Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐⬜

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐⬜

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. The allowances were approximately $758 at March 31,June 30, 2018, compared with approximately $789 at December 31, 2017.

Income tax benefitexpense totaling approximately $106$290 and $183 has been recorded for the three and six months ended March 31,June 30, 2018, respectively, compared with $121$222 and $101, respectively, for the same periodperiods last year.

As of March 31,June 30, 2018 and December 31, 2017, the Company’s net deferred tax assets totaled approximately $3,423$3,139 and $3,317, respectively, and are primarily composed of net operating loss carryforwards (“NOLs”) and research and development costs and tax credits.  As of March 31,June 30, 2018, these NOLs total approximately $6,921$4,422 for federal and $13,903$13,323 for state purposes, with expirations starting in 2018 through 2030.

In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years to utilize its NOLs prior to their expiration. The Company analyzes all positive and negative evidence to determine if, based on the weight of available evidence, the Company is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available, current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.

Based on management’s analysis of all available evidence, both positive and negative, the Company’s management has concluded that the Company does not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Management estimated that as of March 31,June 30, 2018, it is more likely than not that approximately $64$83 of the Company’s deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize its Florida NOLs. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future. If the Company incurs future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of March 31,June 30, 2018.

The Company has an investment in a limited partnership, FGI 1347 Holdings, LP, of which the Company is the sole limited partner. FGI 1347 Holdings, LP, was established for the purpose of investing in securities.

Affiliates of Fundamental Global Investors, LLC serve as the general partner and the investment manager of FGI 1347 Holdings, LP, and the Company is the sole limited partner. As of March 31,June 30, 2018, the Company and the affiliates of Fundamental Global Investors, LLC, including without limitation Ballantyne Strong, Inc., beneficially owned in the aggregate 2,576,6522,639,362 shares of PIH’s common stock, representing approximately 43.1%44.1% of PIH’s outstanding shares. Fundamental Global with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, Chairman of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as Chief Executive Officer and Chairman of the Board of Directors of Ballantyne Strong. Mr. Lewis M. Johnson, a directorCo-Chairman of the Company, is President, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as a director of Ballantyne Strong. Messrs. Cerminara and Johnson also serve onas Chairman and Co-Chairman, respectively, of the Board of Directors of PIH.

The changes in consolidated stockholders’ equity for the threesix months ended March 31,June 30, 2018 are as follows:

 

The following table sets forth the computation of basic and diluted income per share:

Approximately 438,500435,000 stock options and 30,5703,768 restricted stock units for the three and six months ended March 31,June 30, 2018, and 106,000178,500 stock options and zero9,050 restricted stock units granted for the three and six months ended March 31,June 30, 2017, were excluded from the calculation because they were anti-dilutive.

The Company has an employee and non-employee director share-based incentive compensation plan. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $21$17 and $38 for the three and six months ended March 31,June 30, 2018, respectively, compared with $2$14 and $16, respectively, for the same periodperiods last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and six months ended March 31,June 30, 2018 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Company’s consolidated financial statementsConsolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

On June 4, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vest on June 4, 2019, subject to continued service through such vesting date. On June 15, 2017, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vestvested on June 15, 2018. The Company recorded non-cash restricted stock unit compensation expense of $39 and $73 for the three and six months ended June 30, 2018, subject to continued service through such vesting date.respectively, compared with $6 and $0 for the same periods last year.

From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of its business. On March 28, 2017, The Sales Group, Inc. (“TSG”) filed a lawsuit in the U.S. District Court for the Central District of California against the Company. TSG was a sales representative of the Company that the Company terminated in March 2017. TSG asserted claims against the Company for alleged breach of oral contract, violation of the California and Arizona sales representative statutes and an accounting of alleged unpaid sales commissions. TSG’s complaint sought damages in the amount of $6,090 for alleged unpaid past and future sales commissions. On April 3, 2017, counsel for TSG sent the Company a letter outlining additional alleged grounds for recovery against the Company and offering to settle the litigation in exchange for the continued payment of sales commissions to TSG for a negotiated period, a buyout of TSG’s alleged rights for a negotiated sum or reinstatement of TSG for a period of at least 2.5 years with commission rates equal to those in effect at the time of TSG’s termination. The matter was mediated on November 14, 2017, during which the parties agreed to a settlement. On December 19, 2017, the Company entered into a settlement agreement with TSG, pursuant to which TSG agreed to dismiss with prejudice its lawsuit filed against the Company. Pursuant to the settlement agreement, the Company agreed to pay an amount of $900 to TSG on or before December 31, 2017. The Company also agreed to pay to TSG commissions, at the rates in effect since February 7, 2013, on all orders for the Company’s products received and accepted by the Company from the states of Arizona, California, Nevada and Hawaii from January 1, 2018 through December 31, 2018, other than for (i) sales of the Company’s products to federal government agencies and offices, (ii) sales of the Company’s products to other end-users, excepting state and local government agencies and offices, and (iii) sales of parts or service, including warranty service. In addition, if at any time on or before December 31, 2018, the Company completes a change-in-control transaction, then the Company will pay to TSG an amount equal to $2,000, less the amount of commissions paid by the Company with respect to 2018, as described above. The settlement agreement settled all claims raised by TSG in its lawsuit against the Company. In December 2017, the Company recorded an estimated commission amount of approximately $536. As of March 31,For the six months ended June 30, 2018, the Company has paid $149$231 in commissions to TSGTSG. As of June 30, 2018, the Company estimated and recorded an additional commission amount of approximately $290 for the threeremaining six months ended March 31,of 2018.

As of March 31,June 30, 2018, the Company had purchase orders to suppliers for inventory of approximately $4,494.$6,380.

Sales to the United States government agencies represented approximately $3,993 (34.0%$4,776 (35.0%) and $8,769 (34.5%) of the Company’s total gross sales for the three and six months ended March 31,June 30, 2018, respectively, compared with approximately $2,917 (39.5%$3,018 (28.0%) and $5,935 (32.7%), respectively, for the same periodperiods last year. Accounts receivable from agencies of the United States government were $1,928$1,260 as of March 31,June 30, 2018, compared with approximately $1,180$924 at the same date last year.

The Company has a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $1,000 (subject to a borrowing base) and a maturity date of December 26, 2018. As of March 31,June 30, 2018, the Company was in compliance with all covenants under the loan and security agreement, as amended, governing this revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 5 (Debt) of the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017. As of March 31,June 30, 2018, there were no borrowings outstanding under the revolving credit facility and there was $1,000 of borrowing available under the revolving credit facility.

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including the statements about our plans, objectives, expectations and prospects. You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in our subsequent filings with the Securities and Exchange Commission, and include, among others, the following:

We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.

Reported dollar amounts in the management’s discussion and analysis (“MD&A”) are disclosed in millions or as whole dollar amounts.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report and the MD&A, consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

We design, manufacture and market two-way land mobile radios, repeaters, base stations and related components and subsystems.

Two-way land mobile radios can be hand-held (portable) or installed in vehicles (mobile). Repeaters expand the range of two-way land mobile radios, enabling them to operate over a wider area. Base station components and subsystems are installed at radio transmitter sites to improve performance by enhancing the signal and reducing or eliminating signal interference and enabling the use of one antenna for both transmission and reception. We incorporate both analog and digital technologies in our products. Our digital technology is compliant with the Project 25 standard of the Association of Public-Safety Communications Officials (“APCO Project 25,” or “P-25”). Later in 2018, we plan to introduce the first model in our line of multi-band products to complement our existing KNG products.

We conduct business under the names RELM Wireless Corporation andname BK Technologies, Inc. and offer products under two brand names: BK Radio and RELM. Generally, BK Radio-branded products serve the government and public safety market, while RELM-branded products serve the business and industrial market.

Our financial and operating results for the firstthree and six months ended June 30, 2018 improved significantly compared with the same periods last year. Sales grew for both the second quarter and the six month periods of 2018 compared with the same periods last year. Gross profit margins increased during the second quarter of 2018 improved in comparisoncompared with last year’s first quarter. Sales grew more than 59% from the firstsecond quarter last year while gross profit margins increased, and compared with the preceding quarter of 2018. Consequently, we generatedrecognized operating income versusfor the first six months of 2018, as compared to an operating loss for the first quartersame period last year. DuringAlso during the first quarter,six months of 2018, we recognized investmentgenerated positive cash flow and exchange rate losses, which more than offset operating income.

For the firstsecond quarter of 2018, our sales increased 59.2%26.9% to approximately $11.7$13.7 million, compared with approximately $7.4$10.8 million for the same quarter last year. Sales of P-25 digital productsFor the six months ended June 30, 2018, sales increased 40.0% to approximately $25.4 million, compared with $18.1 million for the first quarter of 2018 totaled approximately $9.1 million (77.0% of total sales), compared with approximately $5.5 million (74.3% of total sales) for the first quartersame period last year.

Gross profit margins as a percentage of sales for the firstsecond quarter ended March 31,of 2018 totaledgrew to approximately 41.2%43.1%, compared with 30.3%41.8% for the firstsecond quarter last year. For the six month period ended June 30, 2018, gross profit margins as a percentage of sales increased to 42.2%, compared with 37.1% for the same period last year.

For the firstsecond quarter ended March 31,of 2018, selling, general and administrative expenses (“SG&A”) totaled approximately $4.1$4.6 million (34.8%(33.3% of sales), compared with approximately $3.4$3.5 million (46.7%(32.7% of sales) for the same quarter last year. SG&A expenses for the first six months of 2018 totaled approximately $8.6 million (34.0% of sales), compared with approximately $7.0 million (38.4% of sales) for the same period last year.

For the first quarter ofthree and six months ended June 30, 2018, we recognized a loss on the sale of securities totaling approximately $849,000, and an unrealized loss, totaling $297,000$55,000 and $352,000, respectively, on our investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated variable interest entity. No comparable losses wereloss was incurred for last year’s three and six month periods. Also, for the six months ended June 30, 2018, we recognized a loss on the sale of securities totaling approximately $849,000, compared with a $617,000 gain for the same period last year. DuringOther expense for the first quarter ofthree and six months ended June 30, 2018 we also incurred other expense totalingtotaled approximately $168,000, primarily from foreign exchange losses.$58,000 and $225,000, respectively, compared with approximately $60,000 and $147,000 for the same periods last year.

The pretax lossPretax income for the three months ended March 31,June 30, 2018, totaled approximately $549,000,$1.2 million, compared with approximately $1.4$1.5 million for the same quarter last year. For the six months ended June 30, 2018, pretax income totaled approximately $686,000, compared with approximately $151,000 for the same period last year.

For the three and six months ended March 31,June 30, 2018, we recognized an income tax benefitexpense totaling approximately $106,000,$290,000 and $183,000, respectively, compared with $121,000$222,000 and $101,000, respectively, for the same quarterperiods last year. Our income tax benefitexpense is largely non-cash due to utilization of our NOLs.net operating loss carryforwards (“NOLs”).

Net lossincome for the three months ended March 31,June 30, 2018 was approximately $443,000$947,000 ($0.030.07 per basic and diluted share), compared with approximately $1.3 million ($0.090.10 per basic and diluted share) for the same quarter last year. For the six months ended June 30, 2018, net income totaled approximately $503,000 ($0.04 per basic and diluted share), compared with approximately $50,000 ($0.00 per basic and diluted share) for the same period last year.

As of March 31,June 30, 2018, working capital totaled approximately $22.9$23.4 million, of which approximately $15.8$17.7 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2017, working capital totaled approximately $26.7 million, of which approximately $12.7 million was comprised of cash, cash equivalents and trade receivables.

As an aid to understanding our operating results for the periods covered by this report, the following table shows selected items from our condensed consolidated statements of operationsincome expressed as a percentage of sales:

For the firstsecond quarter ended March 31,June 30, 2018, net sales totaledincreased 26.9% to approximately $11.7$13.7 million, compared with approximately $7.4$10.8 million for the same quarter last year. Sales of P-25 digital products forFor the quarter totaledsix months ended June 30, 2018, net sales increased 40.0% to approximately $9.1$25.4 million, (77.0% of total sales), compared with approximately $5.5$18.1 million (74.3% of total sales) for the same quarterperiod last year.

The increase in total sales and sales of digital products for the firstsecond quarter ofand six months ended June 30, 2018 was attributed primarily to state public safety agencies, including orders for the State of California and new state agency customers. Sales to state agencies were supplemented by demand from federal agencies, as well as international customers.

Sales prospects for the remainder of 2018 and international public safety customers. Theseinto next year appear promising as we look to grow our market share, particularly in the state and local arena. Accordingly, we are investing in additional sales were supplemented by orders from certain state agencies. Our funnel of sales prospects is encouraging and includes a broad range of prospective new customers. We are continuing to expand our salesmarketing resources to maximize potential sales growth.capitalize on new opportunities.

Gross profit margin as a percentage of sales for the firstsecond quarter ended March 31,June 30, 2018 was 41.2%increased to 43.1%, compared with 30.3%41.8% for the same quarter last year. For the six months ended June 30, 2018, gross profit margins increased to 42.2%, compared with 37.1% for the same period last year.

Our cost of products and gross profit margin are derived primarily from material, labor and overhead costs, product mix, manufacturing volumes and pricing. The improvement in gross profit margins for both the firstsecond quarter of 2018and six month period was attributed primarily to theincreased sales combined with a more favorable mix of product sales, which wassales. Additionally, increased production volumes enabled us to more heavily weighted toward higher margin products. Also, programs initiated last year to improveeffectively utilize and absorb our efficienciesbase of manufacturing overhead expenses, and we are realizing benefits associated with manufacturing and quality favorably impacted product costs.improvement programs. Comparatively, last year’s first quartertwo quarters included expenses related to acertain product enhancement expenses and the discontinuation of a product development initiative.

We continue to utilize contract manufacturing relationships for production efficiencies and to manage material and labor costs. We anticipate that our current contract manufacturing relationships or comparable alternatives will be available to us in the future. We may encounter product cost and competitive pricing pressures in the future. However, the extent of their impact on gross margins, if any, is uncertain.

SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters and non-cash share-based employee compensation expenses.

SG&A expenses for the firstsecond quarter ofended June 30, 2018 totaled approximately $4.1$4.6 million, or 34.8%33.3% of sales, compared with approximately $3.4$3.5 million, or 46.7%32.7% of sales, for the firstsecond quarter last year. For the six months ended June 30, 2018, SG&A expenses totaled approximately $8.6 million, or 34.0% of sales, compared with approximately $7.0 million, or 38.4% of sales, for the same period last year.

Engineering and product development expenses for the firstsecond quarter of 2018 totaled approximately $1.8$1.9 million (15.3%(13.8% of total sales), compared with $1.0$1.2 million (12.9%(11.1% of total sales) for the same quarter last year. For the six-month period, engineering and product development expenses totaled approximately $3.7 million (14.6% of sales), compared with approximately $2.1 million (11.6% of sales) for the same period last year. The increase in engineering expenses was driven by costs related to new product development.

Marketing and selling expenses for the firstsecond quarter of 2018 totaled approximately $1.2$1.6 million (10.4%(11.7% of sales) compared with approximately $1.3 million (12.0% of sales) for the second quarter last year. For the six-month period, marketing and selling expenses totaled approximately $2.9 million (11.4% of sales), compared with approximately $1.3$2.6 million (17.9%(14.4% of sales) for the first quartersame period last year. The decrease in marketing and selling expenses wasincrease for both periods is attributed primarily to costs incurred last year associated with rebranding, which were partially offset by increasedsales commissions and incentive compensation directly related to sales performance.

General and administrative expenses for the firstsecond quarter of 2018 totaled approximately $1.1$1.0 million (9.0%(7.3% of total sales), compared with approximately $1.2$1.1 million (15.8%(10.2% of total sales) for the same quarter last year. For the six-month period, general and administrative expenses totaled approximately $2.1 million (8.2% of sales), compared with $2.2 million (12.3% of sales) for the same period last year. The decrease in costs for both periods was attributed primarily to one-time costs incurred last year related to changes in senior leadership.

Operating income for the firstsecond quarter ended March 31,June 30, 2018 totaledincreased 36.8% to approximately $748,000 (6.4%$1.3 million (9.7% of sales), compared with a loss of approximately $1.2 million (16.3%$973,000 (9.0% of sales) for the same quarter last year. For the six months ended June 30, 2018, operating income increased to approximately $2.1 million (8.2% of sales), compared with an operating loss of approximately $233,000 (1.3% of sales) for the same period last year. The increase in operating income for the quarter was attributed primarily to sales growth and improved gross profit margins, which were partially offset by increased product development expenses.

During the first quartersix months ended March 31,June 30, 2018, we sold 1,317,503 shares of Iteris, Inc., which cost approximately $2.4 million, for approximately $8.3 million, and recognized a loss of approximately $849,000. Also, in March 2018, we indirectly purchased 424,572 shares of common stock of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), through an investment in FGI 1347 Holdings, LP, a consolidated variable interest entity of which we are the sole limited partner. These shares were purchased for approximately $3.3 million, and we recognized an unrealized loss on the investment in the first quarter of 2018 of approximately $297,000.

For the first quarter ofthree and six months ended June 30, 2018, we recognized another expenses totaling approximately $58,000 and $225,000, respectively, compared with approximately $60,000 and $147,000, respectively, for the same periods last year. These expenses were primarily attributed to exchange loss of approximately $164,000losses related to sales under a Canadian dollar-denominated contract, compared with an exchange loss of approximately $74,000 for the first quarter last year.contract. Also during last year’s first quarter, we recorded a non-recurring loss of approximately $104,000 on the disposal of assets related to a discontinued product initiative.

We recorded an income tax benefitexpense of approximately $106,000$290,000 and $183,000, respectively, for the first quarterthree and six months ended March 31,June 30, 2018, compared with approximately $121,000$222,000 and $101,000, respectively, for the same quarterperiods last year.

As of March 31,June 30, 2018, our net deferred tax assets totaled approximately $3.4$3.14 million, and are primarily composed of NOLs.  These NOLs total $6.9approximately $4.42 million for federal and $13.9$13.32 million for state purposes, with expirations starting in 2018 through 2030.

In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years to utilize our NOLs prior to their expiration. We analyze all positive and negative evidence to determine if, based on the weight of available evidence, we are more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon our conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.

Based on our analysis of all available evidence, both positive and negative, we have concluded that we do not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Management assertsestimates that as of June 30, 2018, it is more likely than not that approximately $64,000$83,000 of the deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize the Florida NOLs. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of March 31,June 30, 2018.

For the first quartersix months ended March 31,June 30, 2018, net cash provided by operating activities totaled approximately $711,000, compared with cash used in operating activities totaledof approximately $3.3 million, compared with approximately $1.1$1.4 million for the same period last year.  Cash used inprovided by operating activities was primarily related to net loss, trade accounts receivable, accounts payable, inventories and aincome, adjusted by unrealized loss on investment in securities, and a decrease in inventories, which were partially offset by depreciationa decrease in accounts payable and amortization and deferred revenue.an increase in trade accounts receivable.

For the first quartersix months ended March 31,June 30, 2018, we had a net lossincome of approximately $443,000,$503,000, compared with approximately $50,000 for the same period last year. Net inventories decreased during the six months ended June 30, 2018 by approximately $1.6 million, compared with an increase of $843,000 for the same period last year. The 2018 decrease was primarily attributed to an increase in sales. The loss on investment in securities for the six months ended June 30, 2018 totaled approximately $1.2 million, compared with a net lossgain of approximately $1.3 million$617,000 for the first quartersame period last year. For additional information pertaining to our investment in securities, refer to Notes 1 and 6 to the condensed consolidated financial statements found on pages 7 and 9, respectively, of this report. Accounts receivable increased approximately $2.2$1.5 million during the threesix months ended March 31,June 30, 2018, compared to a decrease of $160,000with $1.9 million for the same period last year, reflecting sales that were consummated later in the respective quarter that had not yet completed their collection cycle. Accounts payable for the threesix months ended March 31,June 30, 2018, decreased approximately $1.1$2.4 million, compared with an increase of approximately $673,000$899,000 for the same period last year, primarily due to timing of payments to material suppliers. Net inventories increased during the three months ended March 31, 2018 by approximately $929,000, compared with $785,000 for the same period last year, primarily as a result of purchases of materials. Depreciation and amortization totaled approximately $211,000$439,000 for the threesix months ended March 31,June 30, 2018, compared with approximately $229,000$471,000 for the same period last year.

Cash provided by investing activities for the first quartersix months ended March 31,June 30, 2018 totaled approximately $4.9$4.0 million, which was primarily related to proceedscompared with approximately $450,000 for the same period last year. Proceeds from the sale of available-for-sale securities totalingtotaled approximately $8.3 million partially offset byfor the six months ended June 30, 2018, compared with approximately $897,000 for the same period last year. We utilized approximately $3.7 million for an investment of approximately $3.3 million in FGI 1347 Holdings, LP, and purchases of equipment totaling approximately $143,000. ForLP. There was no comparable investment for the same period last year,year. For the six months ended June 30, 2018, purchases of property, plant and equipment totaled approximately $319,000 was used$569,000, compared with approximately $447,000 for the purchase of manufacturing and engineering equipment.same period last year.

For the first quartersix months ended March 31,June 30, 2018, approximately $630,000$1.2 million was used in financing activities, primarily related to our capital return program, which included quarterly dividends totaling approximately $273,000$544,000 and stock repurchases totaling approximately $357,000.$616,000. For the same period last year, approximately $1.2$2.5 million was used to pay dividends and approximately $97,000$217,000 was used for stock repurchases. For the same period last year, we also received approximately $183,000 provided byfrom the issuance of common stock upon the exercise of stock options.

We have a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $1.0 million and a maturity date of December 26, 2018. As of March 31,June 30, 2018, and the date of this report, we were in compliance with all covenants under the loan and security agreement, as amended, governing the revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 5 (Debt) of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

As of March 31,June 30, 2018, and the date of this report, there were no borrowings outstanding under the revolving credit facility. As of March 31,June 30, 2018, and the date of this report, there was $1.0 million of borrowing available under the revolving credit facility.

Our cash and cash equivalents balance at March 31,June 30, 2018 was approximately $8.1$10.7 million.  We believe these funds combined with anticipated cash generated from operations and borrowing availability under our revolving credit facility are sufficient to meet our working capital requirements for the foreseeable future. However, financial and economic conditions could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Our President (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer) have evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e) and 15d-15(e)) as of March 31,June 30, 2018. Based on this evaluation, they have concluded that our disclosure controls and procedures were effective as of March 31,June 30, 2018.

During the three months ended March 31,June 30, 2018, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index below.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.