Core Insights - VirTra, Inc. successfully demonstrated its next-generation Soldier Virtual Training (SVT) system, surpassing requirements set by the U.S. Army's Program Executive Office for Simulation, Training, and Instrumentation [1][3] - The demonstration showcased the portable V-100® simulator, focusing on soldier readiness in weapon skills development, joint fires, and use-of-force [2][4] - The V-100® system is designed to provide a complete training solution, featuring fast setup, intuitive operation, ballistic accuracy, and data analytics for enhanced training outcomes [3][4] Technology and Features - The demonstration included multiple weapons integrated with the V-100® system, emphasizing immersive training that enhances performance in critical environments [4] - APEX™, an advanced analytics platform, was highlighted for providing actionable insights to improve training efficiency, tracking metrics like accuracy and reaction time [5][6] - Every new VirTra simulator will include APEX at no additional cost, allowing customers to access data-driven insights for quantifying progress and identifying training gaps [6] Research and Effectiveness - Independent studies validate the effectiveness of VirTra's systems, including a study from The Ohio State University confirming the V-100's reliability [7] - Research from the University of Chicago indicated a 23% reduction in use-of-force incidents among officers trained with VirTra technology, alongside significant decreases in racial disparities in arrests [8] - VirTra's training solutions are backed by decades of research, enhancing readiness and operational performance across military and law enforcement sectors [8] Company Overview - VirTra provides training solutions for law enforcement, military, and security professionals, focusing on immersive simulators and certified curricula [9] - The company's technologies are utilized globally to improve decision-making under stress and reduce risks in real-world encounters [9]

Group 1 - TransDigm Group has successfully completed the acquisition of Servotronics, with a tender offer price of $47.00 per share in cash [1][2][3] - A total of 2,228,197 shares of Servotronics' common stock were validly tendered, representing approximately 87.09% of outstanding shares [2] - The merger was completed without a vote from Servotronics' stockholders, as TransDigm acquired a sufficient number of shares [3] Group 2 - Outstanding shares of Servotronics that were not tendered will be converted into the right to receive the tender offer price [4] - Servotronics' common stock will cease trading on NYSE American, and a notice of delisting is expected to be filed [4] Group 3 - TransDigm Group is a leading global designer and supplier of highly engineered aircraft components for commercial and military aircraft [6] - Major product offerings include mechanical/electro-mechanical actuators, ignition systems, specialized pumps, and various aerospace components [6] Group 4 - Servotronics designs and manufactures servo controls and components for commercial and government applications, including aerospace [7]

Core Viewpoint - Star Equity Fund's advocacy led to Servotronics agreeing to be acquired by TransDigm at a significant premium, creating substantial value for shareholders [1][2]. Group 1: Transaction Details - TransDigm will acquire all outstanding shares of Servotronics at $47.00 per share in an all-cash transaction, representing a 357% premium over the closing price on May 16, 2025 [1]. - The transaction was a result of a strategic review initiated by Servotronics' Board, influenced by Star Equity Fund's sustained pressure and advocacy [2]. Group 2: Shareholder Advocacy - Star Equity Fund's campaign included director nominations and various communications with the Board, which led to shareholder-friendly actions that may not have occurred otherwise [2]. - The advocacy highlighted that Servotronics' shares were undervalued and that its intrinsic value was higher than its trading price as a standalone public company [2]. Group 3: Stakeholder Benefits - The acquisition by TransDigm is expected to benefit all stakeholders of Servotronics, including employees and customers, according to the Portfolio Manager of Star Equity Fund [3]. - The efforts of significant shareholders and directors contributed to achieving this favorable outcome for all shareholders, including the Company's Employee Stock Ownership Plan (ESOP) [3]. Group 4: Company Background - Star Equity Fund, LP is focused on unlocking shareholder value through engagement with management teams across its portfolio companies [4]. - Star Equity Holdings, Inc. operates in three business divisions: Building Solutions, Energy Services, and Investments [5].

Core Viewpoint - TransDigm Group Incorporated has announced a definitive merger agreement to acquire Servotronics, Inc., which will become an indirect wholly owned subsidiary of TransDigm, enhancing its portfolio in the aerospace and defense sectors [1][2]. Group 1: Merger Agreement Details - TransDigm will commence a tender offer to acquire all outstanding shares of Servotronics for $38.50 per share in cash, valuing the transaction at approximately $110 million [2][3]. - The cash consideration represents a premium of approximately 274% to Servotronics' closing share price on May 16, 2025 [2]. - The acquisition will be funded with TransDigm's cash on hand and is not subject to any financing conditions [3]. Group 2: Company Profiles - Servotronics is a leading global designer and manufacturer of servo controls and advanced technology components for aerospace and defense applications, generating approximately $45 million in revenue for its fiscal year ended December 31, 2024 [4]. - Servotronics' products have a strong presence across major aerospace and defense platforms, with nearly all revenue derived from proprietary products [4]. - TransDigm is a leading global designer, producer, and supplier of highly engineered aircraft components for commercial and military aircraft, with a diverse range of product offerings [7][8]. Group 3: Strategic Fit and Future Outlook - TransDigm's President and CEO expressed excitement about the acquisition, highlighting Servotronics' proprietary products and significant aftermarket exposure as a good fit with TransDigm's long-standing strategy [5]. - Servotronics' CEO noted that being part of a larger aerospace company will provide growth opportunities and resources for continued product development [5]. - The merger agreement anticipates that TransDigm will commence the cash tender offer for all outstanding shares of Servotronics on or before June 9, 2025 [5].

Core Viewpoint - Servotronics, Inc. has shown a positive turnaround in revenue and earnings for Q1 2025, although its stock performance has lagged behind the S&P 500 index during the same period [1][2]. Financial Performance - Revenues for Q1 2025 reached $11.7 million, marking a 12% increase from $10.4 million in Q1 2024, driven by higher sales volumes and improved pricing [2]. - Gross profit increased by 36% to $2.4 million, resulting in a gross margin improvement to 20.2% from 16.6% year-over-year [2]. - Operating income turned positive at $0.2 million, reversing from a loss of $0.3 million in the prior year [3]. - Net income from continuing operations was $0.1 million, or $0.06 per diluted share, compared to a net loss of $0.4 million, or ($0.15) per diluted share, in Q1 2024 [3]. Key Business Metrics - Adjusted EBITDA on a non-GAAP basis was $0.5 million, a significant improvement from a negative $12,000 in the prior-year period [4]. - Operating cash flow turned negative at ($1.6) million, down from $0.4 million in the same period last year, primarily due to a $2.1 million increase in accounts receivable [4]. - Capital expenditure decreased to $69,000 from $152,000, while financing activities generated $1.6 million in cash from increased borrowing on the company's $7 million asset-based credit facility [5]. Management Insights - CEO William F. Farrell, Jr. highlighted the benefits from rebounding industry demand, particularly in commercial and military aerospace, and noted significant improvements in operating income due to process enhancements [6]. - CFO Robert A. Fraass mentioned revised pricing agreements with key customers, expected to support margin expansion in 2025 and accelerate in 2026 [7]. Revenue Drivers - Revenue growth was attributed to a 12% year-over-year increase, with approximately $763,000 from higher unit volumes and $451,000 from pricing enhancements, partially offset by a $32,000 negative impact from product mix [8]. Expense Trends - Selling, general and administrative expenses rose 5% year-over-year to $2.1 million, largely due to legal and professional fees related to strategic alternatives [9]. - Interest and other expenses increased by 16.9% year-over-year to $97,000, driven by higher usage of the credit facility [9]. Future Outlook - Management expressed optimism for the remainder of 2025, supported by strong demand trends in both commercial and defense sectors, and is pursuing margin-accretive projects [10]. Strategic Developments - Servotronics initiated a formal review of strategic alternatives and engaged an investment bank for assistance, with initial discussions with potential partners yielding positive responses [11]. - Operations related to the previously divested Ontario Knife Company remain classified as discontinued, with minimal residual losses of $17,000 for the quarter [12].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements show a significant turnaround, with a return to profitability driven by revenue growth [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased, driven by higher accounts receivable and greater use of the line of credit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $29,629 | $27,779 | | Accounts receivable, net | $11,362 | $9,288 | | Inventories, net | $15,488 | $15,826 | | **Total Assets** | **$36,708** | **$34,832** | | **Total Current Liabilities** | $8,551 | $6,855 | | Line of credit | $3,725 | $2,127 | | **Total Liabilities** | **$13,013** | **$11,328** | | **Total Shareholders' Equity** | **$23,695** | **$23,504** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a significant operational turnaround with a 12% revenue increase and a return to net income Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $11,703 | $10,446 | | Gross Profit | $2,360 | $1,735 | | Operating Income (Loss) | $242 | ($283) | | Net Income (Loss) | $128 | ($383) | | Basic and Diluted EPS | $0.05 | ($0.16) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income improved significantly, driven by the shift from a net loss to a net income Q1 Comprehensive Income (Loss) (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $128 | ($383) | | Other Comprehensive Income | $17 | $19 | | **Total Comprehensive Income (Loss)** | **$145** | **($364)** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from operations turned negative due to a substantial increase in accounts receivable Q1 Cash Flow Summary (in thousands) | Cash Flow Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash (Used) Provided by Operating Activities | ($1,589) | $413 | | Net Cash Used by Investing Activities | ($52) | ($152) | | Net Cash Provided (Used) by Financing Activities | $1,598 | ($94) | | **Net (Decrease) Increase in Cash** | **($74)** | **$41** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes highlight the OKC discontinued operation, significant customer concentration, a pending lawsuit, and credit facility details - The sale of assets from The Ontario Knife Company (OKC) closed on August 1, 2023, and its results are now reported as a discontinued operation[19](index=19&type=chunk)[55](index=55&type=chunk) - The company has significant customer concentration, with four customers collectively accounting for approximately **84% of revenues** in Q1 2025[89](index=89&type=chunk) - The company is defending against a lawsuit from an employee seeking damages of at least **$5 million**, though management does not consider the risk of loss to be probable[87](index=87&type=chunk) - The company has a **$7 million** asset-based line of credit and was in compliance with its covenants as of March 31, 2025[64](index=64&type=chunk)[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the drivers of improved performance, including revenue growth and margin expansion, and its liquidity position [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenue grew 12% due to price and volume increases, leading to a 36% rise in gross profit and a return to operating income Q1 2025 vs Q1 2024 Performance Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $11,703 | $10,446 | $1,257 | 12.0% | | Gross Profit | $2,360 | $1,735 | $625 | 36.0% | | *Gross Margin* | *20.2%* | *16.6%* | - | - | | Operating Income (Loss) | $242 | ($283) | $525 | 185.5% | - Revenue growth was driven by price increases of approximately **$451,000** and volume increases of approximately **$763,000**[104](index=104&type=chunk) - The increase in SG&A was primarily due to higher professional and legal fees related to the review of strategic alternatives[108](index=108&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by its credit facility, which was used to fund a working capital deficit from higher receivables Key Liquidity Data (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | ($1,589) | $413 | | Net Cash from Financing Activities | $1,598 | ($94) | | Working Capital | $21,078 | $21,481 | - The use of cash from operations in Q1 2025 was primarily due to an **increase in accounts receivable**[116](index=116&type=chunk) - Primary sources of liquidity are cash from operations and the **$7 million** credit facility, which had approximately **$3 million** of additional funding capability[120](index=120&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from this disclosure requirement as a smaller reporting company - As a smaller reporting company, Servotronics is not required to provide quantitative and qualitative disclosures about market risk[131](index=131&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[132](index=132&type=chunk) - **No material changes** were made to the company's internal controls over financial reporting during the first quarter of 2025[133](index=133&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond those disclosed in the financial statement notes - The company refers to Note 9 for details on legal proceedings and states there are **no other material proceedings pending**[135](index=135&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Servotronics is not required to provide this information - The company is a smaller reporting company and is **not required to provide risk factor disclosures** in its Form 10-Q[136](index=136&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - **No directors or Section 16 officers** adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[139](index=139&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the required CEO/CFO certifications and XBRL data files filed as exhibits - The report includes required certifications from the CEO and CFO, as well as XBRL interactive data files as exhibits[140](index=140&type=chunk)

Core Viewpoint - Beaver Hollow Wellness (BHW) is seeking to elect a new board of directors for Servotronics, Inc. due to concerns over material underperformance, misguided capital allocation, and loss of shareholder value [1][2] Group 1: Shareholder Concerns - BHW, the largest shareholder of Servotronics with 15.2% ownership, has filed a definitive proxy statement to nominate four director candidates [1][2] - The current board is criticized for years of declining shareholder value and mismanagement, prompting BHW to advocate for a change in leadership [2][3] - The board's failures are highlighted by deteriorating financial health, declining operating margins, and high executive compensation despite poor performance [3][4] Group 2: Governance Issues - The current board has implemented "Golden Parachute" provisions that protect insiders at the expense of shareholders, which BHW describes as anti-shareholder governance [4] - BHW expresses concern over the board's lack of engagement with shareholders during a critical review of strategic alternatives, indicating a disregard for corporate governance [5][6] Group 3: Proposed Solutions - BHW proposes four highly qualified nominees with expertise in manufacturing, finance, and governance to restore operational and financial strength to Servotronics [7][8] - The campaign is framed as a revitalization effort aimed at growth, transparency, and accountability, urging shareholders to vote for the proposed nominees [8]

Core Viewpoint - Beaver Hollow Wellness, LLC (BHW) criticizes Servotronics, Inc.'s board for prioritizing executive compensation over shareholder value, indicating a disconnect between the board and shareholders [1][2]. Group 1: Board Actions and Shareholder Concerns - The board's newly inserted "change of control" provisions are seen as a self-serving tactic to protect executive payouts, which BHW argues is an inappropriate use of shareholder concerns [2]. - BHW emphasizes that the board has focused on granting excessive "Golden Parachutes" to executives, contrasting this with BHW's commitment to rebuilding the company through responsible practices [3]. Group 2: BHW's Commitment and Strategy - BHW aims to implement lean manufacturing principles, improve supply chain operations, and ensure high-quality deliverables, all while prioritizing shareholder interests and operational excellence [4]. - BHW encourages shareholders to reject the board's fear tactics and support their nominees, promoting a plan for real change within Servotronics [5]. Group 3: Nominees for Board Positions - BHW has nominated four individuals with diverse expertise in aerospace, finance, manufacturing, and governance to enhance the board's effectiveness [6].

Core Viewpoint - Star Equity Fund has been advocating for Servotronics, Inc. to explore strategic alternatives since 2022, leading to the recent announcement of a strategic review by the Company's Board of Directors [1][4]. Group 1: Advocacy and Changes - Star Equity Fund has consistently urged Servotronics' Board to improve corporate governance and maximize shareholder value, emphasizing the need for a change in Board composition due to past poor performance [2][3]. - The Fund's campaign has resulted in several shareholder-friendly actions, including the addition of new independent directors and the resignation of non-qualified directors, as well as the termination of a poison pill strategy [3][4]. - The divestiture of the non-core Consumer Products division in August 2023 was also a result of the Fund's advocacy, alongside calls for a strategic review of all assets [3]. Group 2: Future Expectations - While the initiation of a strategic review is seen as a positive step, there is an expectation for real progress to be made in the coming months, with a focus on maximizing shareholder value [5]. - The intrinsic value of Servotronics is believed to be significantly higher than its current stock price, indicating that the shares are undervalued [5]. - The Fund remains committed to monitoring the situation and aims for Servotronics to become a well-regarded company benefiting all stakeholders [6].

Revenue Performance - Revenues for Q4 2024 were $9.8 million, down 20.8% from $12.3 million in Q4 2023, with units shipped decreasing by 22.0%[3] - Full-year 2024 revenues increased by 3.0% to $44.9 million, up from $43.6 million in 2023, driven by price increases and higher volumes[5] - Total revenue for 2024 increased to $44,917,000 from $43,629,000 in 2023, representing a growth of 2.95%[19] Profitability - Gross profit in Q4 2024 declined to $1.2 million, or 12.3% of revenue, compared to $2.8 million, or 22.4% of revenue in Q4 2023[3] - Consolidated gross profit for 2024 was $8.3 million, or 18.4% of revenue, compared to $7.8 million, or 17.9% for 2023[5] - Gross profit rose to $8,266,000 in 2024, compared to $7,805,000 in 2023, marking an increase of 5.91%[19] - Adjusted EBITDA for 2024 increased significantly to a profit of $0.7 million, reflecting operational improvements[6] Operating Loss and Expenses - Operating loss for Q4 2024 was ($1.1) million, a significant decline from operating income of $0.5 million in Q4 2023[3] - Operating expenses decreased to $9.3 million, or 20.6% of sales in 2024, down from $9.9 million, or 22.7% in 2023[5] - Operating loss improved to $1,009,000 in 2024 from $2,113,000 in 2023, a decrease of 52.3%[19] Net Loss and Earnings Per Share - Loss from continuing operations for 2024 was ($1.5) million, or ($0.60) per diluted share, compared to a loss of ($3.5) million, or ($1.44) per diluted share in 2023[5] - Net loss for 2024 decreased significantly to $1,623,000 from $10,787,000 in 2023, reflecting an improvement of 85%[19] - The company reported a basic and diluted loss per share of $0.64 for 2024, down from $4.37 in 2023, a reduction of 85.3%[19] Cash Flow and Assets - Cash provided by operating activities was $1.3 million for 2024, compared to a use of ($3.8) million for 2023, driven by lower net loss and improved cash collections[6] - Cash and restricted cash at the end of 2024 was $261,000, up from $245,000 in 2023, indicating a net increase of $16,000[20] - Total current assets decreased to $27,779,000 in 2024 from $29,567,000 in 2023, a decline of 6.05%[18] - Total assets decreased to $34,832,000 in 2024 from $36,587,000 in 2023, a decline of 4.8%[18] Liabilities and Financial Position - Total liabilities decreased to $11,328,000 in 2024 from $12,093,000 in 2023, a reduction of 6.31%[18] - The company is well positioned for growth in 2025, with expectations of profitable growth as aircraft deliveries resume[2] - Accounts receivable decreased to $9,288,000 in 2024 from $12,065,000 in 2023, a decline of 23.0%[18]