Blonder Tongue Laboratories, Inc.

Good morning, ladies and gentlemen, and welcome to the Blondertongue Laboratory's first quarter 2022 earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Ted Grau. Sir, the floor is yours.

Thank you. Hi. Good morning, everyone, and thank you for joining us this morning and participating in Blondertongue Laboratory's 2022 First quarter earnings call. I'm Ted Grau, President and Chief Executive Officer of the company. As we give our remarks this morning, we will be discussing certain subjects that will contain forward-looking statements, including the management's view of our prospects and evolving trends in the market. As you know, the future is all but impossible to predict, so I caution you that actual results may differ materially from those that may be projected in our comments. We would ask you to refer to our prior SEC filings, including our Form 10-K for the years 2019, 2020, and 2021, and our filed Form 10-Qs for the four quarters of 2020, for the four quarters of 2021, and for the first quarter of 2022. Each of those filings include additional detailed information concerning factors that could cause actual results to differ from the information discussed this morning. With me today is Eric Skolnick, our Chief Financial Officer and Senior Vice President. Eric's remarks will follow mine and will cover our detailed financial results. All of us will be available to answer questions you may have during a Q&A session immediately following our prepared remarks. In the first quarter of 2022, Blonderton Laboratories had a net loss of $1,154,000 compared with a net loss of $414,000 for the first quarter of 2021. Beginning in late January, the company experienced delays and disruptions in the supply of several specific semiconductors that are required to produce a portion of our product lines. We responded during the quarter to these disruptions in several ways. First, with engineering work to adapt the most effective product lines to use alternative parts that remain available. Changes we made to those products in February and March to work around scarce parts completed during April and all of the company's product lines are or will be back in production during April and May. We are seeing a general improvement in the semiconductor supply chain situation overall, but continue to have new disruptions and delays in areas that had not been previously affected. The company also implemented additional operational expense reductions in the form of staff and compensation reductions services and in a range of other areas comparing q1 of 2022 to the fourth quarter of 2021 the company reduced its operating expenses by 187 000 from these actions while maintaining its production capacity research and development and new product development capabilities through the first quarter the company saw continued steady demand for a broad range of our products with strongest demand in our latest, highest technology video encoding, video transcoding, NXG IP video signal processing platform, and DOCSIS high-speed data delivery product lines. In our DOCSIS product lines, we are seeing particular growing interest in our DOCSIS 3.1 latest generation multi-gigabit data delivery product from our customers in the recovery and hospitality market segment. During the first quarter, the company implemented additional targeted product price increases in order to compensate for several specific chipset cost increases through the same period. Again, we are seeing a general improvement in the overall supply chain situation, and this has included better stability in the pricing situation compared with the environment that we saw in Q3 and Q4 of 2021. We are and will continue to deal with exceptional increases as needed. Overall, the company's backlog for our products remains strong at over $10 million at the end of Q1. On the product side of the business, the TiVo partnership and TiVo-specific NXG platform configuration that we announced during the first quarter of 2022 began shipping to operators during the quarter, and we began shipping higher quantities of our Drake PEG Plus video encoders to large cable and telco operators this year. as many of them continue the process of converting their nationwide network infrastructures to an all IP television technology set. We have been growing our backlog of that product at several operators as they have standardized on using the Drake PEG Plus for their video backhaul requirements. We also recently announced a new two-channel version of the Drake Peg Plus with updated technology and new features targeting the video backhaul and IP television network conversion trends. And demand remains strong for our Clearview product lines within the DirecTV dealer and distributor markets. The company's biggest challenges have remained consistent over the last eight months, managing unexpected and in some cases last-minute raw material availability problems, while at the same time working to take advantage of growing demand in the marketplace. Now I would like to pass the call over to Eric Skolnick, our Chief Financial Officer, to cover our detailed financial results. Eric?

Thanks, Ted. Our net sales increased $90,000, or 2.8%, to $3,341,000 for the first quarter of 2022 from $3,251,000 for the comparable period in 2021. Net loss for the three months ended March 31, 2022 was a loss of $1,154,000 or a $0.09 loss per share compared to a loss of $414,000 or a loss of $0.04 per share for the comparable period in 2021. The increase in sales is primarily attributable to an increase in sales of DOCSIS data products, encoder-transcoder products, digital modulation products, and NXG IP video signal processing products offset by a decrease in sales of CPE products, coax distribution products, and analog modulation products. Sales of DOCSIS data products were $454,000 and $24,000. Encoder transcoder product sales were $1,518,000 and $1,167,000. Sales of digital modulation products were $377,000 and $121,000. NXG product sales were $501,000 and $421,000. TPE product sales were $27,000 and $695,000. Coax distribution product sales were $129,000 and $353,000. And analog modulation product sales were $99,000 and $244,000 in the first three months of 2022 and 2021, respectively. The company experienced a reduction in CPE products due to the continued de-emphasis of this product line, which the company expects to continue during the remainder of 2022. The company experienced an increase in DOCSIS data products due to the pent-up demand caused by the pandemic as these products are used primarily in the hospitality and assisted living environments. The company expects sales of these products to may return to more historical levels during 2022. The company experienced a reduction in analog modulation products due to the continued market shifting away from analog modulation solutions. The company experienced a reduction in coax distribution products due to the reduced demand for legacy products. The company expects the sales of the analog modulation and coax distribution products to continue to decline during 2022. The company experienced an increase in encoder-transcoder products and NXG IP video signal processing products as these product lines represent newer products and newer technologies with higher demand from customers. The company expects sales of these product lines to remain at these levels or increase during the remainder of 2022. Although the company does not expect overall sales to return to pre-pandemic levels during 2022, the company does expect overall sales to be higher during 2022 due to the approximate increase $10,194,000 of sales backlog as of March 31, 2022. The company's primary sources of liquidity have been its existing cash balances, cash generated from operations, amounts available under our mid-cap facility, and amounts available under the subordinate loan facility. As of March 31, 2022, the company had approximately $2,180,000 outstanding under the mid-cap facility and $243,000 of additional availability for borrowing under the same facility. As disclosed in our most recent annual report on Form 10-K, the company experienced a decline in sales, a reduction in working capital, a loss from operations, and cash used in operating activities in conjunction with liquidity constraints. These factors raise substantial doubt about our ability to continue as a going concern. As of March 31, 2022, those factors still exist. Accordingly, there still exists substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of the liabilities that might be necessary should the company be unable to continue as a going concern. Now I'd like to open up the call to the question and answer session.