Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not significantly exposed to the impact
of interest rate changes or foreign currency fluctuations. The Company has not used derivative financial instruments.
The COVID-19 pandemic presents several risks for the
Company. The Company is part of the Defense Industrial Base and thus has remained open and operating throughout the pandemic. The primary
risks resulting from the pandemic are potential declines in customer demand and increased operating costs resulting from pandemic-related
factors such as increased freight costs and increased employee absenteeism causing labor inefficiencies and increased use of overtime.
The COVID-19 pandemic has affected financial results
for the quarter ended June 26, 2021. One of our major customers uses a significant portion of our product in the manufacture of products
used in high-speed rail trains. As a result of decreased ridership due to the pandemic, demand from their customers has declined. This
has resulted in this customer reducing Q2 purchases. The Company believes the worst is behind us, but COVID-19 variants, lack of vaccinations
on a world-wide scale and other factors could continue to negatively affect our financial results moving forward.
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