Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 25, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | BK Technologies Corp | |
Entity Central Index Key | 0000002186 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,658,543 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 8,825 | $ 11,268 |
Trade accounts receivable, net | 2,871 | 5,721 |
Inventories, net | 14,450 | 11,466 |
Prepaid expenses and other current assets | 1,792 | 2,401 |
Total current assets | 27,938 | 30,856 |
Property, plant and equipment, net | 4,134 | 2,729 |
Right-of-use (ROU) asset | 2,558 | 0 |
Investment in securities | 2,105 | 1,919 |
Deferred tax assets, net | 3,911 | 3,495 |
Other assets | 223 | 192 |
Total assets | 40,869 | 39,191 |
Current liabilities: | ||
Accounts payable | 6,854 | 5,595 |
Accrued compensation and related taxes | 1,160 | 2,014 |
Accrued warranty expense | 1,390 | 1,546 |
Accrued other expenses and other current liabilities | 512 | 292 |
Dividends payable | 253 | 256 |
Short-term lease liability | 263 | 0 |
Note payable-current portion | 77 | 0 |
Deferred revenue | 281 | 180 |
Total current liabilities | 10,790 | 9,883 |
Note payable, net of current portion | 348 | 0 |
Long-term lease liability | 2,295 | 0 |
Deferred revenue | 2,419 | 1,596 |
Total liabilities | 15,852 | 11,479 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock; $1.00 par value; 1,000,000 authorized shares; none issued or outstanding | 0 | 0 |
Common stock; $.60 par value; 20,000,000 authorized shares; 13,929,381 and 13,882,937 issued; and 12,672,056 and 12,817,829 outstanding shares at September 30, 2019 and December 31, 2018, respectively | 8,357 | 8,330 |
Additional paid-in capital | 26,037 | 25,867 |
Accumulated deficit | (4,482) | (2,393) |
Treasury stock, at cost, 1,257,325 and 1,065,108 shares at September 30, 2019 and December 31, 2018, respectively | (4,895) | (4,092) |
Total stockholders' equity | 25,017 | 27,712 |
Total liabilities and stockholders' equity | $ 40,869 | $ 39,191 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Stockholders equity: | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ .60 | $ .60 |
Common stock, authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 13,929,381 | 13,882,937 |
Common stock, outstanding shares | 12,672,056 | 12,817,829 |
Treasury stock, shares | 1,257,325 | 1,065,108 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales, net | $ 11,805 | $ 13,302 | $ 32,743 | $ 38,704 |
Expenses | ||||
Cost of products | 6,699 | 7,839 | 19,499 | 22,519 |
Selling, general and administrative | 4,811 | 4,585 | 15,247 | 13,229 |
Total expenses | 11,510 | 12,424 | 34,746 | 35,748 |
Operating income (loss) | 295 | 878 | (2,003) | 2,956 |
Other income (expense): | ||||
Net interest income | 33 | 28 | 134 | 63 |
(Loss) gain on investment in securities | (258) | (191) | 186 | (1,392) |
Other expense | (85) | (48) | (98) | (274) |
Total other (expense) income | (310) | (211) | 222 | (1,603) |
(Loss) income before income taxes | (15) | 667 | (1,781) | 1,353 |
Income tax benefit (expense) | 253 | (17) | 454 | (200) |
Net income (loss) | $ 238 | $ 650 | $ (1,327) | $ 1,153 |
Net income (loss) per share-basic and diluted | $ 0.02 | $ 0.05 | $ (0.10) | $ 0.09 |
Weighted average shares outstanding-basic | 12,696,273 | 13,479,759 | 12,725,793 | 13,538,116 |
Weighted average shares outstanding-diluted | 12,709,057 | 13,501,587 | 12,725,793 | 13,563,990 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities | ||
Net (loss) income | $ (1,327) | $ 1,153 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Inventories allowances | 112 | (31) |
Deferred tax benefit | (416) | 195 |
Depreciation and amortization | 896 | 702 |
Share-based compensation expense | 110 | 66 |
Restricted stock unit compensation expense | 85 | 111 |
(Gain) loss on investment in securities | (186) | 1,392 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 2,850 | (1,883) |
Inventories | (3,096) | 3,700 |
Prepaid expenses and other current assets | 609 | (869) |
Other assets | (31) | 31 |
Accounts payable | 1,259 | (2,475) |
Accrued compensation and related taxes | (854) | 288 |
Accrued warranty expense | (156) | 45 |
Deferred revenue | 924 | 963 |
Accrued other expenses and other current liabilities | 220 | (745) |
Net cash provided by operating activities | 999 | 2,643 |
Investing activities | ||
Purchases of property, plant and equipment | (2,301) | (1,067) |
Investment in securities | 0 | (3,741) |
Proceeds from sale of available-for-sale securities | 0 | 8,335 |
Net cash (used in) provided by investing activities | (2,301) | 3,527 |
Financing activities | ||
Proceeds from note payable | 425 | 0 |
Proceeds from issuance of common stock | 2 | 0 |
Cash dividends declared and paid | (765) | (815) |
Repurchase of common stock | (803) | (1,153) |
Net cash used in financing activities | (1,141) | (1,968) |
Net change in cash and cash equivalents | (2,443) | 4,202 |
Cash and cash equivalents, beginning of period | 11,268 | 7,147 |
Cash and cash equivalents, end of period | 8,825 | 11,349 |
Supplemental disclosure | ||
Cash paid for interest | 2 | 0 |
Income tax paid | 0 | 0 |
Non-cash financing activity | ||
Restricted stock units issued | $ 168 | $ 140 |
1. Condensed Consolidated Finan
1. Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - Condensed Consolidated Financial Statements | Basis of Presentation The condensed consolidated balance sheet as of September 30, 2019, the condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 have been prepared by BK Technologies Corporation (the “Company” or “we”), and are unaudited. On March 28, 2019, BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to “we” or the “Company” or its management or business at any period prior to the holding company reorganization (March 28, 2019) refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates. In the opinion of management, all adjustments, which include normal, recurring adjustments, necessary for a fair presentation have been made. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the operating results for a full year. Revenue Recognition Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” and the additional related ASUs (“ASC 606”), which replaced existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. The Company elected the modified retrospective method upon adoption, with no impact to the opening retained earnings or revenue reported. These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate: Step 1: Identify the contract with the customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations; and Step 5: Recognize revenue as the Company satisfies a performance obligation. ASC 606 provides that revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We generally satisfy performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time, and the revenue is recognized when the installation is complete. Principles of Consolidation The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) or a voting interest entity. VIEs are entities in which (i) the total equity investment at risk is not sufficient to enable the entity to finance its activities independently, or (ii) the at-risk equity holders do not have the normal characteristics of a controlling financial interest. A controlling financial interest in a VIE is present when an enterprise has one or more variable interests that have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The enterprise with a controlling financial interest is the primary beneficiary and consolidates the VIE. Voting interest entities lack one or more of the characteristics of a VIE. The usual condition for a controlling financial interest is ownership of a majority voting interest for a corporation or a majority of kick-out or participating rights for a limited partnership. When the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies (generally defined as owning a voting or economic interest of between 20% to 50%), the Company’s investment is accounted for under the equity method of accounting. If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost. The Company has an investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated VIE. Fair Value The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses and other liabilities. As of September 30, 2019 and December 31, 2018, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments. The Company uses observable market data or assumptions (Level 1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing the investment in securities. There were no transfers of investment in securities between Level 1 and Level 2 during the three and nine months ended September 30, 2019 or 2018. Available-For-Sale Securities On January 1, 2018, the Company adopted ASU 2016-01 “Financial Instruments,” which amended the guidance in U.S. GAAP regarding the classification and measurement of financial instruments. Changes to the prior guidance primarily affected the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Upon its adoption, the Company applied the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance was effective. On January 1, 2018, the Company recognized approximately $4,300 of net unrealized gain in its accumulated deficit balance. During the first quarter of 2018, the Company sold 1,317,503 shares of Iteris, Inc. (Nasdaq: ITI), which cost $2,402, for approximately $8,335 of proceeds and reported a loss on the sales of approximately $849. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 “Leases,” which amended leasing guidance by requiring companies to recognize a right-of-use (“ROU”) asset and a lease liability for all operating and capital (finance) leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases continue to be classified as operating or capital (finance), with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The updated guidance became effective for interim and annual periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019. Adoption resulted in the recognition of ROU assets and lease liabilities on the condensed consolidated financial statements. Based on the Company’s lease portfolio as of September 30, 2019, which consisted solely of operating leases, the Company recognized approximately $2,558 of ROU assets and lease liabilities on its consolidated financial statements. Refer to Note 12 (Leases) for further details on leases. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule became effective for all filings made on or after November 5, 2018. Given the effective date and the proximity to most filers’ quarterly reports, the SEC permitted deferring the presentation of interim changes in stockholders’ equity in Forms 10-Q until the quarter that began after the date of adoption, November 5, 2018. The Company adopted this rule in the first quarter of 2019, and its adoption did not have a material impact on its consolidated financial statements. Note 7 (Stockholders’ Equity) of the Notes to these condensed consolidated financial statements summarizes changes in stockholders’ equity. Recent Accounting Pronouncements The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
2. Significant Events and Trans
2. Significant Events and Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Significant Events And Transactions | |
NOTE 2 - Significant Events and Transactions | Pursuant to the Company’s capital return program, the Company’s Board of Directors declared a quarterly dividend of $0.02 per share of the Company’s common stock on September 12, 2019 to stockholders of record as of October 1, 2019. These dividends were paid on October 15, 2019. In August 2019, the Transportation Security Administration (“TSA”) of the U.S. Department of Homeland Security notified the Company of its intent to exercise its fourth one-year option, extending the contract with the Company for an additional year to September 27, 2020. The option provides for the purchase of up to $2,000 of the Company’s products. Concurrent with the extension, the TSA placed a firm delivery order for equipment and services totaling approximately $1,800, of which $211 was shipped in September, and the remainder is anticipated to be fulfilled in the fourth quarter of 2019. The original contract awarded in September 2015 totaled $26,200, with $15,500 in firm delivery orders and $10,700 in annual option exercises. |
3. Allowance for Doubtful Accou
3. Allowance for Doubtful Accounts | 9 Months Ended |
Sep. 30, 2019 | |
Allowance For Doubtful Accounts | |
NOTE 3 - Allowance for Doubtful Accounts | The allowance for doubtful accounts on trade receivables was approximately $50 on gross trade receivables of $2,921 and $5,771 at September 30, 2019 and December 31, 2018, respectively. This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross trade receivables. |
4. Inventories, net
4. Inventories, net | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
NOTE 4 - Inventories, net | The components of inventories, net of allowances for slow-moving, excess or obsolete inventory, consist of the following: September 30, 2019 December 31, 2018 Finished goods $ 3,867 $ 2,004 Work in process 7,035 5,750 Raw materials 3,548 3,712 $ 14,450 $ 11,466 Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. The allowances were approximately $741 at September 30, 2019, compared with approximately $629 at December 31, 2018. |
5. Income Taxes
5. Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
NOTE 5 - Income Taxes | The Company recorded an income tax benefit of approximately $253 and $454 for the three and nine months ended September 30, 2019, respectively, compared with an income tax expense of approximately $17 and $200, respectively, for the same periods last year. The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year. The tax provision in any period will be affected by, among other things, permanent, as well as temporary, differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, the Company may experience significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period. As of September 30, 2019, the Company’s net deferred tax assets totaled approximately $3,911, and were primarily derived from research and development tax credits, accrued expenses and net operating loss carryforwards (“NOLs”). In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years. The Company analyzed all positive and negative evidence to determine if, based on the weight of available evidence, it is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies. Based on the analysis of all available evidence, both positive and negative, the Company has concluded that it has the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax assets. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future. If the Company incurs future losses, it may be necessary to record a valuation allowance related to the deferred tax assets recognized as of September 30, 2019. |
6. Investment in Securities
6. Investment in Securities | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Investments [Abstract] | |
NOTE 6 - Investment in Securities | The Company has an investment in a limited partnership, FGI 1347 Holdings, LP, of which the Company is the sole limited partner. FGI 1347 Holdings, LP, was established for the purpose of investing in securities. As of September 30, 2019, the Company indirectly held approximately $197 in cash and 477,282 shares of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) with fair value of $2,105, through an investment in FGI 1347 Holdings, LP. These shares were purchased in March and May 2018 for approximately $3,741. For the three months ended September 30, 2019, the Company recognized an unrealized loss on the investment of approximately $258, compared with an unrealized loss of $191 for the same period last year. For the nine months ended September 30, 2019, the Company recognized an unrealized gain on the investment of approximately $186, compared with an unrealized loss of $1,392, which was comprised of a $543 loss on the PIH investment, along with a loss on the sale of securities totaling approximately $849, for the same period last year. Affiliates of Fundamental Global Investors, LLC serve as the general partner and the investment manager of FGI 1347 Holdings, LP, and the Company is the sole limited partner. As of September 30, 2019, the Company and the affiliates of Fundamental Global Investors, LLC, including without limitation Ballantyne Strong, Inc., beneficially owned in the aggregate 2,714,362 shares of PIH’s common stock, representing approximately 45.1% of PIH’s outstanding shares. Fundamental Global with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, Chairman of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as Chief Executive Officer and Chairman of the Board of Directors of Ballantyne Strong. Mr. Lewis M. Johnson, Co-Chairman of the Company’s Board of Directors, is President, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as Co-Chairman of the Board of Directors of Ballantyne Strong. Messrs. Cerminara and Johnson also serve as Chairman and Co-Chairman, respectively, of the Board of Directors of PIH. |
7. Stockholders' Equity
7. Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' equity: | |
NOTE 7 - Stockholders' Equity | The changes in condensed consolidated stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 are as follows: Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Other Comprehensive Income Treasury Stock Total Balance at December 31, 2017 13,844,584 $ 8,307 $ 25,642 $ (5,450 ) $ 4,318 $ (810 ) $ 32,007 Share-based compensation expense — — 21 — — — 21 Restricted stock unit compensation expense — — 34 — — — 34 Dividends declared ($0.02 per share) — — — (271 ) — — (271 ) Net loss — — — (443 ) — — (443 ) Effect of adoption of ASU 2016-01 — — — 4,318 (4,318 ) — — Repurchase of common stock — — — — — (357 ) (357 ) Balance at March 31, 2018 13,844,584 8,307 25,697 (1,846 ) — (1,167 ) 30,991 Restricted stock units issued 38,353 23 (23 ) — — — — Share-based compensation expense — — 17 — — — 17 Restricted stock unit compensation expense — — 39 — — — 39 Dividends declared ($0.02 per share) — — — (271 ) — — (271 ) Net income — — — 946 — — 946 Effect of adoption of ASU 2016-01 — — — — — — — Repurchase of common stock — — — — — (259 ) (259 ) Balance at June 30, 2018 13,882,937 8,330 25,730 (1,171 ) — (1,426 ) 31,463 Restricted stock units issued — — — — — — — Share-based compensation expense — — 28 — — — 28 Restricted stock unit compensation expense — — 38 — — — 38 Dividends declared ($0.02 per share) — — — (268 ) — — (268 ) Net income — — — 650 — — 650 Effect of adoption of ASU 2016-01 — — — — — — — Repurchase of common stock — — — — — (537 ) (537 ) Balance at September 30, 2018 13,882,937 $ 8,330 $ 25,796 $ (789 ) $ — $ (1,963 ) $ 31,374 Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Treasury Stock Total Balance at December 31, 2018 13,882,937 $ 8,330 $ 25,867 $ (2,393 ) $ (4,092 ) $ 27,712 Stock options exercised and issued 1,000 — 2 — — 2 Share-based compensation expense — — 31 — — 31 Restricted stock unit compensation expense — — 41 — — 41 Dividends declared ($0.02 per share) — — — (254 ) — (254 ) Net loss — — — (1,318 ) — (1,318 ) Repurchase of common stock — — — — (337 ) (337 ) Balance at March 31, 2019 13,883,937 8,330 25,941 (3,965 ) (4,429 ) 25,877 Restricted stock units issued 38,353 23 (23 ) — — — Share-based compensation expense — — 37 — — 37 Restricted stock unit compensation expense — — 33 — — 33 Dividends declared ($0.02 per share) — — — (255 ) — (255 ) Net loss — — — (247 ) — (247 ) Repurchase of common stock — — — — (213 ) (213 ) Balance at June 30, 2019 13,922,290 8,353 25,988 (4,467 ) (4,642 ) 25,232 Restricted stock units issued 7,091 4 (4 ) — — — Share-based compensation expense — — 42 — — 42 Restricted stock unit compensation expense — — 11 — — 11 Dividends declared ($0.02 per share) — — — (253 ) — (253 ) Net income — — — 238 — 238 Repurchase of common stock — — — — (253 ) (253 ) Balance at September 30, 2019 13,929,381 $ 8,357 $ 26,037 $ (4,482 ) $ (4,895 ) $ 25,017 |
8. Loss per Share
8. Loss per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
NOTE 8 - Loss per Share | The following table sets forth the computation of basic and diluted (loss) income per share: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Numerator: Net (loss) income (numerator for basic and diluted income per share) $ 238 $ 650 $ (1,327 ) $ 1,153 Denominator: Denominator for basic (loss) income per share weighted average shares 12,696,273 13,479,759 12,725,793 13,538,116 Effect of dilutive securities: Options and restricted stock units 12,784 21,828 — 25,874 Denominator: Denominator for diluted (loss) income per share weighted average shares 12,709,057 13,501,587 12,725,793 13,563,990 Basic (loss) income per share $ 0.02 $ 0.05 $ (0.10 ) $ 0.09 Diluted (loss) income per share $ 0.02 $ 0.05 $ (0.10 ) $ 0.09 Approximately 431,829 and 20,364 stock options and 0 and 7,943 restricted stock units for the three and nine months ended September 30, 2019, respectively, and 434,500 stock options and 11,322 restricted stock units granted for the three and nine months ended September 30, 2018, were excluded from the calculation because they were anti-dilutive. |
9. Non-Cash Share-Based Employe
9. Non-Cash Share-Based Employee Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Compensation Related Costs [Abstract] | |
NOTE 9 - Non-Cash Share-Based Employee Compensation | The Company has an employee and non-employee director share-based incentive compensation plan. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $42 and $110 for the three and nine months ended September 30, 2019, respectively, compared with $28 and $66, respectively, for the same periods last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented. The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and nine months ended September 30, 2019 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Notes to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018. A summary of activity under the Company’s stock option plans during the nine months ended September 30, 2019 is presented below: As of January 1, 2019 Stock Options Wgt. Avg. Exercise Price ($) Per Share Wgt. Avg. Remaining Contractual Life (Years) Wgt. Avg. Grant Date Fair Value ($) Per Share Aggregate Intrinsic Value ($) Outstanding 460,500 4.22 — 1.76 — Vested 156,900 4.03 — 2.05 — Nonvested 303,600 4.32 — 1.61 — Period activity Issued 120,000 4.12 — 2.11 — Exercised 1,000 1.89 — 0.71 — Forfeited 28,000 4.45 — 1.49 — Expired — — — — — As of September 30, 2019 Outstanding 551,500 4.19 6.93 1.85 28,250 Vested 219,800 4.12 4.55 1.94 28,250 Nonvested 331,700 4.24 8.51 1.80 — Restricted Stock Units On September 6, 2019, the Company granted to each non-employee director restricted stock units with a grant fair value of $40 per award (resulting in total aggregate grant-date fair value of $280), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board for election by shareholders, other than for good reason, as determined by the Board in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company. On September 6, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board for election by shareholders, other than for good reason, as determined by the Board in its discretion, then the restricted stock units vest in full as of the director’s last date of service as a director of the Company. On September 6, 2019, which was the first anniversary of the grant date, the first tranche of the September 2018 restricted stock units vested. On June 4, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which vested on June 4, 2019. On June 15, 2017, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which vested on June 15, 2018. The Company recorded non-cash restricted stock unit compensation expense of $11 and $85 for the three and nine months ended September 30, 2019, respectively, compared with $38 and $111, respectively, for the same periods last year. |
10. Commitments and Contingenci
10. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 10 - Commitments and Contingencies | From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of its business. On a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, it records a liability in its consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company does not accrue legal reserves, consistent with applicable accounting guidance. Purchase Commitments As of September 30, 2019, the Company had purchase orders to suppliers of approximately $6,196. Significant Customers Sales to United States government agencies represented approximately $8,585 (72.7%) and $18,006 (55.0%) of the Company’s net total sales for the three and nine months ended September 30, 2019, respectively, compared with approximately $7,110 (53.5%) and $15,879 (41.0%), respectively, for the same periods last year. Accounts receivable from agencies of the United States government were $1,937 as of September 30, 2019, compared with approximately $3,440 at the same date last year. |
11. Debt
11. Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTE 11 - Debt | On September 25, 2019, BK Technologies, Inc., a wholly-owned subsidiary of BK Technologies Corporation, and U.S. Bank Equipment Finance, a division of U.S. Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $425 to finance various items of equipment. The loan is collateralized by the equipment purchased using the proceeds. The Master Loan Agreement has a term of five years and bears a fixed interest rate of 5.11%. On March 28, 2019, BK Technologies, Inc., a wholly-owned subsidiary of BK Technologies Corporation, RELM Communications, Inc., a wholly-owned subsidiary of BK Technologies, Inc., and Silicon Valley Bank, as lender (“SVB”), entered into an Amended and Restated Loan and Security Agreement (the “Loan and Security Agreement”). The Loan and Security Agreement replaced BK Technologies, Inc.’s prior Loan and Security Agreement with SVB (the “Prior Agreement”) under which its secured revolving credit facility (the “Credit Facility”) was maintained. Pursuant to the Loan and Security Agreement, the Credit Facility continues to provide BK Technologies, Inc. with a maximum borrowing availability of $1,000 and BK Technologies, Inc. continues to be subject to substantially the same customary borrowing terms and conditions under the Credit Facility as it was under the Prior Agreement, including the accuracy of representations and warranties, compliance with financial maintenance and restrictive covenants and the absence of events of default. Pursuant to the Loan and Security Agreement, payment of cash dividends, in the aggregate not to exceed $5,000 during any twelve-month period, is permitted so long as an event of default does not exist at the time of such dividend and would not exist after giving effect to such dividend. Any borrowings under the Credit Facility will bear interest at the variable interest rate equal to 25 basis points above The Wall Street Journal The financial maintenance covenants, required to be maintained at all times and tested quarterly (or, for the “Adjusted Quick Ratio” covenant, monthly, if any obligations are outstanding), include: (1) a ratio of “Quick Assets” to the sum of “Current Liabilities” plus outstanding borrowings to SVB to the extent not included in “Current Liabilities” minus the current portion of “Deferred Revenue” (all as defined in the Loan and Security Agreement) of at least 1.25:1.00; provided that “Net Cash” (defined as the difference between unrestricted cash on deposit with SVB minus any outstanding advances under the Credit Facility) is required to be at least $1,000; and (2) maximum “Total Leverage” (as defined in the Loan and Security Agreement) of no greater total consolidated “Indebtedness” than 3 times “Adjusted EBITDA” (all as defined in the Loan and Security Agreement). BK Technologies, Inc.’s obligations are collateralized by substantially all of its assets, principally accounts receivable and inventory. BK Technologies, Inc. was in compliance with all covenants under the Loan and Security Agreement as of the date of filing this report. As of September 30, 2019 and the date of filing this report, there were no borrowings outstanding under the Credit Facility. |
12. Leases
12. Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
NOTE 12 - Leases | The Company adopted ASU No. 2016-02, “Leases” (Topic 842) on January 1, 2019 and applied the modified retrospective approach to adoption whereby the standard is applied only to the current and future periods. The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are accounted for separately. Lease costs consist of the following: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 134 $ 402 Short-term lease cost 6 16 Variable lease cost 31 94 Total lease cost $ 171 $ 512 Supplemental cash flow information related to leases was as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows (fixed payments) $ 118 $ 354 Operating cash flows (liability reduction) 78 234 Right-of-use assets obtained in exchange for lease obligations: Operating leases — 2,840 Other information related to operating leases was as follows: September 30, 2019 Weighted average remaining lease term (in years) 7.61 Weighted average discount rate 5.50 % Maturity of lease liabilities as of September 30, 2019 are as follows: September 30, 2019 Remaining three months of 2019 $ 118 2020 401 2021 431 2022 439 2023 448 Thereafter 1,379 Total payments 3,216 Less: imputed interest 658 Total liability $ 2,558 |
1. Condensed Consolidated Fin_2
1. Condensed Consolidated Financial Statements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The condensed consolidated balance sheet as of September 30, 2019, the condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 have been prepared by BK Technologies Corporation (the “Company” or “we”), and are unaudited. On March 28, 2019, BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to “we” or the “Company” or its management or business at any period prior to the holding company reorganization (March 28, 2019) refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates. In the opinion of management, all adjustments, which include normal, recurring adjustments, necessary for a fair presentation have been made. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated balance sheet at December 31, 2018 has been derived from the Company’s audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the operating results for a full year. |
Revenue Recognition | Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” and the additional related ASUs (“ASC 606”), which replaced existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. The Company elected the modified retrospective method upon adoption, with no impact to the opening retained earnings or revenue reported. These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate: Step 1: Identify the contract with the customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations; and Step 5: Recognize revenue as the Company satisfies a performance obligation. ASC 606 provides that revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We generally satisfy performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time, and the revenue is recognized when the installation is complete. |
Principles of Consolidation | The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) or a voting interest entity. VIEs are entities in which (i) the total equity investment at risk is not sufficient to enable the entity to finance its activities independently, or (ii) the at-risk equity holders do not have the normal characteristics of a controlling financial interest. A controlling financial interest in a VIE is present when an enterprise has one or more variable interests that have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The enterprise with a controlling financial interest is the primary beneficiary and consolidates the VIE. Voting interest entities lack one or more of the characteristics of a VIE. The usual condition for a controlling financial interest is ownership of a majority voting interest for a corporation or a majority of kick-out or participating rights for a limited partnership. When the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies (generally defined as owning a voting or economic interest of between 20% to 50%), the Company’s investment is accounted for under the equity method of accounting. If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost. The Company has an investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated VIE. |
Fair Value | The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses and other liabilities. As of September 30, 2019 and December 31, 2018, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments. The Company uses observable market data or assumptions (Level 1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing the investment in securities. There were no transfers of investment in securities between Level 1 and Level 2 during the three and nine months ended September 30, 2019 or 2018. |
Available-For-Sale Securities | On January 1, 2018, the Company adopted ASU 2016-01 “Financial Instruments,” which amended the guidance in U.S. GAAP regarding the classification and measurement of financial instruments. Changes to the prior guidance primarily affected the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Upon its adoption, the Company applied the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance was effective. On January 1, 2018, the Company recognized approximately $4,300 of net unrealized gain in its accumulated deficit balance. During the first quarter of 2018, the Company sold 1,317,503 shares of Iteris, Inc. (Nasdaq: ITI), which cost $2,402, for approximately $8,335 of proceeds and reported a loss on the sales of approximately $849. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 “Leases,” which amended leasing guidance by requiring companies to recognize a right-of-use (“ROU”) asset and a lease liability for all operating and capital (finance) leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases continue to be classified as operating or capital (finance), with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The updated guidance became effective for interim and annual periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019. Adoption resulted in the recognition of ROU assets and lease liabilities on the condensed consolidated financial statements. Based on the Company’s lease portfolio as of September 30, 2019, which consisted solely of operating leases, the Company recognized approximately $2,558 of ROU assets and lease liabilities on its consolidated financial statements. Refer to Note 12 (Leases) for further details on leases. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule became effective for all filings made on or after November 5, 2018. Given the effective date and the proximity to most filers’ quarterly reports, the SEC permitted deferring the presentation of interim changes in stockholders’ equity in Forms 10-Q until the quarter that began after the date of adoption, November 5, 2018. The Company adopted this rule in the first quarter of 2019, and its adoption did not have a material impact on its consolidated financial statements. Note 7 (Stockholders’ Equity) of the Notes to these condensed consolidated financial statements summarizes changes in stockholders’ equity. Recent Accounting Pronouncements The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
4. Inventories, net (Tables)
4. Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Components of inventory | September 30, 2019 December 31, 2018 Finished goods $ 3,867 $ 2,004 Work in process 7,035 5,750 Raw materials 3,548 3,712 $ 14,450 $ 11,466 |
7. Stockholders' Equity (Tables
7. Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' equity: | |
Changes in consolidated stockholders' equity | Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Other Comprehensive Income Treasury Stock Total Balance at December 31, 2017 13,844,584 $ 8,307 $ 25,642 $ (5,450 ) $ 4,318 $ (810 ) $ 32,007 Share-based compensation expense — — 21 — — — 21 Restricted stock unit compensation expense — — 34 — — — 34 Dividends declared ($0.02 per share) — — — (271 ) — — (271 ) Net loss — — — (443 ) — — (443 ) Effect of adoption of ASU 2016-01 — — — 4,318 (4,318 ) — — Repurchase of common stock — — — — — (357 ) (357 ) Balance at March 31, 2018 13,844,584 8,307 25,697 (1,846 ) — (1,167 ) 30,991 Restricted stock units issued 38,353 23 (23 ) — — — — Share-based compensation expense — — 17 — — — 17 Restricted stock unit compensation expense — — 39 — — — 39 Dividends declared ($0.02 per share) — — — (271 ) — — (271 ) Net income — — — 946 — — 946 Effect of adoption of ASU 2016-01 — — — — — — — Repurchase of common stock — — — — — (259 ) (259 ) Balance at June 30, 2018 13,882,937 8,330 25,730 (1,171 ) — (1,426 ) 31,463 Restricted stock units issued — — — — — — — Share-based compensation expense — — 28 — — — 28 Restricted stock unit compensation expense — — 38 — — — 38 Dividends declared ($0.02 per share) — — — (268 ) — — (268 ) Net income — — — 650 — — 650 Effect of adoption of ASU 2016-01 — — — — — — — Repurchase of common stock — — — — — (537 ) (537 ) Balance at September 30, 2018 13,882,937 $ 8,330 $ 25,796 $ (789 ) $ — $ (1,963 ) $ 31,374 Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Treasury Stock Total Balance at December 31, 2018 13,882,937 $ 8,330 $ 25,867 $ (2,393 ) $ (4,092 ) $ 27,712 Stock options exercised and issued 1,000 — 2 — — 2 Share-based compensation expense — — 31 — — 31 Restricted stock unit compensation expense — — 41 — — 41 Dividends declared ($0.02 per share) — — — (254 ) — (254 ) Net loss — — — (1,318 ) — (1,318 ) Repurchase of common stock — — — — (337 ) (337 ) Balance at March 31, 2019 13,883,937 8,330 25,941 (3,965 ) (4,429 ) 25,877 Restricted stock units issued 38,353 23 (23 ) — — — Share-based compensation expense — — 37 — — 37 Restricted stock unit compensation expense — — 33 — — 33 Dividends declared ($0.02 per share) — — — (255 ) — (255 ) Net loss — — — (247 ) — (247 ) Repurchase of common stock — — — — (213 ) (213 ) Balance at June 30, 2019 13,922,290 8,353 25,988 (4,467 ) (4,642 ) 25,232 Restricted stock units issued 7,091 4 (4 ) — — — Share-based compensation expense — — 42 — — 42 Restricted stock unit compensation expense — — 11 — — 11 Dividends declared ($0.02 per share) — — — (253 ) — (253 ) Net income — — — 238 — 238 Repurchase of common stock — — — — (253 ) (253 ) Balance at September 30, 2019 13,929,381 $ 8,357 $ 26,037 $ (4,482 ) $ (4,895 ) $ 25,017 |
8. Loss per Share (Tables)
8. Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted (loss) income per share | Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Numerator: Net (loss) income (numerator for basic and diluted income per share) $ 238 $ 650 $ (1,327 ) $ 1,153 Denominator: Denominator for basic (loss) income per share weighted average shares 12,696,273 13,479,759 12,725,793 13,538,116 Effect of dilutive securities: Options and restricted stock units 12,784 21,828 — 25,874 Denominator: Denominator for diluted (loss) income per share weighted average shares 12,709,057 13,501,587 12,725,793 13,563,990 Basic (loss) income per share $ 0.02 $ 0.05 $ (0.10 ) $ 0.09 Diluted (loss) income per share $ 0.02 $ 0.05 $ (0.10 ) $ 0.09 |
9. Non-Cash Share-Based Emplo_2
9. Non-Cash Share-Based Employee Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Summary of stock option activity | As of January 1, 2019 Stock Options Wgt. Avg. Exercise Price ($) Per Share Wgt. Avg. Remaining Contractual Life (Years) Wgt. Avg. Grant Date Fair Value ($) Per Share Aggregate Intrinsic Value ($) Outstanding 460,500 4.22 — 1.76 — Vested 156,900 4.03 — 2.05 — Nonvested 303,600 4.32 — 1.61 — Period activity Issued 120,000 4.12 — 2.11 — Exercised 1,000 1.89 — 0.71 — Forfeited 28,000 4.45 — 1.49 — Expired — — — — — As of September 30, 2019 Outstanding 551,500 4.19 6.93 1.85 28,250 Vested 219,800 4.12 4.55 1.94 28,250 Nonvested 331,700 4.24 8.51 1.80 — |
12. Leases (Tables)
12. Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease cost | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 134 $ 402 Short-term lease cost 6 16 Variable lease cost 31 94 Total lease cost $ 171 $ 512 |
Supplemental cash flow information related to leases | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows (fixed payments) $ 118 $ 354 Operating cash flows (liability reduction) 78 234 Right-of-use assets obtained in exchange for lease obligations: Operating leases — 2,840 |
Other information related to operating leases | September 30, 2019 Weighted average remaining lease term (in years) 7.61 Weighted average discount rate 5.50 % |
Maturity of lease liabilities | September 30, 2019 Remaining three months of 2019 $ 118 2020 401 2021 431 2022 439 2023 448 Thereafter 1,379 Total payments 3,216 Less: imputed interest 658 Total liability $ 2,558 |
3. Allowance for Doubtful Acc_2
3. Allowance for Doubtful Accounts (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Allowance For Doubtful Accounts | ||
Allowance for doubtful accounts on trade receivables | $ 50 | $ 50 |
Accounts receivable, gross | $ 2,921 | $ 5,771 |
4. Inventories, net (Details)
4. Inventories, net (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 3,867 | $ 2,004 |
Work in process | 7,035 | 5,750 |
Raw materials | 3,548 | 3,712 |
Total inventory | $ 14,450 | $ 11,466 |
4. Inventories, net (Details Na
4. Inventories, net (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Reserves for slow-moving, excess, or obsolete inventory | $ 741 | $ 629 |
5. Income Taxes (Details Narrat
5. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 253 | $ (17) | $ 454 | $ (200) | |
Net deferred tax assets | $ 3,911 | $ 3,911 | $ 3,495 |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Common Stock | ||||||||
Beginning balance, shares | 13,922,290 | 13,883,937 | 13,882,937 | 13,882,937 | 13,844,584 | 13,844,584 | 13,882,937 | 13,844,584 |
Beginning balance, amount | $ 8,353 | $ 8,330 | $ 8,330 | $ 8,330 | $ 8,307 | $ 8,307 | $ 8,330 | $ 8,307 |
Restricted stock units issued, shares | 7,091 | 38,353 | 38,353 | |||||
Restricted stock units issued, amount | $ 4 | $ 23 | $ 23 | |||||
Stock options exercised and issued, shares | 1,000 | |||||||
Ending balance, shares | 13,929,381 | 13,922,290 | 13,883,937 | 13,882,937 | 13,882,937 | 13,844,584 | 13,929,381 | 13,882,937 |
Ending balance, amount | $ 8,357 | $ 8,353 | $ 8,330 | $ 8,330 | $ 8,330 | $ 8,307 | $ 8,357 | $ 8,330 |
Additional Paid In Capital | ||||||||
Beginning balance, amount | 25,988 | 25,941 | 25,867 | 25,730 | 25,697 | 25,642 | 25,867 | 25,642 |
Restricted stock units issued, amount | (4) | (23) | (23) | |||||
Stock options exercised and issued, amount | 2 | |||||||
Share-based compensation expense | 42 | 37 | 31 | 28 | 17 | 21 | ||
Restricted stock unit compensation expense | 11 | 33 | 41 | 38 | 39 | 34 | ||
Ending balance, amount | 26,037 | 25,988 | 25,941 | 25,796 | 25,730 | 25,697 | 26,037 | 25,796 |
Accumulated Deficit | ||||||||
Beginning balance, amount | (4,467) | (3,965) | (2,393) | (1,171) | (1,846) | (5,450) | (2,393) | (5,450) |
Dividends declared ($0.02 per share) | (253) | (255) | (254) | (268) | (271) | (271) | ||
Net (loss) income | 238 | (247) | (1,318) | 650 | 947 | (443) | ||
Effect of adoption of ASU 2016-01 | 4,318 | |||||||
Ending balance, amount | (4,482) | (4,467) | (3,965) | (789) | (1,171) | (1,846) | (4,482) | (789) |
Accumulated Other Comprehensive Income | ||||||||
Beginning balance, amount | 0 | 0 | 0 | 0 | 0 | 4,318 | 0 | 4,318 |
Effect of adoption of ASU 2016-01 | (4,318) | |||||||
Ending balance, amount | (4,895) | 0 | 0 | 0 | 0 | 0 | (4,895) | 0 |
Treasury Stock | ||||||||
Beginning balance, amount | (4,642) | (4,429) | (4,092) | (1,426) | (1,167) | (810) | (4,092) | (810) |
Repurchase of common stock | (253) | (213) | (337) | (537) | (259) | (357) | ||
Ending balance, amount | 25,017 | (4,642) | (4,429) | (1,963) | (1,426) | (1,167) | 25,017 | (1,963) |
Beginning balance, amount | 25,232 | 25,877 | 27,712 | 31,463 | 30,991 | 32,007 | $ 27,712 | 32,007 |
Restricted stock units issued, amount | 0 | 0 | 0 | 0 | ||||
Stock options exercised and issued, shares | 1,000 | |||||||
Stock options exercised and issued, amount | 2 | |||||||
Share-based compensation expense | (42) | 37 | 31 | 28 | 17 | 21 | ||
Restricted stock unit compensation expense | 11 | 33 | 41 | 38 | 39 | 34 | $ 85 | 111 |
Dividends declared ($0.02 per share) | (253) | (255) | (254) | (268) | (271) | (271) | ||
Net (loss) income | 238 | (247) | (1,318) | 650 | 947 | (443) | (1,327) | 1,153 |
Effect of adoption of ASU 2016-01 | 0 | 0 | ||||||
Repurchase of common stock | (253) | (213) | (337) | (537) | (259) | (357) | (803) | (1,153) |
Ending balance, amount | $ 25,017 | $ 25,232 | $ 25,877 | $ 31,374 | $ 31,463 | $ 30,991 | $ 25,017 | $ 31,374 |
8. Loss per Share (Details)
8. Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||||||
Net (loss) income (numerator for basic and diluted income per share) | $ 238 | $ (247) | $ (1,318) | $ 650 | $ 947 | $ (443) | $ (1,327) | $ 1,153 |
Denominator: | ||||||||
Denominator for basic (loss) income per share weighted average shares | 12,696,273 | 13,479,759 | 12,725,793 | 13,538,116 | ||||
Effect of dilutive securities: | ||||||||
Options and restricted stock units | 12,784 | 21,828 | 0 | 25,874 | ||||
Denominator | ||||||||
Denominator for diluted (loss) income per share weighted average shares | 12,709,057 | 13,501,587 | 12,725,793 | 13,563,990 | ||||
Basic (loss) income per share | $ .02 | $ .05 | $ (.10) | $ .09 | ||||
Diluted (loss) income per share | $ .02 | $ .05 | $ (.10) | $ .09 |
9. Non-Cash Share-Based Emplo_3
9. Non-Cash Share-Based Employee Compensation (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Compensation Related Costs [Abstract] | |
Outstanding Stock Options, beginning | shares | 460,500 |
Vested Stock Options, beginning | shares | 156,900 |
Nonvested Stock Options, beginning | shares | 303,600 |
Issued Stock Options | shares | 120,000 |
Exercised Stock Options | shares | 1,000 |
Forfeited Stock Options | shares | 28,000 |
Expired Stock Options | shares | 0 |
Outstanding Stock Options, ending | shares | 551,500 |
Vested Stock Options, ending | shares | 219,800 |
Nonvested Stock Options, ending | shares | 331,700 |
Outstanding Wgt. Avg. Exercise Price, beginning | $ 4.22 |
Vested Wgt. Avg. Exercise Price, beginning | 4.03 |
Nonvested Wgt. Avg. Exercise Price, beginning | 4.32 |
Issued Wgt. Avg. Exercise Price | 4.12 |
Exercised Wgt. Avg. Exercise Price | 1.89 |
Forfeited Wgt. Avg. Exercise Price | 4.45 |
Expired Wgt. Avg. Exercise Price | 0 |
Outstanding Wgt. Avg. Exercise Price, ending | 4.19 |
Vested Wgt. Avg. Exercise Price, ending | 4.12 |
Nonvested Wgt. Avg. Exercise Price, ending | $ 4.24 |
Outstanding Contractual Life | 6 years 11 months 5 days |
Vested Contractual Life | 4 years 6 months 18 days |
Nonvested Contractual Life | 8 years 6 months 4 days |
Outstanding Grant Date Fair Value, beginning | $ 1.76 |
Vested Grant Date Fair Value, beginning | 2.05 |
Nonvested Grant Date Fair Value, beginning | 1.61 |
Issued Grant Date Fair Value | 2.11 |
Exercised Grant Date Fair Value | .71 |
Forfeited Grant Date Fair Value | 1.49 |
Expired Grant Date Fair Value | 0 |
Outstanding Grant Date Fair Value | 1.85 |
Vested Grant Date Fair Value | 1.94 |
Nonvested Grant Date Fair Value | $ 1.80 |
Outstanding Aggregate Intrinsic Value | $ | $ 0 |
Vested Aggregate Intrinsic Value | $ | $ 0 |
Nonvested Aggregate Intrinsic Value | $ 0 |
Issued Aggregate Intrinsic Value | $ 0 |
Exercised Aggregate Intrinsic Value | $ | $ 0 |
Forfeited Aggregate Intrinsic Value | $ 0 |
Expired Aggregate Intrinsic Value | $ 0 |
Outstanding Aggregate Intrinsic Value | $ | $ 28,250 |
Vested Aggregate Intrinsic Value | $ | $ 28,250 |
Nonvested Aggregate Intrinsic Value | $ 0 |
11. Debt (Details Narrative)
11. Debt (Details Narrative) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Master loan agreement | $ 425 |
Master loan agreement term | 5 years |
Master loan agreement interest rate | 5.11% |
Silicon Valley Bank [Member] | |
Credit facility with maximum borrowing | $ 1,000 |
Maturity date | December 26, 2019 |
Revolving credit outstanding balance | $ 0 |
Borrowing available under the revolving credit facility | $ 1,000 |
12. Leases (Details)
12. Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 134 | $ 402 |
Short-term lease cost | 6 | 16 |
Variable lease cost | 31 | 94 |
Total lease cost | $ 171 | $ 512 |
12. Leases (Details 1)
12. Leases (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows (fixed payments) | $ 118 | $ 354 |
Operating cash flows (liability reduction) | 78 | 234 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | $ 0 | $ 2,840 |
12. Leases (Details 2)
12. Leases (Details 2) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 7 years 7 months 10 days |
Weighted average discount rate | 5.50% |
12. Leases (Details 3)
12. Leases (Details 3) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Remaining six months of 2019 | $ 118 |
2020 | 401 |
2021 | 431 |
2022 | 439 |
2023 | 448 |
Thereafter | 1,379 |
Total payments | 3,216 |
Less: imputed interest | 658 |
Total liability | $ 2,558 |