On August 29, 2011, the Board authorized the Company to repurchase up to 100,000 shares of its common stock in accordance with applicable securities laws. This authorization increased the total number of shares authorized and available for repurchase under the Company's existing share repurchase program to 540,000 shares, at such times, amounts and prices as the Company shall deem appropriate. As of June 30, 2016,March 31, 2017, the Company had repurchased a total of 79,66481,584 shares of common stock at a cost of $572,000,$580,000, which shares are currently held in treasury.

The warrants are "European style warrants" and will only become exercisable on the earlier of (i) their expiration date, August 6, 2018, and (ii) such date that the 30-day volume weighted average price per share, or VWAP, of the Company's common stock is greater than or equal to $15.00 (subject to adjustment). Once the warrants become exercisable, they may be exercised in accordance with the terms of the warrant agreement between the Company and the warrant agent until their expiration at 5:00 p.m., Eastern Time, on the expiration date.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date underdate.  Fair value guidance identifies three primary valuation techniques: the market approach, the income approach and the cost approach.  The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.  The income approach uses valuation techniques to convert future amounts such as cash flows or earnings, to a single present amount. The measurement is based on the value indicated by current market conditions.  Dependingexpectations about those future amounts.  The cost approach is based on the natureamount that currently would be required to replace the service capacity of an asset.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to observable inputs such as quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  The maximization of observable inputs and the minimization of the use of unobservable inputs are required.

Classification within the fair value hierarchy is based upon the objectivity of the inputs that are significant to the valuation of an asset or liability as of the measurement date.  The three levels within the fair value hierarchy are characterized as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, various techniqueseither directly or indirectly. Level 2 inputs include:  quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Unobservable inputs for the asset or liability for which there is little, if any, market activity for the asset or liability at the measurement date. Unobservable inputs reflect the Company's own assumptions can be usedabout what market participants would use to estimateprice the fair value. Assets and liabilities are measured usingasset or liability. These inputs from three levels ofmay include internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value hierarchy, as follows:

To estimate the fairmarket value of its equity and U.S. Treasurymarketable securities, (Level 1), the Company obtains current market pricing from quoted market sources or uses pricing for identical securities. Assets measured at fair value on a recurring basis are summarized below (in thousands).

The Company has two reportable business segments from operations: electronic components, which includes all products manufactured and sold by MtronPTI, and electronic instruments, which includes all products manufactured and sold by PTF. The Company's foreign operations in Hong Kong and India exist under MtronPTI.

Operating income (loss) is equal to revenues less cost of sales and operating expenses, excluding investment income, interest expense, and income taxes.

For the three and six months ended June 30,March 31, 2017 and 2016, domestic revenues were $3,982,000 and 2015, significant$3,482,000, respectively and foreign revenues were $1,642,000 and $1,274,000, respectively. Significant foreign revenues from operations (10% or more of foreign sales) were as follows (in thousands):follows:

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements, the notes thereto and the other unaudited financial data included in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the audited consolidated financial statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q of the Company and the Company's other communications and statements, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”). The Company intends for all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. Such statements include, in particular, statements about the Company's beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company's control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "target," "goal," and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. Therefore, such statements are not intended to be a guarantee of the Company's performance in future periods. The Company's actual future results may differ materially from those set forth in the Company's forward-looking statements. For information concerning these factors and related matters, see "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2016, filed with the Securities and Exchange Commission (the "SEC")the SEC on March 29, 2016,2017, as amended, this Quarterly Report on Form 10-Q and our other filings with the SEC. However, other factors besides those referenced could adversely affect the Company's results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Report.Quarterly Report on Form 10-Q. The Company does not undertake to update any forward-looking statement, except as required by law. As a result, you should not place undue reliance on these forward-looking statements.

Three months ended June 30, 2016March 31, 2017 compared to three months ended June 30, 2015

Total revenues for the three months ended June 30, 2016March 31, 2017 were $5,231,000, a decrease$5,624,000, an increase of 4.4%18.3% from revenues of $5,471,000$4,756,000 for the same prior year period.  Price compression from offshore manufacturers has reducedthree months ended March 31, 2016.  Approximately 73% of the number of economically feasible opportunities in the Internet Communications Technology ("ICT") market segment. The Company has movedincrease is being driven by management’s strategy to move away from such low margin commodities business and is focusedfocus on achieving revenue growth through the development of more complex, higher margin products, particularly in the Aerospace and Defense ("Aero/Defense") market segment.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales, as a percentage of revenues increased  to 33.9%36.7% from 32.7%31.5% for the three months ended June 30, 2016,March 31, 2017, compared to the same prior year period.

As of March 31, 2017, our order backlog was $9,679,000, which was$10,877,000, an increase of 7.4%20.6% compared to thea backlog of $9,016,000 as of March 31, 2016, which was $9,016,000, and an increase of 9.3% compared to the backlog as of June 30, 2015, which was $8,857,000.2016. The backlog of unfilled orders includes amounts based on signed contracts as well as agreed letters of intent, which MtronPTI haswe have determined are firm orders and likely to proceed.  Although backlog represents only firm orders that are considered likely to be fulfilled withinin the next 12 months following receipt of the order, cancellations or scope adjustments may and do occur.

Order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.  The Company expectsWe expect to fill itsour entire order backlog within the next 12twelve months, but cannot provide assurances as to what portion of the order backlog will be fulfilled in a given year.

Operating income was $26,000$108,000 for the three months ended June 30, 2016,March 31, 2017, compared to an operating loss of ($333,000)162,000) for the three months ended June 30, 2015.March 31, 2016.  The improvement is due to an 18.3% increase in revenue and a reduction5.2 percentage point increase in engineering, selling and administrative costs which were 33.4% of revenuegross margin.

Other Income, Net

For the three months ended March 31, 2017, other income, net was $12,000 compared to $42,000 for the three months ended June 30, 2016, compared to 38.8%March 31, 2016. The current period consists primarily of revenue for the comparableforeign currency transactions gains on settled transactions. The prior year period reflects a gain realized on the disposal of assets.

Income Taxes

We recorded a tax (provision) benefit of ($3,000) and a 1.2 percentage point increase in gross margin, offset by a 4.4% decrease in revenue.

Based on the Company'sour assessment of the uncertainty surrounding the realization of the favorable U.S. tax benefitsattributes in future tax returns. When assessingreturns in accordance with the needprovisions of ASC 740, Income Taxes, we have determined that it is more likely than not that deferred tax assets generated from foreign NOLs, can be utilized in the foreseeable future and a  valuation allowance for these assets is not required. We also determined that a full valuation allowances,against the Company considers future taxable incomeremaining U.S net deferred tax assets is required and ongoing prudent and feasiblehave recorded a valuation allowance to reduce deferred tax planning strategies.assets to the amount that is more likely than not to be realized. Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Companywe will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Net income for the three months ended June 30, 2016, the Company reported net income of $16,000,March 31, 2017, was $111,000 compared to a net loss of ($201,000)126,000) for the comparable period in 2015.three months ended March 31, 2016. Basic and diluted net income (loss) per share for the three month periods ended June 30,March 31, 2017 and 2016, and 2015, was $0.01$0.04 and ($0.08)0.05), respectively.

Stock-Based Compensation

For the three months ended June 30, 2016 compared to six months ended June 30, 2015

Liquidity and Capital Resources

As of March 31, 2017 and 2016, cash and cash equivalents increased by $10,000,were $1,989,000 and $2,778,000, respectively. In December 2016 and January 2017, we transferred certain investments in U.S. Treasury securities (cash equivalents) to $5,563,000 at June 30, 2016 from $5,553,000 at December 31, 2015.

Cash provided by operating activities was $43,000$219,000 and $414,000$71,000 for the sixthree months ended June 30,March 31, 2017 and 2016, and 2015, respectively.  The $371,000 decrease$148,000 increase was due primarily due to the non-cash adjustments for stock-based compensation and net changes in working capital, offset by an improvement in net loss.

Cash used in investing activities for the sixthree months ended June 30,March 31, 2017 and 2016 and 2015 was ($33,000)1,008,000) and ($175,000)48,000), respectively.

The decreaseincrease was primarily due to the transfer of certain investments in U.S. Treasury securities to equity securities, which are classified as an investing activity on our consolidated statements of cash flows offset by a reductiondecline in capital expenditures.

There were no financing activities for the Company'sthree months ended March 31, 2017 and 2016.

As of March 31, 2017, our consolidated working capital was $10,079,000,$10,447,000 compared to $9,876,000 at$10,135,000 as of December 31, 2015.  At June 30, 2016, the Company2016.  As of March 31, 2017, we had current assets of $12,404,000,$13,312,000, current liabilities of $2,325,000$2,865,000 and a ratio of current assets to current liabilities of 5.34 to 4.65:1.00. AtAs of December 31, 2015, the Company2016, we had current assets of $11,952,000,$12,890,000, current liabilities of $2,076,000$2,755,000 and a ratio of current assets to current liabilities of 5.76 to 4.68:1.00. Management continues to focus on efficiently managing working capital requirements to match operating activity levels.

On September 30, 2014,2016, MtronPTI entered into arenewed the CNB Loan Agreement (the "CNB Loan Agreement"), with City National Bank of Florida ("City National").National. The CNB Loan Agreement provides for a revolving line of creditthe CNB Revolver in the amount of $3.0 million, (the "CNB Revolver"), which bears interest at a variable rate equal to the 30-day LIBOR plus 200 basis points to be set on the first day of each month, and expires on September 30, 2016.2018. The CNB Loan Agreement also provides that MtronPTI will pay City National a fee equal to 0.75% per year on the daily unused amount. The Company'sOur obligations under the CNB Loan Agreement are secured only by cash collateral and do not require any other liens.

In connection with the CNB Loan Agreement, MtronPTI also entered into a Cash Collateral Agreement with City National (the "CNB Cash Collateral Agreement") and delivered a Revolving Promissory Note in the principal amount of $3.0 million to City National (the "CNB Revolving Promissory Note").

The CNB Cash Collateral Agreement provides that MtronPTI will hold cash collateral equal to any amounts outstanding under the CNB Revolver in a non-interest bearing deposit account with City National. Provided that MtronPTI is not in default of any of its obligations under the CNB Loan Agreement, the CNB Revolving Promissory Note or the CNB Cash Collateral Agreement, the funds collateralizing the CNB Revolver are restricted only to the extent of the outstanding principal amount under the CNB Revolver. At June 30, 2016As of March 31, 2017 and December 31, 2015,2016, there was no balance outstanding under the CNB Revolver and no associated restricted cash.

We believe that existing cash and cash equivalents and cash generated from operations and available line of credit will be sufficient to meet itsour ongoing working capital and capital expenditure requirements for the next 12 months.through May 31, 2018.  However, the Company has entered into discussions with City National to renew the CNB Loan Agreement, andwe may seek additional capital to fund future growth in its business, to provide flexibility to respond to dynamic market conditions, or to fund itsour strategic growth objectives.  

Our Board has adhered to a practice of not paying cash dividends.  This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures, and stockholders' desire for capital appreciation of their holdings.  No cash dividends have been paid to the Company's stockholders since January 30, 1989, and none are expected to be paid for the foreseeable future.

Critical Accounting Policies

Off-Balance Sheet Arrangements

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assuranceensure that information required to be disclosed in the Company'sour reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to the Company,us, including the Company's principalour chief executive officer and principalchief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Company recognizeswe recognize that noany controls and procedures, no matter how well designed and operated, can provide absoluteonly reasonable assurance of achieving the desired control objectives.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of June 30, 2016March 31, 2017 was conducted under the supervision and with the participation of the Company'sour management, including the Company's principalour chief executive officer and principalchief financial officer, of the effectiveness of the Company'sour disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the Company's principalour chief executive officer and principalchief financial officer concluded that the Company'sour disclosure controls and procedures, as of June 30, 2016,March 31, 2017, were effective at athe reasonable assurance level.

Changes in Internal Control Over Financial Reporting

OTHER INFORMATION