DEF 14A of BK Technologies Corp, Apr 29, 2024

DEF 14A of BK Technologies Corp

Filed Apr 29, 2024 · FY20230001654954-24-005115

Open on EDGAR

  1. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS

  2. Nominees for Election as Directors

    Nominees for Election as Directors The following table sets forth the nominees to be elected at the annual meeting, the year each nominee was first elected or appointed as a director and each nominee’s age as of April 22, 2024:

  3. Nominees for Election as Directors

    | Name and Year First Elected or Appointed | Age | Position | | Joshua S. Horowitz (2023) | 46 | Director (Chair) | | R. Joseph Jackson (2021) | 58 | Director | | Charles T. Lanktree (2017) | 74 | Director | | Ellen O. O’Hara (new nominee) | 74 | Director | | E. Gray Payne (2017) | 76 | Director | | Lloyd R. Sams (2022) | 67 | Director | | John M. Suzuki (2021) | 60 | Director, Chief Executive Officer and President |

  4. Nominees for Election as Directors

    The business experience of each nominee for director is set forth below as of April 22, 2024. Joshua S. Horowitz was elected to the Board of Directors at the 2023 Annual Meeting. Mr. Horowitz is a professional investor with over 22 years of investing experience. Since January 2012, he has served as a portfolio manager and Managing Director at various Palm entities, first with Palm Ventures LLC and currently with Palm Management (US) LLC, where he manages the Palm Global Small Cap Master Fund. He was formerly Director of Research at Berggruen Holdings, a multi-billion-dollar family office, and was a research analyst at Crossway Partners LP, a value strategy investment partnership. In addition to his experience in the financial industry, Mr. Horowitz brings extensive public company board experience. Earlier in his career, he served as a director of The Lincoln General Insurance Company (private) from October 2011 to November 2015, 1347 Capital Corp (Nasdaq: TFSC) from July 2014 to July 2016, and 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) from April 2015 to April 2018. He served as both Director, and ultimately, Interim Chairman of the Board of Directors of Birner Dental Management Services, Inc. (OTC: BDMS) from December 2017 until the Company’s sale to Mid Atlantic Dental Partners in January 2019. At the time of his service, Birner was the only publicly traded dental service organization (DSO) in the country with 67 offices and over 500 employees. He also has served as a Director of Barnwell, Inc. (NYSE: BRN), a holding company with diverse investments in oil and gas assets, since February 2023. In addition, in April 2024, Mr. Horowitz was appointed as a Director of NeuroMetrix, Inc. (Nasdaq: NURO), a commercial stage healthcare company that develops and commercializes neurotechnology devices to address needs in the chronic pain and diabetes markets. Mr. Horowitz was formerly an adviser to our Board of Directors, advising the Company on capital markets and M&A strategy matters. Mr. Horowitz holds a B.S. in Management from Binghamton University and studied at the Bath School of Management in the United Kingdom. We believe Mr. Horowitz’s qualifications to serve on our Board include his executive management experience with Palm Management (US) LLC and his extensive background in corporate governance, capital markets transactions, investment analysis and investor communications having served on several public company Boards. R. Joseph Jackson was elected to the Board of Directors at the 2021 Annual Meeting. Mr. Jackson currently serves as the Managing Partner of Metrolina Capital, a firm that is in the business of providing private lending, structured equity and making real estate investments. Mr. Jackson founded Metrolina Capital, which is the evolution of various Metrolina entities that started in 1996 and has served as Managing Partner since its inception. His background and experience include commercial real estate investments, private lending, structured equity, analytics, development and consulting.

  5. Nominees for Election as Directors

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  6. Nominees for Election as Directors

    Mr. Jackson completed his Bachelor of Arts degree in Economics and a Master of Business Administration degree from the University of North Carolina at Charlotte. He has been a licensed Real Estate Broker since 1984 (NC Broker #93412/SC Broker #59906) and has been a State Certified General Real Estate Appraiser since 1990 (NC #A3241/SC #CG1838). Mr. Jackson earned the MAI (#41604) membership designation from the Appraisal Institute, which is held by professionals who can provide a wide range of services relating to all types of real property, such as providing opinions of value, evaluations, reviews and consulting regarding investment decisions. He also holds the CCIM (Certified Commercial Investment Member) designation, a globally recognized designation with members across North America and in more than 30 countries. His CCIM designation number is #19213. In addition, Mr. Jackson also holds an MRICS (#6208909) designation. The Royal Institution of Chartered Surveyors (RICS) is a professional body promoting and enforcing the highest international standards in the valuation, management and development of land, real estate, construction and infrastructure. Mr. Jackson currently serves on the following boards: 1) Carolinas Business Capital, a regional Small Business Administration Certified Development Corporation, for over 20 years and has served as board chair for the last 6 years; 2) Community First Bancorporation and Community First Bank in South Carolina; 3) Camino Community Center, a non-profit organization serving the Latino community; and 4) Charlotte Fund, a Charlotte NC based venture capital fund. He previously served as board chair of SeaTrust Mortgage, a subsidiary of Community First Bancorporation which was sold to Primis Bank in 2022 and also as an investment manager for a private REIT. Charles T. Lanktree was appointed to the Board of Directors in March 2017. Mr. Lanktree has served as Chief Executive Officer of Eggland’s Best, LLC, a joint venture between Eggland’s Best, Inc. and Land O’Lakes, Inc. distributing nationally branded eggs from 2012 when it was formed until December 31, 2022. He also served as its President from 2012 to 2018. He served as President and Chief Executive Officer of Eggland’s Best, Inc., a franchise-driven consumer egg business, from 1997 to 2022 where he previously served as the President and Chief Operating Officer from 1995 to 1996 and Executive Vice President and Chief Operating Officer from 1990 to 1994. Mr. Lanktree served on the board of directors of FG Group Holdings, Inc. (NYSE American: FGH), a holding company with diverse business activities focused on serving the cinema, retail, financial and government markets, from May 2015 through its merger transaction with Fundamental Global Inc. (Nasdaq: FGF) in February 2024. Mr. Lanktree also served on the board of directors of Eggland’s Best, Inc. from 1990 through 2022. He also served on the boards of many of England’s Best affiliates through that time period. From 2010 to 2013, he served on the board of directors of Eurofresh Foods, Inc., a privately-held company, and, from 2004 to 2013, he was on the board of directors of Nature’s Harmony Foods, Inc. Prior to joining Eggland’s Best, Inc., Mr. Lanktree served as the President and Chief Executive Officer of American Mobile Communications, Inc. from 1987 to 1990 and as the President and Chief Operating Officer of Precision Target Marketing, Inc. (NYSE American: PTMI), from 1985 to 1987. From 1976 to 1985, he held various executive-level marketing positions with The Grand Union Company, BeechNut/Nestle, and Unilever. Mr. Lanktree received an MBA from the University of Notre Dame and a B.S. in Food Marketing from St. Joseph’s University. He also served in the U.S. Army and U.S. Army Reserves from 1971 to 1977. Ellen O. O’Hara was nominated to the Board of Directors for the 2024 Annual Meeting. Ms. O’Hara has spent most of her career in the wireless telecommunications industry. She retired in April 2021 from her positions serving on the boards of Zetron, Inc and EFJohnson Technologies, Inc. In addition to her board positions, Ellen concurrently served as Senior Strategy Advisor to JVCKENWOOD and as Chair of the Industry Council for Emergency Response Technologies (iCERT) from 2016-2021. From 2009 through March 2016, Ms. O’Hara was the President and CEO of Zetron, which is headquartered in Redmond, WA. Prior to Zetron, Ms. O’Hara served as president and chief operating officer for EF Johnson in Irving, Texas (2005-2008) and held executive management positions at Motorola Solutions (1992-2005) and product management positions at GE’s Mobile Communications Division (1980-1992). Ms. O’Hara began her career in administrative and organization development roles at the Massachusetts Institute of Technology (1973-1980). In addition to her role as Chair of iCERT, Ms. O’Hara was JVCKENWOOD’s management representative to the Public Safety Technology Alliance. Past industry board activities include the Washington Technology Industry Association, the International Technology Association, the FCC Coordinating Committee and the American SMR Network Association. In 2021, Ms. O’Hara was awarded the Vivian Carr Award for her contributions as a woman in the wireless industry by the Radio Club of America. She has also served on the board of a charity for affordable housing in the Seattle area and on the vestry of her church. Ms. O'Hara holds an MBA with high distinction (Baker Scholar) from the Harvard Graduate School of Business and a BA in European history with distinction from Mount Holyoke College in South Hadley, MA. During her college career, she also attended the University of East Anglia in Norwich, England for one year.

  7. Nominees for Election as Directors

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  8. Nominees for Election as Directors

    E. Gray Payne was appointed to the Board of Directors in January 2017. He served as Senior Vice President of The Columbia Group (“TCG”) from September 2010 to September 2017, where he was responsible for managing the Marine Corps and Navy Programs Divisions. TCG is a federal consulting firm working with the Department of Defense, the Department of Homeland Security, the National Oceanic and Atmospheric Administration, and private clients. TCG consults in the areas of logistics, acquisitions, program management, information technology, training, marine architecture and engineering, and command and control systems. Prior to September 2010, General Payne was on active duty with the Marine Corps for 10 years, retiring as a Major General. His three commands as a General Officer included the Marine Corps Mobilization Command, the Marine Corps Logistics Command and the 4th Marine Logistics Group. In his last tour with the Marine Corps, he served as Assistant Deputy Commandant for Facilities, where he was responsible for 28 installations and an annual budget exceeding $5.5 billion. Prior to March 2001, he worked with a number of companies in various capacities, including as a management consultant, Chief Financial Officer, Chief Operating Officer, and Chief Executive Officer of companies ranging in size from $2.5 million to $100 million. General Payne currently serves on the board of directors of VetCV (since December 2017), and National Wildlife Refuge Association (since June 2018). General Payne served on the board of directors of FG Financial Group, Inc. (Nasdaq: FGF), a publicly traded reinsurance and financial services company, from May 2018 through its merger with FG Group Holdings Inc. in February 2024. He is a prior chairman of the board of the Marine Corps Association and Foundation and served on the Advisory Council of Marstel-Day, LLC. He received a B.S. in Economics from North Carolina State University and a M.S. in Strategic Studies from U.S. Army War College. A member of the National Association of Corporate Directors, he has also earned the Professional Director designation from the American College of Corporate Directors. Lloyd R. Sams was elected to the Board of Directors at the 2022 Annual Meeting. From 2000 to 2019, Mr. Sams had been a Managing Principal of BIA Digital Partners, a private equity group that was focused on investments in the media, telecommunications, business services and information segments and served on numerous boards. From 2020 to 2021, Mr. Sams was a Director of Aceyus Inc., a private software company. From 2018 to 2019, he was the President of Every Income Holdings, LLC, a financial services holding company. Mr. Sams was Managing Director of MoonSail Capital, a private equity group, from 2017 to 2018. From 2013 through 2015, he was a Managing Director and Head of Lower Middle Market Investing at Business Development Corporation of America, a non-traded BDC headquartered in New York. Earlier, Mr. Sams had an 18-year banking career, principally with First Union (now Wells Fargo) and First Chicago (now J.P. Morgan) where he specialized in communications services. Mr. Sams received his B.S. in Business Administration from Washington and Lee University and a MBA from the University of North Carolina at Chapel Hill. John M. Suzuki was appointed to the Board of Directors in July 2021. From May 2019 until accepting the position of Chief Executive Officer of the Company, Mr. Suzuki served as Chief Strategy Officer of Imperium Leadership, where he has overseen the development and growth of the business. From May 2015 through May 2019, he served as President and CEO of EFJohnson Technologies, a two-way radio manufacturer. From 2011 through 2015, Mr. Suzuki served in a variety of leadership positions, including as Senior Vice President of Sales for AVTEC Incorporated, and Vice President of Sales and Marketing for 3eTechnologies International, a subsidiary of UltraElectronics. From 2004 through 2011, Mr. Suzuki served as Senior Vice President, Sales of EFJohnson Technologies. Mr. Suzuki has a broad background in general management, strategy, product development, sales, marketing, supply chain, operations and engineering, and mergers and acquisitions. He is a strategic thinker with extensive experience in developing and growing new business opportunities. Mr. Suzuki holds a bachelor’s degree in electrical engineering from the University of Ottawa and an MBA from Duke University.

  9. Nominees for Election as Directors

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  10. DIRECTOR COMPENSATION FOR 2023

    DIRECTOR COMPENSATION FOR 2023

  11. Director Compensation Program

    Director Compensation Program On September 6, 2018, the Board, upon the recommendation of the Compensation Committee, adopted a new director compensation program for all non-employee directors, effective as of September 1, 2018. The program was adopted to remain competitive in attracting and retaining qualified Board members and to better align director compensation to other public companies of comparable size to the Company. Under the program, each non-employee director receives an annual retainer fee of $50,000, payable in quarterly installments of cash or the cash equivalent in company stock, at the date of the approval of payment by the Compensation Committee. Each non-employee director also receives an annual grant of RSUs with a value of $40,000 pursuant to the 2017 Plan. Each RSU represents a contingent right to receive one share of our common stock. The RSUs vest on the first anniversary of the grant date, subject to the recipient’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. In addition, the director compensation program provides for an additional annual cash retainer of $75,000, payable in quarterly cash or the cash equivalent in company stock installments, for the Chairman of the Board, $3,000, payable in quarterly cash installments, for each Board committee served on, or an additional annual cash retainer of $10,000, payable in quarterly cash or the cash equivalent in company stock installments, per committee for service as committee chairman. All non-employee directors are entitled to reimbursement of reasonable out-of-pocket expenses incurred by them in connection with their attendance at meetings of the Board and any committee thereof on which they serve. If a non-employee director does not serve on the Board or a Board committee, or as Chairman or as a Board committee chairman, for the full year, the Board and any applicable Board committee, Board Chairman, and any Board committee chairman retainers are prorated for the portion of the year served. If a non-employee director joins the Board after the grant of RSUs for that year, the non-employee director’s grant of RSUs will be prorated for the portion of the year to be served.

  12. Director Compensation Program

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  13. Director Compensation Program

    On December 14, 2023, the Board, upon the recommendation of the Compensation Committee, adopted a new director compensation program for all non-employee directors, effective as of January 1, 2024. The program was adopted to remain competitive in attracting and retaining qualified Board members and to better align director compensation to other public companies of comparable size to the Company. Under the new program, each non-employee director receives an annual retainer fee of $60,000, payable in quarterly installments of cash or the cash equivalent in company stock, at the date of the approval of payment by the Compensation Committee. Each non-employee director also receives an annual grant of RSUs with a value of $60,000 pursuant to the 2017 Plan. Directors receive no additional compensation for serving as Chairman or chairing or serving on committees. Each RSU represents a contingent right to receive one share of our common stock. The RSUs vest in three equal annual installments, beginning with the first anniversary of the grant date, subject to the recipient’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. All non-employee directors are entitled to reimbursement of reasonable out-of-pocket expenses incurred by them in connection with their attendance at meetings of the Board and any committee thereof on which they serve. If a non-employee director joins the Board after the grant of RSUs for that year, the non-employee director’s grant of RSUs will be prorated for the portion of the year to be served. Our 2017 Plan provides that the aggregate grant date fair value of all awards granted to any single non-employee director during any single calendar year (determined as of the applicable grant date(s) under applicable financial accounting rules), taken together with any cash fees paid to the non-employee director during the same calendar year, may not exceed $200,000. The following table shows the compensation paid to our non-employee directors for fiscal 2023:

  14. Director Compensation Program

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | D. Kyle Cerminara(2) | — | 165,000 | 165,000 | | Joshua S. Horowitz(2) | — | — | — | | R. Joseph Jackson(2) | — | 104,500 | 104,500 | | Charles T. Lanktree(2) | — | 96,000 | 96,000 | | Michael C. Mitchell(2) | — | 96,000 | 96,000 | | E. Gray Payne(2) | — | 113,000 | 113,000 | | Lloyd R. Sams(2) | — | 93,000 | 93,000 |

  15. Director Compensation Program

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  16. Director Compensation Program

    | (1) Stock awards represent the aggregate grant date fair value of 45,413 RSUs granted to Messrs. Cerminara, Jackson, Lanktree, Mitchell, Payne and Sams. The RSUs were granted pursuant to the 2017 Plan and represent a portion of the compensation payable to our non-employee directors, as described above. Each RSU represents a contingent right to receive one share of our common stock. The RSUs vest in full on the first anniversary of the grant date, subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs shall vest in full as of the director’s last date of service as a director of the Company. In addition, the stock awards also represent the aggregate grant date fair value of 8,549 RSUs granted to Messrs. Cerminara, Jackson, Lanktree, Mitchell, Payne and Sams on December 8, 2023, and December 14, 2023. The RSUs were granted pursuant to the 2017 Plan and represent a portion of the compensation payable to our non-employee directors, as described above. Each RSU represents a contingent right to receive one share of our common stock. The RSUs vested in full on the grant date. In addition, the 2017 Plan and the RSU award agreements grant the Compensation Committee the discretion to accelerate vesting of the RSUs upon the occurrence of a “change in control” (as defined under the 2017 Plan) or in connection with the termination of the director’s service for any reason prior to the vesting date. |

  17. Director Compensation Program

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  18. Director Compensation Program

    The amounts shown represent the aggregate grant date fair value computed in accordance with FASB Accounting Standards Codification (ASC) Topic 718 “Compensation-Stock Compensation” (“FASB ASC Topic 718”). For a discussion of valuation assumptions, see Note 1 (Summary of Significant Accounting Policies) and Note 10 (Share-Based Employee Compensation) of our consolidated financial statements included in our Annual Report on Form 10-K for fiscal 2023.

  19. Director Compensation Program

    | (2) The aggregate number of option and stock awards outstanding (including exercised and unexercised stock options and unvested RSUs) as of December 31, 2023, for each non-employee director was as follows: |

  20. Director Compensation Program

    | Name | Option Awards (#) | Stock Awards (#) | | Joshua S. Horowitz | — | — | | R. Joseph Jackson | — | 3,234 RSUs | | Charles T. Lanktree | — | 11,086 RSUs | | E. Gray Payne | — | 6,559 RSUs | | Lloyd R. Sams | — | 3,234 RSUs |

  21. Director Compensation Program

    The RSUs outstanding for each director listed above as of December 31, 2023 include 415 RSUs remaining pursuant to a grant made to Messrs. Lanktree and Payne on September 6, 2019 (not including 1,662 RSUs that vested prior to December 31, 2023), 1,052 RSUs remaining pursuant to a grant made to Messrs. Lanktree and Payne on August 24, 2020 (not including 1,579 RSUs that vested prior to December 31, 2023), 1,858 RSUs remaining pursuant to a grant made to Messrs. Lanktree and Payne on July 30, 2021 (not including 1,238 RSUs that vested prior to December 31, 2023). Such RSUs vest in full in five equal annual installments, beginning on the first anniversary of the respective grant date, in each case subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. In addition, 3,234 RSUs remain pursuant to a grant made to Messrs. Jackson, Payne and Sams on August 21, 2023, (not including 3,941, 4,487, 3,213 RSUs respectively, that vested prior to December 31, 2023). Such RSUs vest in full on September 21, 2024, in each case subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. In addition, 3,234 RSUs remain pursuant to a grant made to Mr. Lanktree on August 21, 2023. Such RSUs vest in full on September 21, 2027, subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. In addition, 3,395 RSUs remain pursuant to a grant made to Mr. Lanktree on August 21, 2023. Such RSUs vest in full on August 21, 2026, subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. In addition, 1,132 RSUs remain pursuant to a grant made to Mr. Lanktree on December 14, 2023. Such RSUs vest in full on December 14, 2026, subject to the director’s continued service as a director of the Company through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director of the Company, but is not nominated for the Board of directors for election by stockholders, other than for good reason, as determined by the Board in its discretion, then the RSUs will vest in full as of the director’s last date of service as a director of the Company. See footnote 1 above for more information. On December 8, 2023, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Cerminara’s unvested restricted stock units granted September 6, 2019, August 24, 2020, July 30, 2021, August 21, 2023, and granted an additional 2,526 RSUs for fourth quarter 2023 services. These restricted stock units were fully vested and settled on the date of grant. On December 8, 2023, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Mitchell’s unvested restricted stock units granted August 21, 2023, and granted an additional 1,132 RSUs for fourth quarter 2023 services. These restricted stock units were fully vested and settled on the date of grant.

  22. Director Compensation Program

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  23. SUMMARY EXECUTIVE COMPENSATION TABLE FOR 2022-2023

    | Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | John M. Suzuki | 2023 | 300,879 | — | 59,621 | 95,290 | — | 19,548(4) | 475,388 | | Chief Executive Officer and President(9) | 2022 | 358,844 | — | 27,200 | 101,605 | — | 18,528(4) | 506,177 | | Timothy A. Vitou(9) | 2023 | 265,819 | — | — | — | — | 51,036(5) | 316,855 | | President | 2022 | 281,949 | 30,000 | — | 47,550 | — | 14,918(5) | 374,417 | | Scott A. Malmanger(10) | 2023 | 227,216 | — | 7,773 | 37,970 | — | 5,473(6) | 278,432 | | Chief Financial Officer | 2022 | 36,152 | — | — | — | — | 90(6) | 36,242 | | Randy Willis(11) | 2023 | 232,522 | — | — | — | — | 47,025(7) | 279,547 | | Chief Operating Officer | 2022 | 231,454 | 30,000 | — | 47,550 | — | 12,261(7) | 321,265 | | Branko Avanic | 2023 | 254,153 | — | — | — | — | 16,266(8) | 270,420 | | Chief Technology Officer | 2022 | 252,986 | 30,000 | — | 22,710 | — | 11,855(8) | 317,551 |

  24. Pay Versus Performance

    Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (also referred to as “CAP”) and certain financial performance of our Company for each of the last three completed fiscal years. In determining the “compensation actually paid” to our NEOs, we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table in previous years, as the SEC’s valuation methods for this section differ from those required in the Summary Compensation Table. The table below summarizes compensation values both previously reported in our Summary Compensation Table, as well as the adjusted values required in this section for the 2023, 2022 and 2021 fiscal years. Note that for our NEOs other than our CEO, or principal executive officer, compensation is reported as an average.

  25. Pay Versus Performance

    | | John M. Suzuki, PEO | | Timothy A. Vitou, Former PEO | | Non-PEO NEO's | | | | | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEOs (3) | Average Compensation Actually Paid to Non-PEOs (4) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return | Net loss (thousands) (5) | | 2023 | $475,338 | $476,728 | $316,855 | $345,794 | $276,133 | $279,704 | $86.22 | $(2,230) | | 2022 | $506,177 | $573,303 | $374,417 | $408,962 | $273,827 | $294,568 | $117.04 | $(11,633) | | 2021 | $266,905 | $266,905 | $344,341 | $316,875 | $297,704 | $292,867 | $80.92 | $(1,701) |

  26. Pay Versus Performance

    | (1) Represent the amounts of total compensation reported for our PEO and Former PEO during each corresponding year in the “Total” column of the Summary Compensation Table above. | | (2) Represents the amount of “compensation actually paid” to our PEO and Former PEO, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO and Former PEO during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to our PEO and Former PEO’s total compensation for each year to determine the “compensation actually paid”: |

  27. Pay Versus Performance

    | | Year | Reported Summary Compensation Table Total for PEO ($) | Reported Value of Option Awards (a)(b) ($) | Equity Award Adjustments (b) ($) | Compensation Actually Paid to PEO ($) | | John M. Suzuki, PEO | 2023 | $475,338 | $(95,290) | $96,680 | $476,728 | | | 2022 | $506,177 | $(101,605) | $168,732 | $573,303 | | | 2021 | $266,905 | $(111,100) | $111,100 | $266,905 | | Timothy A. Vitou, Former PEO | 2023 | $316,855 | - | $28,939 | $345,974 | | | 2022 | $374,417 | $(47,550) | $82,095 | $408,962 | | | 2021 | $344,341 | $- | $(27,466) | $316,875 |

  28. Pay Versus Performance

    | (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Option Awards” columns in the Summary Compensation Table for the applicable year. | | (b) In order to calculate the compensation “actually paid” to our PEO and Former PEO, we are required under the SEC rules to subtract from the value in the Summary Compensation Table the grant date fair value of equity awards, and add back the following: |

  29. Pay Versus Performance

    | (i) | the year-end fair value of any equity awards in the applicable year that are outstanding and unvested as of the end of the year; | | (ii) | the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; | | (iii) | for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; | | (iv) | for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; | | (v) | for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and | | (vi) | the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. |

  30. Pay Versus Performance

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  31. Pay Versus Performance

    The amounts deducted or added in calculating the equity award adjustments are as follows:

  32. Pay Versus Performance

    | | Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation($) | Total Equity Award Adjustments | | John M. Suzuki, PEO | 2023 | $75,941 | $(65,524) | $- | $(18,711) | $104,974 | $- | $96,680 | | | 2022 | $147,283 | $- | $21,448 | $- | $- | $- | $168,732 | | | 2021 | $- | $- | $111,100 | $- | $- | $- | $111,100 | | Timothy A. Vitou, Former PEO | 2023 | $- | $(24,071) | $- | $(7,237) | $60,247 | $- | $28,939 | | | 2022 | $72,820 | $5,634 | $7,570 | $1,867 | $(5,796) | $- | $82,095 | | | 2021 | $- | $(17,654) | $- | $(9,812) | $- | $- | $(27,466) |

  33. Pay Versus Performance

    | (3) Represents the average of the amounts reported for our NEOs as a group (excluding our PEO and our Former PEO) in each applicable year in the “Total” column of the Summary Compensation Table above. For 2021, this includes William P. Kelly, Randy Willis and Branko Avanic and for 2022, Scott A. Malmanger and the executives listed above, (the “Non-PEO NEOs”). | | (4) Represents the average amount of “compensation actually paid” to the Non-PEO NEOs, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average compensation earned or paid to the Non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the Non-PEO NEOs for each year to determine the “compensation actually paid”, using the same methodology as described above in Note (2): |

  34. Pay Versus Performance

    | Year | Average Reported Summary Compensation Table Total for Non-PEOs ($) | Average Reported Value of Option Awards ($) | Average Equity Award Adjustments (a) ($) | Average Compensation Actually Paid to Non-PEOs ($) | | 2023 | $276,133 | $(12,657) | $16,228 | $279,704 | | 2022 | $273,827 | $(23,420) | $44,141 | $294,568 | | 2021 | $297,704 | $- | $(4,837) | $292,867 |

  35. Pay Versus Performance

    (a) The amounts deducted or added in calculating the total average equity award adjustment are as follows:

  36. Pay Versus Performance

    | Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Total Equity Award Adjustments | | 2023 | $37,970 | $(51,052) | $- | $(15,075) | $76,840 | $- | $48,683 | | 2022 | $100,295 | $21,402 | $13,542 | $5,749 | $(8,504) | $- | $132,484 | | 2021 | $- | $(9,748) | $- | $(4,764) | $- | $- | $(14,511) |

  37. Pay Versus Performance

    | (5) The dollar amounts reported represent the amount of net loss reflected in our consolidated audited financial statements for the applicable year. |

  38. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table provides information with respect to outstanding stock option awards for our shares of common stock classified as exercisable and unexercisable as of December 31, 2023, for the Named Executive Officers.

  39. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | Name | Number of Securities Underlying Unexercised Options (#) Exercisable(11) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | John M. Suzuki | 20,000(1) | — | 15.40 | 7/19/31 | | | 9,633(2) | 7,367 | 11.65 | 3/01/32 | | | — | 9,000(3) | 12.40 | 6/22/32 | | | — | 10,000(4) | 15.53 | 6/11/33 | | Scott A. Malmanger | — | 5,000 | 15.53 | 7/11/33 | | Randy Willis | 5,000(6) | — | 21.00 | 8/30/27 | | | 4,000(7) | — | 18.75 | 3/14/28 | | | 3,200(8) | 800 | 20.35 | 3/05/29 | | | —(11) | 2,000(9) | 11.65 | 3/01/32 | | | — | 6,000(3) | 12.40 | 6/22/32 | | Branko Avanic | 4,800(10) | 1,200 | 18.05 | 10/30/29 | | | 4,000(9) | 2,000 | 11.65 | 3/01/32 |

  40. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (1) The options were granted on July 19, 2021, and are fully vested and exercisable. |

  41. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | 26 | | Table of Contents |

  42. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (2) The options were granted on March 1, 2022, and vest in five equal annual installments, beginning on March 1, 2022. | | (3) The options were granted on June 22, 2022, and vest based on grant terms of achievement of certain business goals. | | (4) The options were granted on July 11, 2023, and vest in five equal annual installments, beginning on July 11, 2024. | | (5) The options were granted on July 11, 2023, and vest in five equal annual installments, beginning on July 11, 2024. | | (6) The options were granted on August 30, 2017, and are fully vested and exercisable. | | (7) The options were granted on March 14, 2018, and are fully vested and exercisable. | | (8) The options were granted on March 5, 2019, and vest in five equal annual installments, beginning on March 5, 2020. | | (9) The options were granted on March 1, 2022, and vest in three equal annual installments, beginning on March 1, 2022. | | (10) The options were granted on October 30, 2019, and vest in five equal annual installments, beginning on October 30, 2020. | | (11) Randy Willis exercised 4,000 options granted on March 1, 2022 in a cashless exercise. |

  43. POTENTIAL PAYMENTS UPON TERMINATION OR IN CONNECTION WITH A CHANGE OF CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OR IN CONNECTION WITH A CHANGE OF CONTROL