Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | SCI Engineered Materials, Inc. | |
Entity Central Index Key | 0000830616 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | SCIA | |
Entity Common Stock, Shares Outstanding | 4,315,869 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 1,499,660 | $ 1,802,839 |
Accounts receivable, less allowance for doubtful accounts of $15,000 | 686,857 | 477,932 |
Note receivable | 7,477 | 0 |
Inventories | 3,209,259 | 2,752,845 |
Prepaid expenses | 88,990 | 613,425 |
Total current assets | 5,492,243 | 5,647,041 |
Property and Equipment, at cost | ||
Machinery and equipment | 8,186,913 | 8,017,850 |
Furniture and fixtures | 129,683 | 127,610 |
Leasehold improvements | 360,225 | 360,225 |
Right of use asset | 488,445 | 0 |
Construction in progress | 173,154 | 138,067 |
Property, Plant and Equipment, Gross | 9,338,420 | 8,643,752 |
Less accumulated depreciation | (6,828,121) | (6,720,847) |
Property, Plant and Equipment, Net | 2,510,299 | 1,922,905 |
Other assets | 76,827 | 75,613 |
TOTAL ASSETS | 8,079,369 | 7,645,559 |
Current Liabilities | ||
Finance lease obligations, current portion | 95,568 | 114,853 |
Operating lease obligations, current portion | 74,760 | 0 |
Accounts payable | 419,211 | 321,348 |
Customer deposits | 3,035,201 | 3,202,447 |
Accrued compensation | 58,170 | 211,227 |
Accrued expenses and other | 88,108 | 125,130 |
Total current liabilities | 3,771,018 | 3,975,005 |
Finance lease obligations, net of current portion | 128,262 | 147,878 |
Operating lease obligations, net of current portion | 452,959 | 0 |
Total liabilities | 4,352,239 | 4,122,883 |
Shareholders' Equity | ||
Convertible preferred stock, Series B, 10% cumulative, nonvoting, no par value, $10 stated value, optional redemption at 103%; optional shareholder conversion 2 shares for 1; 24,152 shares issued and outstanding | 520,476 | 514,438 |
Common stock, no par value, authorized 15,000,000 shares; 4,315,869 and 4,277,731 shares issued and outstanding, respectively | 10,320,687 | 10,275,733 |
Additional paid-in capital | 2,278,180 | 2,280,060 |
Accumulated deficit | (9,392,213) | (9,547,555) |
Total shareholders' equity | 3,727,130 | 3,522,676 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 8,079,369 | $ 7,645,559 |
BALANCE SHEETS _Parenthetical_
BALANCE SHEETS [Parenthetical] - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Allowance for doubtful accounts (in dollars) | $ 15,000 | $ 15,000 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 4,315,869 | 4,277,731 |
Common stock, shares outstanding | 4,315,869 | 4,277,731 |
Convertible Preferred Stock Series B [Member] | ||
Convertible preferred stock, series B, cumulative percentage of interest | 10.00% | 10.00% |
Convertible preferred stock, stated value (in dollars per share) | $ 10 | $ 10 |
Convertible preferred stock, optional redemption | 103.00% | 103.00% |
Convertible preferred stock, optional shareholder conversion | 2:1 | 2:1 |
Convertible preferred stock, shares issued | 24,152 | 24,152 |
Convertible preferred stock, shares outstanding | 24,152 | 24,152 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue | $ 4,015,038 | $ 1,846,858 |
Cost of revenue | 3,318,736 | 1,384,846 |
Gross profit | 696,302 | 462,012 |
General and administrative expense | 359,800 | 247,168 |
Research and development expense | 108,869 | 65,839 |
Marketing and sales expense | 68,619 | 60,792 |
Income from operations | 159,014 | 88,213 |
Interest, net | 1,188 | (7,728) |
Income before provision for income taxes | 160,202 | 80,485 |
Income taxes | 4,860 | 3,248 |
Net income | 155,342 | 77,237 |
Dividends on preferred stock | 6,038 | 6,038 |
INCOME APPLICABLE TO COMMON STOCK | $ 149,304 | $ 71,199 |
Income per common share | ||
Basic | $ 0.03 | $ 0.02 |
Diluted | $ 0.03 | $ 0.02 |
Weighted average shares outstanding | ||
Basic | 4,295,417 | 4,196,512 |
Diluted | 4,350,377 | 4,205,638 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Total | Convertible Preferred Stock, Series B [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2017 | $ 2,479,795 | $ 514,438 | $ 10,131,307 | $ 2,289,474 | $ (10,455,424) |
Accretion of cumulative dividends | 0 | 6,038 | 0 | (6,038) | 0 |
Stock based compensation expense (Note 4) | 2,738 | 0 | 0 | 2,738 | 0 |
Common stock issued (Note 4) | 17,848 | 0 | 17,848 | 0 | 0 |
Net income | 77,237 | 0 | 0 | 0 | 77,237 |
Balance at Mar. 31, 2018 | 2,577,618 | 520,476 | 10,149,155 | 2,286,174 | (10,378,187) |
Balance at Dec. 31, 2018 | 3,522,676 | 514,438 | 10,275,733 | 2,280,060 | (9,547,555) |
Accretion of cumulative dividends | 0 | 6,038 | 0 | (6,038) | 0 |
Stock based compensation expense (Note 4) | 4,158 | 0 | 0 | 4,158 | 0 |
Proceeds from exercise of stock options (Note 4) | 14,952 | 0 | 14,952 | 0 | 0 |
Common stock issued (Note 4) | 30,002 | 0 | 30,002 | 0 | 0 |
Net income | 155,342 | 0 | 0 | 0 | 155,342 |
Balance at Mar. 31, 2019 | $ 3,727,130 | $ 520,476 | $ 10,320,687 | $ 2,278,180 | $ (9,392,213) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 155,342 | $ 77,237 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and accretion | 109,138 | 119,384 |
Amortization | 17,941 | 973 |
Stock based compensation | 34,160 | 20,586 |
Inventory reserve | 300 | 1,500 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (208,925) | 52,320 |
Note receivable | (7,477) | 0 |
Inventories | (456,714) | (196,640) |
Prepaid expenses | 524,435 | (39,755) |
Other assets | (1,900) | (97) |
Right of use asset | (505,700) | 0 |
Accounts payable | 97,863 | 66,666 |
Operating lease obligations | 527,719 | 0 |
Accrued expenses and customer deposits | (357,961) | 1,178,006 |
Net cash (used in) provided by operating activities | (71,779) | 1,280,180 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (207,451) | (104,737) |
Net cash used in investing activities | (207,451) | (104,737) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of common stock options | 14,952 | 0 |
Principal payments on finance lease obligations and notes payable | (38,901) | (119,790) |
Net cash used in financing activities | (23,949) | (119,790) |
NET (DECREASE) INCREASE IN CASH | (303,179) | 1,055,653 |
CASH - Beginning of period | 1,802,839 | 920,802 |
CASH - End of period | 1,499,660 | 1,976,455 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest | 3,234 | 7,916 |
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES | ||
Property and equipment purchased by finance lease | 0 | 105,325 |
Increase in asset retirement obligation | $ 635 | $ 525 |
Business Organization and Purpo
Business Organization and Purpose | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1. Business Organization and Purpose SCI Engineered Materials, Inc. (“SCI”, or the “Company”), an Ohio corporation, was incorporated in 1987. The Company operates in one segment as a global supplier and manufacturer of advanced materials for Physical Vapor Deposition (“PVD”) Thin Film Applications. The Company is focused on specific markets within the PVD industry (Photonics, Thin Film Solar, Glass and Transparent Electronics). Substantially all of the Company’s revenues are generated from customers with multi-national operations. Through collaboration with end users and Original Equipment Manufacturers the Company develops innovative customized solutions enabling commercial success. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2. Summary of Significant Accounting Policies Basis of Presentation - The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the results of operations for the periods presented have been included. The financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2018. Interim results are not necessarily indicative of results for the full year. Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | Note 3. Recent Accounting Pronouncements Leases - In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The amendments in ASU 2018-10 clarify, correct or remove inconsistencies in the guidance provided under ASU 2016-02 related to sixteen specific issues identified. Also in July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to Topic 842. This amendment provides the Company with an additional and optional transition method to adopt the new lease standard. Under this new transition method, the Company can apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption and present the accounting on a prospective or go-forward basis instead of applying to the earliest comparative period presented in the financial new lease standard became effective for the Company beginning January 1, 2019. The Company elected to apply the new transition method upon adoption of the new standard. The Company also elected the available practical expedients on adoption. The new standard did not have a material impact on the Company’s income statements. The most significant impact of the new standard was the recognition of an ROU asset and lease liability of over $500,000 as of January 1, 2019. Revenue Recognition - The core principal of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company’s analysis of sales contracts under ASC 606 supports the recognition of revenue at a point in time, typically when title passes to the customer upon shipment, which is consistent with the previous revenue recognition model. The core principle of ASC 606 is supported by five steps which are listed below: 1. Identify the contract with the customer. 2. Identify the performance obligation in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to performance obligations in the contract. 5. Recognize revenue when or as the Company satisfies a performance obligation. The Company adopted this guidance as of January 1, 2018 utilizing the modified retrospective approach method as applied to customer contracts that were not completed as of January 1, 2018. As a result financial information for reporting periods beginning on or after January 1, 2018 are presented in accordance with ASC 606, while comparative financial information has not been adjusted and continues to be reported in accordance with the Company’s revenue recognition policies prior to the adoption of ASC 606. Implementation of the standard did not have a material impact on the Company’s financial statements as the Company’s method for recognizing revenue subsequent to the implementation of ASC 606 does not vary significantly from its revenue recognition practices under the prior revenue standard. Accordingly, there was no required cumulative adjustment to retained earnings as of January 1, 2018. The Company enters into contracts with its customers that generally represent purchase orders specifying general terms and conditions, order quantities and per unit product prices. The Company has determined that each unit of product purchased represents a separate performance obligation. The Company satisfies its performance obligations and recognizes revenue at a point in time when control of a unit of product is transferred to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. For the majority of product sales, transfer of control occurs when the products are shipped from the Company's manufacturing facility to the customer. The cost of delivering products to the Company's customers is recorded as a component of cost of products sold. Those costs may include the amounts paid to a third party to deliver the products. Any freight costs billed to and paid by a customer are included in revenue. The Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. The Company sells its products typically under agreements with payment terms less than 45 days. The Company does not typically include extended payment terms or significant financing components in contracts with customers. The majority of the Company’s contracts have an obligation to transfer products within one year. Sales commissions are expensed when incurred and recorded within marketing and sales expenses. The Company treats shipping and handling activities that occur after control of the product transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation. Customer deposits are funds received in advance from customers and are recognized as revenue when the Company has transferred control of product to the customer. During the three months ended March 31, 2019 and 2018, revenue from the Photonics market was 97% and 80% of total revenue, respectively. The balance of the revenue in each period was almost entirely from the Thin Film Solar market. The top two customers represented 75% and 72% of total revenue during the three months ended March 31, 2019 and 2018, respectively. International shipments resulted in 16% and 6% of total revenue for the three months ended March 31, 2019 and 2018, respectively. |
Common Stock and Stock Options
Common Stock and Stock Options | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Note 4. Common Stock and Stock Options Compensation cost for all stock awards is based on the grant date fair value and recognized over the required service (vesting) period. Non cash stock based compensation expense was $34,160 and $20,586 for the three months ended March 31, 2019 and 2018, respectively. Unrecognized compensation expense was $29,591 as of March 31, 2019 and will be recognized through 2023. There was no tax benefit recorded for this compensation cost as the expense primarily relates to incentive stock options that do not qualify for a tax deduction until, and only if, a qualifying disposition occurs. The non-employee Board members received compensation of 8,850 and 18,025 aggregate shares of common stock of the Company during the three months ended March 31, 2019 and 2018, respectively. The stock had an aggregate value of $30,002 and $17,848 for the three months ended March 31, 2019 and 2018, respectively, and was recorded as non-cash stock compensation expense in the financial statements. The cumulative status of options granted and outstanding at March 31, 2019, and December 31, 2018, as well as options which became exercisable in connection with the Company’s stock option plans is summarized as follows: Employee Stock Options Weighted Average Stock Options Exercise Price Outstanding at January 1, 2018 381,447 $ 4.54 Granted 41,719 1.25 Exercised (21,225 ) 0.84 Expired (5,000 ) 3.10 Outstanding at December 31, 2018 396,941 $ 4.41 Exercised (31,788 ) 0.84 Expired (271,500 ) 6.00 Outstanding at March 31, 2019 93,653 $ 1.02 Options exercisable at December 31, 2018 329,988 $ 5.09 Options exercisable at March 31, 2019 26,700 $ 0.84 During the three months ended March 31, 2019, a total of 31,788 stock options were exercised. The Company’s new President, Mr. Jeremy Young, received a loan from the Company in the amount of $14,952 in February 2019 to enable him to exercise 17,800 stock options. Per a Promissory Note signed by Mr. Young this loan is to be repaid in two installments with the final installment due January 1, 2020. The first installment of $7,475 was repaid in February 2019 and the balance of $7,477 is recorded on the balance sheet as a Note Receivable as of March 31, 2019. Exercise prices for options ranged from $0.84 to $1.25 at March 31, 2019. The weighted average option price for all options outstanding at March 31, 2019, was $1.02 with a weighted average remaining contractual life of 7.2 years. There were no non-employee director stock options outstanding during 2019 and 2018. |
Preferred Stock
Preferred Stock | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Preferred Stock [Text Block] | Note 5. Preferred Stock Dividends on the Series B preferred stock accrue at 10% annually on the outstanding shares. Dividends on the Series B preferred stock were $6,038 for the three months ended March 31, 2019 and 2018. The Company had accrued dividends on Series B preferred stock of $271,710 at March 31, 2019, and $265,672 at December 31, 2018. These amounts are included in Convertible preferred stock, Series B on the balance sheet at March 31, 2019 and December 31, 2018. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | Note 6. Inventories Inventories consisted of the following: March 31, December 31, 2019 2018 (unaudited) Raw materials $ 2,281,513 $ 1,568,487 Work-in-process 731,126 1,144,080 Finished goods 226,661 70,019 Inventory reserve (30,041 ) (29,741 ) $ 3,209,259 $ 2,752,845 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Note 7. Earnings Per Share Basic income per share is calculated as income applicable to common shareholders divided by the weighted average of common shares outstanding. Diluted earnings per share is calculated as diluted income applicable to common shareholders divided by the diluted weighted average number of common shares. Diluted weighted average number of common shares gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted earnings per share exclude all diluted potential shares if their effect is anti-dilutive. All convertible preferred stock and common stock options listed in Note 4 that were out-of-the-money or anti-dilutive were excluded from diluted earnings per share. The following is provided to reconcile the earnings per share calculations: Three months ended March 31, 2019 2018 Income applicable to common shares $ 149,304 $ 71,199 Weighted average common shares outstanding - basic 4,295,417 4,196,512 Effect of dilution 54,960 9,126 Weighted average shares outstanding - diluted 4,350,377 4,205,638 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Note 8. Notes Payable During 2010, the Company applied and was approved for a 166 Direct Loan to borrow up to $744,250 with the Ohio Department of Development (ODOD), now known as the Ohio Development Services Agency (ODSA). This loan was finalized in February 2011 and the term of the loan was 84 months at a fixed interest rate of 3%. There was also a 0.25% annual servicing fee charged monthly on the outstanding principal balance. A final payment of approximately $71,900 was made as scheduled during November 2018 and this loan was repaid in full. During 2010, the Company also applied and was approved for a 166 Direct Loan through the Advanced Energy Program with the Ohio Air Quality Development Authority (OAQDA) to borrow up to approximately $1.4 million. This maximum commitment by the OAQDA was subsequently reduced to $368,906 on March 20, 2012. A final payment of approximately $50,400 was made as scheduled during February 2018 and this loan was repaid in full. During the fou r th quarter of |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 9. Income Taxes Following is the income tax expense for the three months ended March 31: 2019 2018 Federal - deferred $ - $ - State and local 4,860 3,248 $ 4,860 $ 3,248 Deferred tax assets and liabilities result from temporary differences in the recognition of income and expense for tax and financial reporting purposes. A full valuation allowance has been recorded against the realization of the net deferred tax assets at March 31, 2019 and December 31, 2018. The Company has net operating loss carryforwards available for federal and state tax purposes of approximately $3,700,000 which expire in varying amounts through 2038. |
Purchase Commitment
Purchase Commitment | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Commitment [Text Block] | Note 10. Purchase Commitment The Company entered into a purchase commitment in the amount of $168,885 for an in-plant office structured mezzanine. Work on the structure is expected to begin in the second quarter of 2019 and be completed late in the second quarter or early third quarter of 2019. |
Operating Lease
Operating Lease | 3 Months Ended |
Mar. 31, 2019 | |
Leases, Operating [Abstract] | |
Lessee, Operating Leases [Text Block] | Note 11. Operating Lease The Company entered into an operating lease with a third party on March 18, 2014 for its headquarters in Columbus, Ohio. The terms of the lease include monthly payments ranging from $8,800 to $9,700 with a maturity date of November 2024. The Company has the option to extend the lease period for an additional five years beyond the original expiration date. There are no restrictions or covenants associated with the lease. The lease costs were approximately $26,100 during the period ended March 31, 2019. The following is a maturity analysis, by year, of the annual undiscounted cash flows of the operating lease liabilities as of March 31, 2019: 2019 $ 106,152 2020 108,117 2021 110,364 2022 112,611 2023 114,857 2024 102,550 Total minimum lease payments $ 654,651 Operating cash flows from operating leases 17,599 Weighted average remaining lease term – operating leases 5.7 years Weighted average discount rate – operating leases 5.5% |
Finance Lease
Finance Lease | 3 Months Ended |
Mar. 31, 2019 | |
Finance Lease Obligations [Abstract] | |
Lessee, Finance Leases [Text Block] | Note 12. Finance Lease The Company leases certain equipment under finance leases. Future minimum lease payments, by year, with the present value of such payments, as of March 31, 2019, are shown in the following table. 2019 $ 83,331 2020 86,052 2021 69,641 2022 and beyond - Total minimum lease payments 239,024 Less amount representing interest 15,194 Present value of minimum lease payments 223,830 Less current portion 95,568 Finance lease obligations, net of current portion $ 128,262 The equipment under finance lease at March 31, 2019, and December 31, 2018 is included in the accompanying balance sheets as follows: March 31, 2019 Dec. 31, 2018 Machinery and equipment $ 725,036 $ 725,036 Less accumulated depreciation and amortization 241,099 222,973 Net book value $ 483,937 $ 502,063 These assets are amortized over a period of ten years using the straight-line method and amortization is included in depreciation expense. The finance leases are structured such that ownership of the leased asset reverts to the Company at the end of the lease term. Accordingly, leased assets are depreciated using the Company's normal depreciation methods and lives. In 2018, ownership of certain assets were transferred to the Company in accordance with the terms of the leases and these assets have been excluded from the leased asset disclosure above. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation - The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the results of operations for the periods presented have been included. The financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2018. Interim results are not necessarily indicative of results for the full year. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Common Stock and Stock Options
Common Stock and Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation, Stock Options, Activity [Table Text Block] | The cumulative status of options granted and outstanding at March 31, 2019, and December 31, 2018, as well as options which became exercisable in connection with the Company’s stock option plans is summarized as follows: Employee Stock Options Weighted Average Stock Options Exercise Price Outstanding at January 1, 2018 381,447 $ 4.54 Granted 41,719 1.25 Exercised (21,225 ) 0.84 Expired (5,000 ) 3.10 Outstanding at December 31, 2018 396,941 $ 4.41 Exercised (31,788 ) 0.84 Expired (271,500 ) 6.00 Outstanding at March 31, 2019 93,653 $ 1.02 Options exercisable at December 31, 2018 329,988 $ 5.09 Options exercisable at March 31, 2019 26,700 $ 0.84 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | Inventories consisted of the following: March 31, December 31, 2019 2018 (unaudited) Raw materials $ 2,281,513 $ 1,568,487 Work-in-process 731,126 1,144,080 Finished goods 226,661 70,019 Inventory reserve (30,041 ) (29,741 ) $ 3,209,259 $ 2,752,845 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following is provided to reconcile the earnings per share calculations: Three months ended March 31, 2019 2018 Income applicable to common shares $ 149,304 $ 71,199 Weighted average common shares outstanding - basic 4,295,417 4,196,512 Effect of dilution 54,960 9,126 Weighted average shares outstanding - diluted 4,350,377 4,205,638 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | Following is the income tax expense for the three months ended March 31: 2019 2018 Federal - deferred $ - $ - State and local 4,860 3,248 $ 4,860 $ 3,248 |
Operating Lease (Tables)
Operating Lease (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases, Operating [Abstract] | |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The following is a maturity analysis, by year, of the annual undiscounted cash flows of the operating lease liabilities as of March 31, 2019: 2019 $ 106,152 2020 108,117 2021 110,364 2022 112,611 2023 114,857 2024 102,550 Total minimum lease payments $ 654,651 |
Lessee Operating Lease Other Information [Table Text Block] | Operating cash flows from operating leases 17,599 Weighted average remaining lease term – operating leases 5.7 years Weighted average discount rate – operating leases 5.5% |
Finance Lease (Tables)
Finance Lease (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Finance Lease Obligations [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block] | The Company leases certain equipment under finance leases. Future minimum lease payments, by year, with the present value of such payments, as of March 31, 2019, are shown in the following table. 2019 $ 83,331 2020 86,052 2021 69,641 2022 and beyond - Total minimum lease payments 239,024 Less amount representing interest 15,194 Present value of minimum lease payments 223,830 Less current portion 95,568 Finance lease obligations, net of current portion $ 128,262 |
Schedule of Capital Leased Assets [Table Text Block] | The equipment under finance lease at March 31, 2019, and December 31, 2018 is included in the accompanying balance sheets as follows: March 31, 2019 Dec. 31, 2018 Machinery and equipment $ 725,036 $ 725,036 Less accumulated depreciation and amortization 241,099 222,973 Net book value $ 483,937 $ 502,063 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Detail Textual) - USD ($) | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Operating Lease, Right-of-Use Asset | $ 488,445 | $ 0 | ||
Photonics market [Member] | ||||
Concentration Risk, Percentage | 97.00% | 80.00% | ||
Top two customers [Member] | ||||
Concentration Risk, Percentage | 75.00% | 72.00% | ||
International Shipments [Member] | ||||
Concentration Risk, Percentage | 16.00% | 6.00% | ||
Accounting Standards Update 2016-02 [Member] | ||||
Operating Lease, Right-of-Use Asset | $ 500,000 | |||
Operating Lease, Liability | $ 500,000 |
Common Stock and Stock Option_2
Common Stock and Stock Options (Details) - Employee Stock Options [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options, Outstanding, Beginning Balance | 396,941 | 381,447 |
Stock Options, Granted | 41,719 | |
Stock Options, Exercised | (31,788) | (21,225) |
Stock Options, Expired | (271,500) | (5,000) |
Stock Options, Outstanding, Ending Balance | 93,653 | 396,941 |
Stock Options, Options exercisable | 26,700 | 329,988 |
Weighted Average Exercise Price, Outstanding, Beginning Balance | $ 4.41 | $ 4.54 |
Weighted Average Exercise Price, Granted | 1.25 | |
Weighted Average Exercise Price, Exercised | 0.84 | 0.84 |
Weighted Average Exercise Price, Expired | 6 | 3.10 |
Weighted Average Exercise Price, Outstanding, Ending Balance | 1.02 | 4.41 |
Weighted Average Exercise Price, Options exercisable | $ 0.84 | $ 5.09 |
Common Stock and Stock Option_3
Common Stock and Stock Options (Detail Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Feb. 28, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation | $ 34,160 | $ 20,586 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 29,591 | |||
Stock Issued During Period, Value, New Issues | $ 30,002 | $ 17,848 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $ 0.84 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | 1.25 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price | $ 1.02 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 years 2 months 12 days | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 26,700 | 329,988 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 31,788 | 21,225 | ||
President [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Notes Receivable, Related Parties | $ 14,952 | $ 7,477 | ||
Proceeds from Collection of Notes Receivable | $ 7,475 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 17,800 | |||
Common Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock Issued During Period, Shares, New Issues | 8,850 | 18,025 | ||
Stock Issued During Period, Value, New Issues | $ 30,002 | $ 17,848 |
Preferred Stock (Detail Textual
Preferred Stock (Detail Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Preferred Stock Dividends, Income Statement Impact | $ 6,038 | $ 6,038 | |
Series B Preferred Stock [Member] | |||
Preferred Stock, Dividend Rate, Percentage | 10.00% | ||
Dividends | $ 271,710 | $ 265,672 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory [Line Items] | ||
Raw materials | $ 2,281,513 | $ 1,568,487 |
Work-in-process | 731,126 | 1,144,080 |
Finished goods | 226,661 | 70,019 |
Inventory reserve | (30,041) | (29,741) |
Inventory, Net | $ 3,209,259 | $ 2,752,845 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income applicable to common shares | $ 149,304 | $ 71,199 |
Weighted average common shares outstanding - basic | 4,295,417 | 4,196,512 |
Effect of dilution | 54,960 | 9,126 |
Weighted average shares outstanding - diluted | 4,350,377 | 4,205,638 |
Notes Payable (Detail Textual)
Notes Payable (Detail Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Dec. 31, 2018 | Mar. 31, 2019 | Nov. 30, 2018 | Mar. 20, 2012 | Dec. 31, 2010 | |
Debt Conversion [Line Items] | |||||
Debt Instrument, Interest Rate, Basis for Effective Rate | 0.5 percentage points over the Prime Commercial Rate | ||||
HuntingTon Bank [Member] | |||||
Debt Conversion [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||||
Line of Credit Facility, Expiration Date | Oct. 5, 2019 | ||||
Long-term Line of Credit | $ 0 | ||||
Ohio Development Services Agency [Member] | |||||
Debt Conversion [Line Items] | |||||
Line of Credit Facility, Interest Rate During Period | 3.00% | ||||
Servicing Fee Annual Percent Fee | 0.25% | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 744,250 | ||||
Line of Credit Facility Term | 84 months | ||||
Ohio Development Services Agency [Member] | Line of Credit [Member] | |||||
Debt Conversion [Line Items] | |||||
Line of Credit Facility, Final Periodic Payment | $ 71,900 | ||||
Ohio Air Quality Development Authority [Member] | |||||
Debt Conversion [Line Items] | |||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | $ 368,906 | $ 1,400,000 | |||
Line Of Credit Facility, State Final Periodic Payment | $ 50,400 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Contingency [Line Items] | ||
Federal - deferred | $ 0 | $ 0 |
State and local | 4,860 | 3,248 |
Income Tax Expense (Benefit) | $ 4,860 | $ 3,248 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Income Tax Contingency [Line Items] | |
Deferred Tax Assets, Operating Loss Carryforwards, State and Local | $ 3,700,000 |
Operating Loss Carry forward Expiration Year | 2038 |
Purchase Commitment (Details Te
Purchase Commitment (Details Textual) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Purchase Commitment | $ 168,885 |
Operating Lease (Details)
Operating Lease (Details) | Mar. 31, 2019USD ($) |
2019 | $ 106,152 |
2020 | 108,117 |
2021 | 110,364 |
2022 | 112,611 |
2023 | 114,857 |
2024 | 102,550 |
Total minimum lease payments | $ 654,651 |
Operating Lease (Details Textua
Operating Lease (Details Textual) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Operating cash flows from operating leases | $ 17,599 |
Weighted average remaining lease term – operating leases | 5 years 8 months 12 days |
Weighted average discount rate – operating leases | 5.50% |
Operating Lease, Cost | $ 26,100 |
Lessee, Operating Lease, Option to Extend | The Company has the option to extend the lease period for an additional five years beyond the original expiration date. |
Maximum [Member] | |
Operating Lease Monthly Rent Payable | $ 9,700 |
Minimum [Member] | |
Operating Lease Monthly Rent Payable | $ 8,800 |
Finance Lease (Details)
Finance Lease (Details) | Mar. 31, 2019USD ($) |
Capital Leased Assets [Line Items] | |
2019 | $ 83,331 |
2020 | 86,052 |
2021 | 69,641 |
2022 and beyond | 0 |
Total minimum lease payments | 239,024 |
Less amount representing interest | 15,194 |
Present value of minimum lease payments | 223,830 |
Less current portion | 95,568 |
Finance lease obligations, net of current portion | $ 128,262 |
Finance Lease (Details 1)
Finance Lease (Details 1) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Capital Leased Assets [Line Items] | ||
Machinery and equipment | $ 725,036 | $ 725,036 |
Less accumulated depreciation and amortization | 241,099 | 222,973 |
Net book value | $ 483,937 | $ 502,063 |