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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2025
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 nine months ended September 30, 2025 and 2024 is set forth in the table below:
|  | Balance at Beginning of Period |  |  | Charged to Expenses |  |  | Deductions from the Allowance |  |  | Balance at End of Period |
Nine Months ended September 30, 2025 Allowance for Credit Losses |  | $ | 396,000 |  |  | $ | 76,000 |  |  | $ | (96,000 | ) |  | $ | 376,000 |
Nine Months ended September 30, 2024 Allowance for Credit Losses |  | $ | 344,000 |  |  | $ | 26,000 |  |  | $ | (133,000 | ) |  | $ | 237,000 |
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:
|  | September 30, 2025 |  |  | December 31, 2024 |
Raw Materials |  | $ | 7,298,000 |  |  | $ | 6,318,000 |
Work In Progress |  |  | 17,687,000 |  |  |  | 13,028,000 |
Semi-Finished Goods |  |  | 8,228,000 |  |  |  | 8,805,000 |
Final-Finished Goods |  |  | 1,214,000 |  |  |  | 660,000 |
Total Inventory |  | $ | 34,427,000 |  |  | $ | 28,811,000 |
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 for the three months ended September 30, 2025 and 2024 are shown below:
|  | Percentage of Net Sales |
Customer |  | 2025 |  |  | 2024 |
RTX (a) |  |  | 38.2 | % |  |  | 30.9 | %
Lockheed |  |  | 30.2 | % |  |  | 23.9 | %
Northrop |  |  | 3.2 | % |  |  | 18.3 | %
(a) | RTX includes Collins Landing Systems and Collins Aerostructures
The composition of customers that exceeded 10% of net sales for the nine months ended September 30, 2025 and 2024 are shown below:
|  | Percentage of Net Sales |
Customer |  | 2025 |  |  | 2024 |
RTX (a) |  |  | 37.1 | % |  |  | 29.8 | %
Lockheed |  |  | 32.5 | % |  |  | 25.1 | %
Northrop |  |  | 6.6 | % |  |  | 19.9 | %
(a) | RTX includes Collins Landing Systems and Collins Aerostructures
The composition of customers that exceed 10% of accounts receivable at September 30, 2025 and December 31, 2024 are shown below:
|  | Percentage of Net Receivables |
Customer |  | September 30, 2025 |  |  | December 31, 2024 |
RTX (a) |  |  | 53.3 | % |  |  | 38.2 | %
Lockheed |  |  | 18.7 | % |  |  | 8.6 | %
Northrop |  |  | 3.0 | % |  |  | 11.0 | %
Ontic |  |  | 2.6 | % |  |  | 14.6 | %
(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 nine month periods ending September 30, 2025 and 2024:
|  | Three Months Ended |  |  | Nine Months Ended |
Product |  | September 30, 2025 |  |  | September 30, 2024 |  |  | September 30, 2025 |  |  | September 30, 2024 |
Military |  | $ | 5,377,000 |  |  | $ | 7,968,000 |  |  | $ | 20,549,000 |  |  | $ | 28,272,000 |
Commercial |  |  | 4,932,000 |  |  |  | 4,587,000 |  |  |  | 14,562,000 |  |  |  | 11,916,000 |
Total |  | $ | 10,309,000 |  |  | $ | 12,555,000 |  |  | $ | 35,111,000 |  |  | $ | 40,188,000 |
Cash and Restricted Cash During the period ended September 30, 2025, 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. As of September 30, 2025, and December 31, 2024 the Company reported restricted cash of $3,930,000 and $0 on its condensed consolidated balance sheets. Restricted cash represents proceeds from the Company’s ATM offering that are pledged as security for its obligations under the Current Credit Facility. The following table reconciles cash and restricted cash reported with the condensed consolidated balance sheets to the total amount shown in the condensed consolidated statements of cash flows:
|  | September 30, 2025 |  |  | December 31, 2024 |
Cash |  | $ | 126,000 |  |  | $ | 753,000 |
Restricted Cash |  |  | 3,930,000 |  |  |  | - |
Total cash and restricted cash |  | $ | 4,056,000 |  |  | $ | 753,000 |
Major Suppliers The Company utilizes sole-source suppliers to supply raw materials or other parts used in production of certain 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 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 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 September 30, 2025 and December 31, 2024, customer deposits were $442,000 and $1,115,000 respectively. The Company recognized revenue of $0 and $673,000 during the three and nine months ended September 30, 2025, respectively, that was included in the customer deposits balance as of December 31, 2024. The Company recognized revenue of $544,000 and $1,840,000 during the three and nine months ended September 30, 2024, respectively, that was included in the customer deposits balance as of December 31, 2023. 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 September 30, 2025, backlog relating to remaining performance obligations on contracts was approximately $131.8 million as compared to our backlog of $128.5 million at June 30, 2025. The Company estimates that a substantial portion of our current 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 future periods will also include sales from 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 collected the contract cost receivable of $296,000 at December 31, 2024 in March of 2025. Contract costs receivable at September 30, 2025 and December 31, 2024 were $0 and $296,000, respectively. 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, restricted units and warrants using the treasury stock method and convertible notes payable using the if-converted method. There were no adjustments to net loss applicable to common shareholders utilized to calculate EPS. The following securities have been excluded from the calculation as the exercise price was greater than the average market price of the common stock and because the effect of including these potential shares was anti-dilutive due to net loss incurred during that period:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2025 |  |  | September 30, 2024 |  |  | September 30, 2025 |  |  | September 30, 2024 |
Stock Options |  |  | 373,103 |  |  |  | 154,250 |  |  |  | 373,103 |  |  |  | 154,250 |
Restricted Stock Units |  |  | 190,418 |  |  |  | 282,628 |  |  |  | 190,418 |  |  |  | 282,628 |
Convertible notes payable |  |  | 361,700 |  |  |  | 405,800 |  |  |  | 361,700 |  |  |  | 405,800 |
|  |  | 925,221 |  |  |  | 842,678 |  |  |  | 925,221 |  |  |  | 842,678 |
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 $152,000 and $150,000 for the three months ended September 30, 2025 and 2024, respectively, and $744,000 and $186,000 for the nine months ended September 30, 2025 and 2024, respectively. Stock compensation expense for directors amounted to $14,000 and $40,000 for the three months ended September 30, 2025 and 2024, respectively, and $92,000 and $116,000 for the nine months ended September 30, 2025 and 2024, 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. In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses”, which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures. In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic326): Measurement of Credit Loss for Accounts Receivable and Contract Assets”, which provides a practical expedient for estimating expected credit losses for current accounts receivable and contract assets arising under ASC 606 “Revenue from Contracts with Customers”. The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual periods. The Company is currently assessing the impact of that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures. 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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