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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2019
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principal Business Activity The Company, through its AIM subsidiary, is primarily engaged in manufacturing aircraft structural parts and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Sterling manufactures components and provides services for jet engines and ground-power turbines. The Company's customers consist mainly of publicly traded companies in the aerospace industry. Inventory Valuation For annual periods, the Company values inventory at the lower of cost on a first-in-first-out basis or estimated net realizable value. The Company does not take physical inventories at interim quarterly reporting periods. As such, substantially all of the inventory value at September 30, 2019 has been estimated using a gross profit percentage based on historical gross profit percentages of previous periods as applied to the net sales of the current period, as management believes that the gross profit percentage on these items are materially consistent from period to period. The remainder of the inventory value at September 30, 2019 is estimated based on the Company's standard cost perpetual inventory system, as management believes the perpetual system computed value for these items provides a better estimate of value for that inventory. Adjustments to reconcile the annual physical inventory to the Company's books are treated as changes in accounting estimates and are recorded in the fourth quarter. Inventories consist of the following at:
|  | September 30, |  |  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (Unaudited) |  |  |  |
Raw Materials |  | $ | 4,369,000 |  |  | $ | 4,622,000 |
Work In Progress |  |  | 20,298,000 |  |  |  | 17,530,000 |
Finished Goods |  |  | 9,966,000 |  |  |  | 10,915,000 |
Inventory Reserve |  |  | (4,281,000 | ) |  |  | (4,016,000 | )
Total Inventory |  | $ | 30,352,000 |  |  | $ | 29,051,000 |
Credit and Concentration Risks There were two customers that represented 61.7% and three customers that represented 69.3% of total net sales for the three months ended September 30, 2019 and 2018, respectively. This is set forth in the table below.
Customer |  | Percentage of Sales |
|  | September 30, 2019 |  |  | September 30, 2018 |
|  | (Unaudited) |  |  | (Unaudited) |
1 |  |  | 35.0 |  |  |  | 27.1 |
2 |  |  | 26.7 |  |  |  | 28.5 |
3 |  |  | * |  |  |  | 13.7 |
* Customer was less than 10% of sales for the three months ended September 30, 2019. There were three customers that represented 73.4% and 72.3% of total sales for the nine months ended September 30, 2019 and 2018, respectively. This is set forth in the table below.
Customer |  | Percentage of Sales |
|  | September 30, 2019 |  |  | September 30, 2018 |
|  | (Unaudited) |  |  | (Unaudited) |
1 |  |  | 31.1 |  |  |  | 27.5 |
2 |  |  | 31.0 |  |  |  | 33.3 |
3 |  |  | 11.3 |  |  |  | 11.5 |
There were three customers that represented 54.6% and two customers that represented 64.9% of gross accounts receivable at September 30, 2019 and December 31, 2018, respectively. This is set forth in the table below.
Customer |  | Percentage of Receivables |
|  | September 30, 2019 |  |  | December 31, 2018 |
|  | (Unaudited) |  |  |  |
1 |  |  | 24.0 |  |  |  | 38.5 |
2 |  |  | 19.5 |  |  |  | 26.4 |
3 |  |  | 11.1 |  |  |  | * |
* Customer was less than 10% of gross receivables at December 31, 2018. During the year, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable or unwilling to provide parts for any reason, its business could be severely harmed. Earnings per share Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive. The following is a reconciliation of the denominators of basic and diluted earnings per share computations:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2019 |  |  | September 30, 2018 |  |  | September 30, 2019 |  |  | September 30, 2018 |
|  | (Unaudited) |  |  | (Unaudited) |  |  | (Unaudited) |  |  | (Unaudited) |
Weighted average shares outstanding used to compute basic earnings per share |  |  | 28,909,072 |  |  |  | 26,768,914 |  |  |  | 28,774,041 |  |  |  | 26,295,703 |
Effect of dilutive stock options and warrants |  |  | 131,458 |  |  |  | — |  |  |  | — |  |  |  | — |
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share |  |  | 29,040,530 |  |  |  | 26,768,914 |  |  |  | 28,774,041 |  |  |  | 26,295,703 |
The following securities have been excluded from the calculation as the exercise price was greater than the average market price of the common shares:
|  | Three and Nine Months Ended |
|  | September 30, 2019 |  |  | September 30, 2018 |
|  | (Unaudited) |  |  | (Unaudited) |
Stock Options |  |  | 852,000 |  |  |  | 215,000 |
Warrants |  |  | 2,183,000 |  |  |  | 1,480,000 |
|  |  | 3,035,000 |  |  |  | 1,695,000 |
The following securities have been excluded from the calculation even though the exercise price was less than the average market price of the common shares during the periods set forth below because the effect of including these potential shares was anti-dilutive due to the net loss incurred during these periods:
|  | Nine Months Ended |  |  | Three and Nine Months Ended |
|  | September 30, 2019 |  |  | September 30, 2018 |
|  | (Unaudited) |  |  | (Unaudited) |
Stock Options |  |  | 500,000 |  |  |  | 695,000 |
Warrants |  |  | — |  |  |  | 480,000 |
|  |  | 500,000 |  |  |  | 1,175,000 |
Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation expense for employees and directors amounted to $81,000 and $83,000 for the three months ended September 30, 2019 and 2018, respectively, and $446,000 and $308,000 for the nine months ended September 30, 2019 and 2018, respectively, and was included in operating expenses on the accompanying Condensed Consolidated Statements of Operations. Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $163,000 at September 30, 2019 and December 31, 2018 relates to the acquisition of NTW. Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company has determined that there has been no impairment of goodwill at September 30, 2019. Recently Issued Accounting Pronouncements In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities" ("ASU 2018-17"). This ASU reduces the cost and complexity of financial reporting associated with consolidation of variable interest entities (VIEs). A VIE is an organization in which consolidation is not based on a majority of voting rights. The new guidance supersedes the private company alternative for common control leasing arrangements issued in 2014 and expands it to all qualifying common control arrangements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ASU 2018-17 is not expected to have a material impact on the Company's condensed consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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