PARK AEROSPACE CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES.   (a)    Disclosure Controls and Procedures.   The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of February 27, 2022, the end of the fiscal year covered by this annual report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such fiscal year, the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.   (b)    Management’s Annual Report on Internal Control Over Financial Reporting.   Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is 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 in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.   Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   Management assessed the effectiveness of the Company’s internal control over financial reporting as of February 27, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013) . Based on management’s assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of February 27, 2022.   63     (c)    Changes in Internal Control Over Financial Reporting.   There has not been any change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter of the fiscal year to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.   ITEM 9B. OTHER INFORMATION.   None.   64     PART III   ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.   The information called for by this Item (except for information as to the Company's executive officers, which information appears elsewhere in this Report) is incorporated by reference to the Company's definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.   ITEM 11. EXECUTIVE COMPENSATION.   The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.   The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.   The information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.   ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.   This information called for by this Item is incorporated by reference to the Company's definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.   65     PART IV   ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES       Page (a) Documents filed as a part of this Report:             (1) Consolidated Financial Statements:               The following Consolidated Financial Statements of the Company are included in Part II, Item 8:               Report of Independent Registered Public Accounting Firm (PCAOB ID 596 )   37           Consolidated Balance Sheets   38           Consolidated Statements of Operations   39           Consolidated Statements of Comprehensive Earnings   40           Consolidated Statements of Shareholders' Equity   41           Consolidated Statements of Cash Flows   42           Notes to Consolidated Financial Statements (1-15)   43         (2) Financial Statement Schedule:               The following additional information should be read in conjunction with the Consolidated Financial Statements of the Registrant described in Item 15(a)(1) above:               Schedule II – Valuation and Qualifying Accounts   67           All other schedules have been omitted because they are not applicable or not required, or the information is included elsewhere in the financial statements or notes thereto.             (3) Exhibits:               The information required by this Item relating to Exhibits to this Report is included in the Exhibit Index beginning on page 71 hereof.           ITEM 16. FORM 10-K SUMMARY   Not Applicable   66       PARK AEROSPACE CORP. AND SUBSIDIARIES   SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS               Column C                   Column A   Column B     Additions     Column D     Column E                                             Description   Balance at Beginning of Period     Costs and Expenses     Other     Reductions     Balance at End of Period                                             DEFERRED INCOME TAX ASSET VALUATION ALLOWANCE:                                                                                   52 weeks ended February 27, 2022   $ 3,587,000     $ -     $ -     $ -     $ 3,587,000   52 weeks ended February 28, 2021   $ 3,175,000     $ 412,000     $ -     $ -     $ 3,587,000   52 weeks ended March 1, 2020   $ 2,755,000     $ 420,000     $ -     $ -     $ 3,175,000                             Column D           Column A   Column B     Column C     Other     Column E                                             Description   Balance at Beginning of Period     Charged to Cost and Expenses     Accounts Written Off (A)     Translation Adjustment     Balance at End of Period                                             ALLOWANCE FOR DOUBTFUL ACCOUNTS:                                                                                   52 weeks ended February 27, 2022   $ 89,000     $ 15,000     $ -     $ -     $ 104,000   52 weeks ended February 28, 2021   $ 73,000     $ 16,000     $ -     $ -     $ 89,000   52 weeks ended March 1, 2020   $ 32,000     $ 41,000     $ -     $ -     $ 73,000     (A)   Uncollectible amounts, net of recoveries   67       EXHIBIT INDEX   Exhibit Numbers Description     3.1 Restated Certificate of Incorporation, dated March 28, 1989, filed with the Secretary of State of the State of New York on April 10, 1989, as amended by Certificate of Amendment of the Certificate of Incorporation, increasing the number of authorized shares of Common stock from 15,000,000 to 30,000,000 shares, dated July 12, 1995, filed with the Secretary of State of the State of New York on July 17, 1995, and by Certificate of Amendment of the Certificate of Incorporation, amending certain provisions relating to the rights, preferences and limitations of the shares of a series of Preferred Stock, dated August 7, 1995, filed with the Secretary of State of the State of New York on August 16, 1995 (Reference is made to Exhibit 3.01 of the Company's Annual Report on Form 10-K for the fiscal year ended March 3, 2002, Commission File No. 1-4415, which is incorporated herein by reference.)     3.2 Certificate of Amendment of the Certificate of Incorporation, increasing the number of authorized shares of Common Stock from 30,000,000 to 60,000,000 shares, dated October 10, 2000, filed with the Secretary of State of the State of New York on October 11, 2000 (Reference is made to Exhibit 3.02 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 2, 2003, Commission File No. 1-4415, which is incorporated herein by reference.)     3.3 Certificate of Amendment of the Certificate of Incorporation, changing the name of the Company from “Park Electrochemical Corp.” to “Park Aerospace Corp.” filed with the New York Department of State on July 16, 2019 (Reference is made to Exhibit 3.1 of the Company’s Current Report on Form 8-K dated July 22, 2019 Commission File No. 1-4415, which is incorporated herein by reference.)     3.4 By-Laws, amended and restated as of July 16, 2019 (Reference is made to Exhibit 3.2 of the Company’s Current Report on Form 8-K dated July 22, 2019 Commission File No. 1-4415, which is incorporated herein by reference.)     10.3 Forms of Incentive Stock Option Contract for employees, Non-Qualified Stock Option Contract for employees and Non-Qualified Stock Option Contract for directors under the 2002 Stock Option Plan of the Company (Reference is made to Exhibit 10.10 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2005, Commission File No.1-4415, which is incorporated herein by reference.)     10.4 2018 Stock Option Plan of the Company (Reference is made to Exhibit 99.1 of the Company’s Current Report on Form 8-K dated July 30, 2018, Commission File No. 1-4415, which is incorporated herein by reference. This exhibit is a management contract or compensatory plan or arrangement.)   68     Exhibit Numbers Description     10.5 Forms of Incentive Stock Option Contract for employees, Non-Qualified Stock Option Contract for employees and Non-Qualified Stock Option Contract for directors under the 2018 Stock Option Plan of the Company (Reference is made to Exhibit 10.1 and 10.2 of the Company’s Current Report on Form 8-K dated April 30, 2019, Commission File No. 1-4415, which is incorporated herein by reference.)     14.1 Code of Ethics for Chief Executive Officer and Senior Financial Officers adopted on May 6, 2004 (Reference is made to Exhibit 14.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, Commission File No. 1-4415, which is incorporated herein by reference.)     21.1 Subsidiaries of the Company     23.1 Consent of Independent Registered Public Accounting Firm     31.1 Certification of principal executive officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)     31.2 Certification of principal financial officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)     32.1 Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002     32.2 Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     101 The following materials from the Company’s Annual Report on Form 10-K for the year ended February 27, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at February 27, 2022 and February 28, 2021, (ii) Consolidated Statements of Operations for the years ended February 27, 2022, February 28, 2021 and March 1, 2020, (iii) Consolidated Statements of Comprehensive Earnings for the years ended February 27, 2022, February 28, 2021 and March 1, 2020, (iv) Consolidated Statements of Shareholders’ Equity for the years ended February 27, 2022, February 28, 2021 and March 1, 2020 and (v) Consolidated Statements of Cash Flows for the years ended February 27, 2022, February 28, 2021 and March 1, 2020 .*+     104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)       * Filed electronically herewith.   + Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.           69     SIGNATURES     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   Date:  May 12, 2022   PARK AEROSPACE CORP.         By: /s/ Brian E. Shore     Brian E. Shore, Chief Executive Officer   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.   Signature Title Date       /s/ Brian E. Shore Brian E. Shore Chairman of the Board, Chief Executive Officer and Director (principal executive officer) May 12, 2022       /s/ P. Matthew Farabaugh P. Matthew Farabaugh Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) May 12, 2022       /s/ Dale Blanchfield Dale Blanchfield Director May 12, 2022             /s/ Emily J. Groehl Emily J. Groehl Director May 12, 2022             /s/ Yvonne Julian Yvonne Julian Director May 12, 2022             /s/ Carl W. Smith Carl W. Smith Director May 12, 2022             /s/ D. Bradley Thress D. Bradley Thress Director May 12, 2022             /s/ Steven T. Warshaw Steven T. Warshaw Director May 12, 2022     70