What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-17 compared with 2021-03-23 · 105 added, 119 removed, 159 unchanged (58% of the section changed)

Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Registrant ’

s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

As of March 9, 2022, there were 628 shareholders of record.

Our stock is listed on the NASDAQ Capital Market under the symbol “NSYS”.

We intend to invest our profits into the growth of our operations and, therefore, do not plan to pay out dividends to shareholders in the foreseeable future.

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Stock price comparisons (NASDAQ):

During the Three Months Ended Low High

During the Three Months Ended

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December 31, 2020

Issuer Purchase of Equity Securities

In August 2018, the Board of Directors approved a $250,000 share repurchase program.

Under this repurchase program, we repurchased zero shares and 32,769 shares totaling $0 and $130,376 during the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, this share repurchase plan has expired.

The table below sets forth information regarding repurchases we made of our common stock under the $250,000 share repurchase program authorized in August 2018 during the periods indicated.

Average Price

Paid Per Share

Total Number of

Shares Purchased

Announced Plan

Maximum Dollar

Value of Shares

that May Yet be

Purchased Under

Balance at December 31, 2018

Stock Repurchases

Balance at December 31, 2019

Stock Repurchases

Balance at December 31, 2020

Equity Compensation Plan Information

Certain information with respect to our equity compensation plans are contained in Part III, Item 12 of this Annual Report on Form 10-K.

Selected Financial Data

As a smaller reporting company, we are not required to provide the information required by this Item.

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

Selected Financial Data [Reserved]

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations

We are a Minnesota, United States based full-service global EMS contract manufacturer in the Medical, Aerospace & Defense and Industrial markets offering a full range of value-added engineering, technical and manufacturing services and support including project management, design, testing, prototyping, manufacturing, supply chain management and post-market services.

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As of December 31, 2020, we have facilities in Minnesota:

Bemidji, Blue Earth, Mankato, Merrifield, Milaca and Maple Grove.

Bemidji, Blue Earth, Mankato, Milaca and Maple Grove.

We also have facilities in Monterrey, Mexico and Suzhou, China.

Our revenue is derived from complex designed products built to the customers’ specifications.

Our revenue is derived from complex designed products built to the customers’

specifications.

The products we manufacture are engineered and designed products that require sophisticated manufacturing support.

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Global Pandemic

In March 2020, the World Health Organization recognized the outbreak of a novel coronavirus (“COVID-19”) as a pandemic.

While the COVID-19 pandemic has had an impact on our operations, we have been able to continue to operate our manufacturing facilities and provide essential services to our customers.

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We actively manage our cash and working capital to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.

Facility Consolidation

To further improve operational efficiencies and lower overhead costs, the Company approved on August 7, 2020, the closure of our Merrifield, Minnesota, production facility, shifting wire and cable assembly, system-level assembly and printed circuit board (PCB) manufacturing to Nortech’s other Minnesota locations.

The Merrifield production facility consolidation is expected to be complete in the first quarter of 2021, and will impact approximately 60 employees, who were offered positions at other Nortech facilities in Minnesota.

As of December 31, 2020, this closure did not qualify for held for sale nor discontinued operations accounting.

Facility Consolidation  

The Merrifield production facility consolidation was completed in the first quarter of 2021, and impacted approximately 60 employees, who were offered positions at other Nortech facilities in Minnesota.

This closure did not qualify for held for sale nor discontinued operations accounting.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with U.S.

Generally Accepted Accounting Principles (“U.S.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods presented, as well as our disclosures of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates and assumptions, including, but not limited to, goodwill impairment testing, long-lived assets impairment, allowance for doubtful accounts and inventory reserves.

We base our estimates and assumptions on our historical experience and on various other information available to us at the time that these estimates and assumptions are made.

We believe that these estimates and assumptions are reasonable under the circumstances and form the basis for our making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources.

Actual results and outcomes could differ from our estimates primarily due to incorrect sales forecasting.

Generally Accepted Accounting Principles (“U.S.

GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods presented, as well as our disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions, including, but not limited to, long-lived assets impairment, allowance for doubtful accounts and inventory reserves.

We base our estimates and assumptions on our historical experience and on various other information available to us at the time that these estimates and assumptions are made. We believe that these estimates and assumptions are reasonable under the circumstances and form the basis for our making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources.  Actual results and outcomes could differ from our estimates primarily due to incorrect sales forecasting.

We utilize a pipeline generated by our sales team and speak directly with all departments regarding estimates and assumptions.

If, for any reason, those estimates, and assumptions vary substantially it would also impact our financial results.

Our significant accounting policies are described in “Note 1 – Summary of Significant Accounting Policies,” in Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Our significant accounting policies are described in “Note 1 –

Summary of Significant Accounting Policies,”

in Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

We believe that the following discussion addresses our critical accounting policies and reflects those areas that require more significant judgments and use of estimates and assumptions in the preparation of our consolidated financial statements.

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Our revenue is comprised of product, engineering services and repair services.

All revenue is recognized when the Company satisfies its performance obligation(s) under the contract by transferring the promised product or service to our customer either when (or as) our customer obtains control of the product or service, with the majority of our revenue being recognized over time including goods produced under contract manufacturing agreements and services revenue.

All revenue is recognized when the Company satisfies its performance obligation(s) under the contract by transferring the promised product or service to our customer either when (or as) our customer obtains control of the product or service, with the majority of our revenue being recognized over time including goods produced under contract manufacturing agreements and services revenue.

A performance obligation is a promise in a contract to transfer a distinct product or service to a customer.

A contract’s transaction price is allocated to each distinct performance obligation.

The majority of our contracts have a single performance obligation.

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Shipping and handling costs charged to our customers are included in net sales, while the corresponding shipping expenses are included in cost of goods sold.

Goodwill and Other Intangible Assets

In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill is not amortized but is required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value.

We test impairment annually as of October 1st.

In testing goodwill for impairment we perform a quantitative or qualitative impairment test, including computing the fair value of the reporting unit and comparing that value to its carrying value.

If the fair value is less than its carrying value, then the goodwill is determined to be impaired.

In the event that goodwill is impaired, an impairment charge to earnings would become necessary.

To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment.

Prior to completing the quantitative analysis described above, we have the option to perform a qualitative assessment of goodwill for impairment to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets.

If we conclude the fair value is more likely than not less than the carrying value, we perform the quantitative analysis.

Otherwise, no further testing is needed.

In our annual impairment test in 2020, we performed a quantitative analysis based on the triggering event caused by the COVID-19 impact on our results using discounted cash flows and market approach which is based on the guideline public company method.

Discounted cash flow models include assumptions related to our product revenue, gross margins, operating margins and other assumptions.

We took a goodwill impairment of $2.4 million, the total amount of remaining goodwill, in 2020.

See Note 4, Goodwill and Other Intangible Assets .

Long-Lived Assets Impairment

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To the extent such projections indicate that future undiscounted cash flows are not sufficient to recover the carrying amounts of related assets, a charge might be required to reduce the carrying amount to equal estimated fair value.

In 2020, we did evaluate that there was a trigger event, largely driven by the impacts of COVID-19, that indicated that the carrying amount of the asset group may not be recoverable.

We performed the recoverability test and determined there was no impairment.

In 2020, we did evaluate that there was a triggering event, largely driven by the impacts of COVID-19, that indicated that the carrying amount of the asset group may not be recoverable.

We performed the recoverability test and determined there was no impairment at December 31, 2020.

In 2021, we evaluated that we did not have a triggering event occur.

See Note 4, Goodwill and Other Intangible Assets.

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General and Administrative Expenses

Restructuring Expenses

Impairment of Goodwill

Loss on Abandonment of Intangible Asset

Gain on Sale of Property and Equipment

(Loss) Income from Operations

(Income) Loss from Operations

Interest Expense

Loss Before Income Taxes

PPP Loan Forgiveness

Income (Loss) Before Income Taxes

Income Tax Expense

Our net sales in 2020 were $104.1 million, compared to $116.3 million in 2019, a decrease of $12.2 million or 10.5% that was driven primarily by the COVID-19 pandemic in our medical and industrial markets.

The medical market decreased by $7.5 million or 12.0% with medical devices accounting for 31% of the decrease and medical component products 69% of the decrease.

The industrial market decreased by $7.1 million or 20.0% in 2020 as compared to 2019.

Net sales from the aerospace and defense markets increased by $2.4 million or 13.2% in 2020 as compared to 2019.

Net Income (Loss)

Our net sales in 2021 were $115.2 million, compared to $104.1 million in 2020, an increase of $11.1 million or 10.7% that was driven by increases in our industrial and medical markets.

The industrial market increased by $7.1 million or 25.0% in 2021 as compared to 2020.

The medical market increased by $8.0 million or 14.5% with medical devices accounting for 22% of the increase and medical component products 78% of the increase.

Net sales from the aerospace and defense markets decreased by $4.0 million or 19.4% in 2021 as compared to 2020.

The overall revenue improvement was primarily due to higher production volume resulting from actions to scale the direct labor workforce and strengthen the supply chain for parts.

Net sales by our major EMS industry markets for the years ended December 31, 2021 and 2020 were as follows:

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Transferred Over

Transferred at

Consideration

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Transferred Over

Transferred at

Consideration

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Total net sales

Our 90-day backlog at December 31, 2020 decreased to $24.3 million as compared to $27.3 million at the end of 2019.

Our 90-day backlog at December 31, 2021 increased to $36.9 million as compared to $24.3 million at the end of 2020.

The 90-day backlog by our major EMS industry markets are as follows:

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These variables cause inconsistencies in comparing the backlog from one period to the next.

Our total shipment backlog was $48.7 million at December 31, 2020 compared to $50.1 million at the end of December 31, 2019.

Our total shipment backlog was $95.0 million at December 31, 2021 compared to $48.7 million at the end of December 31, 2020.

Our gross profit as a percentage of net sales was 13.8% and 9.3% for the years ended December 31, 2021 and 2020, respectively.

The decline in gross profit as a percent of sales was driven by lower sales on a fixed cost base in part due to the impact of COVID-19 and increased inventory reserves partially due to the closure of the Merrifield facility.

The gross profit improvement relates primarily to the $4.7 million reduction in payroll and medical expenses related to the ERC and from an increase in utilization as a result of the sales increase.

Selling expenses were $2.4 million, or 2.0% of net sales, for the year ended December 31, 2021 and $2.5 million, or 2.4% of net sales, for the year ended December 31, 2020.

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General and administrative expenses were $10.0 million, or 8.7% of net sales, for the year ended December 31, 2021 and $9.3 million, or 8.9% of net sales, for the year ended 2020.

The decrease was due to higher spend in the prior year related one-time expenditures to improve operations in 2019 and the benefits of those cost reduction measures in 2020.

The increase in general and administrative expenses compared to the prior year relates to an increase in professional service fees.

Restructuring Charges

Restructuring charges related to the closure of the Merrifield facility were $0.3 million or 0.3% of net sales for year ended December 31, 2021.

There were no restructuring charges for the year ended December 31, 2020.

Research and Development Expense

Research and development expenses were $0.5 million or 0.4% of sales for the year ended December 31, 2021.

There were minimal to no research and development expenses for the year ended December 31, 2020.

Impairment of Goodwill

The loss on impairment of goodwill was $2.4 million in the year ended December 31, 2020.

The loss on impairment of goodwill was $0 and $2.4 million for the years ended December 31, 2021 and 2020, respectively.

In our impairment test of goodwill in the fourth quarter of 2020, we concluded that goodwill was impaired due to a significant reduction of results from operations during the fourth quarter of 2020 largely a result of the COVID-19 pandemic.

See Note 4, Goodwill and Other Intangible Assets .

Loss on Abandonment of Intangible Asset

Abandonment charges were approximately $0.6 million or 0.5% of net sales for the year ended December 31, 2021.

There were no abandonment charges for the year ended December 31, 2020.

The charges relate to the abandonment of the Devicix tradename.

Gain on Sale of Property and Equipment

The gain on sale of property and equipment was $3.8 million in the year ended December 31, 2020.

This gain was due to the sale leaseback transaction we completed in 2020 relating to the manufacturing facilities in Bemidji and Mankato, Minnesota.

(Loss) Income from Operations

Our loss from operations for the 2020 fiscal year was $0.6 million, a decrease of $0.8 million from the 2019 fiscal year of $0.2 million income, due an impairment of goodwill of $2.4 million and lower gross profit, partially offset by the gain on sale of property and equipment of $3.8 million.

The gain on sale of property and equipment was $0.1 million and $3.8 million for the years ended December 31, 2021 and 2020, respectively.

This 2020 gain was due to the sale leaseback transaction relating to the manufacturing facilities in Bemidji and Mankato, Minnesota.

Income (Loss) from Operations

Our income from operations for the 2021 fiscal year was $2.3 million, an increase of $2.9 million from the 2020 fiscal year loss of $0.6 million.

Income from operations was positively affected by the 2021 employee retention credits of $5.2 million along with increased utilization as a result of increased sales.

Interest Expense

Interest expense for the year ended December 31, 2020 was $0.6 million, compared with $1.0 million for the year ended December 31, 2019 due largely to lower borrowing on line of credit from the proceeds on the sale leaseback transaction and funds received to the Paycheck Protection Program under the Coronavirus Aid discussed in Liquidity .

Interest expense for the year ended December 31, 2021 was $0.4 million, compared with $0.6 million for the year ended December 31, 2020.

Paycheck Protection Program (PPP) Loan Forgiveness

In the fourth quarter of 2021, we received forgiveness from the Small Business Association (SBA) for the $6.1 million Promissory Note under the PPP.

We recorded a PPP loan forgiveness gain of $6.2 million which is included in other income (expense) on the consolidated statement of operations and other comprehensive income (loss) for the year ended December 31, 2021.

Income tax expense for the year ended December 31, 2021 was $0.9 million.

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The effective tax rate for fiscal 2021 and 2020 was 12.0% and 20%, respectively.

Our 2020 tax rate was driven by the nontaxable goodwill impairment loss, the tax on global intangible low-taxed income provisions and additional valuation allowance created due to more deferred tax assets generated in 2020.

Our 2019 tax rate was driven by additional valuation allowance created due to more deferred tax assets generated in 2019 and the tax on global intangible low-taxed income provisions.

The statutory reconciliation for the years ended December 31, 2020 and 2019 is as follows (in millions):

Our 2021 tax rate was driven by the nontaxable PPP loan forgiveness.

The statutory reconciliation for the years ended December 31, 2021 and 2020 is as follows (in millions):

Statutory Rate

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Effect of foreign operations

Uncertain tax benefits, including federal benefit for state reserves

Change in State Deferred Rate

Valuation Allowance

PPP Loan Forgiveness

US Permanent differences

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Return to provision - credits, perm diffs

Deferred Adjustment

Goodwill Impairment

Our net loss in 2020 was $1.5 million or $(0.57) per diluted common share.

Our net loss in 2019 was $1.2 million or $(0.46) per diluted common share.

Net Income (Loss)

Our net income in 2021 was $7.2 million or $2.54 per diluted common share and $2.68 per basic common share.

Our net loss in 2020 was $1.5 million or $(0.58) per diluted and basic common share.

Liquidity and Capital Resources

Our 2020 sales and shipment backlog were impacted by the ongoing COVID-19 pandemic.

Due to the inherent uncertainty of this evolving situation, we are unable at this time to predict the likely impact of the COVID-19 pandemic on our future operations which has led to indicators of an inability to continue as a going concern.

However, these indicators have been mitigated by our focus on reducing costs, minimizing capital expenditures, and managing working capital.

In addition, we believe that cash provided by operations, funds available under the credit agreement with Bank of America, N.A.

(BofA), funds available under a Promissory Note with BofA (“Promissory Note”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, funds received from our sales leaseback transaction and cash on hand will be adequate to meet our liquidity needs, including working capital, capital expenditures, and debt payment obligations for at least the next 12 months from the financial statement release date.

We believe that our existing financing arrangements, anticipated cash flows from operations, funds expected to be received for the ERC and cash on hand will be sufficient to satisfy our working capital needs, capital expenditures and debt repayments.

Credit Facility

We have a credit agreement with Bank of America which was entered into on June 15, 2017 and provides for a line of credit arrangement of $16,000 that expires on June 15, 2022.

The credit arrangement also has a $5,000 real estate term note outstanding with a maturity date of June 15, 2022.

Under the Bank of America credit agreement, both the line of credit and real estate term notes are subject to variations in the LIBOR rate.

Our line of credit bears interest at a weighted-average interest rate of 4.0% and 5.5% as of December 31, 2020 and 2019, respectively.

We had borrowings on our line of credit of $3,328 and $10,088 outstanding as of December 31, 2020 and December 31, 2019, respectively.

We have a credit agreement with Bank of America which was entered into on June 15, 2017 and provides for a line of credit arrangement of $16,000 that was to expire on June 15, 2022.

On December 31, 2021, we renewed the credit agreement through June 15, 2026.

Under the Bank of America credit agreement, the line of credit is subject to variations in the Bloomberg Short-Term Bank Yield (BSBY) index rate.

Our line of credit bears interest at a weighted-average interest rate of 3.5% and 4.0% as of December 31, 2021 and 2020, respectively.

We had borrowings on our line of credit of $9.0 million and $3.3 million outstanding as of December 31, 2021 and December 31, 2020, respectively.

There are no subjective acceleration clauses under the credit agreement that would accelerate the maturity of our outstanding borrowings.

The line of credit and real estate term notes with Bank of America contain certain covenants which, among other things, require us to adhere to regular reporting requirements, abide by annual shareholder dividend limitations, maintain certain financial performance, and limit the amount of annual capital expenditures.

The availability under our line is subject to borrowing base requirements, and advances are at the discretion of the lender.

The line of credit is secured by substantially all of our assets.

The Bank of America Credit Agreement provides for, among other things, a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0, for the twelve months ending December 31, 2020 and each Fiscal Quarter end thereafter subject only during a trigger period commencing when our availability under our line is less than $2,000 until availability is above that amount for 30 days due to amendment to our agreement dated in December of 2020.

The line of credit is shown net of debt issuance costs of $57 thousand on the consolidated balance sheet for the year ended December 31, 2021.

The line of credit with Bank of America contains certain covenants which, among other things, require us to adhere to regular reporting requirements, abide by shareholder dividend limitations, maintain certain financial performance, and limit the amount of annual capital expenditures. 

The Bank of America Credit Agreement provides for, among other things, a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0, for the twelve months ending December 31, 2021 and each Fiscal Quarter end thereafter subject only during a trigger period commencing when our availability under our line is less than $2.0 million until availability is above that amount for 30 days.

The Company met the covenants for the period ended December 31, 2021.

The availability under the line is subject to borrowing base requirements, and advances are at the discretion of the lender.

At December 31, 2020 and 2019, we had unused availability under our line of credit of $8,131 and $4,148, respectively, supported by our borrowing base.

At December 31, 2021 and 2020, we had unused availability under our line of credit of $3.5 million and $8.1 million, respectively, supported by our borrowing base.

The line is secured by substantially all of our assets.

On April 15, 2020, we entered into a Promissory Note with Bank of America, N.A.

(the “Promissory Note”), which provides for an unsecured loan of $6,077 pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”) of which funds were received on April 22, 2020.

The Promissory Note has a term of 2 years with a 1% per annum interest rate.

Payments are deferred for 10 months after the end of the Promissory Note covered period (which is defined as 24 weeks after the date of the loan) and we can apply for forgiveness of the Promissory Note after 60 days.

Forgiveness of the Promissory Note will be determined in accordance with the provisions of the Cares Act and applicable regulations.

Any principal and interest amounts outstanding after the determination of amounts forgiven will be repaid on a monthly basis.

We expect that all or a significant portion of the Promissory Note will be forgiven;

we plan to apply for forgiveness in the second or third quarter of 2021 before the application deadline.

In the second quarter of 2019, our China operations entered into a line of credit arrangement with China Construction Bank which provides for a line of credit arrangement of 6,000,000 Renminbi (RMB) that will expire on April 3, 2021.

This line of credit bears an interest rate of 6% and we had no amounts outstanding as of December 31, 2020.

In the first quarter of 2022, we amended our credit agreement to include the Employee Retention Credit Receivable as security in our line of credit which improves our unused availability.

On April 15, 2020, we entered into a Promissory Note with Bank of America, N.A., which provides for an unsecured loan of $6.1 million pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”) of which funds were received on April 22, 2020.

The loan was accounted for as debt until November 3, 2021 when the $6.1 million loan and $0.1 million accrued interest was fully forgiven by the SBA.

As a result, we recorded a PPP loan forgiveness gain of $6.2 which is included in other income (expense) on the consolidated statements of operations and other comprehensive income (loss) for the year ended December 31, 2021.

Our China operation has a financing agreement with China Construction Bank which provides for a line of credit arrangement of 10,000,000 Renminbi (RMB) (approximately 1.6 million USD) that will expire on June 22, 2022.

This line of credit bears an interest rate of 4.5% and we had no amounts outstanding as of December 31, 2021 and 2020.

Cash flows for the years ended December 31, 2021 and 2020 are summarized as follows:

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Financing activities

Effect of exchange rate changes on cash

Net change in cash

Cash provided by operating activities for the year ended December 31, 2020 was $1.4 million and for the year ended December 31, 2019 was $1.0 million, both comprised primarily of net loss adjusted by the noncash add back of depreciation and amortization and other non-cash charges.

The year-over-year increase in cash provided by operating activities is due to the decrease in working capital driven by reduction of accounts receivable of $3.0 million.

Net cash provided by investing activities was $5.5 million for the year ended December 31, 2020 and net cash used in investing activities was $0.8 million for the year ended December 31, 2019, respectively.

Cash used in operating activities for the year ended December 31, 2021 was $4.6 million compared to cash provided by operations of $1.4 million for the year ended December 31, 2020.

Increases in working capital due to higher sales backlog as well as actions taken to address the global supply chain shortages drove the use of cash from operating activities, primarily increased inventories of $4.6 million.

Net cash used in investing activities was $0.7 million for the year ended December 31, 2021 and net cash provided by investing activities was $5.5 million for the year ended December 31, 2020, respectively.

Cash used in investing activities in 2021 relates primarily to the purchase of $1.3 million of property and equipment offset by the sale of $0.6 million of property and equipment related to the Merrifield plant closure.

Cash provided by investing activities in 2020 was due to the $6.0 million received from our sales leaseback transaction.

Net cash used in financing activities in 2020 and 2019 of $4.0 million and $0.5 million, respectively.

The cash used in 2020 consisted primarily of net the paydown of debt from in funds received from our sales leaseback.

Off-Balance Sheet Arrangements

We do not have any significant off-balance sheet arrangements.

Net cash provided by financing activities in 2021 of $3.9 million consisted primarily of increased borrowing on the line of credit of $5.7 million offset by payments on long-term debt and capital leases or $1.7 million.

The cash used of $3.8 million in 2020 consisted primarily of the paydown of debt from funds received from our sales leaseback.

Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

in Item 7, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

We may also make forward-looking statements in other reports filed with the SEC, in materials delivered to stockholders and in press releases.

Such statements generally will be accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “possible,” “potential,” “predict,” “project,” or other similar words that convey the uncertainty of future events or outcomes.

Such statements generally will be accompanied by words such as “anticipate,”

“believe,”

“estimate,”

“expect,”

“forecast,”

“intend,”

“possible,”

“potential,”

“predict,”

“project,”

or other similar words that convey the uncertainty of future events or outcomes.

Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate.

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The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by us.

Discussion of these factors is also incorporated in Part I, Item 1A, “Risk Factors,” and should be considered an integral part of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

Discussion of these factors is also incorporated in Part I, Item 1A, “Risk Factors,”

and should be considered an integral part of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

All forward-looking statements included in this Form 10-K are expressly qualified in their entirety by the forgoing cautionary statements.

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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-K

Item 5. Market for Registrant’s Common Equity