What changed in this filing

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Item 1. Financial Statements

2020-12-11 compared with 2020-09-14 · 135 added, 105 removed, 342 unchanged (41% of the section changed)

7 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $183 at July 31, 2020

and April 30, 2020

Accounts receivable, net of allowance for doubtful accounts of $183 at October 31, 2020 and April 30, 2020

Costs and estimated earnings in excess of billings, net

8 unchanged sentences

Current liabilities:

Line of credit

Accounts payable – trade

6 unchanged sentences

Operating lease liability – non-current

Deferred rent and other liabilities

Other liabilities

Total liabilities

4 unchanged sentences

Common stock - $1.00 par value;

authorized 20,000 shares, 9,164 shares issued and 9,160 shares outstanding at July 31, 2020;

9,121 shares outstanding at April 30, 2020

authorized 20,000 shares, 9,176 shares issued and 9,175 shares outstanding at October 31, 2020;

9,164 shares issued and 9,121 shares outstanding at April 30, 2020

Additional paid-in capital

Accumulated deficit

Common stock reacquired and held in treasury -

at cost (4 shares at July 31, 2020 and 43 shares at April 30, 2020)

Common stock reacquired and held in treasury - at cost (1 share at October 31, 2020 and 43 shares at April 30, 2020)

Accumulated other comprehensive income

4 unchanged sentences

and SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended July 31,

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands except per share data)

Six Months Ended October 31,

Three Months Ended October 31,

Condensed Consolidated Statements of Operations

Cost of revenues

Gross margin (loss)

Selling and administrative expenses

Research and development expense

Operating loss

Research and development expenses

Operating (loss) income

Other income (expense):

2 unchanged sentences

Other income (expense), net

Loss before provision for income taxes

Income (loss) before provision for income taxes

Provision for income taxes

Net loss per common share:

Basic and diluted loss per share

Net income (loss)

Net income (loss) per common share:

Basic and diluted earnings (loss) per share

Weighted average shares outstanding:

Basic and diluted

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss)

Net income (loss)

Unrealized gain (loss) on marketable securities:

Change in market value of marketable securities before

reclassification, net of tax

Reclassification adjustment for realized gains included in

net income, net of tax

Total unrealized gain on marketable securities, net of tax

Comprehensive loss

Change in market value of marketable securities before reclassification, net of tax

Reclassification adjustment for realized gains included in net income, net of tax

Total unrealized (loss) gain on marketable securities, net of tax

Comprehensive income (loss)

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended July 31,

(In thousands)

Six Months Ended October 31,

Cash flows from operating activities:

Net income (loss)

Non-cash charges to earnings

5 unchanged sentences

Purchase of fixed assets and other assets

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash used in financing activities:

1 unchanged sentence

Proceeds from UBS line of credit

Net cash used in financing activities

Net decrease in cash and cash equivalents

3 unchanged sentences

Cash paid during the period for:

Cash refunded during the period for:

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended July 31, 2020 and July 31, 2019

Three and Six Months Ended October 31, 2020

(In thousands except share data)

8 unchanged sentences

Other comprehensive income, net of tax

Net income (loss)

Balance at July 31, 2020

Contribution of stock to 401(k) plan

Stock-based compensation expense

Exercise of stock options and stock appreciation rights - net of shares tendered for exercise price

Other comprehensive income, net of tax

Net income (loss)

Balance at October 31, 2020

See accompanying notes to condensed consolidated financial statements.

FREQUENCY ELECTRONICS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three and Six Months Ended October 31, 2019

(In thousands except share data)

Treasury stock

1 unchanged sentence

comprehensive

Income (loss)

Balance at April 30, 2019

4 unchanged sentences

Balance at July 31, 2019

Contribution of stock to 401(k) plan

Stock-based compensation expense

Exercise of stock options and stock appreciation rights - net of shares tendered for exercise price

Other comprehensive income, net of tax

Balance at October 31, 2019

See accompanying notes to condensed consolidated financial statements.

4 unchanged sentences

In the opinion of management of Frequency Electronics, Inc.

(the “Company”), the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly, in all material respects, the consolidated financial position of the Company as of July 31, 2020 and the results of its operations and cash flows for the three months ended July 31, 2020 and July 31, 2019.

(the “Company”), the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly, in all material respects, the consolidated financial position of the Company as of October 31, 2020 and the results of its operations, changes in Stockholders’ Equity for the three and six months ended October 31, 2020 and 2019, and cash flows for the six months ended October 31, 2020 and 2019.

The April 30, 2020 condensed consolidated balance sheet was derived from audited financial statements.

1 unchanged sentence

GAAP”) have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended April 30, 2020, filed on July 29, 2020 with the Securities and Exchange Commission, and the financial statements and notes thereto.

These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2020, filed on July 29, 2020 with the Securities and Exchange Commission.

The results of operations for such interim periods are not necessarily indicative of the operating results for the full fiscal year.

5 unchanged sentences

Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021.

Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the potential adverse effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021.

The Company faces various risks related to COVID-19 outbreak.

1 unchanged sentence

If significant portions of the Company’s workforce are unable to work effectively, or if the U.S.

Government and/or other customers’ operations are curtailed due to illness, quarantines, government actions, facility closures, or other restrictions in connection with the COVID-19 pandemic, the Company’s operations will likely be impacted.

Government, state and/or other customers or supplier operations are curtailed due to illness, quarantines, government actions, facility closures, or other restrictions in connection with the COVID-19 pandemic, the Company’s operations may be impacted.

The Company may be unable to perform fully on its contracts and costs may increase as a result of the COVID-19 outbreak.

2 unchanged sentences

Certain of the Company’s vendors have been unable to deliver materials on time due to the COVID-19 outbreak.

Such delays have negatively impacted the Company’s production, and the Company plans to continue to monitor these and its other vendors and, if necessary, seek alternative suppliers.

At this time, the Company’s management cannot predict the impact of the COVID-19 pandemic, but management continues to monitor the situation, to assess further possible implications to operations, the supply chain, and customers, and to take actions in an effort to mitigate adverse consequences.

Further, the pandemic may have an adverse effect on the Company’s results of operations, financial position, and liquidity in fiscal year 2021.

Such delays have had a minor impact on the Company’s production schedules to date, but vendor delivery performance is being closely monitored and alternate sources of supply are generally available if necessary.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act also appropriated funds for the Small Business Administration (SBA) Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.

The Company received a loan under the Paycheck Protection Program (“PPP”) in April 2020, which it repaid in full in May 2020.

For more detail regarding the Company’s PPP Loan, see Note K below.

FREQUENCY ELECTRONICS, INC.

2 unchanged sentences

NOTE B – EARNINGS PER SHARE

Reconciliation of the weighted average shares outstanding for basic and diluted loss per share for the three months ended July 31, 2020 and 2019, respectively, were as follows:

Three months ended July 31,

Reconciliation of the weighted average shares outstanding for basic and diluted loss per share for the six and three months ended October 31, 2020 and 2019, respectively, were as follows:

Periods ended October 31,

Weighted average shares outstanding:

1 unchanged sentence

Effect of Dilutive Securities

Basic and Diluted EPS Shares outstanding

**For the three-month periods ended July 31, 2020 and 2019 dilutive securities are excluded from the calculation of earnings per share since the inclusion of such shares would be antidilutive due to the net loss for both periods.

Basic and diluted shares outstanding for the three months ended July 31, 2020 and 2019 are 9,139,130 and 9,001,324, respectively.

Additionally, there are anti-dilutive exercisable shares excluded in the above table for the three months ended July 31, 2020 and 2019 of 676,000 and 1,201,125, respectively.

Diluted EPS Shares outstanding

**For the six and three-month periods ended October 31, 2019 dilutive securities are excluded from the calculation of earnings per share since the inclusion of such shares would be antidilutive due to the net loss for those periods.

The exercisable shares excluded for the three and six months ended October 31, 2020 are 303,000 and 436,000 options, respectively.

The exercisable shares excluded as of October 31, 2019 are 178,000 options for both periods.

The effect of dilutive securities would have been 239,866 options and 230,670 options for the six and three-month periods ended October 31, 2019, respectively.

NOTE C – COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS, NET

At July 31, 2020 and April 30, 2020, costs and estimated earnings in excess of billings, net, consisted of the following:

July 31, 20 20

At October 31, 2020 and April 30, 2020, costs and estimated earnings in excess of billings, net, consisted of the following:

October 31, 2020

April 30, 2020

2 unchanged sentences

Billings in excess of costs and estimated earnings

Such amounts represent revenue recognized on long-term contracts that had not been billed at the balance sheet dates or represent a liability for amounts billed in excess of the revenue recognized.

Such amounts represent revenue recognized on long-term contracts that had not been billed at the balance sheet dates or represent a liability for amounts billed in excess of the revenue earned.

Amounts are billed to customers pursuant to contract terms.

1 unchanged sentence

Revenue on these long-term contracts is accounted for on the percentage of completion (“POC”) basis.

During the three months ended July 31, 2020 and 2019, revenue recognized under POC contracts was approximately $11.7 million and $11.5 million, respectively.

During the six and three months ended October 31, 2020, revenue recognized under POC contracts was approximately $24.6 million and $12.9 million, respectively.

During the six and three months ended October 31, 2019, revenue recognized under POC contracts was approximately $19.1 million and $7.7 million, respectively.

If contract losses are anticipated, costs and estimated earnings in excess of billings are reduced for the full amount of such losses when they are determinable.

Contract losses of approximately $611,000 and $314,000 were recorded for the three months ended July 31, 2020 and July 31, 2019, respectively.

Contract losses of approximately $731,000 and $121,000 were recorded for the six and three months ended October 31, 2020, respectively.

Contract losses recognized for the six and three months ended October 31, 2019 were approximately $1.9 million and $1.6 million, respectively.

NOTE D – TREASURY STOCK TRANSACTIONS

During the three month period ended July 31, 2020, the Company made contributions of 14,926 shares of its common stock held in treasury to the Company’s profit-sharing plan and trust under Section 401(k) of the Internal Revenue Code.

During the six month period ended October 31, 2020, the Company made contributions of 24,422 shares of its common stock and common stock held in treasury to the Company’s profit-sharing plan and trust under Section 401(k) of the Internal Revenue Code.

Such contributions are in accordance with the Company’s discretionary match of employee voluntary contributions to this plan.

4 unchanged sentences

Inventories, which are reported at the lower of cost and net realizable value, consisted of the following:

July 31, 20 20

October 31, 2020

April 30, 2020

3 unchanged sentences

Finished Goods

The amounts above are net of reserves of $6.8 million and $6.6 million as of July 31, 2020 and April 30, 2020, respectively.

The amounts above are net of reserves of $7.0 million and $6.6 million as of October 31, 2020 and April 30, 2020, respectively.

NOTE F – RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

2 unchanged sentences

Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

Right-of-use (“ROU”) assets and lease liabilities are recorded based on the present value of future lease payments which will factor in certain qualifying initial direct costs incurred as well as any lease incentives that may have been received.

Right-of-use (“ROU”) assets and lease liabilities are recorded based on the present value of future lease payments which factor in certain qualifying initial direct costs incurred as well as any lease incentives that may have been received.

Lease expenses for operating lease payments are recognized on a straight-line basis over the lease term.

4 unchanged sentences

Classification

July 31, 2020

October 31, 2020

April 30, 2020

6 unchanged sentences

Total lease liabilities

Total operating lease expense was $478,000 and $504,000 for the three months ended July 31, 2020 and July 31, 2019, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the unaudited condensed consolidated statements of operations.

There were no new leases entered into during the three months ended July 31, 2020.

Total operating lease expense was $1.2 million and $500,000 for the six and three months ended October 31, 2020, respectively, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the unaudited condensed consolidated statements of operations.

Total operating lease expense was approximately $1.0 million and $504,000 for the six and three months, respectively, ended October 31, 2019, respectively, the majority of which is included in cost of revenues and the remaining amount in selling and administrative expenses on the unaudited condensed consolidated statements of operations.

FREQUENCY ELECTRONICS, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the unaudited consolidated balance sheet as of July 31, 2020:

Fiscal Year Ending July 31 ,

Fiscal Year Ending April 30,

( in thousands )

5 unchanged sentences

Long-term lease obligations

As of July 31, 2020, the weighted-average remaining lease term for all operating leases was 8.1 years.

As of October 31, 2020, the weighted-average remaining lease term for all operating leases was 7.9 years.

The Company does not generally have access to the rate implicit in the leases and therefore utilized the Company’s borrowing rate as the discount rate.

The weighted average discount rate for operating leases as of July 31, 2020 was 6.20%.

The weighted average discount rate for operating leases as of October 31, 2020 was 6.20%.

NOTE G – SEGMENT INFORMATION

12 unchanged sentences

Consequently, the Company determined that the segments indicated above most appropriately reflect the way the Company’s management views the business.

The accounting policies of the two segments are the same as those described in the “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended April 30, 2020, filed on July 29, 2020 with the Securities and Exchange Commission.

The accounting policies of the two segments are the same as those described in the “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2020, filed on July 29, 2020 with the Securities and Exchange Commission.

The Company evaluates the performance of its segments and allocates resources to them based on operating profit which is defined as income before investment income, interest expense and taxes.

4 unchanged sentences

The tables below present information about reported segments with reconciliation of segment amounts to consolidated amounts as reported in the condensed consolidated statements of operations or the condensed consolidated balance sheets for each of the periods (in thousands):

Three months ended July 31,

Periods ended October 31,

less intersegment revenues

Consolidated revenues

Operating (loss) profit:

Consolidated operating loss

July 31, 20 20

Operating profit (loss):

Consolidated operating (loss) income

October 31, 2020

April 30, 2020

2 unchanged sentences

Consolidated identifiable assets

Total revenue recognized over time as POC and Passage of Title (“POT”) were approximately $11.7 million and $1.3 million, respectively, of the $13.0 million reported for the three months ended July 31, 2020.

The amounts recognized over time as POC and POT were approximately $11.5 million and $1.1 million of the $12.6 million reported for the three months ended July 31, 2019.

Total revenue recognized over time as POC and Passage of Title (“POT”) were approximately $24.6 million and $2.3 million, respectively, for the six months ended October 31, 2020.

The amounts recognized over time as POC and POT were approximately $19.1 million and $2.5 million, respectively, for the six months ended October 31, 2019.

The amounts by segment and product line were as follows:

Three Months Ended July 31, 20 20

Three Months Ended July 31, 201 9

Six Months Ended October 31,

(In thousands)

2 unchanged sentences

Total Revenue

Three Months Ended July 31,

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Three Months Ended October 31,

(In thousands)

Revenue by Product Line:

(In thousands)

Total Revenue

Periods ended October 31,

(in thousands)

Revenues by Product Line:

Satellite Revenue

2 unchanged sentences

Consolidated revenues

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

NOTE H – INVESTMENT IN MORION, INC.

4 unchanged sentences

This investment of approximately $800,000 is included in other assets in the accompanying condensed consolidated balance sheets.

During the three months ended July 31, 2020 and 2019, the Company acquired product from Morion in the aggregate amount of approximately $150,000 and $245,000, respectively.

There were no sales to Morion during the three months ended July 31, 2020.

The Company sold product and training services to Morion in the aggregate amount of approximately $47,000 during the three months ended July 31, 2019, which is included in revenues in the unaudited condensed consolidated statements of operations as part of the FEI-NY segment.

At July 31, 2020 there was approximately $34,000 payable to Morion.

There were no amounts payable to Morion at April 30, 2020.

There were no receivables related to Morion for either period ended July 31, 2020 and April 30.

The Company did not receive dividends from Morion during the three months ended July 31, 2020.

During the three months ended July 31, 2019, the Company received a dividend from Morion in the amount of approximately $125,000, which is included in other income, net in the condensed consolidated statements of operations as part of the FEI-NY segment.

During the six months ended October 31, 2020 and 2019, the Company acquired product from Morion in the aggregate amount of approximately $268,000 and $380,000, respectively, and during the six months ended October 31, 2019 the Company sold product and training services to Morion in the aggregate amount of approximately $49,000, included in revenues in the condensed consolidated statements of operations as part of the FEI-NY segment.

During the three months ended October 31, 2020 and 2019, the Company acquired product from Morion in the aggregate amount of approximately $118,000 and $135,000, respectively, and during three months ended October 31, 2019 the Company sold product and training services to Morion in the aggregate amount of approximately $2,000, included in revenues in the condensed consolidated statements of operations as part of the FEI-NY segment.

During the six months ended October 31, 2020 and 2019, the Company received dividends from Morion in the amount of approximately $105,000 and $125,000, respectively, which is included in other income, net in the condensed consolidated statements of operations as part of the FEI-NY segment.

Morion is a less than wholly-owned subsidiary of Gazprombank, a state-owned Russian bank.

1 unchanged sentence

On July 16, 2014, after the Company’s investment in Morion, Gazprombank was designated as an SSI.

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

In light of Morion’s relationship with Gazprombank, the Company recently evaluated, with the assistance of external legal counsel, certain sales to Morion and the timing of payments by Morion to the Company in connection with those sales to determine whether payments by Morion may have inadvertently constituted extensions of credit in violation of Directive 1 under Executive Order 13662.

8 unchanged sentences

Also, the Company is unable to predict the duration, scope, result or related costs of the investigation, including legal fees.

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

NOTE I – FAIR VALUE OF FINANCIAL INSTRUMENTS

The cost, gross unrealized gains, gross unrealized losses, and fair market value of available-for-sale securities at July 31, 2020 and April 30, 2020, respectively, were as follows (in thousands):

July 31, 2020

The cost, gross unrealized gains, gross unrealized losses, and fair market value of available-for-sale securities at October 31, 2020 and April 30, 2020, respectively, were as follows (in thousands):

October 31, 2020

Gross Unrealized Gains

10 unchanged sentences

12 Months or more

Unrealized Losses

July 31, 2020

October 31, 2020

Fixed Income Securities

1 unchanged sentence

Fixed Income Securities

During the three months ended July 31, 2020, the Company sold or redeemed available-for-sale securities of approximately $725,000, realizing gains of approximately $3,000.

Maturities of fixed income securities classified as available-for-sale at July 31, 2020 were as follows, at cost (in thousands):

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

During the six and three months ended October 31, 2020, the Company sold or redeemed available-for-sale securities of approximately $1.5 million and $796,000, respectively, realizing gains of approximately $12,000 and $9,000, respectively.

Maturities of fixed income securities classified as available-for-sale at October 31, 2020 were as follows, at cost (in thousands):

Due after one year through five years

2 unchanged sentences

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

FREQUENCY ELECTRONICS, INC.

and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The levels of the fair value hierarchy are described below:

29 unchanged sentences

NOTE K – CREDIT FACILITY

As of July 31, 2020, the Company had available credit with UBS Bank USA at variable terms based on its securities holdings under an advisory arrangement, under which the Company has borrowed $3 million.

On April 12, 2020, the Company received proceeds from a loan in the amount of $4,964,810 (the “PPP Loan”) from JPMorgan Chase Bank, N.A.

As of October 31, 2020, the Company had available credit with UBS Bank USA at variable terms based on its securities holdings under an advisory arrangement, under which the Company has borrowed $3 million.

On April 12, 2020, the Company received proceeds from a PPP Loan in the amount of $4,964,810 from JPMorgan Chase Bank, N.A.

as the Lender, pursuant to the SBA Paycheck Protection Program under the CARES Act.

2 unchanged sentences

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future.

As required by the authoritative guidance on accounting for income taxes, we evaluate the realizability of deferred tax assets on a jurisdictional basis at each reporting date.

As required by the authoritative guidance on accounting for income taxes, we evaluate the realization of deferred tax assets on a jurisdictional basis at each reporting date.

We consider all positive and negative evidence, including the reversal of deferred tax liabilities, projected future taxable income, tax planning strategies, and results of recent operations.

1 unchanged sentence

In circumstances where there is sufficient negative evidence indicating that the deferred tax assets will not be realizable, we establish a valuation allowance.

As of July 31, 2020, and April 30, 2020, the Company maintained a full valuation allowance against its deferred tax assets.

As of October 31, 2020, and April 30, 2020, the Company maintained a full valuation allowance against its deferred tax assets.

If these estimates and assumptions change in the future, the Company may be required to adjust its existing valuation allowance resulting in changes to deferred income tax expense.

1 unchanged sentence

On January 28, 2020, Martin B.

Bloch, the former Chief Scientist of the Company and a former member of the Company’s Board, filed a complaint against the Company and Jonathan Brolin, Lance W.

Bloch, the former Chief Scientist of the Company and a former member of the Company’s Board of Directors (the “Board”), filed a complaint against the Company and Jonathan Brolin, Lance W.

Lord, Russell M.

13 unchanged sentences

Bloch’s amended complaint.

The Parties’ respective motions are pending.

The Company and the Director Defendants believe that the Board was justified in its decision to terminate Mr.

On September 23, 2020, the Court denied Mr.

Bloch’s motion for summary judgment.

It also granted the Company and the Director Defendants’ motion for summary judgment as to all claims, except for one claim for breach of contract against the Company.

On October 23, 2020, the Company filed a brief with the Appellate Division, Second Department, seeking a reversal of the lower court’s order to the extent that it denied the Company’s summary judgment motion on the breach of contract claim.

Bloch filed its responsive brief on November 20, 2020.

The appeal is currently pending.

The Company believes that the Board was justified in its decision to terminate Mr.

Bloch “for cause” and that Mr.

Bloch’s complaint is entirely without merit.

Bloch’s single surviving claim is entirely without merit.

The Company intends to vigorously defend against all of Mr.

Bloch’s allegations.

At this time, the Company does not have sufficient information to determine whether liability, if any, arising out of these matters is probable or the possible loss, if any that could result from an unfavorable outcome arising out of these matters.

At this time, the Company does not have sufficient information to determine whether liability, if any, arising out of these matters is probable or the possible loss, if any, which could result from an unfavorable outcome arising out of these matters.

In addition, Mr.

17 unchanged sentences

Bloch filed a motion on June 16, 2020 seeking a change of venue to the County of Nassau, which the Company opposed on July 7, 2020.

The motion is currently pending.

The Court granted Mr.

Bloch’s motion on September 8, 2020.

The case was therefore transferred to the County of Nassau, and assigned to the same Judge hearing the other cases between the parties.

At this time, the Company does not have sufficient information to determine the likelihood of success of this petition.

On June 5, 2020, Mr.

Bloch filed a petition against the Company, the Compensation Committee of the Company’s Board of Directors, and the Deferred Compensation Plan Agreement Dated March 7, 2008, as amended, for the appointment of an arbitrator in one of the arbitration proceedings that Mr.

Bloch filed a petition against the Company, the Compensation Committee of the Company’s Board of Directors, and the Deferred Compensation Plan Agreement Dated March 7, 2008, as amended (“Respondents”), for the appointment of an arbitrator in one of the arbitration proceedings that Mr.

Bloch sought to initiate.

4 unchanged sentences

filed June 5, 2020)).

On June 22, 2020, the Company moved to dismiss Mr.

Bloch’s petition, and he opposed the Company’s motion on July 2, 2020.

On June 22, 2020, Respondents moved to dismiss Mr.

Bloch’s petition, and he opposed the motion on July 2, 2020.

The motion is currently pending.

Defendants dispute all of Bloch’s claims and intend to continue to vigorously defend the Company in this special proceeding.

On September 11, 2020, the Court granted Respondents’ application for an interim stay of the arbitration pending the Court’s determination of the Company’s petition for a stay of arbitration (described above), Mr.

Bloch’s petition for the appointment of an arbitrator, and other outstanding motions.

Respondents dispute all of Bloch’s claims and intend to continue to vigorously defend the Company in this special proceeding.

The likelihood of any outcome of this proceeding cannot be determined at this time.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements