$38,891** | **$34,734** | **$23,108** | **12.0%** | **68.3%** | - Gross Profit Margin: Improved significantly to **27.3% in Q3 2021** (from **7.4% in Q3 2020**) and **16.1% in 9M 2021** (from **9.9% in 9M 2020**), primarily due to the **$4.7 million ERC** reduction in payroll and medical expenses and increased utilization[86](index=86&type=chunk) - Operating Expenses: Selling expenses decreased due to **ERC**. General and administrative expenses decreased in Q3 2021 due to **ERC** but increased in 9M 2021 due to higher professional service fees. Research and development expenses were **$0.3 million** for 9M 2021, up from minimal expenses in 2020[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - Liquidity and Capital Resources: Management believes cash from operations, available funds under the **Bank of America credit agreement**, expected **ERC funds**, and cash on hand will be adequate to meet liquidity needs, despite ongoing COVID-19 uncertainties. Net cash used in operating activities for 9M 2021 was **$2.9 million**, driven by increased working capital and inventory[94](index=94&type=chunk)[95](index=95&type=chunk) [Overview](index=21&type=section&id=Overview) [Recent Developments](index=21&type=section&id=Recent%20Developments) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) [Net Sales](index=22&type=section&id=Net%20Sales) [Backlog](index=24&type=section&id=Backlog) [Gross Profit](index=24&type=section&id=Gross%20Profit) [Selling Expense](index=24&type=section&id=Selling%20Expense) [General and Administrative Expense](index=24&type=section&id=General%20and%20Administrative%20Expense) [Research and Development Expense](index=24&type=section&id=Research%20and%20Development%20Expense) [Restructuring Charges](index=24&type=section&id=Restructuring%20Charges) [Loss on Abandonment of Intangible Asset](index=25&type=section&id=Loss%20on%20Abandonment%20of%20Intangible%20Asset) [Income Taxes](index=25&type=section&id=Income%20Taxes) [Net Income](index=25&type=section&id=Net%20Income) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company, though various market risks like volatility, supply chain disruptions, and raw material cost instability are implicitly relevant - Not Applicable: The company states that quantitative and qualitative disclosures about market risk are not applicable[107](index=107&type=chunk) - Identified Market Risks (from surrounding text): - **Volatility in market supply, demand, or currency exchange rates** - **Supply chain disruption** and unreliability due to COVID-19 - Lack of sufficient **human resources** - Increased **competition** or OEMs ceasing outsourcing - Increases in **raw material costs** (e.g., copper, oil) - **Commodity and energy cost instability** - General **economic, financial, and business conditions** - Outbreaks of **epidemic, pandemic, or contagious diseases**[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204-%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective, with no material changes in internal control over financial reporting during the quarter - Disclosure Controls and Procedures: Management, with the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and concluded they were **effective** as of the end of the reporting period[108](index=108&type=chunk) - Internal Control Over Financial Reporting: There were **no material changes** in internal control over financial reporting during the most recently completed fiscal quarter[109](index=109&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Changes in Internal Control Over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=29&type=section&id=Item%201-%20Legal%20Proceedings) The company is subject to various legal proceedings and claims that arise in the ordinary course of business - The company is subject to various legal proceedings and claims that arise in the ordinary course of business[112](index=112&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%20-%201A.%20Risk%20Factors) This section refers to risk factors from the 2020 Annual Report on Form 10-K, noting no material changes other than those specified - Refers to risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[113](index=113&type=chunk) - No material changes in risk factors from the Annual Report on Form 10-K, other than as noted[113](index=113&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds](index=29&type=section&id=Item%202-%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds) The company's share repurchase program has expired, and no additional amounts are available for repurchase as of September 30, 2021 - The share repurchase program expired as of September 30, 2021, with no additional amounts available for repurchase[114](index=114&type=chunk) [Item 3. Defaults on Senior Securities](index=29&type=section&id=Item%203-%20Defaults%20on%20Senior%20Securities) There are no defaults on senior securities to report - No defaults on senior securities[115](index=115&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204-%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[116](index=116&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205-%20Other%20Information) There is no other information to report under this item - No other information[117](index=117&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and financial statements formatted in Inline XBRL - Exhibits include **CEO and CFO certifications (31.1, 31.2, 32)**, financial statements in **Inline XBRL (101)**, and the **Cover Page Interactive Data File (104)**[119](index=119&type=chunk) SIGNATURES