Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 05, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | CPI AEROSTRUCTURES INC | ||
Entity Central Index Key | 889,348 | ||
Document Type | 10-K | ||
Trading Symbol | CVU | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 73,550,935 | ||
Sales price | $ 9.40 | ||
Entity Common Stock, Shares Outstanding | 8,878,965 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 1,430,877 | $ 1,039,586 |
Accounts receivable, net | 5,379,821 | 8,514,613 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 111,158,551 | 99,578,526 |
Prepaid expenses and other current assets | 2,413,187 | 2,155,481 |
Total current assets | 120,382,436 | 111,288,206 |
Property and equipment, net | 2,046,942 | 2,298,610 |
Deferred income taxes, net | 1,566,818 | 3,952,598 |
Other assets | 188,303 | 252,481 |
Total Assets | 124,184,499 | 117,791,895 |
Current Liabilities: | ||
Accounts payable | 15,129,872 | 14,027,457 |
Accrued expenses | 1,911,421 | 1,386,147 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 74,657 | 115,337 |
Current portion of long-term debt | 2,009,000 | 1,341,924 |
Contract loss | 171,673 | 1,377,171 |
Line of credit | 22,838,685 | 22,438,685 |
Income taxes payable | 109,327 | 6,000 |
Total current liabilities | 42,244,635 | 40,692,721 |
Long-term debt, net of current portion | 7,019,468 | 8,860,724 |
Other liabilities | 607,063 | 632,744 |
Total Liabilities | 49,871,166 | 50,186,189 |
Commitments | ||
Shareholders' Equity: | ||
Common stock - $.001 par value; authorized 50,000,000 shares, 8,864,319 and 8,739,836 shares, respectively, issued and outstanding | 8,863 | 8,738 |
Additional paid-in capital | 53,770,618 | 52,824,950 |
Retained earnings | 20,548,652 | 14,781,018 |
Accumulated other comprehensive loss | (14,800) | (9,000) |
Total Shareholders' Equity | 74,313,333 | 67,605,706 |
Total Liabilities and Shareholders' Equity | $ 124,184,499 | $ 117,791,895 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 8,864,319 | 8,739,836 |
Common stock, outstanding | 8,864,319 | 8,739,836 |
STATEMENTS OF OPERATIONS AND CO
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Revenue | $ 81,283,148 | $ 81,329,858 | $ 100,202,557 |
Cost of sales | 62,637,232 | 77,010,940 | 83,600,854 |
Gross profit | 18,645,916 | 4,318,918 | 16,601,703 |
Selling, general and administrative expenses | 8,449,594 | 8,614,190 | 7,636,148 |
Income (loss) from operations | 10,196,322 | (4,295,272) | 8,965,555 |
Other expense: | |||
Other income | (19,774) | (22,659) | (40,433) |
Interest expense | (1,698,914) | (1,356,645) | (918,129) |
Total other expense, net | (1,718,688) | (1,379,304) | (958,562) |
Income (loss) before provision for (benefit from) income taxes | 8,477,634 | (5,674,576) | 8,006,993 |
Provision for (benefit from) income taxes | 2,710,000 | (2,066,000) | 2,991,000 |
Net income (loss) | 5,767,634 | (3,608,576) | 5,015,993 |
Other comprehensive income (loss), net of tax | |||
Change in unrealized (gain) loss interest rate swap | (5,800) | (5,547) | 6,263 |
Comprehensive income (loss) | $ 5,761,834 | $ (3,614,123) | $ 5,022,256 |
Income (loss) per common share - basic (in dollars per share) | $ 0.65 | $ 0.42 | $ 0.59 |
Income (loss) per common share - diluted (in dollars per share) | $ 0.65 | $ 0.42 | $ 0.58 |
Shares used in computing earnigs per common share: | |||
Basic (shares) | 8,831,064 | 8,655,848 | 8,552,817 |
Diluted (shares) | 8,838,445 | 8,655,848 | 8,579,986 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance, beginning at Dec. 31, 2014 | $ 8,501 | $ 51,440,770 | $ 13,373,601 | $ (9,716) | $ 64,813,156 |
Balance, beginning (in shares) at Dec. 31, 2014 | 8,500,555 | ||||
Net income (loss) | 5,015,993 | 5,015,993 | |||
Change in unrealized (gain) loss from interest rate swap | 6,263 | 6,263 | |||
Common stock issued upon exercise of options, net | $ 26 | 79,974 | 80,000 | ||
Common stock issued upon exercise of options, net (in shares) | 25,352 | ||||
Common stock issued as employee compensation | $ 6 | 59,417 | 59,423 | ||
Common stock issued as employee compensation (in shares) | 6,255 | ||||
Stock based compensation expense | $ 51 | 524,223 | 524,274 | ||
Stock based compensation expense (in shares) | 51,349 | ||||
Tax benefit of stock option exercise | 33,000 | 33,000 | |||
Balance, ending at Dec. 31, 2015 | $ 8,584 | 52,137,384 | 18,389,594 | (3,453) | 70,532,109 |
Balance, ending (in shares) at Dec. 31, 2015 | 8,583,511 | ||||
Net income (loss) | (3,608,576) | (3,608,576) | |||
Change in unrealized (gain) loss from interest rate swap | (5,547) | (5,547) | |||
Common stock issued upon exercise of options, net | $ 3 | (3) | |||
Common stock issued upon exercise of options, net (in shares) | 3,448 | ||||
Common stock issued as employee compensation | $ 97 | 163,354 | 163,451 | ||
Common stock issued as employee compensation (in shares) | 98,645 | ||||
Stock based compensation expense | $ 54 | 524,215 | 524,269 | ||
Stock based compensation expense (in shares) | 54,232 | ||||
Balance, ending at Dec. 31, 2016 | $ 8,738 | 52,824,950 | 14,781,018 | (9,000) | $ 67,605,706 |
Balance, ending (in shares) at Dec. 31, 2016 | 8,739,836 | 8,739,836 | |||
Net income (loss) | 5,767,634 | $ 5,767,634 | |||
Change in unrealized (gain) loss from interest rate swap | (5,800) | (5,800) | |||
Common stock issued upon exercise of options, net | $ 3 | (3) | |||
Common stock issued upon exercise of options, net (in shares) | 3,334 | ||||
Common stock issued as employee compensation | $ 6 | 50,776 | 50,782 | ||
Common stock issued as employee compensation (in shares) | 5,550 | ||||
Stock based compensation expense | $ 116 | 894,895 | 895,011 | ||
Stock based compensation expense (in shares) | 115,599 | ||||
Balance, ending at Dec. 31, 2017 | $ 8,863 | $ 53,770,618 | $ 20,548,652 | $ (14,800) | $ 74,313,333 |
Balance, ending (in shares) at Dec. 31, 2017 | 8,864,319 | 8,864,319 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 5,767,634 | $ (3,608,576) | $ 5,015,993 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 616,291 | 661,921 | 854,063 |
Debt issue costs | 85,571 | 61,320 | |
Deferred rent | (30,680) | 8,235 | 46,017 |
Stock-based compensation expense | 895,011 | 524,269 | 524,274 |
Common stock issued as employee compensation | 50,782 | 163,451 | 59,423 |
Loss on disposal of fixed asset | 21,010 | ||
Deferred income taxes | 2,384,980 | (2,077,299) | 2,659,000 |
Tax benefit from stock option plans | (33,000) | ||
Bad debt expense | 150,000 | 460,514 | 50,000 |
Changes in operating assets and liabilities: | |||
(Increase) decrease in accounts receivable | 2,984,792 | (1,309,290) | (1,249,023) |
(Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts | (11,580,025) | 3,043,861 | (23,568,248) |
Increase in prepaid expenses and other assets | (257,706) | (1,013,008) | (237,199) |
(Increase) decrease in refundable income taxes | (77,000) | 8,133,433 | |
Increase (decrease) in accounts payable and accrued expenses | 1,627,689 | (4,023,547) | 9,446,948 |
(Decrease) increase in accrued losses on uncompleted contracts | (1,205,498) | 827,448 | 153,541 |
Increase (decrease) in income taxes payable | 103,327 | (183,000) | 220,822 |
Decrease in billings in excess of costs and estimated earnings on uncompleted contracts | (40,680) | (60,101) | (18,212) |
Net cash provided by (used in) operating activities | 1,572,498 | (6,600,802) | 2,057,832 |
Cash flows from investing activities: | |||
Purchase of plant and equipment | (281,922) | (136,320) | (209,718) |
Proceeds from sale of fixed asset | 42,480 | ||
Net cash used in investing activities | (239,442) | (136,320) | (209,718) |
Cash flows from financing activities: | |||
Proceeds from exercise of stock options | 80,000 | ||
Payment on line of credit | (4,100,000) | (30,400,000) | (9,650,000) |
Proceeds from line of credit | 4,500,000 | 29,138,685 | 8,200,000 |
Payment on long-term debt | (1,341,765) | (1,710,145) | (1,013,998) |
Proceeds from long-term debt | 10,000,000 | ||
Debt issue costs paid | (253,855) | ||
Tax benefit from stock options | 33,000 | ||
Net cash (used in) provided by financing activities | (941,765) | 6,774,685 | (2,350,998) |
Net increase (decrease) in cash | 391,291 | 37,563 | (502,884) |
Cash at beginning of year | 1,039,586 | 1,002,023 | 1,504,907 |
Cash at end of year | 1,430,877 | 1,039,586 | 1,002,023 |
Supplemental schedule of noncash investing and financing activities: | |||
Equipment acquired under capital lease | 146,192 | 465,475 | 247,881 |
Cashless exercise of stock options | 202,500 | 168,750 | |
Cash paid during the year for: | |||
Interest | 1,578,627 | 1,182,791 | 1,000,403 |
Income taxes | $ 144,718 | $ 302,025 | $ 351,275 |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. Principal business activity And summary of significant Accounting policies CPI Aerostructures, Inc. (“CPI Aero®” or the “Company”) is a U.S. supplier of aircraft parts for fixed wing aircraft and helicopters in both the commercial and defense markets. We manufacture complex aerostructure assemblies, as well as aerosystems. Additionally, we supply parts for maintenance, repair and overhaul (“MRO”) and kitting contracts. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the use of estimates by management. Actual results could differ from these estimates. Revenue Recognition The Company’s revenue is primarily recognized based on the percentage of completion method of accounting for its contracts measured by the percentage of total costs incurred to date to estimated total costs at completion for each contract. Contract costs include all direct material, labor costs, tooling and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and administrative costs are charged to expense as incurred. Estimated losses on uncompleted contracts are recognized in the period in which such losses are determined. Changes in job performance may result in revisions to costs and income and are recognized in the period in which revisions are determined to be required. The percentage of completion method of accounting involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods and, as a result, there can be a significant disparity between earnings (both for accounting and taxes) as reported and actual cash received by the Company during any reporting period. In accordance with industry practice, costs and estimated earnings in excess of billings on uncompleted contracts, included in the accompanying balance sheets, contain amounts relating to contracts and programs with long production cycles, a portion of which will not be realized within one year. The Company’s recorded revenue may be adjusted in later periods in the event that the Company’s cost estimates prove to be inaccurate or a contract is terminated. When adjustments are required for the estimated total revenue on a contract, these changes are recognized with an inception-to-date effect in the current period. Also, when estimates of total costs to be incurred exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. In addition, the Company recognizes revenue for parts supplied for certain MRO contracts when parts are shipped. Government Contracts The Company’s government contracts are subject to the procurement rules and regulations of the U.S. government. Many of the contract terms are dictated by these rules and regulations. Specifically, cost-based pricing is determined under the Federal Acquisition Regulation (“FAR”), which provides guidance on the types of costs that are allowable in establishing prices for goods and services under U.S. government contracts. For example, costs such as those related to charitable contributions, advertising, interest expense, and public relations are unallowable, and therefore not recoverable through sales. During and after the fulfillment of a government contract, the Company may be audited in respect of the direct and allocated indirect costs attributable thereto. These audits may result in adjustments to the Company’s contract cost, and/or revenue. When contractual terms allow, the Company invoices its customers on a progress basis. Cash The Company maintains its cash in three financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed these limits. As of December 31, 2017 and 2016, the Company had approximately $1,377,000 and $1,276,000, respectively, of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly credit worthy. Accounts Receivable Accounts receivable are reported at their outstanding unpaid principal balances. The Company writes off accounts when they are deemed to be uncollectible. Property and Equipment Depreciation and amortization of property and equipment is provided by the straight-line method over the shorter of estimated useful lives of the respective assets or the life of the lease, for leasehold improvements. Rent We recognize rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases there are escalations in payments over the lease term. The effects of the escalations have been reflected in rent expense on a straight-line basis over the expected lease term. Long-Lived Assets The Company reviews its long-lived assets and certain related intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. As a result of its review, the Company does not believe that any such change has occurred. If such changes in circumstance are present, a loss is recognized to the extent the carrying value of the asset is in excess of the fair value of cash flows expected to result from the use of the asset and amounts expected to be realized upon its eventual disposition. Short-Term Debt The fair value of the Company’s short-term debt is estimated based on the current rates offered to the Company for debt of similar terms and maturities. Using this method, the fair value of the Company’s short-term debt was not significantly different than the stated value at December 31, 2017 and 2016. Derivatives Our use of derivative instruments has primarily been to hedge interest rates. These derivative contracts are entered into with financial institutions. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use. We record these derivative financial instruments on the balance sheet at fair value. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. See below for a discussion of the Company’s use of derivative instruments, management of credit risk inherent in derivative instruments and fair value information. In March 2012, the Company entered into an interest rate swap with the objective of reducing its exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of these contracts match those of the underlying debt. The Company has designated this interest rate swap contract as cash flow hedge. The Company measures ineffectiveness by comparing the cumulative change in the forward contract with the cumulative change in the hedged item. The interest rate swap contract was terminated as of March 24, 2016. The Company paid approximately $4,000 at termination to settle the swap contract. In May 2016, the Company entered into a new interest rate swap with the objective of reducing our exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of this contract match those of the underlying debt. The Company has designated this interest rate swap contract as a cash flow hedge. The Company measures ineffectiveness by comparing the cumulative change in the forward contact with the cumulative change in the hedged item. As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties may fail to meet their contractual obligations. Recent adverse developments in the global financial and credit markets could negatively impact the creditworthiness of our counterparties and cause one or more of our counterparties to fail to perform as expected. To mitigate the counterparty credit risk, we only enter into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. To date, all counterparties have performed in accordance with their contractual obligations. Fair Value At December 31, 2017 and 2016, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2017 2016 Carrying Amount Fair Value Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 31,893,894 $ 31,893,894 $ 32,689,467 $ 32,689,467 We estimated the fair value of debt using market quotes and calculations based on market rates. The following tables present the fair values of liabilities measured on a recurring basis as of December 31, 2017 and 2016: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — Fair Value Measurements 2016 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 13,685 — $ 13,685 — Total $ 13,685 — $ 13,685 — The fair value of the Company’s interest rate swap was determined by comparing the fixed rate set at the inception of the transaction to the “replacement swap rate,” which represents the market rate for an offsetting interest rate swap with the same notional amounts and final maturity date. The market value is then determined by calculating the present value interest differential between the contractual swap and the replacement swap. As of December 31, 2017 and 2016, $18,781 and $13,685, respectively, was included in other liabilities related to the fair value of the Company’s interest rate swap, and $15,000 and $9,000, respectively, net of tax of approximately $4,000 and $5,000, respectively, was included in Accumulated Other Comprehensive Loss. Earnings Per Share Basic earnings (loss) per common share is computed using the weighted-average number of shares outstanding. Diluted earnings (loss) per common share is computed using the weighted-average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. Incremental shares of approximately 35,000 were used in the calculation of diluted earnings per common share in 2017. Incremental shares of 45,249 were not included in the diluted earnings per share calculations at December 31, 2017, as their exercise price was in excess of the Company’s quoted market price and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation. No incremental shares were used in the calculation of diluted loss per common share in 2016, as the effect of incremental shares would be anti-dilutive. Incremental shares of approximately 85,000 were used in the calculation of diluted earnings per common share in 2015. Incremental shares of 184,983 were not included in the diluted earnings per share calculations at December 31, 2015, as their exercise price was in excess of the Company’s quoted market price and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation. Income taxes Income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company does not have any liabilites for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return. It is the Company’s policy to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. Uncertain tax positions are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions. In accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform”), we have recorded a credit for income taxes of $207,000. The impact of the U.S. Tax Reform is primarily from revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The provisional impact of the U.S. Tax Reform is our current best estimate based on the preliminary review of the new law and is subject to revision based on our existing accounting for income taxes policy as further information is gathered and interpretation and analysis of the tax legislation evolves. The Securities and Exchange Commission has issued rules allowing for a measurement period of up to one year after the enactment date of the U.S. Tax Reform to finalize the recording of the related tax impacts. Any future changes to our provisional estimated impact of the U.S. Tax Reform will be included as an adjustment to the provision for income taxes. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) The new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The fundamental principles of the guidance are that entities should recognize revenue in a manner that reflects the timing of transfer of goods and services to customers and the amount of revenue recognized reflects the consideration that an entity expects to receive for the goods and services provided. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” |
COSTS AND ESTIMATED EARNINGS ON
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 12 Months Ended |
Dec. 31, 2017 | |
Contractors [Abstract] | |
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 2. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS At December 31, 2017, costs and estimated earnings in excess of billings on uncompleted contracts (unbilled) consist of: U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 380,585,374 $ 176,564,952 $ 557,150,326 Estimated earnings 44,708,920 65,341,115 110,050,035 425,294,294 241,906,067 667,200,361 Less billings to date 370,755,359 185,361,108 556,116,467 Costs and estimated earnings in excess of billings on uncompleted contracts $ 54,538,935 $ 56,544,959 $ 111,083,894 At December 31, 2016, costs and estimated earnings in excess of billings on uncompleted contracts (unbilled) consist of: U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 341,003,461 $ 153,898,425 $ 494,901,886 Estimated earnings 39,638,231 58,346,518 97,984,749 380,641,692 212,244,943 592,886,635 Less billings to date 331,277,942 162,145,504 493,423,446 Costs and estimated earnings in excess of billings on uncompleted contracts $ 49,363,750 $ 50,099,439 $ 99,463,189 The above amounts are included in the accompanying balance sheets under the following captions at December 31, 2017 and 2016. 2017 2016 Costs and estimated earnings in excess of billings on uncompleted contracts $ 111,158,551 $ 99,578,526 Billings in excess of costs and estimated earnings on uncompleted contracts (74,657 ) (115,337 ) Totals $ 111,083,894 $ 99,463,189 Unbilled costs and estimated earnings are billed in accordance with applicable contract terms. As of December 31, 2017, approximately $35 million of the balances above are not expected to be collected within one year. There are no amounts billed under retainage provisions. Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which the circumstances requiring the revisions occur. During the years ended December 31, 2017, 2016 and 2015, the effect of such revisions in total estimated contract profits resulted in a decrease to the total gross profit to be earned on the contracts of approximately $1,040,000, $1,667,000 and $1,875,000, respectively, from that which would have been reported had the revised estimate been used as the basis of recognition of contract profits in prior years. Although management believes it has established adequate procedures for estimating costs to complete on uncompleted open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | 3. Accounts receivable consists of trade receivables as follows: December 31, 2017 2016 Billed receivables $ 5,529,821 $ 9,050,127 Less: allowance for doubtful accounts (150,000 ) (535,514 ) $ 5,379,821 $ 8,514,613 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 4. December 31, Estimated 2017 2016 Useful Life (years) Machinery and equipment $ 2,461,047 $ 2,289,175 5 to 10 Computer equipment 3,476,454 3,417,701 5 Furniture and fixtures 610,323 610,323 7 Automobiles and trucks 13,162 13,162 5 Leasehold improvements 1,798,823 1,694,900 Lesser of lease term or 10 years 8,359,809 8,025,261 Less accumulated depreciation and amortization 6,312,867 5,726,651 $ 2,046,942 $ 2,298,610 Depreciation and amortization expense for the years ended December 31, 2017, 2016 and 2015 was $616,291, $661,921 and $854,063, respectively. During the years ended December 31, 2017 and 2016, the Company acquired $146,192 and $465,475, respectively, of property and equipment under capital leases. |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2017 | |
Line of Credit Facility [Abstract] | |
LINE OF CREDIT | 5. LINE OF CREDIT On December 5, 2012, the Company entered into an Amended and Restated Credit Agreement (“Restated Agreement”) with Sovereign Bank, now called Santander Bank, N.A. (“Santander”), as the sole arranger, administrative agent and collateral agent and Valley National Bank. The Restated Agreement provided for a revolving credit loan (“Revolving Facility”) commitment of $35 million. On March 24, 2016, the Company entered into a Credit Agreement with Bank United, N.A. as the sole arranger, administrative agent and collateral agent and Citizens Bank N.A. (the “BankUnited Facility”). The BankUnited Facility provides for a revolving credit loan commitment of $30 million (the “Revolving Loan”) and a $10 million term loan (“Term Loan”). The proceeds of the BankUnited Facility were used to pay off all amounts outstanding under the Santander Term Loan and the Revolving Facility. The Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the agreement. On May 9, 2016, the Company entered into an amendment (the “Amendment”) to the BankUnited Facility. The Amendment changes the definition of EBITDA for the Leverage Coverage Ratio Covenant for the remainder of 2016 and changes the maximum leverage ratio from 3 to 1 to 3.5 to 1 for the quarters ending June 30, 2016 and September 30, 2016. Also, the Amendment increased the interest rate on the BankUnited Facility by 50 basis points and requires the repayment of a portion of the Term Loan if and to the extent that the Company receives any contract reimbursement payments from its current Request for Equitable Adjustment with Boeing on the A-10 program. As of December 31, 2017, the Company was in compliance with all of the financial covenants, contained in the Restated Agreement, as amended. As of December 31, 2017, the Company had $22.8 million outstanding under the Restated Agreement bearing interest at 4.75%. The BankUnited Facility is secured by all of the Company’s assets. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 6. LONG-TERM DEBT On March 9, 2012, the Company obtained a $4.5 million term loan from Santander to be amortized over five years (the “Santander Term Facility”). The Santander Term Facility was used to purchase tooling and equipment for new programs. Additionally, the Company and Santander entered into a five-year interest rate swap agreement, in the notional amount of $4.5 million. Under the interest rate swap, the Company pays an amount to Santander representing interest on the notional amount at a fixed rate of 4.11% and receives an amount from Santander Bank representing interest on the notional amount of a rate equal to the one-month LIBOR plus 3%. The effect of this interest rate swap will be the Company paying a fixed interest fixed rate of 4.11% over the term of the Santander Term Facility. The Santander interest swap agreement was terminated and the Santander Term Facility was paid off on March 24, 2016 using the proceeds of the Bank United Facility (See Note 5). The Company paid approximately $254,000 of debt issuance costs with the Bank United Facility of which approximately $80,000 is included in other current assets and $27,000 is a reduction of long-term debt. The Term Loan had an initial amount of $10 million, payable in monthly installments, as defined in the agreement, which matures on March 31, 2019. The maturities of the Term Loan are included in the maturities of long-term debt. The maturities of the long-term debt (excluding unamortized debt issuance costs) are as follows: Year ending December 31, 2018 $ 2,009,000 2019 6,837,608 2020 134,655 2021 42,073 2022 31,873 $ 9,055,209 Also included in long-term debt are capital leases and notes payable of $555,209 and $584,116 at December 31, 2017 and 2016, respectively, including a current portion of $175,667 and $175,257, respectively. The cost of assets under capital leases was $1,975,642 and $1,829,450 at December 31, 2017 and 2016, respectively. Accumulated depreciation of assets under capital leases was approximately $1,300,970 and $1,157,000 at December 31, 2017 and 2016, respectively. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Commitments Abstract | |
COMMITMENTS | 7. COMMITMENTS The Company leases an office and warehouse facility under a non-cancelable operating lease which expires in April, 2022. The aggregate future commitment under this agreement is as follows: Year ending December 31, 2018 $ 1,679,465 2019 1,720,750 2020 1,763,275 2021 1,807,074 2022 602,358 $ 7,572,922 Rent expense for the years ended December 31, 2017, 2016 and 2015 was $1,608,701, $1,608,701 and $1,608,701, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 8. INCOME TAXES The provision for (benefit from) income taxes consists of the following: Year ended December 31, 2017 2016 2015 Current: Federal $ 200,000 — $ 82,000 Prior year under accrual — — 143,000 State 126,000 ($ 51,000 ) 107,000 Deferred: Federal 2,244,000 (2,015,000 ) 2,659,000 State/Local 140,000 — — $ 2,710,000 ($ 2,066,000 ) $ 2,991,000 The difference between the income tax provision computed at the federal statutory rate and the actual tax provision is accounted for as follows: December 31, 2017 2016 2015 Taxes computed at the federal statutory rate $ 2,882,000 ($ 1,929,000 ) $ 2,722,000 State income tax, net 176,000 (34,000 ) 70,000 Prior year true-up 2,000 (3,000 ) 325,000 Research and development tax credit (235,000 ) (246,000 ) (177,000 ) Change in Federal Statutory Rate (207,000 ) — — Permanent differences 92,000 146,000 51,000 Provision for (benefit from) income taxes $ 2,710,000 ($ 2,066,000 ) $ 2,991,000 The components of deferred income tax assets and liabilities are as follows: Deferred Tax Assets: 2017 2016 Interest rate swap $ 1,000 $ 9,000 Allowance for doubtful accounts 32,000 187,000 Credit carryforwards 1,986,000 1,548,000 Deferred rent 126,000 221,000 Stock options 102,000 295,000 Restricted stock 90,000 47,000 Net operating loss carryforward 750,000 5,057,000 Deferred Tax Assets 3,087,000 7,364,000 Deferred Tax Liabilities: Prepaid expenses 141,000 130,000 Revenue recognition 1,036,000 2,807,000 Property and equipment 276,000 475,000 State taxes 67,000 — Deferred tax liabilities 1,520,000 3,412,000 Net Deferred Tax Assets $ 1,567,000 $ 3,952,000 The Company recognized, for income tax purposes, a tax benefit of $33,000 for the year ended December 31, 2015 for compensation expense related to its stock option plan for which no corresponding charge to operations has been recorded. Such amounts have been added to additional paid-in capital in those years. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 9. STOCK BASED COMPENSATION The Company accounts for compensation expense associated with stock options and restricted stock units (“RSUs”) based on the fair value of the options and units on the date of grant. The Company used the modified transition method to establish the beginning balance of the additional paid-in capital pool related to the tax effects of employee stock based compensation, which is available to absorb tax deficiencies recognized subsequent to the adoption of the fair value method. The Company’s net income (loss) for the years ended December 31, 2017, 2016 and 2015, includes approximately $946,000, $688,000 and $584,000 of stock based compensation expense, respectively, for the grant of stock options and RSUs. In January 2017, the Company granted 59,395 RSUs to its board of directors as partial compensation for the 2017 year. On January 1, 2016, the Company granted 53,882 RSUs to its board of directors as partial compensation for the 2016 year. RSUs vest quarterly on a straight-line basis over a one-year period. The Company’s net income (loss) for the year ended December 31, 2017 and 2016 includes approximately $550,000 and $524,000, respectively, of noncash compensation expense related to the RSU grants to the board of directors. This expense is recorded as a component of selling, general and administrative expenses. In addition, for the year ended December 31, 2017, the Company granted 5,550 shares of common stock to various employees and approximately $13,300 of compensation expense is included in selling, general and administrative expenses and approximately $37,500 of compensation expense is included in cost of sales for this grant. In August 2016 and March 2017, the Company granted 98,645 and 73,060 shares of common stock, respectively, to various employees. In the event that any of these employees voluntarily terminates their employment prior to certain dates, portions of the shares may be forfeited. In addition, if certain Company performance criteria are not achieved, portions of these shares may be forfeited. These shares will be expensed during various periods through March 2021 based upon the service and performance thresholds. In March 2017, 12,330 of the shares granted in August 2016 were forfeited because the Company failed to achieve certain performance criteria for the year ended December 31, 2016. In addition, on March 9, 2017, these employees returned 4,525 common shares, valued at approximately $33,000, to pay the employees’ withholding taxes. For the years ended December 31, 2017 and 2016, approximately $219,000 and $135,100, respectively, of compensation expense is included in selling, general and administrative expenses and approximately $46,300 and $28,400, respectively of compensation expense is included in cost of sales for this grant. The Company recorded reductions in income tax payable of approximately $325,000 for the year ended December 31, 2015 as a result of the tax benefit upon exercise of options. The compensation expense related to the Company’s stock based compensation arrangements is recorded as a component of selling, general and administrative expenses. Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized from options exercised (excess tax benefits) are classified as cash inflows from financing activities and cash inflows from operating activities. In 2009, the Company adopted the Performance Equity Plan 2009 (the “2009 Plan”). The 2009 Plan reserved 500,000 common shares for issuance. The 2009 Plan provides for the issuance of either incentive stock options or nonqualified stock options to employees, consultants or others who provide services to the Company. The options’ exercise price is equal to the closing price of the Company’s shares on the day of issuance, except for incentive stock options granted to any person possessing more than 10% of the total combined voting power of all classes of Company stock, which are exercisable at 110% of the closing price of the Company’s shares on the date of issuance. The Company has 172,978 shares available for grant under the 2009 Plan. In 2016, the Company adopted the 2016 Long Term Incentive Plan (the “2016 Plan”). The 2016 Plan reserved 600,000 common shares for issuance, provided that, no more than 200,000 common shares be granted as incentive stock options. Awards may be made or granted to employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The Company has 270,309 shares available for grant under the 2016 Plan. The Company did not grant any stock options in 2017, 2016 or 2015. A summary of the status of the Company’s stock option plans is as follows: Fixed Options Options Weighted Average Exercise Price Average remaining contractual term (in years) Aggregate Intrinsic Value Outstanding at January 1, 2015 349,983 10.97 2.20 Granted during period — — Exercised (55,000 ) 8.00 Forfeited/Expired (25,000 ) 14.08 Outstanding at December 31, 2015 269,983 11.29 1.71 Granted during period — — Exercised (25,000 ) 6.75 Forfeited/Expired (95,517 ) 13.83 Outstanding at December 31, 2016 149,466 $ 10.43 1.58 Granted during period — — Exercised (25,000 ) 8.10 Forfeited/Expired (44,217 ) 10.62 Outstanding at December 31, 2017 80,249 $ 11.05 1.10 $ 82,250 Vested at December 31, 2017 80,249 $ 11.05 1.10 $ 82,250 The Company’s stock options granted to non-employee directors vest immediately upon grant and have a maximum contractual term of five years. Stock options granted to employees vest over three years and have a maximum contractual term of ten years. The expected option term is calculated utilizing historical data of option exercises. During the year ended December 31, 2017, no stock options were exercised for cash. During the same period, 25,000 options were exercised, pursuant to provisions of the stock option plan, where the Company received no cash and 21,666 shares of its common stock in exchange for the 25,000 shares issued in the exercise. The 21,666 shares that the Company received were valued at $202,580, the fair market value of the shares on the dates of exercise . During the year ended December 31, 2016, no stock options were exercised for cash. During the same period, 25,000 options were exercised, pursuant to provisions of the stock option plan, where the Company received no cash and 21,552 shares of its common stock in exchange for the 25,000 shares issued in the exercise. The 21,552 shares that the Company received were valued at $168,750, the fair market value of the shares on the dates of exercise . The intrinsic value of stock options exercised during the years ended December 31, 2017, 2016 and 2015 was approximately $31,300, $27,000 and $230,500, respectively. The fair value of all options vested during the years ended December 31, 2017, 2016 and 2015 was approximately $82,000, $151,000 and $221,000, respectively. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | 10. EMPLOYEE BENEFIT PLAN On September 11, 1996, the Company’s board of directors instituted a defined contribution plan under Section 401(k) of the Internal Revenue Code (the “Code”). On October 1, 1998, the Company amended and standardized its plan as required by the Code. Pursuant to the amended plan, qualified employees may contribute a percentage of their pretax eligible compensation to the Plan and the Company will match a percentage of each employee’s contribution. Additionally, the Company has a profit-sharing plan covering all eligible employees. Contributions by the Company are at the discretion of management. The amount of contributions recorded by the Company in 2017, 2016 and 2015 amounted to $361,682, $351,932 and $422,334, respectively. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | 11. MAJOR CUSTOMERS Eight percent of revenue in 2017, 4% of revenue in 2016 and 1% of revenue in 2015 were directly to the U.S. government. Less than 6% and 10% of accounts receivable at December 31, 2017 and 2016, respectively, were from the U. S. Government. In addition, in 2017, 25%, 23% and 12% of our revenue were to our three largest commercial customers, respectively. In 2016, 36%, 29%, 12% and 11% of our revenue were to our four largest commercial customers, respectively. At December 31, 2017, 44%, 18% and 13% of accounts receivable were from our three largest commercial customers. At December 31, 2016, 35%, 24% and 17% of accounts receivable were from our three largest commercial customers. At December 31, 2017 and 2016, 4% and 1%, respectively, of costs and estimated earnings in excess of billings on uncompleted contracts were from the U.S. Government. At December 31, 2017, 32%, 20%, 12%, and 10% of costs and estimated earnings in excess of billings on uncompleted contracts were from our four largest commercial customers. At December 31, 2016, 33%, 26%, 12%, and 11% of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were from our four largest commercial customers. In 2017 and 2016, approximately 4% and 11%, respectively, of our revenue was from a customer who is located outside the United States. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12. QUARTERLY FINANCIAL DATA (UNAUDITED) The results of any single quarter are not necessarily indicative of the Company’s results for the full year. Earnings per share data is computed independently for each of the periods presented. As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year. Quarter ended 2017 March 31, June 30, September 30, December 31, Revenue $ 20,032,701 $ 16,731,951 $ 20,706,460 $ 23,812,036 Gross Profit 4,537,514 3,683,748 4,912,436 5,512,218 Net Income 1,249,301 765,647 1,695,513 2,057,173 Income per common share Basic 0.14 0.09 0.19 0.23 Diluted 0.14 0.09 0.19 0.23 2016 Revenue $ 12,670,032 $ 22,280,964 $ 22,110,829 $ 24,268,033 Gross Profit (loss) (11,639,104 ) 5,034,001 5,024,368 5,899,653 Net Income (loss) (9,220,220 ) 1,790,580 1,686,065 2,134,999 Income (loss) per common share Basic (1.07 ) 0.21 0.19 0.24 Diluted (1.07 ) 0.21 0.19 0.24 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS On March 21, 2018, the Company entered into a Stock Purchase Agreement (the "Agreement") with Air Industries Group ("Air Industries"), pursuant to which, subject to the satisfaction or waiver of certain conditions, the Company will purchase from Air Industries all of the shares (the "Shares") of Welding Metallurgy, Inc. ("WMI"), a wholly owned subsidiary of Air Industries (the "Acquisition"). WMI is engaged in the manufacture of complex components and assemblies for the defense and commercial aircraft industries. Under the terms of the Agreement, the Company will pay a purchase price for the Shares as follows: (i) $9.0 million in cash, subject to adjustment based on the working capital of WMI at the closing of the Acquisition and (ii) up to an aggregate of $1.0 million, in two payments of up to $500,000 each (the "Contingent Payments") if WMI enters into certain long-term supply agreements. The Contingent Payments are reduced if milestones for signing are not achieved. |
PRINCIPAL BUSINESS ACTIVITY A20
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the use of estimates by management. Actual results could differ from these estimates. |
Revenue Recognition | Revenue Recognition The Company’s revenue is primarily recognized based on the percentage of completion method of accounting for its contracts measured by the percentage of total costs incurred to date to estimated total costs at completion for each contract. Contract costs include all direct material, labor costs, tooling and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and administrative costs are charged to expense as incurred. Estimated losses on uncompleted contracts are recognized in the period in which such losses are determined. Changes in job performance may result in revisions to costs and income and are recognized in the period in which revisions are determined to be required. The percentage of completion method of accounting involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods and, as a result, there can be a significant disparity between earnings (both for accounting and taxes) as reported and actual cash received by the Company during any reporting period. In accordance with industry practice, costs and estimated earnings in excess of billings on uncompleted contracts, included in the accompanying balance sheets, contain amounts relating to contracts and programs with long production cycles, a portion of which will not be realized within one year. The Company’s recorded revenue may be adjusted in later periods in the event that the Company’s cost estimates prove to be inaccurate or a contract is terminated. When adjustments are required for the estimated total revenue on a contract, these changes are recognized with an inception-to-date effect in the current period. Also, when estimates of total costs to be incurred exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. In addition, the Company recognizes revenue for parts supplied for certain MRO contracts when parts are shipped. |
Government Contracts | Government Contracts The Company’s government contracts are subject to the procurement rules and regulations of the U.S. government. Many of the contract terms are dictated by these rules and regulations. Specifically, cost-based pricing is determined under the Federal Acquisition Regulation (“FAR”), which provides guidance on the types of costs that are allowable in establishing prices for goods and services under U.S. government contracts. For example, costs such as those related to charitable contributions, advertising, interest expense, and public relations are unallowable, and therefore not recoverable through sales. During and after the fulfillment of a government contract, the Company may be audited in respect of the direct and allocated indirect costs attributable thereto. These audits may result in adjustments to the Company’s contract cost, and/or revenue. When contractual terms allow, the Company invoices its customers on a progress basis. |
Cash | Cash The Company maintains its cash in three financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed these limits. As of December 31, 2017 and 2016, the Company had approximately $1,377,000 and $1,276,000, respectively, of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly credit worthy. |
Accounts Receivable | Accounts Receivable Accounts receivable are reported at their outstanding unpaid principal balances. The Company writes off accounts when they are deemed to be uncollectible. |
Property and Equipment | Property and Equipment Depreciation and amortization of property and equipment is provided by the straight-line method over the shorter of estimated useful lives of the respective assets or the life of the lease, for leasehold improvements. |
Rent | Rent We recognize rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases there are escalations in payments over the lease term. The effects of the escalations have been reflected in rent expense on a straight-line basis over the expected lease term. |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived assets and certain related intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. As a result of its review, the Company does not believe that any such change has occurred. If such changes in circumstance are present, a loss is recognized to the extent the carrying value of the asset is in excess of the fair value of cash flows expected to result from the use of the asset and amounts expected to be realized upon its eventual disposition. |
Short-Term Debt | Short-Term Debt The fair value of the Company’s short-term debt is estimated based on the current rates offered to the Company for debt of similar terms and maturities. Using this method, the fair value of the Company’s short-term debt was not significantly different than the stated value at December 31, 2017 and 2016. |
Derivatives | Derivatives Our use of derivative instruments has primarily been to hedge interest rates. These derivative contracts are entered into with financial institutions. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use. We record these derivative financial instruments on the balance sheet at fair value. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. See below for a discussion of the Company’s use of derivative instruments, management of credit risk inherent in derivative instruments and fair value information. In March 2012, the Company entered into an interest rate swap with the objective of reducing its exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of these contracts match those of the underlying debt. The Company has designated this interest rate swap contract as cash flow hedge. The Company measures ineffectiveness by comparing the cumulative change in the forward contract with the cumulative change in the hedged item. The interest rate swap contract was terminated as of March 24, 2016. The Company paid approximately $4,000 at termination to settle the swap contract. In May 2016, the Company entered into a new interest rate swap with the objective of reducing our exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of this contract match those of the underlying debt. The Company has designated this interest rate swap contract as a cash flow hedge. The Company measures ineffectiveness by comparing the cumulative change in the forward contact with the cumulative change in the hedged item. As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties may fail to meet their contractual obligations. Recent adverse developments in the global financial and credit markets could negatively impact the creditworthiness of our counterparties and cause one or more of our counterparties to fail to perform as expected. To mitigate the counterparty credit risk, we only enter into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. To date, all counterparties have performed in accordance with their contractual obligations. |
Fair Value | Fair Value At December 31, 2017 and 2016, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2017 2016 Carrying Amount Fair Value Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 31,893,894 $ 31,893,894 $ 32,689,467 $ 32,689,467 We estimated the fair value of debt using market quotes and calculations based on market rates. The following tables present the fair values of liabilities measured on a recurring basis as of December 31, 2017 and 2016: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — Fair Value Measurements 2016 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 13,685 — $ 13,685 — Total $ 13,685 — $ 13,685 — The fair value of the Company’s interest rate swap was determined by comparing the fixed rate set at the inception of the transaction to the “replacement swap rate,” which represents the market rate for an offsetting interest rate swap with the same notional amounts and final maturity date. The market value is then determined by calculating the present value interest differential between the contractual swap and the replacement swap. As of December 31, 2017 and 2016, $18,781 and $13,685, respectively, was included in other liabilities related to the fair value of the Company’s interest rate swap, and $15,000 and $9,000, respectively, net of tax of approximately $4,000 and $5,000, respectively, was included in Accumulated Other Comprehensive Loss. |
Earnings Per Share | Earnings Per Share Basic earnings (loss) per common share is computed using the weighted-average number of shares outstanding. Diluted earnings (loss) per common share is computed using the weighted-average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. Incremental shares of approximately 35,000 were used in the calculation of diluted earnings per common share in 2017. Incremental shares of 45,249 were not included in the diluted earnings per share calculations at December 31, 2017, as their exercise price was in excess of the Company’s quoted market price and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation. No incremental shares were used in the calculation of diluted loss per common share in 2016, as the effect of incremental shares would be anti-dilutive. Incremental shares of approximately 85,000 were used in the calculation of diluted earnings per common share in 2015. Incremental shares of 184,983 were not included in the diluted earnings per share calculations at December 31, 2015, as their exercise price was in excess of the Company’s quoted market price and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation. |
Income taxes | Income taxes Income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company does not have any liabilities for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return. It is the Company’s policy to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. Uncertain tax positions are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions. In accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform”), we have recorded a credit for income taxes of $207,000. The impact of the U.S. Tax Reform is primarily from revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The provisional impact of the U.S. Tax Reform is our current best estimate based on the preliminary review of the new law and is subject to revision based on our existing accounting for income taxes policy as further information is gathered and interpretation and analysis of the tax legislation evolves. The Securities and Exchange Commission has issued rules allowing for a measurement period of up to one year after the enactment date of the U.S. Tax Reform to finalize the recording of the related tax impacts. Any future changes to our provisional estimated impact of the U.S. Tax Reform will be included as an adjustment to the provision for income taxes. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) The new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The fundamental principles of the guidance are that entities should recognize revenue in a manner that reflects the timing of transfer of goods and services to customers and the amount of revenue recognized reflects the consideration that an entity expects to receive for the goods and services provided. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” |
PRINCIPAL BUSINESS ACTIVITY A21
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of fair values | At December 31, 2017 and 2016, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2017 2016 Carrying Amount Fair Value Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 31,893,894 $ 31,893,894 $ 32,689,467 $ 32,689,467 |
Schedule of liabilities measured on recurring basis | The following tables present the fair values of liabilities measured on a recurring basis as of December 31, 2017 and 2016: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — Fair Value Measurements 2016 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest Rate Swap $ 13,685 — $ 13,685 — Total $ 13,685 — $ 13,685 — |
COSTS AND ESTIMATED EARNINGS 22
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Contractors [Abstract] | |
Schedule of costs and estimated earnings in excess of billings on uncompleted contracts (unbilled) | At December 31, 2017, costs and estimated earnings in excess of billings on uncompleted contracts (unbilled) consist of: U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 380,585,374 $ 176,564,952 $ 557,150,326 Estimated earnings 44,708,920 65,341,115 110,050,035 425,294,294 241,906,067 667,200,361 Less billings to date 370,755,359 185,361,108 556,116,467 Costs and estimated earnings in excess of billings on uncompleted contracts $ 54,538,935 $ 56,544,959 $ 111,083,894 At December 31, 2016, costs and estimated earnings in excess of billings on uncompleted contracts (unbilled) consist of: U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 341,003,461 $ 153,898,425 $ 494,901,886 Estimated earnings 39,638,231 58,346,518 97,984,749 380,641,692 212,244,943 592,886,635 Less billings to date 331,277,942 162,145,504 493,423,446 Costs and estimated earnings in excess of billings on uncompleted contracts $ 49,363,750 $ 50,099,439 $ 99,463,189 |
Schedule of costs and estimated earnings in excess of billings on uncompleted contracts included in balance sheet | The above amounts are included in the accompanying balance sheets under the following captions at December 31, 2017 and 2016. 2017 2016 Costs and estimated earnings in excess of billings on uncompleted contracts $ 111,158,551 $ 99,578,526 Billings in excess of costs and estimated earnings on uncompleted contracts (74,657 ) (115,337 ) Totals $ 111,083,894 $ 99,463,189 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable consists of trade receivables as follows: December 31, 2017 2016 Billed receivables $ 5,529,821 $ 9,050,127 Less: allowance for doubtful accounts (150,000 ) (535,514 ) $ 5,379,821 $ 8,514,613 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, Estimated 2017 2016 Useful Life (years) Machinery and equipment $ 2,461,047 $ 2,289,175 5 to 10 Computer equipment 3,476,454 3,417,701 5 Furniture and fixtures 610,323 610,323 7 Automobiles and trucks 13,162 13,162 5 Leasehold improvements 1,798,823 1,694,900 Lesser of lease term or 10 years 8,359,809 8,025,261 Less accumulated depreciation and amortization 6,312,867 5,726,651 $ 2,046,942 $ 2,298,610 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of maturities of long-term debt | The maturities of the long-term debt (excluding unamortized debt issuance costs) are as follows: Year ending December 31, 2018 $ 2,009,000 2019 6,837,608 2020 134,655 2021 42,073 2022 31,873 $ 9,055,209 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments Tables | |
Schedule of aggreagte future commitments under operating leases | The Company leases an office and warehouse facility under a non-cancelable operating lease which expires in April, 2022. The aggregate future commitment under this agreement is as follows: Year ending December 31, 2018 $ 1,679,465 2019 1,720,750 2020 1,763,275 2021 1,807,074 2022 602,358 $ 7,572,922 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of the provision for (benefit from) income taxes | The provision for (benefit from) income taxes consists of the following: Year ended December 31, 2017 2016 2015 Current: Federal $ 200,000 — $ 82,000 Prior year under accrual — — 143,000 State 126,000 ($ 51,000 ) 107,000 Deferred: Federal 2,244,000 (2,015,000 ) 2,659,000 State/Local 140,000 — — $ 2,710,000 ($ 2,066,000 ) $ 2,991,000 |
Schedule of effective income tax rate reconciliation | The difference between the income tax provision computed at the federal statutory rate and the actual tax provision is accounted for as follows: December 31, 2017 2016 2015 Taxes computed at the federal statutory rate $ 2,882,000 ($ 1,929,000 ) $ 2,722,000 State income tax, net 176,000 (34,000 ) 70,000 Prior year true-up 2,000 (3,000 ) 325,000 Research and development tax credit (235,000 ) (246,000 ) (177,000 ) Change in Federal Statutory Rate (207,000 ) — — Permanent differences 92,000 146,000 51,000 Provision for (benefit from) income taxes $ 2,710,000 ($ 2,066,000 ) $ 2,991,000 |
Schedule of deferred income tax assets and liabilities | The components of deferred income tax assets and liabilities are as follows: Deferred Tax Assets: 2017 2016 Interest rate swap $ 1,000 $ 9,000 Allowance for doubtful accounts 32,000 187,000 Credit carryforwards 1,986,000 1,548,000 Deferred rent 126,000 221,000 Stock options 102,000 295,000 Restricted stock 90,000 47,000 Net operating loss carryforward 750,000 5,057,000 Deferred Tax Assets 3,087,000 7,364,000 Deferred Tax Liabilities: Prepaid expenses 141,000 130,000 Revenue recognition 1,036,000 2,807,000 Property and equipment 276,000 475,000 State taxes 67,000 — Deferred tax liabilities 1,520,000 3,412,000 Net Deferred Tax Assets $ 1,567,000 $ 3,952,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock options plans activity | A summary of the status of the Company’s stock option plans is as follows: Fixed Options Options Weighted Average Exercise Price Average remaining contractual term (in years) Aggregate Intrinsic Value Outstanding at January 1, 2015 349,983 10.97 2.20 Granted during period — — Exercised (55,000 ) 8.00 Forfeited/Expired (25,000 ) 14.08 Outstanding at December 31, 2015 269,983 11.29 1.71 Granted during period — — Exercised (25,000 ) 6.75 Forfeited/Expired (95,517 ) 13.83 Outstanding at December 31, 2016 149,466 $ 10.43 1.58 Granted during period — — Exercised (25,000 ) 8.10 Forfeited/Expired (44,217 ) 10.62 Outstanding at December 31, 2017 80,249 $ 11.05 1.10 $ 82,250 Vested at December 31, 2017 80,249 $ 11.05 1.10 $ 82,250 |
QUARTERLY FINANCIAL DATA (UNA29
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data Tables | |
Schedule of Quarterly Financial Information | The results of any single quarter are not necessarily indicative of the Company’s results for the full year. Earnings per share data is computed independently for each of the periods presented. As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year. Quarter ended 2017 March 31, June 30, September 30, December 31, Revenue $ 20,032,701 $ 16,731,951 $ 20,706,460 $ 23,812,036 Gross Profit 4,537,514 3,683,748 4,912,436 5,512,218 Net Income 1,249,301 765,647 1,695,513 2,057,173 Income per common share Basic 0.14 0.09 0.19 0.23 Diluted 0.14 0.09 0.19 0.23 2016 Revenue $ 12,670,032 $ 22,280,964 $ 22,110,829 $ 24,268,033 Gross Profit (loss) (11,639,104 ) 5,034,001 5,024,368 5,899,653 Net Income (loss) (9,220,220 ) 1,790,580 1,686,065 2,134,999 Income (loss) per common share Basic (1.07 ) 0.21 0.19 0.24 Diluted (1.07 ) 0.21 0.19 0.24 |
PRINCIPAL BUSINESS ACTIVITY A30
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 22, 2018 | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)Numbershares | |
Cash uninsured amount | $ 1,377,000 | $ 1,276,000 | |
AOCI - Gain (Loss) from Cash Flow Hedges net of tax | 15,000 | 9,000 | |
AOCI - Gain (Loss) from Cash Flow Hedges, tax | 4,000 | 5,000 | |
Derivative Liability | $ 18,781 | $ 13,685 | |
Incremental common shares attributable to dilutive effect | shares | 35,000 | 85,000 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 45,249 | 184,983 | |
Number of Financial Institutions where cash is maintained | Number | 3 | ||
Amount paid at swap contract settlement and termination | $ 4,000 | ||
Credit for income taxes change for effective rate reduction | $ (207,000) | ||
Statutory federal tax rate | 34.00% | ||
Subsequent Event [Member] | |||
Statutory federal tax rate | 21.00% |
PRINCIPAL BUSINESS ACTIVITY A31
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value [Member] | ||
Short-term borrowings and long-term debt | $ 31,893,894 | $ 32,689,467 |
Carrying Amount [Member] | ||
Short-term borrowings and long-term debt | $ 31,893,894 | $ 32,689,467 |
PRINCIPAL BUSINESS ACTIVITY A32
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Interest Rate Swap | $ 18,781 | $ 13,685 |
Recurring Basis [Member] | ||
Interest Rate Swap | 18,781 | 13,685 |
Total | 18,781 | 13,685 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Interest Rate Swap | 18,781 | 13,685 |
Total | $ 18,781 | $ 13,685 |
COSTS AND ESTIMATED EARNINGS 33
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Contractors [Abstract] | |||
Decrease in gross profits due to change in contract estimates | $ 1,040,000 | $ 1,667,000 | $ 1,875,000 |
Costs and estimated eanings in excess of billings to be collected after one year | $ 35,000,000 |
COSTS AND ESTIMATED EARNINGS 34
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Costs incurred on uncompleted Contracts | $ 557,150,326 | $ 494,901,886 |
Estimated earnings | 110,050,035 | 97,984,749 |
Sub-total | 667,200,361 | 592,886,635 |
Less billings to date | 556,116,467 | 493,423,446 |
Totals | 111,083,894 | 99,463,189 |
US Government [Member] | ||
Costs incurred on uncompleted Contracts | 380,585,374 | 341,003,461 |
Estimated earnings | 44,708,920 | 39,638,231 |
Sub-total | 425,294,294 | 380,641,692 |
Less billings to date | 370,755,359 | 331,277,942 |
Totals | 54,538,935 | 49,363,750 |
Commercial [Member] | ||
Costs incurred on uncompleted Contracts | 176,564,952 | 153,898,425 |
Estimated earnings | 65,341,115 | 58,346,518 |
Sub-total | 241,906,067 | 212,244,943 |
Less billings to date | 185,361,108 | 162,145,504 |
Totals | $ 56,544,959 | $ 50,099,439 |
COSTS AND ESTIMATED EARNINGS 35
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Contractors [Abstract] | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 111,158,551 | $ 99,578,526 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (74,657) | (115,337) |
Totals | $ 111,083,894 | $ 99,463,189 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Billed receivables | $ 5,529,821 | $ 9,050,127 |
Less: allowance for doubtful accounts | (150,000) | (535,514) |
[us-gaap:AccountsReceivableNetCurrent] | $ 5,379,821 | $ 8,514,613 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrtaive) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Depreciation, Depletion and Amortization | $ 616,291 | $ 661,921 | $ 854,063 |
Assets Held under Capital Leases [Member] | |||
Property and equipment acquired under capital lease | $ 146,192 | $ 465,475 |
PROPERTY AND EQUIPMENT (Detai38
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | |
Property and equipment, gross | $ 8,025,261 | $ 8,359,809 |
Less accumulated depreciation and amortization | 5,726,651 | 6,312,867 |
Property and equipment, net | 2,298,610 | 2,046,942 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | $ 2,289,175 | 2,461,047 |
Machinery and Equipment [Member] | Minimum [Member] | ||
Estimated Useful Life | 5 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Estimated Useful Life | 10 years | |
Computer Equipment [Member] | ||
Property and equipment, gross | $ 3,417,701 | 3,476,454 |
Estimated Useful Life | 5 years | |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | $ 610,323 | 610,323 |
Estimated Useful Life | 7 years | |
Automobiles and Trucks [Member] | ||
Property and equipment, gross | $ 13,162 | 13,162 |
Estimated Useful Life | 5 years | |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 1,694,900 | $ 1,798,823 |
Estimated Useful Life | 10 years |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) | May 09, 2016 | Mar. 24, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 05, 2012USD ($) |
Oustanding loans | $ 22,838,685 | $ 22,438,685 | |||
Bank United [Member] | Term Loan [Member] | |||||
Debt instrument, face amount | $ 10,000,000 | ||||
Revolving Credit Facility [Member] | Bank United [Member] | |||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | ||||
Debt covenant, maximum leverage ratio | 3 | ||||
Revolving Credit Facility [Member] | Amendment - Bank United [Member] | |||||
Debt covenant, maximum leverage ratio | 3.5 | ||||
Debt Instrument, interest rate, increase | 0.50% | ||||
Oustanding loans | $ 228,000,000 | ||||
Line of credit facility, interest rate at period end | 4.75% | ||||
Revolving Credit Facility [Member] | Restated Agreement [Member] | |||||
Line of credit facility, maximum borrowing capacity | $ 35,000,000 |
LONG-TERM DEBT (Details Narrati
LONG-TERM DEBT (Details Narrative) - USD ($) | Mar. 24, 2016 | Mar. 09, 2012 | Dec. 31, 2016 | Dec. 31, 2017 |
Payments of debt issuance costs | $ 253,855 | |||
Capital lease and notes payable | 584,116 | $ 555,209 | ||
Long-term debt and capital lease obligations, current | 175,257 | 175,667 | ||
Cost of assets under capital lease | 1,829,450 | 1,975,642 | ||
Accumulated depreciation of assets under capital lease | $ 1,157,000 | 1,300,970 | ||
Term Loan [Member] | Bank United [Member] | ||||
Debt instrument, face amount | $ 10,000,000 | |||
Payments of debt issuance costs | $ 254,000 | |||
Debt issuance costs | 80,000 | |||
Debt issuance costs, reduction of long-term debt | $ 27,000 | |||
Santander Bank Term Facility [Member] | Term Loan [Member] | ||||
Debt instrument, face amount | $ 4,500,000 | |||
Period of amortization | 5 years | |||
Santander Bank Term Facility [Member] | Interest Rate Swap [Member] | ||||
Derivative, remaining maturity | 5 years | |||
Derivative liability, notional amount | $ 4,500,000 | |||
Derivative, fixed interest rate | 4.11% | |||
Derivative, interest rate description | One month Libor plus 3% | |||
Derivative, basis spread on variable rate | 3.00% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Dec. 31, 2017USD ($) |
Year ending December 31, | |
2,018 | $ 2,009,000 |
2,019 | 6,837,608 |
2,020 | 134,655 |
2,021 | 42,073 |
Thereafter | 31,873 |
Total maturities | $ 9,055,209 |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments Details Narrative | |||
Operating Leases, Rent Expense, Net | $ 1,608,701 | $ 1,608,701 | $ 1,608,701 |
COMMITMENTS (Details)
COMMITMENTS (Details) | Dec. 31, 2017USD ($) |
Year ending December 31, | |
2,018 | $ 1,679,465 |
2,019 | 1,720,751 |
2,020 | 1,763,274 |
2,021 | 1,807,074 |
2,022 | 602,358 |
[us-gaap:OperatingLeasesFutureMinimumPaymentsDue] | $ 7,572,922 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Tax benefit from compensation expense related to stock option plans | $ 33,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 200,000 | $ 82,000 | |
Prior year under accrual | 143,000 | ||
State | 126,000 | $ (51,000) | 107,000 |
Deferred: | |||
Federal | 2,244,000 | (2,015,000) | 2,659,000 |
State/Local | 140,000 | ||
[us-gaap:IncomeTaxExpenseBenefit] | $ 2,710,000 | $ (2,066,000) | $ 2,991,000 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Taxes computed at the federal statutory rate | $ 2,882,000 | $ (1,929,000) | $ 2,722,000 |
State income tax, net | 176,000 | (34,000) | 70,000 |
Prior year true-up | 2,000 | (3,000) | 325,000 |
Research and development tax credit | (235,000) | (246,000) | (177,000) |
Change in Federal Statutory Rate | (207,000) | ||
Permanent differences | 92,000 | 146,000 | 51,000 |
[us-gaap:IncomeTaxExpenseBenefit] | $ 2,710,000 | $ (2,066,000) | $ 2,991,000 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Interest rate swap | $ 1,000 | $ 9,000 |
Allowance for doubtful accounts | 32,000 | 187,000 |
Credit carryforwards | 1,986,000 | 1,548,000 |
Deferred rent | 126,000 | 221,000 |
Stock options | 102,000 | 295,000 |
Restricted stock | 90,000 | 47,000 |
Net operating loss carryforward | 750,000 | 5,057,000 |
Deferred Tax Assets | 3,087,000 | 7,364,000 |
Prepaid expenses | 141,000 | 130,000 |
Revenue recognition | 1,036,000 | 2,807,000 |
Property and equipment | 276,000 | 475,000 |
State taxes | 67,000 | |
Deferred tax liabilities | 1,520,000 | 3,412,000 |
Net Deferred Tax Assets | $ 1,567,000 | $ 3,952,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | Jan. 02, 2016 | Mar. 31, 2017 | Jan. 31, 2017 | Aug. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stock-based compensation | $ 946,000 | $ 688,000 | $ 584,000 | ||||
Stock-based compensation - RSUs | $ 550,000 | $ 524,000 | |||||
Reduction in income taxes payable from tax benefit upon exercise of stock options | 325,000 | ||||||
Performance Equity Plan 2009 [Member] | |||||||
Number of shares authorized under plan | 500,000 | ||||||
Number of shares available for grant | 172,978 | ||||||
Ownership greater than (percent) for incentive stock options | 10.00% | ||||||
Exercisable price of incentive stock options for majority shareholder (percent) | 110.00% | ||||||
2016 Long Term Incentive Plan [Member] | |||||||
Number of shares authorized under plan | 600,000 | ||||||
Number of shares available for grant | 270,309 | ||||||
Maximum number of shares to be granted as incentive stock | 200,000 | ||||||
Selling, General and Administrative Expenses [Member] | |||||||
Stock-based compensation | $ 13,300 | ||||||
Cost of Sales [Member] | |||||||
Stock-based compensation | $ 37,500 | ||||||
Stock Option Plans [Member] | |||||||
Common stock issued upon cashless exercise of options (in shares) | 25,000 | 25,000 | |||||
Number of shares received in cashless exercise | 21,666 | 21,552 | |||||
Fair value of shares received for cashless exercise of stock options | $ 202,580 | $ 168,750 | |||||
Intrinsic value of stock options exercised | 31,300 | 27,000 | 230,500 | ||||
Fair value of options vested | 82,000 | 151,000 | $ 221,000 | ||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||
Restricted stock units granted | 53,882 | 59,395 | |||||
Vesting period | 1 year | 1 year | |||||
Stock Awards [Member] | Selling, General and Administrative Expenses [Member] | |||||||
Stock-based compensation | 219,000 | 135,100 | |||||
Stock Awards [Member] | Cost of Sales [Member] | |||||||
Stock-based compensation | $ 46,300 | $ 28,400 | |||||
Stock Awards [Member] | Employees [Member] | |||||||
Number of common shares granted | 73,060 | 98,645 | 5,550 | ||||
Stock awards forfeited (shares) | 12,330 | ||||||
Number of shares returned for employee's withholding taxes (shares) | 4,525 | ||||||
Value of shares returned for employee's withholding taxes | $ 33,000 |
STOCK-BASED COMPENSATION (Det49
STOCK-BASED COMPENSATION (Details) - Stock Option Plans [Member] - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options, Outstanding | ||||
Outstanding at beginning | 149,466 | 269,983 | 349,983 | |
Exercised | (25,000) | (25,000) | (55,000) | |
Forfeited/Expired | (44,217) | (95,517) | (25,000) | |
Outstanding at end | 80,249 | 149,466 | 269,983 | 349,983 |
Vested at end | 80,249 | |||
Options, Outstanding, Weighted Average Exercise Price | ||||
Outstanding at beginning | $ 10.43 | $ 11.29 | $ 10.97 | |
Exercised | 8.10 | 6.75 | 8 | |
Forfeited/Expired | 10.62 | 13.83 | 14.08 | |
Outstanding at end | 11.05 | $ 10.43 | $ 11.29 | $ 10.97 |
Vested at end | $ 11.05 | |||
Options, Weighted Average Remaining Contractual Term | ||||
Outstanding at end | 1 year 1 month 6 days | 1 year 6 months 29 days | 1 year 8 months 16 days | 2 years 2 months 12 days |
Vested at end | 1 year 1 month 6 days | |||
Options, Aggregate Intrinsic Value | ||||
Outstanding at end | $ 82,250 | |||
Vested at end | $ 82,250 |
EMPLOYEE BENEFIT PLAN (Details
EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Retirement Benefits [Abstract] | |||
Profit-sharing plan contributions | $ 361,682 | $ 351,932 | $ 422,334 |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - Number | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Number of large commercial customers | 3 | 3 | |
Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Number of large commercial customers | 3 | 4 | |
Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Number of large commercial customers | 4 | 4 | |
US Government Concentration Risk [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 6.00% | 10.00% | |
US Government Concentration Risk [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 8.00% | 4.00% | 1.00% |
US Government Concentration Risk [Member] | Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 4.00% | 1.00% | |
Customer One [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 44.00% | 35.00% | |
Customer One [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 25.00% | 36.00% | |
Customer One [Member] | Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 32.00% | 33.00% | |
Customer Two [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 18.00% | 24.00% | |
Customer Two [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 23.00% | 29.00% | |
Customer Two [Member] | Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.00% | 26.00% | |
Customer Three [Member] | Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% | 17.00% | |
Customer Three [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 12.00% | |
Customer Three [Member] | Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 12.00% | |
Customer Four [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Customer Four [Member] | Costs and Estimated Earnings in Excess of Billing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 11.00% | |
Outside United States [Member] | Revenue [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 4.00% | 11.00% |
QUARTERLY FINANCIAL DATA (UNA52
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |||||||||||
Revenue | $ 23,812,036 | $ 20,706,460 | $ 16,731,951 | $ 20,032,701 | $ 24,268,033 | $ 22,110,829 | $ 22,280,964 | $ 12,670,032 | $ 81,283,148 | $ 81,329,858 | $ 100,202,557 |
Gross Profit (loss) | 5,512,218 | 4,912,436 | 3,683,748 | 4,537,514 | 5,899,653 | 5,024,368 | 5,034,001 | (11,639,104) | 18,645,916 | 4,318,918 | 16,601,703 |
Net income (loss) | $ 2,057,173 | $ 1,695,513 | $ 765,647 | $ 1,249,301 | $ 2,134,999 | $ 1,686,065 | $ 1,790,580 | $ (9,220,220) | $ 5,767,634 | $ (3,608,576) | $ 5,015,993 |
Income (loss) per common share | |||||||||||
Basic (in dollars per share) | $ 0.23 | $ 0.19 | $ 0.09 | $ 0.14 | $ 0.24 | $ 0.19 | $ 0.21 | $ (1.07) | $ 0.65 | $ 0.42 | $ 0.59 |
Diluted (in dollars per share) | $ 0.23 | $ 0.19 | $ 0.09 | $ 0.14 | $ 0.24 | $ 0.19 | $ 0.21 | $ (1.07) | $ 0.65 | $ 0.42 | $ 0.58 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Stock Purchase Agreement - WMI [Member] $ in Thousands | Mar. 19, 2018USD ($) |
Purchase price for Shares | $ 9,000 |
Total Contingent Payments [Member] | |
Contingent payments | 1,000 |
Contingent Payment #1 [Member] | |
Contingent payments | 500 |
Contingent Payment #2 [Member] | |
Contingent payments | $ 500 |