Nortech Systems Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Nortech Systems Inc. filed its 2023 10-K, detailing financial performance and subsequent events including credit line amendments and new agreements.</b>

AI Summary

NORTECH SYSTEMS INC (NSYS) filed a Annual Report (10-K) with the SEC on March 20, 2024. Nortech Systems Inc. filed its 2023 10-K report on March 20, 2024. The company's fiscal year ended on December 31, 2023. Key subsequent events include a revolving line of credit amendment with Bank of America on February 29, 2024. An agreement with Marpe Technologies LTD was entered into on March 1, 2024. A partial payment of accounts receivable from Abilitech Medical Inc. occurred between January 1 and January 31, 2024.

Why It Matters

For investors and stakeholders tracking NORTECH SYSTEMS INC, this filing contains several important signals. The filing provides a comprehensive overview of Nortech's financial health and operational activities for the fiscal year 2023, crucial for investors assessing the company's stability and future prospects. Subsequent events like credit line amendments and new agreements offer insights into the company's immediate financial strategies and potential business developments post-fiscal year-end.

Risk Assessment

Risk Level: — NORTECH SYSTEMS INC shows moderate risk based on this filing. The filing contains limited specific financial data (revenue, net income, etc.) and focuses more on corporate actions and subsequent events, making a full financial risk assessment challenging without more detailed figures.

Analyst Insight

Investors should review the details of the amended credit line with Bank of America and the new agreement with Marpe Technologies LTD to understand their potential impact on Nortech's financial flexibility and strategic direction.

Key Numbers

• 2023-12-31 — Fiscal Year End (20231231)
• 2024-03-20 — Filing Date (20240320)
• 2024-02-29 — Credit Line Amendment Date (us-gaap:SubsequentEventMember)
• 2024-03-01 — Marpe Technologies Agreement Date (nsys:AgreementBetweenTheBIRDFoundationTheCompanyAndMarpeTechnologiesLTDMember)

Key Players & Entities

• NORTECH SYSTEMS INC (company) — COMPANY CONFORMED NAME
• NSYS (company) — tk
• 2023-12-31 (date) — FISCAL YEAR END
• 2024-03-20 (date) — FILED AS OF DATE
• Bank of America (company) — nsys:BankOfAmericaMember
• Marpe Technologies LTD (company) — nsys:MarpeTechnologiesLTDMember
• Abilitech Medical Inc (company) — nsys:AbilitechMedicalIncMember
• David Kunin (person) — nsys:DavidKuninMember

FAQ

Risk Factors

• Subsequent Events [medium — financial]: The company entered into a credit line amendment with Bank of America on February 29, 2024, and an agreement with Marpe Technologies LTD on March 1, 2024.

Industry Context

Nortech Systems Inc. operates in the electronic components manufacturing sector, providing services such as design, engineering, and manufacturing for complex electronic and electro-mechanical devices.

Regulatory Implications

The filing is a standard 10-K annual report required by the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934.

What Investors Should Do

1. Analyze the terms and financial implications of the Bank of America credit line amendment.
2. Investigate the strategic importance and financial impact of the agreement with Marpe Technologies LTD.
3. Monitor future filings for detailed financial results and operational updates.

Key Dates

• 2023-12-31: Fiscal Year End — End of the reporting period for the 10-K.
• 2024-03-20: Filing Date — Date the 10-K was officially filed with the SEC.
• 2024-02-29: Credit Line Amendment — Significant subsequent event impacting financial flexibility.
• 2024-03-01: Marpe Technologies Agreement — New business agreement entered into post-fiscal year-end.

Year-Over-Year Comparison

This filing is the annual 10-K report for the fiscal year ended December 31, 2023, providing a comprehensive update compared to previous filings.

Key Financial Figures

• $9.70 — gistrant, based on the closing price of $9.70 per share, was $ 12,357,276 as of June
• $1.2 million — into production. We spent approximately $1.2 million and $1.5 million on product research an
• $1.5 million — We spent approximately $1.2 million and $1.5 million on product research and development in
• $747,000 — na. Monterrey, Mexico has approximately $747,000 and $494,000 in long-term assets, and $
• $494,000 — , Mexico has approximately $747,000 and $494,000 in long-term assets, and $2,123,000 and
• $2,123,000 — 0 and $494,000 in long-term assets, and $2,123,000 and $2,469,000 of net operating lease a
• $2,469,000 — in long-term assets, and $2,123,000 and $2,469,000 of net operating lease assets as of Dec
• $861,000 — tively. Suzhou, China has approximately $861,000 and $805,000 in long-term assets, and $
• $805,000 — u, China has approximately $861,000 and $805,000 in long-term assets, and $278,000 and $
• $278,000 — 0 and $805,000 in long-term assets, and $278,000 and $384,000 of net operating lease ass
• $384,000 — 0 in long-term assets, and $278,000 and $384,000 of net operating lease assets as of Dec

Filing Documents

• nsys20231231_10k.htm (10-K) — 1351KB
• ex_640236.htm (EX-21) — 3KB
• ex_640237.htm (EX-23) — 2KB
• ex_640238.htm (EX-31.1) — 14KB
• ex_640239.htm (EX-31.2) — 15KB
• ex_640240.htm (EX-32.1) — 11KB
• ex_640241.htm (EX-97.1) — 28KB
• 0001437749-24-008690.txt (&nbsp;) — 7388KB
• nsys-20231231.xsd (EX-101.SCH) — 60KB
• nsys-20231231_def.xml (EX-101.DEF) — 466KB
• nsys-20231231_lab.xml (EX-101.LAB) — 424KB
• nsys-20231231_pre.xml (EX-101.PRE) — 496KB
• nsys-20231231_cal.xml (EX-101.CAL) — 74KB
• nsys20231231_10k_htm.xml (XML) — 1181KB

Business

Business 5-8 Item 1A.

Risk Factors

Risk Factors 8-18 Item 1B. Unresolved Staff Comments 18 Item 1C. Cybersecurity 18-19 Item 2.

Properties

Properties 19 Item 3.

Legal Proceedings

Legal Proceedings 20 Item 4. Mine Safety Disclosures 20 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6.

Selected Financial Data

Selected Financial Data 21 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 22-32 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 32 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 33-58 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 59 Item 9A.

Controls and Procedures

Controls and Procedures 59 Item 9B. Other Information 59 PART III Item 10. Directors, Executive Officers and Corporate Governance 60 Item 11.

Executive Compensation

Executive Compensation 60 Item 12.

Security Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters 60-61 Item 13. Certain Relationships and Related Transactions, and Director Independence 61 Item 14. Principal Accountant Fees and Services 61 PART IV Item 15. Exhibits and Financial Statement Schedules 62-64

Signatures

Signatures 65 Index to Exhibits 66-68 4 NORTECH SYSTEMS INCORPORATED FORM 10-K For the Year Ended December 31, 2023 PART I

Business

Item 1. Business General Nortech Systems Incorporated, ("the Company", "we", "our") organized in December 1990, is a provider of engineering design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies and components headquartered in Maple Grove, Minnesota, a suburb of Minneapolis, Minnesota. We maintain facilities and operations in Minnesota in the United States; Monterrey, Mexico; and Suzhou, China. We offer a full range of value-added engineering, technical and manufacturing services and support including project management, designing, testing, prototyping, manufacturing, supply chain management and post-market services. Our manufacturing and engineering services include complex electromedical and electromechanical products including medical devices, wire and cable assemblies, printed circuit board assemblies, complex higher-level assemblies and other box builds for a wide range of industries. In the design phase, we provide technical support, subject matter expertise in design for manufacturing and testing capabilities that allow our customer programs to get to production faster while meeting both their quality and cost requirements. Our breadth of manufacturing, technical expertise and experience make us attractive to our broad customer base. Our customers are original equipment manufacturers ("OEMs") in the Medical, Aerospace and Defense and Industrial markets. The diversity in the markets we serve is an advantage to mitigate the effects of fluctuations from the economy and competition. Our customers rely on our experience and capabilities in manufacturing and supply chain to manage and reduce total overall cost over the life cycle of their products. This requires a strong relationship with our customers based on a trusting partnership as we perform as an extension of their operations. Most of our net sales are derived from products built to the customer's unique design specifications. Our quality systems

Risk Factors

Item 1A. Risk Factors In evaluating our Company, careful consideration should be given to the following risk factors, in addition to the other information included in this Annual Report on Form 10-K. Each of these risk factors could adversely affect our business, operating results and/or financial condition, as well as adversely affect the value of an investment in our common stock. In addition to the following disclosures, please refer to the other information contained in this report, including our consolidated financial statements and the related notes. Risks Related to our Business A large percentage of our net sales have been made to a small number of customers, and the loss of a major customer, if not replaced, would adversely affect us. Two customers, individually, accounted for at 25.7% and 10.3%, respectively, of net sales for the year ended December 31, 2023, and one customer accounted for 26.9% of net sales for the year ended December 31, 2022. The loss of a substantial portion of net sales to our largest customers could have a material adverse effect on us. We are dependent on suppliers for components and raw materials and may experience shortages, extended lead times, cost premiums and shipment delays that would adversely affect our customers and us. We purchase raw materials, commodities and components for use in our production process. Increased costs of these materials could have an adverse effect on our production costs if we are unable to pass along price increases or reduce the other cost of goods produced through cost improvement initiatives. Fuel and energy cost increases could also adversely affect our freight and operating costs. Due to customer specifications and requirements, we are dependent on suppliers to provide critical electronic and other components and materials for our operations that could result in shortages of some of the components needed for production. Component shortages may result in an inability to deliver product

View Full Filing

View this 10-K filing on SEC EDGAR