Management's discussion and analysis is provided as supplement to, and is intended to be read in conjunction with, the Company's audited financial statements and the accompanying integral notes ("Notes") thereto. The following statements may be forward-looking in nature and actual results may differ materially.
RESULTS OF OPERATIONS
GENERAL: We specialize in the manufacturing and development of data radio products. The Company offers product lines which provide innovative communication solutions for applications not served by existing conventional communication systems. We offer product lines in markets for process automation in commercial, industrial and government arenas domestically as well as internationally. We market our products through direct sales, sales representatives, and domestic, as well as foreign, resellers. Operations are sustained solely from revenues received through sales of its products and services.
As a result of COVID-19, and governmental responses thereto, are experiencing some negative impacts to our business, primarily as a result of reductions in staffing by our customers, and their customers, which is lengthening our normal sales cycles. Many of our customers are also restricting visits from vendors. All of our planned trade shows and sales presentations have been canceled or postponed as a result of the risks associated with face to face meetings. We have utilized various platforms to provide current customers and potential customers with presentations about our products and services. We have also experienced some delays in our supply chain but none of these COVID-19 related disruptions, to the supply chain, has been significant at this point.
FISCAL YEAR 2021 vs. FISCAL YEAR 2020
GROSS REVENUES: Total revenues for the fiscal year 2021 were
Interest revenues during 2021 decreased to
As of
COST OF SALES: Cost of Sales, as a percentage of net sales, was 49.2% and 49.7% respectively, for 2021 and 2020. Cost of Sales variances are the result of differences in the product mix sold and occurrences of obsolete inventory expense, as well as differences in the price discounting structure for the mix of products sold during the period.
INVENTORY: The Company's year-end inventory values for 2021 and 2020 were as follows: 2021 2020 Parts$ 92,751 $ 99,303 Work in progress 171,705 275,230 Finished goods 237,377 257,174 TOTAL$ 501,833 $ 631,707
The Company's objective is to maintain inventory levels as low as possible to provide maximum cash liquidity, while at the same time meet production and delivery requirements.
10
OPERATING EXPENSES: Operating expenses increased to
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues and expenses resulted in net income of
The Company's current asset to current liability ratio at
The Company believes the level of risk associated with customer receipts on export sales is minimal. Foreign shipments are made only after payment has been received or on Net 30 day credit terms to established foreign companies with which the Company has distributor relationships. Foreign orders are generally filled as soon as they are received therefore; foreign exchange rate fluctuations do not impact the Company.
Inventories at
We had capital expenditures
As of
We had no off-balance sheet arrangements for the year ended
Inflation had minimal adverse effect on the Company's operations during 2021. Minimal adverse effect is anticipated during 2022.
FORWARD LOOKING STATEMENTS: The above discussion may contain forward-looking
statements that involve a number of risks and uncertainties. These factors are
more fully described in the "Risk Factors" section of Item 1A of this Annual
Report on Form 10-K. In addition to the factors discussed above, among other
factors that could cause actual results to differ materially are the following:
competitive factors such as rival wireless architectures and price pressures;
availability of third party component products at reasonable prices; inventory
risks due to shifts in market demand and/or price erosion of purchased
components; change in product mix, rapid advances in competing technologies and
risk factors that are listed in the Company's reports filed with the
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