XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

Summary of Significant Accounting Policies | 6 Months Ended
--- | ---
Jun. 30, 2024
Summary of Significant Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 six months ended June 30, 2024 and 2023 is set forth in the table below:
|  | Balance at Beginning of |  |  | Charged to Costs and |  |  | Deductions from |  |  | Balance at End of |
|  | Period |  |  | Expenses |  |  | Reserves |  |  | Period |
Six Months ended June 30, 2024 Allowance for Credit Losses |  | $ | 344,000 |  |  | $ | 26,000 |  |  | $ | (82,000 | ) |  | $ | 288,000 |
Six Months ended June 30, 2023 Allowance for Credit Losses |  | $ | 281,000 |  |  | $ | 38,000 |  |  | $ | - |  |  | $ | 319,000 |
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:
|  | June 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Raw Materials |  | $ | 4,953,000 |  |  | $ | 4,968,000 |
Work In Progress |  |  | 12,495,000 |  |  |  | 12,798,000 |
Semi – Finished Goods |  |  | 10,001,000 |  |  |  | 10.296,000 |
Final – Finished Goods |  |  | 1,729,000 |  |  |  | 1,789,000 |
Total Inventory |  | $ | 29,178,000 |  |  | $ | 29,851,000 |
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 June 30, 2024 or 2023 are shown below:
|  | Percentage of Net Sales |
Customer |  | 2024 |  |  | 2023 |
Northrop |  |  | 30.5 | % |  |  | 3.9 | %
Lockheed Martin |  |  | 25.4 | % |  |  | 18.5 | %
RTX (a) |  |  | 22.4 | % |  |  | 36.3 | %
Ruag |  |  | - |  |  |  | 14.0 | %
(a) | RTX includes Collins Landing Systems and Collins Aerostructures
The composition of customers that exceeded 10% of net sales in either the six months ended June 30, 2024 or 2023 are shown below:
|  | Percentage of Sales |
Customer |  | 2024 |  |  | 2023 |
RTX (a) |  |  | 26.6 | % |  |  | 29.7 | %
Lockheed Martin |  |  | 25.6 | % |  |  | 21.3 | %
Northrop |  |  | 20.6 | % |  |  | 3.8 | %
Ruag |  |  | 2.2 | % |  |  | 12.1 | %
(a) | RTX includes Collins Landing Systems and Collins Aerostructures
The composition of customers that exceed 10% of accounts receivable at either June 30, 2024 or December 31, 2023 are shown below:
|  | Percentage of Net Receivables |
|  | June 30, |  |  | December 31, |
Customer |  | 2024 |  |  | 2023 |
RTX (a) |  |  | 37.7 | % |  |  | 45.5 | %
Northrop |  |  | 29.4 | % |  |  | 8.2 | %
Boeing |  |  | 0.1 | % |  |  | 16.0 | %
(a) | RTX includes Collins Landing Systems and Collins Aerostructures
Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the three and six month periods ending June 30, 2024 and 2023:
|  | Three Months Ended |  |  | Six Months Ended |
Product |  | June 30, 2024 |  |  | June 30, 2023 |  |  | June 30, 2024 |  |  | June 30, 2023 |
Military |  | $ | 8,920,000 |  |  | $ | 11,337,000 |  |  | $ | 19,304,000 |  |  | $ | 21,369,000 |
Commercial |  |  | 4,652,000 |  |  |  | 1,868,000 |  |  |  | 8,329,000 |  |  |  | 4,385,000 |
Total |  | $ | 13,572,000 |  |  | $ | 13,205,000 |  |  | $ | 27,633,000 |  |  | $ | 25,754,000 |
Cash During the period ended June 30, 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 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 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 June 30, 2024 and December 31, 2023, customer deposits were $2,261,000 and $3,557,000 respectively. The Company recognized revenue of $897,000 and $1,296,000 during the three and six months ended June 30, 2024, respectively, that was included in the customer deposits balance as of December 31, 2023.The Company recognized revenue of $42,000 and $314,000 during the three and six months ended June 30, 2023, respectively, that was included in the customer deposits balance as of December 31, 2022. 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 June 30, 2024, backlog relating to remaining performance obligations on contracts was approximately $100.7 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 backlog. 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 June 30, 2024 and December 31, 2023. 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 is a calculation of net income (loss) applicable to common stockholders utilized to calculate EPS:
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Net Income (Loss) per condensed consolidated statements of operations |  | $ | 298,000 |  |  | $ | (395,000 | ) |  | $ | (408,000 | ) |  | $ | (1,013,000 | )
Add: Convertible Note Interest for Potential Note Conversion |  |  | 77,000 |  |  |  | - |  |  |  | - |  |  |  | - |
Net Income (Loss) used to calculate diluted earnings per share |  | $ | 375,000 |  |  | $ | (395,000 | ) |  | $ | (408,000 | ) |  | $ | (1,013,000 | )
The following is a reconciliation of the denominators of basic and diluted earnings per share computations:
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Weighted average shares outstanding used to compute basic earnings per share |  |  | 3,318,620 |  |  |  | 3,265,727 |  |  |  | 3,318,146 |  |  |  | 3,262,122 |
Effect of dilutive stock options |  |  | 106,420 |  |  |  | - |  |  |  | - |  |  |  | - |
Effect of dilutive convertible notes payable |  |  | 405,800 |  |  |  | - |  |  |  | - |  |  |  | - |
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share |  |  | 3,724,420 |  |  |  | 3,265,727 |  |  |  | 3,318,146 |  |  |  | 3,262,122 |
Per share amount - basic |  | $ | 0.09 |  |  | $ | (0.12 | ) |  | $ | (0.12 | ) |  | $ | (0.31 | )
Per share amount - diluted |  | $ | 0.08 |  |  | $ | (0.12 | ) |  | $ | (0.12 | ) |  | $ | (0.31 | )
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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Stock Options |  |  | 313,583 |  |  |  | 462,870 |  |  |  | 313,583 |  |  |  | 462,870 |
Warrants |  |  | - |  |  |  | 28,000 |  |  |  | - |  |  |  | 28,000 |
|  |  | 313,583 |  |  |  | 490,870 |  |  |  | 313,583 |  |  |  | 490,870 |
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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Stock Options |  |  | - |  |  |  | - |  |  |  | 106,420 |  |  |  | - |
Convertible notes payable |  |  | - |  |  |  | 405,800 |  |  |  | 405,800 |  |  |  | 405,800 |
|  |  | - |  |  |  | 405,800 |  |  |  | 512,220 |  |  |  | 405,800 |
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 $12,000 and $187,000 for the three months ended June 30, 2024 and 2023, respectively, and $36,000 and $232,000 for the six months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense for directors amounted to $38,000 and $54,000 for the three months ended June 30, 2024 and 2023, respectively, and $76,000 and $108,000 for the six months ended June 30, 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 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.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/235/tableOfContent + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration