Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 | Jan. 08, 2024 | Mar. 31, 2023 | |
Cover | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Sep. 30, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-41503 | ||
Entity Registrant Name | INNOVATIVE SOLUTIONS AND SUPPORT, INC. | ||
Entity Incorporation, State or Country Code | PA | ||
Entity Tax Identification Number | 23-2507402 | ||
Entity Address, Address Line One | 720 Pennsylvania Drive | ||
Entity Address, City or Town | Exton | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19341 | ||
City Area Code | 610 | ||
Local Phone Number | 646-9800 | ||
Title of 12(b) Security | Common Stock par value $.001 per share | ||
Trading Symbol | ISSC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 95.2 | ||
Entity Common Stock, Shares Outstanding | 17,453,733 | ||
Entity Central Index Key | 0000836690 | ||
Current Fiscal Year End Date | --09-30 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Firm ID | 248 | ||
Auditor Location | Philadelphia, Pennsylvania |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Current assets | ||
Cash and cash equivalents | $ 3,097,193 | $ 17,250,546 |
Accounts receivables | 9,743,714 | 4,297,457 |
Contract assets | 487,139 | 162,742 |
Inventories | 6,139,713 | 5,349,104 |
Prepaid inventory | 12,069,114 | |
Prepaid expenses and other current assets | 1,073,012 | 1,142,470 |
Assets held for sale | 2,063,818 | |
Total current assets | 34,673,703 | 28,202,319 |
Goodwill | 3,557,886 | |
Intangible assets, net | 16,185,321 | 60,348 |
Property and equipment, net | 7,892,427 | 6,292,189 |
Deferred income taxes | 456,392 | 46,487 |
Other assets | 191,722 | 103,980 |
Total assets | 62,957,451 | 34,705,323 |
Current liabilities | ||
Current portion long-term debt | 2,000,000 | |
Accounts payable | 1,337,275 | 708,845 |
Accrued expenses | 2,918,325 | 2,972,275 |
Contract liabilities | 143,359 | 259,183 |
Total current liabilities | 6,398,959 | 3,940,303 |
Long-term debt | 17,500,000 | |
Other liabilities | 421,508 | 15,065 |
Total liabilities | 24,320,467 | 3,955,368 |
Commitments and contingencies (See Note 16) | ||
Shareholders' equity | ||
Preferred stock, 10,000,000 shares authorized, $.001 par value, of which 200,000 shares are authorized as Class A Convertible stock. No shares issued and outstanding at September 30, 2023 and 2022 | ||
Common stock, $.001 par value: 75,000,000 shares authorized, 19,543,441 and 19,412,664 issued at September 30, 2023 and 2022, respectively | 19,543 | 19,413 |
Additional paid-in capital | 54,317,265 | 52,458,121 |
Retained Earnings (accumulated deficit) | 5,668,713 | (359,042) |
Treasury stock, at cost, 2,096,451 shares at September 30, 2023 and at September 30, 2022 | (21,368,537) | (21,368,537) |
Total shareholders' equity | 38,636,984 | 30,749,955 |
Total liabilities and shareholders' equity | $ 62,957,451 | $ 34,705,323 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Sep. 30, 2022 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 19,543,441 | 19,412,664 |
Treasury stock, shares | 2,096,451 | 2,096,451 |
Class A Convertible stock | ||
Preferred stock, shares authorized | 200,000 | 200,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Sales: | |||
Total net sales | $ 34,808,513 | $ 27,740,695 | $ 23,044,796 |
Cost of sales: | |||
Total cost of sales | 13,497,442 | 11,066,314 | 10,263,166 |
Gross profit | 21,311,071 | 16,674,381 | 12,781,630 |
Operating expenses: | |||
Research and development | 3,129,518 | 2,705,140 | 2,622,919 |
Selling, general and administrative | 10,822,505 | 6,753,915 | 6,257,732 |
Total operating expenses | 13,952,023 | 9,459,055 | 8,880,651 |
Operating income | 7,359,048 | 7,215,326 | 3,900,979 |
Interest expense | (393,281) | ||
Interest income | 518,188 | 61,051 | 1,234 |
Other income | 151,317 | 65,232 | 74,906 |
Income before income taxes | 7,635,272 | 7,341,609 | 3,977,119 |
Income tax expense (benefit) | 1,607,517 | 1,817,831 | (1,087,783) |
Net income | $ 6,027,755 | $ 5,523,778 | $ 5,064,902 |
Net income per common share: | |||
Basic | $ 0.35 | $ 0.32 | $ 0.29 |
Diluted | $ 0.35 | $ 0.32 | $ 0.29 |
Weighted average shares outstanding: | |||
Basic | 17,411,684 | 17,256,750 | 17,225,423 |
Diluted | 17,419,185 | 17,257,871 | 17,226,620 |
Product | |||
Net Sales: | |||
Total net sales | $ 22,589,657 | $ 22,400,159 | $ 18,725,789 |
Cost of sales: | |||
Total cost of sales | 9,715,517 | 9,402,900 | 8,695,568 |
Customer Service | |||
Net Sales: | |||
Total net sales | 11,086,062 | 4,879,591 | 4,034,294 |
Cost of sales: | |||
Total cost of sales | 3,386,122 | 1,502,899 | 1,489,942 |
Engineering development contracts | |||
Net Sales: | |||
Total net sales | 1,132,794 | 460,945 | 284,713 |
Cost of sales: | |||
Total cost of sales | $ 395,803 | $ 160,515 | $ 77,656 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | Treasury Stock | Total |
Balance, beginning at Sep. 30, 2020 | $ 19,311 | $ 51,458,787 | $ (2,340,530) | $ (21,368,537) | $ 27,769,031 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 181,350 | 181,350 | |||
Exercise of stock options | 5 | 17,005 | 17,010 | ||
Issuance of stock to directors | 27 | 159,953 | 159,980 | ||
Dividends declared | (8,607,192) | (8,607,192) | |||
Net income | 5,064,902 | 5,064,902 | |||
Balance, ending at Sep. 30, 2021 | 19,343 | 51,817,095 | (5,882,820) | (21,368,537) | 24,585,081 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 166,617 | 166,617 | |||
Exercise of stock options | 43 | 301,111 | 301,154 | ||
Issuance of stock to directors | 27 | 173,298 | 173,325 | ||
Net income | 5,523,778 | 5,523,778 | |||
Balance, ending at Sep. 30, 2022 | 19,413 | 52,458,121 | (359,042) | (21,368,537) | 30,749,955 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 39 | 1,123,902 | 1,123,941 | ||
Exercise of stock options | 58 | 408,789 | 408,847 | ||
Issuance of stock to directors | 33 | 326,453 | 326,486 | ||
Net income | 6,027,755 | 6,027,755 | |||
Balance, ending at Sep. 30, 2023 | $ 19,543 | $ 54,317,265 | $ 5,668,713 | $ (21,368,537) | $ 38,636,984 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 6,027,755 | $ 5,523,778 | $ 5,064,902 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 697,943 | 368,499 | 432,176 |
Share-based compensation expense | |||
Stock options | 756,198 | 166,617 | 181,350 |
Stock awards | 694,230 | 173,325 | 159,980 |
Impairment of long-lived assets | 44,400 | ||
Gain on disposal of property and equipment | (1,191,743) | ||
Excess and obsolete inventory cost (recovery) | 44,308 | (100,446) | |
Deferred income taxes | 9,503 | 1,017,335 | (1,193,511) |
(Increase) decrease in: | |||
Accounts receivables | (5,446,257) | (251,120) | 322,774 |
Contract assets | (324,397) | (162,742) | |
Inventories | (834,917) | (708,859) | (153,611) |
Prepaid expenses and other assets | 69,458 | (309,394) | (157,967) |
Other non-current assets | (101,356) | ||
Increase (decrease) in: | |||
Accounts payables | 628,430 | 85,224 | (167,272) |
Accrued expenses | 203,754 | 1,272,826 | (4,655) |
Income taxes payable/receivable | (257,055) | 269,015 | 104,640 |
Contract liabilities | (115,823) | (158,321) | 104,139 |
Net cash provided by operating activities | 2,096,174 | 6,094,440 | 4,592,499 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (298,373) | (161,230) | (340,678) |
Proceeds from the sale of property and equipment | 2,750,576 | ||
Acquisition of a business | (35,860,000) | ||
Net cash (used in) provided by investing activities | (36,158,373) | 2,589,346 | (340,678) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from exercise of stock options | 408,846 | 301,154 | 17,010 |
Debt payments | (500,000) | ||
Debt proceeds | 20,000,000 | ||
Dividend paid | (19,788,092) | ||
Net cash provided by (used in) financing activities | 19,908,846 | 301,154 | (19,771,082) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (14,153,353) | 8,984,940 | (15,519,261) |
Cash and cash equivalents and restricted cash, beginning of year | 17,250,546 | 23,784,867 | |
Cash and cash equivalents and restricted cash, end of year | 3,097,193 | 17,250,546 | 8,265,606 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||
Cash paid for income taxes | $ 1,855,069 | $ 531,481 | $ 1,089 |
Background
Background | 12 Months Ended |
Sep. 30, 2023 | |
Background | |
Background | 1. Background Innovative Solutions and Support, Inc. (the “Company,” “IS&S,” “we” or “us”) was incorporated in Pennsylvania on February 12, 1988. The Company operates in one business segment as a systems integrator that designs, develops, manufactures, sells and services air data equipment, engine display systems, standby equipment, primary flight guidance and cockpit display systems for retrofit applications and original equipment manufacturers (“OEMs”). The Company supplies integrated Flight Management Systems (“FMS”), Flat Panel Display Systems (“FPDS”), FPDS with Autothrottle, air data equipment, Integrated Standby Units (“ISU”), ISU with Autothrottle and advanced GPS receivers that enable reduced carbon footprint navigation, communications, navigation and inertial reference products. The Company has continued to position itself as a system integrator, which provides the Company with the capability and potential to generate more substantive orders over a broader product base. This strategy, as both a manufacturer and integrator, is designed to leverage the latest technologies developed for the computer and telecommunications industries into advanced and cost-effective solutions for the general aviation, commercial air transport, DoD/governmental and foreign military markets. This approach, combined with the Company’s industry experience, is designed to enable IS&S to develop high-quality products and systems, to reduce product time to market and to achieve cost advantages over products offered by its competitors. Customers include various OEMs, commercial air transport carriers and corporate/general aviation companies, DoD and its commercial contractors, aircraft operators, aircraft modification centers, government agencies and foreign militaries. On June 30, 2023 (the “Acquisition Date”), the Company entered into an Asset Purchase and License Agreement (the “Honeywell Agreement”) with Honeywell International, Inc. (“Honeywell”) whereby Honeywell sold certain assets and granted perpetual license rights to manufacture and sell licensed products related to its inertial, communication and navigation product lines (the “Product Lines”) to the Company (the “Transaction”). The Transaction involved a sale of certain inventory, equipment and customer-related documents; an assignment of certain customer contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its inertial, communication and navigation product lines to repair, overhaul, manufacture sell, import, export and distribute certain products to the Company. See Note 4, “Acquisition” for more details. On September 22, 2023, the Company entered into an at-the-market equity offering Sales Agreement (the “ATM Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated (the “Sales Agent”), pursuant to which the Company may offer and sell from time to time through the Sales Agent up to $40 million of shares of its common stock. The shares will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-267595), which was declared effective by the SEC on October 14, 2022. The Company filed a prospectus supplement, dated September 22, 2023, with the SEC in connection with the offer and sale of the shares. Subject to the terms and conditions of the ATM Sales Agreement, the Sales Agent will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based upon the Company’s instructions. The Company is not obligated to sell any shares under the ATM Sales Agreement, and the Company or the Sales Agent may at any time suspend solicitation and offers under the ATM Sales Agreement or terminate the ATM Sales Agreement. The Company has provided the Sales Agent with customary indemnification rights, and the Sales Agent will be entitled to compensation for its services of up to 3.0% of the gross sales price per share of the shares of the Company’s common stock sold through the Sales Agent. Sales of the shares of the Company’s common stock, if any, under the ATM Sales Agreement may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act, including sales made directly on or through NASDAQ or any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices and/or any other method permitted by law. During fiscal 2023, we did not sell any shares of common stock under the ATM Sales Agreement. |
Concentrations
Concentrations | 12 Months Ended |
Sep. 30, 2023 | |
Concentrations | |
Concentrations | 2. Concentrations Major Customers and Products In fiscal 2023, 2022 and 2021, the Company derived 54%, 58% and 59%, respectively, of total sales from five customers, although not all the same customers in each year. Accounts receivable and contract assets related to those top five customers was $3.5 million, $3.3 million and $2.1 million as of September 30, 2023, 2022 and 2021, respectively. In fiscal year 2023, the three largest customers, Pilatus, ATSG and Textron accounted for 23%, 12% and 10% of total revenue, respectively. In fiscal year 2022, the three largest customers, Pilatus, ATSG and Textron accounted for 22%, 11% and 11% of total revenue, respectively. In fiscal year 2021, the two largest customers, Pilatus and Textron accounted for 20% and 17% of total revenue, respectively. Flat panel product sales were 99%, 98% and 88% of total product sales in the years ended September 30, 2023, 2022 and 2021, respectively. Product sales of air data systems and components were 1%, 2% and 12% of total product sales for the years ended September 30, 2023, 2022 and 2021, respectively. Product sales to government contractors and agencies accounted for approximately 9%, 14% and 18% of total product sales during fiscal years 2023, 2022 and 2021, respectively. The government agency or general contractor typically retains the right to terminate the contract at any time at its convenience. Upon alteration or termination of these contracts, IS&S is typically entitled to an equitable adjustment to the contract price so that it would be compensated for delivered items and allowable costs incurred. Accordingly, because these contracts can be terminated, the Company cannot be assured that its backlog will result in sales. Major Suppliers The Company buys several of its components from sole source suppliers. Although there are a limited number of suppliers of particular components, management believes other suppliers could provide similar components on comparable terms. During fiscal 2023, the Company had four suppliers that accounted for 49.0% of the Company’s total inventory related purchases. During fiscal 2022, the Company had three suppliers that accounted for 33.7% of the Company’s total inventory related purchases. During fiscal 2021, the Company had one supplier that accounted for 14.9% of the Company’s total inventory related purchases. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash balances and accounts receivable. The Company invests its excess cash where preservation of principal is the major consideration. Cash balances are maintained with two major banks. Balances on deposit with certain money market accounts and operating accounts may exceed the Federal Deposit Insurance Corporation limits. The Company’s customer base consists principally of companies within the aviation industry. The Company requests advance payments and/or letters of credit from customers that it considers to be significant credit risks. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reclassification The Company presented intangible assets, net, separately in the consolidated balance sheet as of September 30, 2023. In order to conform to the presentation of the consolidated balance sheet as of September 30, 2023, the Company reclassified $60,348 from other assets to intangible assets, net, in the consolidated balance sheet as of September 30, 2022. This reclassification has no impact on the Company’s net income for the years ended September 30, 2023 and 2022. Use of Estimates The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Estimates are used in accounting for, among other items, valuation of tangible and intangible assets acquired, long term contracts, evaluation of allowances for doubtful accounts, inventory obsolescence, product warranty cost liabilities, income taxes, engineering and material costs on EDC programs, percentage of completion on EDC contracts, the useful lives of long-lived assets for depreciation and amortization, the recoverability of long-lived assets, evaluation of goodwill impairment and contingencies. Estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the consolidated statements of operations in the period they are determined. Acquisitions The Company evaluates each of its acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), to determine whether the transaction is a business combination or an asset acquisition. In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, the Company first performs a screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the acquired set is not deemed to be a business and is instead accounted for as an asset acquisition. If this is not the case, the Company then further evaluates whether the acquired set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the acquired set is a business. The Company accounts for business acquisitions using the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but these assumptions are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. During the measurement period, which may be up to one year from the Acquisition Date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date that, if known, would have affected the measurement of the amounts recognized as of that date. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the Company’s consolidated statements of operations. Intangible Assets The Company’s identifiable intangible assets primarily consist of license agreements and customer relationships. Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired and are reported separately from any goodwill recognized. Intangible assets with a finite life are amortized over their estimated useful life and are reported net of accumulated amortization. They are assessed for impairment in accordance with the Company’s policy on assessing long-lived assets for impairment described below. Indefinite-lived intangible assets are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-lived intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying amount, the indefinite-lived intangible asset is not considered impaired. Goodwill Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The recorded amounts of goodwill from business combinations are based on management’s best estimates of the fair values of assets acquired and liabilities assumed at the date of acquisition. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company’s goodwill impairment test is performed at the reporting unit level. Reporting units are determined based on an evaluation of the Company’s operating segments and the components making up those operating segments. Goodwill is tested for impairment annually or in an interim period if certain changes in circumstances indicate a possibility that an impairment may exist. Factors to consider that may indicate an impairment may exist are: the macroeconomic conditions, industry and market considerations such as a significant adverse change in the business climate, cost factors, overall financial performance such as current-period operating results or cash flow declines combined with a history of operating results or cash flow declines or a projection/forecast that demonstrates continuing declines in the cash flow or the inability to improve the operations to forecasted levels, and any entity-specific events. If the Company determines that it is more likely than not that the fair value of the reporting unit is below the carrying amount as part of its qualitative assessment, a quantitative assessment of goodwill is required. In the quantitative evaluation, the fair value of the reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the goodwill is deemed not to be impaired and no further action is required. If the fair value is less than the carrying value, goodwill is considered impaired and a charge is reported as impairment of goodwill in the consolidated statements of operations. Cash and Cash Equivalents Highly liquid investments, purchased with an original maturity of three months or less, are classified as cash equivalents. Cash equivalents at September 30, 2023 and 2022 consist of cash on deposit and cash invested in money market funds with financial institutions. Due to the short maturity of these instruments, the carrying values on our consolidated balance sheets approximate fair value. Inventory Valuation Inventories are stated at the lower of cost (first-in, first-out) or net realizable value, net of write-downs for excess and obsolete inventory, and consists of the following: September 30, September 30, 2023 2022 Raw materials $ 5,162,177 $ 4,451,045 Work-in-process 966,888 795,723 Finished goods 10,648 102,336 $ 6,139,713 $ 5,349,104 Assets Held for Sale Asset to be disposed of by sale (“disposal groups”) are reclassified into “assets held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The reclassification occurs when the disposal group is available for immediate sale and the sale is probable. These criteria are generally met when an agreement to sell exists, or management has committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying amount or fair value less costs to sell and are not depreciated or amortized. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was reclassified as held for sale. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group. Property and Equipment Property and equipment are stated at cost. Depreciation is provided using an accelerated method over the estimated useful lives of the assets (the lesser of three Long-Lived Assets The Company assesses the impairment of long-lived assets in accordance with FASB ASC Topic 360-10, “ Property, Plant and Equipment.” Revenue Recognition The Company enters into sales arrangements with customers that, in general, provide for the Company to design, develop, manufacture and deliver large flat-panel display systems, flight information computers, autothrottles and advanced monitoring systems that measure and display critical flight information, including data relative to aircraft separation, airspeed, altitude and engine and fuel data measurements. Revenue from Contracts with Customers The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers 1) The Company’s contract with its customers typically is in the form of a purchase order issued to the Company by its customers and, to a lesser degree, in the form of a purchase order issued in connection with a formal contract executed with a customer. For the purpose of accounting for revenue under ASC 606, a contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. Most of our revenue is derived from purchases under which we provide a specific product or service and, as a result, there is only one performance obligation. In the event that a contract includes multiple promised goods or services, such as an EDC contract which includes both engineering services and a resulting product shipment, the Company must apply judgment to determine whether promised goods or services are capable of being distinct in the context of the contract. In these cases, the Company considers whether the customer could, on its own, or together with other resources that are readily available from third parties, produce the physical product using only the output resulting from the Company’s completion of engineering services. If the customer cannot produce the physical product, then the promised goods or services are accounted for as a combined performance obligation. 3) The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. 4) If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions as well as the cost of the goods or services and the Company’s normal margins for similar performance obligations. 5) The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Historically, the Company has also recognized revenue from EDC contracts and is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Contract costs include material, components and third-party avionics purchased from suppliers, direct labor and overhead costs. Contract Estimates Accounting for performance obligations in long-term contracts that are satisfied over time involves the use of various techniques to estimate progress towards satisfaction of the performance obligation. The Company typically measures progress based on costs incurred compared to estimated total contract costs. Contract cost estimates are based on various assumptions to project the outcome of future events that often span more than a single year. These assumptions include the amount of labor and labor costs, the quantity and cost of raw materials used in the completion of the performance obligation and the complexity of the work to be performed. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates did not change our revenue and operating earnings (and diluted earnings per share) for the fiscal years ended September 30, 2023 and 2022. Therefore, no adjustment on any contract was material to our consolidated financial statements for the fiscal years ended September 30, 2023 and 2022. Contract Balances Contract assets consist of the right to consideration in exchange for product offerings that we have transferred to a customer under the contract. Contract liabilities primarily relate to consideration received in advance of performance under the contract. The following table reflects the Company’s contract assets and liabilities: Contract Contract Assets Liabilities September 30, 2022 $ 162,742 $ 259,183 Amount transferred to receivables from contract assets — — Contract asset additions 324,397 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (240,944) Increases due to invoicing prior to satisfaction of performance obligations — 125,120 September 30, 2023 $ 487,139 $ 143,359 Lease Recognition The Company accounts for leases in accordance with ASU 2016-02, Leases Income Taxes Income taxes are recorded in accordance with ASC Topic 740, “ Income Taxes any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. At the end of each interim reporting period, the Company prepares an estimate of the annual effective income tax rate and applies that annual effective income tax rate to ordinary year-to-date pre-tax income for the interim period. Specific tax items discrete to a particular quarter are recorded in income tax expense for that quarter. The estimated annual effective tax rate used in providing for income taxes on a year-to-date basis may change in subsequent periods. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. Significant weight is given to evidence that can be verified objectively, and significant management judgment is required in determining any valuation allowance recorded against net deferred tax assets. The Company evaluates deferred income taxes on a quarterly basis to determine if a valuation allowance is required by considering available evidence. Deferred tax assets are recognized when expected future taxable income is sufficient to allow the related tax benefits to reduce taxes that would otherwise be payable. The sources of taxable income that may be available to realize the benefit of deferred tax assets are future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and credit carryforwards, taxable income in carry-back years and tax planning strategies which are both prudent and feasible. For the year ended September 30, 2021, the valuation allowance was released against all federal and state deferred tax assets with the exception of certain state net operating losses due to positive evidence that the assets are more likely than not to be realized in future years. The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets. If the Company were to determine that it would be able to realize additional state deferred tax assets in the future, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes. The accounting for uncertainty in income taxes requires a more likely than not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the (i) benefit recognized and measured for financial statement purposes and (ii) the tax position taken or expected to be taken on the Company’s tax return. To the extent that the Company’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The Company has elected to record any interest or penalties associated with uncertain tax positions as income tax expense. The Company files a consolidated U.S. federal income tax return. The Company prepares and files tax returns based on the interpretation of tax laws and regulations and records estimates based on these judgments and interpretations. In the normal course of business, the tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities, and the Company records a liability when it is probable that there will be an assessment. The Company adjusts the estimates periodically as a result of ongoing examinations by and settlements with the various taxing authorities, and changes in tax laws, regulations and precedent. The consolidated tax provision of any given year includes adjustments to prior years’ income tax accruals that are considered appropriate and any related estimated interest. Management believes that it has made adequate accruals for income taxes. Differences between estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material effect on the Company’s consolidated financial position but could possibly be material to its consolidated results of operations or cash flow of any one period. In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law to provide emergency assistance to affected individuals, families and businesses. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of NOLs. The CARES Act amends the NOL provisions of the Tax Cuts and Jobs Act of 2017, thereby allowing for the carryback of losses arising in tax years beginning before December 31, 2017 to each of the two taxable years preceding the taxable year of loss. Approximately $1,500,000 of pre-tax NOL was carried back two years to fully offset taxable income. This carryback freed up previously utilized R&D credits which resulted in an estimated increase in the R&D credit carryforward of $196,000. The carryback created approximately $16,000 of AMT tax, which was refunded. The cash impact of this carryback was $309,412. A receivable was setup for this amount as of March 31, 2020, and the cash has since been received. In December 2020, the Consolidations Appropriations Act of 2020 (“CAA”) was enacted as a supplement to the CARES Act legislation and provided additional financial relief to taxpayers adversely impacted by restrictions put into place in response to the COVID-19 pandemic. In addition, the CAA provides funding for public health initiatives in response to the pandemic. This legislation did not have a material impact on the Company’s tax position. In March, 2021, American Rescue Plan Act of 2021 (the “ARPA”), which includes certain business tax provisions, was signed into law. This legislation did not have a material impact on the Company’s tax position. In August 2022, the U.S. government enacted the Inflation Reduction Act (the “IRA”). The IRA makes the following changes to the U.S tax code: imposes a corporate alternative minimum tax of 15% on corporations with an average annual Adjusted Financial Statement Income over a three year period in excess of $1 billion, increases the amount of R&D credit that qualified businesses can apply against payroll taxes to $500,000 and imposes an excise tax equal to one percent of the fair market value of stock of a publicly traded U.S. corporation that is repurchased by the company. These changes predominately apply to tax years beginning after December 31, 2022. It does not appear that this legislation will have a material impact on the Company’s tax position. Engineering Development Total engineering development expense comprises both internally funded R&D, which is expensed in research and development, and product development and design charges related to specific customer contracts. Engineering development expense consists primarily of payroll-related expenses of employees engaged in EDC projects, engineering related product materials and equipment, and subcontracting costs. R&D charges incurred for product design, product enhancements and future product development are expensed as incurred. Product development and design charges related to specific customer contracts are charged to cost of sales-EDC based on the method of contract accounting (either percentage-of-completion or completed contract) applicable to such contracts. Fair Value of Financial Instruments The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value as the interest rate is variable and approximates current market levels. For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value as follows: Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: ● Quoted prices for similar assets or liabilities in active markets; ● Quoted prices for identical or similar assets in non-active markets; ● Inputs other than quoted prices that are observable for the asset or liability; and ● Inputs that are derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and 2022, according to the valuation techniques the Company used to determine their fair values. Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — Fair Value Measurement on September 30, 2022 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 16,083,571 $ — $ — The fiscal 2023 money market funds balance differs from the cash and cash equivalents balance on the consolidated balance sheet due to the timing of sweep transactions within the PNC cash investment accounts. Share-Based Compensation The Company accounts for share-based compensation under ASC Topic 718, which requires the Company to measure the cost of employee or non-employee director services received in exchange for an award of equity instruments based on the grant-date fair value of the award using an option pricing model. The Company recognizes such cost over the period during which an employee or non-employee director is required to provide service in exchange for the award. Accordingly, adoption of ASC Topic 718’s fair value method results in recording compensation costs under the Company’s stock based compensation plans. The Company determined the fair value of its stock option awards at the date of grant using the Black-Scholes option pricing model. Option pricing models and generally accepted valuation techniques require management to make assumptions and to apply judgment to determine the fair value of its awards. These assumptions and judgments include estimating future volatility of the Company’s stock price, expected dividend yield, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can materially affect fair value estimates. The Company does not believe that a reasonable likelihood exists that there will be a material change in future estimates or assumptions used to determine share-based compensation expense. However, if actual results are not consistent with the Company’s estimates or assumptions, the Company would adjust its estimates. Such adjustments could have a material impact on the Company’s financial position. Warranty Reserves The Company offers warranties on some products of various lengths, however the standard warranty period is twenty-four months. At the time of shipment, the Company establishes a reserve for estimated costs of warranties based on its best estimate of the amounts necessary to settle future and existing claims using historical data on products sold as of the balance sheet date. The length of the warranty period, the product’s failure rates and the customer’s usage affect warranty cost. If actual warranty costs differ from the Company’s estimated amounts, future results of operations could be affected adversely. Warranty cost is recorded as cost of sales, and the reserve balance recorded as an accrued expense. While the Company maintains product quality programs and processes, its warranty obligation is affected by product failure rates and the related corrective costs. If actual product failure rates and/or corrective costs differ from the estimates, the Company revises the estimated warranty liability accordingly. Self-Insurance Reserves Since January 1, 2014, the Company has self-insured a significant portion of its employee medical insurance. The Company maintains a stop-loss insurance policy that limits its losses both on a per employee basis and an aggregate basis. Liabilities associated with the risks that are retained by the Company are estimated based upon actuarial assumptions such as historical claims experience and demographic factors. The Company estimated the total medical claims incurred but not reported, and the Company believes that it has adequate reserves for these claims at September 30, 2023 and 2022. However, the actual value of such claims could be significantly affected if future occurrences and claims differ from these assumptions. At September 30, 2023 and 2022, the estimated liability for medical claims incurred but not reported was $62,300 and $51,600, respectively. The Company has recorded the excess of funded premiums over estimated claims incurred but not reported of $382,000 as a current asset in the accompanying consolidated balance sheet. During the year ended September 30, 2023, the Company has used the excess of funded premiums to reduce amounts payable for claims incurred. Treasury Stock We account for treasury stock purchased under the cost method and include treasury stock as a component of shareholders’ equity. Treasury stock purchased with intent to retire (whether or not the retirement is actually accomplished) is charged to common stock. New Accounting Pronouncements In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrumen |
Acquisition
Acquisition | 12 Months Ended |
Sep. 30, 2023 | |
Acquisition | |
Acquisition | 4. Acquisition On June 30, 2023, the Company entered into the Honeywell Agreement with Honeywell whereby Honeywell sold certain assets and granted perpetual license rights to manufacture and sell licensed products related to its inertial, communication and navigation product lines to the Company (the “Transaction”). The Transaction involves a sale of certain inventory, equipment and customer-related documents; an assignment of certain customer contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its inertial, communication and navigation product lines to repair, overhaul, manufacture sell, import, export and distribute certain products to the Company. The Transaction allows the Company to diversify its product offerings in the aerospace industry. The Company determined that the Transaction met the definition of a business under ASC 805; therefore, the Company accounted for the Transaction as a business combination and applied the acquisition method of accounting. In connection with the Transaction, the Company entered into a term loan with PNC Bank, National Association for $20.0 million to fund a portion of the Transaction (the “Term Loan”) – refer to Note 20, “Loan Agreement” for further details. The purchase consideration transferred at the Acquisition Date was $35.9 million, which was entirely cash. The allocation of the purchase price is based upon certain preliminary valuations and other analyses. The allocation of the purchase price has not been finalized as of the date of this filing due to fact that while legal control has occurred, the Company has not received physical possession of the prepaid inventory, equipment and construction in progress, and thus these assets will be subject to settlement adjustments upon transfer as outlined in the Honeywell Agreement. The transfer of the prepaid inventory, equipment and construction in progress is expected to occur within the measurement period. As a result, the purchase price amount for the Transaction and the allocation of the preliminary purchase consideration for prepaid inventory, equipment, construction in progress and goodwill are preliminary estimates, which may be subject to change within the measurement period. The allocation of the preliminary purchase consideration as of the Acquisition Date is as follows: Amounts Recognized as of Acquisition Date Measurement Purchase Price (as previously reported) Period Adjustments Allocation Cash consideration $ 35,860,000 $ — $ 35,860,000 Total consideration $ 35,860,000 $ — $ 35,860,000 — Prepaid inventory (a) $ 10,036,160 $ 2,032,954 (1) $ 12,069,114 Equipment 2,609,000 (54,000) (1) 2,555,000 Construction in progress 1,238,000 — 1,238,000 Intangible assets (b) 20,900,000 (4,460,000) (1) 16,440,000 Goodwill (c) 4,608,041 (1,050,155) (1)(2) 3,557,886 Assets acquired 39,391,201 (3,531,201) 35,860,000 Accrued expenses (3,531,201) 3,531,201 (2) — Liabilities assumed (3,531,201) 3,531,201 — Net assets acquired $ 35,860,000 $ — $ 35,860,000 (a) Prepaid inventory consists of raw materials and finished goods acquired by the Company but not in the Company’s physical possession as of the Acquisition Date. The fair value of raw materials was estimated to equal the replacement cost. The fair value of finished goods was determined based on the estimated selling price, net of selling costs and a margin on the selling activities, which resulted in a step-up in the value of the finished goods. (b) Intangible assets consist of license agreements related to the license rights to use certain Honeywell intellectual property and customer relationships and are recorded at estimated fair values. The estimated fair value of the license agreement is based on a variation of the income valuation approach and is determined using the relief from royalty method. The estimated fair value of the customer relationships is based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Note 5, “Intangible assets” for further details. (c) Goodwill represents the excess of the purchase consideration over the preliminary fair value of the net assets acquired. The goodwill recognized is primarily attributable to the expected synergies from the Transaction. Goodwill resulting from the Transaction has been assigned to the Company’s one reporting unit. The goodwill is not expected to be deductible for income tax purposes. Further, the Company determined that the goodwill was not impaired as of September 30, 2023 and as such, no impairment charges have been recorded for the year ended September 30, 2023. (1) During the fiscal fourth quarter of 2023, the Company identified measurement period adjustments related to fair value estimates. The measurement period adjustments resulted from the refinement of inputs used to calculate the fair value of the prepaid inventory, equipment, license agreement, and customer relationships based on facts and circumstances that existed as of the Acquisition Date. The adjustments resulted in an overall increase to goodwill of $2.5 million. Additionally, the change to the fair value estimates did not have a material impact to the consolidated statements of operations for the year ended September 30, 2023. (2) During the fourth quarter of fiscal year 2023, the Company identified measurement period adjustments related to the preliminary fair value estimates for accrued expenses. While the Honeywell Agreement indicated an amount of liabilities related to open supplier purchase orders to be assumed by the Company as of the Acquisition Date, it was determined that there were no actual liabilities outstanding as relates to these open supplier purchase orders as of the Acquisition Date; therefore, the $3.5 million assumed liabilities preliminarily recorded were reversed. The adjustments resulted in an overall decrease to goodwill of $3.5 million; the adjustments have no impact to the consolidated statements of operations for the year ended September 30, 2023. Transition services agreement Concurrent with the Transaction, the Company entered into a transition services agreement (the “TSA”) with Honeywell, at no additional cost, to receive certain transitional services and technical support during the transition service period. The Company accounted for the TSA separate from the business combination and has recognized $140,000 in prepaid expenses and other current assets within the consolidated balance sheet as of the Acquisition Date for the services to be received in the future from Honeywell. The prepaid expense related to the TSA was determined using the with and without method. Acquisition and related costs For the year ended September 30, 2023, the Company incurred acquisition costs of $408,961, which were expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations; the debt issuance costs related to the Term Loan were not material. Unaudited actual and pro forma information For the year ended September 30, 2023, the Company recognized $5.8 million of revenues and $3.0 million of net income related to the Product Lines in the consolidated statements of operations. The following unaudited pro forma summary presents consolidated information of the Company, including the Product Lines, as if the Transaction had occurred on October 1, 2021: Year Ended September 30, 2023 2022 Net sales $ 43,757,196 $ 49,218,764 Net income $ 8,542,330 $ 9,716,082 These pro forma results are for illustrative purposes and are not indicative of the actual results of operations that would have been achieved, nor are they indicative of future results of operations. The unaudited pro forma information for all periods presented was adjusted to give effect to pro forma events that are directly attributable to the Transaction and are factually supportable. The adjustments are based on information available to the Company at this time. Accordingly, the adjustments are subject to change, and the impact of such changes may be material. The unaudited pro forma results do not include any incremental cost savings that may result from the integration. |
Intangible assets
Intangible assets | 12 Months Ended |
Sep. 30, 2023 | |
Intangible assets | |
Intangible assets | 5. Intangible assets The Company’s intangible assets other than goodwill are as follows: As of September 30, 2023 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (268,500) 10,471,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (906,785) $ 16,185,321 As of September 30, 2022 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value Licensing and certification rights (b) $ 696,506 $ — $ (636,158) $ 60,348 Total $ 696,506 $ — $ (636,158) $ 60,348 (a) As part of the Transaction, the Company acquired intangible assets related to the license agreement for the license rights to use certain Honeywell intellectual property and customer relationships. The license agreement has an indefinite life and is not subject to amortization; the customer relationships have an estimated weighted average life of ten years . The Company determined that the intangible assets were not impaired as of September 30, 2023 and, as such, no impairment charges have been recorded for the year ended September 30, 2023. (b) The licensing and certification rights are amortized over a defined number of units. An impairment charge of $44,400 was recorded during the year ended September 30, 2023. No impairment charges were recorded during the years ended September 30, 2022 or 2021. Intangible asset amortization expense was $270,627, $2,126 and $50,377 for the years ended September 30, 2023, 2022 and 2021, respectively. The timing of future amortization expense is not determinable for the licensing and certification rights because they are amortized over a defined number of units. The expected future amortization expense related to the customer relationships as of September 30, 2023 is as follows: 2024 $ 1,074,000 2025 1,074,000 2026 1,074,000 2027 1,074,000 2028 1,074,000 Thereafter 5,101,500 Total $ 10,471,500 |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Sep. 30, 2023 | |
Net Income Per Share | |
Net Income Per Share | 6. Net Income Per Share For the Fiscal Year Ended September 30, 2023 2022 2021 Numerator: Net income $ 6,027,755 $ 5,523,778 $ 5,064,902 Denominator: Basic 17,411,684 17,256,750 17,225,423 Dilutive effect of share-based awards 7,501 1,121 1,197 Diluted weighted average shares 17,419,185 17,257,871 17,226,620 Net income per common share: Basic $ 0.35 $ 0.32 $ 0.29 Diluted $ 0.35 $ 0.32 $ 0.29 Net income per share is calculated pursuant to ASC Topic 260, “ Earnings per Share” The number of incremental shares from the assumed exercise of stock options and RSUs is calculated by using the treasury stock method. As of September 30, 2023, 2022 and 2021, there were 224,000, 57,584 and 100,000 options to purchase common stock outstanding, respectively. As of September 30, 2023, 2022 and 2021, there were 101,968, 7,886 and 0 shares subject to vesting of restricted stock units outstanding, respectively. The average outstanding diluted shares calculation excludes options with an exercise price that exceeds the average market price of shares during the period. For fiscal year 2023 and 2022, 203,000 options and 0 options to purchase common stock were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive. For fiscal year 2021, 100,000 shares were excluded from the calculation of earnings per share as their effect would be anti-dilutive. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 7. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: September 30, September 30, 2023 2022 Prepaid insurance $ 623,186 $ 777,311 Other 449,826 365,159 $ 1,073,012 $ 1,142,470 |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Sep. 30, 2023 | |
Assets Held for Sale | |
Assets Held for Sale | 8. Assets Held for Sale The asset classified as held for sale, net consists of the following: September 30, September 30, 2023 2022 Corporate airplane 2,406,468 — Less: accumulated depreciation and amortization (342,650) — $ 2,063,818 $ — As of September 30, 2023, the Company classified $2.1 million of net property and equipment as “assets held for sale” on the consolidated balance sheet. During the quarter ended September 30, 2023, management of the Company implemented a plan to sell a Company-owned aircraft and commenced efforts to locate a buyer for the aircraft. On November 20, 2023 the Company-owned aircraft was sold for $2.3 million, see Note 21, “Subsequent Events” for further details. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Sep. 30, 2023 | |
Property and Equipment | |
Property and Equipment | 9. Property and Equipment Property and equipment, net consists of the following balances: September 30, September 30, 2023 2022 Computer equipment $ 2,343,996 $ 2,307,139 Corporate airplane — 2,406,468 Furniture and office equipment 970,230 976,993 Manufacturing facility 5,926,584 5,889,491 Equipment 9,554,197 5,624,966 Land 1,021,245 1,021,245 19,816,252 18,226,302 Less accumulated depreciation and amortization (11,923,825) (11,934,113) $ 7,892,427 $ 6,292,189 Depreciation related to property and equipment was $427,317, $358,837 and $373,068 in fiscal years 2023, 2022 and 2021, respectively. The Pilatus PC-12 airplane, one of the Company’s two corporate airplanes, was sold during the quarter ended September 30, 2022 and the Company recognized a gain on sale of the aircraft of approximately $1,192,000. The corporate airplanes are utilized primarily in support of product development. Non-cash investing activities involving property, plant and equipment comprise the abandonment of fully depreciated assets with an original cost and accumulated amortization of $94,954, $34,656 and $416,626 in fiscal years 2023, 2022 and 2021, respectively. |
Other Assets
Other Assets | 12 Months Ended |
Sep. 30, 2023 | |
Other Assets | |
Other Assets | 10. Other Assets Other assets consist of the following: September 30, September 30, 2023 2022 Operating lease right-of-use assets $ 15,065 $ 28,680 Other non-current assets 176,657 75,300 $ 191,722 $ 103,980 Other non-current assets as of September 30, 2023 and September 30, 2022 include the security deposit for an airplane hangar, and a deposit for medical claims required under the Company’s medical plan. In addition, other non-current assets include $0 and $0 of prepaid software licenses, that will be earned upon the shipment of a certain product to a customer, as of September 30, 2023, and September 30, 2022, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Accrued Expenses | 11. Accrued Expenses Accrued expenses consist of the following: September 30, September 30, 2023 2022 Warranty $ 562,645 $ 607,001 Salary, benefits and payroll taxes 1,181,219 1,030,628 Professional fees 200,668 364,794 Operating lease 12,965 13,615 Other 960,828 956,237 $ 2,918,325 $ 2,972,275 |
Warranty
Warranty | 12 Months Ended |
Sep. 30, 2023 | |
Warranty | |
Warranty | 12. Warranty The Company provides for the estimated cost of product warranties at the time revenue is recognized. Warranty cost is recorded as cost of sales, and the reserve balance is recorded as an accrued expense in the financial statements. While the Company engages in extensive product quality programs and processes, the Company’s warranty obligation is affected by product failure rates and by the related material, labor and delivery costs incurred in correcting a product failure. If actual product failure rates, material, or labor costs differ from the Company’s estimates, further revisions to the estimated warranty liability would be recorded. Warranty cost and accrual information for fiscal years ended September 30, 2023 and 2022: 2023 2022 Warranty accrual as of October 1, $ 607,001 $ 589,260 Expense accrual for fiscal year 58,472 152,419 Warranty cost incurred for fiscal year (102,828) (134,678) Warranty accrual as of September 30, $ 562,645 $ 607,001 |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 13. Income Taxes In March 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of NOLs. The CARES Act amends the NOL provisions of the Tax Cuts and Jobs Act of 2017, thereby allowing for the carryback of losses arising in tax years beginning before December 31, 2017, to each of the two taxable years preceding the taxable year of loss. Approximately $1,500,000 of pre-tax NOL was carried back two years to fully offset taxable income. This carryback freed up previously utilized R&D credits which resulted in an estimated increase in the R&D credit carryforward of $196,000. The carryback created approximately $16,000 of AMT tax, which was refunded. The cash impact of this carryback was $309,412. A receivable was set up for this amount as of March 31, 2020, and the cash has since been received. In December 2020, the CAA was enacted as a supplement to the CARES Act legislation and provided additional financial relief to taxpayers adversely impacted by restrictions put into place in response to the COVID-19 pandemic. In addition, the CAA provides funding for public health initiatives in response to the pandemic. This legislation did not have a material impact on the Company’s tax position. On March 11, 2021, the ARPA, which includes certain business tax provisions, was signed into law. This legislation did not have a material impact on the Company’s tax position. In August 2022, the U.S. government enacted the Inflation Reduction Act (the “IRA”). The IRA makes the following changes to the U.S tax code: imposes a corporate alternative minimum tax of 15% on corporations with an average annual Adjusted Financial Statement Income over a three year period in excess of $1 billion, increases the amount of R&D credit that qualified businesses can apply against payroll taxes to $500,000 and imposes an excise tax equal to one percent of the fair market value of stock of a publicly traded U.S. corporation that is repurchased by the company. These changes predominately apply to tax years beginning after December 31, 2022. It does not appear that this legislation will have a material impact on the Company’s tax position. The components of income taxes are as follows: For the Fiscal Year Ended September 30, 2023 2022 2021 Current provision (benefit): Federal $ 1,541,726 $ 522,473 $ 95,818 State 56,288 277,991 9,911 Total current provision (benefit) 1,598,014 800,464 105,729 Deferred provision (benefit) Federal 28,994 998,585 (754,995) State (19,491) 18,782 (438,517) Total deferred provision (benefit) 9,503 1,017,367 (1,193,511) Total current and deferred provision (benefit) $ 1,607,517 $ 1,817,831 $ (1,087,783) Following is a reconciliation of the statutory federal rate to the Company’s effective income tax rate: For the Fiscal Year Ended September 30, 2023 2022 2021 U.S. Federal statutory tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 0.4 % 11.8 % 0.6 % Permanent items — % 0.1 % 0.2 % Research and development tax credits (0.8) % (0.1) % (0.6) % Valuation allowance (0.1) % (6.4) % (47.9) % Change in unrecognized tax benefits 0.1 % (1.5) % (0.7) % 123R cancellations and forfeitures 0.4 % 0.3 % 0.0 % Other 0.1 % (0.5) % 0.0 % Effective income tax rate 21.1 % 24.7 % (27.4) % The deferred tax effect of temporary differences giving rise to the Company’s deferred tax assets and liabilities consists of the components below: As of September 30, 2023 2022 2021 Non Current Non Current Non Current Deferred tax assets: Reserves and accruals $ 778,805 $ 651,321 $ 654,624 Research and development credit — — 1,327,162 NOL carryforwards -fed/state 980,755 984,004 1,612,043 Depreciation — — — Stock options 241,598 45,069 41,652 Amortization 520,445 — — 2,521,603 1,680,394 3,635,481 Less: Valuation allowance (977,747) (981,816) (1,449,204) Total deferred tax assets 1,543,856 698,578 2,186,277 Deferred tax liabilities: Depreciation (1,087,653) (652,091) (1,122,455) Total deferred tax liabilities (1,087,653) (652,091) (1,122,455) Net deferred tax asset $ 456,203 $ 46,487 $ 1,063,822 At September 30, 2023 and 2022, the Company had state NOL carryforwards of approximately $19.5 million and $19.7 million, respectively, which begin to expire in varying amounts after the fiscal year ending September 30, 2027. The Company does not have federal R&D Tax Credit carryforwards in fiscal 2023 and 2022. Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. Significant weight is given to evidence that can be verified objectively, and significant management judgment is required in determining any valuation allowance recorded against net deferred tax assets. The Company evaluates deferred income taxes on a quarterly basis to determine if valuation allowances are required by considering available evidence, including historical and projected taxable income and tax planning strategies which are both prudent and feasible. ASC Topic 740 requires the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against net deferred tax assets. For the year ended September 30, 2021, the valuation allowance was released against all federal and state deferred tax assets with the exception of certain state net operating losses due to positive evidence that the assets are more likely than not to be realized in future years. The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets. If the Company were to determine that it would be able to realize additional state deferred tax assets in the future, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes. Following is a reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits: For the Fiscal Year Ended September 30, 2023 2022 2021 Balance at beginning of year $ 452,000 $ 590,000 $ 615,000 Unrecognized tax benefits related to prior years — — — Unrecognized tax benefits related to current year 8,000 — 7,000 Decrease in unrecognized tax benefits due to the lapse of applicable statute of limitations — (138,000) (32,000) Balance at end of year $ 460,000 $ 452,000 $ 590,000 The total liabilities associated with the unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $460,000, $452,000 and $590,000 at September 30, 2023, 2022 and 2021, respectively. It is not anticipated that the balance of unrecognized tax benefits at September 30, 2023 will change significantly over the next twelve months. The balance of unrecognized tax benefits as reflected in the table above at September 30, 2023 are recorded on the balance sheet as a reduction to deferred tax assets. The Company’s policy is to recognize interest accrued and, if applicable, penalties related to unrecognized tax benefits in income tax expense for all periods presented. At September 30, 2023, the Company currently has no unrecognized tax benefits against which interest has been accrued, and there is no accrual recorded for penalties. For the fiscal years ended September 30, 2023, 2022 and 2021, the Company did not recognize any expense for interest (net of federal impact) within income tax expense. The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of related tax laws and regulations and require significant judgment to apply. The Company’s federal income tax returns for the fiscal years ended September 30, 2018 and thereafter are open years subject to examination by the Internal Revenue Service. The Company files income tax returns in various state jurisdictions, as appropriate, with varying statutes of limitation. There are no state income tax examinations in process at this time. |
Savings Plan
Savings Plan | 12 Months Ended |
Sep. 30, 2023 | |
Savings Plan | |
Savings Plan | 14. Savings Plan The Company sponsors a voluntary defined contribution savings plan covering all employees. The Company made contributions of approximately $242,000, $126,000 and $123,000 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Sep. 30, 2023 | |
Share-Based Compensation | |
Share-Based Compensation | 15. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC Topic 718 by using the fair value method for expensing stock options and stock awards. Total share-based compensation expense was approximately $1,336,000, $345,000, and $341,000 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. The income tax impact recognized as a credit to additional paid in capital in the statement of shareholders’ equity related to share-based compensation arrangements was $756,000, $166,617 and $181,350 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. Compensation expense related to share-based awards is recorded as a component of selling, general and administrative expenses. 2019 Stock-Based Incentive Compensation Plan The 2019 Stock-Based Incentive Compensation Plan (the “2019 Plan”) was approved by the Company’s shareholders at the Company’s Annual Meeting of Shareholders held on April 2, 2019. The 2019 Plan authorizes the grant of stock appreciation rights, restricted stock, options and other equity-based awards. Options granted under the 2019 Plan may be either “incentive stock options” as defined in section 422 of the Code or nonqualified stock options, as determined by the Compensation Committee. Subject to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution, or similar corporate transaction or event, the maximum number of shares of common stock available for awards under the 2019 Plan is 750,000, plus 139,691 shares of common stock that were authorized but unissued under the 2009 Plan as of the effective date of the 2019 Plan (i.e., April 2, 2019), all of which may be issued pursuant to awards of incentive stock options. As of September 30, 2023, there were 262,000 shares of common stock available for awards under the 2019 Plan. If any award is forfeited, terminates or otherwise is settled for any reason without an actual distribution of shares to the participant, the related shares of common stock subject to such award will again be available for future grant. Any shares tendered by a participant in payment of the exercise price of an option or the tax liability with respect to an award (including, in any case, shares withheld from any such award) will not be available for future grant under the 2019 Plan. If there is any change in the Company’s corporate capitalization, the Compensation Committee must proportionately and equitably adjust the number and kind of shares of common stock which may be issued in connection with future awards, the number and kind of shares of common stock covered by awards then outstanding under the 2019 Plan, the aggregate number and kind of shares of common stock available under the 2019 Plan, any applicable individual limits on the number of shares of common stock available for awards under the 2019 Plan, the exercise or grant price of any award, or if deemed appropriate, make provision for a cash payment with respect to any outstanding award. In addition, the Compensation Committee may make adjustments in the terms and conditions of any awards, including any performance goals, in recognition of unusual or nonrecurring events affecting the Company or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. Following is a summary of option activity under the 2019 Plan for the fiscal year ended September 30, 2023, and changes during the periods then ended: Weighted Average Aggregate Exercise Intrinsic Options Price Value Outstanding at September 30, 2021 100,000 $ 7.10 $ — Granted — — — Exercised (42,416) 8.26 64,896 Cancelled — — — Outstanding at September 30, 2022 57,584 $ 7.10 $ 88,104 Granted 224,374 8.19 — Exercised (57,584) 7.10 28,792 Cancelled — — — Outstanding at September 30, 2023 224,374 $ 8.19 $ — Vested and expected to vest 69,796 $ 8.20 $ — Options exercisable at September 30, 2023 154,578 $ 8.19 $ — The following table summarizes information about stock options under the 2019 Plan at September 30, 2023: Options Outstanding Options Exercisable Outstanding Weighted- As of Average Weighted- As of Weighted- Range of Exercise September 30, Remaining Average September 30, Average Prices 2023 Contractual Life Exercise Price 2023 Exercise Price $0.00 - $9.00 224,374 9.4 $ 8.20 154,578 $ 8.19 Fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Options are exercisable over a maximum term of ten years from date of grant and vest typically over periods of three Below are the fair value assumptions used to record stock option compensation expense, related to the 2019 Plan, for the following periods identified: Fiscal Year Ended September 30, 2023 2022 (1) 2021 (1) Expected dividend rate — — — Expected volatility 55.1 % — % — % Weighted average risk-free interest rate 3.7 % — % — % Expected lives (years) 5.3 — — (1) The Company did not grant any options in fiscal 2022 and 2021. Total compensation expense associated with stock option awards to employees under the 2019 Plan was approximately $756,000, $164,000 and $181,000 for fiscal years ended September 30, 2023, 2022 and 2021, respectively. At September 30, 2023, unrecognized compensation expense of $205,000, net of forfeitures, related to non-vested stock options under the 2019 Plan, will be recognized. Restricted Stock Units During fiscal 2023, the Company’s Board of Directors (the “Board”) approved grants of RSUs to the non-employee directors on the Board as compensation for their services from the beginning of calendar year 2023 to vest on the date of the Company’s 2023 Annual Meeting of Shareholders. After the 2023Annual Meeting of Shareholders, the Board approved grants of RSUs to the non-employee directors on the Board as compensation for their services. Under the terms of the awards, the RSUs will vest on the first anniversary of the grant date. At the time of vesting, the RSUs will be settled in shares of the Company’s common stock at a rate of one share of stock for each unit, provided that, if a director resigns from the Board prior to the vesting date, such director shall only receive a pro rata portion of such award for time served. During fiscal 2023, the Board approved grants of RSUs to both the Chief Executive Officer and the former Chief Financial Officer. Certain RSUs to the Chief Executive Officer vested immediately, and the remainder will vest quarterly over a three-year period. The approved grants of the RSUs to the former Chief Financial Officer will vest over a four-year period. On November 8, 2023, Michael Linacre, Chief Financial Officer of Innovative Solutions and Support, Inc., notified the Company of his resignation from all of his positions with the Company, effective immediately, which resulted in the forfeiture of 11,503 RSUs. As of September 30, 2023, there were 101,968 unvested restricted stock units outstanding under the 2019 Plan. As of September 30, 2022, and September 30, 2021 there were 32,897 and 25,396 respectively, unvested restricted stock units outstanding under the 2019 Plan. Non-vested Weighted Average Stock Awards Share Price Balance at September 30, 2021 25,396 $ 6.30 Granted 38,986 6.52 Issued (27,425) 6.32 Cancelled (4,059) 6.57 Balance at September 30, 2022 32,897 $ 6.51 Granted 133,554 8.00 Issued (64,483) 7.51 Cancelled — — Balance at September 30, 2023 101,968 $ 7.84 Total share-based compensation expense associated with the annual grant of stock awards to non-employee directors under the 2019 Plan was approximately $212,000, $178,000 and $160,000 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. Total share-based compensation expense associated with the annual grant of stock awards to employees under the 2019 Plan was approximately $368,000, $3,000 and $0 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. At September 30, 2023, unrecognized compensation expense of $659,000, net of forfeitures, related to non-vested stock awards under the 2019 Plan, will be recognized. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 16. Commitments and Contingencies Purchase Obligations A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and legally binding on the Company and that specifies all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions, and the approximate timing of the transaction. These amounts primarily comprise of open purchase order commitments entered in the ordinary course of business with vendors and subcontractors pertaining to fulfillment of the Company’s current order backlog. The purchase obligations on open purchase orders were $2.4 million, $2.6 million and $2.1 million as of September 30, 2023, 2022 and 2021, respectively. Product Liability The Company has product liability insurance of $50,000,000. The Company has not experienced any material product liability claims. Legal Proceedings In the ordinary course of business, the Company is at times subject to various legal proceedings and claims. The Company does not believe any such matters that are currently pending will, individually or in the aggregate, have a material effect on the results of operations or financial position. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | 17. Related Party Transactions In recent years, the Company has had sales to AML Global Eclipse, LLC, (“Eclipse”), whose principal shareholder is also a principal shareholder in the Company. Eclipse is a new related party for fiscal year 2023 due to their president acquiring more than 10% in shares on the company. Prior balances are disclosed below for comparability. Sales to Eclipse amounted to $0.3 million, $0.6 million and $1.6 million for the years ended September 30, 2023, 2022 and 2021, respectively. As of September 30, 2023 and 2022, contract liability to Eclipse was approximately $0.0 million and $0.1 million, respectively. |
Business Segments
Business Segments | 12 Months Ended |
Sep. 30, 2023 | |
Business Segments | |
Business Segments | 18. Business Segments The Company operates in one business segment which designs, manufactures and sells flat panel displays, flight information computers and advanced monitoring systems to the DoD, the Department of Interior, other government agencies, commercial air transport carriers and corporate/general aviation markets. The Company currently derives virtually all of its revenues from the sale of this equipment and related EDC. Geographic Data Most of the Company’s sales, operating results and identifiable assets are generated in the United States. In fiscal years 2023, 2022 and 2021, net sales outside the United States amounted to $15.5 million, $11.1 million and $8.4 million, respectively. Product Data The Company’s current product line includes FPDS, flight management systems and air data systems and components. During fiscal years 2023, 2022 and 2021, the Company derived 99%, 98% and 88%, respectively, of its total product sales of FPDS. The remaining product sales for each of the fiscal years was from sales of air data systems and components. |
Lease Recognition
Lease Recognition | 12 Months Ended |
Sep. 30, 2023 | |
Lease Recognition | |
Lease Recognition | 19. Lease Recognition The Company accounts for leases in accordance with ASU 2016-02 and records “right-of-use” assets and corresponding lease liabilities on the balance sheet for most leases with an initial term of greater than one year. We recognize payments for leases with a term of less than one year in the statements of operations on a straight-line basis over the lease term. We lease real estate and equipment under various operating leases. A lease exists when a contract or part of a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In determining whether a lease exists, we consider whether a contract provides us with both: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset and (b) the right to direct the use of the identified asset. Some of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. To the extent a significant economic incentive exists to exercise an option, that option is included within the lease term. However, based on the nature of our lease arrangements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements. Our leases typically include a combination of fixed and variable payments. Fixed payments are generally included when measuring the right-of-use asset and lease liability. Variable payments, which primarily represent payments based on usage of the underlying asset, are generally excluded from such measurement and expensed as incurred. In addition, certain of our lease arrangements may contain a lease coupled with an arrangement to provide other services, such as maintenance, or may require us to make other payments on behalf of the lessor related to the leased asset, such as payments for taxes or insurance. As permitted by ASU 2016-02, we have elected to account for these non-lease components together with the associated lease component if included in the lease payments. This election has been made for each of our asset classes. The measurement of “right-of-use” assets and lease liabilities requires us to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such rate is utilized. However, based on information available at lease commencement for our leases, the rate implicit in the lease is not known. In these instances, we utilize an incremental borrowing rate, which represents the rate of interest that we would pay to borrow on a collateralized basis over a similar term. Rent expense and cash paid for various operating leases in aggregate are approximately $73,000 for the period ended September 30, 2023. The weighted average remaining lease term is 1.2 years, and the weighted average discount rate is 5.0% as of September 30, 2023. Related assets and liabilities resulting from lease obligations are deemed to be immaterial. Future minimum lease payments under operating leases are as follows at September 30, 2023: Twelve Months Ending Operating September 30, Leases 2024 $ 14,676 2025 2,446 Total minimum lease payments $ 17,122 Amount representing interest (2,057) Present value of minimum lease payments 15,065 Current portion (12,965) Long-term portion of lease obligations $ 2,100 |
Loan Agreement
Loan Agreement | 12 Months Ended |
Sep. 30, 2023 | |
Loan Agreement | |
Loan Agreement | 20. Loan Agreement On June 28, 2023, the Company and one of its subsidiaries entered into an Amendment to Loan Documents (the “Loan Amendment”) with PNC Bank, National Association (the “PNC”), which amends certain terms of that certain Loan Agreement entered into by the parties on May 11, 2023 (the “Loan Agreement” and, as amended, the “Amended Loan Agreement”) and (ii) a corresponding Term Note in favor of PNC (the “Term Note”), which together provide for a senior secured term loan in an aggregate principal amount of $20.0 million, with a maturity date of June 28, 2028. Availability of funds under the Term Loan was conditioned upon the closing of the transactions contemplated by the Amended Loan Agreement and was used to fund a portion of the Transaction. Under the agreement, the Company has the right to prepay any amounts outstanding at any time and from time to time, whole or in part; subject to payment of any break funding indemnification amounts. Future interest payments on the Term Loan, based on current interest rates, are expected to approximate $1.5 million in fiscal 2024, $1.3 million in fiscal 2025, $1.2 million in fiscal 2026, $1.0 million in fiscal 2027, and $0.7 million thereafter. The interest rate applicable to loans outstanding under the Term Loan is a floating interest rate equal to the sum of (A) the Term SOFR Rate (as defined in the Term Note) plus (B) an unadjusted spread of the Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio, as defined in the Amended Loan Agreement. Commencing on June 30, 2023, the Term Loan will consist of sixty In addition to providing for the Term Loan, the Loan Agreement, together with a corresponding Revolving Line of Credit Note in favor of PNC, executed May 11, 2023 (“Line of Credit Note”), provides for a senior secured revolving line of credit in an aggregate principal amount of $10,000,000, with an expiration date of May 11, 2028 (the “Revolving Line of Credit”). The interest rate applicable to loans outstanding under the Revolving Line of Credit is a rate per annum equal to the sum of (A) Daily SOFR (as defined in the Line of Credit Note) plus (B) an unadjusted spread of Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio. The Company will pay an annual commitment fee of 0.15% on the amount available for borrowing under the revolving credit facility. The Company was in compliance with all applicable covenants throughout and at September 30, 2023. As of September 30, 2023, the term loan balance amounted to $19,500,000. There was no balance drawn on the Revolving Line of Credit as of September 30, 2023. Fixed mandatory principal repayments due on the outstanding Term Loan are as follows: $2.0 million in fiscal 2024, $2.0 million in fiscal 2025, $2.0 million in fiscal 2026, $2.0 million in fiscal 2027, and $11.5 million in fiscal 2028. On December 19, 2023, the Company and PNC entered into an Amendment to Loan Documents and a corresponding Amended and Restated Revolving Line of Credit Note and Amended and Restated Line of Credit and Investment Sweep Rider. See Note 21, “Subsequent Events”. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2023 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events On December 19, 2023, the Company and PNC entered into an Amendment to Loan Documents (the “Restated Loan Amendment”) and a corresponding Amended and Restated Revolving Line of Credit Note (“Restated Line of Credit Note”) and Amended and Restated Line of Credit and Investment Sweep Rider (the “Restated Rider”), to increase the aggregate principal amount available under the Company’s senior secured revolving line of credit from $10,000,000 to $30,000,000 and extend the maturity date until December 19, 2028. The proceeds of the Restated Line of Credit Note will be used for working capital and other general corporate purposes, for acquisitions as permitted under the Restated Loan Amendment, and to pay off and close the loan evidenced by that certain Term Note executed in favor of PNC, dated June 28, 2023, which provides for a senior secured term loan in an aggregate principal amount of $20,000,000, with a maturity date of June 28, 2023. The interest rate applicable to loans outstanding under the Restated Line of Credit is a rate per annum equal to the sum of (A) Daily SOFR (as defined in the Restated Line of Credit Note) plus (B) an unadjusted spread of Applicable SOFR Margin (as defined in the Restated Line of Credit Note) plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio, as defined in the Restated Line of Credit Note. The foregoing descriptions of the Restated Loan Amendment, Restated Line of Credit Note and Restated Rider do not purport to be complete and are qualified in their entirety by reference to the full text of the Restated Loan Amendment, Restated Line of Credit Note and Restated Rider, which are filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, to the Current Report on Form 8-K filed December 22, 2023 and are incorporated therein by reference On November 20, 2023, the Company sold its assets held for sale, the King Air aircraft, for $2.3 million. The resultant gain on sale will be a reduction to selling, general and administrative expense in the quarter ended December 31, 2023. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Reclassification | Reclassification The Company presented intangible assets, net, separately in the consolidated balance sheet as of September 30, 2023. In order to conform to the presentation of the consolidated balance sheet as of September 30, 2023, the Company reclassified $60,348 from other assets to intangible assets, net, in the consolidated balance sheet as of September 30, 2022. This reclassification has no impact on the Company’s net income for the years ended September 30, 2023 and 2022. |
Use of Estimates | Use of Estimates The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Estimates are used in accounting for, among other items, valuation of tangible and intangible assets acquired, long term contracts, evaluation of allowances for doubtful accounts, inventory obsolescence, product warranty cost liabilities, income taxes, engineering and material costs on EDC programs, percentage of completion on EDC contracts, the useful lives of long-lived assets for depreciation and amortization, the recoverability of long-lived assets, evaluation of goodwill impairment and contingencies. Estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the consolidated statements of operations in the period they are determined. |
Acquisitions | Acquisitions The Company evaluates each of its acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), to determine whether the transaction is a business combination or an asset acquisition. In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, the Company first performs a screening test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the acquired set is not deemed to be a business and is instead accounted for as an asset acquisition. If this is not the case, the Company then further evaluates whether the acquired set includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the Company concludes that the acquired set is a business. The Company accounts for business acquisitions using the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but these assumptions are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. During the measurement period, which may be up to one year from the Acquisition Date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the Acquisition Date that, if known, would have affected the measurement of the amounts recognized as of that date. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the Company’s consolidated statements of operations. |
Intangible Assets | Intangible Assets The Company’s identifiable intangible assets primarily consist of license agreements and customer relationships. Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired and are reported separately from any goodwill recognized. Intangible assets with a finite life are amortized over their estimated useful life and are reported net of accumulated amortization. They are assessed for impairment in accordance with the Company’s policy on assessing long-lived assets for impairment described below. Indefinite-lived intangible assets are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-lived intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying amount, the indefinite-lived intangible asset is not considered impaired. |
Goodwill | Goodwill Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The recorded amounts of goodwill from business combinations are based on management’s best estimates of the fair values of assets acquired and liabilities assumed at the date of acquisition. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company’s goodwill impairment test is performed at the reporting unit level. Reporting units are determined based on an evaluation of the Company’s operating segments and the components making up those operating segments. Goodwill is tested for impairment annually or in an interim period if certain changes in circumstances indicate a possibility that an impairment may exist. Factors to consider that may indicate an impairment may exist are: the macroeconomic conditions, industry and market considerations such as a significant adverse change in the business climate, cost factors, overall financial performance such as current-period operating results or cash flow declines combined with a history of operating results or cash flow declines or a projection/forecast that demonstrates continuing declines in the cash flow or the inability to improve the operations to forecasted levels, and any entity-specific events. If the Company determines that it is more likely than not that the fair value of the reporting unit is below the carrying amount as part of its qualitative assessment, a quantitative assessment of goodwill is required. In the quantitative evaluation, the fair value of the reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the goodwill is deemed not to be impaired and no further action is required. If the fair value is less than the carrying value, goodwill is considered impaired and a charge is reported as impairment of goodwill in the consolidated statements of operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents Highly liquid investments, purchased with an original maturity of three months or less, are classified as cash equivalents. Cash equivalents at September 30, 2023 and 2022 consist of cash on deposit and cash invested in money market funds with financial institutions. Due to the short maturity of these instruments, the carrying values on our consolidated balance sheets approximate fair value. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost (first-in, first-out) or net realizable value, net of write-downs for excess and obsolete inventory, and consists of the following: September 30, September 30, 2023 2022 Raw materials $ 5,162,177 $ 4,451,045 Work-in-process 966,888 795,723 Finished goods 10,648 102,336 $ 6,139,713 $ 5,349,104 |
Assets Held for Sale | Assets Held for Sale Asset to be disposed of by sale (“disposal groups”) are reclassified into “assets held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The reclassification occurs when the disposal group is available for immediate sale and the sale is probable. These criteria are generally met when an agreement to sell exists, or management has committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying amount or fair value less costs to sell and are not depreciated or amortized. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was reclassified as held for sale. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is provided using an accelerated method over the estimated useful lives of the assets (the lesser of three |
Long-Lived Assets | Long-Lived Assets The Company assesses the impairment of long-lived assets in accordance with FASB ASC Topic 360-10, “ Property, Plant and Equipment.” |
Revenue Recognition | Revenue Recognition The Company enters into sales arrangements with customers that, in general, provide for the Company to design, develop, manufacture and deliver large flat-panel display systems, flight information computers, autothrottles and advanced monitoring systems that measure and display critical flight information, including data relative to aircraft separation, airspeed, altitude and engine and fuel data measurements. Revenue from Contracts with Customers The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers 1) The Company’s contract with its customers typically is in the form of a purchase order issued to the Company by its customers and, to a lesser degree, in the form of a purchase order issued in connection with a formal contract executed with a customer. For the purpose of accounting for revenue under ASC 606, a contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. Most of our revenue is derived from purchases under which we provide a specific product or service and, as a result, there is only one performance obligation. In the event that a contract includes multiple promised goods or services, such as an EDC contract which includes both engineering services and a resulting product shipment, the Company must apply judgment to determine whether promised goods or services are capable of being distinct in the context of the contract. In these cases, the Company considers whether the customer could, on its own, or together with other resources that are readily available from third parties, produce the physical product using only the output resulting from the Company’s completion of engineering services. If the customer cannot produce the physical product, then the promised goods or services are accounted for as a combined performance obligation. 3) The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. 4) If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions as well as the cost of the goods or services and the Company’s normal margins for similar performance obligations. 5) The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Historically, the Company has also recognized revenue from EDC contracts and is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Contract costs include material, components and third-party avionics purchased from suppliers, direct labor and overhead costs. Contract Estimates Accounting for performance obligations in long-term contracts that are satisfied over time involves the use of various techniques to estimate progress towards satisfaction of the performance obligation. The Company typically measures progress based on costs incurred compared to estimated total contract costs. Contract cost estimates are based on various assumptions to project the outcome of future events that often span more than a single year. These assumptions include the amount of labor and labor costs, the quantity and cost of raw materials used in the completion of the performance obligation and the complexity of the work to be performed. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates did not change our revenue and operating earnings (and diluted earnings per share) for the fiscal years ended September 30, 2023 and 2022. Therefore, no adjustment on any contract was material to our consolidated financial statements for the fiscal years ended September 30, 2023 and 2022. Contract Balances Contract assets consist of the right to consideration in exchange for product offerings that we have transferred to a customer under the contract. Contract liabilities primarily relate to consideration received in advance of performance under the contract. The following table reflects the Company’s contract assets and liabilities: Contract Contract Assets Liabilities September 30, 2022 $ 162,742 $ 259,183 Amount transferred to receivables from contract assets — — Contract asset additions 324,397 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (240,944) Increases due to invoicing prior to satisfaction of performance obligations — 125,120 September 30, 2023 $ 487,139 $ 143,359 |
Lease Recognition | Lease Recognition The Company accounts for leases in accordance with ASU 2016-02, Leases |
Income Taxes | Income Taxes Income taxes are recorded in accordance with ASC Topic 740, “ Income Taxes any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. At the end of each interim reporting period, the Company prepares an estimate of the annual effective income tax rate and applies that annual effective income tax rate to ordinary year-to-date pre-tax income for the interim period. Specific tax items discrete to a particular quarter are recorded in income tax expense for that quarter. The estimated annual effective tax rate used in providing for income taxes on a year-to-date basis may change in subsequent periods. Deferred tax assets are reduced by a valuation allowance if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. Significant weight is given to evidence that can be verified objectively, and significant management judgment is required in determining any valuation allowance recorded against net deferred tax assets. The Company evaluates deferred income taxes on a quarterly basis to determine if a valuation allowance is required by considering available evidence. Deferred tax assets are recognized when expected future taxable income is sufficient to allow the related tax benefits to reduce taxes that would otherwise be payable. The sources of taxable income that may be available to realize the benefit of deferred tax assets are future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and credit carryforwards, taxable income in carry-back years and tax planning strategies which are both prudent and feasible. For the year ended September 30, 2021, the valuation allowance was released against all federal and state deferred tax assets with the exception of certain state net operating losses due to positive evidence that the assets are more likely than not to be realized in future years. The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets. If the Company were to determine that it would be able to realize additional state deferred tax assets in the future, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes. The accounting for uncertainty in income taxes requires a more likely than not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the (i) benefit recognized and measured for financial statement purposes and (ii) the tax position taken or expected to be taken on the Company’s tax return. To the extent that the Company’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The Company has elected to record any interest or penalties associated with uncertain tax positions as income tax expense. The Company files a consolidated U.S. federal income tax return. The Company prepares and files tax returns based on the interpretation of tax laws and regulations and records estimates based on these judgments and interpretations. In the normal course of business, the tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities, and the Company records a liability when it is probable that there will be an assessment. The Company adjusts the estimates periodically as a result of ongoing examinations by and settlements with the various taxing authorities, and changes in tax laws, regulations and precedent. The consolidated tax provision of any given year includes adjustments to prior years’ income tax accruals that are considered appropriate and any related estimated interest. Management believes that it has made adequate accruals for income taxes. Differences between estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material effect on the Company’s consolidated financial position but could possibly be material to its consolidated results of operations or cash flow of any one period. In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law to provide emergency assistance to affected individuals, families and businesses. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of NOLs. The CARES Act amends the NOL provisions of the Tax Cuts and Jobs Act of 2017, thereby allowing for the carryback of losses arising in tax years beginning before December 31, 2017 to each of the two taxable years preceding the taxable year of loss. Approximately $1,500,000 of pre-tax NOL was carried back two years to fully offset taxable income. This carryback freed up previously utilized R&D credits which resulted in an estimated increase in the R&D credit carryforward of $196,000. The carryback created approximately $16,000 of AMT tax, which was refunded. The cash impact of this carryback was $309,412. A receivable was setup for this amount as of March 31, 2020, and the cash has since been received. In December 2020, the Consolidations Appropriations Act of 2020 (“CAA”) was enacted as a supplement to the CARES Act legislation and provided additional financial relief to taxpayers adversely impacted by restrictions put into place in response to the COVID-19 pandemic. In addition, the CAA provides funding for public health initiatives in response to the pandemic. This legislation did not have a material impact on the Company’s tax position. In March, 2021, American Rescue Plan Act of 2021 (the “ARPA”), which includes certain business tax provisions, was signed into law. This legislation did not have a material impact on the Company’s tax position. In August 2022, the U.S. government enacted the Inflation Reduction Act (the “IRA”). The IRA makes the following changes to the U.S tax code: imposes a corporate alternative minimum tax of 15% on corporations with an average annual Adjusted Financial Statement Income over a three year period in excess of $1 billion, increases the amount of R&D credit that qualified businesses can apply against payroll taxes to $500,000 and imposes an excise tax equal to one percent of the fair market value of stock of a publicly traded U.S. corporation that is repurchased by the company. These changes predominately apply to tax years beginning after December 31, 2022. It does not appear that this legislation will have a material impact on the Company’s tax position. |
Engineering Development | Engineering Development Total engineering development expense comprises both internally funded R&D, which is expensed in research and development, and product development and design charges related to specific customer contracts. Engineering development expense consists primarily of payroll-related expenses of employees engaged in EDC projects, engineering related product materials and equipment, and subcontracting costs. R&D charges incurred for product design, product enhancements and future product development are expensed as incurred. Product development and design charges related to specific customer contracts are charged to cost of sales-EDC based on the method of contract accounting (either percentage-of-completion or completed contract) applicable to such contracts. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value as the interest rate is variable and approximates current market levels. For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value as follows: Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: ● Quoted prices for similar assets or liabilities in active markets; ● Quoted prices for identical or similar assets in non-active markets; ● Inputs other than quoted prices that are observable for the asset or liability; and ● Inputs that are derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and 2022, according to the valuation techniques the Company used to determine their fair values. Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — Fair Value Measurement on September 30, 2022 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 16,083,571 $ — $ — The fiscal 2023 money market funds balance differs from the cash and cash equivalents balance on the consolidated balance sheet due to the timing of sweep transactions within the PNC cash investment accounts. |
Share-Based Compensation | Share-Based Compensation The Company accounts for share-based compensation under ASC Topic 718, which requires the Company to measure the cost of employee or non-employee director services received in exchange for an award of equity instruments based on the grant-date fair value of the award using an option pricing model. The Company recognizes such cost over the period during which an employee or non-employee director is required to provide service in exchange for the award. Accordingly, adoption of ASC Topic 718’s fair value method results in recording compensation costs under the Company’s stock based compensation plans. The Company determined the fair value of its stock option awards at the date of grant using the Black-Scholes option pricing model. Option pricing models and generally accepted valuation techniques require management to make assumptions and to apply judgment to determine the fair value of its awards. These assumptions and judgments include estimating future volatility of the Company’s stock price, expected dividend yield, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can materially affect fair value estimates. The Company does not believe that a reasonable likelihood exists that there will be a material change in future estimates or assumptions used to determine share-based compensation expense. However, if actual results are not consistent with the Company’s estimates or assumptions, the Company would adjust its estimates. Such adjustments could have a material impact on the Company’s financial position. |
Warranty Reserves | Warranty Reserves The Company offers warranties on some products of various lengths, however the standard warranty period is twenty-four months. At the time of shipment, the Company establishes a reserve for estimated costs of warranties based on its best estimate of the amounts necessary to settle future and existing claims using historical data on products sold as of the balance sheet date. The length of the warranty period, the product’s failure rates and the customer’s usage affect warranty cost. If actual warranty costs differ from the Company’s estimated amounts, future results of operations could be affected adversely. Warranty cost is recorded as cost of sales, and the reserve balance recorded as an accrued expense. While the Company maintains product quality programs and processes, its warranty obligation is affected by product failure rates and the related corrective costs. If actual product failure rates and/or corrective costs differ from the estimates, the Company revises the estimated warranty liability accordingly. |
Self-Insurance Reserves | Self-Insurance Reserves Since January 1, 2014, the Company has self-insured a significant portion of its employee medical insurance. The Company maintains a stop-loss insurance policy that limits its losses both on a per employee basis and an aggregate basis. Liabilities associated with the risks that are retained by the Company are estimated based upon actuarial assumptions such as historical claims experience and demographic factors. The Company estimated the total medical claims incurred but not reported, and the Company believes that it has adequate reserves for these claims at September 30, 2023 and 2022. However, the actual value of such claims could be significantly affected if future occurrences and claims differ from these assumptions. At September 30, 2023 and 2022, the estimated liability for medical claims incurred but not reported was $62,300 and $51,600, respectively. The Company has recorded the excess of funded premiums over estimated claims incurred but not reported of $382,000 as a current asset in the accompanying consolidated balance sheet. During the year ended September 30, 2023, the Company has used the excess of funded premiums to reduce amounts payable for claims incurred. |
Treasury Stock | Treasury Stock We account for treasury stock purchased under the cost method and include treasury stock as a component of shareholders’ equity. Treasury stock purchased with intent to retire (whether or not the retirement is actually accomplished) is charged to common stock. |
New Accounting Pronouncements | New Accounting Pronouncements In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument As new accounting pronouncements are issued, we will adopt those that are applicable. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of inventories | September 30, September 30, 2023 2022 Raw materials $ 5,162,177 $ 4,451,045 Work-in-process 966,888 795,723 Finished goods 10,648 102,336 $ 6,139,713 $ 5,349,104 |
Summary of contract assets and contract liabilities balances | Contract Contract Assets Liabilities September 30, 2022 $ 162,742 $ 259,183 Amount transferred to receivables from contract assets — — Contract asset additions 324,397 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (240,944) Increases due to invoicing prior to satisfaction of performance obligations — 125,120 September 30, 2023 $ 487,139 $ 143,359 |
Schedule of financial assets and liabilities accounted for at fair value on a recurring basis | Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — Fair Value Measurement on September 30, 2022 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 16,083,571 $ — $ — The fiscal 2023 money market funds balance differs from the cash and cash equivalents balance on the consolidated balance sheet due to the timing of sweep transactions within the PNC cash investment accounts. |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Acquisition | |
Schedule of preliminary allocation of the purchase consideration | Amounts Recognized as of Acquisition Date Measurement Purchase Price (as previously reported) Period Adjustments Allocation Cash consideration $ 35,860,000 $ — $ 35,860,000 Total consideration $ 35,860,000 $ — $ 35,860,000 — Prepaid inventory (a) $ 10,036,160 $ 2,032,954 (1) $ 12,069,114 Equipment 2,609,000 (54,000) (1) 2,555,000 Construction in progress 1,238,000 — 1,238,000 Intangible assets (b) 20,900,000 (4,460,000) (1) 16,440,000 Goodwill (c) 4,608,041 (1,050,155) (1)(2) 3,557,886 Assets acquired 39,391,201 (3,531,201) 35,860,000 Accrued expenses (3,531,201) 3,531,201 (2) — Liabilities assumed (3,531,201) 3,531,201 — Net assets acquired $ 35,860,000 $ — $ 35,860,000 (a) Prepaid inventory consists of raw materials and finished goods acquired by the Company but not in the Company’s physical possession as of the Acquisition Date. The fair value of raw materials was estimated to equal the replacement cost. The fair value of finished goods was determined based on the estimated selling price, net of selling costs and a margin on the selling activities, which resulted in a step-up in the value of the finished goods. (b) Intangible assets consist of license agreements related to the license rights to use certain Honeywell intellectual property and customer relationships and are recorded at estimated fair values. The estimated fair value of the license agreement is based on a variation of the income valuation approach and is determined using the relief from royalty method. The estimated fair value of the customer relationships is based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Note 5, “Intangible assets” for further details. (c) Goodwill represents the excess of the purchase consideration over the preliminary fair value of the net assets acquired. The goodwill recognized is primarily attributable to the expected synergies from the Transaction. Goodwill resulting from the Transaction has been assigned to the Company’s one reporting unit. The goodwill is not expected to be deductible for income tax purposes. Further, the Company determined that the goodwill was not impaired as of September 30, 2023 and as such, no impairment charges have been recorded for the year ended September 30, 2023. (1) During the fiscal fourth quarter of 2023, the Company identified measurement period adjustments related to fair value estimates. The measurement period adjustments resulted from the refinement of inputs used to calculate the fair value of the prepaid inventory, equipment, license agreement, and customer relationships based on facts and circumstances that existed as of the Acquisition Date. The adjustments resulted in an overall increase to goodwill of $2.5 million. Additionally, the change to the fair value estimates did not have a material impact to the consolidated statements of operations for the year ended September 30, 2023. (2) During the fourth quarter of fiscal year 2023, the Company identified measurement period adjustments related to the preliminary fair value estimates for accrued expenses. While the Honeywell Agreement indicated an amount of liabilities related to open supplier purchase orders to be assumed by the Company as of the Acquisition Date, it was determined that there were no actual liabilities outstanding as relates to these open supplier purchase orders as of the Acquisition Date; therefore, the $3.5 million assumed liabilities preliminarily recorded were reversed. The adjustments resulted in an overall decrease to goodwill of $3.5 million; the adjustments have no impact to the consolidated statements of operations for the year ended September 30, 2023. |
Summary of unaudited pro forma consolidated information | Year Ended September 30, 2023 2022 Net sales $ 43,757,196 $ 49,218,764 Net income $ 8,542,330 $ 9,716,082 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Intangible assets | |
Summary of intangible assets other than goodwill | As of September 30, 2023 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (268,500) 10,471,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (906,785) $ 16,185,321 As of September 30, 2022 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value Licensing and certification rights (b) $ 696,506 $ — $ (636,158) $ 60,348 Total $ 696,506 $ — $ (636,158) $ 60,348 (a) As part of the Transaction, the Company acquired intangible assets related to the license agreement for the license rights to use certain Honeywell intellectual property and customer relationships. The license agreement has an indefinite life and is not subject to amortization; the customer relationships have an estimated weighted average life of ten years . The Company determined that the intangible assets were not impaired as of September 30, 2023 and, as such, no impairment charges have been recorded for the year ended September 30, 2023. (b) The licensing and certification rights are amortized over a defined number of units. An impairment charge of $44,400 was recorded during the year ended September 30, 2023. No impairment charges were recorded during the years ended September 30, 2022 or 2021. |
Summary of expected future amortization expense related to the customer relationships | 2024 $ 1,074,000 2025 1,074,000 2026 1,074,000 2027 1,074,000 2028 1,074,000 Thereafter 5,101,500 Total $ 10,471,500 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Net Income Per Share | |
Schedule of earnings per share | For the Fiscal Year Ended September 30, 2023 2022 2021 Numerator: Net income $ 6,027,755 $ 5,523,778 $ 5,064,902 Denominator: Basic 17,411,684 17,256,750 17,225,423 Dilutive effect of share-based awards 7,501 1,121 1,197 Diluted weighted average shares 17,419,185 17,257,871 17,226,620 Net income per common share: Basic $ 0.35 $ 0.32 $ 0.29 Diluted $ 0.35 $ 0.32 $ 0.29 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | September 30, September 30, 2023 2022 Prepaid insurance $ 623,186 $ 777,311 Other 449,826 365,159 $ 1,073,012 $ 1,142,470 |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Assets Held for Sale | |
Disclosure of Long Lived Assets Held-for-sale [Table Text Block] | September 30, September 30, 2023 2022 Corporate airplane 2,406,468 — Less: accumulated depreciation and amortization (342,650) — $ 2,063,818 $ — |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Property and Equipment | |
Schedule of property and equipment, net | September 30, September 30, 2023 2022 Computer equipment $ 2,343,996 $ 2,307,139 Corporate airplane — 2,406,468 Furniture and office equipment 970,230 976,993 Manufacturing facility 5,926,584 5,889,491 Equipment 9,554,197 5,624,966 Land 1,021,245 1,021,245 19,816,252 18,226,302 Less accumulated depreciation and amortization (11,923,825) (11,934,113) $ 7,892,427 $ 6,292,189 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Other Assets | |
Schedule of other assets | September 30, September 30, 2023 2022 Operating lease right-of-use assets $ 15,065 $ 28,680 Other non-current assets 176,657 75,300 $ 191,722 $ 103,980 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Schedule of accrued expenses | September 30, September 30, 2023 2022 Warranty $ 562,645 $ 607,001 Salary, benefits and payroll taxes 1,181,219 1,030,628 Professional fees 200,668 364,794 Operating lease 12,965 13,615 Other 960,828 956,237 $ 2,918,325 $ 2,972,275 |
Warranty (Tables)
Warranty (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Warranty | |
Schedule of warranty cost and accrual information | 2023 2022 Warranty accrual as of October 1, $ 607,001 $ 589,260 Expense accrual for fiscal year 58,472 152,419 Warranty cost incurred for fiscal year (102,828) (134,678) Warranty accrual as of September 30, $ 562,645 $ 607,001 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule of components of income taxes | For the Fiscal Year Ended September 30, 2023 2022 2021 Current provision (benefit): Federal $ 1,541,726 $ 522,473 $ 95,818 State 56,288 277,991 9,911 Total current provision (benefit) 1,598,014 800,464 105,729 Deferred provision (benefit) Federal 28,994 998,585 (754,995) State (19,491) 18,782 (438,517) Total deferred provision (benefit) 9,503 1,017,367 (1,193,511) Total current and deferred provision (benefit) $ 1,607,517 $ 1,817,831 $ (1,087,783) |
Schedule of reconciliation of the statutory federal rate to the Company's effective income tax rate | For the Fiscal Year Ended September 30, 2023 2022 2021 U.S. Federal statutory tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 0.4 % 11.8 % 0.6 % Permanent items — % 0.1 % 0.2 % Research and development tax credits (0.8) % (0.1) % (0.6) % Valuation allowance (0.1) % (6.4) % (47.9) % Change in unrecognized tax benefits 0.1 % (1.5) % (0.7) % 123R cancellations and forfeitures 0.4 % 0.3 % 0.0 % Other 0.1 % (0.5) % 0.0 % Effective income tax rate 21.1 % 24.7 % (27.4) % |
Schedule of deferred tax assets and liabilities | As of September 30, 2023 2022 2021 Non Current Non Current Non Current Deferred tax assets: Reserves and accruals $ 778,805 $ 651,321 $ 654,624 Research and development credit — — 1,327,162 NOL carryforwards -fed/state 980,755 984,004 1,612,043 Depreciation — — — Stock options 241,598 45,069 41,652 Amortization 520,445 — — 2,521,603 1,680,394 3,635,481 Less: Valuation allowance (977,747) (981,816) (1,449,204) Total deferred tax assets 1,543,856 698,578 2,186,277 Deferred tax liabilities: Depreciation (1,087,653) (652,091) (1,122,455) Total deferred tax liabilities (1,087,653) (652,091) (1,122,455) Net deferred tax asset $ 456,203 $ 46,487 $ 1,063,822 |
Schedule of reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits | For the Fiscal Year Ended September 30, 2023 2022 2021 Balance at beginning of year $ 452,000 $ 590,000 $ 615,000 Unrecognized tax benefits related to prior years — — — Unrecognized tax benefits related to current year 8,000 — 7,000 Decrease in unrecognized tax benefits due to the lapse of applicable statute of limitations — (138,000) (32,000) Balance at end of year $ 460,000 $ 452,000 $ 590,000 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Restricted Stock Units | |
Share-Based Compensation | |
Schedule of restricted stock units | Non-vested Weighted Average Stock Awards Share Price Balance at September 30, 2021 25,396 $ 6.30 Granted 38,986 6.52 Issued (27,425) 6.32 Cancelled (4,059) 6.57 Balance at September 30, 2022 32,897 $ 6.51 Granted 133,554 8.00 Issued (64,483) 7.51 Cancelled — — Balance at September 30, 2023 101,968 $ 7.84 |
2019 Plan | |
Share-Based Compensation | |
Schedule of option activity | Weighted Average Aggregate Exercise Intrinsic Options Price Value Outstanding at September 30, 2021 100,000 $ 7.10 $ — Granted — — — Exercised (42,416) 8.26 64,896 Cancelled — — — Outstanding at September 30, 2022 57,584 $ 7.10 $ 88,104 Granted 224,374 8.19 — Exercised (57,584) 7.10 28,792 Cancelled — — — Outstanding at September 30, 2023 224,374 $ 8.19 $ — Vested and expected to vest 69,796 $ 8.20 $ — Options exercisable at September 30, 2023 154,578 $ 8.19 $ — |
Schedule of information about stock options | Options Outstanding Options Exercisable Outstanding Weighted- As of Average Weighted- As of Weighted- Range of Exercise September 30, Remaining Average September 30, Average Prices 2023 Contractual Life Exercise Price 2023 Exercise Price $0.00 - $9.00 224,374 9.4 $ 8.20 154,578 $ 8.19 |
Schedule of fair value assumptions used to record stock option compensation expense | Fiscal Year Ended September 30, 2023 2022 (1) 2021 (1) Expected dividend rate — — — Expected volatility 55.1 % — % — % Weighted average risk-free interest rate 3.7 % — % — % Expected lives (years) 5.3 — — (1) The Company did not grant any options in fiscal 2022 and 2021. |
Lease Recognition (Tables)
Lease Recognition (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Lease Recognition | |
Schedule of future minimum lease payments under operating leases | Future minimum lease payments under operating leases are as follows at September 30, 2023: Twelve Months Ending Operating September 30, Leases 2024 $ 14,676 2025 2,446 Total minimum lease payments $ 17,122 Amount representing interest (2,057) Present value of minimum lease payments 15,065 Current portion (12,965) Long-term portion of lease obligations $ 2,100 |
Background (Details)
Background (Details) shares in Millions | 12 Months Ended | |
Sep. 22, 2023 shares | Sep. 30, 2023 segment | |
Number of business segments | segment | 1 | |
ATM Sales Agreement | Sales Agent | ||
Maximum number of shares offered and sell from time to time | shares | 40 | |
Compensation as percentage | 3% |
Concentrations (Details)
Concentrations (Details) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 USD ($) item customer | Sep. 30, 2022 USD ($) customer item | Sep. 30, 2021 USD ($) customer item | |
Flat Panel Display Systems | |||
Concentrations | |||
Concentration risk threshold percentage | 99% | 98% | 88% |
Concentration of Credit Risk | |||
Concentration of Credit Risk | |||
Number of banks for maintenance of cash balances | item | 2 | ||
Revenues Net [Member] | Customer Concentration Risk [Member] | |||
Concentrations | |||
Number of major annual customers | 3 | 3 | 2 |
Revenues Net [Member] | Customer Concentration Risk [Member] | Five Customers | |||
Concentrations | |||
Number of major customers | 5 | 5 | 5 |
Concentration risk threshold percentage | 54% | 58% | 59% |
Revenues Net [Member] | Customer Concentration Risk [Member] | Pilatus | |||
Concentrations | |||
Concentration risk threshold percentage | 23% | 22% | 20% |
Revenues Net [Member] | Customer Concentration Risk [Member] | ATSG | |||
Concentrations | |||
Concentration risk threshold percentage | 12% | 11% | |
Revenues Net [Member] | Customer Concentration Risk [Member] | Textron | |||
Concentrations | |||
Concentration risk threshold percentage | 10% | 11% | 17% |
Revenues Net [Member] | Customer Concentration Risk [Member] | Government Contractors and Agencies | |||
Concentrations | |||
Concentration risk threshold percentage | 9% | 14% | 18% |
Revenues Net [Member] | Product Concentration Risk [Member] | Flat Panel Display Systems | |||
Concentrations | |||
Concentration risk threshold percentage | 99% | 98% | 88% |
Revenues Net [Member] | Product Concentration Risk [Member] | Air Data Systems and Components | |||
Concentrations | |||
Concentration risk threshold percentage | 1% | 2% | 12% |
Accounts receivable | Customer Concentration Risk [Member] | Five Customers | |||
Concentrations | |||
Number of customers | 5 | 5 | 5 |
Accounts receivable and contract assets | $ | $ 3.5 | $ 3.3 | $ 2.1 |
Inventory [Member] | Supplier Concentration Risk [Member] | |||
Concentrations | |||
Concentration risk threshold percentage | 49% | 33.70% | 14.90% |
Number of major suppliers | item | 4 | 3 | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Sep. 30, 2020 USD ($) | |
Number of business segments | ||||
Number of operating segments | segment | 1 | |||
Long-Lived Assets | ||||
Impairment charges | $ 44,400 | |||
Contract Balances | ||||
Balance at beginning of the period (Contract Assets) | 162,742 | |||
Balance at beginning of the period (Contract Liabilities) | 259,183 | |||
Contract asset additions | 324,397 | |||
Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period (Contract Liabilities) | (240,944) | |||
Increases due to invoicing prior to satisfaction of performance obligations (Contract Liabilities) | 125,120 | |||
Balance at end of the period (Contract Assets) | 487,139 | $ 162,742 | ||
Balance at end of the period (Contract Liabilities) | $ 143,359 | $ 259,183 | ||
Income Taxes | ||||
U.S. Federal statutory tax rate (as a percent) | 21% | 21% | 21% | |
Deferred income tax expense | $ (9,503) | $ (1,017,367) | $ 1,193,511 | |
Warranty Reserve | ||||
Standard warranty period | 24 months | |||
Self-Insurance Reserves | ||||
Estimated liability for medical claims incurred but not reported | $ 62,300 | 51,600 | ||
Excess of funded premiums over estimated claims incurred but not reported | 382,000 | |||
Intangible assets, net | $ 16,185,321 | $ 60,348 | ||
COVID 19 | ||||
Income Taxes | ||||
Amount of pre-tax NOL carried back two years to fully offset taxable income | $ 1,500,000 | |||
AMT tax | 16,000 | |||
Cash impact of carryback | $ 309,412 | |||
Property Plant and Equipment Other than Air Transportation Equipment and Manufacturing Facility | Minimum | ||||
Property and Equipment | ||||
Estimated useful lives | 3 years | |||
Property Plant and Equipment Other than Air Transportation Equipment and Manufacturing Facility | Maximum | ||||
Property and Equipment | ||||
Estimated useful lives | 7 years | |||
Manufacturing facility | ||||
Property and Equipment | ||||
Estimated useful lives | 39 years | |||
Corporate airplane | ||||
Property and Equipment | ||||
Estimated useful lives | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Inventories and Prepaid expenses and other current assets (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Inventory Valuation | ||
Raw materials | $ 5,162,177 | $ 4,451,045 |
Work-in-process | 966,888 | 795,723 |
Finished goods | 10,648 | 102,336 |
Total inventories | 6,139,713 | 5,349,104 |
Prepaid expenses and other current assets | ||
Prepaid insurance | 623,186 | 777,311 |
Other | 449,826 | 365,159 |
Total prepaid expenses and other current assets | $ 1,073,012 | $ 1,142,470 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Fair Value, Warranty and Self-Insurance Reserves (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Warranty Reserve | ||
Standard warranty period | 24 months | |
Self-Insurance Reserves | ||
Estimated liability for medical claims incurred but not reported | $ 62,300 | $ 51,600 |
Excess of funded premiums over estimated claims incurred but not reported | 382,000 | |
Fair Value, Measurements, Recurring | Quoted Price in Active Markets for Identical Assets (Level 1) | Money Market Funds | ||
Assets | ||
Cash and cash equivalents | $ 3,665,128 | $ 16,083,571 |
Acquisition - Asset Purchase an
Acquisition - Asset Purchase and License Agreement (Details) - Honeywell International, Inc - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Business Acquisition [Line Items] | |||
Preliminary purchase consideration transferred | $ 35,860,000 | ||
Revenue recognized related to Product Lines | $ 5,800,000 | ||
Net income recognized related to Product Lines | 3,000,000 | ||
Asset Purchase and License Agreement (the "Honeywell Agreement") | |||
Business Acquisition [Line Items] | |||
Preliminary purchase consideration transferred | $ 35,900,000 | ||
Incurred acquisition costs | $ 408,961 | $ 408,961 | |
Asset Purchase and License Agreement (the "Honeywell Agreement") | PNC Bank [Member] | Term loan | |||
Business Acquisition [Line Items] | |||
Debt instrument face amount | 20,000,000 | ||
Transition services agreement | |||
Business Acquisition [Line Items] | |||
Business combination recognized prepaid expenses and other current assets | $ 140,000 |
Acquisition - Preliminary alloc
Acquisition - Preliminary allocation of the purchase consideration (Details) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) segment | |
Business Acquisition [Line Items] | |||
Goodwill | $ 3,557,886 | $ 3,557,886 | |
Number of operating segments | segment | 1 | ||
Number of reportable unit | segment | 1 | ||
Honeywell International, Inc | |||
Business Acquisition [Line Items] | |||
Cash consideration | 35,860,000 | ||
Total consideration | 35,860,000 | ||
Prepaid inventory | 12,069,114 | $ 12,069,114 | |
Equipment | 2,555,000 | 2,555,000 | |
Intangible assets | 16,440,000 | 16,440,000 | |
Goodwill | 3,557,886 | 3,557,886 | |
Assets acquired | 35,860,000 | 35,860,000 | |
Net assets acquired | 35,860,000 | 35,860,000 | |
Goodwill impairment charges | 0 | ||
Honeywell International, Inc | Amounts Recognized as of Acquisition Date (as previously reported) | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 35,860,000 | ||
Total consideration | 35,860,000 | ||
Prepaid inventory | 10,036,160 | ||
Equipment | 2,609,000 | ||
Intangible assets | 20,900,000 | ||
Goodwill | 4,608,041 | ||
Assets acquired | 39,391,201 | ||
Accrued expenses | (3,531,201) | ||
Liabilities assumed | (3,531,201) | ||
Net assets acquired | 35,860,000 | ||
Honeywell International, Inc | Measurement Period Adjustments | |||
Business Acquisition [Line Items] | |||
Prepaid inventory | 2,032,954 | 2,032,954 | |
Equipment | (54,000) | (54,000) | |
Intangible assets | (4,460,000) | (4,460,000) | |
Goodwill | (1,050,155) | (1,050,155) | |
Assets acquired | (3,531,201) | (3,531,201) | |
Accrued expenses | 3,531,201 | 3,531,201 | |
Liabilities assumed | 3,531,201 | 3,531,201 | |
Honeywell International, Inc | Measurement Period Adjustments | Adjustment of preliminary fair value estimates of assets | |||
Business Acquisition [Line Items] | |||
Goodwill | 2,500,000 | 2,500,000 | |
Honeywell International, Inc | Measurement Period Adjustments | Adjustment of preliminary fair value estimates of liabilities | |||
Business Acquisition [Line Items] | |||
Goodwill | (3,500,000) | (3,500,000) | |
Liabilities assumed | 3,500,000 | 3,500,000 | |
Honeywell International, Inc | Asset Purchase and License Agreement (the "Honeywell Agreement") | |||
Business Acquisition [Line Items] | |||
Total consideration | 35,900,000 | ||
Construction in progress | Honeywell International, Inc | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 1,238,000 | $ 1,238,000 | |
Construction in progress | Honeywell International, Inc | Amounts Recognized as of Acquisition Date (as previously reported) | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 1,238,000 |
Acquisition - Summary of unaudi
Acquisition - Summary of unaudited pro forma consolidated information (Details) - Honeywell International, Inc - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Net sales | $ 43,757,196 | $ 49,218,764 |
Net income | $ 8,542,330 | $ 9,716,082 |
Intangible assets - Intangible
Intangible assets - Intangible assets other than goodwill (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Finite-Lived Intangible Assets, Net | |||
Accumulated Impairment | $ (44,400) | ||
Accumulated Amortization | (906,785) | $ (636,158) | |
Intangible asset amortization expense | 270,627 | 2,126 | $ 50,377 |
Intangible Assets, Net (Excluding Goodwill) | |||
Gross Carrying Value | 17,136,506 | 696,506 | |
Accumulated Impairment | (44,400) | ||
Accumulated Amortization | (906,785) | (636,158) | |
Net Carrying Value | 16,185,321 | 60,348 | |
Customer relationships acquired from the Transaction | |||
Finite-Lived Intangible Assets, Net | |||
Gross Carrying Value | 10,740,000 | ||
Accumulated Amortization | (268,500) | ||
Total | $ 10,471,500 | ||
Estimated weighted average life | 10 years | ||
Impairment charges | $ 0 | ||
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | ||
Intangible Assets, Net (Excluding Goodwill) | |||
Accumulated Amortization | $ (268,500) | ||
Licensing and certification rights | |||
Finite-Lived Intangible Assets, Net | |||
Gross Carrying Value | 696,506 | 696,506 | |
Accumulated Impairment | (44,400) | ||
Accumulated Amortization | (638,285) | (636,158) | |
Total | 13,821 | 60,348 | |
Impairment charges | $ 44,400 | $ 0 | $ 0 |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
Intangible Assets, Net (Excluding Goodwill) | |||
Accumulated Impairment | $ (44,400) | ||
Accumulated Amortization | (638,285) | $ (636,158) | |
Licensing and certification rights | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | |||
Gross Carrying Value | 5,700,000 | ||
Net Carrying Value | $ 5,700,000 |
Intangible assets - Intangibl_2
Intangible assets - Intangible assets timing of future amortization expense (Details) - Customer relationships acquired from the Transaction | Sep. 30, 2023 USD ($) |
Expected future amortization expense | |
2024 | $ 1,074,000 |
2025 | 1,074,000 |
2026 | 1,074,000 |
2027 | 1,074,000 |
2028 | 1,074,000 |
Therafter | 5,101,500 |
Total | $ 10,471,500 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | |||
Net income | $ 6,027,755 | $ 5,523,778 | $ 5,064,902 |
Denominator: | |||
Basic weighted average shares | 17,411,684 | 17,256,750 | 17,225,423 |
Dilutive effect of share-based awards | 7,501 | 1,121 | 1,197 |
Diluted weighted average shares | 17,419,185 | 17,257,871 | 17,226,620 |
Net income per common share: | |||
Basic | $ 0.35 | $ 0.32 | $ 0.29 |
Diluted | $ 0.35 | $ 0.32 | $ 0.29 |
Options to purchase common stock outstanding (in shares) | 224,000 | 57,584 | 100,000 |
Anti-dilutive options to purchase common stock excluded from the computation of diluted earnings per share (in shares) | 203,000 | 0 | 100,000 |
Restricted Stock Units | |||
Net income per common share: | |||
Restricted stock units outstanding (in shares) | 101,968 | 7,886 | 0 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Prepaid Expenses and Other Current Assets | ||
Prepaid insurance | $ 623,186 | $ 777,311 |
Other | 449,826 | 365,159 |
Total prepaid expenses and other current assets | $ 1,073,012 | $ 1,142,470 |
Assets Held for Sale - Classifi
Assets Held for Sale - Classifications (Details) | Sep. 30, 2023 USD ($) |
Long-Lived Assets Held-for-Sale [Line Items] | |
Less: accumulated depreciation and amortization | $ (342,650) |
Assets held for sale | 2,063,818 |
Corporate aircraft | |
Long-Lived Assets Held-for-Sale [Line Items] | |
Assets held for sale, gross | $ 2,406,468 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) | 12 Months Ended | ||
Nov. 20, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | |
Long-Lived Assets Held-for-Sale [Line Items] | |||
Assets held for sale | $ 2,063,818 | ||
Proceeds from the sale of property and equipment | $ 2,750,576 | ||
Corporate aircraft | Subsequent Event | |||
Long-Lived Assets Held-for-Sale [Line Items] | |||
Proceeds from the sale of property and equipment | $ 2,300,000 |
Property and Equipment (Details
Property and Equipment (Details) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) aircraft | Sep. 30, 2023 USD ($) aircraft | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | |
Property and Equipment | ||||
Property and equipment, gross | $ 18,226,302 | $ 19,816,252 | $ 18,226,302 | |
Less: accumulated depreciation and amortization | (11,934,113) | (11,923,825) | (11,934,113) | |
Property and equipment, net | $ 6,292,189 | 7,892,427 | 6,292,189 | |
Depreciation | $ 427,317 | 358,837 | $ 373,068 | |
Number of Pilatus PC-12 airplane sold during the year | aircraft | 1 | |||
Number of corporate airplanes | aircraft | 2 | |||
Gain on sale of the aircraft | $ 1,192,000 | |||
Depreciated assets with an original cost and accumulated amortization | $ 94,954 | 34,656 | $ 416,626 | |
Computer equipment | ||||
Property and Equipment | ||||
Property and equipment, gross | 2,307,139 | 2,343,996 | 2,307,139 | |
Corporate airplane | ||||
Property and Equipment | ||||
Property and equipment, gross | 2,406,468 | 2,406,468 | ||
Furniture and office equipment | ||||
Property and Equipment | ||||
Property and equipment, gross | 976,993 | 970,230 | 976,993 | |
Manufacturing facility | ||||
Property and Equipment | ||||
Property and equipment, gross | 5,889,491 | 5,926,584 | 5,889,491 | |
Equipment | ||||
Property and Equipment | ||||
Property and equipment, gross | 5,624,966 | 9,554,197 | 5,624,966 | |
Land | ||||
Property and Equipment | ||||
Property and equipment, gross | $ 1,021,245 | $ 1,021,245 | $ 1,021,245 |
Other Assets (Details)
Other Assets (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Other Assets | ||
Operating leases | $ 15,065 | $ 28,680 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total other assets | Total other assets |
Other non-current assets | $ 176,657 | $ 75,300 |
Total other assets | 191,722 | 103,980 |
Prepaid software licenses | $ 0 | $ 0 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 |
Accrued Expenses | |||
Warranty | $ 562,645 | $ 607,001 | $ 589,260 |
Salary, benefits and payroll taxes | 1,181,219 | 1,030,628 | |
Professional fees | 200,668 | 364,794 | |
Operating lease | $ 12,965 | $ 13,615 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total accrued expenses | Total accrued expenses | |
Other | $ 960,828 | $ 956,237 | |
Total accrued expenses | $ 2,918,325 | $ 2,972,275 |
Warranty (Details)
Warranty (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Warranty cost and accrual information | ||
Warranty accrual, beginning of period | $ 607,001 | $ 589,260 |
Expense accrual for fiscal year | 58,472 | 152,419 |
Warranty cost incurred for fiscal year | (102,828) | (134,678) |
Warranty accrual, end of period | $ 562,645 | $ 607,001 |
Income Taxes - Impact of COVID-
Income Taxes - Impact of COVID-19 (Details) - COVID 19 | 1 Months Ended |
Mar. 31, 2020 USD ($) | |
Income Taxes | |
Amount of pre-tax NOL carried back two years to fully offset taxable income | $ 1,500,000 |
AMT tax | 16,000 |
Cash impact of carryback | 309,412 |
R&D | |
Income Taxes | |
Increase in R&D credit carryforward | $ 196,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Current provision (benefit): | ||||
Federal | $ 1,541,726 | $ 522,473 | $ 95,818 | |
State | 56,288 | 277,991 | 9,911 | |
Total current provision (benefit) | 1,598,014 | 800,464 | 105,729 | |
Deferred provision (benefit) | ||||
Federal | 28,994 | 998,585 | (754,995) | |
State | (19,491) | 18,782 | (438,517) | |
Total deferred provision (benefit) | 9,503 | 1,017,367 | (1,193,511) | |
Total current and deferred provision (benefit) | $ 1,607,517 | $ 1,817,831 | $ (1,087,783) | $ (1,087,783) |
Reconciliation of the statutory federal rate to the Company's effective income tax rate | ||||
U.S. Federal statutory tax rate (as a percent) | 21% | 21% | 21% | |
State income taxes, net of federal benefit (as a percent) | 0.40% | 11.80% | 0.60% | |
Permanent items (as a percent) | 0.10% | 0.20% | ||
Research and development tax credits (as a percent) | (0.80%) | (0.10%) | (0.60%) | |
Valuation allowance (as a percent) | (0.10%) | (6.40%) | (47.90%) | |
Change in unrecognized tax benefits (as a percent) | 0.10% | (1.50%) | (0.70%) | |
123R cancellations and forfeitures (as a percent) | 0.40% | 0.30% | 0% | |
Other (as a percent) | 0.10% | (0.50%) | 0% | |
Effective income tax rate (as a percent) | 21.10% | 24.70% | (27.40%) |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and liabilities component (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2020 |
Deferred tax assets: | |||
Reserves and accruals | $ 778,805 | $ 651,321 | $ 654,624 |
Research and development credit | 1,327,162 | ||
NOL carryforwards -fed/state | 980,755 | 984,004 | 1,612,043 |
Stock options | 241,598 | 45,069 | 41,652 |
Amortization | 520,445 | ||
Gross deferred tax assets | 2,521,603 | 1,680,394 | 3,635,481 |
Less: Valuation allowance | (977,747) | (981,816) | (1,449,204) |
Total deferred tax assets | 1,543,856 | 698,578 | 2,186,277 |
Deferred tax liabilities: | |||
Depreciation | (1,087,653) | (652,091) | (1,122,455) |
Total deferred tax liabilities | (1,087,653) | (652,091) | (1,122,455) |
Net deferred tax asset | $ 456,203 | $ 46,487 | $ 1,063,822 |
Income Taxes - Net operating lo
Income Taxes - Net operating loss (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Sep. 30, 2022 |
State | ||
Income Taxes | ||
Net operating loss | $ 19.5 | $ 19.7 |
Income Taxes - Tax carryforward
Income Taxes - Tax carryforward and reconciliation of unrecognized tax benefit (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits | |||
Balance at beginning of year | $ 452,000 | $ 590,000 | $ 615,000 |
Unrecognized tax benefits related to current year | 8,000 | 7,000 | |
Decrease in unrecognized tax benefits due to the lapse of applicable statute of limitations | (138,000) | (32,000) | |
Balance at end of year | 460,000 | 452,000 | 590,000 |
Unrecognized tax benefits , if recognized, would impact effective tax rate | 460,000 | $ 452,000 | $ 590,000 |
Unrecognized tax benefits against accrued interest | 0 | ||
Accrual recorded for penalties | 0 | ||
Adjustments resulting from IRS examination | $ 0 |
Savings Plan (Details)
Savings Plan (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Savings Plan | |||
Contributions made to defined contribution savings plan | $ 242,000 | $ 126,000 | $ 123,000 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation | |||
Share-based compensation expense | $ 1,336,000 | $ 345,000 | $ 341,000 |
Income tax effect recognized as a credit to additional paid-in capital related to share-based compensation | 1,123,941 | 166,617 | 181,350 |
Employee and Non Employee Stock Option | |||
Share-Based Compensation | |||
Income tax effect recognized as a credit to additional paid-in capital related to share-based compensation | $ 756,000 | $ 166,617 | $ 181,350 |
Share-Based Compensation - 2019
Share-Based Compensation - 2019 Stock-Based Incentive Compensation Plan (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Shareholders' Equity and Share-Based Payments | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Options | ||
Outstanding at the beginning of the period (in shares) | 57,584 | 100,000 |
Outstanding at the end of the period (in shares) | 224,000 | 57,584 |
2019 Plan | ||
Shareholders' Equity and Share-Based Payments | ||
Number of shares of common stock reserved for awards | 750,000 | |
Common stock, shares authorized | 139,691 | |
Number of shares of common stock available for awards under the plan | 262,000 | |
2019 Plan | Employee and Non Employee Stock Option | ||
Options | ||
Outstanding at the beginning of the period (in shares) | 57,584 | 100,000 |
Granted (in shares) | 224,374 | |
Exercised (in shares) | (57,584) | (42,416) |
Outstanding at the end of the period (in shares) | 224,374 | 57,584 |
Vested and expected to vest (in shares) | 69,796 | |
Options exercisable at the end of the period (in shares) | 154,578 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 7.10 | $ 7.10 |
Granted (in dollars per share) | 8.19 | |
Exercised (in dollars per share) | 7.10 | 8.26 |
Outstanding at the end of the period (in dollars per share) | 8.19 | $ 7.10 |
Vested and expected to vest (in dollars per share) | 8.20 | |
Options exercisable at the end of the period (in dollars per share) | $ 8.19 | |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ 88,104 | |
Exercised (in dollars) | $ 28,792 | $ 64,896 |
Outstanding at the end of the period (in dollars) | $ 88,104 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of information about stock options 2019 plan (Details) - 2019 Plan - Exercise Price Range From Dollars 0.00 To Dollars 9.00 - Employee and Non Employee Stock Option | 12 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Information about stock options, by exercise price range | |
Exercise price, low end of range (in dollars per share) | $ 0 |
Exercise price, high end of range (in dollars per share) | $ 9 |
Options outstanding at the end of the period (in shares) | shares | 224,374 |
Options Outstanding - Weighted-Average Remaining Contractual Life | 9 years 4 months 24 days |
Options Outstanding - Weighted-Average Exercise Price (in dollars per share) | $ 8.20 |
Options exercisable at the end of the period (in shares) | shares | 154,578 |
Options Exercisable - Weighted-Average Exercise Price (in dollars per share) | $ 8.19 |
Share-Based Compensation - Fair
Share-Based Compensation - Fair value assumptions related to the 2019 Plan (Details) - 2019 Plan - Employee and Non Employee Stock Option | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2020 | |
Shareholders' Equity and Share-Based Payments | |||
Expected volatility | 55.10% | ||
Weighted average risk-free interest rate | 3.70% | ||
Expected lives (years) | 5 years 3 months 18 days | 0 years | 0 years |
Share-Based Compensation - Fa_2
Share-Based Compensation - Fair Value assumptions for stock option plan (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation | |||
Share-based compensation expense | $ 1,336,000 | $ 345,000 | $ 341,000 |
2019 Plan | Employee and Non Employee Stock Option | |||
Share-Based Compensation | |||
Share-based compensation expense | 756,000 | $ 164,000 | $ 181,000 |
Unrecognized compensation cost, related to non-vested stock options | $ 205,000 | ||
2019 Plan | Employee and Non Employee Stock Option | Minimum | |||
Share-Based Compensation | |||
Vesting period | 3 years | ||
2019 Plan | Employee and Non Employee Stock Option | Maximum | |||
Share-Based Compensation | |||
Expiration term | 10 years | ||
Vesting period | 5 years |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of restricted stock units (Details) - Restricted Stock Units - $ / shares | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Non-vested Stock Awards | |||
Balance at the beginning of the period (in shares) | 7,886 | 0 | |
Balance at the end of the period (in shares) | 101,968 | 7,886 | |
2019 Plan | |||
Non-vested Stock Awards | |||
Balance at the beginning of the period (in shares) | 32,897 | 25,396 | |
Granted (in shares) | 133,554 | 38,986 | |
Issued (in shares) | (64,483) | (27,425) | |
Cancelled (in shares) | (4,059) | ||
Balance at the end of the period (in shares) | 101,968 | 32,897 | |
Weighted Average Share Price | |||
Balance at the beginning of the period (in dollars per share) | $ 7.84 | $ 6.51 | $ 6.30 |
Granted (in dollars per share) | 8 | 6.52 | |
Issued (in dollars per share) | 7.51 | 6.32 | |
Cancelled (in dollars per share) | 6.57 | ||
Balance at the end of the period (in dollars per share) | $ 7.84 | $ 6.51 |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted stock units related to the plan 2019 (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Shareholders' Equity and Share-Based Payments | |||
Share-based compensation expense | $ 1,336,000 | $ 345,000 | $ 341,000 |
Restricted Stock Units | |||
Shareholders' Equity and Share-Based Payments | |||
Number of securities called by each award vested | 1 | ||
Restricted stock units outstanding (in shares) | 101,968 | 7,886 | 0 |
Restricted Stock Units | Chief Executive Officer | |||
Shareholders' Equity and Share-Based Payments | |||
Vesting period | 3 years | ||
Restricted Stock Units | Chief Financial Officer | |||
Shareholders' Equity and Share-Based Payments | |||
Vesting period | 4 years | ||
Forfeiture period | 11,503 | ||
Restricted Stock Units | 2019 Plan | |||
Shareholders' Equity and Share-Based Payments | |||
Restricted stock units outstanding (in shares) | 101,968 | 32,897 | 25,396 |
Unrecognized compensation expense | $ 659,000 | ||
Restricted Stock Units | 2019 Plan | Non-employee directors | |||
Shareholders' Equity and Share-Based Payments | |||
Share-based compensation expense | 212,000 | $ 178,000 | $ 160,000 |
Restricted Stock Units | 2019 Plan | Employee | |||
Shareholders' Equity and Share-Based Payments | |||
Share-based compensation expense | $ 368,000 | $ 3,000 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Operating leases and purchase obligations (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Purchase Obligations | |||
Purchase obligations on open purchase orders | $ 2,400,000 | $ 2,600,000 | $ 2,100,000 |
Product Liability | |||
Product liability insurance | $ 50,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2021 | |
Related Party Transactions | |||
Acquiring of shares | 10% | ||
Investor | Eclipse | |||
Related Party Transactions | |||
Sales amount to Eclipse | $ 0.3 | $ 0.6 | $ 1.6 |
Contract liability to Eclipse | $ 0 | $ 0.1 |
Business Segments (Details)
Business Segments (Details) $ in Millions | 12 Months Ended | ||
Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | |
Business segments | |||
Number of business segments | segment | 1 | ||
Flat Panel Display Systems | |||
Geographic Data | |||
Concentration risk threshold percentage | 99% | 98% | 88% |
Foreign Countries | |||
Geographic Data | |||
Net sales from outside the United States | $ | $ 15.5 | $ 11.1 | $ 8.4 |
Lease Recognition - Additional
Lease Recognition - Additional Information (Details) | 12 Months Ended |
Sep. 30, 2023 USD ($) | |
Lease Recognition | |
Operating leases expenses | $ 73,000 |
Weighted average remaining lease term | 1 year 2 months 12 days |
Weighted average discount rate | 5% |
Lease Recognition - Future mini
Lease Recognition - Future minimum lease payments (Details) - USD ($) | Sep. 30, 2023 | Sep. 30, 2022 |
Future minimum lease payments under operating leases | ||
2024 | $ 14,676 | |
2025 | 2,446 | |
Total minimum lease payments | 17,122 | |
Amount representing interest | (2,057) | |
Present value of minimum lease payments | 15,065 | |
Current portion | (12,965) | $ (13,615) |
Long-term portion of lease obligations | $ 2,100 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent |
Loan Agreement (Details)
Loan Agreement (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2023 | Sep. 30, 2023 | Jun. 28, 2023 | May 11, 2023 | |
Senior secured revolving line of credit | ||||
Loan Agreement | ||||
Aggregate principal amount | $ 10,000,000 | |||
Annual commitment fee (in percent) | 0.15% | |||
Amount drawn | $ 0 | |||
SOFR | Senior secured revolving line of credit | ||||
Loan Agreement | ||||
Adjustment to variable interest rate | 0.10% | |||
SOFR | Minimum | Senior secured revolving line of credit | ||||
Loan Agreement | ||||
Applicable Margin | 1.50% | |||
SOFR | Maximum | Senior secured revolving line of credit | ||||
Loan Agreement | ||||
Applicable Margin | 2.50% | |||
Senior secured term loan | ||||
Loan Agreement | ||||
Aggregate principal amount | $ 20,000,000 | |||
Future interest payments, fiscal 2024 | $ 1,500,000 | |||
Future interest payments, fiscal 2025 | 1,300,000 | |||
Future interest payments, fiscal 2026 | 1,200,000 | |||
Future interest payments, fiscal 2027 | 1,000,000 | |||
Future interest payments, thereafter | $ 700,000 | |||
Adjustment to variable interest rate | 0.10% | |||
Amortization period of debt | 10 years | |||
Balance | $ 19,500,000 | |||
Fixed mandatory principal repayments due on the outstanding Term Loan | ||||
2024 | 2,000,000 | |||
2025 | 2,000,000 | |||
2026 | 2,000,000 | |||
2027 | 2,000,000 | |||
2028 | $ 11,500,000 | |||
Senior secured term loan | Maximum | ||||
Loan Agreement | ||||
Amortization period of debt in equal monthly principal installments | 60 months | |||
Senior secured term loan | SOFR | Minimum | ||||
Loan Agreement | ||||
Applicable Margin | 1.50% | |||
Senior secured term loan | SOFR | Maximum | ||||
Loan Agreement | ||||
Applicable Margin | 2.50% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 12 Months Ended | |||||
Nov. 20, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 19, 2023 | Jun. 28, 2023 | May 11, 2023 | |
Subsequent Event | ||||||
Proceeds from assets held for sale | $ 2,750,576 | |||||
Senior secured term loan | ||||||
Subsequent Event | ||||||
Aggregate principal amount | $ 20,000,000 | |||||
Adjustment to variable interest rate | 0.10% | |||||
Senior secured revolving line of credit | ||||||
Subsequent Event | ||||||
Aggregate principal amount | $ 10,000,000 | |||||
Senior secured revolving line of credit | SOFR | ||||||
Subsequent Event | ||||||
Adjustment to variable interest rate | 0.10% | |||||
PNC Bank | Senior secured term loan | ||||||
Subsequent Event | ||||||
Aggregate principal amount | $ 20,000,000 | |||||
Minimum [Member] | Senior secured term loan | SOFR | ||||||
Subsequent Event | ||||||
Applicable Margin | 1.50% | |||||
Minimum [Member] | Senior secured revolving line of credit | SOFR | ||||||
Subsequent Event | ||||||
Applicable Margin | 1.50% | |||||
Maximum [Member] | Senior secured term loan | SOFR | ||||||
Subsequent Event | ||||||
Applicable Margin | 2.50% | |||||
Maximum [Member] | Senior secured revolving line of credit | SOFR | ||||||
Subsequent Event | ||||||
Applicable Margin | 2.50% | |||||
Subsequent Event | Corporate aircraft | ||||||
Subsequent Event | ||||||
Proceeds from assets held for sale | $ 2,300,000 | |||||
Subsequent Event | Minimum [Member] | PNC Bank | Senior secured revolving line of credit | ||||||
Subsequent Event | ||||||
Aggregate principal amount | $ 10,000,000 | |||||
Subsequent Event | Maximum [Member] | PNC Bank | Senior secured revolving line of credit | ||||||
Subsequent Event | ||||||
Aggregate principal amount | $ 30,000,000 |