Subsequent Events

As a result of the COVID-19 pandemic, the global economy has experienced substantial turmoil including impacts from the world financial markets which have experienced a period of significant volatility and overall declines. In addition, as of the date of this 2019 Annual Report, due to unprecedented decreases in demand, an oil price war, and economic uncertainty resulting from the COVID-19 pandemic, crude oil prices declined precipitously. A significant portion of the Company’s sales and profitability is derived from the sale of products that are used within the oil and gas industry. While the Company has yet to experience significant supply chain interruptions or material cancellations of orders, the potential impact of future disruptions, continued economic uncertainty, and continued depressed crude oil prices and declining rig count levels may have a significant adverse impact on the results of future operations, financial position, and liquidity of the Company. Further, it is reasonably possible that these potential adverse impacts may result in the recognition of material impairments or other related charges.

The Company is aggressively beginning the execution of contingency actions as a result of the expected significant negative impacts of these factors. The Company is reviewing operating expenses as part of the contingency planning process, including prioritizing certain R&D investments in support of the Company’s long-term growth objectives. As of the date of this Quarterly Report, the Company has implemented the following temporary cost reduction measures designed to mitigate the operating and financial impacts of the COVID-19 pandemic on its business:


•	reduced the hours of operations of the Company’s production facilities;


•	reduced the work week for all office employees;


•	reduced pay for salaried employees by between 10% and 30%, depending on the employee’s position;


•	suspended the Company’s 401(k) plan match;


•	deferred spending on certain R&D programs;


•	implemented a hiring freeze;


•	restricted all non-essential travel; and


•	minimized discretionary expenses and consulting services.

On March 27, 2020, President Trump signed into law the CARES Act. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments and income taxes. The income tax implications are discussed within Note 10. Income Taxes.