Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 28, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | CPI AEROSTRUCTURES INC | ||
Entity Central Index Key | 0000889348 | ||
Document Type | 10-K | ||
Trading Symbol | CVU | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 82,667,519 | ||
Share Price | $ 10.50 | ||
Entity Common Stock, Shares Outstanding | 11,734,326 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Current Assets: | |||
Cash | $ 4,128,142 | $ 1,430,877 | |
Restricted cash | 2,000,000 | ||
Accounts receivable, net | 8,623,329 | 5,379,821 | |
Contract Assets | 113,333,491 | 111,158,551 | [1] |
Inventory | 9,711,997 | 1,685,378 | |
Refundable income taxes | 435,000 | ||
Prepaid expenses and other current assets | 1,972,630 | 727,809 | |
Total current assets | 140,204,589 | 120,382,436 | |
Property and equipment, net | 2,545,192 | 2,046,942 | |
Refundable income taxes | 435,000 | ||
Deferred income taxes | 279,318 | 1,566,818 | |
Other assets | 249,575 | 188,303 | |
Total Assets | 143,713,674 | 124,184,499 | |
Current Liabilities: | |||
Accounts payable | 9,902,481 | 15,129,872 | |
Accrued expenses | 1,558,160 | 1,911,421 | |
Contract liabilities | 3,805,106 | 246,330 | [1] |
Current portion of long-term debt | 2,434,981 | 2,009,000 | |
Line of credit | 24,038,685 | 22,838,685 | |
Income taxes payable | 115,000 | 109,327 | |
Total current liabilities | 41,854,413 | 42,244,635 | |
Long-term debt, net of current portion | 3,876,238 | 7,019,468 | |
Deferred income taxes | 4,028,553 | ||
Other liabilities | 531,124 | 607,063 | |
Total Liabilities | 50,290,328 | 49,871,166 | |
Commitments | |||
Shareholders' Equity: | |||
Common stock - $.001 par value; authorized 50,000,000 shares, 11,718,246 and 8,864,319 shares, respectively, issued and outstanding | 11,715 | 8,863 | |
Additional paid-in capital | 70,651,416 | 53,770,618 | |
Retained earnings | 22,760,215 | 20,548,652 | |
Accumulated other comprehensive loss | (14,800) | ||
Total Shareholders' Equity | 93,423,346 | 74,313,333 | |
Total Liabilities and Shareholders' Equity | $ 143,713,674 | $ 124,184,499 | |
[1] | On January 1, 2018, as a result of the adoption of ASC 606, the Company reclassified costs and estimated earnings in excess of billings on uncompleted contracts to contract assets and billings in excess of costs and estimated earnings on uncompleted contracts and contract losses to contract liabilities. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
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 | 11,718,246 | 8,864,319 |
Common stock, outstanding | 11,718,246 | 8,864,319 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 83,929,270 | $ 81,283,148 |
Cost of sales | 65,765,007 | 62,637,232 |
Gross profit | 18,164,263 | 18,645,916 |
Selling, general and administrative expenses | 9,528,883 | 8,449,594 |
Income from operations | 8,635,380 | 10,196,322 |
Other expense: | ||
Other income (expense) | 28,709 | (19,774) |
Interest expense | (1,989,417) | (1,698,914) |
Total other expense, net | (1,960,708) | (1,718,688) |
Income before provision for income taxes | 6,674,672 | 8,477,634 |
Provision for income taxes | 4,463,109 | 2,710,000 |
Net income | 2,211,563 | 5,767,634 |
Other comprehensive income (loss), net of tax | ||
Change in unrealized (gain) loss-interest rate swap | 14,800 | (5,800) |
Comprehensive income | $ 2,226,363 | $ 5,761,834 |
Income per common share-basic (in dollars per share) | $ .23 | $ 0.65 |
Income per common share-diluted (in dollars per share) | $ .23 | $ 0.65 |
Shares used in computing earnings per common share: | ||
Basic (in shares) | 9,480,948 | 8,831,064 |
Diluted (in shares) | 9,489,630 | 8,838,445 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED 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, 2016 | $ 8,738 | $ 52,824,950 | $ 14,781,018 | $ (9,000) | $ 67,605,706 |
Balance, beginning (in shares) at Dec. 31, 2016 | 8,739,836 | ||||
Net income | 5,767,634 | 5,767,634 | |||
Change in unrealized loss from interest rate swap | (5,800) | (5,800) | |||
Common stock issued upon exercise of options | $ 3 | (3) | |||
Common stock issued upon exercise of options (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 | |||
Net income | 2,211,563 | $ 2,211,563 | |||
Change in unrealized loss from interest rate swap | $ 14,800 | 14,800 | |||
Common stock issued in share offering, net of expenses | $ 2,760 | 16,163,357 | 16,166,117 | ||
Common stock issued in share offering, net of expenses (in shares) | 2,760,000 | ||||
Common stock issued as employee compensation | $ 5 | 45,908 | 45,913 | ||
Common stock issued as employee compensation (in shares) | 5,130 | ||||
Stock based compensation expense | $ 87 | 671,533 | 671,620 | ||
Stock based compensation expense (in shares) | 88,797 | ||||
Balance, ending at Dec. 31, 2018 | $ 11,715 | $ 70,651,416 | $ 22,760,215 | $ 93,423,346 | |
Balance, ending (in shares) at Dec. 31, 2018 | 11,718,246 | 11,718,246 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 2,211,563 | $ 5,767,634 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 710,197 | 616,291 |
Debt issuance costs | 95,942 | 85,571 |
Deferred rent | (70,764) | (30,680) |
Stock based compensation expense | 671,620 | 895,011 |
Common stock issued as employee compensation | 45,913 | 50,782 |
Loss on disposal of fixed asset | 21,010 | |
Deferred income taxes | 5,337,053 | 2,384,980 |
Adjustment for maturity of interest rate swap | 20,600 | |
Bad debt expense | 125,000 | 150,000 |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
(Increase) decrease in accounts receivable | (1,796,225) | 2,984,792 |
(Increase) in contract assets | (2,174,941) | (11,580,025) |
Increase in prepaid expenses and other current assets | (51,570) | (257,706) |
Increase in refundable income taxes | (870,000) | |
Increase (decrease) in accounts payable and accrued expenses | (7,696,024) | 1,627,689 |
Increase (decrease) in contract liabilities | 911,901 | (1,246,178) |
Decrease in other liabilities | (10,976) | |
Increase (decrease) in income taxes payable | 5,673 | 103,327 |
Net cash provided by (used in) operating activities | (2,535,038) | 1,572,498 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (559,037) | (281,922) |
Proceeds from sale of fixed assets | 42,480 | |
Purchase of WMI | (6,050,906) | |
Net cash used in investing activities | (6,609,943) | (239,442) |
Cash flows from financing activities: | ||
Net proceeds from sale of common stock | 16,166,117 | |
Payment of line of credit | (6,500,000) | (4,100,000) |
Proceeds from line of credit | 7,700,000 | 4,500,000 |
Payment of long-term debt | (3,314,789) | (1,341,765) |
Proceeds from long-term debt | ||
Debt issuance costs | (209,082) | |
Net cash provided by (used in) financing activities | 13,842,246 | (941,765) |
Net increase in cash and restricted cash | 4,697,265 | 391,291 |
Cash and restricted cash at beginning of year | 1,430,877 | 1,039,586 |
Cash and restricted cash at end of year | 6,128,142 | 1,430,877 |
Supplemental schedule of noncash investing and financing activities | ||
Equipment acquired under capital lease | 649,410 | 146,192 |
Cashless exercise of stock options | 202,500 | |
Supplemental schedule of cash flow information: | ||
Cash paid for interest | 2,134,574 | 1,578,627 |
Cash paid for income taxes | $ 10,947 | $ 144,718 |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Welding Metallurgy, Inc. [Member] | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. Principal business activity And summary of significant Accounting policies The Company consists of CPI Aerostructures, Inc. (“CPI”) and Welding Metallury, Inc. (“WMI”), a wholly owned subsidiary acquired on December 20, 2018 and Compac Development Corporation (“Compac”), a wholly owned subsidiary of WMI, collectively the “Company.” CPI 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. CPI acquired WMI on December 20, 2018 and the year ended December 31, 2018 operating results include the operating results of WMI from the date of acquisition, which were not material. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Acquisition of WMI On December 20, 2018 (the “WMI Acquisition Date”), pursuant to the Stock Purchase Agreement (the “Agreement”), dated as of March 21, 2018, with Air Industries Group (“Air Industries”), the Company purchased from Air Industries all of the outstanding shares of WMI, previously a wholly owned subsidiary of Air Industries (the “WMI Acquisition”) (See Note 2). Public Offering On October 19, 2018 the Company completed an underwritten public offering of 2,760,000 shares of its common stock, including 360,000 shares pursuant to the underwriters’ full exercise of their over-allotment option, at a public offering price of $6.25 per share. The Company’s net proceeds from the offering, after deducting underwriting discounts, commissions, and other offering expenses, were approximately $16.1 million. Use of Estimates The preparation of consolidated 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. Business Combinations The Company applied business combination accounting for the WMI Acquisition in accordance with ASC 805, “Business Combinations” (“ASC 805”). Business combination accounting requires that the assets acquired and liabilities assumed be recorded at their respective estimated fair values at the date of acquisition. The excess purchase price over fair value of the net assets acquired is recorded as goodwill. In determining estimated fair values, we are required to make estimates and assumptions that affect the recorded amounts, including, but not limited to, expected future cash flows, discount rates, remaining useful lives of long-lived assets, useful lives of identified intangible assets, replacement or reproduction costs of property and equipment and the amounts to be recovered in future periods from acquired net operating losses and other deferred tax assets. Our estimates in this area impact, among other items, the amount of depreciation and amortization, impairment charges in certain instances if the asset becomes impaired, and income tax expense or benefit that we report. Our provisional estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain. See Note 2 for a summary and status of the application of business combination accounting. Revenue Recognition Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method for all of its contracts. ASC 606 requires sales and gross profit to be recognized over the contract period as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Recognized revenues that will not be billed under the terms of the contract until a later date are recorded as an asset captioned “Contract assets.” Contracts where billings to date have exceeded recognized revenues are recorded as a liability captioned “Contract liabilities.” Changes to the original estimates may be required during the life of the contract. Estimates are reviewed monthly and the effect of any change in the estimated gross margin percentage for a contract is reflected in revenue in the period the change becomes known. ASC 606 involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash received during any reporting period. The Company continually evaluates all matters that could have an impact on the assumptions, risks and uncertainties inherent with the process; however, it cannot be assured that estimates will be accurate. If estimates are not accurate or a contract is terminated, the Company is required to adjust revenue in later periods. Furthermore, even if estimates are accurate, there may be a shortfall in cash flow and the Company may need to borrow money, or seek access to other forms of liquidity, to fund its work in process or to pay taxes until the reported earnings materialize as actual cash receipts. When changes 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. Following the adoption of ASC 606, the Company’s revenue recognition for all of its contracts remained materially consistent with historical practice and there was no material impact in the year ended December 31, 2018 consolidated financial statements upon adoption. In compliance with ASC 606, costs and estimated earnings in excess of billings on uncompleted contracts, on the December 31, 2017 consolidated balance sheet, have been reclassified to contract assets. Additionally, billings in excess of costs and estimated earnings on uncompleted contracts and contract losses, on the December 31, 2017 consolidated balance sheet, have been combined and reclassified to contract liabilities. In addition, the Company recognizes revenue for parts supplied for certain MRO contracts and for WMI when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer - for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery. 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 five 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, 2018 and 2017, the Company had approximately $4,034,000 and $1,377,000, respectively, of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly credit worthy. Restricted Cash During the year ended December 31, 2018, the Company adopted Accounting Standards Update No. 2016-08, Statement of Cash Flows - Restricted Cash, (“ASU 2016-18”), which requires the inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The Company's restricted cash balance is $2,000,000 as of December 31, 2018, which is cash held in escrow pursuant to the WMI acquisition and the determination of a final working capital adjustment. 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 estimated useful lives of the respective assets or the lease term if shorter, 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 intangibles with definite lives 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, 2018 and 2017. 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 consolidated 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 accumulated 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. In May 2016, the Company entered into an 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, 2018 and 2017, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2018 2017 Carrying Fair Value Carrying Fair Value Debt Short-term borrowings and long-term debt $ 30,349,903 $ 30,349,903 $ 31,893,894 $ 31,893,894 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: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — 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 of the interest differential between the contractual swap and the replacement swap. As of December 31, 2017, $18,781 was included in other liabilities related to the fair value of the Company’s interest rate swap and $15,000, net of tax of approximately $4,000 was included in accumulated other comprehensive loss. During June 2018, the interest rate swap matured and the Company realized a net gain of approximately $7,000. Earnings Per Share Basic earnings per common share is computed using the weighted-average number of shares outstanding. Diluted earnings 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 2018. Incremental shares of 6,772 were not included in the diluted earnings per share calculations at December 31, 2018, 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. 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. Income taxes Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “Income Taxes,” (“ASC 740”) whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the consolidated 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. Recently Issued but not Adopted Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings. The FASB subsequently issued Accounting Standards Update No. 2018-10 and Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU 2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. The new lease standard requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet. Lessor accounting is substantially unchanged compared to the current accounting guidance. Additional footnote disclosures related to leases will also be required. On January 1, 2019, the Company expects to adopt the new lease standard using the optional transition method. The comparative financial information will not be restated and will continue to be reported under the previous lease standard in effect during those periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company expects to elect the package of practical expedients. As such, the Company will not reassess whether expired or existing contracts are or contain a lease; will not need to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The Company will not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company expects to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company expects to elect the practical expedient to not separate lease and non-lease components for certain classes of assets (office buildings). On January 1, 2019, the Company expects to recognize right of use assets and lease liabilities in the range of approximately $5,300,000 to $5,800,000 and no adjustment to the accumulated deficit. The Company does not expect the adoption of the new lease standard to impact its consolidated statement of operations or its consolidated statement of cash flows. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | 2. BUSINESS COMBINATIONS As discussed in Note 1, the Company completed the WMI Acquisition on December 20, 2018. The acquisition was accounted for as a business combination in accordance with ASC Topic 805. Accordingly, the Company is required to determine and record the fair value of the assets acquired, including any potential intangible assets, and liabilities assumed at the date of acquisition. The acquisition was considered a stock purchase for tax purposes. The purchase price for the acquisition was $7.9 million, which is subject to a post-closing working capital adjustment. As such, $2 million of the purchase price was held in escrow at closing subject to the completion of the working capital adjustment and in the event of other contingencies. The escrowed amount is shown as restricted cash on the consolidated balance sheet as of December 31, 2018. The working capital adjustment is based on the historical values of components of working capital as defined in the Agreement. Based on the working capital statement prepared by the Company and delivered to Air Industries on March 20, 2019, the Company has concluded that it is more likely than not, that the purchase price will be reduced sufficiently such that at a minimum, the full amount in escrow will be retained by the Company. The final working capital statement presented to Air Industries is expected to be reviewed and the purchase price adjustment finalized not later than the third quarter of 2019. The Company is in process of determining the acquisition date fair values of the assets and liabilities acquired and has recorded provisional estimates as of the acquisition date. As the Company completes this process and additional information becomes known concerning the acquired assets and assumed liabilities, management will likely make adjustments to the fair value of the amounts provisionally recorded in the opening balance sheet of WMI during the measurement period, which is no longer than a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. If the final aggregate fair value of the net assets acquired is less than the final purchase price paid then the Company may be required to record goodwill. Conversely, if the final aggregate fair value of the net assets acquired is in excess of the final purchase price paid then the Company may potentially conclude that the purchase of WMI was a “bargain purchase.” As stated above, the Company has determined the following provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI: Provisional Other current assets $ 1,274,000 Accounts receivable 1,522,000 Inventory 7,969,000 Current liabilities 4,813,000 Total $ 5,952,000 The following table presents the unaudited pro forma revenue and net income for the period presented as if the WMI Acquisition had occurred on January 1, 2017 based on the provisional estimates of the fair value of the net assets acquired: Year Ended December 31, 2018 2017 Revenue $ 97,780,960 $ 94,412,148 Net income (loss) $ 3,190,457 $ (1,330,366) The pro forma results presented above include the impact of eliminating parent company charges from Air Industries for general expenses and interest, net of tax. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION The majority of the Company’s revenues are from long-term contracts with the U.S. government and commercial contractors. The contracts with the U.S. government typically are subject to the FAR which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. The pricing for commercial contractors are based on the specific negotiations with each customer. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified and payment terms are identified. To determine the proper revenue recognition method, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. All of the Company’s current long-term contracts have a single performance obligation as the promise to transfer the goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company’s contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new performance obligations or changes the existing enforceable rights and obligations. All of the Company’s contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Revenues for the Company’s long-term contracts are recognized over time as the Company performs its obligations because of continuous transfer of control to the customer. The continuous transfer of control to the customer is supported by clauses in contracts that either allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and the products and services have no alternative use or the customer controls the work in progress. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company uses the cost-to-cost input method to measure progress for its contracts because it best depicts the transfer of assets to the customer which occurs as the Company incurs costs on its contracts. In applying the cost-to-cost input method, the Company compares the actual costs incurred relative to the total estimated costs to determine its progress towards contract completion and to calculate the corresponding amount of estimated revenue and estimated gross profit recognized. For any costs incurred that do not contribute to a performance obligation, the Company excludes such costs from its input method of revenue recognition as the amounts are not reflective in transferring control of the asset to the customer. Costs to fulfill a performance obligation include labor, materials and subcontractors costs, other direct costs and an allocation of indirect costs. Changes to the original estimates may be required during the life of the contract. Estimates are reviewed monthly and the effect of any change in the estimated gross margin for a contract is reflected in revenue in the period the change becomes known. Contract estimates involve considerable use of estimates in determining revenues and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash received during any reporting period. The Company continually evaluates all of the issues related to the assumptions, risks and uncertainties inherent with the application of the cost-to-cost input method; however, it cannot be assured that estimates will be accurate. If estimates are not accurate or a contract is terminated, the Company is required to adjust revenue in later periods. Furthermore, even if estimates are accurate, there may be a shortfall in cash flow and the Company may need to borrow money, or seek access to other forms of liquidity, to fund its work in process or to pay taxes until the reported earnings materialize as actual cash receipts. For the Company’s uncompleted contracts, contract assets include unbilled amounts and when the estimated revenues recognized exceeds the amount billed to the customer and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are classified as current. The Company’s contract liabilities consist of billings in excess of estimated revenues recognized and contract losses. Contract liabilities are classified as current. The Company’s contract assets and liabilities are reported in a gross position at the end of each reporting period. Revenue recognized for the year ended December 31, 2018, that was included in the contract liabilities at January 1, 2018, was zero. The Company’s remaining performance obligations represents the transaction price of its long-term contracts for which work has not been performed. As of December 31, 2018, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $78,934,000. The Company estimates that it expects to recognize approximately 97% of its remaining performance obligations in 2019. In addition, the Company recognizes revenue for products manufactured by WMI and parts supplied for certain MRO contracts at a point in time following the transfer of control to the customer, which typically occurs upon shipment or delivery, depending on the terms of the underlying contract. Revenue recognized from WMI in 2018 was immaterial. Revenue from long-term contracts transferred to customers over time and revenue from MRO contracts transferred at a point in time accounted for approximately 95% and 5%, respectively, of revenue for the year ended December 31, 2018. Revenue by long-term contract type for the year ended December 31, 2018 is as follows: Government subcontracts $ 43,440,742 Commercial contracts 31,271,857 Prime government contracts 9,216,671 $ 83,929,270 |
CONTRACT ASSETS AND CONTRACT LI
CONTRACT ASSETS AND CONTRACT LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
Contract Assets And Contract Liabilities | |
CONTRACT ASSETS AND CONTRACT LIABILITIES | 4. CONTRACT ASSETS AND CONTRACT LIABILITIES Net contract assets (liabilities) consist of the following: December 31, 2018 U.S. Government Commercial Total Contract assets $ 48,358,481 $ 64,975,010 $ 113,333,491 Contract liabilities (3,780,866 ) (24,240 ) (3,805,106 ) Net contract assets (liabilities) $ 44,577,615 $ 64,950,770 $ 109,528,385 December 31, 2017 (1) U.S. Government Commercial Total Contract assets $ 54,591,601 $ 56,566,950 $ 111,158,551 Contract liabilities (224,339 ) (21,991 ) (246,330 ) Net contract assets (liabilities) $ 54,367,262 $ 56,544,959 $ 110,912,221 (1) On January 1, 2018, as a result of the adoption of ASC 606, the Company reclassified costs and estimated earnings in excess of billings on uncompleted contracts to contract assets and billings in excess of costs and estimated earnings on uncompleted contracts and contract losses to contract liabilities. The increase or decrease in the Company’s net contract assets (liabilities) from January 1, 2018 to December 31, 2018 was primarily due to costs incurred on newer programs, like the new design of the HondaJet engine inlet ($3 million increase), for which the Company has not begun billing at a steady rate. Additionally, the Company experienced some delays in shipping on the G650 program which increased contract assets by $8 million. This has been offset by a decrease in contract assets on our E-2D program ($2 million decrease) which is shipping on a regular schedule and a decrease in contract assets on our Next Generation Jammer Pod program ($7 million decrease). Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which the circumstances became known requiring the revisions. During the year ended December 31, 2018, 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 $686,000 from that which would have been reported had the revised estimates been used as the basis of recognition of contract profits since inception of the contracts. During the year ended December 31, 2017, the effect of such revisions was a decrease to total gross profit of approximately $1.0 million. Although management believes it has established adequate procedures for estimating costs to uncompleted open contracts, it is possible that additional significant costs could occur on contracts prior to completion. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | 5. ACCOUNTS RECEIVABLE Accounts receivable consists of trade receivables as follows: December 31, 2018 2017 Billed receivables $ 8,898,329 $ 5,529,821 Less: allowance for doubtful accounts (275,000 ) (150,000 ) $ 8,623,329 $ 5,379,821 |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 6. INVENTORY The components of inventory consisted of the following: December 31, 2018 2017 Raw Materials $ 3,379,986 $ 918,799 Work In Progress 4,495,980 431,403 Finished Goods 1,836,031 335,176 $ 9,711,997 $ 1,685,378 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT December 31, Estimated 2018 2017 Useful Life (years) Machinery and equipment $ 2,879,707 $ 2,461,047 5 to 10 Computer equipment 3,973,406 3,476,454 5 Furniture and fixtures 707,726 610,323 7 Automobiles and trucks 13,162 13,162 5 Leasehold improvements 1,994,253 1,798,823 Lesser of lease term or 10 years 9,568,254 8,359,809 Less accumulated depreciation and amortization 7,023,062 6,312,867 $ 2,545,192 $ 2,046,942 Depreciation and amortization expense for the years ended December 31, 2018 and 2017 was $710,197 and $616,291, respectively. During the years ended December 31, 2018 and 2017, the Company acquired $651,775 and $146,192, respectively, of property and equipment under capital leases. |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2018 | |
Line of Credit Facility [Abstract] | |
LINE OF CREDIT | 8. LINE OF CREDIT On March 24, 2016, the Company entered into a Credit Agreement with BankUnited, 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 Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the agreement. On August 15, 2018, the Company entered into a Third Amendment and Waiver to the Amended and Restated Credit Agreement (the “Amendment”) with the Lenders named therein and BankUnited, N.A., as sole arranger, agent, and collateral agent, dated as of March 24, 2016, as amended by the First Amendment and Waiver to the Amended and Restated Credit Agreement dated as of May 9, 2016, as further amended by the Second Amendment to the Amended and Restated Credit Agreement dated as of July 13, 2017 (collectively, the “Credit Agreement”). Under the Amendment, the parties amended the Credit Agreement by, among other things, (i) extending the maturity date of the Company’s existing $30 million Revolving Loan and its existing $10 million Term Loan to June 30, 2020, (ii) amending the leverage ratio covenant, (iii) amending the interest rates corresponding to the leverage ratio, (iv) waiving non-compliance with the leverage ratio covenant for the trailing four fiscal quarters ended March 31, 2018 and June 30, 2018, and (v) amending provisions relating to the consummation of a public offering of common stock so that if an offering results in gross proceeds of $7 million or more, (A) the Company will prepay the loans in an amount equal to 25% of net proceeds of the offering (with $1.2 million applied to the Term Loan and the remainder applied to the Revolving Loan) and (B) the Company will maintain a minimum of $3 million in either unrestricted cash in an account with BankUnited, N.A., or in availability under the Revolving Loan. Pursuant to the Amendment, on October 19, 2018, the Company used $4.1 million of the net proceeds of its public offering completed on October 19, 2018 for prepayments of loans under the BankUnited Facility, including $1.2 million applied to the term loan and $2.9 million applied to the revolving line of credit. As of December 31, 2018, the Company was not in compliance with the leverage and net profit financial covenants contained in the BankUnited Facility, as amended. The Bank has waived the provisions of these covenants as of December 31, 2018. As of December 31, 2018, the Company had $24.0 million outstanding under the Restated Agreement bearing interest at 5.72%. The BankUnited Facility is secured by all of the Company’s assets. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 9. LONG-TERM DEBT In May 2016, 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 this contract match those of the underlying debt. The Company has designated this interest rate swap contract as a cash flow hedge. The interest rate swap ended in accordance with its terms as of June 1, 2018. On August 15, 2018, the Company entered into a Third Amendment and Waiver to the Amended and Restated Credit Agreement (the “Amendment”) with the Lenders named therein and BankUnited, N.A., as sole arranger, agent, and collateral agent, dated as of March 24, 2016, as amended by the First Amendment and Waiver to the Amended and Restated Credit Agreement dated as of May 9, 2016, as further amended by the Second Amendment to the Amended and Restated Credit Agreement dated as of July 13, 2017 (collectively, the “Credit Agreement”). Under the Amendment, the parties amended the Credit Agreement by, among other things, (i) extending the maturity date of the Company’s existing $30 million Revolving Loan and its existing $10 million Term Loan to June 30, 2020, (ii) amending the leverage ratio covenant, (iii) amending the interest rates corresponding to the leverage ratio, (iv) waiving non-compliance with the leverage ratio covenant for the trailing four fiscal quarters ended March 31, 2018 and June 30, 2018, and (v) amending provisions relating to the consummation of a public offering of common stock so that if an offering results in gross proceeds of $7 million or more, (A) the Company will prepay the loans in an amount equal to 25% of net proceeds of the offering (with $1.2 million applied to the Term Loan and the remainder applied to the Revolving Loan) and (B) the Company will maintain a minimum of $3 million in either unrestricted cash in an account with BankUnited, N.A., or in availability under the Revolving Loan. The Company paid to BankUnited, N.A. commitment and agent fees in the amount of $209,082, together with out-of-pocket costs, expenses, and reasonable attorney’s fees incurred by BankUnited, N.A. in connection with the Amendment. The Company paid approximately $463,000 of total debt issuance costs in connection with the BankUnited Facility of which approximately $141,000 is included in other assets and $50,000 is a reduction of long-term debt at December 31, 2018. The Term Loan had an initial amount of $10 million, payable in monthly installments, as defined in the agreement, which matures on June 30, 2020. The maturities of the long-term debt (excluding unamortized debt issuance costs) are as follows: Year ending December 31, 2019 $ 2,434,981 2020 3,647,234 2021 150,225 2022 107,078 2023 21,509 $ 6,361,026 Also included in long-term debt are capital leases and notes payable of $592,712 and $555,209 at December 31, 2018 and 2017, respectively, including a current portion of $334,981 and $175,667, respectively. The cost of assets under capital leases was $2,625,052 and $1,975,642 at December 31, 2018 and 2017, respectively. Accumulated depreciation of assets under capital leases was approximately $1,517,000 and $1,300,000 at December 31, 2018 and 2017, respectively. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Commitments Abstract | |
COMMITMENTS | 10. 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, 2019 $ 1,720,750 2020 1,763,275 2021 1,807,074 2022 602,358 $ 5,893,457 Rent expense for the years ended December 31, 2018 and 2017 was $1,608,701 and $1,608,701, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as U.S. Tax Reform. The U.S. Tax Reform makes broad and complex changes to the U.S. tax code and includes significant provisions impacting the Company’s 2017 and 2018 effective tax rate. The changes include, but are not limited to, a reduction in the U.S. federal corporate tax rate from 35% to 21% effective for tax years beginning after December 31, 2017. As a result, the Company believes that the most significant impact on its 2017 consolidated financial statements was the reduction of approximately $207,000 in deferred tax assets and liabilities. The provision for income taxes consists of the following: Year ended December 31, 2018 2017 Current: Federal $ 3,104,000 $ 200,000 State 73,000 266,000 Deferred: Federal 1,286,000 2,244,000 $ 4,463,000 $ 2,710,000 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, 2018 2017 Taxes computed at the federal statutory rate $ 1,381,000 $ 2,882,000 State income tax, net 58,000 176,000 Prior year true-up 18,000 2,000 Research and development tax credit (164,000 ) (235,000 ) Change in federal statutory rate — (207,000 ) Uncertain tax position 3,128,000 — Permanent differences 42,000 92,000 Provision for income taxes $ 4,463,000 $ 2,710,000 The components of deferred income tax assets and liabilities are as follows: Deferred Tax Assets: 2018 2017 Allowance for doubtful accounts $ 60,000 $ 32,000 Credit carryforwards 1,255,000 1,986,000 Deferred rent 117,000 126,000 Stock options 12,000 102,000 Restricted stock 88,000 90,000 Other 8,000 1,000 Interest on uncertain tax position 654,000 — Net operating loss carryforward 863,000 750,000 Deferred Tax Assets 3,057,000 3,087,000 Deferred Tax Liabilities: Prepaid expenses 159,000 141,000 Revenue recognition 3,137,000 1,036,000 Property and equipment 404,000 276,000 State taxes — 67,000 Deferred tax liabilities 3,700,000 1,520,000 Net Deferred Tax Assets (Liabilities) $ (643,000 ) $ 1,567,000 As of December 31, 2018, the Company had roughly $4,000,000 of gross net operating losses for federal tax purposes and $1,500,000 for state tax purposes which will begin to expire in 2034. The Company will recognize a tax benefit in the consolidated financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for financial reporting purposes. The provision for income taxes for the year ended December 31, 2018 was approximately $4.5 million, an effective tax rate of approximately 66%. In February 2019, the Company received information that the net operating loss carryback that was utilized in 2014 was under examination and could possibly be disallowed by the Internal Revenue Service (“IRS”). The Company has not received a written notice or tax assessment related to the possible disallowance of our net operating loss carryback. If the Company receives written notice the Company has the ability to appeal the disallowance, as well as go to tax court to challenge the notice. Although the Company has not received any formal documentation or notice of such disallowance, in accordance with ASC 740-10 “Accounting for Uncertainty in Tax Positions” the Company has recorded a liability of approximately $3.1 million as of December 31, 2018 for this uncertainty. The liability represents the maximum net tax adjustment for the disallowance of the net operating loss carryback, computed at the pre-2018 tax rates, and tax savings of recording a net operating loss carryforward, calculated at the current tax rates. In accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform”), the Company has 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 tax purposes, the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The following table indicates the changes to the Company’s uncertain tax position for the years ended December 31, 2018 and 2017 including interest and penalties: Years Ended December 31, 2018 2017 Balance, beginning of year $ — $ — Additions 3,128,000 — Reductions — — Balance, end of year $ 3,128,000 $ — The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company generally is no longer subject to U.S. or state examinations by tax authorities for taxable years prior to 2015. However, net operating losses utilized from prior years in subsequent years’ tax returns are subject to examination until three years after the filing of subsequent years’ tax returns. The statute of limitations expiration in foreign jurisdictions for corporate tax returns generally ranges between two and five years depending on the jurisdiction. The Company’s policy is to record estimated interest and penalties related to uncertain tax positions in income tax expense. At December 31, 2018, the Company’s consolidated balance sheet reflects cumulative provisions for interest and penalties of $654,000, related to potential interest. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK BASED COMPENSATION | 12. 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 for the years ended December 31, 2018 and 2017, includes approximately $718,000 and $946,000 of stock based compensation expense, respectively, for the grant of stock options and RSUs. In January 2018, the Company granted 58,578 RSUs to its board of directors as partial compensation for the 2018 year. On January 1, 2017, the Company granted 59,395 RSUs to its board of directors as partial compensation for the 2017 year. RSUs vest quarterly on a straight-line basis over a one-year period. The Company’s net income for the years ended December 31, 2018 and 2017 includes approximately $524,000 and $550,000, 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, 2018, the Company granted 5,130 shares of common stock to various employees and approximately $10,000 of compensation expense is included in selling, general and administrative expenses and approximately $36,000 of compensation expense is included in cost of sales for this grant. 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 March 2018, the Company granted 68,764 shares of common stock 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 2022 based upon the service and performance thresholds. For the year ended December 31, 2018, approximately $88,100 of compensation expense is included in selling, general and administrative expenses and approximately $18,400 of compensation expense is included in cost of revenue 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. For the years ended December 31, 2018 and 2017, approximately $0 and $219,000, respectively, of compensation expense is included in selling, general and administrative expenses and approximately $0 and $46,300, respectively, of compensation expense is included in cost of sales for this grant. In March 2018, 12,330 and 9,130 of the shares granted in 2016 and 2017, respectively, were forfeited because the Company failed to achieve certain performance criteria for the year ended December 31, 2017. In addition, on March 22, 2018, these employees returned 7,552 common shares, valued at approximately $62,000, to pay the employees’ withholding taxes. 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. 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 211,175 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 119,910 shares available for grant under the 2016 Plan. The Company did not grant any stock options in 2018 or 2017. A summary of the status of the Company’s stock option plans is as follows: Options Weighted Average Aggregate Outstanding at January 1, 2017 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 Granted during period — — Exercised — — Forfeited/Expired (38,477 ) 14.81 Outstanding at December 31, 2018 41,772 $ 7.58 0.29 $ 0 Vested at December 31, 2018 41,772 $ 7.58 0.29 $ 0 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. The intrinsic value of stock options exercised during the year ended December 31, 2017 was approximately $31,300. The fair value of all options vested during the year ended December 31, 2017 was approximately $82,000. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | 13. 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 2018 and 2017 amounted to $237,568 and $361,682, respectively. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | 14. MAJOR CUSTOMERS Eleven percent of revenue in 2018 and 8% of revenue in 2017 were directly attributable to the U.S. government. Twenty two percent and 6% of accounts receivable at December 31, 2018 and 2017, respectively, were from the U. S. Government. In addition, in 2018, 24%, 16% and 12% of our revenue were to our three largest commercial customers, respectively. In 2017, 25%, 23% and 12% of our revenue were to our three largest commercial customers, respectively. At December 31, 2018, 20%, 18% and 17% of accounts receivable were from our three largest commercial customers. At December 31, 2017, 44%, 18% and 13% of accounts receivable were from our three largest commercial customers. At December 31, 2018 and 2017, 2% and 4%, respectively, of contract assets were from the U.S. Government. At December 31, 2018, 39%, 14%, 13%, and 13% of contract assets were from our four largest commercial customers. At December 31, 2017, 32%, 20%, 12%, and 10% of contract assets were from our four largest commercial customers. In 2018 and 2017, approximately 5% and 4%, respectively, of our revenue was from a customer who is located outside the United States. |
PRINCIPAL BUSINESS ACTIVITY A_2
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated 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. |
Business Combinations | Business Combinations The Company applied business combination accounting for the WMI Acquisition in accordance with ASC 805, “Business Combinations” (“ASC 805”). Business combination accounting requires that the assets acquired and liabilities assumed be recorded at their respective estimated fair values at the date of acquisition. The excess purchase price over fair value of the net assets acquired is recorded as goodwill. In determining estimated fair values, we are required to make estimates and assumptions that affect the recorded amounts, including, but not limited to, expected future cash flows, discount rates, remaining useful lives of long-lived assets, useful lives of identified intangible assets, replacement or reproduction costs of property and equipment and the amounts to be recovered in future periods from acquired net operating losses and other deferred tax assets. Our estimates in this area impact, among other items, the amount of depreciation and amortization, impairment charges in certain instances if the asset becomes impaired, and income tax expense or benefit that we report. Our provisional estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain. See Note 2 for a summary and status of the application of business combination accounting. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method for all of its contracts. ASC 606 requires sales and gross profit to be recognized over the contract period as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Recognized revenues that will not be billed under the terms of the contract until a later date are recorded as an asset captioned “Contract assets.” Contracts where billings to date have exceeded recognized revenues are recorded as a liability captioned “Contract liabilities.” Changes to the original estimates may be required during the life of the contract. Estimates are reviewed monthly and the effect of any change in the estimated gross margin percentage for a contract is reflected in revenue in the period the change becomes known. ASC 606 involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash received during any reporting period. The Company continually evaluates all matters that could have an impact on the assumptions, risks and uncertainties inherent with the process; however, it cannot be assured that estimates will be accurate. If estimates are not accurate or a contract is terminated, the Company is required to adjust revenue in later periods. Furthermore, even if estimates are accurate, there may be a shortfall in cash flow and the Company may need to borrow money, or seek access to other forms of liquidity, to fund its work in process or to pay taxes until the reported earnings materialize as actual cash receipts. When changes 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. Following the adoption of ASC 606, the Company’s revenue recognition for all of its contracts remained materially consistent with historical practice and there was no material impact in the year ended December 31, 2018 consolidated financial statements upon adoption. In compliance with ASC 606, costs and estimated earnings in excess of billings on uncompleted contracts, on the December 31, 2017 consolidated balance sheet, have been reclassified to contract assets. Additionally, billings in excess of costs and estimated earnings on uncompleted contracts and contract losses, on the December 31, 2017 consolidated balance sheet, have been combined and reclassified to contract liabilities. In addition, the Company recognizes revenue for parts supplied for certain MRO contracts and for WMI when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer - for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery. |
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 five 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, 2018 and 2017, the Company had approximately $4,034,000 and $1,377,000, respectively, of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly credit worthy. |
Restricted Cash | Restricted Cash During the year ended December 31, 2018, the Company adopted Accounting Standards Update No. 2016-08, Statement of Cash Flows - Restricted Cash, (“ASU 2016-18”), which requires the inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The Company's restricted cash balance is $2,000,000 as of December 31, 2018, which is cash held in escrow pursuant to the WMI acquisition and the determination of a final working capital adjustment. |
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 estimated useful lives of the respective assets or the lease term if shorter, 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 intangibles with definite lives 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, 2018 and 2017. |
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 consolidated 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 accumulated 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. In May 2016, the Company entered into an 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, 2018 and 2017, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2018 2017 Carrying Fair Value Carrying Fair Value Debt Short-term borrowings and long-term debt $ 30,349,903 $ 30,349,903 $ 31,893,894 $ 31,893,894 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: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — 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 of the interest differential between the contractual swap and the replacement swap. As of December 31, 2017, $18,781 was included in other liabilities related to the fair value of the Company’s interest rate swap and $15,000, net of tax of approximately $4,000 was included in accumulated other comprehensive loss. During June 2018, the interest rate swap matured and the Company realized a net gain of approximately $7,000. |
Earnings Per Share | Earnings Per Share Basic earnings per common share is computed using the weighted-average number of shares outstanding. Diluted earnings 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 2018. Incremental shares of 6,772 were not included in the diluted earnings per share calculations at December 31, 2018, 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. 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. |
Income taxes | Income taxes Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “Income Taxes,” (“ASC 740”) whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the consolidated 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. |
Recently Issued but not Adopted Accounting Pronouncements | Recently Issued but not Adopted Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings. The FASB subsequently issued Accounting Standards Update No. 2018-10 and Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU 2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. The new lease standard requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet. Lessor accounting is substantially unchanged compared to the current accounting guidance. Additional footnote disclosures related to leases will also be required. On January 1, 2019, the Company expects to adopt the new lease standard using the optional transition method. The comparative financial information will not be restated and will continue to be reported under the previous lease standard in effect during those periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company expects to elect the package of practical expedients. As such, the Company will not reassess whether expired or existing contracts are or contain a lease; will not need to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The Company will not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company expects to elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company expects to elect the practical expedient to not separate lease and non-lease components for certain classes of assets (office buildings). On January 1, 2019, the Company expects to recognize right of use assets and lease liabilities in the range of approximately $5,300,000 to $5,800,000 and no adjustment to the accumulated deficit. The Company does not expect the adoption of the new lease standard to impact its consolidated statement of operations or its consolidated statement of cash flows. |
PRINCIPAL BUSINESS ACTIVITY A_3
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of fair values | At December 31, 2018 and 2017, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. 2018 2017 Carrying Fair Value Carrying Fair Value Debt Short-term borrowings and long-term debt $ 30,349,903 $ 30,349,903 $ 31,893,894 $ 31,893,894 |
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: Fair Value Measurements 2017 Description Total Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs Interest Rate Swap $ 18,781 — $ 18,781 — Total $ 18,781 — $ 18,781 — |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of allocation of purchase price | As stated above, the Company has determined the following provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI: Provisional Other current assets $ 1,274,000 Accounts receivable 1,522,000 Inventory 7,969,000 Current liabilities 4,813,000 Total $ 5,952,000 |
Schedule of pro forma revenue and net income | The following table presents the unaudited pro forma revenue and net income for the period presented as if the WMI Acquisition had occurred on January 1, 2017 based on the provisional estimates of the fair value of the net assets acquired: Year Ended December 31, 2018 2017 Revenue $ 97,780,960 $ 94,412,148 Net income (loss) $ 3,190,457 $ (1,330,366) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by long-term contract type | Revenue by long-term contract type for the year ended December 31, 2018 is as follows: Government subcontracts $ 43,440,742 Commercial contracts 31,271,857 Prime government contracts 9,216,671 $ 83,929,270 |
CONTRACT ASSETS AND CONTRACT _2
CONTRACT ASSETS AND CONTRACT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Contract Assets And Contract Liabilities | |
Schedule of net contract assets (liabilities) | Net contract assets (liabilities) consist of the following: December 31, 2018 U.S. Government Commercial Total Contract assets $ 48,358,481 $ 64,975,010 $ 113,333,491 Contract liabilities (3,780,866 ) (24,240 ) (3,805,106 ) Net contract assets (liabilities) $ 44,577,615 $ 64,950,770 $ 109,528,385 December 31, 2017 (1) U.S. Government Commercial Total Contract assets $ 54,591,601 $ 56,566,950 $ 111,158,551 Contract liabilities (224,339 ) (21,991 ) (246,330 ) Net contract assets (liabilities) $ 54,367,262 $ 56,544,959 $ 110,912,221 (1) On January 1, 2018, as a result of the adoption of ASC 606, the Company reclassified costs and estimated earnings in excess of billings on uncompleted contracts to contract assets and billings in excess of costs and estimated earnings on uncompleted contracts and contract losses to contract liabilities. |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable consists of trade receivables as follows: December 31, 2018 2017 Billed receivables $ 8,898,329 $ 5,529,821 Less: allowance for doubtful accounts (275,000 ) (150,000 ) $ 8,623,329 $ 5,379,821 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | The components of inventory consisted of the following: December 31, 2018 2017 Raw Materials $ 3,379,986 $ 918,799 Work In Progress 4,495,980 431,403 Finished Goods 1,836,031 335,176 $ 9,711,997 $ 1,685,378 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, Estimated 2018 2017 Useful Life (years) Machinery and equipment $ 2,879,707 $ 2,461,047 5 to 10 Computer equipment 3,973,406 3,476,454 5 Furniture and fixtures 707,726 610,323 7 Automobiles and trucks 13,162 13,162 5 Leasehold improvements 1,994,253 1,798,823 Lesser of lease term or 10 years 9,568,254 8,359,809 Less accumulated depreciation and amortization 7,023,062 6,312,867 $ 2,545,192 $ 2,046,942 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2019 $ 2,434,981 2020 3,647,234 2021 150,225 2022 107,078 2023 21,509 $ 6,361,026 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments Abstract | |
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, 2019 $ 1,720,750 2020 1,763,275 2021 1,807,074 2022 602,358 $ 5,893,457 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of the provision for income taxes | The provision for income taxes consists of the following: Year ended December 31, 2018 2017 Current: Federal $ 3,104,000 $ 200,000 State 73,000 266,000 Deferred: Federal 1,286,000 2,244,000 $ 4,463,000 $ 2,710,000 |
Schedule of difference between the income tax provision computed at the federal statutory rate and the actual tax provision | 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, 2018 2017 Taxes computed at the federal statutory rate $ 1,381,000 $ 2,882,000 State income tax, net 58,000 176,000 Prior year true-up 18,000 2,000 Research and development tax credit (164,000 ) (235,000 ) Change in federal statutory rate — (207,000 ) Uncertain tax position 3,128,000 — Permanent differences 42,000 92,000 Provision for income taxes $ 4,463,000 $ 2,710,000 |
Schedule of components of deferred income tax assets and liabilities | The components of deferred income tax assets and liabilities are as follows: Deferred Tax Assets: 2018 2017 Allowance for doubtful accounts $ 60,000 $ 32,000 Credit carryforwards 1,255,000 1,986,000 Deferred rent 117,000 126,000 Stock options 12,000 102,000 Restricted stock 88,000 90,000 Other 8,000 1,000 Interest on uncertain tax position 654,000 — Net operating loss carryforward 863,000 750,000 Deferred Tax Assets 3,057,000 3,087,000 Deferred Tax Liabilities: Prepaid expenses 159,000 141,000 Revenue recognition 3,137,000 1,036,000 Property and equipment 404,000 276,000 State taxes — 67,000 Deferred tax liabilities 3,700,000 1,520,000 Net Deferred Tax Assets (Liabilities) $ (643,000 ) $ 1,567,000 |
Schedule of changes to uncertain tax positions | The following table indicates the changes to the Company’s uncertain tax position for the years ended December 31, 2018 and 2017 including interest and penalties: Years Ended December 31, 2018 2017 Balance, beginning of year $ — $ — Additions 3,128,000 — Reductions — — Balance, end of year $ 3,128,000 $ — |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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: Options Weighted Average Aggregate Outstanding at January 1, 2017 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 Granted during period — — Exercised — — Forfeited/Expired (38,477 ) 14.81 Outstanding at December 31, 2018 41,772 $ 7.58 0.29 $ 0 Vested at December 31, 2018 41,772 $ 7.58 0.29 $ 0 |
PRINCIPAL BUSINESS ACTIVITY A_4
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying Amount [Member] | ||
Short-term borrowings and long-term debt | $ 30,349,903 | $ 31,893,894 |
Fair Value [Member] | ||
Short-term borrowings and long-term debt | $ 30,349,903 | $ 31,893,894 |
PRINCIPAL BUSINESS ACTIVITY A_5
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | Dec. 31, 2017USD ($) |
Interest Rate Swap | $ 18,781 |
Recurring Basis [Member] | |
Interest Rate Swap | 18,781 |
Total | 18,781 |
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | |
Interest Rate Swap | 18,781 |
Total | $ 18,781 |
PRINCIPAL BUSINESS ACTIVITY A_6
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Oct. 19, 2018USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)Numbershares | Dec. 31, 2017USD ($)shares |
Cash uninsured amount | $ 4,034,000 | $ 1,377,000 | ||
AOCI - Gain (Loss) from Cash Flow Hedges net of tax | 15,000 | |||
AOCI - Gain (Loss) from Cash Flow Hedges, tax | 4,000 | |||
Derivative Liability | $ 18,781 | |||
Gain on interest rate swap | $ 7,000 | |||
Incremental common shares attributable to dilutive effect | shares | 35,000 | 35,000 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 6,772 | 45,249 | ||
Number of Financial Institutions where cash is maintained | Number | 5 | |||
Common stock issued in share offering, net of expenses | $ 16,100,000 | $ 16,166,117 | ||
Common stock issued in share offering, net of expenses (in shares) | shares | 2,760,000 | |||
Share price | $ / shares | $ 6.25 | |||
Restricted cash | $ 2,000,000 | |||
Over-Allotment Option [Member] | ||||
Common stock issued for over-allotment option of public offering (in shares) | shares | 360,000 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) | Dec. 31, 2018USD ($) |
Allocation of the total purchase price of business combination: | |
Other current assets | $ 1,274,000 |
Accounts receivable | 1,522,000 |
Inventory | 7,969,000 |
Current liabilities | 4,813,000 |
Total | $ 5,952,000 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pro forma Information: | ||
Pro-forma revenue | $ 97,780,960 | $ 94,412,148 |
Net income (loss) | $ 3,190,457 | $ (1,330,366) |
BUSINESS COMBINATIONS (Detail_2
BUSINESS COMBINATIONS (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Combinations [Abstract] | |
Allocation of total purchase price | $ 7,900,000 |
Purchase price held in escrow | $ 2,000,000 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Revenue by long-term contract type | $ 83,929,270 |
Government Subcontracts [Member] | |
Revenue by long-term contract type | 43,440,742 |
Commercial Contracts [Member] | |
Revenue by long-term contract type | 31,271,857 |
Prime Government Contracts [Member] | |
Revenue by long-term contract type | $ 9,216,671 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Revenue recognized that was included in contrcat liabilities | $ 18,620,527 |
Remaining performance obligations | $ 78,934,000 |
2019 [Member] | |
Expect remaining performance obligation (percent) | 97.00% |
Performance Obligation Year | 2019 |
Transferred over Time [Member] | |
Revenue from long-term contracts (percent) | 95.00% |
Transferred at Point in Time [Member] | |
Revenue from MRO contracts (percent) | 5.00% |
CONTRACT ASSETS AND CONTRACT _3
CONTRACT ASSETS AND CONTRACT LIABILITIES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | [1] |
Contract assets | $ 113,333,491 | $ 111,158,551 | |
Contract liabilities | (3,805,106) | (246,330) | |
Net contract assets (liabilities) | 109,528,385 | 110,912,221 | |
US Government [Member] | |||
Contract assets | 48,358,481 | 54,591,601 | |
Contract liabilities | (3,780,866) | (224,339) | |
Net contract assets (liabilities) | 44,577,615 | 54,367,262 | |
Commercial [Member] | |||
Contract assets | 64,975,010 | 56,566,950 | |
Contract liabilities | (24,240) | (21,991) | |
Net contract assets (liabilities) | $ 64,950,770 | $ 56,544,959 | |
[1] | On January 1, 2018, as a result of the adoption of ASC 606, the Company reclassified costs and estimated earnings in excess of billings on uncompleted contracts to contract assets and billings in excess of costs and estimated earnings on uncompleted contracts and contract losses to contract liabilities. |
CONTRACT ASSETS AND CONTRACT _4
CONTRACT ASSETS AND CONTRACT LIABILITIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Decrease total gross profit | $ 1,000,000 | |
Decrease total gross profit earned on the contracts | $ 686,000 | |
Honda Jet Engine Inlet [Member] | ||
Increase (decrease) and in contract assets | 3,000,000 | |
G 650 Program[Member] | ||
Increase (decrease) and in contract assets | 8,000,000 | |
E-2D Program[Member] | ||
Increase (decrease) and in contract assets | (2,000,000) | |
Jammer Pod Program[Member] | ||
Increase (decrease) and in contract assets | $ 7,000,000 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Billed receivables | $ 8,898,329 | $ 5,529,821 |
Less: allowance for doubtful accounts | (275,000) | (150,000) |
Accounts receivable, net | $ 8,623,329 | $ 5,379,821 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 3,379,986 | $ 918,799 |
Work In Progress | 4,495,980 | 431,403 |
Finished Goods | 1,836,031 | 335,176 |
Inventory | $ 9,711,997 | $ 1,685,378 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment, gross | $ 9,568,254 | $ 8,359,809 |
Less accumulated depreciation and amortization | 7,023,062 | 6,312,867 |
Property and equipment, net | 2,545,192 | 2,046,942 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | $ 2,879,707 | 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 | $ 3,973,406 | 3,476,454 |
Estimated useful life | 5 years | |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | $ 707,726 | 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 | $ 1,994,253 | $ 1,798,823 |
Estimated useful life | 10 years |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Depreciation and amortization expense | $ 710,197 | $ 616,291 |
Assets Held under Capital Leases [Member] | ||
Property and equipment acquired under capital lease | $ 651,775 | $ 146,192 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) | Oct. 19, 2018 | Aug. 15, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 24, 2016 |
Oustanding loans | $ 24,038,685 | $ 22,838,685 | |||
Proceeds from of common stock | 16,166,117 | ||||
Unrestricted cash | 4,128,142 | $ 1,430,877 | |||
Bank United [Member] | Term loan [Member] | |||||
Repayments of debt | $ 1,200,000 | ||||
Revolving Credit Facility [Member] | |||||
Proceeds from of common stock | $ 2,900,000 | ||||
Repayments of debt | 4,100,000 | ||||
Revolving Credit Facility [Member] | Bank United [Member] | |||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | ||||
Line of credit facility, maturity date | Jun. 30, 2020 | ||||
Proceeds from of common stock | $ 7,000,000 | ||||
Unrestricted cash | $ 3,000,000 | ||||
Revolving Credit Facility [Member] | Amendment - Bank United [Member] | |||||
Oustanding loans | $ 24,000,000 | ||||
Line of credit facility, interest rate at period end | 5.72% | ||||
Term loan [Member] | Bank United [Member] | |||||
Debt instrument, face amount | $ 2,100,000 | $ 10,000,000 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Dec. 31, 2018USD ($) |
Twelve months ending December 31, | |
2019 | $ 2,434,981 |
2020 | 3,647,234 |
2021 | 150,225 |
2022 | 107,078 |
2023 | 21,509 |
Total maturities | $ 6,361,026 |
LONG-TERM DEBT (Details Narrati
LONG-TERM DEBT (Details Narrative) - USD ($) | Oct. 19, 2018 | Aug. 15, 2018 | Mar. 24, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Proceeds from of common stock | $ 16,166,117 | ||||
Unrestricted cash | 4,128,142 | $ 1,430,877 | |||
Payments of debt issuance costs | 209,082 | ||||
Capital leases and notes payable | 592,712 | 555,209 | |||
Capital leases and notes payable, current | 334,981 | 175,667 | |||
Cost of assets under capital leases | 2,625,052 | 1,975,642 | |||
Accumulated depreciation of assets under capital leases | 1,517,164 | $ 1,300,970 | |||
Revolving Credit Facility [Member] | |||||
Proceeds from of common stock | $ 2,900,000 | ||||
Repayments of debt | 4,100,000 | ||||
Bank United [Member] | |||||
Commitment and agent fees | 209,082 | ||||
Bank United [Member] | Revolving Credit Facility [Member] | |||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | ||||
Line of credit facility, maturity date | Jun. 30, 2020 | ||||
Proceeds from of common stock | $ 7,000,000 | ||||
Unrestricted cash | 3,000,000 | ||||
Bank United [Member] | Term loan [Member] | |||||
Debt instrument, face amount | $ 2,100,000 | 10,000,000 | |||
Payments of debt issuance costs | $ 463,000 | ||||
Debt issuance costs | 141,000 | ||||
Debt issuance costs, reduction of long-term debt | $ 50,000 | ||||
Bank United [Member] | Term loan [Member] | |||||
Repayments of debt | $ 1,200,000 |
COMMITMENTS (Details)
COMMITMENTS (Details) | Dec. 31, 2018USD ($) |
Year ending December 31, | |
2019 | $ 1,720,750 |
2020 | 1,763,275 |
2021 | 1,807,074 |
2022 | 602,358 |
Operating Leases, Future Minimum Payments Due | $ 5,893,457 |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments Abstract | ||
Rent expense, net | $ 1,608,701 | $ 1,608,701 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | ||
Federal | $ 3,104,000 | $ 200,000 |
State | 73,000 | 266,000 |
Deferred: | ||
Federal | 1,286,000 | 2,244,000 |
Income Tax Expense (Benefit) | $ 4,463,109 | $ 2,710,000 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Taxes computed at the federal statutory rate | $ 1,381,000 | $ 2,882,000 |
State income tax, net | 58,000 | 176,000 |
Prior year true-up | 18,000 | 2,000 |
Research and development tax credit | (164,000) | (235,000) |
Change in federal statutory rate | (207,000) | |
Uncertain tax positions | 3,128,000 | |
Permanent differences | 42,000 | 92,000 |
Provision for income taxes | $ 4,463,109 | $ 2,710,000 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Allowance for doubtful accounts | $ 60,000 | $ 32,000 |
Credit carryforwards | 1,255,000 | 1,986,000 |
Deferred rent | 117,000 | 126,000 |
Stock options | 12,000 | 102,000 |
Restricted stock | 88,000 | 90,000 |
Other | 8,000 | 1,000 |
Interest on uncertain tax position | 654,000 | |
Net operating loss carryforward | 863,000 | 750,000 |
Deferred Tax Assets | 3,057,000 | 3,087,000 |
Prepaid expenses | 159,000 | 141,000 |
Revenue recognition | 3,137,000 | 1,036,000 |
Property and equipment | 404,000 | 276,000 |
State taxes | 0 | 67,000 |
Deferred tax liabilities | 3,700,000 | 1,520,000 |
Net Deferred Tax Assets (Liabilities) | $ (643,000) | $ 1,567,000 |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Balance, beginning of year | $ 0 |
Additions | 3,128,000 |
Balance, end of year | $ 3,128,000 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
U.S. Federal tax rate | 21.00% | 35.00% |
Reduction in deferred tax assets and liabilities | $ (207,000) | |
Examination year | 3 years | |
Description of limitations | Limitations expiration in foreign jurisdictions for corporate tax returns generally ranges between two and five years depending | |
Provisions for interest and penalties | $ 654,000 | |
Credit for income taxes change for effective rate reduction | $ (207,000) | |
Statutory federal tax rate | 21.00% | 35.00% |
Provision for income taxes | $ 4,463,109 | $ 2,710,000 |
Effective tax rate | 66.00% | |
Uncertain tax positions | $ 3,100,000 | |
Federal [Member] | ||
Net operating losses | 4,000,000 | |
State [Member] | ||
Net operating losses | $ 1,500,000 | |
Expire date | Dec. 31, 2034 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - Stock Option Plans [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Options, Outstanding | |||
Outstanding at beginning | 80,249 | 149,466 | |
Exercised | 0 | (25,000) | |
Forfeited/Expired | (38,477) | (44,217) | |
Outstanding at end | 41,772 | 80,249 | 149,466 |
Vested at end | 41,772 | ||
Options, Outstanding, Weighted Average Exercise Price | |||
Outstanding at beginning | $ 11.05 | $ 10.43 | |
Exercised | 0 | 8.10 | |
Forfeited/Expired | 14.81 | 10.62 | |
Outstanding at end | 7.58 | $ 11.05 | $ 10.43 |
Vested at end | $ 7.58 | ||
Options, Weighted Average Remaining Contractual Term | |||
Outstanding at end | 3 months 15 days | 1 year 1 month 6 days | 1 year 6 months 29 days |
Vested at end | 3 months 15 days | ||
Options, Aggregate Intrinsic Value | |||
Outstanding at end | $ 0 | ||
Vested at end | $ 0 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | Mar. 22, 2018 | Mar. 09, 2017 | Mar. 31, 2018 | Jan. 31, 2018 | Mar. 31, 2017 | Jan. 31, 2017 | Aug. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock-based compensation | $ 718,000 | $ 946,000 | |||||||
Stock-based compensation - RSUs | $ 524,000 | $ 550,000 | |||||||
Long Term Incentive Plan [Member] | |||||||||
Number of shares authorized under plan | 600,000 | ||||||||
Number of shares available for grant | 119,910 | ||||||||
Maximum number of shares to be granted as incentive stock | 200,000 | ||||||||
Performance Equity Plan 2009 [Member] | |||||||||
Number of shares authorized under plan | 500,000 | ||||||||
Number of shares available for grant | 211,175 | ||||||||
Ownership greater than (percent) for incentive stock options | 10.00% | ||||||||
ExercisablePriceOfIncentiveStockOptionsForMajorityShareholderPercent | 110.00% | ||||||||
Stock Option Plans [Member] | |||||||||
Common stock issued upon cashless exercise of options (in shares) | 25,000 | ||||||||
Number of shares received in cashless exercise | 21,666 | ||||||||
Fair value of shares received for cashless exercise of stock options | $ 202,580 | ||||||||
Intrinsic value of stock options exercised | 31,300 | ||||||||
Fair value of options vested | 82,000 | ||||||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||||
Restricted stock units granted | 58,578 | 59,395 | |||||||
Vesting period | 1 year | 1 year | |||||||
Stock Awards [Member] | Selling, General and Administrative Expenses [Member] | |||||||||
Stock-based compensation | $ 0 | 219,000 | |||||||
Stock Awards [Member] | Cost of Sales [Member] | |||||||||
Stock-based compensation | $ 0 | $ 46,300 | |||||||
Stock Awards [Member] | Employees [Member] | |||||||||
Number of common shares granted | 68,764 | 73,060 | 98,645 | 5,130 | 5,550 | ||||
Stock awards forfeited (shares) | 12,330 | 12,330 | 9,130 | ||||||
Number of shares returned for employee's withholding taxes (shares) | 7,552 | 4,525 | |||||||
Value of shares returned for employee's withholding taxes | $ 62,000 | $ 33,000 | |||||||
Stock Awards [Member] | Employees [Member] | Selling, General and Administrative Expenses [Member] | |||||||||
Stock-based compensation | $ 10,000 | $ 13,300 | |||||||
Stock Awards [Member] | Employees [Member] | Cost of Sales [Member] | |||||||||
Stock-based compensation | 36,000 | $ 37,500 | |||||||
Stock Awards [Member] | Employees [Member] | Selling, General and Administrative Expenses [Member] | |||||||||
Stock-based compensation | 88,100 | ||||||||
Stock Awards [Member] | Employees [Member] | Cost of Sales [Member] | |||||||||
Stock-based compensation | $ 18,400 |
EMPLOYEE BENEFIT PLAN (Details
EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Profit-sharing plan contributions | $ 237,568 | $ 361,682 |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - Number | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue [Member] | ||
Concentration Risk [Line Items] | ||
Number of large commercial customers | 3 | 3 |
Revenue [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 24.00% | 25.00% |
Revenue [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 16.00% | 23.00% |
Revenue [Member] | Customer Three [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 12.00% | 12.00% |
Revenue [Member] | US Government Concentration Risk [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.00% | 8.00% |
Revenue [Member] | Outside United States [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 5.00% | 4.00% |
Contract Assets [Member] | ||
Concentration Risk [Line Items] | ||
Number of large commercial customers | 4 | 4 |
Contract Assets [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 39.00% | 32.00% |
Contract Assets [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 14.00% | 20.00% |
Contract Assets [Member] | Customer Three [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.00% | 12.00% |
Contract Assets [Member] | US Government Concentration Risk [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 2.00% | 4.00% |
Contract Assets [Member] | Customer Four [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.00% | 10.00% |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Number of large commercial customers | 3 | 3 |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 20.00% | 44.00% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 18.00% | 18.00% |
Accounts Receivable [Member] | Customer Three [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 17.00% | 13.00% |
Accounts Receivable [Member] | US Government Concentration Risk [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 22.00% | 6.00% |