Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended March 31,
2018
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
transition period from _________ to _________
Commission
file number 001-32644
RELM WIRELESS CORPORATION
(Exact
name of registrant as specified in its charter)
|
Nevada
|
59-3486297
|
|
State
or other jurisdiction of incorporation or
organization
|
(I.R.S.
Employer Identification
No.)
|
7100 Technology Drive
West Melbourne, Florida 32904
(Address
of principal executive offices and Zip Code)
Registrant’s
telephone number, including area code: (321) 984-1414
Indicate by check
mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes
☑ No ☐
Indicate by check
mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☑ No
☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
|
Large
accelerated filer
|
☐
|
Accelerated
filer
|
☐
|
|
Non-accelerated
filer
|
☐
|
(Do not
check if a smaller reporting company)
|
|
|
Smaller
reporting company
|
☑
|
Emerging
growth company
|
☐
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ☐ No
☑
There
were 13,844,584 shares of common stock, $0.60 par value, of the
registrant outstanding at May 1, 2018.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
RELM WIRELESS CORPORATION
Condensed Consolidated Balance Sheets
(In
thousands, except share data)
|
|
|
|
|
|
|
|
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ASSETS
|
|
|
|
|
|
|
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Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$8,058
|
$7,147
|
|
Available-for-sale-securities
|
—
|
9,184
|
|
Trade accounts
receivable, net
|
7,708
|
5,524
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|
Inventories,
net
|
15,318
|
14,358
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|
Prepaid expenses
and other current assets
|
760
|
772
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|
Total current
assets
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31,844
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36,985
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,151
|
2,201
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|
Investment in
securities
|
3,036
|
—
|
|
Deferred tax
assets, net
|
3,423
|
3,317
|
|
Other
assets
|
273
|
298
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Total
assets
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$40,727
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$42,801
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|
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
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Current
liabilities:
|
|
|
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Accounts
payable
|
$4,855
|
$5,971
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|
Accrued
compensation and related taxes
|
1,288
|
1,364
|
|
Accrued warranty
expense
|
1,447
|
1,389
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|
Accrued other
expenses and other current liabilities
|
956
|
1,159
|
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Dividends
payable
|
271
|
273
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Deferred
revenue
|
166
|
157
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Total current
liabilities
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8,983
|
10,313
|
|
|
|
|
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Deferred
revenue
|
753
|
481
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Total
liabilities
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$9,736
|
$10,794
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Commitments and
contingencies
|
|
|
|
Stockholders’
equity:
|
|
|
|
Preferred stock;
$1.00 par value; 1,000,000 authorized shares; none issued or
outstanding
|
—
|
—
|
|
Common stock; $.60
par value; 20,000,000 authorized shares; 13,844,584 issued and
outstanding shares at March 31, 2018 and December 31, 2017,
respectively
|
8,307
|
8,307
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Additional paid-in
capital
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25,697
|
25,642
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Accumulated
deficit
|
(1,846)
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(5,450)
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Accumulated other
comprehensive income
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—
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4,318
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|
Treasury stock, at
cost, 285,514 and 192,094 shares at March 31, 2018 and December 31,
2017, respectively
|
(1,167)
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(810)
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Total
stockholders’ equity
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30,991
|
32,007
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Total liabilities
and stockholders’ equity
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$40,727
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$42,801
|
See notes to condensed consolidated financial
statements.
RELM WIRELESS CORPORATION
Condensed Consolidated Statements of Operations
(In
thousands, except share and per share data) (Unaudited)
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|
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Sales,
net
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$11,746
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$7,380
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Expenses
|
|
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Cost of
products
|
6,909
|
5,143
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Selling, general
and administrative
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4,089
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3,443
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Total
expenses
|
10,998
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8,586
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|
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Operating income
(loss)
|
748
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(1,206)
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|
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Other income
(expense):
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Interest
income
|
17
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8
|
|
Loss
on investment in securities
|
(1,146)
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—
|
|
Loss
on disposal of property, plant and equipment
|
—
|
(104)
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|
Other
expense
|
(168)
|
(87)
|
|
Total
other
|
(1,297)
|
(183)
|
|
|
|
|
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Loss before
taxes
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(549)
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(1,389)
|
|
|
|
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Income tax
benefit
|
106
|
121
|
|
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Net
loss
|
$(443)
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$(1,268)
|
|
|
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Net loss per
share-basic
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$(0.03)
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$(0.09)
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Net loss per
share-diluted
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$(0.03)
|
$(0.09)
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Weighted average
shares outstanding-basic
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13,754,119
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13,734,053
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Weighted average
shares outstanding-diluted
|
13,754,119
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13,734,053
|
See
notes to condensed consolidated financial statements.
RELM
WIRELESS CORPORATION
Condensed Consolidated Statements of Comprehensive
Income
(In
thousands) (Unaudited)
|
|
|
|
|
|
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Net
loss
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$(443)
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$(1,268)
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Unrealized gain on
available-for-sale securities, net of tax
|
—
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2,059
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Total comprehensive
(loss) income
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$(443)
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$791
|
See notes to condensed consolidated financial
statements.
RELM WIRELESS CORPORATION
Condensed Consolidated Statements of Cash Flows
(In
thousands) (Unaudited)
|
|
|
|
|
|
|
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Operating
activities
|
|
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Net
loss
|
$(443)
|
$(1,268)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
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Inventories
allowances
|
(31)
|
33
|
|
Deferred
tax benefit
|
(106)
|
(121)
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|
Depreciation and
amortization
|
211
|
229
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Share-based
and stock compensation expense
|
21
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2
|
|
Restricted
stock unit compensation expense
|
34
|
—
|
|
Loss
on investment in securities
|
1,146
|
—
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|
Loss
on disposal of property, plant and equipment
|
—
|
104
|
|
Changes in
operating assets and liabilities:
|
|
|
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Trade accounts
receivable
|
(2,184)
|
160
|
|
Inventories
|
(929)
|
(785)
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|
Prepaid expenses
and other current assets
|
12
|
368
|
|
Other
assets
|
7
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(5)
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Accounts
payable
|
(1,116)
|
673
|
|
Accrued
compensation and related taxes
|
(76)
|
(912)
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|
Accrued warranty
expense
|
58
|
196
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Deferred
revenue
|
281
|
(24)
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Accrued other
expenses and other current liabilities
|
(203)
|
233
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|
Net
cash used in operating activities
|
(3,318)
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(1,117)
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|
|
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Investing
activities
|
|
|
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Purchases of
property, plant and equipment
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(143)
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(319)
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Investment in
securities
|
(3,333)
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—
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Proceeds from sale
of available-for-sale securities
|
8,335
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—
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Net
cash provided by (used in) investing activities
|
4,859
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(319)
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Financing
activities
|
|
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Proceeds from
issuance of common stock
|
—
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183
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Cash dividends
declared and paid
|
(273)
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(1,235)
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Repurchase of
common stock
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(357)
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(97)
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Cash
used in financing activities
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(630)
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(1,149)
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Net change in cash
and cash equivalents
|
911
|
(2,585)
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Cash and cash
equivalents, beginning of period
|
7,147
|
10,910
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Cash and cash
equivalents, end of period
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$8,058
|
$8,325
|
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Supplemental
disclosure
|
|
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Cash paid for
interest
|
$—
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$—
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Income tax
paid
|
$—
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$—
|
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Non-cash
financing activity
|
|
|
|
Cashless exercise
of stock options and related conversion of net shares to
stockholders’ equity
|
$—
|
$27
|
See notes to condensed consolidated financial
statements.
RELM WIRELESS CORPORATION
Notes to Condensed Consolidated Financial Statements
Unaudited
(in thousands, except share and per share data and
percentages)
1.
Condensed
Consolidated Financial Statements
Basis of Presentation
The
condensed consolidated balance sheets as of March 31, 2018, the
condensed consolidated statements of operations and comprehensive
income for the three months ended March 31, 2018 and 2017 and the
condensed consolidated statements of cash flows for the three
months ended March 31, 2018 and 2017 have been prepared by RELM
Wireless Corporation (the “Company”), and are
unaudited. In the opinion of management, all adjustments, which
include normal recurring adjustments, necessary for a fair
presentation have been made. The condensed consolidated balance
sheet at December 31, 2017 has been derived from the
Company’s audited consolidated financial statements at that
date.
Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S.
GAAP”) have been condensed or omitted. It is suggested that
these condensed consolidated financial statements be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2017, as filed with the
Securities and Exchange Commission. The results of operations for
the three months ended March 31, 2018 are not necessarily
indicative of the operating results for a full year.
Principles of Consolidation
The
Company consolidates entities in which it has a controlling
financial interest. The Company determines whether it has a
controlling financial interest in an entity by first evaluating
whether the entity is a variable interest entity ("VIE") or a
voting interest entity.
VIEs
are entities in which (i) the total equity investment at risk is
not sufficient to enable the entity to finance its activities
independently or (ii) the at-risk equity holders do not have the
normal characteristics of a controlling financial interest. A
controlling financial interest in a VIE is present when an
enterprise has one or more variable interests that have both (i)
the power to direct the activities of the VIE that most
significantly impact the VIE's economic performance and (ii) the
obligation to absorb losses of the VIE or the right to receive
benefits from the VIE that could potentially be significant to the
VIE. The enterprise with a controlling financial interest is the
primary beneficiary and consolidates the VIE.
Voting
interest entities lack one or more of the characteristics of a VIE.
The usual condition for a controlling financial interest is
ownership of a majority voting interest for a corporation or a
majority of kick-out or participating rights for a limited
partnership.
When
the Company does not have a controlling financial interest in an
entity but exerts significant influence over the entity's operating
and financial policies (generally defined as owning a voting or
economic interest of between 20 percent to 50 percent), the
Company's investment is accounted for under the equity method of
accounting. If the Company does not have a controlling financial
interest in, or exert significant influence over, an entity, the
Company accounts for its investment at fair value, if the fair
value option was elected, or at cost.
The
Company has an investment in 1347 Property Insurance Holdings,
Inc., made through FGI 1347 Holdings, LP, a consolidated
VIE.
Fair Value
The
Company’s financial instruments consist of cash and cash
equivalents, trade accounts receivable and investment in
securities, accounts payable, accrued expenses and other
liabilities. As of March 31, 2018 and December 31, 2017, the
carrying amount of cash and cash equivalents, trade accounts
receivable, accounts payable, accrued expenses and other
liabilities approximated their respective fair value due to the
short-term nature and maturity of these instruments.
The
Company uses observable market data or assumptions (Level 1 inputs
as defined in accounting guidance) that it believes market
participants would use in pricing the investment in securities.
There were no transfers of investment
in securities between Level 1 and Level 2 during the three months
ended March 31, 2018.
Available-For-Sale Securities
Investments
reported on the December 31, 2017 balance sheet consisted of
marketable equity securities of a publicly held company. As of
December 31, 2017, the investment cost was $2,402. On January 1,
2018, the Company adopted Accounting Standards Update
(“ASU”) 2016-01 “Financial Instruments,”
which amended the guidance in U.S. GAAP regarding the
classification and measurement of financial instruments. Changes to
the prior guidance primarily affected the accounting for equity
investments, financial liabilities under the fair value option and
the presentation and disclosure requirements for financial
instruments. In addition, the ASU clarified guidance related to the
valuation allowance assessment when recognizing deferred tax assets
resulting from unrealized losses on available-for-sale debt
securities. Upon its adoption, the Company applied the amendments
by means of a cumulative-effect adjustment to the balance sheet at
the beginning of the first reporting period in which the guidance
was effective. On January 1, 2018, the Company recognized
approximately $4,300 of net unrealized gain in its accumulated
deficit balance. During the three months ended March 31, 2018, the
Company sold 1,317,503 shares of Iteris, Inc. (Nasdaq: ITI), which
cost $2,402, for approximately $8,335 of proceeds and reported a
loss on the sales of approximately $849.
Other Comprehensive Income
Other
comprehensive income consists of net income and unrealized gain on
available-for-sale securities, net of taxes.
Recent Accounting Pronouncements
In May
2014, the Financial Accounting Standards Board (“FASB”)
issued ASU 2014-09 on “Revenue from Contracts with
Customers,” which provides for a single, principles-based
model for revenue recognition and replaces the existing revenue
recognition guidance. In August 2015, the FASB issued ASU 2015-14,
which delays the effective date of ASU 2014-09 by one year. The
guidance is effective for annual and interim periods beginning on
or after December 15, 2017, and replaces most existing revenue
recognition guidance under U.S. GAAP. This ASU requires additional
disclosures about the nature, amount, timing and uncertainty of
revenue and cash flows arising from customer contracts, including
significant judgements and estimates and changes in those
estimates. It permits the use of either a modified retrospective or
cumulative effect transition method. The Company adopted ASU
2014-09 in the first quarter of 2018 and applied the modified
retrospective approach. Because the Company’s primary source
of revenues is from shipments of products, the adoption of this new
guidance did not have any impact on its consolidated financial
statements and related disclosures.
In
January 2016, the FASB issued ASU 2016-01 “Financial
Instruments,” which amends the guidance in U.S. GAAP on the
classification and measurement of financial instruments. Changes to
the current guidance primarily affect the accounting for equity
investments, financial liabilities under the fair value option, and
the presentation and disclosure requirements for financial
instruments. In addition, the ASU clarifies guidance related to the
valuation allowance assessment when recognizing deferred tax assets
resulting from unrealized losses on available-for-sale debt
securities. The new standard is effective for fiscal years and
interim periods beginning after December 15, 2017, and upon
adoption, an entity should apply the amendments by means of a
cumulative-effect adjustment to the balance sheet at the beginning
of the first reporting period in which the guidance is effective.
Early adoption is not permitted, except for the provision to record
fair value changes for financial liabilities under the fair value
option resulting from instrument-specific credit risk in other
comprehensive income. The Company adopted the new guidance, which
had a material impact on its retained earnings, as the Company
reclassified approximately $4,300 of unrealized gain on investment
securities that was previously classified in other comprehensive
income.
In
February 2016, the FASB issued ASU 2016-02, “Leases,”
which amends leasing guidance by requiring companies to recognize a
right-of-use asset and a lease liability for all operating and
capital (finance) leases with lease terms greater than twelve
months. The lease liability will be equal to the present value of
lease payments. The lease asset will be based on the lease
liability, subject to adjustment, such as for initial direct costs.
For income statement purposes, leases will continue to be
classified as operating or capital (finance), with lease expense in
both cases calculated substantially the same as under the prior
leasing guidance. The updated guidance is effective for interim and
annual periods beginning after December 15, 2018, with early
adoption permitted. The Company
expects this will result in the recognition of right-of-use assets
and lease liabilities not currently recorded on the consolidated
financial statements under existing accounting guidance, but the
Company is still evaluating all the Company’s contractual
arrangements and the impact that adoption of ASU 2016-02 will have
on the Company’s consolidated financial
statements.
The
Company does not discuss recent pronouncements that are not
anticipated to have an impact on or are unrelated to its financial
condition, results of operations, cash flows or
disclosures.
2.
Significant
Events and Transactions
Pursuant to the
Company’s capital return program, the Company’s Board
of Directors declared a quarterly dividend of $0.02 per share of
the Company’s common stock on March 14, 2018 to stockholders
of record as of April 2, 2018. These dividends were paid on April
16, 2018.
On
February 8, 2018, the Company announced that it received a purchase
order totaling approximately $2,000 from Alberta Health Services
for P-25 800MHz portable and mobile radios with accessories. The
order was fulfilled in the first quarter of 2018.
On
February 13, 2018, the Company announced that it received orders
totaling approximately $1,500 from the U.S. Forest Service. The
orders were for RELM’s KNG-Series Digital P-25 portable and
mobile radios with accessories and were fulfilled in the first
quarter of 2018.
3.
Allowance
for Doubtful Accounts
The
allowance for doubtful accounts on trade receivables was
approximately $50 on gross trade receivables of $7,758 and $5,574
at March 31, 2018 and December 31, 2017, respectively. This
allowance is used to state trade receivables at a net realizable
value or the amount that the Company estimates will be collected of
the Company’s gross trade receivables.
The
components of inventories, net of allowances for slow-moving,
excess or obsolete inventory, consist of the
following:
|
|
|
|
|
Finished
goods
|
$2,234
|
$2,825
|
|
Work in
process
|
8,780
|
7,111
|
|
Raw
materials
|
4,304
|
4,422
|
|
|
$15,318
|
$14,358
|
Allowances for
slow-moving, excess, or obsolete inventory are used to state the
Company’s inventories at the lower of cost or net realizable
value. The allowances were approximately $758 at March 31, 2018,
compared with approximately $789 at December 31, 2017.
Income
tax benefit totaling approximately $106 has been recorded for the
three months ended March 31, 2018, compared with $121 for the same
period last year.
As of
March 31, 2018 and December 31, 2017, the Company’s net
deferred tax assets totaled approximately $3,423 and $3,317,
respectively, and are primarily composed of net operating loss
carryforwards (“NOLs”) and research and development
costs and tax credits. As of March 31, 2018, these NOLs total
approximately $6,921 for federal and $13,903 for state purposes,
with expirations starting in 2018 through 2030.
In
order to fully utilize the net deferred tax assets, the Company
will need to generate sufficient taxable income in future years to
utilize its NOLs prior to their expiration. The Company analyzes
all positive and negative evidence to determine if, based on the
weight of available evidence, the Company is more likely than not
to realize the benefit of the net deferred tax assets. The
recognition of the net deferred tax assets and related tax benefits
is based upon the Company’s conclusions regarding, among
other considerations, estimates of future earnings based on
information currently available, current and anticipated customers,
contracts and product introductions, as well as historical
operating results and certain tax planning strategies.
Based
on management’s analysis of all available evidence, both
positive and negative, the Company’s management has concluded
that the Company does not have the ability to generate sufficient
taxable income in the necessary period to utilize the entire
benefit for the deferred tax asset. Management estimated that as of
March 31, 2018, it is more likely than not that approximately $64
of the Company’s deferred tax asset will not be realized due
to the inability to generate sufficient Florida taxable income in
the necessary period to fully utilize its Florida NOLs. The Company
cannot presently estimate what, if any, changes to the valuation of
its deferred tax assets may be deemed appropriate in the future. If
the Company incurs future losses, it may be necessary to record
additional valuation allowance related to the deferred tax assets
recognized as of March 31, 2018.
6.
Investment
in Securities
The
Company has an investment in a limited partnership, FGI 1347
Holdings, LP, of which the Company is the sole limited partner. FGI
1347 Holdings, LP, was established for the purpose of investing in
securities.
As
of March 31, 2018, the Company indirectly held approximately $667
in cash and 424,572 shares of 1347 Property Insurance Holdings,
Inc. (Nasdaq: PIH) with fair value of $3,036, through an investment
in FGI 1347 Holdings, LP. These shares were purchased in March 2018
for approximately $3,333. For the first quarter of 2018, the
Company recognized an unrealized loss on the investment of
approximately $297.
Affiliates of
Fundamental Global Investors, LLC serve as the general partner and
the investment manager of FGI 1347 Holdings, LP, and the Company is
the sole limited partner. As of March 31, 2018, the Company and the
affiliates of Fundamental Global Investors, LLC, including without
limitation Ballantyne Strong, Inc., beneficially owned in the
aggregate 2,576,652 shares of PIH’s common stock,
representing approximately 43.1% of PIH’s outstanding shares.
Fundamental Global with its affiliates is the largest stockholder
of the Company. Mr. Kyle Cerminara, Chairman of the Company’s
Board of Directors, is Chief Executive Officer, Co-Founder and
Partner of Fundamental Global Investors, LLC and serves as Chief
Executive Officer and Chairman of the Board of Directors of
Ballantyne Strong. Mr. Lewis M. Johnson, a director of the Company,
is President, Co-Founder and Partner of Fundamental Global
Investors, LLC and serves as a director of Ballantyne Strong.
Messrs. Cerminara and Johnson also serve on the Board of Directors
of PIH.
The
changes in consolidated stockholders’ equity for the three
months ended March 31, 2018 are as follows:
|
|
|
|
Additional
Paid-In Capital
|
|
Other
Comprehensive
Income
|
|
|
|
Balance at December
31, 2017
|
13,844,584
|
$8,307
|
$25,642
|
$(5,450)
|
$4,318
|
$(810)
|
$32,007
|
|
Share-based
compensation expense
|
—
|
—
|
21
|
—
|
—
|
—
|
21
|
|
Restricted stock
unit compensation expense
|
—
|
—
|
34
|
—
|
—
|
—
|
34
|
|
Dividends
declared
|
—
|
—
|
—
|
(271)
|
—
|
—
|
(271)
|
|
Net
Loss
|
—
|
—
|
—
|
(443)
|
—
|
—
|
(443)
|
|
Effect of adoption
of ASU 2016-01
|
—
|
—
|
—
|
4,318
|
(4,318)
|
—
|
—
|
|
Repurchase of
common stock
|
—
|
—
|
—
|
—
|
—
|
(357)
|
(357)
|
|
Balance at March
31, 2018
|
13,844,584
|
$8,307
|
$25,697
|
$(1,846)
|
$—
|
$(1,167)
|
$30,991
|
The
following table sets forth the computation of basic and diluted
income per share:
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
Net loss (numerator
for basic and diluted earnings per share)
|
$(443)
|
$(1,268)
|
|
Denominator:
|
|
|
|
Denominator for
basic earnings per share weighted average shares
|
13,754,119
|
13,734,053
|
|
Effect
of dilutive securities:
|
|
|
|
Options and
restricted stock units
|
—
|
—
|
|
Denominator:
|
|
|
|
Denominator for
diluted earnings per share weighted average shares
|
13,754,119
|
13,734,053
|
|
Basic
loss per share
|
$(0.03)
|
$(0.09)
|
|
Diluted
loss per share
|
$(0.03)
|
$(0.09)
|
Approximately
438,500 stock options and 30,570 restricted stock units for the
three months ended March 31, 2018, and 106,000 stock options and
zero restricted stock units granted for the three months ended
March 31, 2017, were excluded from the calculation because they
were anti-dilutive.
9.
Non-Cash
Share-Based Employee Compensation
The
Company has an employee and non-employee director share-based
incentive compensation plan. Related to these programs, the Company
recorded non-cash share-based employee compensation expense of $21
for the three months ended March 31, 2018, compared with $2 for the
same period last year. The Company considers its non-cash
share-based employee compensation expenses as a component of cost
of products and selling, general and administrative expenses. There
was no non-cash share-based employee compensation expense
capitalized as part of capital expenditures or inventory for the
periods presented.
The
Company uses the Black-Scholes-Merton option valuation model to
calculate the fair value of a stock option grant. The non-cash
share-based employee compensation expense recorded in the three
months ended March 31, 2018 was calculated using certain
assumptions. Such assumptions are described more comprehensively in
Note 10 (Share-Based Employee Compensation) of the Company’s
consolidated financial statements included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2017.
A
summary of activity under the Company’s stock option plans
during the three months ended March 31, 2018 is presented
below:
|
As
of January 1, 2018
|
|
Wgt.
Avg.
Exercise
Price
($)
Per
Share
|
Wgt.
Avg.
Remaining
Contractual
Life
(Years)
|
Wgt.
Avg.
Grant
Date
Fair Value
($)
Per
Share
|
Aggregate
Intrinsic
Value
($)
|
|
Outstanding
|
354,500
|
4.46
|
—
|
1.79
|
—
|
|
Vested
|
113,000
|
3.75
|
—
|
2.23
|
—
|
|
Nonvested
|
241,500
|
4.80
|
—
|
1.58
|
—
|
|
|
|
|
|
|
|
|
Period
activity
|
|
|
|
|
|
|
Issued
|
90,000
|
3.75
|
—
|
1.64
|
—
|
|
Exercised
|
—
|
—
|
—
|
—
|
—
|
|
Forfeited
|
6,000
|
5.10
|
—
|
1.37
|
—
|
|
Expired
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
As
of March 31, 2018
|
|
|
|
|
|
|
Outstanding
|
438,500
|
4.31
|
7.66
|
1.76
|
64,260
|
|
Vested
|
146,500
|
4.04
|
4.27
|
2.04
|
45,540
|
|
Nonvested
|
292,000
|
4.44
|
9.36
|
1.62
|
18,720
|
Restricted Stock Units
On June
15, 2017, the Company granted to each non-employee director
restricted stock units with a grant fair value of $20 per award,
which will vest on June 15, 2018, subject to continued service
through such vesting date.
10.
Commitments
and Contingencies
From
time to time the Company may be involved in various claims and
legal actions arising in the ordinary course of its business. On
March 28, 2017, The Sales Group, Inc. (“TSG”) filed a
lawsuit in the U.S. District Court for the Central District of
California against the Company. TSG was a sales representative of
the Company that the Company terminated in March 2017. TSG asserted
claims against the Company for alleged breach of oral contract,
violation of the California and Arizona sales representative
statutes and an accounting of alleged unpaid sales commissions.
TSG’s complaint sought damages in the amount of $6,090 for
alleged unpaid past and future sales commissions. On April 3, 2017,
counsel for TSG sent the Company a letter outlining additional
alleged grounds for recovery against the Company and offering to
settle the litigation in exchange for the continued payment of
sales commissions to TSG for a negotiated period, a buyout of
TSG’s alleged rights for a negotiated sum or reinstatement of
TSG for a period of at least 2.5 years with commission rates equal
to those in effect at the time of TSG’s termination. The
matter was mediated on November 14, 2017, during which the parties
agreed to a settlement. On December 19, 2017, the Company entered
into a settlement agreement with TSG, pursuant to which TSG agreed
to dismiss with prejudice its lawsuit filed against the Company.
Pursuant to the settlement agreement, the Company agreed to pay an
amount of $900 to TSG on or before December 31, 2017. The Company
also agreed to pay to TSG commissions, at the rates in effect since
February 7, 2013, on all orders for the Company’s products
received and accepted by the Company from the states of Arizona,
California, Nevada and Hawaii from January 1, 2018 through December
31, 2018, other than for (i) sales of the Company’s products
to federal government agencies and offices, (ii) sales of the
Company’s products to other end-users, excepting state and
local government agencies and offices, and (iii) sales of parts or
service, including warranty service. In addition, if at any time on
or before December 31, 2018, the Company completes a
change-in-control transaction, then the Company will pay to TSG an
amount equal to $2,000, less the amount of commissions paid by the
Company with respect to 2018, as described above. The settlement
agreement settled all claims raised by TSG in its lawsuit against
the Company. In December 2017, the Company recorded an estimated
commission amount of approximately $536. As of March 31, 2018, the
Company has paid $149 in commissions to TSG for the three months
ended March 31, 2018.
Purchase Commitments
As of
March 31, 2018, the Company had purchase orders to suppliers for
inventory of approximately $4,494.
Significant Customers
Sales
to the United States government agencies represented approximately
$3,993 (34.0%) of the Company’s total gross sales for the
three months ended March 31, 2018, compared with approximately
$2,917 (39.5%) for the same period last year. Accounts receivable
from agencies of the United States government were $1,928 as of
March 31, 2018, compared with approximately $1,180 at the same date
last year.
The
Company has a secured revolving credit facility with Silicon Valley
Bank with maximum borrowing availability of $1,000 (subject to a
borrowing base) and a maturity date of December 26, 2018. As of
March 31, 2018, the Company was in compliance with all covenants
under the loan and security agreement, as amended, governing this
revolving credit facility. For a description of such covenants and
the other terms and conditions of the loan and security agreement,
as amended, reference is made to Note 5 (Debt) of the
Company’s consolidated financial statements included in its
Annual Report on Form 10-K for the fiscal year ended December 31,
2017. As of March 31, 2018, there were no borrowings outstanding
under the revolving credit facility and there was $1,000 of
borrowing available under the revolving credit
facility.
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SPECIAL NOTE CONCERNING
FORWARD-LOOKING STATEMENTS
We
believe that it is important to communicate our future expectations
to our security holders and to the public. This report, therefore,
contains statements about future events and expectations which are
“forward-looking statements” within the meaning of
Sections 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including the statements about our
plans, objectives, expectations and prospects. You can expect to
identify these statements by forward-looking words such as
“may,” “might,” “could,”
“would,” “will,” “anticipate,”
“believe,” “plan,” “estimate,”
“project,” “expect,” “intend,”
“seek” and other similar expressions. Any statement
contained in this report that is not a statement of historical fact
may be deemed to be a forward-looking statement. Although we
believe that the plans, objectives, expectations and prospects
reflected in or suggested by our forward-looking statements are
reasonable, those statements involve risks, uncertainties and other
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by these
forward-looking statements, and we can give no assurance that our
plans, objectives, expectations and prospects will be
achieved.
Important factors
that might cause our actual results to differ materially from the
results contemplated by the forward-looking statements are
contained in the “Risk Factors” section of and
elsewhere in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2017 and in our subsequent filings with the
Securities and Exchange Commission, and include, among others, the
following:
●
changes or advances
in technology;
●
the success of our
land mobile radio product line;
●
successful
introduction of new products and technologies;
●
competition in the
land mobile radio industry;
●
general economic
and business conditions, including federal, state and local
government budget deficits and spending limitations;
●
the availability,
terms and deployment of capital;
●
reliance on
contract manufacturers and suppliers;
●
heavy reliance on
sales to agencies of the United States government;
●
our ability to
utilize deferred tax assets;
●
retention of
executive officers and key personnel;
●
our ability to
manage our growth;
●
our ability to
identify potential candidates for, and consummate, acquisition or
investment transactions, and risks incumbent to being a
noncontrolling interest stockholder in a corporation;
●
impact of our
capital allocation strategy;
●
our business with
manufacturers located in other countries;
●
our inventory and
debt levels;
●
protection of our
intellectual property rights;
●
fluctuation in our
operating results;
●
acts of war or
terrorism, natural disasters and other catastrophic
events;
●
any infringement
claims;
●
data security
breaches and other factors impacting our technology
systems;
●
availability of
adequate insurance coverage;
●
maintenance of our
NYSE American listing; and
●
the effect on our
stock price and ability to raise equity capital of future sales of
shares of our common stock.
We
assume no obligation to publicly update or revise any
forward-looking statements made in this report, whether as a result
of new information, future events, changes in assumptions or
otherwise, after the date of this report. Readers are cautioned not
to place undue reliance on these forward-looking
statements.
Reported dollar
amounts in the management’s discussion and analysis
(“MD&A”) are disclosed in millions or as whole
dollar amounts.
The
following discussion and analysis should be read in conjunction
with our condensed consolidated financial statements and notes
thereto appearing elsewhere in this report and the MD&A,
consolidated financial statements and notes thereto appearing in
our Annual Report on Form 10-K for the fiscal year ended December
31, 2017.
Executive Overview
We
design, manufacture and market two-way land mobile radios,
repeaters, base stations and related components and
subsystems.
Two-way
land mobile radios can be hand-held (portable) or installed in
vehicles (mobile). Repeaters expand the range of two-way land
mobile radios, enabling them to operate over a wider area. Base
station components and subsystems are installed at radio
transmitter sites to improve performance by enhancing the signal
and reducing or eliminating signal interference and enabling the
use of one antenna for both transmission and reception. We
incorporate both analog and digital technologies in our products.
Our digital technology is compliant with the Project 25 standard of
the Association of Public-Safety Communications Officials
(“APCO Project 25,” or “P-25”). Later in
2018, we plan to introduce the first model in our line of
multi-band products to complement our existing KNG products. We
conduct business under the names RELM Wireless Corporation and BK
Technologies and offer products under two brand names: BK Radio and
RELM. Generally, BK Radio-branded products serve the government and
public safety market, while RELM-branded products serve the
business and industrial market.
First Quarter Summary
Our
financial and operating results for the first quarter of 2018
improved in comparison with last year’s first quarter. Sales
grew more than 59% from the first quarter last year, while gross
profit margins increased, and we generated operating income, versus
an operating loss for the first quarter last year. During the first
quarter, we recognized investment and exchange rate losses, which
more than offset operating income.
For the
first quarter of 2018, our sales increased 59.2% to approximately
$11.7 million, compared with approximately $7.4 million for the
same quarter last year. Sales of P-25 digital products for the
first quarter of 2018 totaled approximately $9.1 million (77.0% of
total sales), compared with approximately $5.5 million (74.3% of
total sales) for the first quarter last year.
Gross
profit margins as a percentage of sales for the first quarter ended
March 31, 2018 totaled approximately 41.2%, compared with 30.3% for
the first quarter last year.
For the
first quarter ended March 31, 2018, selling, general and
administrative expenses (“SG&A”) totaled
approximately $4.1 million (34.8% of sales), compared with
approximately $3.4 million (46.7% of sales) for the same quarter
last year.
For the
first quarter of 2018, we recognized a loss on the sale of
securities totaling approximately $849,000, and an unrealized loss
totaling $297,000 on our investment in 1347 Property Insurance
Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated
variable interest entity. No comparable losses were incurred for
the same period last year. During the first quarter of 2018, we
also incurred other expense totaling approximately $168,000,
primarily from foreign exchange losses.
The
pretax loss for the three months ended March 31, 2018, totaled
approximately $549,000, compared with approximately $1.4 million
for the same quarter last year.
For the
three months ended March 31, 2018, we recognized an income tax
benefit totaling approximately $106,000, compared with $121,000 for
the same quarter last year. Our income tax benefit is largely
non-cash due to our NOLs.
Net
loss for the three months ended March 31, 2018 was approximately
$443,000 ($0.03 per basic and diluted share), compared with
approximately $1.3 million ($0.09 per basic and diluted share) for
the same quarter last year.
As of
March 31, 2018, working capital totaled approximately $22.9
million, of which approximately $15.8 million was comprised of
cash, cash equivalents and trade receivables. As of December 31,
2017, working capital totaled approximately $26.7 million, of which
approximately $12.7 million was comprised of cash, cash equivalents
and trade receivables.
Results of Operations
As an
aid to understanding our operating results for the periods covered
by this report, the following table shows selected items from our
condensed consolidated statements of operations expressed as a
percentage of sales:
|
|
Percentage of
Sales Three Months Ended
|
|
|
|
|
|
|
|
|
|
Sales
|
100.0%
|
100.0%
|
|
Cost of
products
|
(58.8)
|
(69.7)
|
|
Gross
margin
|
41.2
|
30.3
|
|
Selling, general
and administrative expenses
|
(34.8)
|
(46.7)
|
|
Other
expense
|
(11.1)
|
(2.4)
|
|
Pretax
loss
|
(4.7)
|
(18.8)
|
|
Income tax
benefit
|
0.9
|
1.6
|
|
Net
loss
|
(3.8)%
|
(17.2)%
|
Net Sales
For the
first quarter ended March 31, 2018, net sales totaled approximately
$11.7 million, compared with approximately $7.4 million for the
same quarter last year. Sales of P-25 digital products for the
quarter totaled approximately $9.1 million (77.0% of total sales),
compared with approximately $5.5 million (74.3% of total sales) for
the same quarter last year.
The
increase in total sales and sales of digital products for the first
quarter of 2018 was attributed primarily to demand from federal and
international public safety customers. These sales were
supplemented by orders from certain state agencies. Our funnel of
sales prospects is encouraging and includes a broad range of
prospective new customers. We are continuing to expand our sales
resources to maximize potential sales growth.
Cost of Products and Gross Profit Margin
Gross
profit margin as a percentage of sales for the first quarter ended
March 31, 2018 was 41.2%, compared with 30.3% for the same quarter
last year.
Our
cost of products and gross profit margin are derived primarily from
material, labor and overhead costs, product mix, manufacturing
volumes and pricing. The improvement in gross profit margins for
the first quarter of 2018 was attributed primarily to the mix of
product sales, which was more heavily weighted toward higher margin
products. Also, programs initiated last year to improve our
efficiencies and quality favorably impacted product costs.
Comparatively, last year’s first quarter included expenses
related to a product enhancement and the discontinuation of a
product development initiative.
We
continue to utilize contract manufacturing relationships for
production efficiencies and to manage material and labor costs. We
anticipate that our current contract manufacturing relationships or
comparable alternatives will be available to us in the future. We
may encounter product cost and competitive pricing pressures in the
future. However, the extent of their impact on gross margins, if
any, is uncertain.
Selling, General and Administrative Expenses
SG&A expenses
consist of marketing, sales, commissions, engineering, product
development, management information systems, accounting,
headquarters and non-cash share-based employee compensation
expenses.
SG&A expenses
for the first quarter of 2018 totaled approximately $4.1 million,
or 34.8% of sales, compared with approximately $3.4 million, or
46.7% of sales, for the first quarter last year.
Engineering and
product development expenses for the first quarter of 2018 totaled
approximately $1.8 million (15.3% of total sales), compared with
$1.0 million (12.9% of total sales) for the same quarter last year.
The increase in engineering expenses was driven by costs related to
new product development.
Marketing and
selling expenses for the first quarter of 2018 totaled
approximately $1.2 million (10.4% of sales), compared with
approximately $1.3 million (17.9% of sales) for the first quarter
last year. The decrease in marketing and selling expenses was
attributed primarily to costs incurred last year associated with
rebranding, which were partially offset by increased commissions
and incentive compensation directly related to sales
performance.
General
and administrative expenses for the first quarter of 2018 totaled
approximately $1.1 million (9.0% of total sales), compared with
approximately $1.2 million (15.8% of total sales) for the same
quarter last year. The decrease was attributed primarily to
one-time costs incurred last year related to changes in senior
leadership.
Operating Income (Loss)
Operating income
for the first quarter ended March 31, 2018 totaled approximately
$748,000 (6.4% of sales), compared with a loss of approximately
$1.2 million (16.3% of sales) for the same quarter last year. The
increase in operating income for the quarter was attributed
primarily to sales growth and improved gross profit margins, which
were partially offset by increased product development
expenses.
Other Income (Expense)
We
realized net interest income of $17,000 for the first quarter ended
March 31, 2018, compared with $8,000 for the first quarter last
year. Interest income increased as a result of our higher cash
balance. Interest expense may be incurred from time to time on
outstanding borrowings under our revolving credit facility and earn
interest income on our cash balances. The interest rate on such
revolving credit facility as of March 31, 2018 was the Wall Street Journal prime rate plus 25
basis points (5.00% as of March 31, 2018).
During
the first quarter ended March 31, 2018, we sold 1,317,503 shares of
Iteris, Inc., which cost approximately $2.4 million, for
approximately $8.3 million, and recognized a loss of approximately
$849,000. Also, in March 2018, we indirectly purchased 424,572 shares of common stock of 1347 Property
Insurance Holdings, Inc. (Nasdaq: PIH), through an investment in
FGI 1347 Holdings, LP, a consolidated variable interest entity of
which we are the sole limited partner. These shares were purchased
for approximately $3.3 million, and we recognized an unrealized
loss on the investment in the first quarter of 2018 of
approximately $297,000.
For the
first quarter of 2018, we recognized an exchange loss of
approximately $164,000 related to sales under a Canadian
dollar-denominated contract, compared with an exchange loss of
approximately $74,000 for the first quarter last year. Also during
last year’s first quarter, we recorded a non-recurring loss
of approximately $104,000 on the disposal of assets related to a
discontinued product initiative.
Income Taxes
We
recorded an income tax benefit of approximately $106,000 for the
first quarter ended March 31, 2018, compared with approximately
$121,000 for the same quarter last year.
As of
March 31, 2018, our net deferred tax assets totaled approximately
$3.4 million, and are primarily composed of NOLs. These NOLs
total $6.9 million for federal and $13.9 million for state
purposes, with expirations starting in 2018 through
2030.
In
order to fully utilize the net deferred tax assets, we will need to
generate sufficient taxable income in future years to utilize our
NOLs prior to their expiration. We analyze all positive and
negative evidence to determine if, based on the weight of available
evidence, we are more likely than not to realize the benefit of the
net deferred tax assets. The recognition of the net deferred tax
assets and related tax benefits is based upon our conclusions
regarding, among other considerations, estimates of future earnings
based on information currently available and current and
anticipated customers, contracts and product introductions, as well
as historical operating results and certain tax planning
strategies.
Based
on our analysis of all available evidence, both positive and
negative, we have concluded that we do not have the ability to
generate sufficient taxable income in the necessary period to
utilize the entire benefit for the deferred tax asset. Management
asserts that it is more likely than not that approximately $64,000
of the deferred tax asset will not be realized due to the inability
to generate sufficient Florida taxable income in the necessary
period to fully utilize the Florida NOLs. We cannot presently
estimate what, if any, changes to the valuation of our deferred tax
assets may be deemed appropriate in the future. If we incur future
losses, it may be necessary to record additional valuation
allowance related to the deferred tax assets recognized as of March
31, 2018.
Liquidity and Capital Resources
For the
first quarter ended March 31, 2018, net cash used in operating
activities totaled approximately $3.3 million, compared with
approximately $1.1 million for the same period last year.
Cash used in operating activities was primarily related to net
loss, trade accounts receivable, accounts payable, inventories and
a loss on investment in securities, partially offset by
depreciation and amortization and deferred revenue.
For the
first quarter ended March 31, 2018, we had a net loss of
approximately $443,000, compared with a net loss of approximately
$1.3 million for the first quarter last year. Accounts receivable
increased approximately $2.2 million during the three months ended
March 31, 2018, compared to a decrease of $160,000 for the same
period last year, reflecting sales that were consummated later in
the quarter that had not yet completed their collection cycle.
Accounts payable for the three months ended March 31, 2018,
decreased approximately $1.1 million, compared with an increase of
approximately $673,000 for the same period last year, primarily due
to payments to material suppliers. Net inventories increased during
the three months ended March 31, 2018 by approximately $929,000,
compared with $785,000 for the same period last year, primarily as
a result of purchases of materials. Depreciation and amortization
totaled approximately $211,000 for the three months ended March 31,
2018, compared with approximately $229,000 for the same period last
year.
Cash
provided by investing activities for the first quarter ended March
31, 2018 totaled approximately $4.9 million, which was primarily
related to proceeds from the sale of available-for-sale securities
totaling approximately $8.3 million, partially offset by an
investment of approximately $3.3 million in FGI 1347 Holdings, LP,
and purchases of equipment totaling approximately $143,000. For the
same period last year, approximately $319,000 was used for the
purchase of manufacturing and engineering equipment.
For the
first quarter ended March 31, 2018, approximately $630,000 was used
in financing activities, primarily related to our capital return
program, which included quarterly dividends totaling approximately
$273,000 and stock repurchases totaling approximately $357,000. For
the same period last year, approximately $1.2 million was used to
pay dividends and approximately $97,000 was used for stock
repurchases. For the same period last year, we also received
approximately $183,000 provided by the issuance of common stock
upon the exercise of stock options.
We have
a secured revolving credit facility with Silicon Valley Bank with
maximum borrowing availability of $1.0 million and a maturity date
of December 26, 2018. As of March 31, 2018, and the date of this
report, we were in compliance with all covenants under the loan and
security agreement, as amended, governing the revolving credit
facility. For a description of such covenants and the other terms
and conditions of the loan and security agreement, as amended,
reference is made to Note 5 (Debt) of our consolidated financial
statements included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2017.
As of
March 31, 2018, and the date of this report, there were no
borrowings outstanding under the revolving credit facility. As of
March 31, 2018, and the date of this report, there was $1.0 million
of borrowing available under the revolving credit
facility.
Our
cash and cash equivalents balance at March 31, 2018 was
approximately $8.1 million. We believe these funds combined
with anticipated cash generated from operations and borrowing
availability under our revolving credit facility are sufficient to
meet our working capital requirements for the foreseeable future.
However, financial and economic conditions could limit our access
to credit and impair our ability to raise capital, if needed, on
acceptable terms or at all. We also face other risks that could
impact our business, liquidity and financial condition. For a
description of these risks, see “Item 1A. Risk Factors”
set forth in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2017.
Critical Accounting Policies
In
response to the SEC’s financial reporting release, FR-60,
Cautionary Advice Regarding Disclosure About Critical Accounting
Policies, we have selected for disclosure our revenue recognition
process and our accounting processes involving significant
judgments, estimates and assumptions. These processes affect
our reported revenues and current assets and are, therefore,
critical in assessing our financial and operating status. We
regularly evaluate these processes in preparing our financial
statements. The processes for revenue recognition, allowance
for collection of trade receivables, allowance for excess or
obsolete inventory, software development and income taxes involve
certain assumptions and estimates that we believe to be reasonable
under present facts and circumstances. These estimates and
assumptions, if incorrect, could adversely impact our operations
and financial position. There were no changes to our critical
accounting policies during the quarter ended March 31, 2018, as
described in Item 7 of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2017.
Item 4. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our
President (who serves as our principal executive officer) and Chief
Financial Officer (who serves as our principal financial and
accounting officer) have evaluated the effectiveness of our
disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e)
and 15d-15(e)) as of March 31, 2018. Based on this evaluation, they
have concluded that our disclosure controls and procedures were
effective as of March 31, 2018.
Changes in Internal Control over Financial Reporting
During
the three months ended March 31, 2018, there were no changes in our
internal control over financial reporting identified in connection
with the evaluation required by paragraph (d) of Securities
Exchange Act Rules 13a-15 or 15d-15 that have materially affected,
or are reasonably likely to materially affect, our internal control
over financial reporting.
PART II-OTHER INFORMATION
Item 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
|
|
Total Number of Shares Purchased
|
Average
Price Paid Per Share (1)
|
Total Number of Shares Purchased as Part of Publicly Announced
Plans or Programs (2)
|
Maximum Number of
Shares that May Yet Be Purchased Under Publicly Announced Plans or
Programs (2)
|
|
01/01/18-01/31/18
|
41,698
|
$3.81
|
41,698
|
766,408(2)
|
|
02/01/18-02/28/18
|
17,331
|
$3.69
|
17,331
|
749,077
|
|
03/01/18-03/31/18
|
34,391
|
$3.91
|
34,391
|
714,686
|
|
Total
|
93,420
|
$3.80
|
93,420
|
|
(1)
Average price paid
per share of common stock repurchased is the executed price,
including commissions paid to brokers.
(2)
The Company has a
repurchase program of up to 1 million shares of the Company’s
common stock that can be purchased, from time to time, pursuant to
a stock repurchase plan in conformity with the provisions of Rule
10b5-1 and Rule 10b-18 promulgated under the Exchange Act. The
repurchase program has no termination date.
Item 6. EXHIBITS
Exhibits required
to be filed by Item 601 of Regulation S-K are listed in the Exhibit
Index below.
Exhibit Index
|
Exhibit Number
|
|
Description
|
|
|
|
|
|
|
|
Articles
of Incorporation(1)
|
|
|
|
Certificate
of Amendment to Articles of Incorporation(2)
|
|
|
|
Amended
and Restated By-Laws(3)
|
|
|
|
Amendment
to By-Laws, dated December 9, 2015(4)
|
|
|
|
Seventh
Amendment to Loan and Security Agreement, dated as of January 8,
2018 and effective as of December 27, 2017, by and among Silicon
Valley Bank, RELM Wireless Corporation and RELM Communications,
Inc.(5)
|
|
|
|
Certification
Pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification
Pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item
601(b) (32) of Regulation S-K)
|
|
|
|
Certification
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item
601(b) (32) of Regulation S-K)
|
|
Exhibit
101.INS
|
|
XBRL
Instance Document
|
|
Exhibit
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document
|
|
Exhibit
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
Exhibit
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
|
Exhibit
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
Exhibit
101.DEF
|
|
XBRL
Taxonomy Definition Linkbase Document
|
(1)
Incorporated by
reference from Exhibit 3(i) to the Company’s Annual Report on
Form 10-K for the year ended December 31, 1997.
(2)
Incorporated by
reference from Exhibit 10.3 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2001.
(3)
Incorporated by
reference from Exhibit 3(iii) to the Company’s Current Report
on Form 8-K filed May 29, 2013.
(4)
Incorporated by
reference from Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed December 10, 2015.
(5)
Incorporated
by reference from Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed January 9, 2018.
SIGNATURES
Pursuant to the
requirements 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.
|
|
RELM WIRELESS CORPORATION
|
|
|
(The “Registrant”)
|
|
|
|
|
Date:
May 9, 2018
|
By:/s/
Timothy A.
Vitou
|
|
|
Timothy
A. Vitou
President
(Principal
executive officer and duly
authorized
officer)
|
|
|
|
|
Date:
May 9, 2018
|
By:/s/
William P.
Kelly
|
|
|
William
P. Kelly
Executive Vice
President and
Chief
Financial Officer
(Principal
financial and accounting
officer
and duly authorized officer)
|