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Accounting Policies, by Policy (Policies)
 3 Months Ended
Mar. 31, 2024
Summary of Significant Accounting Policies [Abstract]  
Accounts Receivable

Accounts Receivable

Accounts receivable are carried at the original invoice amount less an estimate made for credit losses based on a review of all outstanding amounts on a quarterly basis. Management determines the allowance for credit losses by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, current economic conditions and other relevant factors, including specific reserves for certain accounts. Accounts receivable are written off when deemed uncollectible.  Bad debt expenses are recorded in operating expenses on the condensed consolidated statements of operations.

The activity for the allowance for credit losses during the three months ended March 31, 2024 and 2023 is set forth in the table below:

      Charged       
   Balance at
Beginning of		  

to

Costs and

   Deductions
from		   Balance at
End of		 
   Period   Expenses   Reserves   Period 
Three Months ended March 31, 2024 Allowance for Credit Losses  $344,000   $26,000   $(49,000)  $321,000 
Three Months ended March 31, 2023 Allowance for Credit Losses  $281,000   $4,000   $
-
   $285,000 
Inventory Valuation

Inventory Valuation

The Company values inventory at the lower of cost or an estimated net realizable value. The Company periodically evaluates inventory items not secured by backlog and establishes write-downs to estimated net realizable value for excess quantities, slow-moving goods, obsolescence and for other impairments of value.

 

Inventories consist of the following at:

   March 31,   December 31, 
   2024   2023 
         
Raw Materials  $5,390,000   $5,213,000 
Work In Progress   13,164,000    13,502,000 
Semi - Finished Goods   12,468,000    12,590,000 
Final - Finished Goods   1,839,000    1,789,000 
Reserve   (3,502,000)   (3,243,000)
Total Inventory  $29,359,000   $29,851,000 
Credit and Concentration Risks

Credit and Concentration Risks

A large percentage of the Company’s revenues are derived directly from large aerospace and defense prime contractors for which the ultimate end-user is the U.S. Government, other governments, or commercial airlines. 

The composition of customers that exceeded 10% of net sales in either the three months ended March 31, 2024 or 2023 are shown below:

  Percentage of Net Sales 
Customer  2024   2023 
RTX (a)   30.7%   22.8%
Lockheed Martin   25.9%   24.3%
Northrop   11.0%   3.7%
Ruag   4.2%   10.0%
(a) RTX includes Collins Landing Systems and Collins Aerostructures

The composition of customers that exceed 10% of accounts receivable at either March 31, 2024 or December 31, 2023 are shown below: 

  Percentage of Net Receivables 
  March 31,   December 31, 
Customer  2024   2023 
         
RTX (a)   52.6%   45.5%
Boeing   0.0%   16.0%
(a) RTX includes Collins Landing Systems and Collins Aerostructures

 
Disaggregation of Revenue

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the three month periods ended March 31, 2024 and 2023:

Product  March 31, 2024   March 31, 2023 
         
Military  $10,385,000   $10,032,000 
Commercial   3,676,000    2,517,000 
           
Total  $14,061,000   $12,549,000 
Cash

Cash

During the period ended March 31, 2024, 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. 
Major Suppliers

Major Suppliers

The Company utilizes sole-source suppliers to supply raw materials or other parts used in production. 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 to provide parts for any reason, the Company’s business would be severely harmed.
Customer Deposits

Customer Deposits

The Company receives advance payments on certain contracts with the remainder of the contract balance due upon the shipment of the final product once the customer inspects and approves the product for shipment. At that time, the entire amount will be recognized as revenue and the deposit will be applied to the customer’s invoice.

At March 31, 2024 and December 31, 2023, customer deposits were $3,158,000 and $3,557,000 respectively. The Company recognized revenue of $399,000 during the three months ended March 31, 2024 that was included in customer deposits balance as of December 31, 2023.The Company recognized revenue of $273,000 during the three months ended March 31, 2023, that was included in the customer deposits balance as of December 31, 2022
Backlog

Backlog

Backlog represents the value of orders received pursuant to our Long-Term Agreements (“LTA”) or spot orders pursuant to a purchase order. As of March 31, 2024, backlog relating to remaining performance obligations on contracts was approximately $99.3 million. The Company estimates that a substantial portion of this backlog will be recognized as net sales during the next twenty-four-months, with the rest thereafter. This expectation assumes that raw material supplies and outsourced processing is completed and delivered on time and that the Company’s customers will accept delivery as scheduled. The Company anticipates that sales during the aforementioned periods will also include sales from expected new orders that are not included in our backlog.
Contract Costs Receivable

Contract Costs Receivable

Contract costs receivable represent costs to be reimbursed from a terminated contract. The Company expects to collect the receivable in the next twelve months. Contract costs receivable were $296,000 at both March 31, 2024 and December 31, 2023.

 
Earnings (Loss) per share

Earnings (Loss) per share

Basic earnings (loss) per share (“EPS”) is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

For purposes of calculating diluted earnings (loss) per common share, the numerator includes net income (loss) plus interest on convertible notes payable assumed converted as of the first day of the period. The denominator includes both the weighted-average number of shares of common stock outstanding during the period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially include stock options and warrants using the treasury stock method and convertible notes payable using the if-converted method.

The following securities have been excluded from the calculation as the exercise price was greater than the average market price of the common stock:

   Three Months Ended 
   March 31,   March 31, 
   2024   2023 
         
Stock Options   234,750    302,550 
Warrants   
-
    28,000 
    234,750    330,550 

The following securities have been excluded from the calculation because the effect of including these potential shares was anti-dilutive due to the net loss incurred during that period:

   Three Months Ended 
   March 31,   March 31, 
   2024   2023 
         
Stock Options   189,260    
-
 
Convertible notes payable   405,800    405,800 
    595,060    405,800 
Stock-Based Compensation

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 and stock grants at their closing reported market value. Stock-based compensation expense for employees amounted to $24,000 and $45,000 for the three months ended March 31, 2024 and 2023, respectively. Stock-based compensation expense for directors amounted to $38,000 and $54,000 for the three months ended March 31, 2024 and 2023, respectively. Stock compensation expenses for employees and directors were included in operating expenses in the accompanying condensed consolidated statements of operations.

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. The adoption of this pronouncement 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.