8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  August 15, 2018

NORTECH SYSTEMS INCORPORATED

(Exact name of registrant as specified in charter)

Minnesota	0-13257	41-16810894
(State or other jurisdiction	(Commission	IRS Employer
of incorporation)	File Number)	Identification No.)

7550 Meridian Circle N, Maple Grove, MN 55369

(Address of principal executive offices)

(952) 345-2244

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

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. o

Item 2.02 Results of Operations and Financial Condition

The Registrant issued a news release on August 15, 2018, entitled “Nortech Systems Reports Second Quarter Results” regarding its consolidated second quarter results and financial condition.  A copy of this news release is attached hereto as Exhibit 99.1.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 15, 2018, Richard G. Wasielewski, the Chief Executive Officer and President of Nortech Systems Incorporated (the “Company”), notified the Company of his intention to retire. Nortech Systems’ board of directors has retained an executive recruitment firm to assist in its national search to identify Wasielewski’s replacement. He will continue to lead the company during the search and subsequent transition period. A copy of this news release is attached hereto as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits

99.1	News Release dated August 15, 2018 (furnished)
99.2	News Release dated August 15, 2018 (furnished)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 16, 2018

Nortech Systems Incorporated

(Registrant)

/s/ Constance M. Beck

Constance M. Beck

Chief Financial Officer

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EX-99.1

Exhibit 99.1

Contact:	Connie Beck
	Nortech Systems Incorporated
	(952) 345-2244
	or
	Warren Djerf
	Brookside Communications Group
	952-920-3908 / warren@brookcomm.net

August 15, 2018

Nortech Systems Reports Second Quarter Results

Company Posts Sequential Gains in Revenue and Operating Profits

MINNEAPOLIS — Nortech Systems Incorporated (NASDAQ: NSYS) today reported net sales of $28.5 million for the second quarter ended June 30, 2018, which includes $1.6 million of revenue recognized under new FASB accounting guidelines adopted this fiscal year. On a pro forma basis to adjust for this change in accounting guidance, second quarter sales of $26.9 million increased 5 percent and $1.2 million sequentially from the first quarter of 2018 while net sales for the second quarter of 2017 were $30.1 million.

For the six months ended June 30, 2018, Nortech Systems’ reported net sales of $55.0 million, which includes $2.3 million of revenue recognized under the new FASB guidelines. For the first six months of 2017, net sales were $58.5 million.

For the second quarter of 2018, Nortech Systems reported operating income of $734,000, compared to an operating loss of $120,000 for the first quarter of 2018; operating income was $95,000 for the prior-year period. For the first six months of 2018, operating income of $615,000 compares with $215,000 for the same period last year.

For the second quarter of 2018, Nortech Systems reported net income of $390,000, or $0.14 per diluted common share, compared with a net loss of $16,000, or $0.01 per diluted common share, for the same period last year which included $175,000 of loss on extinguishment of debt. For the six months ended June 30, 2018, Nortech Systems reported essentially breakeven results. This compares with a net loss of $30,000, or $0.01 per diluted common share, for the first six months of 2017.

“We’re pleased with our sequential quarterly sales and profit improvements,” said Rich Wasielewski, Nortech Systems’ president and CEO. “After several quarters of working through customer inventory issues, it was good to see contributions across the board.” He noted that Nortech’s overall quarterly backlog increased nine percent, both sequentially and year over year,

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with all three markets — medical, industrial and defense — providing momentum heading into the second half of the year.

Gross margin in the second quarter of 2018 was 13.4 percent, an improvement of 190 basis points sequentially and 220 basis points compared to the prior-year period. The strong gross margin performance resulted from a favorable product/service mix, cost reductions and process improvements.

“Our industry continues to face tariff concerns and electronic component shortages,” concluded Wasielewski, adding that these issues may become even more challenging in the second half of the year. Nortech estimates it was unable to ship $0.6 million in customer orders in the second quarter due to component shortages.

Conference Call

Nortech Systems announces a conference call to be held at 10:00 a.m. (CDT) on Thursday, August 16, 2018, to discuss the company’s second quarter results. Anyone interested in participating in the conference can access the call by dialing 877-407-0782 from within the United States, or 201-689-8567 if calling internationally. An audio webcast and replay of this conference call can be accessed at the investor relations portion of Nortech Systems’ website at www.nortechsys.com or at www.investorcalendar.com. The telephone replay will be available through August 30, 2018, by dialing 877-481-4010 (from U.S.) or 919-882-2331 (International). To access the replay, the conference ID 36917 is required.

About Nortech Systems Incorporated

Nortech Systems (www.nortechsys.com), based in Maple Grove, Minn., is a full-service electronics manufacturing services (EMS) provider of complex interconnect solutions, printed circuit board assemblies and diagnostic repair and integration services including higher-level assemblies and box builds for a wide range of industries. Markets served include industrial and commercial equipment, medical device, and aerospace & defense. Nortech has a range of specialized, high-tech facilities in the U.S., Latin America and Asia used for customized design, manufacture, testing and repair of its solutions. Nortech Systems is traded on the NASDAQ Stock Market under the symbol NSYS.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.  Examples of forward-looking statements include, among others, statements we make regarding business development activities, backlog, financial results, and initiatives related to operational efficiencies, cash management, working capital utilization, inventory reduction and accounts payable reduction. While this release is based on management’s best judgment and current expectations, actual results may differ and involve a number of risks and uncertainties.  Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: volatility in market conditions which may affect market supply of and demand for the company’s products; increased competition; dependence on major customers, including a single customer that has represented a large percentage of our revenues in recent years; changes in the reliability and efficiency of operating facilities or those of third parties; risks related to availability of labor; commodity and energy cost instability; general economic, financial and business conditions that could affect the company’s financial condition and results of operations; as well as risk factors listed from time to time in the company’s filings with the SEC.

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Condensed Consolidated Statements of Operations

(in thousands, except for share data)

	As Reported						As Reported					Pro Forma as if the previous accounting guidance was in effect
	THREE MONTHS ENDED						SIX MONTHS ENDED					THREE MONTHS ENDED		SIX MONTHS ENDED
	JUNE 30,						JUNE 30,					JUNE 30,
	Unaudited			Unaudited			Unaudited		Unaudited			Unaudited		Unaudited
	2018			2017			2018		2017			2018		2018
Net Sales	$	28,538		$	30,134		54,985		$	58,452		26,928		$	52,658
Cost of Goods Sold	24,721			26,769			48,140		51,995			23,106		45,836
Gross Profit	3,817			3,365			6,845		6,457			3,822		6,822
	13.4		%	11.2		%	12.4	%	11.0		%	14.2	%	13.0		%
Operating Expenses
Selling Expenses	1,037			1,327			2,075		2,532			1,037		2,075
General and Administrative Expenses	2,046			1,944			4,155		4,065			2,046		4,155
Gain on Sale of Property and Equipment	—			(1		)	—		(355		)			—
Total Operating Expenses	3,083			3,270			6,230		6,242			3,083		6,230
Income From Operations	734			95			615		215			739		592
Other Expense
Loss on Extinguishment of Debt	—			(175		)	—		(175		)	—		—
Interest Expense	(209		)	(142		)	(382	)	(281		)	(209	)	(382		)
Income (Loss) Before Income Taxes	525			(222		)	233		(241		)	530		210
Income Tax Expense (Benefit)	135			(206		)	235		(211		)	135		235
Net Income (Loss)	$	390		$	(16	)	(2	)	$	(30	)	395		$	(25	)
Income (Loss) Per Common Share - Basic and Diluted	$	0.14		$	(0.01	)	(0.00	)	$	(0.01	)	0.15		$	(0.01	)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted	2,695,994			2,747,831			2,708,234		2,747,831			2,695,994		2,708,234

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Condensed Consolidated Balance Sheets

(in thousands)

	JUNE 30, 2018		DECEMBER 31, 2017
	Unaudited		Audited
Cash	$	437	$	473
Restricted Cash	234		306
Accounts Receivable	19,309		17,417
Inventories	13,969		18,527
Contract Assets	6,547		—
Prepaid Expenses and Other Current Assets	1,259		1,044
Property and Other Long-term Assets	10,138		10,204
Goodwill and Other Intangible Assets, Net	4,008		4,114
Total Assets	$	55,901	$	52,085
Accounts Payable	$	15,676	$	11,699
Other Current Liabilities	6,975		6,346
Long Term Line of Credit	7,142		8,503
Long-term Debt and Other Long-term Liabilities	5,099		5,712
Shareholders’ Equity	21,009		19,825
Total Liabilities and Shareholders’ Equity	$	55,901	$	52,085

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EX-99.2

Exhibit 99.2

Contact:	Connie Beck
	Nortech Systems Incorporated
	(952) 345-2244
	or
	Warren Djerf
	Brookside Communications Group
	952-920-3908 / warren@brookcomm.net

August 15, 2018

Nortech Systems’ CEO Rich Wasielewski Announces His Retirement

Board of Directors to Conduct National Search for New CEO

MINNEAPOLIS — Rich Wasielewski, president and CEO of Nortech Systems, Inc. (NASDAQ: NSYS), today announced he will be retiring. Nortech Systems’ board of directors has retained an executive recruitment firm to assist in its national search to identify Wasielewski’s replacement. He will continue to lead the company during the search and subsequent transition period.

“Rich has been, and continues to be, an invaluable contributor to Nortech’s growth and evolution,” said David Kunin, Nortech Systems’ chairman of the board. “The vision he developed and spearheaded includes a global solutions footprint, expanded medical-market presence, enhanced value-added services and an innovative R&D culture.

“We are grateful for Rich’s ongoing leadership and this orderly transition will benefit our company, employees, customers, shareholders and other stakeholders,” added Kunin. “This is one of the board’s most significant responsibilities and a top priority for management.”

“This succession plan has been discussed with the board for some time,” said Wasielewski. “The timing is right for me — and for Nortech — to make this transition. We have a strong track record of accomplishment and many opportunities on the horizon. Leading Nortech has been the highlight of my professional life and it’s one of my greatest responsibilities to help find and support a successor who values our people, who understands our customers and who can help guide Nortech into its next chapter of success.”

Wasielewski has served as Nortech’s president and chief executive officer since 2014.  He joined the company in 2004 as vice president and chief financial officer; he advanced to senior vice president and CFO in 2008; he added the defense operations to his responsibilities in 2011 before being named president and chief operating officer in 2013.

During Wasielewski’s tenure, the company made several strategic investments and acquisitions, broadened its customer base and strengthened its international and domestic capabilities. In the U.S., the 2015 investment in Devicix’s medical device engineering expanded Nortech’s innovative design solutions and comprehensive product development capabilities.

In Mexico, printed circuit board technology was added to Nortech’s custom cable services in 2014, providing increased value-added and box-build opportunities; plans are underway to relocate to a new, larger facility by the end of this year. In 2016, Nortech opened a greenfield facility in Suzhou, China, to serve existing global customers and reach new, fast-growing regional markets in Asia.

About Nortech Systems Incorporated

Nortech Systems (www.nortechsys.com), based in Maple Grove, Minn., is a full-service electronics manufacturing services (EMS) provider of complex interconnect solutions, printed circuit board assemblies and diagnostic repair and integration services including higher-level assemblies and box builds for a wide range of industries. Markets served include industrial and commercial equipment, medical device, and aerospace & defense. Nortech has a range of specialized, high-tech facilities in the U.S., Latin America and Asia used for customized design, manufacture, testing and repair of its solutions. Nortech Systems is traded on the NASDAQ Stock Market under the symbol NSYS.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.  While this release is based on management’s best judgment and current expectations, actual results may differ and involve a number of risks and uncertainties.  Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: volatility in market conditions which may affect market supply of and demand for the company’s products; increased competition; changes in the reliability and efficiency of operating facilities or those of third parties; risks related to availability of labor; commodity and energy cost instability; general economic, financial and business conditions that could affect the company’s financial condition and results of operations; as well as risk factors listed from time to time in the company’s filings with the SEC.