NSYS Nortech Systems Inc

Exhibit 10.1

SECOND AMENDMENT TO LEASE

This SECOND AMENDMENT TO LEASE (this "Second Amendment") is made and effective this 15th day of May, 2024 ("Effective Date"), by and between Sri Management and Consulting LLC, a Minnesota limited liability company, as management agent for the property owners ("Landlord") and Nortech Systems, Inc., a Minnesota corporation ("Tenant").

RECITALS:

WHEREAS, LSOP 3 MN 3, LLC, a Delaware limited liability company (as predecessor in interest to Landlord) and Tenant entered into that certain Lease Agreement dated April 1, 2015, the landlord’s interest in which was subsequently assigned to Landlord, and as amended by a First Amendment to Lease dated September 18, 2018 (collectively, as amended and assigned, the "Lease"), with respect to that certain premises known as Suite 150 and containing approximately 19,154 rentable square-feet of space (the "Premises") located in that certain building commonly known as the Meridian Business Center Building, 7550 Meridian Circle, Maple Grove, Minnesota (the "Building").

WHEREAS, the term of the Lease is scheduled to expire January 31, 2025, but Tenant desires to remain a tenant at the Building in a reduced size premises, and Landlord is willing to accommodate Tenant’s desire in accordance with the terms and contained herein.

WHEREAS, Landlord and Tenant desire to amend the Lease as more fully described herein.

NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements herein contained, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:

*Provided no uncured Event of Default then exists beyond any applicable notice and cure periods, Landlord shall abate Tenant’s Minimum Annual Rent for the first three (3) full calendar months of the Term (the “Conditional Rent”). To the extent that Conditional Rent is not abated because of an existing Event of Default, upon Tenant’s cure of such Event of Default, Tenant shall receive the benefit of the unabated portion of the Conditional Rent. Upon Landlord’s termination of this Lease as a result of the occurrence of an Event of Default at any time during the term of the Lease which remains uncured beyond any applicable notice and cure periods, in addition to any other remedies to which Landlord may be entitled, Landlord shall be entitled to recover the unamortized portion of the Conditional Rent, amortized on a straight-line basis over the final one hundred (100) months of the initial Term (i.e., the Conditional Rent shall not be deemed to have been abated, but shall become immediately due and payable as unpaid rent earned, but due at the time of such Event of Default), provided that such amount shall be deducted from any acceleration of rent by Landlord as a result of such Event of Default.

(h) Annual Operating Expenses. Tenant shall pay Tenant’s Share of estimated Operating Expenses on a monthly basis throughout the Term, as the same may be extended, and such payment shall be due on or before the first day of each calendar month. Landlord may adjust the amount of the estimated Operating Expenses to conform to actual Operating Expenses and Tenant shall be obligated to pay such adjusted actual Operating Expenses. As of the Effective Date, Operating Expenses are $6.75 per square foot of the Premises. Notwithstanding any provision in this Lease to the contrary, Tenant's liability for Tenant's Share of Operating Expenses (excluding Noncontrollable Expenses, it being understood that Tenant shall pay Tenant's Share of Noncontrollable Expenses) for each calendar year shall not exceed an amount which would result from Operating Expenses (excluding Noncontrollable Expenses on a Dollar per square foot basis) increasing four percent (4%) per calendar year during the Term on a cumulative basis, it being understood that such four percent (4%) cap will not apply to Noncontrollable Expenses. "Noncontrollable Expenses" shall mean Landlord's costs of insuring the Building and its interest therein, the cost of utilities, snow and ice removal for the Building, and taxes.

[Signature Page to Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed effective as of the Effective Date above written.

Exhibit 99.1

Nortech Systems Reports First Quarter Results

And Actions to Reduce Facility Costs

MINNEAPOLIS – May 16, 2024 -- Nortech Systems Incorporated (Nasdaq: NSYS) (“Nortech” or, the "Company"), a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, industrial and defense markets, reported first quarter ended March 31, 2024 financial results.

2024 Q1 Highlights:

Management Commentary

“We posted solid results in the first quarter of 2024 and continued to improve margins and manage expenses,” said Jay D. Miller, President and CEO of Nortech. “As a result, we are generating improved net income and EBITDA in the quarter as compared with the same quarter in 2023.”

“Our dedicated Nortech employees worldwide embody our corporate values, including teamwork, excellence, commitment, integrity and innovation,” Miller noted. “While we measure employee engagement success with a number of metrics, we are pleased to see continued high employee retention and high employee engagement. Most recently, 230 of our North American employees participated in the American Cancer Society “FIT2Be Cancer Free” challenge.”

“As we further look for opportunities to optimize our expense structure and plant capacity utilization, we are consolidating our Minnesota facilities. This morning we announced the decision to consolidate production of our wire and cable products for the Aerospace and Defense industry to our Bemidji, Minnesota facility. The shift in production is expected to be completed by the end of 2024, at which time the Company will close the Blue Earth, Minnesota facility. In the spirit of taking the best care of our employees as possible, all Blue Earth employees will be extended job offers at our other Minnesota facilities. We sincerely hope to keep them all.”

“Further, we are consolidating the square footage of our Maple Grove, Minnesota headquarters and engineering facility by almost 30 percent. This reduction reflects our current and future space needs which have been heavily influenced by the Company’s hybrid remote work arrangements.”

2024 First Quarter

In the first quarter of 2024, net sales totaled $34.2 million. This represents a 1.9% decrease from net sales of $34.9 million in the first quarter of 2023. For the first quarter, gross profit totaled $5.4 million, or 15.9% of net sales, compared with gross profit of $5.5 million, or 15.7%, in the prior year. First quarter 2024 operating expenses totaled $4.3 million, a 3.1% decrease from the prior year operating expenses of $4.4 million.

GAAP net income totaled $765 thousand, or $0.26 per diluted share, in the current quarter, up from GAAP net income of $681 thousand, or $0.23 per diluted share, in the same prior-year quarter. EBITDA totaled $1.637 million, a 5.1% increase from EBITDA of $1.558 million in the same prior-year quarter.

Conference Call

The Company will hold a live conference call and webcast at 3:00 p.m. central time on Wednesday, May 16, 2024, to discuss the Company's 2024 first quarter results. The call will be hosted by Jay D. Miller, Chief Executive Officer and President and Andrew D. C. LaFrence, Chief Financial Officer. To access the live audio conference call, US participants may call 888-506-0062 and international participants may call 973-528-0011. Participant Access Code: 945063. Participants may also access the call via webcast at: https://www.webcaster4.com/Webcast/Page/2814/50447.

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About Nortech Systems Incorporated 

Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies, and components. Nortech primarily serves the medical, aerospace & defense, and industrial markets. Its design services span concept development to commercial design, and include medical device, software, electrical, mechanical, and biomedical engineering. Its manufacturing and supply chain capabilities are vertically integrated around wire/cable/interconnect assemblies, printed circuit board assemblies, as well as system-level assembly, integration, and final test. Headquartered in Maple Grove, Minn., Nortech currently has seven manufacturing locations and design centers across the U.S., Latin America, and Asia. Nortech Systems is traded on the NASDAQ Stock Market under the symbol NSYS. Nortech's website is www.nortechsys.com.

Forward-Looking Statements 

This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 including without limitation statements regarding future financial results, expense management, effects of consolidation of our facilities, and continued high performance of personnel. While this release is based on management's best judgment and current expectations, actual results may differ materially from those expressed or implied and involve a number of risks and uncertainties. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: (1) commodity cost increases coupled with challenges in raising prices and/or customer pressure to reduce prices; (2) supply chain disruptions leading to shortages of critical components; (3) volatility in market conditions which may affect demand for the Company's products; (4) increased competition; (5) changes in the reliability and efficiency of operating facilities or those of third parties; (6) risks related to the availability of labor; (7) the unanticipated loss of any key member of senior management; (8) geopolitical, economic, financial and business conditions; (9) the Company's ability to steadily improve manufacturing output and product quality throughout the remainder of 2024 or (10) the impact of global health epidemics on our customers, employees, manufacturing facilities, suppliers, the capital markets and our financial condition. Some of the above-mentioned factors are described in further detail in the section entitled "Risk Factors" in our annual and quarterly reports, as applicable. You should assume the information appearing in this document is accurate only as of the date hereof, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since such date. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Reconciliation of Generally Accepted Accounting Principles (“GAAP”) Measures to Non-GAAP Financial Measure

EBITDA is a non-GAAP financial measure used by management that we believe provides useful information to investors because it reflects ongoing performance excluding certain non-recurring items during comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between different organizations as a result of differing capital structures and tax strategies. EBITDA is defined as net income (loss) plus interest expense, plus income tax expense plus depreciation expense and amortization expense. EBITDA should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. It is not a measurement of our financial performance under GAAP and should not be considered an alternative to revenue or net income, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. EBITDA has limitations as an analytical metric, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP.

There are no material adjustments to EBITDA in 2022 or 2023.

Adjustments to EBITDA in 2021 include ($ in thousands):

Contact

Andrew D. C. LaFrence
Chief Financial Officer and Senior Vice President of Finance
alafrence@nortechsys.com

952-345-2243

Grafico Azioni Nortech Systems (NASDAQ:NSYS)
Storico
Da Dic 2024 a Gen 2025

Grafico Azioni Nortech Systems (NASDAQ:NSYS)
Storico
Da Gen 2024 a Gen 2025