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Supplemental Balance Sheet Disclosures | 6 Months Ended
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Mar. 31, 2015
Supplemental Balance Sheet Disclosures |
Supplemental Balance Sheet Disclosures | 2. Supplemental Balance Sheet Disclosures Unbilled Receivables Unbilled receivables principally represent sales recorded under the percentage-of-completion method of accounting that, in accordance with applicable contract terms, have not been billed to customers. Unbilled receivables, net of progress payments and an impairment of $3.6 million and $3.7 million related to the Delta contract at March 31, 2015 and September 30, 2014 respectively, were $5.9 million and $7.4 million at March 31, 2015 and September 30, 2014, respectively. Significant changes in estimates related to accounting for long-term contracts under the percentage-of-completion method may have a material effect on the Company’s results of operations in the period in which the revised estimates are made. Cumulative catch-up adjustments resulting from changes in estimates increased operating income by $354,000 and $720,000 for the three and six months ended March 31, 2015 respectively. Cumulative catch-up adjustments resulting from changes in estimates reduced operating income by $443,000 and $614,000 for the three and six months ended March 31, 2014 respectively. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market, net of reserve for excess and obsolete inventory, and consist of the following:
|  | March 31, |  | September 30, |
|  | 2015 |  | 2014 |
Raw materials |  | $ | 3,766,723 |  | $ | 4,389,334 |
Work-in-process |  | 658,153 |  | 905,529 |
Finished goods |  | 194,365 |  | 175,923 |
|  | $ | 4,619,241 |  | $ | 5,470,786 |
Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the following:
|  | March 31, |  | September 30, |
|  | 2015 |  | 2014 |
Prepaid insurance |  | $ | 613,418 |  | $ | 398,090 |
Other |  | 262,472 |  | 352,018 |
|  | $ | 875,890 |  | $ | 750,108 |
Property and equipment Property and equipment, net consists of the following:
|  | March 31, |  | September 30, |
|  | 2015 |  | 2014 |
Land |  | $ | 1,021,245 |  | $ | 1,021,245 |
Computer equipment |  | 2,302,497 |  | 2,292,548 |
Corporate airplane |  | 3,128,504 |  | 3,128,504 |
Furniture and office equipment |  | 1,063,253 |  | 1,063,254 |
Manufacturing facility |  | 5,733,313 |  | 5,728,437 |
Equipment |  | 5,178,275 |  | 5,047,737 |
|  | 18,427,087 |  | 18,281,725 |
Less: accumulated depreciation and amortization |  | (11,063,600 | ) | (10,814,062 | )
|  | $ | 7,363,487 |  | $ | 7,467,663 |
Depreciation and amortization related to property and equipment was approximately $140,000 and $144,000 for the three months ended March 31, 2015 and 2014, respectively. The corporate airplane is utilized primarily in support of product development and has been depreciated to its estimated salvage value. Depreciation and amortization related to property and equipment was approximately $275,000 and $274,000 for the six months ended March 31, 2015 and 2014, respectively. Other assets Other assets consist of the following:
|  | March 31, |  | September 30, |
|  | 2015 |  | 2014 |
Intangible assets, net of accumulated amortization of $512,237 and $499,837 at March 31, 2015 and September 30, 2014 |  | $ | 88,000 |  | $ | 100,400 |
Other non-current assets |  | 82,248 |  | 10,448 |
|  | $ | 170,248 |  | $ | 110,848 |
Intangible assets consist of licensing and certification rights which are amortized over a defined number of units. No impairment charges were recorded in the six months ended March 31, 2015 and 2014. Total amortization expense was approximately $8,000 and $0 for the three months ended March 31, 2015 and 2014, respectively. Total amortization expense was approximately $12,000 and $0 for the six months ended March 31, 2015 and 2014, respectively. The timing of future amortization expense is not determinable because the intangible assets are being amortized over a defined number of units. Accrued expenses Accrued expenses consist of the following:
|  | March 31, |  | September 30, |
|  | 2015 |  | 2014 |
Warranty |  | $ | 826,136 |  | $ | 777,599 |
Salary, benefits and payroll taxes |  | 499,687 |  | 787,277 |
Professional fees |  | 203,040 |  | 431,612 |
Income taxes payable |  | — |  | 185,151 |
Other, including losses on contracts |  | 962,379 |  | 1,895,651 |
|  | $ | 2,491,242 |  | $ | 4,077,290 |
Other accrued expense at March 31, 2015 and September 30, 2014 includes $0.7 and $1.5 million of EDC program costs, respectively. Warranty cost and accrual information for the three and six months ended March 31, 2015 is highlighted below:
|  | Three Months Ending |  | Six Months Ending |
|  | March 31, 2015 |  | March 31, 2015 |
Warranty accrual, beginning of period |  | $ | 818,006 |  | $ | 777,599 |
Accrued expense |  | 41,056 |  | 132,444 |
Warranty cost |  | (32,926 | ) | (83,907 | )
Warranty accrual, end of period |  | $ | 826,136 |  | $ | 826,136 |

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