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):  May 13, 2021

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):

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock, par value $.01 per share	NSYS	NASDAQ Capital Market

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 ☐

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. ☐

Item 2.02   Results of Operations and Financial Condition

The Registrant issued a news release on May 13, 2021, entitled “Nortech Systems Announces First Quarter 2021 Results” regarding its consolidated fiscal year results and financial condition.  A copy of this news release is attached hereto as Exhibit 99.1.

Item 5.07   Submission of Matters to a Vote of Security Holders.

On May 13, 2021, Nortech Systems Incorporated (the “Company”) held its annual meeting of shareholders.  The items voted on at the meeting and the results of such voting are set forth below:

(1) The shareholders elected seven directors to serve as members of the Company’s Board of Directors for one-year terms and until their successors are elected and qualified. The shareholders present in person or by proxy cast the following numbers of votes in connection with the election of directors, resulting in the election of all director nominees:

Nominee	Votes For		Votes Withheld
David B. Kunin		1,852,863		20,724
Ryan P. McManus		1,757,251		116,336
Jay D. Miller		1,844,132		29,455
Steven J. Rosenstone		1,845,633		27,954
Dan Sachs		1,845,813		27,774
Philip I. Smith		1,846,067		27,520
Stacy Kruse		1,846,435		27,152

(2) The shareholders approved, on an advisory basis, the compensation of the Company’s named executive officers (referred to as the “Say-On-Pay” proposal), as described in the Company’s proxy statement. There were 1,837,904 votes cast for the proposal; 24,018 votes cast against the proposal; 11,665 votes abstained; and there were 356,074 broker non-votes.

(3) The shareholders ratified the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm of the Company for fiscal 2021. There were 2,226,395 votes cast for the proposal; 1,265 votes cast against the proposal; and 2,001 votes abstained; and there were no broker non-votes.

Item 9.01   Financial Statements and Exhibits

99.1 News Release dated May 13, 2021 (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: May 18, 2021

Nortech Systems Incorporated

(Registrant)

/s/ Christopher D. Jones

Christopher D. Jones

SVP and Chief Financial Officer

EX-99.1

Exhibit 99.1

May 13, 2021

Nortech Systems Announces First Quarter 2021 Results

● Revenue Declines (19.6%); GAAP Net Loss of ($1.6) million

● Adjusted EBITDA loss of ($1.5) million for Fiscal First Quarter of 2021 Compared to $1.0 million in Fiscal First Quarter 2020

● Monthly Bookings Trends Improving. Solid 90-day Backlog of $63 million, Improved $14 million or +29% vs 12/31/20

● Balance Sheet Remains Strong with $7.6 million Unused Availability on the Long Term Line of Credit

MINNEAPOLIS, MINNESOTA, USA – Nortech Systems Incorporated (Nasdaq: NSYS) (the “Company”), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, aerospace & defense and industrial markets, reported net sales of $22.1 million for the quarter ended March 31, 2021, a decline of 19.6% compared to $27.4 for the first quarter of 2020. The decline was primarily due to COVID-related factors including supply chain disruptions and short-term challenges scaling our direct labor workforce. Gross margin for the first quarter of 2021 was 7.1% compared to 11.0% in 2020, a decline of 3.9 percentage points. Lower margin was due to unabsorbed fixed overhead in the Company’s global manufacturing network. Net loss for first quarter 2021 was ($1.6) million and ($0.58) per diluted share compared to a net income of $0.1 million and $0.05 per diluted share in first quarter 2020. Adjusted EBITDA was a loss of ($1.5) million in first quarter 2021 compared to net income of $1.0 million in first quarter 2020.

"The first quarter of 2021 was a significant challenge for Nortech, especially in January and February. In response, we took aggressive action to overcome COVID-related obstacles and enable higher production volume. Our manufacturing plants are regaining strength and we’re confident we’ll see steady improvement throughout the remainder of 2021.” stated Jay D. Miller, Chief Executive Officer and President.

Nortech, in partnership with our medical, industrial and defense customers, uses intelligence, innovation, speed and global expertise to provide manufacturing and engineering solutions. This enables our customers to be leaders in digital connectivity and data management to achieve their business goals. Nortech strives to be a premier workplace that fosters valued relationships internally and in our communities.

About Nortech Systems Incorporated Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech Systems primarily serves the medical, aerospace & defense, and industrial markets. Its design services span concept development to commercial design, and include medical device, software, electrical, mechanical, and biomedical engineering. Its manufacturing and supply chain capabilities are vertically integrated around wire/cable/interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has seven manufacturing locations and design centers across the U.S., Latin America, and Asia. Nortech Systems is traded on the NASDAQ Stock Market under the symbol NSYS. Nortech’s website is www.nortechsys.com.

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 including without limitation statements regarding the Company returning to profitable growth, monthly sales booking trends, customer demand, the ability of our supply chain to supply materials on a timely basis, our ability to hire sufficient direct labor to produce our products, and the effects of changes in operations. While this release is based on management’s best judgment and current expectations, actual results may differ materially from those expressed or implied 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: (1) the impact of the COVID-19 pandemic on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition (2) supply chain disruptions leading to parts shortages for critical components; (3) volatility in market conditions which may affect market supply of and demand for the company’s products; (4) increased competition; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) commodity cost increases coupled with our inability to raise prices charged to our customers; (8) the unanticipated loss of key members of senior management and the transition of new members of our management teams to their new roles; (9) and general economic, financial and business conditions that could affect the company’s financial condition and results of operations. Some of the above-mentioned factors are described in further detail in the section entitled “Risk Factors” in our annual and quarterly reports, as applicable. You should assume the information appearing in this document is accurate only as of the date hereof, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since such date. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Non-GAAP Measurements Management believes that certain non-GAAP financial measures may be useful in providing additional meaningful comparisons between current results and results in prior periods. Adjusted EBITDA is a metric used by management to evaluate performance. Adjusted EBITDA is also used by the financial community to facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period. The Company provides this information to investors to assist in comparisons of past, present, and future operating results and to assist in highlighting the results of on-going operations. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results. Other supplemental information has been provided to demonstrate reconciliation of non-GAAP measurements discussed above to most relevant GAAP financial measurements.

Contact Information is:

Chris Jones, CFO

cjones@nortechsys.com

952-345-2244

Condensed Consolidated Statements of Operations

(in thousands, except for share data)

	THREE MONTHS ENDED
	March 31,
	Unaudited			Unaudited
	2021			2020
Net Sales	$	22,072		$	27,440
Cost of Goods Sold		20,511			24,435
Gross Profit		1,561			3,005
		7.1	%		11.0	%
Operating Expenses
Selling Expenses		721			621
General and Administrative Expenses		2,796			1,993
Restructuring Expenses		219			-
Total Operating Expenses		3,736			2,614
Income (Loss) from Operations		(2,175	)		391
Interest Expense		(86	)		(224	)
Income (Loss) Before Income Taxes		(2,261	)		167
Income Tax (Benefit) Expense		(707	)		30
Net Income (Loss)	$	(1,554	)	$	137
Income (Loss) Per Common Share - Diluted	$	(0.58	)	$	0.05
Weighted Average Number of Common Shares Outstanding - Diluted		2,659,132			2,668,590

Condensed Consolidated Balance Sheets

(in thousands)

	March 31, 2021		December 31, 2020
	Unaudited		Audited
Cash	$	384	$	352
Restricted Cash		598		3,212
Accounts Receivable		12,507		15,625
Inventories		17,079		13,917
Contract Assets		6,677		5,899
Prepaid Expenses and Other Current Assets		3,127		2,032
Property and Other Long-term Assets		15,956		15,424
Other Intangible Assets, Net		1,172		1,173
Total Assets	$	57,500	$	57,634
Accounts Payable	$	13,006	$	11,239
Lease Obligations, Finance & Operating, Net		11,872		11,389
All Other Liabilities		6,312		5,891
Long Term Line of Credit		2,200		3,328
Long-term Debt, Net		6,959		7,069
Shareholders’ Equity		17,151		18,718
Total Liabilities and Shareholders’ Equity	$	57,500	$	57,634

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

	THREE MONTHS ENDED
	March 31,
	2021			2020
Net Income (Loss)	$	(1,554	)	$	137
Income Tax (Benefit) Expense		(707	)		30
Interest Expense		86			224
Depreciation and Amortization		477			567
EBITDA		(1,698	)		958
Restructuring Expenses		219			-
Adjusted EBITDA	$	(1,479	)	$	958