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M-tron Industries, Inc.

M-tron Industries, Inc.MPTIEarnings & Financial Report

NYSE · Information Technology · Electronic Components, NEC

M-tron Industries, Inc. designs, manufactures and markets high-performance frequency control and timing solutions including crystal oscillators, filters and integrated timing assemblies. Its products serve aerospace, defense, telecom, industrial automation and medical device segments, catering mainly to North American, European and Asian commercial and government clients.

What changed in M-tron Industries, Inc.'s 10-K — 2023 vs 2024

Top changes in M-tron Industries, Inc.'s 2024 10-K

137 paragraphs added · 166 removed · 94 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Spanning frequencies from 10MHz to 50GHz, components such as filters, low noise amplifiers, couplers, attenuators, switches, circulators, oscillators, multipliers, phase lock loops, mixers, digitally tuned oscillators, voltage-controlled oscillators, and phase shifters, all with associated control circuitry, are integrated into one exceptional SWaP-C (Size, Weight and Power at a competitive Cost) assembly.
Spanning frequencies from 10MHz to 50GHz, components such as filters, low noise amplifiers, couplers, attenuators, switches, circulators, oscillators, multipliers, phase lock loops, mixers, digitally tuned oscillators, voltage-controlled oscillators, and phase shifters, all with associated control circuitry, are integrated into one exceptional Size, Weight and Power at a competitive Cost ("SWaP-C") assembly.
Such convictions or actions could also result in suspension or debarment from serving as a supplier to government contractors for some period of time. Such convictions or actions could have a material adverse effect on us and our operating results. The costs of cooperating or complying with such audits or investigations may also adversely impact our financial results.
Such convictions or actions could also result in suspension or debarment from serving as a supplier to government contractors for some period of time. Such convictions or actions could have a material adverse effect on us and our operating results. The costs of cooperating with or complying with such audits or investigations may also adversely impact our financial results.
We believe that successful execution of this strategy will lead to a transformation of our product portfolio towards multi-component integrated offerings, longer product life cycles, better margins and an improved competitive position. Business Segment The Company conducts its business through one business segment: Electronic Components, which includes all products manufactured and sold by MtronPTI.
We believe that successful execution of this strategy will lead to a transformation of our product portfolio towards multi-component integrated offerings, longer product life cycles, better margins and an improved competitive position. Business Segment The Company conducts its business through one business segment: Electronic Components, which includes all products manufactured and sold by Mtron.
MtronPTI employs a market-based approach of designing and offering new products to its customers through both organic research and development, and through strategic partnerships, joint ventures, acquisitions, or mergers. We seek to leverage our core strength as an engineering leader to expand client access, add new capabilities and continue to diversify our product offerings.
Mtron employs a market-based approach of designing and offering new products to its customers through both organic research and development, and through strategic partnerships, joint ventures, acquisitions, or mergers. We seek to leverage our core strength as an engineering leader to expand client access, add new capabilities and continue to diversify our product offerings.
The IMA product group designs and develops solutions using the same circuit, electromagnetic, mechanical, thermal, and stress analysis tools as our customers, which allows MtronPTI’s MFM and IMA design synthesis to be effortlessly integrated into the customer’s system synthesis at early stages in the development process.
The IMA product group designs and develops solutions using the same circuit, electromagnetic, mechanical, thermal, and stress analysis tools as our customers, which allows Mtron’s MFM and IMA design synthesis to be effortlessly integrated into the customer’s system synthesis at early stages in the development process.
Products MtronPTI’s portfolio is divided into three product groupings, Frequency Control, Spectrum Control and Integrated Microwave Assemblies, and has expanded from primarily crystal-based components to include higher levels of integration, advanced materials science, cavity-based products, and various types of compensation methods employing integrated circuits and other methods to create products geared for applications that require high reliability in harsh environments.
Products Mtron's portfolio is divided into three product groupings: Frequency Control, Spectrum Control and Integrated Microwave Assemblies (Solutions), and has expanded from primarily crystal-based components to include higher levels of integration, advanced materials science, cavity-based products, and various types of compensation methods employing integrated circuits and other methods to create products geared for applications that require high reliability in harsh environments.
This design collaboration essentially makes MtronPTI’s design team an extension of the customer, so our customer’s resources can focus on their areas of expertise, resulting in a shortened design cycle and a faster time to market.
This design collaboration essentially makes Mtron’s design team an extension of the customer, so our customer’s resources can focus on their areas of expertise, resulting in a shortened design cycle and a faster time to market.
Our manufacturing operations, products, and/or product packaging are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, wastes and other chemicals.
Our manufacturing operations, products, and/or product packaging are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, waste and other chemicals.
MtronPTI's Spectrum Control product group includes a wide array of radio frequency (“RF”), microwave and millimeter wave filters and diplexers covering a frequency range from 1 MHz to 30 GHz, and solid-state power amplifiers covering a frequency range from 300 MHz to 26 GHz, with power output from 10 Watts to 10kW.
Spectrum Control Mtron's Spectrum Control product group includes a wide array of radio frequency ("RF"), microwave and millimeter wave filters and diplexers covering a frequency range from 1 MHz to 30 GHz, and solid-state power amplifiers covering a frequency range from 300 MHz to 26 GHz, with power output from 10 Watts to 10kW.
The IMA product group also reviews all build-to-print opportunities, utilizing all our in-house assembly and test capabilities to competitively bid this service. 2 Table of Contents Major Markets The following table provides a breakdown of revenues by end-market as a percent of consolidated revenues: 2023 2022 Aerospace and Defense 55.5 % 48.4 % Avionics 24.9 % 22.6 % Industrial 14.3 % 21.7 % Space 5.3 % 7.3 % 100.0 % 100.0 % Customers We primarily work directly with original equipment manufacturers (“OEMs”) to define the appropriate solutions for their unique applications, including the design of custom parts with unique part numbers.
The IMA product group also reviews all build-to-print opportunities, utilizing all our in-house assembly and test capabilities to competitively support this service. 2 Table of Contents Major Markets The following table provides a breakdown of revenues by end-market as a percent of consolidated revenues: 2024 2023 Aerospace and Defense 67.3 % 55.5 % Avionics 21.7 % 24.9 % Industrial 6.6 % 14.3 % Space 4.4 % 5.3 % 100.0 % 100.0 % Customers We primarily work directly with original equipment manufacturers ("OEMs") to define the appropriate solutions for their unique applications, including the design of custom parts with unique part numbers.
Our competitive strategy begins with our focus on niche markets where precise specification and reliability are the major requirements. Research and Development Utilizing our understanding of market requirements, we employ a disciplined approach to capital allocation when selecting new product development projects.
Our competitive strategy begins with our focus on niche markets where highly engineered performance and reliability are the major requirements. Research and Development Utilizing our understanding of market requirements, we employ a disciplined approach to capital allocation when selecting new product development projects.
We maintain our executive offices at 2525 Shader Road, Orlando, Florida 32804. Our telephone number is (407) 298-2000. Our website is www.mtronpti.com. Our common stock is traded on the NYSE American (“NYSE”) under the symbol "MPTI". MtronPTI ’ s Separation On October 7, 2022, the separation of the MtronPTI business from The LGL Group, Inc.
We maintain our executive offices at 2525 Shader Road, Orlando, Florida 32804. Our telephone number is (407) 298-2000. Our common stock is traded on the NYSE American ("NYSE") under the symbol "MPTI." Mtron ' s Separation On October 7, 2022, the separation of the Mtron business from The LGL Group, Inc.
These products are employed in applications within the commercial and military aerospace and defense, space, avionics, and industrial markets. MtronPTI’s Integrated Microwave Assembly (IMA) product group brings over 55 years of expert crystal, filter and oscillator design experience to our Custom Multi-Functional Modules (MFM) and Integrated Microwave Assemblies (IMA).
These products are employed in applications within the commercial and military aerospace and defense, space, avionics, and industrial markets. Integrated Microwave Assembly Mtron’s Integrated Microwave Assembly ("IMA") products brings over 60 years of expert crystal, filter and oscillator design experience to our Custom Multi-Functional Modules ("MFM") and Integrated Microwave Assemblies.
We expect to fill a substantial portion of our order backlog as of December 31, 2023 during 2024 and 2025, but cannot provide assurances as to what portion of the order backlog will be fulfilled in any given year.
We expect to fill the vast majority of our order backlog as of December 31, 2024 during 2025 and 2026, but cannot provide assurances as to what portion of the order backlog will be fulfilled in any given year.
Order Backlog Our order backlog was $47,831,000 and $46,180,000 as of December 31, 2023 and 2022, respectively. The backlog of unfilled orders includes amounts based on signed contracts and purchase orders.
Order Backlog Our order backlog was $47,239 and $47,831 as of December 31, 2024 and 2023, respectively. The backlog of unfilled orders includes amounts based on signed contracts and purchase orders.
These devices may be based on quartz, quartz MEMS or advanced materials science designed to achieve higher performance levels than quartz. MtronPTI's products offer high reliability over a wide temperature range and are well-suited for harsh environments, including shock and vibration-resistant oscillators with low-g sensitivity. These products are designed for applications within aerospace and defense, avionics, and industrial markets.
These devices may be based on quartz, quartz micro-electromechanical systems ("MEMS") or advanced materials science designed to achieve higher performance levels than quartz. Mtron's products offer high reliability over a wide temperature range and are well-suited for harsh environments, including shock and vibration-resistant oscillators with low-g sensitivity.
Design, assembly, test and integration along with component design and manufacturing is done at MtronPTI’s AS9100 D operations. These products are designed for both extreme aerospace and defense and avionics as well as industrial markets.
Design, assembly, test and integration along with component design and manufacturing is done at Mtron’s AS9100 D, ISO9001:2025 certified facilities. These products are designed for both extreme aerospace and defense and avionics requirements as well as industrial markets.
Filter devices include crystal, ceramic, LC, planar, combline, cavity, interdigital and metal insert waveguide, as well as switched filter arrays and RF subsystems. Power amplifiers add active devices to MtronPTI's portfolio and include GaN, GaAS FET, LDMOS and chip and wire technologies in narrow or broadband, module or rack-mounted packages.
Filter devices include crystal, ceramic, LC, planar, combline, cavity, interdigital and metal insert waveguide, as well as switched filter arrays and RF subsystems. Power amplifiers add active devices to Mtron's portfolio and include gallium nitride ("GaN"), gallium arsenide ("GaAS") field-effect transistors ("FET"), laterally-diffused metal-oxide semiconductors ("LDMOS") and chip and wire technologies in narrow or broadband, module or rack-mounted packages.
U.S. production facilities in Orlando, Florida and Yankton, South Dakota are International Traffic in Arms Regulations (“ITAR”) registered and AS9100 Rev D certified and our Yankton, South Dakota production facility is MIL-STD-790 certified. MtronPTI's production facility in India operates under a Manufacturing License Agreement (MLA) issued by the U.S. Department of State.
In addition, its U.S. production facilities in Orlando and Yankton are International Traffic in Arms Regulations ("ITAR") registered and International Aerospace Quality Group AS9100 Rev D certified and our Yankton, South Dakota production facility is Military Standard ("MIL-STD") 790 certified. Mtron's production facility in India operates under a Manufacturing License Agreement ("MLA") issued by the U.S. Department of State.
International Revenues Our international revenues were $11,064,000 in 2023, or 26.9% of total consolidated revenues, compared to $9,406,000, or 29.5% of total consolidated revenues, in 2022. In each of 2023 and 2022, these revenues were derived mainly from customers in Asia, with significant sales in Malaysia.
International Revenues Our international revenues were $11,029 in 2024, or 22.5% of total consolidated revenues, compared to $11,064, or 26.9% of total consolidated revenues, in 2023. In both 2024 and 2023, these revenues were derived mainly from contract manufacturer customers in Asia, with significant sales in Malaysia.
An important part of the sales process is gaining qualification of specific products from the OEM, confirming suitability for use in a specific system design, which is commonly referred to as a "design-win." Through direct contact with our clients and through our representative network, we are able to understand the needs of the marketplace and then guide our product development process to allocate resources to meet those requirements. 3 Table of Contents Domestic Revenues Our domestic revenues were $30,104,000 in 2023, or 73.1% of total consolidated revenues, compared to $22,439,000, or 70.5% of total consolidated revenues, in 2022.
An important part of the sales process is gaining qualification of specific products from the OEM, confirming suitability for use in a specific system design, which is commonly referred to as a "design-win." Through direct contact with our clients and through our representative network, we are able to understand the needs of the marketplace and then guide our product development process to allocate resources to meet those requirements.
Item 1. Business. General Originally founded in 1965, M-tron Industries, Inc. (the "Company," "MtronPTI," "we," "us," or "our") is engaged in the designing, manufacturing and marketing of highly engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications.
General Originally founded in 1965, M-tron Industries, Inc. is engaged in the designing, manufacturing and marketing of highly engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications. Mtron's primary markets are aerospace and defense, space, and avionics.
New product development continues to be a key focus for MtronPTI as we continue to push our roadmap to meet the needs of our served markets. Within the Frequency Control product group, design efforts are focused on smaller packages, lower power, lower phase noise and use of new materials to provide compensation and harsh environment performance that surpasses customer requirements.
Within the Frequency Control product group, design efforts are focused on smaller packages, lower power, lower phase noise and use of new materials to provide compensation and harsh environment performance that surpasses customer requirements.
These products are differentiated by their precise level of accuracy, stability over time and within harsh environments, and very low phase noise. MtronPTI's Frequency Control product group includes a broad portfolio of quartz crystal resonators, clock oscillators, VCXO, TCXO OCXO and TCVCXO devices which meet some of the tightest specifications, including IEEE 1588 standards.
Frequency Control Mtron's Frequency Control product group includes a broad portfolio of quartz crystal resonators, clock oscillators, voltage-controlled crystal oscillator ("VCXO"), temperature-compensated crystal oscillator ("TCXO"), oven-controlled crystal oscillator ("OCXO"), and temperature-compensated voltage-controlled crystal oscillator ("TCVCXO") devices which meet some of the tightest specifications, including Institute of Electrical and Electronics Engineers ("IEEE") 1588 standards.
Marketing and Sales We have a highly skilled team of sales engineers who work in tandem with a worldwide network of independent external manufacturer representatives and franchised electronics distributors to market and sell our products.
Research and development expense was $2,809 and $2,216 for the years ended December 31, 2024 and 2023, respectively, and will remain a significant part of the Company's efforts to continually enhance its intellectual property position. 3 Table of Contents Marketing and Sales We have a highly skilled team of sales engineers who work in tandem with a worldwide network of independent external manufacturer representatives and franchised electronics distributors to market and sell our products.
MtronPTI’s primary markets are aerospace and defense, space, and avionics. Our component-level devices and integrated modules are used extensively in electronic systems for applications in aerospace and defense, avionics, satellites, global positioning systems, down-hole drilling, medical systems, instrumentation, and industrial devices.
Our component-level devices and integrated modules are used extensively in electronic systems for applications in aerospace and defense, avionics, satellites, global positioning systems, down-hole drilling, medical systems, instrumentation, and industrial devices. As an engineering-centric company, Mtron provides close support to the customer throughout its products' entire life cycles, including product design, prototyping, production and subsequent product upgrades and maintenance.
As an engineered products and solutions company, a significant number of our workforce consists of degreed engineers providing expertise in product design and process development. 5 Table of Contents
As an engineered products and solutions company, a significant number of our workforce consists of degreed engineers providing expertise in product design and process development. Available Information The Company's internet address is www.mtronpti.com. Information on or accessible through our website is not deemed to be incorporated into this Report. Website references in this Report are merely textual references.
In addition, the team considers the inherent value of intellectual property that each project presents with consideration for technical roadmap objectives. Research and development expense was $2,216,000 and $2,006,000 for the years ended December 31, 2023 and 2022, respectively, and will remain a significant part of the Company's efforts to continually revitalize its intellectual property position.
In addition, the team considers the inherent value of intellectual property that each project presents with consideration for technical roadmap objectives.
The Company has three full-time employees in Hong Kong, and nine full-time employees and 142 contractors in Noida, India. None of the Company's employees are represented by a labor union and the Company considers its relationships with employees to be good.
The following table summarizes our employees by employment type and geographic location: Full-Time Part-Time Contractors Total United States: Orlando, Florida 186 16 2 204 Yankton, South Dakota 28 4 — 32 Total United States 214 20 2 236 International: Hong Kong 3 — — 3 Noida, India 9 — 148 157 Total International 12 — 148 160 Total 226 20 150 396 None of the Company's employees are represented by a labor union and the Company considers its relationships with employees to be good.
Employees As of December 31, 2023, we employed 356 people, including 188 full-time and 20 part-time employees, along with 148 contractors. Of this total, the Company has 176 full-time, 20 part-time, and 6 contract employees within the U.S., with 169 located in Orlando, Florida, and 33 in Yankton, South Dakota.
Human Capital Management As of December 31, 2024, we employed 396 people, including 226 full-time and 20 part-time employees, along with 150 contractors.
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As an engineering-centric company, MtronPTI provides close support to the customer throughout its products' entire life cycles, including product design, prototyping, production and subsequent product upgrades and maintenance. This collaborative approach has resulted in the development and growth of long-standing business relationships with its customers. All of MtronPTI’s production facilities in the U.S. and India are ISO 9001:2015 certified.
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Item 1. Business In this Annual Report on Form 10-K, the terms "Mtron," the "Company," "we," "us," and "our" refer collectively to M-tron Industries, Inc. and its subsidiaries. Unless otherwise stated, all dollar amounts are in thousands.
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For the year ended December 31, 2023, our largest customer accounted for $12,921,000, or 31.4%, of the Company's total revenues, compared to $8,190,000, or 25.7%, of the Company’s total revenues for the year ended December 31, 2022.
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This collaborative approach has resulted in the development and growth of long-standing business relationships with its customers. The Company has manufacturing facilities in Orlando, Florida; Yankton, South Dakota; and Noida, India. The Company also has a sales office in Hong Kong.
Removed
The Company’s second largest customer for the year ended December 31, 2023 accounted for $7,822,000, or 19.0%, of the Company's total revenues, compared to $4,857,000, or 15.3%, of the Company’s total revenues for the year ended December 31, 2022.
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All of Mtron's production facilities are International Organization for Standardization ("ISO") 9001:2015 certified (the international standard for creating a quality management system) and Restriction of Hazardous Substances ("RoHS") compliant.
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The loss of either of these customers, or a decrease in their demand for our products, could have a material adverse effect on our results. As of December 31, 2023, four of our largest customers accounted for approximately $3,774,000, or 76.4%, of accounts receivable.
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These products are differentiated by their precise level of accuracy, stability over time and within harsh environments, and very low phase noise.
Removed
As of December 31, 2022, four of our largest customers accounted for approximately $2,872,000, or 53.8%, of accounts receivable. The insolvency of any of these customers could have a material adverse impact on our liquidity.
Added
These products are designed for applications within aerospace and defense, avionics, and industrial markets.
Added
New Product Development New product development continues to be a key focus for Mtron as we continue to push our roadmap to meet the needs of our served markets at an attractive price point.
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The table below presents the concentration of revenue of the Company's customers for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (in thousands) $ % $ % Customer 1 $ 18,145 37.0 % $ 12,921 31.4 % Customer 2 8,522 17.4 % 7,822 19.0 % Customer 3 2,977 6.1 % 2,510 6.1 % Customer 4 2,542 5.2 % 2,267 5.5 % Top 4 largest customers 32,186 65.7 % 25,520 62.0 % All other (a) 16,826 34.3 % 15,648 38.0 % Total revenues $ 49,012 100.0 % $ 41,168 100.0 % (a) Comprised of approximately 113 and 118 customers for the years ended December 31, 2024 and 2023, respectively The loss of any of these customers, or a decrease in their demand for our products, could have a material adverse effect on our results.
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The table below presents the concentration of accounts receivable of the Company's customers as of December 31, 2024 and 2023: December 31, 2024 2023 (in thousands) $ % $ % Customer 1 $ 2,100 29.9 % $ 2,128 43.1 % Customer 2 1,360 19.4 % 852 17.2 % Customer 3 795 11.3 % 483 9.8 % Customer 4 393 5.6 % 311 6.3 % Top 4 largest customers 4,648 66.2 % 3,774 76.4 % All other (a) 2,376 33.8 % 1,169 23.6 % Total accounts receivable, gross $ 7,024 100.0 % $ 4,943 100.0 % (a) Comprised of approximately 54 and 47 customers as of December 31, 2024 and 2023, respectively The insolvency of any of these customers could have a material adverse impact on our liquidity.
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The Company makes available, free of charge through its website, copies of the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed with or furnished to the Securities and Exchange Commission (the "SEC") pursuant to Section 13(a) of the Exchange Act, as soon as reasonably practicable after those reports are filed with or furnished to the SEC.
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The contents of our website are not incorporated by reference into this Report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only. 5 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Our future operating results are dependent on our ability to develop, introduce and market innovative products continually, to modify existing products, to respond to technological change and to customize some of our products to meet customer requirements.
Our future operating results are dependent on our ability to continually develop, introduce and market innovative products, to modify existing products, to respond to technological change and to customize some of our products to meet customer requirements.
Should this line of business fail to generate sufficient sales to support ongoing operations, there can be no assurance that we will be able to develop alternate business lines. Our operating results vary significantly from period to period. We experience fluctuations in our operating results.
Should this line of business fail to generate sufficient sales to support ongoing operations, there can be no assurance that we will be able to develop alternate business lines. Our operating results may vary significantly from period to period. We experience fluctuations in our operating results.
Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; ‒ Sanctions or restrictions on trade imposed by the United States Government; ‒ Export license requirements; ‒ Trade restrictions; ‒ Currency controls or fluctuations in exchange rates; ‒ High levels of inflation or deflation; ‒ Difficulty in staffing and managing non-U.S. operations; ‒ Greater difficulty in collecting accounts receivable and longer payment cycles; ‒ Changes in labor conditions and difficulties in staffing and managing international operations; and ‒ Limitations on insurance coverage against geopolitical risks, natural disasters and business operations.
Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; • Sanctions, tariffs or restrictions on trade imposed or proposed by the United States Government; • Export license requirements; • Trade restrictions; • Currency controls or fluctuations in exchange rates; • High levels of inflation or deflation; • Difficulty in staffing and managing non-U.S. operations; • Greater difficulty in collecting accounts receivable and longer payment cycles; • Changes in labor conditions and difficulties in staffing and managing international operations; and • Limitations on insurance coverage against geopolitical risks, natural disasters and business operations.
These provisions include prohibiting our stockholders from fixing the number of directors and establishing advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors (the “Board”).
These provisions include prohibiting our stockholders from fixing the number of directors and establishing advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors (the "Board").
The Amended and Restated Tax Indemnity and Sharing Agreement (“Tax Agreement”) by and between the Company and LGL Group generally prohibits us from taking certain actions that could cause the Separation to fail to qualify as a tax-free transaction, including but not limited to, within two (2) years of the Separation date not entering into any agreement, understanding or arrangement involving the substantial acquisition of stock of the Company or a substantial shift in ownership (by vote or value) of the Company.
The Amended and Restated Tax Indemnity and Sharing Agreement ("Tax Agreement") by and between the Company and LGL Group generally prohibits us from taking certain actions that could cause the Separation to fail to qualify as a tax-free transaction, including but not limited to, within two (2) years of the Separation date not entering into any agreement, understanding or arrangement involving the substantial acquisition of stock of the Company or a substantial shift in ownership (by vote or value) of the Company.
As one of their suppliers, we must comply with significant procurement regulations and other requirements. Under applicable federal regulations for defense contractors, we will be required to comply with the Cybersecurity Maturity Model Certification (“CMMC”) program in the next several years and other similar cybersecurity requirements. We also maintain registration under ITAR for certain of our production facilities.
As one of their suppliers, we must comply with significant procurement regulations and other requirements. Under applicable federal regulations for defense contractors, we will be required to comply with the Cybersecurity Maturity Model Certification ("CMMC") program in the next several years and other similar cybersecurity requirements. We also maintain registration under ITAR for certain of our production facilities.
During 2024, we expect a significant portion of our revenues to continue to be derived from sales to these manufacturers. Often OEMs and other service providers within these markets have experienced periods of capacity shortage and periods of excess capacity, as well as periods of either high or low demand for their products.
During 2025, we expect a significant portion of our revenues to continue to be derived from sales to these manufacturers. Often OEMs and other service providers within these markets have experienced periods of capacity shortage and periods of excess capacity, as well as periods of either high or low demand for their products.
Our variable rate indebtedness subjects us to interest rate risk and could cause our debt service obligations to increase significantly. Amounts outstanding under our Loan Agreement bear interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25%, with a SOFR floor of 0.00%.
Our variable rate indebtedness subjects us to interest rate risk and could cause our debt service obligations to increase significantly. Amounts outstanding under our Loan Agreement would bear interest at the Secured Overnight Financing Rate ("SOFR") plus a margin of 2.25%, with a SOFR floor of 0.00%.
In 2023 and 2022, the majority of our revenues were derived from sales to manufacturers of equipment for the aerospace and defense, space, avionics, instrumentation and industrial markets for frequency and spectrum control devices, including indirect sales through distributors and contract manufacturers.
In 2024 and 2023, the majority of our revenues were derived from sales to manufacturers of equipment for the aerospace and defense, space, avionics, instrumentation and industrial markets for frequency and spectrum control devices, including indirect sales through distributors and contract manufacturers.
We do not currently engage in foreign currency hedging activities, but may do so in the future to the extent that we incur a significant amount of foreign-currency denominated liabilities. We rely on information technology systems to conduct our business, and disruption, failure or security breaches of these systems could adversely affect our business and results of operations.
We do not currently engage in foreign currency hedging activities, but may do so in the future to the extent that we incur a significant amount of foreign-currency denominated liabilities. 10 Table of Contents We rely on information technology systems to conduct our business, and disruption, failure or security breaches of these systems could adversely affect our business and results of operations.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). We are required to comply with the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), and other rules that govern public companies.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles ("GAAP"). We are required to comply with the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), and other rules that govern public companies.
Systems that are subject to review include our purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems and management information systems. 9 Table of Contents Any costs found to be improperly allocated to a specific contract will not be reimbursed or must be refunded if already reimbursed.
Systems that are subject to review include our purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed or must be refunded if already reimbursed.
The loss of any of these customers, a decrease in their demand for our products, or the insolvency of any of these customers could have a material adverse effect on our results of operations or liquidity. Our order backlog may not be indicative of future revenues.
The loss of any of these customers, a decrease in their demand for our products, or the insolvency of any of these customers could have a material adverse effect on our results of operations or liquidity. Our order backlog may not be indicative of future revenues and may fluctuate from period to period.
In addition, we face cybersecurity threats from entities and persons that may seek to target us through our customers, suppliers and other third parties with whom we do business. Many of these cybersecurity threats are increasingly sophisticated and constantly evolving.
In addition, we face cybersecurity threats from entities and persons that may seek to target us through our customers, suppliers and other third parties with whom we do business. Many of these cybersecurity threats are increasingly sophisticated and constantly evolving, especially with the growing prevalence of artificial intelligence.
In addition, restrictions on credit availability could adversely affect the ability of our customers to make payments. Similarly, credit restrictions may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress. Inflation and rising interest rates may adversely affect our financial condition and results of operations.
In addition, restrictions on credit availability could adversely affect the ability of our customers to make payments. Similarly, credit restrictions may adversely affect our supplier base and increase the potential for one or more of our suppliers to experience financial distress.
The expected business life of these products ranges from less than one year to more than 10 years depending on the application. Some of the customizations are modest changes to existing product designs while others are major product redesigns or new product platforms.
The majority of our products are custom designed for requirements of specific OEM systems. The expected business life of these products ranges from less than one year to more than 10 years depending on the application. Some of the customizations are modest changes to existing product designs while others are major product redesigns or new product platforms.
However, there can be no assurance that any such actions, including the timeliness of our efforts to review, update or implement policies, procedures and practices in light of evolving threats, or the safeguards put in place by our customers, suppliers and other parties on which we rely, will be sufficient to detect, prevent and mitigate cybersecurity breaches or disruptions, or the unauthorized release of sensitive information or corruption of data. 11 Table of Contents A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources.
However, there can be no assurance that any such actions, including the timeliness of our efforts to review, update or implement policies, procedures and practices in light of evolving threats, or the safeguards put in place by our customers, suppliers and other parties on which we rely, will be sufficient to detect, prevent and mitigate cybersecurity breaches or disruptions, or the unauthorized release of sensitive information or corruption of data.
Gabelli serves as special advisor to our chairman of the board and also serves as chairman of the board and co-chief executive officer of LGL Group and Michael J. Ferrantino serves as our chief executive officer and as one of our directors and also as a director of LGL Group.
Gabelli serves as special advisor to our Chairman of the Board of Directors and also serves as Chairman of the Board of Directors and co-Chief Executive Officer of LGL Group.
As a result of limited trading volume in our common stock, the purchase or sale of a relatively small number of shares could result in significant price fluctuations and it may be difficult for holders to sell their shares without depressing the market price for our common stock. 12 Table of Contents Additionally, the market price of our common stock may continue to fluctuate significantly in response to a number of factors, some of which are beyond our control, including the following: ‒ General economic conditions affecting the availability of long-term or short-term credit facilities, the purchasing and payment patterns of our customers, or the requirements imposed by our suppliers; ‒ Economic conditions in our industry and in the industries of our customers and suppliers; ‒ Changes in financial estimates or investment recommendations by securities analysts relating to our common stock; ‒ Market reaction to our reported financial results; ‒ Loss of a major customer; ‒ Announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and ‒ Changes in key personnel.
Additionally, the market price of our common stock may continue to fluctuate significantly in response to a number of factors, some of which are beyond our control, including the following: • General economic conditions affecting the availability of long-term or short-term credit facilities, the purchasing and payment patterns of our customers, or the requirements imposed by our suppliers; • Economic conditions in our industry and in the industries of our customers and suppliers; • Changes in financial estimates or investment recommendations by securities analysts relating to our common stock; • Market reaction to our reported financial results; • Loss of a major customer; • Announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and • Changes in key personnel.
Such convictions or actions could also result in suspension or debarment from serving as a supplier to government contractors for some period of time. Such convictions or actions could have a material adverse effect on us and our operating results. The costs of cooperating or complying with such audits or investigations may also adversely impact our financial results.
Such convictions or actions could also result in suspension or debarment from serving as a supplier to government contractors for some period of time. Such convictions or actions could have a material adverse effect on us and our operating results.
Our officers, directors and 10% or greater stockholders have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders. Our officers, directors and 10% or greater stockholders control approximately 21.4% of the voting power represented by our outstanding shares of common stock as of March 18, 2024.
Our officers and directors have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders. Our officers and directors control approximately 6.5% of the voting power represented by our outstanding shares of common stock as of March 14, 2025.
In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission (the “SEC”) or other regulatory authorities, which could require additional financial and management resources. These events could have a material and adverse effect on our business, operating results, financial condition and prospects.
In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission (the “SEC”) or other regulatory authorities, which could require additional financial and management resources.
These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption.
A relatively small number of customers account for a significant portion of our revenues and accounts receivable, and the loss of any of these customers, a decrease in their demand for our products, or their insolvency could have a material adverse effect on our results of operations or liquidity..
We cannot be certain whether we will generate sufficient revenues or sufficiently manage expenses to sustain profitability. 7 Table of Contents A relatively small number of customers account for a significant portion of our revenues and accounts receivable, and the loss of any of these customers, a decrease in their demand for our products, or their insolvency could have a material adverse effect on our results of operations or liquidity.
In the event that LGL Group suffers tax-related losses in connection with the Separation that must be indemnified by us under the Tax Agreement, the indemnification liability could have a material adverse effect on us. 14 Table of Contents If the Separation fails to qualify for tax-free treatment, for any reason, LGL Group and/or holders of LGL Group's common stock would be subject to substantial U.S. taxes as a result of the Separation, and we could incur significant liabilities under applicable law or as a result of the Tax Agreement.
If the Separation fails to qualify for tax-free treatment, for any reason, LGL Group and/or holders of LGL Group's common stock would be subject to substantial U.S. taxes as a result of the Separation, and we could incur significant liabilities under applicable law or as a result of the Tax Agreement. 13 Table of Contents
For the year ended December 31, 2023, our largest customer accounted for 31.4% of the Company's total revenues. The Company’s second largest customer in 2023 accounted for 19.0% of the Company's total revenues. Additionally, as of December 31, 2023, four of our largest customers accounted for approximately 76.4% of our accounts receivable balance.
For the year ended December 31, 2024, our largest and second largest customers accounted for 37.0% and 17.4% of the Company's total revenues, respectively. Additionally, as of December 31, 2024, four of our largest customers accounted for approximately 66.2% of our gross accounts receivable balance.
From October 7, 2022, the date our common stock began trading on the NYSE American, through December 31, 2023, the high and low closing prices for our common stock were $38.43 and $8.36, respectively. There is a limited public market for our common stock, and we cannot provide assurances that a more active trading market will develop or be sustained.
From January 1, 2024 through December 31, 2024, the high and low closing prices for our common stock were $69.98 and $23.79, respectively. There is a limited public market for our common stock, and we cannot provide assurances that a more active trading market will develop or be sustained.
Our revenues and operating results are highly dependent on the development and growth of demand for our products in the aerospace and defense, space, avionics, instrumentation and industrial markets, which are cyclical. We cannot be certain whether we will generate sufficient revenues or sufficiently manage expenses to sustain profitability.
Our revenues and operating results are highly dependent on the development and growth of demand for our products in the aerospace and defense, space, avionics, instrumentation and industrial markets, which are cyclical.
As a result, we cannot provide assurances as to the portion of backlog orders to be filled in any given year, and our order backlog as of any particular date may not be representative of actual revenues for any subsequent period. 7 Table of Contents Our future rate of growth and profitability are highly dependent on the development and growth of the aerospace and defense, space, avionics, instrumentation and industrial markets, which are cyclical.
As a result, we cannot provide assurances as to the portion of backlog orders to be filled in any given year, and our order backlog as of any particular date may not be representative of actual revenues for any subsequent period.
We have office and manufacturing space in Noida, India, and a sales office in Hong Kong. Additionally, foreign revenues for 2023 (primarily to Malaysia) accounted for 26.9% of our 2023 consolidated revenues. We anticipate that sales to customers located outside of the United States will continue to be a significant part of our revenues for the foreseeable future.
We have significant international operations and sales to customers outside of the United States that subject us to certain business, economic and political risks. We have office and manufacturing space in Noida, India, and a sales office in Hong Kong. Additionally, foreign revenues for 2024 (primarily to Malaysia) accounted for 22.5% of our 2024 consolidated revenues.
LGL Group continues to perform functions for us, and we continue to perform functions for LGL Group, on a transitional basis, and as a result we may experience operational disruptions and incur significant costs to perform these functions ourselves following the transition period or be subject to claims and liability.
In addition, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between LGL Group and us regarding the terms of the agreements governing the Separation and the relationship thereafter between the companies. 12 Table of Contents LGL Group continues to perform functions for us, and we continue to perform functions for LGL Group, on a transitional basis, and as a result we may experience operational disruptions and incur significant costs to perform these functions ourselves following the transition period or be subject to claims and liability.
Environmental laws and regulations may cause us to change our manufacturing processes, redesign some of our products, and change components to eliminate some substances in our products in order to be able to continue to offer them for sale. 10 Table of Contents We have significant international operations and sales to customers outside of the United States that subject us to certain business, economic and political risks.
Environmental laws and regulations may cause us to change our manufacturing processes, redesign some of our products, and change components to eliminate some substances in our products in order to be able to continue to offer them for sale.
Risks Related to Our Securities The price of our common stock has fluctuated considerably and is likely to remain volatile, in part due to the limited market for our common stock.
These events could have a material and adverse effect on our business, operating results, financial condition and prospects. 11 Table of Contents Risks Related to Our Securities The price of our common stock has fluctuated considerably and is likely to remain volatile, in part due to the limited market for our common stock.
Our products are complex and may contain errors or design flaws, which could be costly to correct. When we release new products, or new versions of existing products, they may contain undetected or unresolved errors or defects. The majority of our products are custom designed for requirements of specific OEM systems.
The costs of cooperating or complying with such audits or investigations may also adversely impact our financial results. 9 Table of Contents Our products are complex and may contain errors or design flaws, which could be costly to correct. When we release new products, or new versions of existing products, they may contain undetected or unresolved errors or defects.
A significant increase in the costs of performing or outsourcing these functions could materially and adversely affect our business, results of operations, financial condition and cash flows. The obligations associated with operating as an independent public company require significant resources and management attention.
A significant increase in the costs of performing or outsourcing these functions could materially and adversely affect our business, results of operations, financial condition and cash flows. We are subject to significant restrictions on our actions in order to avoid triggering significant tax-related liabilities.
We are engaged only in the design, manufacture and marketing of standard and custom-engineered electronic components that are used primarily for the control of frequency and spectrum of signals in electronic circuits. Virtually all of our 2023 and 2022 revenues came from sales of electronic components, which consist of packaged quartz crystals, oscillator modules, electronic filters and integrated modules.
Virtually all of our 2024 and 2023 revenues came from sales of electronic components, which consist of packaged quartz crystals, oscillator modules, electronic filters and integrated modules.
As of December 31, 2023 and 2022, we had no outstanding balances under the line of credit. 6 Table of Contents We are dependent on a single line of business.
As of December 31, 2024 and 2023, we had no outstanding balances under the line of credit. We are dependent on a single line of business. We are engaged only in the design, manufacture and marketing of standard and custom-engineered electronic components that are used primarily for the control of frequency and spectrum of signals in electronic circuits.
Removed
During 2023, inflation in the United States moderated but, as of the date of this Report, is expected to continue at an elevated level in the near-term. Elevated inflation may have an adverse impact on our Loan Agreement (as defined in Part II, Item 7.
Added
Unless otherwise stated, all dollar amounts are in thousands.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Report below) and general and administrative expenses, as these costs could increase at a rate higher than our revenue. The U.S.
Added
Summary Risk Factors Risks Related to our Business and Industry • Macroeconomic fluctuations may harm our business, results of operations and stock price • Our variable rate indebtedness subjects us to interest rate risk and could cause our debt service obligations to increase significantly. • We are dependent on a single line of business. • Our operating results may vary significantly from period to period. • A relatively small number of customers account for a significant portion of our revenues and accounts receivable, and the loss of any of these customers, a decrease in their demand for our products, or their insolvency could have a material effect on our results of operations or liquidity. • Our order backlog may not be indicative of future revenues and may fluctuate from period to period. • Our future rate of growth and profitability are highly dependent on the development and growth of the aerospace and defense, space, avionics, instrumentation and industrial markets, which can be cyclical. • The market share of our customers in the aerospace and defense, space, avionics, instrumentation and industrial markets may change over time, reducing the potential value of our relationships with our existing customer base. • We may make acquisitions that are not successful, or we may fail to integrate acquired business into our operations properly. • If we are unable to introduce innovative products, demand for our products may decrease. • Our markets are highly competitive, and we may lose business to larger and better-financed competitors. • Our success depends on our ability to retain key management and technical personnel and attracting, retaining, and training new technical personnel. • We purchase certain key components and raw materials from single or limited sources and could lose sales if these sources fail to fulfill our needs for any reason. • As a supplier to United States government defense contractors, we are subject to a number of procurement regulations and other requirements and could be adversely affected by changes in regulations or any negative findings from a U.S. government audit or investigation. • Our products are complex and may contain errors or design flaws, which could be costly to correct. • Future changes in our environmental liability and compliance obligations may increase costs and decrease profitability. • We have significant international operations and sales to customers outside of the United States that subject us to certain business, economic and political risks. • We rely on information technology systems to conduct our business, and disruption, failure or security breaches of these systems could adversely affect our business and results of operations. • Cybersecurity risks and cybersecurity incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results • If we fail to correct any material weakness that we identify in our internal control over financial reporting or otherwise fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports and the price of our common stock may decline.
Removed
Federal Reserve raised the federal funds rate a total of four times throughout 2023, with its most recent increase in July of 2023, resulting in a range from 5.25% to 5.50% as of December 31, 2023. Although there are expectations that the U.S. Federal Reserve will begin reducing the federal funds rate in 2024, these expectations may not materialize.
Added
Risks Related to Our Securities • The price of our common stock has fluctuated considerably and is likely to remain volatile, in part due to the limited market for our common stock. • Our officers and directors have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders. • Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company more difficult, which acquisition may be beneficial to our stockholders. 6 Table of Contents Risks Related to the Separation • As a result of the Separation, certain of our directors and officers may have actual or potential conflicts of interest because of their positions or relationships with LGL Group. • LGL Group continues to perform functions for us, and we continue to perform functions for LGL Group, on a transitional basis, and as a result, we may experience operational disruptions and incur significant costs to perform these functions ourselves following the transition period or be subject to claims and liability. • We are subject to significant restriction on our actions in order to avoid triggering significant tax-related liabilities. • If the Separation does not qualify as tax-free United States federal income tax purposes as a result of a breach by us of any covenant or representation made by us in the Tax Agreement, we could be subject to significant liability.
Removed
Federal Reserve continue to raise rates in the future to, among other things, control inflation, or if rates continue at an elevated level, to the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such elevated rates may result in higher debt service costs, which would adversely affect our cash flows.
Added
Our future rate of growth and profitability are highly dependent on the development and growth of the aerospace and defense, space, avionics, instrumentation and industrial markets, which can be cyclical.
Removed
In addition, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between LGL Group and us regarding the terms of the agreements governing the Separation and the relationship thereafter between the companies. 13 Table of Contents We have limited history of operating as an independent company, and our historical combined and unaudited financial information for periods prior to the Separation is not necessarily representative of the results that we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.
Added
We anticipate that sales to customers located outside of the United States will continue to be a significant part of our revenues for the foreseeable future.
Removed
Our historical combined and unaudited financial information for periods prior to the Separation included in this Annual Report on Form 10-K was derived from LGL Group’s consolidated financial statements and accounting records and are not necessarily indicative of our future results of operations, financial condition or cash flows, nor do they reflect what our results of operations, financial condition or cash flows would have been as an independent public company during the periods presented.
Added
As a result of limited trading volume in our common stock, the purchase or sale of a relatively small number of shares could result in significant price fluctuations and it may be difficult for holders to sell their shares without depressing the market price for our common stock.
Removed
In particular, the historical combined financial information included in this Annual Report on Form 10-K is not necessarily indicative of our future results of operations, financial condition or cash flows.
Added
In the event that LGL Group suffers tax-related losses in connection with the Separation that must be indemnified by us under the Tax Agreement, the indemnification liability could have a material adverse effect on us.
Removed
Prior to the Separation, we were not directly subject to the reporting and other requirements of the Exchange Act. As a result of the Separation, we are directly subject to such reporting and other obligations under the Exchange Act and the rules of the NYSE.
Removed
These reporting and other obligations place significant demands on our management and our administrative and operational resources, including accounting resources, and we have faced and expect to continue to face increased legal, accounting, administrative and other costs and expenses relating to these demands that we had not incurred as a subsidiary of LGL Group.
Removed
Our investment in compliance with existing and evolving regulatory requirements will result in increased administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Removed
We are subject to significant restrictions on our actions in order to avoid triggering significant tax-related liabilities.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Removed
Item 1C. Cybersecurity. Cybersecurity risk management is an integral part of our overall enterprise risk management efforts. No enterprise risk can be eliminated entirely. We seek to mitigate as much risk as possible and manage the remaining financial risk through a robust cyber insurance policy.
Added
Item 1C. Cybersecurity 14 Item 2. Properties 14 Item 3. Legal Proceedings 14 Item 4. Mine Safety Disclosures 14 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 15 Item 6. Reserved 15 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 7A.
Removed
The Company has chosen the National Institute of Standards (NIST) for its base framework for handling cybersecurity threats and incidents because it is compatible with certain risk management business functions required by customers and US Government oversight.
Added
Quantitative and Qualitative Disclosures About Market Risk 21 Item 8. Financial Statements and Supplementary Data 22 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 43 Item 9A. Controls and Procedures 43
Removed
Controls in the SP 800-53 (Security and Privacy Controls for Information Systems and Organizations) catalog have been tailored-in based on governance found in SP 800-171 (Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations), internally determined IT general controls and industry best practices to create a balanced approach aimed at protecting confidentiality, integrity, and availability of the Company’s IT systems.
Removed
The Board has delegated its primary responsibility for the oversight of cybersecurity and information technology risks, and the Company’s preparedness for these risks, to the Audit Committee of the Board (the “Audit Committee”).
Removed
The Audit Committee has delegated the Company's cybersecurity functions to senior management, including the Director of IT, and ensures there are sufficient budgetary resources for personnel and technology to support the necessary cybersecurity functions.
Removed
The Company’s cybersecurity incident response is overseen by our Director of IT, who reports directly to our President and is a member of the enterprise management team which includes our CEO. Our Director of IT has more than 15 years of experience in information system management, holds multiple university degrees in information systems and is a Microsoft Certified System Engineer.
Removed
As part of its oversight responsibilities, the Audit Committee receives updates at least annually, and as requested throughout the year, on our cybersecurity practices as well as cybersecurity and information technology risks from our Director of IT.
Removed
These regular updates include topics related to cybersecurity practices, cyber risks, and risk management processes, such as updates to our cybersecurity programs and mitigation strategies, and other cybersecurity developments. Senior management are responsible for incident response efforts enterprise wide with the Director of IT and the broader internal IT team focusing on cybersecurity incidents.
Removed
In the event MtronPTI determines it has experienced a material cybersecurity incident, the Audit Committee will be notified and consulted regarding the incident in advance of filing a Current Report on Form 8-K.
Removed
The Company's internal IT team participates in several industry information sharing groups including the Defense Industrial Base Cybersecurity Program and The Society of Industrial Security Professionals and has also fostered local contacts with the FBI and local industry peers. The IT team monitors industry news daily and responds to threat feeds from multiple sources.
Removed
To further its cybersecurity efforts, MtronPTI has partnered with several external entities including: ● A strategic customer who provides a network sensor monitored by its 24/7 security operations center. ● A commercial threat feed integrated with our perimeter security devices in partnership with the Defense Cyber Crime Center. ● A commercial DNS security service integrated with perimeter security devices. ● A commercial email threat detection service including detonation chamber services.
Removed
Insider threats are monitored by an internal insider threat team. All users with email access are provided annual and quarterly cyber security training and participate in bi-weekly phishing tests to maintain continuous awareness of threats. Access to the Company's enterprise resource planning system is limited by a second layer of access approval and authorization through the corporate controller.
Removed
Endpoint detection and response is centrally managed as is endpoint flaw detection and remediation. In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
Removed
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
Removed
For more information about these risks, please see “Risk Factors – Cybersecurity risks and cybersecurity incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results” in this Report. 15 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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MtronPTI also leases approximately 13,000 square feet of office and manufacturing space in Noida, India and approximately 700 square feet of office space in Hong Kong. It is our opinion that the facilities referred to above are in good operating condition, suitable, and adequate for present uses.
Mtron also leases approximately 13,000 square feet of office and manufacturing space in Noida, India and approximately 700 square feet of office space in Hong Kong. It is our opinion that the facilities referred to above are in good operating condition, suitable, and adequate for present uses.
MtronPTI owns a facility in Orlando, Florida, containing approximately 71,000 square feet on approximately five acres of land and owns a facility in Yankton, South Dakota, containing approximately 32,000 square feet on approximately 11 acres of land.
Mtron owns a facility in Orlando, Florida, containing approximately 71,000 square feet on approximately five acres of land and owns a facility in Yankton, South Dakota, containing approximately 32,000 square feet on approximately 11 acres of land.
Item 2. Properties. The Company's principal executive offices are located in Orlando, Florida within an MtronPTI operating facility. MtronPTI's operations are located in Orlando, Florida; Yankton, South Dakota; and Noida, India. We also have a sales office in Hong Kong.
Item 2. Properties The Company's principal executive offices are located in Orlando, Florida within an Mtron operating facility. Mtron's operations are located in Orlando, Florida; Yankton, South Dakota; and Noida, India. We also have a sales office in Hong Kong.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings. The information required for this Part I, Item 3 is incorporated by reference to the discussion under Note I – Contingencies to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report. Item 4. Mine Safety Disclosures. Not applicable. 16 Table of Contents PART II
Item 3. Legal Proceedings The information required for this Part I, Item 3 is incorporated by reference to the discussion under Note 12 – Contingencies to the Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this Report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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In addition, the covenants under MtronPTI’s credit facility effectively place certain limitations on its ability to make certain payments, including but not limited to payments of dividends and other distributions, which effectively could limit the Company’s ability to pay cash dividends to stockholders. No cash dividends are expected to be paid for the foreseeable future.
In addition, the covenants under Mtron's credit facility effectively place certain limitations on its ability to make certain payments, including but not limited to payments of dividends and other distributions, which effectively could limit the Company’s ability to pay cash dividends to stockholders. No cash dividends are expected to be paid for the foreseeable future.
This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures and stockholders' desire for capital appreciation of their holdings.
Cash Dividend Policy Our Board intends to adhere to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures and stockholders' desire for capital appreciation of their holdings.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Common Equity Our common stock is traded on the NYSE American, under the symbol “MPTI”. Cash Dividend Policy Our Board intends to adhere to a practice of not paying cash dividends.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Unless otherwise stated, all dollar amounts are in thousands Market for Common Equity Our common stock are listed on the NYSE American, under the symbol "MPTI." Holders of Common Stock As of March 14, 2025, we had approximately 6,900 holders of record of our common stock.
Added
The actual number of holders of common stock is greater than this number of record holders, and includes holders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include holders whose shares may be held in trust by other entities.
Added
Recent Sales of Unregistered Securities The Company did not sell any equity securities during the three months and year ended December 31, 2024 that were not registered under the Securities Act. Purchases of Equity Securities by the Issuer or Affiliated Purchaser The Company did not repurchase any shares of its common stock during the three months ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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On June 15, 2022, we entered into a loan agreement (the “Loan Agreement”) for a revolving line of credit with Fifth Third Bank, National Association, for up to $5.0 million bearing interest at SOFR plus a margin of 2.25%, with a SOFR floor of 0.00%.
Revolving Line of Credit On June 15, 2022, we entered into a loan agreement (the "Loan Agreement") for a revolving line of credit with Fifth Third Bank, National Association, for up to $5.0 million bearing interest at SOFR plus a margin of 2.25%, with a SOFR floor of 0.00%.
Overview MtronPTI is engaged in the designing, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications. MtronPTI’s primary markets are aerospace and defense, space, and avionics.
Overview Mtron is engaged in the designing, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits in various applications. Mtron’s primary markets are aerospace and defense, space, and avionics.
Financial Statements and Supplementary Data of this Report. Certain accounting policies require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.
Certain accounting policies require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.
Financial Statements and Supplementary Data of this Report for details of the Loan Agreement. Our Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential acquisitions or other strategic ventures and stockholders' desire for capital appreciation of their holdings.
Our Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential acquisitions or other strategic ventures and stockholders' desire for capital appreciation of their holdings.
All loans pursuant to the Loan Agreement will be secured by a continuing and unconditional first priority security interest in and to any and all property of the Company. See Note E – Revolving Credit Agreement to the Consolidated and Combined Financial Statements included in Item 8.
All loans pursuant to the Loan Agreement will be secured by a continuing and unconditional first priority security interest in and to any and all property of the Company. See Note 5 – Revolving Credit Agreement to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report for details of the Loan Agreement.
Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Report, particularly under the headings "Caution Concerning Forward-Looking Statements" and "Risk Factors ” .
Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Report, particularly under the headings "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors ." Unless otherwise stated, all dollar amounts are in thousands.
On an ongoing basis, we evaluate our estimates and assumptions, and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary.
On an ongoing basis, we evaluate our estimates and assumptions, and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary. The accounting policies described below are those that most frequently require us to make estimates and judgments and, therefore, are critical to understanding our results of operations.
In determining these estimates, the Company performs an analysis on current demand and usage for each inventory item over historical time periods. Based on that analysis, the Company reserves a percentage of the inventory amount within each time period based on historical demand and usage patterns of specific items in inventory.
Based on that analysis, the Company reserves a percentage of the inventory amount within each time period based on historical demand and usage patterns of specific items in inventory. Actual experience could differ from the amounts estimated requiring adjustments to inventory valuation in future periods.
As of December 31, 2022, we had current assets of $14,314,000, current liabilities of $4,856,000 and a ratio of current assets to current liabilities of 2.95 to 1.00. Management continues to focus on efficiently managing working capital requirements to match operating activity levels and will seek to deploy the Company’s working capital where it will generate the greatest returns.
Our working capital metrics were as follows: As of December 31, (in thousands) 2024 2023 Current assets $ 29,752 $ 18,187 Less: Current liabilities 5,216 4,384 Working capital $ 24,536 $ 13,803 Current ratio 5.7 4.1 Management continues to focus on efficiently managing working capital requirements to match operating activity levels and will seek to deploy the Company’s working capital where it will generate the greatest returns.
We expect to fill a substantial portion of our order backlog as of December 31, 2023 during 2024 and 2025, but cannot provide assurances as to what portion of the order backlog will be fulfilled in any given year.
We expect to fill the vast majority of our order backlog as of December 31, 2024 during 2025 and 2026, but cannot provide assurances as to what portion of the order backlog will be fulfilled in any given year. 17 Table of Contents Non-GAAP Financial Measures To supplement our Consolidated Financial Statements presented on a GAAP basis, the Company presents its financial condition and results of operations in the way it believes will be most meaningful and representative of its business results.
Reconciliations of GAAP to Non-GAAP Measures To supplement our consolidated financial statements presented on a GAAP basis, the Company uses certain non-GAAP measures, including Adjusted EBITDA, which we define as net income before income taxes adjusted to exclude depreciation and amortization expense, interest income and expense, stock-based compensation expense, and other items we believe are discrete events which have a significant impact on comparable GAAP measures and could distort an evaluation of our normal operating performance.
Excluded items include the following: • Interest income • Interest expense • Depreciation • Amortization • Non-cash stock-based compensation • Other discrete items that might have a significant impact on comparable GAAP measures and could distort the evaluation of our normal operating performance.
No cash dividends are expected to be paid for the foreseeable future. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP. Our significant accounting policies are more fully described in Note A – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies to the Consolidated and Combined Financial Statements included in Item 8.
No cash dividends are expected to be paid for the foreseeable future. 20 Table of Contents Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").
We believe that existing cash and cash equivalents, marketable securities and cash generated from operations will provide sufficient liquidity to meet our ongoing working capital and capital expenditure requirements for the next 12 months from the date of this filing. The Company’s management continues to strive for profitability both internally and through acquisition.
Financing Activities Cash provided by (used in) financing activities was $3,105 in 2024 compared to ($137) in 2023, an increase of $3,242 primarily due to the exercise of stock options awarded in December 2023. 19 Table of Contents Capital Resources We believe that existing cash and cash equivalents, marketable securities and cash generated from operations will provide sufficient liquidity to meet our ongoing working capital and capital expenditure requirements for the next 12 months from the date of this filing and for the foreseeable future.
The backlog of unfilled orders includes amounts based on signed contracts and purchase orders, which are likely to be fulfilled substantially within the next 12 to 24 months. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost.
The decrease in backlog from December 31, 2023 reflects the nature of a program centric business model, which can materially affect backlog based on the timing and size of these orders. The backlog of unfilled orders includes amounts based on signed contracts and purchase orders, which are likely to be fulfilled substantially within the next 12 to 24 months.
The accounting policies described below are those that most frequently require us to make estimates and judgments and, therefore, are critical to understanding our results of operations. 22 Table of Contents Income Taxes We account for income taxes in accordance with Accounting Standards Codification Topic 740 “Income Taxes” (“ASC 740”), which requires an asset and liability approach for the financial accounting and reporting of income taxes.
Income Taxes We account for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes ("ASC 740"), which requires an asset and liability approach for the financial accounting and reporting of income taxes.
The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation, based solely on the technical merits of the position.
The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.
Inventories We account for inventories at the lower of cost or net realizable value using the FIFO (first-in, first-out) method. Inventory reserves are determined based on estimated losses that result from inventory that becomes obsolete or for which the Company has excess inventory levels.
Inventory reserves are determined based on estimated losses that result from inventory that becomes obsolete or for which the Company has excess inventory levels. In determining these estimates, the Company performs an analysis on current demand and usage for each inventory item over historical time periods.
See Note G - Stock-Based Compensation to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report for additional details on stock option grants.
Our significant accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Report.
Our projections of future taxable income include estimates and assumptions regarding our income and costs, as well as the timing and amount of reversals of taxable temporary differences. We account for unrecognized tax benefits in accordance with ASC 740, which prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized.
Our projections of future taxable income include estimates and assumptions regarding our income and costs, as well as the timing and amount of reversals of taxable temporary differences. The Company follows a two-step approach to recognize and measure uncertain tax positions.
The increase in revenue reflects strong aerospace and defense product shipments. Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales as a percentage of revenues, improved to 40.7% for the year ended December 31, 2023 compared to 35.6% for the prior year.
Gross Margin Gross margin (Revenues less Manufacturing cost of sales as a percentage of Revenues) increased 550 basis points from 40.7% in 2023 to 46.2% in 2024 reflecting higher revenues, improved manufacturing efficiencies, and a higher margin product mix.
Removed
Results of Operations Factors Which May Influence Results of Operations We are not aware of any material trends or uncertainties, other than the global economic conditions affecting our industry generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than those listed in Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K.
Added
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 25, 2024, which is available free of charge on the SEC's website at https://www.sec.gov and on our website at ir.mtronpti.com.
Removed
Inflation and Rising Interest Rates During 2023, inflation in the United States moderated and, as of the date of this Report, is currently expected to fall slightly in the near-term.
Added
Trends and Uncertainties We are not aware of any material trends or uncertainties, other than the global economic conditions affecting our industry generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on our revenues or income other than those listed in Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K. 16 Table of Contents Results of Operations The following table presents our Consolidated Statements of Operations for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 $ Change % Change Revenues $ 49,012 $ 41,168 $ 7,844 19.1 % Costs and expenses: Manufacturing cost of sales 26,372 24,402 1,970 8.1 % Engineering, selling and administrative 13,246 12,467 779 6.2 % Total costs and expenses 39,618 36,869 2,749 7.5 % Operating income 9,394 4,299 5,095 118.5 % Other income: Interest income, net 243 7 236 3,371.4 % Other income, net 138 94 44 46.8 % Total other income, net 381 101 280 277.2 % Income before income taxes 9,775 4,400 5,375 122.2 % Income tax expense 2,139 911 1,228 134.8 % Net income $ 7,636 $ 3,489 $ 4,147 118.9 % 2024 compared to 2023 Total Revenues Total revenues increased $7,844, or 19.1%, from $41,168 in 2023 to $49,012 in 2024 primarily due to strong defense program product and solution shipments.
Removed
Inflation and the resulting higher interest rates may have an adverse impact on our Loan Agreement and general and administrative expenses, as these costs could increase at a rate higher than our revenue. The U.S.
Added
Total Costs and Expenses Total costs and expenses increased $2,749, or 7.5%, from $36,869 in 2023 to $39,618 in 2024 primarily due to: • a $1,970, or 8.1%, increase in Manufacturing cost of sales from $24,402 in 2023 to $26,372 in 2024 driven by higher revenues partially offset by manufacturing efficiencies and sales of higher margin products; and • a $779, or 6.2%, increase in Engineering, selling and administrative from $12,467 in 2023 to $13,246 in 2024 driven by increased investment in research and development, increased sales commissions consistent with the growth in revenues, and an increase in administrative and corporate expenses to support the growth in revenues.
Removed
Federal Reserve raised the federal funds rate four times during 2023, with their last increase in July of 2023, resulting in a range from 5.25% to 5.50% as of December 31, 2023. It is expected that the Federal Reserve may ease the federal funds rate during 2024 to, among other things, control unemployment while balancing the risks of inflation.
Added
Total Other Income, Net Total other income, net increased $280, or 277.2%, from $101 in 2023 to $381 in 2024 primarily due to a $236 increase in Interest income, net from $7 in 2023 to $243 in 2024 driven by higher interest income earned related to an increase in balances invested in money market mutual funds.
Removed
As a result, to the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such increases may result in higher debt service costs, which will adversely affect our cash flows. 18 Table of Contents 2023 Compared to 2022 Consolidated Revenues, Gross Margin and Backlog Total revenues for the year ended December 31, 2023 were $41,168,000, an increase of $9,323,000, or 29.3%, from $31,845,000 for the year ended December 31, 2022.
Added
Income Tax Expense Income tax expense increased $1,228, or 134.8%, from $911 in 2023 to $2,139 in 2024 primarily due to the increase in Income before income taxes driven by the increase in revenues discussed above. Backlog As of December 31, 2024, our order backlog was $47,239, a decrease of $592, or 1.2%, from $47,831 as of December 31, 2023.
Removed
Gross margins improved in 2023 as compared to 2022 due to increased business volume and the effects of product mix changes, offset by inflationary headwinds due to labor and materials cost increases on long term contracts. As of December 31, 2023, our order backlog was $47,831,000, an increase of 3.6% compared to $46,180,000 as of December 31, 2022.
Added
Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost.
Removed
Strong 2023 bookings of $42,818,000 following very strong 2022 bookings of $48,586,000 from the effect of increased aerospace and defense orders, drove the improvement. This booking trend in excess of our product shipments reflects strong aerospace and defense orders, most of which are expected to ship during 2024 and into 2025.
Added
Some of the measurements the Company uses are "Non-GAAP financial measures" under SEC rules and regulations. The non-GAAP financial measures the Company presents are listed below and may not be comparable to similarly-named measures reported by other companies.
Removed
Engineering, Selling and Administrative Expenses Engineering, selling and administrative expenses for 2023 included a one-time stock option grant to employees for which the Company recognized a stock-based compensation expense of $2,013,000.
Added
The Company uses the following operating performance measure because the Company believes it provides both management and investors with a more complete understanding of the underlying operational results and trends and our marketplace performance as well as a more accurate view of the Company's ability to generate profits: Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") is derived by excluding the items set forth below from Income before income taxes.
Removed
The Board approved a one-time grant of 183,300 shares to all 185 full-time employees below the officer level with the quantity of shares for each determined based upon their length of time with the Company.
Added
Reconciliation of GAAP Income Before Income Taxes to EBITDA and Non-GAAP Adjusted EBITDA The following table presents a reconciliation of income before income taxes to Adjusted EBITDA, a non-GAAP measure: Three Months Ended December 31, Year Ended December 31, (in thousands, except share data) 2024 2023 2024 2023 Income before income taxes $ 2,758 $ 53 $ 9,775 $ 4,400 Adjustments: Interest income, net (104 ) (13 ) (243 ) (7 ) Depreciation 251 220 968 797 Amortization — 13 5 53 Total adjustments 147 220 730 843 EBITDA 2,905 273 10,505 5,243 Non-cash stock compensation 151 2,124 636 2,421 Excess Separation costs — — — 28 Adjusted EBITDA $ 3,056 $ 2,397 $ 11,141 $ 7,692 Three months ended December 31, 2024 compared to three months ended December 31, 2023 Adjusted EBITDA increased $659 from $2,397 for the three months ended December 31, 2023 to $3,056 for the three months ended December 31, 2024.
Removed
This grant was made to align the interests of our employees with those of our stockholders, and to recognize and reward our valued employees for their past and continuing dedication and service to MtronPTI. It is our employees whose present and future contributions will help ensure the continued success of the organization.
Added
The increase was primarily due to improved gross margins, continued containment of expenses, a higher margin product mix, and decrease in non-cash stock compensation. Year ended 2024 compared to Year ended 2023 Adjusted EBITDA increased $3,449 from $7,692 in 2023 to $11,141 in 2024.
Removed
Details for engineering, selling and administrative expenses are as follows: Quarter ended Fiscal Year ended December 31, December 31, (Amounts in thousands) 2023 2022 Change 2023 2022 Change Engineering research and development $ 586 $ 501 $ 85 $ 2,216 $ 2,006 $ 210 Sales costs 719 644 75 2,781 2,556 225 Administrative costs: Employee compensation and benefits 1,023 759 264 3,444 2,865 579 Legal and SEC costs 219 112 107 1,052 210 842 General insurance and other 127 156 (29 ) 610 554 56 Audit and tax fees 66 93 (27 ) 351 280 71 One-time stock option grant 2,013 — 2,013 2,013 — 2,013 Total administrative costs $ 3,448 $ 1,120 $ 2,328 $ 7,470 $ 3,909 $ 3,561 Total engineering, selling and administrative $ 4,753 $ 2,265 $ 2,488 $ 12,467 $ 8,471 $ 3,996 19 Table of Contents Engineering, selling and administrative costs increased $3,996,000 for the year ended December 31, 2023 compared to the year ended December 31, 2022, as a result of $210,000 of increased engineering costs supporting MtronPTI's research and development activities, $225,000 of increased sales costs due to the increase in revenues, and $3,561,000 of increased administrative costs for 2023.
Added
The increase was primarily due to improved gross margins and continued containment of expenses, a higher margin product mix, and a decrease in non-cash stock compensation. 18 Table of Contents Liquidity and Capital Resources Overview Liquidity refers to our ability to access sufficient sources of cash to meet the requirements of our operating, investing and financing activities.
Removed
Administrative costs included the impact from the one-time employee stock option grant of $2,013,000, increased legal and SEC costs of $841,000, increased salaries and employee benefits of $579,000 along with increased audit and tax costs of $71,000 and general insurance and other cost increases of $56,000.
Added
Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of the business, timing of cash flows, general economic conditions and access to the capital markets and the other sources of liquidity and capital described herein.
Removed
The legal and SEC cost increase of $841,000 represents the incremental direct costs of being a public company, without comparable amounts from the prior year when results were presented on a standalone basis.
Added
As of December 31, 2024 and 2023, Cash and cash equivalents were $12,641 and $3,913, respectively.
Removed
Employee compensation and benefit costs were higher due primarily to increased bonuses of $505,000, higher salaries and benefits of $322,000, offset by reduced stock-based compensation expenses of $248,000, excluding the one-time stock option grant noted above. Audit and tax costs increased primarily due to the costs of being a standalone public company.
Added
Cash Flow Activity The following table presents the cash flow activity for the period indicated: As of December 31, (in thousands) 2024 2023 Cash and cash equivalents, beginning of year $ 3,913 $ 926 Cash provided by operating activities 7,521 4,405 Cash used in investing activities (1,898 ) (1,281 ) Cash provided by (used in) financing activities 3,105 (137 ) Net change in cash and cash equivalents 8,728 2,987 Cash and cash equivalents, end of year $ 12,641 $ 3,913 Operating Activities Cash provided by operating activities was $7,521 in 2024 compared to $4,405 in 2023, an increase of $3,116 primarily due to the following: • Net income increased $4,147 from $3,489 in 2023 to $7,636 in 2024; and • Deferred income tax provision increased $996 from ($784) in 2023 to $212 in 2024.
Removed
Operating Income The Company reported an operating income of $4,299,000 for the year ended December 31, 2023 compared to operating income of $2,875,000 for the year ended December 31, 2022.
Added
The increase was partially offset by the following: • Stock-based compensation expense decreased $1,785 from $2,421 in 2023 to $636 in 2024; and • Net change in operating assets/liabilities decreased $365 from ($1,571) in 2023 to ($1,936) in 2024.
Removed
This increase reflects the higher revenues and effects from product mix changes, offset by increased engineering, selling and administrative expenses, which were 30.3% of revenue for the year ended December 31, 2023, compared to 26.6% of revenue for the year ended December 31, 2022.
Added
Investing Activities Cash used in investing activities was $1,898 in 2024 compared to $1,281 in 2023, an increase of $617 primarily due to the purchase of equipment to support growth and next generation product development.
Removed
Total Other Income (Expense), Net Total other income (expense), net was income of $100,000 for the year ended December 31, 2023 compared to expense of $280,000 for the year ended December 31, 2022, primarily reflecting excess Separation costs of $219,000 in 2022 which represented 50% of the excess Separation costs which MtronPTI agreed to share with LGL Group (See Note B – Related Party Transactions to the Consolidated and Combined Financial Statements included in Item 8.
Added
The Company’s management continues to strive for profitability both internally and through acquisition.
Removed
Financial Statements and Supplementary Data of this Report), along with the impact from currency changes. Income Tax Provision We must make certain estimates and judgments in determining income tax expense for financial statement purposes.
Added
Contractual Obligations The following table summarizes contractual obligations, in total, and by remaining maturity: Payments due by Period (in thousands) Total Payments 2025 Leases $ 10 $ 10 Revolving credit line — — Total $ 10 $ 10 Leases Leases represent the future minimum lease payments under our operating leases.
Removed
These estimates and judgments occur in the calculation of tax credits, tax benefits and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.
Added
We believe that we maintain adequate financial resources to meet the actual required payments under these obligations.
Removed
Significant changes to these estimates may result in an increase or decrease to the tax provision in a subsequent period. We recorded a tax provision of $911,000 and $797,000 for the years ended December 31, 2023 and 2022, respectively.
Added
The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes.
Removed
The income tax provision is based on an estimated annual effective tax rate across the jurisdictions in which we operate. 20 Table of Contents Net Income Net income was $3,489,000 for the year ended December 31, 2023 compared to $1,798,000 for the year ended December 31, 2022.
Added
The Company's policy is to include interest and penalties related to uncertain tax positions in income tax expense. Inventories We account for inventories at the lower of cost or net realizable value using the FIFO (first-in, first-out) method.
Removed
Basic and diluted net income per share for the year ended December 31, 2023 was $1.29 and $1.28, respectively, and for the year ended December 31, 2022 basic and diluted net income per share was $0.67.
Added
Recently Issued Accounting Pronouncements For additional information on recently issued account pronouncements, refer to Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
Removed
Adjusted EBITDA (a Non-GAAP Measure) Adjusted EBITDA (as defined below) was $2,425,000 for the quarter ended December 31, 2023 versus $1,114,000 for the quarter ended December 31, 2022, a portion of which was reported on a standalone basis.
Removed
Adjusted EBITDA was $7,692,000 for the year ended December 31, 2023 versus $4,008,000 for the year ended December 31, 2022, a portion of which was reported on a standalone basis. Adjusted EBITDA excluded excess Separation costs of $28,000 for 2023 and $219,000 for 2022.
Removed
Included within the non-cash stock compensation is $2,013,000 for the impact from the one-time employee stock option grant. Note that adjusted EBITDA for the quarter and year ended December 31, 2022 does not include any adjustments for the potential impact from the additional costs of being a publicly traded company.
Removed
Management calculated the incremental direct costs of being a public company which do not have any comparable amounts in the prior year when results were presented partially on a standalone basis at $106,000 and $841,000 for the quarter and year ended December 31, 2023, respectively.
Removed
These adjustments to our GAAP results are made with the intent of providing both management and investors with a more complete understanding of the underlying operational results and trends and our marketplace performance.
Removed
Reconciliation of GAAP Income Before Income Taxes to EBITDA and Non-GAAP Adjusted EBITDA: Quarter ended Fiscal Year ended December 31, December 31, (Amounts in thousands, except share and per share amounts) 2023 2022 2023 2022 Income before income taxes $ 53 $ 595 $ 4,400 $ 2,595 Interest (income) expense, net (13 ) 5 (7 ) 11 Depreciation and amortization 233 199 850 725 EBITDA $ 273 $ 799 $ 5,243 $ 3,331 Non-cash stock compensation 2,124 96 2,421 458 Excess Separation costs 28 219 28 219 Adjusted EBITDA $ 2,425 $ 1,114 $ 7,692 $ 4,008 Basic per share information: Weighted average shares outstanding 2,703,897 2,676,512 2,696,445 2,676,480 Adjusted EBITDA per share $ 0.90 $ 0.42 $ 2.85 $ 1.50 Diluted per share information: Weighted average shares outstanding 2,774,023 2,693,035 2,733,502 2,676,524 Adjusted EBITDA per share $ 0.87 $ 0.41 $ 2.81 $ 1.50 21 Table of Contents Liquidity and Capital Resources As of December 31, 2023 and 2022, cash and cash equivalents were $3,913,000 and $926,000, respectively.
Removed
The increase was due to our financial results following the Separation, as the cash balance at Separation exceeding $1,000,000 was retained by LGL Group. Cash provided by operating activities was $4,405,000 and $2,042,000 for the years ended December 31, 2023 and 2022, respectively.
Removed
The increase was largely due to our improved financial results, and a decrease in accounts payable and accrued expenses in 2023 as compared to 2022, partially offset by increases in inventory.
Removed
Inventory increased due to supply chain constraints and as a result of an increase in our order backlog, while payables and accruals decreased due to the efficient use of available cash.
Removed
Cash used in investing activities for the years ended December 31, 2023 and 2022 was $1,281,000 and $936,000, respectively, and related entirely to capital expenditures, which were primarily used for new and upgraded production equipment to improve our costs and efficiency.
Removed
Cash used in financing activities for the years ended December 31, 2023 and 2022 was $137,000 and $2,815,000, respectively, with the 2023 amount related to the forfeiture of shares to pay taxes while the 2022 amount resulted almost exclusively from payments to LGL Group and its subsidiaries.
Removed
As of December 31, 2023, our consolidated working capital was $13,803,000, compared to $9,458,000 as of December 31, 2022. As of December 31, 2023, we had current assets of $18,187,000, current liabilities of $4,384,000 and a ratio of current assets to current liabilities of 4.15 to 1.00.
Removed
The tax benefit recognized is the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. During the periods prior to the Separation that are presented in the accompanying Consolidated and Combined Financial Statements, the Company's income tax expense was included in LGL Group’s income tax returns.
Removed
Income tax expense contained in the accompanying Consolidated and Combined Financial Statements for periods prior to the Separation is presented on a separate return basis, as if the Company had filed its own income tax returns.
Removed
As a result, actual tax transactions included in LGL Group’s consolidated financial statements may or may not be included in the accompanying Consolidated and Combined Financial Statements of the Company.
Removed
Similarly, the tax treatment of certain items reflected in the accompanying Consolidated and Combined Financial Statements of the Company may or may not be reflected in LGL Group’s consolidated financial statements and income tax returns.

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