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spk01: Good day, ladies and gentlemen, and welcome to the Blonder Tongue Laboratory's second quarter 2022 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for 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.
spk04: Hi. Good morning, everyone, and thank you for joining us this morning and participating in Blonder Tongue Laboratory's second quarter 2022 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 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, the four quarters of 2021, the first quarter of 2022, and our upcoming second quarter 2022 10-Q as well. Each of those filings include additional detailed information concerning factors that could cause actual results to differ from the information we are discussing 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. Both of us will also be available to answer questions that you may have during the Q&A session immediately following our prepared remarks. In the second quarter of 2022, Blonderton Laboratories had a net loss of $1,154,000 due primarily to continued semiconductor supply chain shortages and disruptions and raw material cost increases. The company continued the work that we have discussed in last quarter's earnings call, including further planning for future operating expense reductions and focusing our engineering activities on rapid responses when parts supplies are disrupted or delayed. Our efforts in engineering resulted in a number of products being able to go back into production within approximately six, eight, or even ten weeks of unexpected chipset delivery problems. We've accomplished those projects by changing our product designs to use semiconductor parts that remain available and designing out parts that are not available in the short term. Dealing with raw material cost increases, we have continued to raise product pricing on impacted product lines, but we also continue to see a time delay in the realization of those price increases as we end up delivering products against backlog that was booked in the past at previous pricing. The company saw continued healthy demand for our products during Q2, with the strongest demand coming from our NXG IP video processing products, our Clearview IP encoders and transcoders, and our DOCSIS CMTS high-speed data delivery product. We were also able to produce our BIDA indoor broadband amplifier product line again during late Q2 after a long delay due to parts availability. On the sales and product fronts, Blonderton Laboratories has been taking advantage of the return of in-person trade shows where we've been able to demonstrate our new products and technologies recently. This has included a new version of our Clearview IP video encoder that allows large tier one cable operators to create locally produced channels on their network, onsite, at apartment buildings, hotels, campuses, and other small and medium business locations without having to carry that content back to their central offices or national operation centers. We've also recently began shipping a HD SDI video format input function for our NXG IP video platform that expands the usable market of that product line, the NXG product line, to broadcasters, TV studios, and some industrial users such as the cruise ship industry. As I mentioned last quarter, the demand has remained strong for our Clearview IP video transcoder product line in the direct TV dealer and distributor networks. The company's biggest challenges have continued to be those that we've discussed in the last three quarterly earnings calls. managing last-minute raw material availability, including shortages and allocation issues, while at the same time working to take advantage of growing demand in the marketplace. And second, managing raw materials costs that have put stress on our product gross margins and therefore impacting our operating margins by extension. We do expect to see some relief in the near future on product gross margins, potentially increasing on a few important but we do not want to predict any specific larger-scale supply chain recovery until we actually see the dynamics and the availability and the parts pricing begin to change across the board, which we have not seen happen yet. Now I would like to pass the call over to Eric Skolnick, our Chief Financial Officer, to cover our detailed financial results. Eric?
spk05: Thank you, Ted. Our net sales decreased $104,000 or 2.4% to $4,234,000 for the second quarter of 2022 from $4,338,000 for the comparable period in 2021. That loss for the three months ended June 30th, 2022 was $1,154,000 or a loss of 9 cents per share diluted share compared to a net income of $1,626,000 or 11 cents per diluted share for the comparable period in 2021. The decrease in sales is primarily attributed to a decrease in sales of digital modulation products, CPE products, and analog modulation products, offset by an increase in sales of DOCSIS data products and encoder-transcoder products. Sales of digital modulation products were $45,381, TPE products were $0 and $288,000. Analog modulation products were $138,000 and $238,000. DOCSIS data products were $686,000 and $284,000. And encoder transcoder products were $2,163,000 and $1,940,000 in the second 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 a reduction in analog modulation products due to the continued market shift away from analog modulation solutions. The company expects the sales of the analog modulation products to continue to decline during the second half 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 may return to more historical levels during the second half of 2022. The company experienced an increase in encoder-transcoder 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 second half 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 approximately $9,783,000 of sales backlog at June 30, 2022. The six months ended June 30, 2022, net sales decreased $14,000 or 0.2% to $7,575,000 in 2021 from excuse me, from 2022 from the $7,589,000 from the comparable period in 2021. Net loss for the six months ended June 30th, 2022 was $2,307,000 or 17 cent loss per diluted share compared to net income of $1,212,000 or 8 cents per diluted share for the comparable period in 2021. The decrease in sales is primarily attributed to a decrease in sales of CPE products, analog modulation products, and coax distribution products offset by an increase in sales of DOCSIS data products and encoder-transcoder products. Sales of CP products were $27,000 and $983,000. Analog modulation products were $237,000 and $482,000. Coax distribution products were $620,000 and $783,000. DOCSIS data products were $1,140,000 and $308,000, and encoder-transcoder products were $3,681,000 and $3,107,000 in the first six months of 2022 and 2021, respectively. The company experienced, as I mentioned earlier, a reduction in our CPE products due to the continued de-emphasis of the product line, and as I said earlier, we do expect that to remain the rest of 2022. We also, as I said earlier, experienced a reduction in our analog modulation products due to the continued market shifting away from the analog modulation solutions, and we do expect the sales of these products to continue to decline in 2022. We do expect that 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. and the company does expect sales of these products to return to more historical levels during the second half of 2022. The company experienced an increase in encoder-transcoder products. As I said earlier, these products represent newer products and newer technologies with higher demand from customers. We expect the sales of these product lines to remain at these levels or increase during the second half of 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 our subordinated loan facility. As of June 30, 2022, the company had approximately $3,918,000 outstanding under the mid-cap facility and $389,000 of additional availability for borrowing under the mid-cap 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 net cash used in operating activities in conjunction with liquidity constraints. These factors raise substantial doubt about the company's ability to continue as a going concern. As of June 30, 2022, these factors still exist. Accordingly, there still exists substantial doubt about the company's 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 classifications of the liabilities that might be necessary should the company be unable to continue as a going concern. Now I would like to open up the call to our question and answer session.
spk01: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is coming from George Gaspar. George, your line is live.
spk02: Yes, thank you. Good morning. Ted, just the first question is, what was the reason that the company didn't come out and make a comment after you lost your listing and you disappeared from the market? And there was no disclosure or any comment that came forward from the company until this report came out this morning. Can you give me a little insight from your perspective as to why you decided not to say something to encourage shareholders to be still confident that you might be able to pull through this?
spk07: That's a good question.
spk04: I think that just based on The fact that the board of directors and the senior management both unanimously believed that the best thing for our shareholders was to move to the OTCQB and preserve the most shareholder value and maximize our prospects for the long run. We felt like the required filings were sufficient to to notify people of that transition. The cost for us to have remained on the NYSE American had a lot of risk. The amount of additional debt and the kinds of deals that we could have done for additional investment just didn't make sense. It brought a really tremendous amount of risk. given that the fundamental problems with the company are coming from, at least for the last nine months, have been coming from supply chain issues, and those are very open-ended, and we don't have a lot of very firm – there's nothing we can hang our hat on in terms of data that's coming from the semiconductor industry to say how long this is going to last, how bad it's going to get. How much more cost increases and shortages and quantity allocations are we going to have to suffer through until it's all over? So because of the open-endedness of this, we just felt like this was the right thing to do for everybody, including ourselves, everybody in the senior management and the board who are shareholders and are shareholders. And just for the overall health of the company, this is by far the right thing to do. I see.
spk03: Okay.
spk04: All right. Eric, do you have any more comment on that topic?
spk05: No. Just like Ted said, we felt that our disclosures with our 8K filings were sufficient enough, so we didn't want to do anything more from a press release perspective.
spk02: I see. Okay. All right. And my next question relates to your need for financing to – get moving in a better arrangement as a going corporation. I would think that you should be able to raise some money because you have some pretty good things going on developments and some of the new revenue streams that you're developing. In the last quarter, we saw that. and obviously you're continuing to make progress, and some of it looks very positive, and it would seem like there's still reason to keep this company together and that I would think you should have been able to or can generate some additional investment in your company to stabilize this whole situation. Can you make any comments about that?
spk04: Sure. As you saw back during the first quarter, we did a press release saying that the company was open for different strategic initiatives. That's a wide net. That's investment, that's partnerships, that's all different types of mashups that we could have with other companies, both strategic and financially oriented, to help the long-term prospects of long-term laboratories. We've had a large number of discussions with a large number of both financial and strategic companies since we made that press release. Some of those are still ongoing, and some of them represent potential opportunities. when we end up with one that we feel is in the best interest of the shareholders and for the long-term prospects of the company, we'll move forward with something. But for the moment, there's no news on that.
spk02: I see. Okay. All right. You know, the encouraging thing is just even with your comments this morning about the new product developments and the going forward process, it just looks like there's some capabilities here that could really set this thing in a very positive motion. And hopefully that can continue to happen going forward here. And it sounded like some of your supply problems are now improving for you. And hopefully now we're getting close to halfway through this quarter and So, I mean, could you make any comment about the supply chain situation at this point and if you're continuing to make progress on it?
spk04: We are continuing to make progress on it. Again, I'll stand by the statements that I made earlier in this call as well as in the press release that we just can't. It's so unpredictable because we're not getting anything. We're not getting any kind of firm statements from from the semiconductor industry across the board. So we're, we're, we're, we're taking some wins and we're taking some losses like on a weekly and monthly basis. Like it's improving with some guys and it's not improving with other people. And we're still getting surprises every, every few weeks that, you know, chip that we were relying on for a particular product line is all of a sudden not available. We find out with two or three or seven days notice and we have to scramble to work around it. Um, So just given that sort of Wild West kind of situation, we really are, as normal, trying to remain as cautious in the way we kind of characterize the situation with you, our investors, and the other shareholders and everybody. What we can say, though, is that we put in the releases that There are a couple of chipsets that are important for a number of product lines that we do see specific improvements in. We're not seeing improvements across the board with everything, but we're seeing very specific and encouraging improvements on a couple of product lines and a couple of chipsets. We are going to see slightly higher allocations on some important chipsets at the very end of this year. And we're getting better and better at running our factory more efficiently combined with our engineering. Really, if there's any sort of hero in our company over the last two months, three months, four months, it's been our engineering team who have been able to, you know, we've got them organized and managed, and it's really their capabilities to the point where when we get a surprise on a particular chipset, These guys jump into action, they find alternative parts, and they figure out the most efficient way to get that product back into production. And in some cases, we've seen products get back into production in four, five, six weeks, and it's just unbelievable. We re-spin the boards, we get our sample boards back, we produce prototypes, and boom, we're back in production. So they're doing really quite amazing work. to work around the current uncertainties in the semiconductor supply chain market. So that's been pretty amazing to watch.
spk02: Okay. And then on the supply chain situation, can you give us a thought on what percentage increase you've seen in prices on supply chain requirement? If you could. And how much of your supply chain problem is domestic and how much is coming is from the international side. Can you, can you describe that?
spk04: Sure. Sure. I laughed when you asked that question because here's, here's what happens. So when you talk about the price increases associated with the mainstream supply, which is big companies, big semiconductor companies supplying through standard legitimate big distributors.
spk03: Yes.
spk04: That we've seen increases in the 20%, 30%, 40%, 50% kind of range, depending on what kind of chip it is, how widely used it is in the industry, what kind of technology is used in it. That's the kind of rough range we've seen for mainstream. When a part becomes unavailable through the normal mainstream supply chain, say a fabulous semiconductor company, all all of a sudden can't get the wafer uh the wafers that they need out of some um some fab facility like for example like gluten like let's say global foundries decides they're going to give more wafers this quarter or this half to somebody else right so one of our suppliers with a big brand name, doesn't get the wafers that they expected. It all flows downhill from there. We get notified that we're not going to get the chips we expect in a week or two. We go to the broker market, which are people that are buying sort of the excess capacity of some big contract manufacturer may end up with, after they've run a big production lot, they may end up with some extra chips that they're not going to use. So those get sold off to brokers, and then we buy from those brokers. So in those cases, when we have to go to the broker market, we've seen ridiculous inflation on parts when you buy them in that situation. We've seen 500% increases in those parts, 900% increases in those parts. So you take a $5 part, and now you have to pay $170 for that part. wow that's that's not out of the question but but i don't want to i don't want to scare anybody by bringing up these kinds of numbers because those tend to be you know that's like one part on a product right it's not it's not that's not what we see across the board that's the exception and we're doing that just so that we can go get those parts to keep a continuity of production while we work around the fact that those have either gone unavailable or gone extremely expensive. We work around it. We get back into production with the reasonably priced part that we can find. But if you're faced with the option of not producing a product versus producing the product with, say, a $200 or $300 cost increase while you work around the problem, that's obviously the better path. So that's the kind of stuff that we've been faced with. In terms of international versus domestics, almost all these semiconductors, I'd say 90 plus percent are coming from, uh, different countries in Asia. It doesn't mean that the companies that originated the technology are in Asia, but like even, even the big U S semiconductor companies like, like Intel, they'll produce a certain portion of their products over at TSMC or global foundries or the other guys just as over, you know, as overflow. So, um, You know, we'll get an Intel product, but it was produced in Taiwan, for example, right? So it really is a global supply chain at this point.
spk02: I see. Okay, well, you know, you've got so much going for you here in terms of technology, and obviously you're making wonderful progress in bringing into the market a broader... opportunities for you to build your revenue stream and hopefully that can continue in the coming quarters here and get this back on track because your technology is obviously you've got good technology and what you're accomplishing and so there should be an opportunity for you to keep moving forward. This is a tough hill to climb up and get over but you've gotten this far. Hopefully, you can get through it. Good luck to you guys.
spk04: We really appreciate your commentary, George. Thank you. Thank you very much.
spk07: Thank you.
spk01: Your next question for today is coming from Gregory Urban. Gregory, your line is live.
spk03: Good morning, guys. Good morning, Greg. Regarding the backlog of nearly $10 million, Is it, what would you say is the percentage that you could work down by the end of the year?
spk04: I don't have that number off the top of my head. I think an easier thing to say is that of that backlog, we're very confident that about approximately 9 million of that can be is incredibly highly confident to be shipped over the course of the next 11 or 12 months. So that is an analysis that was done recently that I have on the top of my head. Certainly much more than half of that is shippable this calendar year. But it all figures into when are we going to get the parts to produce those products and at what quantity and all that.
spk03: It comes down to the same bottom line, parts availability. Yes. Can you give me a handle on the percentage of that or dollar amount? that is the raised prices, you know, how much of the backlog is in there? Is it, you know, adjusted and raised prices?
spk04: So everything in our current backlog is that pricing that is higher than what our pricing was in 2021. So, you know, we've had we've had a series of price increases on different products as they were affected by specific raw materials increases. Some of those we did in October, November and December last year. Some were done in January and then again, late Q1 and early Q2 and more late Q2 and then more just recently. So there's a scattering. So I can tell you confidently everything on the backlog that was in that chunk that we're highly confident we're going to ship over the next 11 or 12 months, that's all had some levels of price increases that were in place by the early part of this year. How it further breaks down into backlog that's associated with the most recent price increases, I can't tell you off the top of my head, but you can imagine it's sort of a curve.
spk03: Right. Well, the reason I ask that is I would hope that the gross margins are pretty much bottoming out and that if the prices in that backlog are more recent contracts, then it seems to me that would obviously mean that gross margins have a chance to improve maybe significantly.
spk04: That's certainly our hope as well. Of course, the counterpoint to that is if we do have to sustain additional price increases, then, of course, that works against us, and we continue with headwinds in that area even recently. But, yes, things are getting more stable than they were six months ago. on that front, but we are still continuing to face some challenges, and we're just working them, you know, as they come to us, we're working them one by one.
spk03: Eric, what was the cash flow from operations this quarter?
spk05: Great question. So, we had a cash flow, we used
spk07: $1,450,000 this quarter in operating activities. That's cash flows from operations? Correct. The current headcount?
spk05: The current headcount is approximately 75, I would think.
spk04: That's about right, plus or minus one.
spk03: DTO, Mr. Oterio, is he remain on furlough or is he back in?
spk07: No, he's currently still on furlough.
spk03: Do you expect that to last much longer?
spk04: We expect that to last until we have the liquidity and the financial stability in the company to, uh, to reverse that. So if that's happens quicker, then that'll change quicker. If it takes longer, it'll take longer.
spk03: But despite his furlough, uh, from what you said, the engineering department is pretty much performed miracles.
spk04: They have done some miracles for sure. Yes. It's not, not the structure you'd want to run the company longterm, but it's, um, they're, I mean, you can imagine these guys, most of them have been with the company for a very, very long time. So they're very seasoned people.
spk07: They're very, very high skill people.
spk03: How much of our manufacturing now, especially since analog is being phased out, is performed in China?
spk04: We're all of the most... All of our highest technology products, including our NXGs, our Clearview product lines, our Drake product lines, they're all produced in New Jersey. There are a few product lines we do have produced for us in China. They represent probably something in the 10% of our product lines. It's not the bulk of our company. The large bulk of the company's products are produced in New Jersey in our own factory.
spk03: And let's see, a couple other questions. Our standing with MidCap, which, as we talked about last call, is going to be we're either going to renegotiate with them something new or look elsewhere. What's your general outlook on continued financing, debt financing? Okay.
spk07: Well, we're still working it, and when we have something to report, obviously we'll be able to report.
spk03: And finally, I hate to even ask this, but is the viability, given the precariousness, the near negative working cap, is the viability become an issue with any of the customers?
spk04: We have not had a single customer to my knowledge raise that issue with us at all. We're not seeing that as a big impediment at all.
spk03: I would hope not. I would hope not, but still, you know, it's on shaky grounds. As we're all aware for the last nearly a year.
spk04: Greg, I do want to clarify the comment I just made. So we have had some discussions with a couple of our distributors about our status. There have been a couple of our distributors that have raised a few months ago, for example, what's going on with Blonder Tongue, how are things going, especially mostly in the movement from the NYC American to the OTCQB as our exchange. That prompted some discussions. But there is no customer of ours or distributor or dealer that have stopped doing business or even talking about stopping doing business with us. There have been some conversations just about people asking the same questions as you effectively, Greg.
spk03: I would presume. Anyway. I appreciate George's optimism. I would like to be optimistic, but it's rather dicey, and it looks like we don't know how this is going to play out, but hopefully we're going to be in the game and growing some months into the future.
spk07: Yes. Thanks for your time. Thank you, Greg.
spk01: Your next question for today is coming from Dave Poole. Dave, your line is live.
spk06: Hi. I had a few questions that kind of along the same lines as everyone else, but one which probably somewhat answered. I was wondering if you had everything that you needed along the supply chain, would you be able to meet the demand and fulfill backlog and how much would you expect to see sales and income increase from that? And also, what capacity are you working at right now as far as production? Are you at 10%, 90%, something like that? Do you have those numbers?
spk04: Let me answer the first question first. Sure. If we had everything we needed in supply chain, we would be running our factory more efficiently in the sense that we could be running larger blocks of the same product before we switched over. What we've been having to do because we have limited quantities of specific types of chipsets, we'll run a small batch, then switch to a small batch of a different product, switch to a small batch. That's one of the main inefficiencies we've been battling over the last few months, last six to nine months, actually, that's been causing some of the problems along with the other things we've already discussed. So if we had everything we needed, we'd be running the factory more efficiently. We'd be producing a much higher quantity of product. And we'd probably be, at least in the very short term, we could be doing something we could probably be doing 25% more per month than we're doing now in the short term. And that would run for a number of months. And I think, and this is just a supposition on my part, that the fact that we'd be more confidently producing quantity, we'd see our customers respond by directing more business towards us because one of the things that's dragged us is people having to wait a number of months for product. If they didn't have that situation, we'd likely be having even more demand than we've got right now on some types of product lines. So I don't want to speculate on exactly the specific numbers we could be doing, but we could certainly be doing quite a bit more with the same team and the same equipment in our factory than we're doing now. Again, I don't want to answer your other question. The factories running, in terms of a staffing perspective, we're running close to 90% to 100% right now, but because we're having to run small batches, that's just a less efficient way to run a factory than what you'd like to do. What could we be producing with all the parts we needed? I think I just answered that question quite a bit more than we're doing now, but I don't want to be pegged down to a particular number because I think there's a lot of different variables in that equation. I think that answered both the questions, maybe not as detailed as you'd like.
spk06: Yeah, well, I know there's a lot of variables, and I'm just curious if demand doubled if you're at 90 right now and it sounds like it's not an easy or an overnight cut over when you go from one product to another so you have downtime that's no no but for example i mean in in that scenario if demand really did double um what we'd be looking at and which which actually was just recently analyzed was um internally was
spk04: what would it take for us to support a higher demand on products if we have the parts? And we'd be looking at some, uh, new, new, uh, auto insert machinery that would increase our, our capacity with a, with a very similar, um, uh, staffing level that we have today. So, um, that's not out of the question support with some machinery. So it's not, it's not necessarily so much of a labor, um, Labor is not really the main constraint here. It's a combination of the way that you run the different batch sizes coupled with the equipment that we have. Right now, our equipment is not the main bottleneck. It's parts, right? But you can imagine if we had much higher demand and we could have every part that we wanted to get and we got them when we needed them, we could easily be doing twice as much. the business that we have today. I'm not saying that that's going to happen. I'm just saying you're, I'm playing out your, your hypothetical situation. Right.
spk06: Okay. And also I was wondering why, uh, it seems like, you know, I mean, some companies were, uh, put out more news about what's happening with the business than others. And Vondertum seems to be, uh, playing it close to the best. And if it isn't for a disclosure or earnings or conference call, I mean, I think once in a while I see about a new product, but I think investors like to kind of know what's going on through the quarter, have some more information that makes them feel more comfortable. And I don't know if this is part of a strategy. I don't know if you want to get into it.
spk04: I think the company has had a long history of just playing a more conservative tack on these things. We don't want to provide optimism when we don't have all the ducks in a row and everything buttoned up. When purchase orders are in hand and we know We can produce everything associated with those, and that yields an increase or an improvement in our business. We would be very happy to press release that. What we don't want to do is speculate, and we've got a kind of a culture in the company that's been led by a combination of our board of directors, our management, and our legal to just play the most conservative angle. We don't want to speculate. We don't want to provide optimism if there's still variables that could change in that equation.
spk06: Okay. Also, I was wondering, the OTCQB, is that the insolvency bulletin board? I should have looked it up before this.
spk04: Oh, no. No, not at all. There's companies that go public and only go, rather than going on one of the other exchanges, they simply have decided that the cost of maintaining a public status is more efficient from a cost perspective by being on an OTC exchange. So, Eric, do you want to comment more on that?
spk05: That's fair. Yep, that's it.
spk06: Yeah, I know the cost on the NYSE American is quite a bit. Yes. Even the regular NASDAQ.
spk04: Yes. Right. I mean, and it's not just the exchange costs. It's also legal accounting. You know, there's like a lot of different little things that add up.
spk06: Yeah, reporting, capital.
spk04: Exactly, exactly.
spk06: Okay. And I think my last question is on the debt. What would you say the average interest is and is it fixed or what are the terms on the debt? Good question for you, Eric.
spk05: Yeah, of course. Yeah, sure. So it's, no, it is variable. Right now it's pegged to LIBOR. And the, at June 30th, the rate was approximately, let's see, just looking it up real quick. It was about 6.36%. That's the standard interest rate that we were paying at that moment in time. Obviously, as rates fluctuate, it will fluctuate as well. And that's just the regular, let's call it the core interest. There's other interest and fees that exist as a result of the various types of deals that we've done under the line of credit. For example, the over advance that we have, we pay extra interest on that. et cetera, et cetera. So it's a little difficult to get an actual effective interest rate, but it's probably in the 8%, 9% right now is what we're paying.
spk07: Okay.
spk06: So as the Fed moves, your rates will change. That is correct. Okay. Yes, sir. And do you see any adverse effects from that?
spk05: Well, adverse effects obviously is in the sense that we'll be paying more in interest, but so far we've been able to accommodate the changes in the interest rates under our facility without a significant issue.
spk07: Okay. Thank you. I'm done. Thank you. Thank you for your question. Thank you, Dave.
spk01: Once again, if there are any questions or comments, please press star 1 on your phone at this time. There are no further questions in queue. I would like to turn the floor over to Ted for any closing remarks.
spk04: Great. Thank you. I would like to thank everybody for attending Blonder Tongue Laboratory's second quarter 2022 earnings call and for all your questions today. Thank you very much and goodbye.
spk01: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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