Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TEL INSTRUMENT ELECTRONICS CORP | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --03-31 | |
Entity Common Stock, Shares Outstanding | 3,255,887 | |
Amendment Flag | false | |
Entity Central Index Key | 96,885 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 130,235 | $ 287,873 |
Accounts receivable, net | 1,067,277 | 1,556,382 |
Inventories, net | 4,456,377 | 4,208,179 |
Prepaid expenses and other current assets | 77,282 | 188,578 |
Total current assets | 5,731,171 | 6,241,012 |
Equipment and leasehold improvements, net | 176,717 | 161,427 |
Other long-term assets | 33,509 | 33,509 |
Total assets | 5,941,397 | 6,435,948 |
Current liabilities: | ||
Current portion of long-term debt | 77,802 | 291,991 |
Line of credit | 1,000,000 | 200,000 |
Capital lease obligations – current portion | 6,564 | 6,268 |
Accounts payable and accrued liabilities | 2,357,566 | 2,072,955 |
Federal and state taxes payable | 0 | 4,105 |
Deferred revenues – current portion | 45,358 | 123,720 |
Accrued legal damages | 4,900,000 | 2,800,000 |
Accrued payroll, vacation pay and payroll taxes | 417,016 | 527,413 |
Total current liabilities | 8,804,306 | 6,026,452 |
Capital lease obligations – long-term | 10,402 | 13,760 |
Long-term debt | 0 | 2,124 |
Deferred revenues – long-term | 366,915 | 352,973 |
Warrant liability | 5,000 | 95,000 |
Total liabilities | 9,186,623 | 6,490,309 |
Commitments | ||
Stockholders’ (deficit) equity: | ||
Common stock, 4,000,000 shares authorized, par value $0.10 per share, 3,255,887 shares issued and outstanding, respectively | 325,586 | 325,586 |
Additional paid-in capital | 8,123,184 | 8,107,369 |
Accumulated deficit | (11,693,996) | (8,487,316) |
Total stockholders’ (deficit) equity | (3,245,226) | (54,361) |
Total liabilities and stockholders’ (deficit) equity | $ 5,941,397 | $ 6,435,948 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Sep. 30, 2017 | Mar. 31, 2017 |
Common stock, par value (in Dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares issued | 3,255,887 | 3,255,887 |
Common stock, shares outstanding | 3,255,887 | 3,255,887 |
Common stock, shares authorized | 4,000,000 | 4,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net sales | $ 1,787,165 | $ 5,076,029 | $ 5,329,242 | $ 10,418,398 |
Cost of sales | 1,387,295 | 3,250,441 | 3,688,082 | 6,716,157 |
Gross margin | 399,870 | 1,825,588 | 1,641,160 | 3,702,241 |
Operating expenses: | ||||
Selling, general and administrative | 626,395 | 687,013 | 1,332,681 | 1,460,042 |
Litigation expenses | 43,333 | 188,125 | 425,845 | 326,840 |
Legal damages | 2,100,000 | 0 | 2,100,000 | 0 |
Engineering, research and development | 529,667 | 583,771 | 1,144,940 | 1,168,648 |
Total operating expenses | 3,299,395 | 1,458,909 | 5,003,466 | 2,955,530 |
(Loss) income from operations | (2,899,525) | 366,679 | (3,362,306) | 746,711 |
Other income (expense): | ||||
Proceeds from life insurance | 0 | 0 | 92,678 | 0 |
Amortization of deferred financing costs | (1,357) | (1,357) | (2,714) | (2,713) |
Change in fair value of common stock warrants | (5,000) | 34,000 | 90,000 | 251,203 |
Interest expense | (14,707) | (17,507) | (24,338) | (35,333) |
Total other (expense) income | (21,064) | 15,136 | 155,626 | 213,157 |
(Loss) income before income taxes | (2,920,589) | 381,815 | (3,206,680) | 959,868 |
Income tax expense | 0 | 109,760 | 0 | 277,504 |
Net (loss) income | $ (2,920,589) | $ 272,055 | $ (3,206,680) | $ 682,364 |
Basic (loss) income per common share (in Dollars per share) | $ (0.90) | $ 0.08 | $ (0.98) | $ 0.21 |
Diluted (loss) income per common share (in Dollars per share) | $ (0.90) | $ 0.07 | $ (0.98) | $ 0.20 |
Weighted average shares outstanding: | ||||
Basic (in Shares) | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 |
Diluted (in Shares) | 3,255,887 | 3,266,133 | 3,255,887 | 3,267,192 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (3,206,680) | $ 682,364 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Deferred income taxes | 0 | 277,504 |
Depreciation and amortization | 38,112 | 71,390 |
Provision for inventory obsolescence | 25,000 | 15,000 |
Amortization of deferred financing costs | 2,714 | 2,713 |
Change in fair value of common stock warrant | (90,000) | (251,203) |
Non-cash stock-based compensation | 15,815 | 16,358 |
Changes in assets and liabilities: | ||
Decrease (increase) in accounts receivable | 489,105 | (406,895) |
(Increase) decrease in inventories | (273,198) | 988,244 |
Decrease in prepaid expenses & other assets | 108,582 | 42,789 |
Increase (decrease) in accounts payable and other accrued expenses | 284,611 | (678,052) |
Decrease in federal and state taxes | (4,105) | (53,623) |
Decrease in accrued payroll, vacation pay & withholdings | (110,397) | (257,011) |
(Decrease) increase in deferred revenues | (64,420) | 405,073 |
Increase in accrued legal damages | 2,100,000 | 0 |
Decrease in other long-term liabilities | 0 | (7,800) |
Net cash (used in) provided by operating activities | (684,861) | 846,851 |
Cash flows from investing activities: | ||
Purchases of equipment | (53,402) | (30,303) |
Net cash used in investing activities | (53,402) | (30,303) |
Cash flows from financing activities: | ||
Proceeds from line of credit | 800,000 | 0 |
Payment of warrant liability | 0 | (720,000) |
Repayment of long-term debt | (216,313) | (205,838) |
Repayment of subordinated notes - related parties | 0 | (25,000) |
Repayment of capitalized lease obligations | (3,062) | (7,809) |
Net cash provided by (used in) financing activities | 580,625 | (958,647) |
Net decrease in cash and cash equivalents | (157,638) | (142,099) |
Cash and cash equivalents at beginning of period | 287,873 | 972,633 |
Cash and cash equivalents at end of period | 130,235 | 830,534 |
Supplemental cash flow information: | ||
Taxes paid | 5,000 | 50,000 |
Interest paid | $ 36,477 | $ 32,642 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 6 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Basis of Accounting [Text Block] | Note 1 – Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Tel-Instrument Electronics Corp. (the “Company” or “TIC”) as of September 30, 2017, the results of operations for the three and six months ended September 30, 2017 and September 30, 2016, and statements of cash flows for the three and six months ended September 30, 2017 and September 30, 2016. These results are not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include disclosures normally made in an Annual Report on Form 10-K. The March 31, 2017 balance sheet included herein was derived from the audited financial statements included in the Company’s Annual Report on Form 10-K as of that date. Accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017, as filed with the United States Securities and Exchange Commission (the “SEC”) on July 14, 2017 (the “Annual Report). |
Note 2 - Liquidity and Going Co
Note 2 - Liquidity and Going Concern | 6 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial Doubt about Going Concern [Text Block] | Note 2 - Liquidity and Going Concern These condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern. As discussed in Note 14 to the Notes to the Condensed Consolidated Financial Statements, the Company has recorded total damages of $4,900,000 as a result of the jury verdict associated with the Aeroflex litigation as well as the court’s decision on punitive damages. The jury found no misappropriation of Aeroflex trade secrets but it did rule that the Company tortiously interfered with a prospective business opportunity and awarded damages. The jury also ruled that Tel tortiously interfered with Aeroflex’s non-disclosure agreements with two former Aeroflex employees. The jury also found that the former Aeroflex employees breached their non-disclosure agreements with Aeroflex. The court conducted further hearings on the Company’s post-trial motions which sought to reduce the damages award, as well as the punitive damages claim. The court denied the Company’s motions and awarded Aeroflex an additional $2.1 million of punitive damages, which brings the total Tel damages awarded in this case to approximately $4.9 million. No judgment has yet been entered by the court, and we have filed a motion with the court that these changes are duplicative and not supported by Kansas Law. The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital to support the appeal process or pay any final damages amount and achieve profitable operations. In November 2017, the Company signed a subscription agreement in which the Company received $3 million for Series A Convertible Preferred Stock (See Note 16 to the Notes to the Condensed Financial Statements). These funds will be used to finance an appeal and provide funds for operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 3 - Summary of Significant
Note 3 - Summary of Significant Accounting Policies | 6 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 3 – Summary of Significant Accounting Policies During the six months ended September 30, 2017, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Annual Report. |
Note 4 - Accounts Receivable, n
Note 4 - Accounts Receivable, net | 6 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 – Accounts Receivable, net The following table sets forth the components of accounts receivable: September 30, 2017 March 31, 2017 Government $ 660,135 $ 1,392,482 Commercial 414,642 171,400 Less: Allowance for doubtful accounts (7,500 ) (7,500 ) $ 1,067,277 $ 1,556,382 |
Note 5 - Inventories, net
Note 5 - Inventories, net | 6 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | Note 5 – Inventories, net Inventories consist of: September 30, 2017 March 31, 2017 Purchased parts $ 3,682,890 $ 3,197,378 Work-in-process 1,040,989 1,272,235 Finished goods 87,498 68,566 Less: Inventory reserve (355,000 ) (330,000 ) $ 4,456,377 $ 4,208,179 |
Note 6 - Net Income (Loss) per
Note 6 - Net Income (Loss) per Share | 6 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Note 6 – Net Income (Loss) per Share Net income (loss) per share has been computed according to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC 260”), “Earnings per Share,” which requires a dual presentation of basic and diluted income (loss) per share (“EPS”). Basic EPS represents net income (loss) divided by the weighted average number of common shares outstanding during a reporting period. Diluted EPS reflects the potential dilution that could occur if securities, including warrants and options, were converted into common stock. The dilutive effect of outstanding warrants and options is reflected in earnings per share by use of the treasury stock method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise and the amounts of average unrecognized compensation costs attributed to future services. Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 Basic net (loss) income per share computation: Net (loss) income $ (2,920,589 ) $ 272,055 Weighted-average common shares outstanding 3,255,887 3,255,887 Basic net (loss) income per share $ (0.90 ) $ 0.08 Diluted net (loss) income per share computation Net (loss) income $ (2,920,589 ) $ 272,055 Add: Change in fair value of warrants - 34,000 Diluted (loss) income $ (2,920,589 ) 238,055 Weighted-average common shares outstanding 3,255,887 3,255,887 Incremental shares attributable to the assumed exercise of outstanding stock options and warrants - 10,246 Total adjusted weighted-average shares 3,255,887 3,266,133 Diluted net (loss) income per share $ (0.90 ) $ 0.07 Six Months Ended Six Months Ended September 30, 2017 September 30, 2016 Basic net income per share computation: Net (loss) income $ (3,206,680 ) $ 682,364 Weighted-average common shares outstanding 3,255,887 3,255,887 Basic net income per share $ (0.98 ) $ 0.21 Diluted net income per share computation Net income $ (3,206,680 ) $ 682,364 Change in fair value of warrants - 33,000 Diluted income $ (3,206,680 ) 649,364 Weighted-average common shares outstanding 3,255,887 3,255,887 Incremental shares attributable to the assumed exercise of outstanding stock options and warrants - 11,305 Total adjusted weighted-average shares 3,255,887 3,267,192 Diluted net (loss) income per share $ (0.98 ) $ 0.20 The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share: September 30, 2017 September 30, 2016 Stock options 77,000 75,000 Warrants 50,000 - 127,000 75,000 |
Note 7 - Long-Term Debt
Note 7 - Long-Term Debt | 6 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Long-term Debt [Text Block] | Note 7 – Long-Term Debt Term Loans with Bank of America In November 2014, the Company entered into a term loan in the amount of $1,200,000 with Bank of America. The term loan is for three years, and matures in November 2017. Monthly payments are at $36,551 including interest at 6%. The term loan is collateralized by substantially all of the assets of the Company. At September 30, 2017 and March 31, 2017, the outstanding balances were $72,552 and $285,810, respectively. At September 30, 2017, $72,552 was classified as current. This term loan is scheduled to be fully paid in November 2017. In July 2015, the Company entered into a term loan in the amount of $18,000 with Bank of America. The term loan is for three years, and matures in July 2018. Monthly payments are at $536 including interest at 4.5%. The term loan is collateralized by substantially all of the assets of the Company. At September 30, 2017 and March 31, 2017, the outstanding balances were $5,250 and $8,305, respectively. At September 30, 2017, $5,250 was classified as current. |
Note 8 - Line of Credit
Note 8 - Line of Credit | 6 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Note 8 - Line of Credit On March 21, 2016, the Company entered into a line of credit agreement with Bank of America, which expired March 31, 2017. In March 2017, the line of credit was renewed and the expiration date extended until March 31, 2018. The new line provides a revolving credit facility with borrowing capacity of up to $1,000,000 . |
Note 9 - Deferred Revenues
Note 9 - Deferred Revenues | 6 Months Ended |
Sep. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue Disclosure [Text Block] | Note 9 – Deferred Revenues In June 2016, the Company negotiated a settlement with a customer in the amount of $679,935 for price increases due to delays on a production release. Deferred revenues are recognized based upon the shipment of units under this contract. During the six months ended September 30, 2017, the Company recognized the remaining balance of $73,302 as compared to $342,836 for the six months ended September 30, 2016. As of September 30, 2017, the remaining deferred revenues related to the above-mentioned settlement was $-0- as compared to $73,302 at March 31, 2017. During the quarter ended September 30, 2017, the Company recognized revenues in the amount of $70,000 that pertained to fiscal year 2017 shipments and was not recorded in fiscal year 2017. |
Note 10 - Segment Information
Note 10 - Segment Information | 6 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | Note 10 – Segment Information In accordance with FASB ASC 280, “Disclosures about Segments of an Enterprise and related information”, the Company determined it has two reportable segments - avionics government and avionics commercial. There are no inter-segment revenues. The Company is organized primarily on the basis of its avionics products. The avionics government segment consists primarily of the design, manufacture, and sale of test equipment to the U.S. and foreign governments and militaries either directly or through distributors. The avionics commercial segment consists of design, manufacture, and sale of test equipment to domestic and foreign airlines, directly or through commercial distributors, and to general aviation repair and maintenance shops. The Company develops and designs test equipment for the avionics industry and as such, the Company’s products and designs cross segments. Management evaluates the performance of its segments and allocates resources to them based on gross margin. The Company’s general and administrative costs and sales and marketing expenses, and engineering costs are not segment specific. As a result, all operating expenses are not managed on a segment basis. Net interest includes expenses on debt and income earned on cash balances, both maintained at the corporate level. Segment assets include accounts receivable and work-in-process inventory. Asset information, other than accounts receivable and work-in-process inventory, is not reported, since the Company does not produce such information internally. All long-lived assets are located in the U.S. The table below presents information about reportable segments within the avionics business for the three month periods ending September 30, 2017 and 2016: Three Months Ended September 30, 2017 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 1,028,693 $ 758,472 $ 1,787,165 $ - $ 1,787,165 Cost of sales 660,589 726,706 1,387,295 - 1,387,295 Gross margin 368,104 31,766 399,870 - 399,870 Engineering, research, and development 529,667 - 529,667 Selling, general and administrative 277,518 348,877 626,395 Litigation costs 43,333 43,333 Legal damages 2,100,000 2,100,000 Amortization of deferred financing costs - 1,357 1,357 Change in fair value of common stock warrants - 5,000 5,000 Proceeds from life insurance - - Interest expense, net - 14,707 14,707 Total expenses 807,185 2,513,274 3,320,459 Income (loss) before income taxes $ (407,315 ) $ (2,513,274 ) $ (2,920,589 ) Three Months Ended September 30, 2016 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 4,338,764 $ 737,265 $ 5,076,029 $ - $ 5,076,029 Cost of sales 2,665,561 584,880 3,250,441 - 3,250,441 Gross margin 1,673,203 152,385 1,825,588 - 1,825,588 Engineering, research, and development 583,771 - 583,771 Selling, general and administrative 346,108 340,905 687,013 Litigation costs 188,125 188,125 Amortization of deferred financing costs - 1,357 1,357 Change in fair value of common stock warrants - (34,000 ) (34,000 ) Interest expense, net - 17,507 17,507 Total expenses 929,879 513,894 1,443,773 Income (loss) before income taxes $ 895,709 $ (513,894 ) $ 381,815 Six Months Ended September 30, 2017 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 4,001,019 $ 1,328,223 $ 5,329,242 $ - $ 5,329,242 Cost of sales 2,475,742 1,212,340 3,688,082 - 3,688,082 Gross margin 1,525,277 115,883 1,641,160 - 1,641,160 Engineering, research, and development 1,144,940 - 1,144,940 Selling, general and administrative 636,185 696,496 1,332,681 Litigation costs 425,845 425,845 Legal damages 2,100,000 2,100,000 Amortization of deferred financing costs - 2,714 2,714 Change in fair value of common stock warrants - (90,000 ) (90,000 ) Proceeds from life insurance (92,678 ) (92,678 ) Interest expense, net - 24,338 24,338 Total expenses 1,781,125 3,066,715 4,847,840 Income (loss) before income taxes $ (139,965 ) $ (3,066,715 ) $ (3,206,680 ) Six Months Ended September 30, 2016 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 9,210,384 $ 1,208,014 $ 10,418,398 $ - $ 10,418,398 Cost of sales 5,770,479 945,678 6,716,157 - 6,716,157 Gross margin 3,439,905 262,336 3,702,241 - 3,702,241 Engineering, research, and development 1,168,648 - 1,168,648 Selling, general and administrative 689,990 770,052 1,460,042 Litigation expenses 326,840 326,840 Amortization of deferred financing costs - 2,713 2,713 Change in fair value of common stock warrants - (251,203 ) (251,203 ) Interest expense, net - 35,333 35,333 Total expenses 1,858,638 883,735 2,742,373 Income (loss) before income taxes $ 1,843,603 $ (883,735 ) $ 959,868 |
Note 11 - Income Taxes
Note 11 - Income Taxes | 6 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 11 – Income Taxes FASB ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”) prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company does not have any unrecognized tax benefits. The tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities, gave rise to the Company’s deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. The Company has provided a 100% valuation allowance against its deferred tax asset at September 30, 2017 and March 31, 2017. |
Note 12 - Fair Value Measuremen
Note 12 - Fair Value Measurements | 6 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | Note 12 – Fair Value Measurements FASB ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurements. As defined in ASC 820-10, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observation of those inputs. ASC 820-10 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). The three levels of the fair value hierarchy defined by ASC 820-10 are as follows: - Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. - Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. - Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The valuation techniques that may be used to measure fair value are as follows: · Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. · Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method. · Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). The carrying value of the Company’s borrowings is a reasonable estimate of its fair value as borrowings under the Company’s credit facility reflect currently available terms and conditions for similar debt. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2017 and March 31, 2017. As required by ASC 820-10, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. September 30, 2017 Level I Level II Level III Total Total Assets $ - $ - $ - $ - Warrant liability - - 5,000 5,000 Total Liabilities $ - $ - $ 5,000 $ 5,000 March 31, 2017 Level I Level II Level III Total Total Assets $ - $ - $ - $ - Warrant liability - - 95,000 95,000 Total Liabilities $ - $ - $ 95,000 $ 95,000 The Company adopted the guidance of ASC 815 “Derivative and Hedging”, which requires that we mark the value of our warrant liability to market and recognize the change in valuation in our statement of operations each reporting period. Determining the warrant liability to be recorded requires us to develop estimates to be used in calculating the fair value of the warrant. The following table provides a summary of the changes in fair value of our Level 3 financial liabilities from March 31, 2017 through September 30, 2017, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to the liability held at September 30, 2017: Level 3 Reconciliation Balance at beginning of period (Gains) and losses for the period (realized and unrealized) Purchases, issuances, sales and settlements, net Transfers in or out of Level 3 Balance at the end of period Warrant liability $ 95,000 $ (90,000 ) $ - $ - $ 5,000 Total Liabilities $ 95,000 $ (90,000 ) $ - $ - $ 5,000 The Company has remaining warrants with an outside investor to purchase 50,000 shares of the Company’s common stock at an exercise price of $3.35 per share or exercising the “put option” to the Company. The warrant liability of the 50,000 warrants was $5,000 at September 30, 2017 as compared to $95,000 at March 31, 2017. |
Note 13 - Reclassifications
Note 13 - Reclassifications | 6 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Reclassifications [Text Block] | Note 13 – Reclassifications Certain prior year and period amounts have been reclassified to conform to the current period presentation. |
Note 14 - Litigation
Note 14 - Litigation | 6 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Legal Matters and Contingencies [Text Block] | Note 14 – Litigation Contingencies are recorded in the consolidated financial statements when it is probable that a liability will be incurred and the amount of the loss is reasonably estimable, or otherwise disclosed, in accordance with Accounting Standards Codification 450, Contingencies (“ASC 450”). Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, when applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss or if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. On March 24, 2009, Aeroflex Wichita, Inc. (“Aeroflex”) filed a petition against the Company and two of its employees in the District Court located in Sedgwick County, Kansas, Case No. 09 CV 1141 (the “Aeroflex Action”), alleging that the Company and its two employees misappropriated Aeroflex’s proprietary technology in connection with the Company winning a substantial contract from the U.S. Army, to develop new Mode-5 radar test sets and kits to upgrade the existing TS-4530 radar test sets to Mode 5 (the “Award”). Aeroflex’s petition, seeking injunctive relief and damages, alleges that in connection with the Award, the Company and its named employees misappropriated Aeroflex’s trade secrets; tortiously interfered with Aeroflex’s business relationship; conspired to harm Aeroflex and tortiously interfered with Aeroflex’s contract. The central basis of all the claims in the Aeroflex Action is that the Company misappropriated and used Aeroflex proprietary technology and confidential information in winning the Award. In February 2009, subsequent to the Company winning the Award, Aeroflex filed a protest of the Award with the Government Accounting Office (“GAO”). In its protest, Aeroflex alleged, inter alia, that the Company used Aeroflex’s proprietary technology in order to win the Award, the same material allegations as were later alleged in the Aeroflex Action. On or about March 17, 2009, the U.S. Army Contracts Attorney and the U.S. Army Contracting Officer each filed a statement with the GAO, expressly rejecting Aeroflex’s allegations that the Company used or infringed on Aeroflex’s proprietary technology in winning the Award, and concluding that the Company had used only its own proprietary technology. On April 6, 2009, Aeroflex withdrew its protest. In December 2009, the Kansas District Court dismissed the Aeroflex Action on jurisdiction grounds. Aeroflex appealed this decision. In May 2012, the Kansas Supreme Court reversed the decision and remanded the Aeroflex Action to the Kansas District Court for further proceedings. On May 23, 2016, the Company filed a motion for summary judgment based on Aeroflex’s lack of jurisdictional standing to bring the case. The motion asserts that Aeroflex does not own the intellectual property at issue since it is a bare licensee of Northrop Grumman. Northrop Grumman has declined to join this suit as plaintiff. Aeroflex lacks standing to sue alone. Also, the motion raises the fact that Aeroflex allowed the license to expire, Aeroflex’s claims are either moot or Aeroflex lacks standing to sue for damages alleged to have accrued after the license ended in 2015 2011. The motion for summary judgment was denied. The Aeroflex trial on remand in the Kansas District Court began in March 2017. After a six-week trial, the jury rendered its verdict. The jury found no misappropriation of Aeroflex trade secrets but it did rule that the Company tortiously interfered with a prospective business opportunity and awarded damages of $1.3 million for lost profits. The jury also ruled that Tel tortiously interfered with Aeroflex’s non-disclosure agreements with two former Aeroflex employees and awarded damages of $1.5 million for lost profits, resulting in total damages against the Company of $2.8 million. The jury also found that the former Aeroflex employees breached their non-disclosure agreements with Aeroflex and awarded damages against these two individuals totaling $525,000. The jury also decided that punitive damages should be allowed against the Company. Following the verdict, the Company filed a motion for judgment as a matter of law. In the motion, the Company renewed its motion for judgment on Aeroflex’s tortious interference with prospective business opportunity claim arguing that such claim is barred by the statute of limitations. Alternatively, the motion asserts there is insufficient evidence supporting the lost profit award on that claim. Additionally, the motion for judgment addresses inconsistency between the awards against the former Aeroflex employees for breach of the non-disclosure agreements and the award against the Company for interfering with those agreements. Alternatively, the motion asserts there is insufficient evidence supporting the lost profit award on that claim. During July 2017, the Court heard the Company’s motion for judgment as well as conducting a hearing as to the amount of a punitive damages award. Kansas statutes limit punitive damages to a maximum of $5 million. Aeroflex submitted a motion to the Court requesting that the judge award punitive damages at the maximum $5 million amount. In Kansas, punitive damages are awarded to “punish the wrongdoer for his malicious, vindictive or willful and wanton invasion of another’s rights, with the ultimate purpose being to restrain and deter others from the commission of similar wrongdoings.” Importantly, Kansas courts have ruled that the purpose of punitive damages “is to sting, not to kill”. The Court will also take into consideration the Company’s financial condition in setting the amount of punitive damages. In October 2017, the court denied the Company’s motions and awarded Aeroflex an additional $2.1 million of punitive damages, which brings the total Tel damages awarded in this case to approximately $4.9 million. No judgment has yet been entered by the court, and we have filed a motion with the court that these changes are duplicative and not supported by Kansas Law. Once the court has entered judgment, the Company has approximately 30 days to file an appeal or request a new trial. If the Company files the appeal on its own, it will be required to post a bond equal to the lesser of: (1) the final damages award; or (2) $1 million plus 25% of the amount of the verdict in excess of $1 million, which would currently total $1.975 million. The Company believes it has excellent grounds to appeal this verdict. The appeal process would be expected to take several years to complete. In November 2017, the Company signed a subscription agreement in which the Company received $3 million for Series A Convertible Preferred Stock (See Note 16 to the Notes to the Condensed Financial Statements). These funds will be used to finance an appeal and provide funds for operations. Other than the matters outlined above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of executive officers of our Company, threatened against or affecting our Company, or our common stock in which an adverse decision could have a material effect. |
Note 15 - New Accounting Pronou
Note 15 - New Accounting Pronouncements | 6 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Note 15 – New Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments should be applied prospectively to an award modified on or after the adoption date. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating whether this ASU will have a material impact on our consolidated financial statements. In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 (“Improvements to Employee Share-Based Payment Accounting”) which simplifies several aspects of accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company does not believe that the adoption of this standard will have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (“Leases”), which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early adoption permitted. The adoption of this ASU will increase assets and liabilities for operating leases. The Company is evaluating the impact that the adoption of this standard will have on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, which is an update to Topic 740, “Income Taxes”. This update requires that all deferred tax assets and liabilities be classified as non-current. The Company adopted this update in the current year, which is reflected in the accompanying balance sheets. The deferred tax recorded as a current asset for the year ended March 31, 2016 was reclassified as Deferred Tax – Non-Current. The adoption of this update did not have any impact on the Company’s results of operations. In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern. The guidance requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. When management identifies such conditions or events, a footnote disclosure is required to disclose their nature, as well as management’s plans to alleviate the substantial doubt to continue as a going concern. The standard became effective for our fiscal year end 2017 and did not have an impact on the consolidated financial statements. In May 2014, the FASB issued ASU 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In March 2016, the FASB issued ASU 2016-08 which further clarifies the guidance on the principal versus agent considerations within ASU 2014-09. In April 2016, the FASB issued ASU 2016-10 to expand the guidance on identifying performance obligations and licensing within ASU 2014-09. In May 2016, the FASB issued ASU 2016-12 to improve revenue recognition in the areas of collectability, presentation of sales tax and other similar taxes collected from customers, noncash consideration, contract modifications and completed contracts at transition. This update also amends the disclosure requirements within ASU 2014-09 for entities that retrospectively apply the guidance. The latest amendments are intended to address implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group, and provide additional practical expedients. These standards are effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact, if any, it will have on its consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s condensed consolidated financial statements. |
Note 16 - Subsequent Event
Note 16 - Subsequent Event | 6 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 16 – Subsequent Event In November 2017, the Company entered into a subscription agreement with an existing stockholder to provide $3 million in exchange for Series A Convertible Preferred Stock. The Series A Preferred Stock has the rights, privileges, preferences and restrictions set for in the Certificate of Amendment to Certificate of Incorporation (the “Designations”) filed by the Company with the Secretary of State of the State of New Jersey on November 8, 2017. The Designations provide for an 8% dividend rate and Series A Preferred Stock is convertible into shares of common stock at a price of $3.00 per share. The Company has the option of repurchasing the shares of the Series A Preferred Stock at face value plus unpaid dividends after three years. The holders of the Series A Preferred Stock will vote together with the holders of the Company’s Common Stock on an as-converted basis on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a Holder shall be equal to one (1) vote for each Conversion Share underlying such Holder’s outstanding shares of Series A Preferred, subject to adjustment based on the applicable Maximum Conversion Amount, as of the record date for such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent. Each Holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. At the Company’s Annual Meeting in January 2018, the shareholders will vote to approve (i) an amendment to our Certificate of Incorporation to increase the number of authorized Common Shares from 4,000,000 shares to 6,000,000 shares and (ii) the increase of the maximum amount of shares of Common Stock into which the Series A Preferred Stock can be converted from 600,000 shares to 1,000,000 shares. |
Note 4 - Accounts Receivable,22
Note 4 - Accounts Receivable, net (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The following table sets forth the components of accounts receivable: September 30, 2017 March 31, 2017 Government $ 660,135 $ 1,392,482 Commercial 414,642 171,400 Less: Allowance for doubtful accounts (7,500 ) (7,500 ) $ 1,067,277 $ 1,556,382 |
Note 5 - Inventories, net (Tabl
Note 5 - Inventories, net (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | Inventories consist of: September 30, 2017 March 31, 2017 Purchased parts $ 3,682,890 $ 3,197,378 Work-in-process 1,040,989 1,272,235 Finished goods 87,498 68,566 Less: Inventory reserve (355,000 ) (330,000 ) $ 4,456,377 $ 4,208,179 |
Note 6 - Net Income (Loss) pe24
Note 6 - Net Income (Loss) per Share (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 Basic net (loss) income per share computation: Net (loss) income $ (2,920,589 ) $ 272,055 Weighted-average common shares outstanding 3,255,887 3,255,887 Basic net (loss) income per share $ (0.90 ) $ 0.08 Diluted net (loss) income per share computation Net (loss) income $ (2,920,589 ) $ 272,055 Add: Change in fair value of warrants - 34,000 Diluted (loss) income $ (2,920,589 ) 238,055 Weighted-average common shares outstanding 3,255,887 3,255,887 Incremental shares attributable to the assumed exercise of outstanding stock options and warrants - 10,246 Total adjusted weighted-average shares 3,255,887 3,266,133 Diluted net (loss) income per share $ (0.90 ) $ 0.07 Six Months Ended Six Months Ended September 30, 2017 September 30, 2016 Basic net income per share computation: Net (loss) income $ (3,206,680 ) $ 682,364 Weighted-average common shares outstanding 3,255,887 3,255,887 Basic net income per share $ (0.98 ) $ 0.21 Diluted net income per share computation Net income $ (3,206,680 ) $ 682,364 Change in fair value of warrants - 33,000 Diluted income $ (3,206,680 ) 649,364 Weighted-average common shares outstanding 3,255,887 3,255,887 Incremental shares attributable to the assumed exercise of outstanding stock options and warrants - 11,305 Total adjusted weighted-average shares 3,255,887 3,267,192 Diluted net (loss) income per share $ (0.98 ) $ 0.20 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share: September 30, 2017 September 30, 2016 Stock options 77,000 75,000 Warrants 50,000 - 127,000 75,000 |
Note 10 - Segment Information (
Note 10 - Segment Information (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The table below presents information about reportable segments within the avionics business for the three month periods ending September 30, 2017 and 2016: Three Months Ended September 30, 2017 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 1,028,693 $ 758,472 $ 1,787,165 $ - $ 1,787,165 Cost of sales 660,589 726,706 1,387,295 - 1,387,295 Gross margin 368,104 31,766 399,870 - 399,870 Engineering, research, and development 529,667 - 529,667 Selling, general and administrative 277,518 348,877 626,395 Litigation costs 43,333 43,333 Legal damages 2,100,000 2,100,000 Amortization of deferred financing costs - 1,357 1,357 Change in fair value of common stock warrants - 5,000 5,000 Proceeds from life insurance - - Interest expense, net - 14,707 14,707 Total expenses 807,185 2,513,274 3,320,459 Income (loss) before income taxes $ (407,315 ) $ (2,513,274 ) $ (2,920,589 ) Three Months Ended September 30, 2016 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 4,338,764 $ 737,265 $ 5,076,029 $ - $ 5,076,029 Cost of sales 2,665,561 584,880 3,250,441 - 3,250,441 Gross margin 1,673,203 152,385 1,825,588 - 1,825,588 Engineering, research, and development 583,771 - 583,771 Selling, general and administrative 346,108 340,905 687,013 Litigation costs 188,125 188,125 Amortization of deferred financing costs - 1,357 1,357 Change in fair value of common stock warrants - (34,000 ) (34,000 ) Interest expense, net - 17,507 17,507 Total expenses 929,879 513,894 1,443,773 Income (loss) before income taxes $ 895,709 $ (513,894 ) $ 381,815 Six Months Ended September 30, 2017 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 4,001,019 $ 1,328,223 $ 5,329,242 $ - $ 5,329,242 Cost of sales 2,475,742 1,212,340 3,688,082 - 3,688,082 Gross margin 1,525,277 115,883 1,641,160 - 1,641,160 Engineering, research, and development 1,144,940 - 1,144,940 Selling, general and administrative 636,185 696,496 1,332,681 Litigation costs 425,845 425,845 Legal damages 2,100,000 2,100,000 Amortization of deferred financing costs - 2,714 2,714 Change in fair value of common stock warrants - (90,000 ) (90,000 ) Proceeds from life insurance (92,678 ) (92,678 ) Interest expense, net - 24,338 24,338 Total expenses 1,781,125 3,066,715 4,847,840 Income (loss) before income taxes $ (139,965 ) $ (3,066,715 ) $ (3,206,680 ) Six Months Ended September 30, 2016 Avionics Government Avionics Commercial Avionics Total Corporate Items Total Net sales $ 9,210,384 $ 1,208,014 $ 10,418,398 $ - $ 10,418,398 Cost of sales 5,770,479 945,678 6,716,157 - 6,716,157 Gross margin 3,439,905 262,336 3,702,241 - 3,702,241 Engineering, research, and development 1,168,648 - 1,168,648 Selling, general and administrative 689,990 770,052 1,460,042 Litigation expenses 326,840 326,840 Amortization of deferred financing costs - 2,713 2,713 Change in fair value of common stock warrants - (251,203 ) (251,203 ) Interest expense, net - 35,333 35,333 Total expenses 1,858,638 883,735 2,742,373 Income (loss) before income taxes $ 1,843,603 $ (883,735 ) $ 959,868 |
Note 12 - Fair Value Measurem26
Note 12 - Fair Value Measurements (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. September 30, 2017 Level I Level II Level III Total Total Assets $ - $ - $ - $ - Warrant liability - - 5,000 5,000 Total Liabilities $ - $ - $ 5,000 $ 5,000 March 31, 2017 Level I Level II Level III Total Total Assets $ - $ - $ - $ - Warrant liability - - 95,000 95,000 Total Liabilities $ - $ - $ 95,000 $ 95,000 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table provides a summary of the changes in fair value of our Level 3 financial liabilities from March 31, 2017 through September 30, 2017, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to the liability held at September 30, 2017: Level 3 Reconciliation Balance at beginning of period (Gains) and losses for the period (realized and unrealized) Purchases, issuances, sales and settlements, net Transfers in or out of Level 3 Balance at the end of period Warrant liability $ 95,000 $ (90,000 ) $ - $ - $ 5,000 Total Liabilities $ 95,000 $ (90,000 ) $ - $ - $ 5,000 |
Note 2 - Liquidity and Going 27
Note 2 - Liquidity and Going Concern (Details) | 6 Months Ended |
Sep. 30, 2017USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Estimated Litigation Liability | $ 4,900,000 |
Loss Contingency, Damages Awarded, Value | $ 2,100,000 |
Note 4 - Accounts Receivable,28
Note 4 - Accounts Receivable, net (Details) - Schedule of Accounts, Notes, Loans and Financing Receivable - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Less: Allowance for doubtful accounts | $ (7,500) | $ (7,500) |
Accounts Receivable, net | 1,067,277 | 1,556,382 |
Government Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | 660,135 | 1,392,482 |
Commercial Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | $ 414,642 | $ 171,400 |
Note 5 - Inventories, net (Det
Note 5 - Inventories, net (Details) - Schedule of Inventory, Current - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Schedule of Inventory, Current [Abstract] | ||
Purchased parts | $ 3,682,890 | $ 3,197,378 |
Work-in-process | 1,040,989 | 1,272,235 |
Finished goods | 87,498 | 68,566 |
Less: Inventory reserve | (355,000) | (330,000) |
$ 4,456,377 | $ 4,208,179 |
Note 6 - Net Income (Loss) pe30
Note 6 - Net Income (Loss) per Share (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic net (loss) income per share computation: | ||||
Net (loss) income | $ (2,920,589) | $ 272,055 | $ (3,206,680) | $ 682,364 |
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 |
Basic net (loss) income per share | $ (0.90) | $ 0.08 | $ (0.98) | $ 0.21 |
Diluted net (loss) income per share computation | ||||
Net (loss) income | $ (2,920,589) | $ 272,055 | $ (3,206,680) | $ 682,364 |
Add: Change in fair value of warrants | 0 | 34,000 | 0 | 33,000 |
Diluted (loss) income | $ (2,920,589) | $ 238,055 | $ (3,206,680) | $ 649,364 |
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 |
Incremental shares attributable to the assumed exercise of outstanding stock options and warrants | 0 | 10,246 | 0 | 11,305 |
Total adjusted weighted-average shares | 3,255,887 | 3,266,133 | 3,255,887 | 3,267,192 |
Diluted net (loss) income per share | $ (0.90) | $ 0.07 | $ (0.98) | $ 0.20 |
Note 6 - Net Income (Loss) pe31
Note 6 - Net Income (Loss) per Share (Details) - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share - shares | 6 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-Dilutive Securities | 127,000 | 75,000 |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-Dilutive Securities | 77,000 | 75,000 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-Dilutive Securities | 50,000 | 0 |
Note 7 - Long-Term Debt (Detail
Note 7 - Long-Term Debt (Details) - Notes Payable to Banks [Member] - USD ($) | 1 Months Ended | |||
Jul. 31, 2015 | Nov. 30, 2014 | Sep. 30, 2017 | Mar. 31, 2017 | |
Note to Bank #1 [Member] | ||||
Note 7 - Long-Term Debt (Details) [Line Items] | ||||
$ 1,200,000 | ||||
Debt Instrument, Term | 3 years | |||
Debt Instrument, Maturity Date, Description | November 2,017 | |||
Debt Instrument, Frequency of Periodic Payment | Monthly | |||
Debt Instrument, Periodic Payment | $ 36,551 | |||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | |||
Notes Payable | $ 72,552 | $ 285,810 | ||
Notes Payable, Current | 72,552 | |||
Debt Instrument, Collateral | collateralized by substantially all of the assets of the Company | |||
Note to Bank #2 [Member] | ||||
Note 7 - Long-Term Debt (Details) [Line Items] | ||||
$ 18,000 | ||||
Debt Instrument, Term | 3 years | |||
Debt Instrument, Frequency of Periodic Payment | Monthly | |||
Debt Instrument, Periodic Payment | $ 536 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | |||
Notes Payable | 5,250 | $ 8,305 | ||
Notes Payable, Current | $ 5,250 | |||
Debt Instrument, Collateral | collateralized by substantially all of the assets of the Company |
Note 8 - Line of Credit (Detail
Note 8 - Line of Credit (Details) - Line of Credit [Member] - USD ($) | 1 Months Ended | 6 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Note 8 - Line of Credit (Details) [Line Items] | ||
Line of Credit Facility, Expiration Date | Mar. 31, 2018 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | |
Line of Credit Facility, Interest Rate at Period End | 4.985% | |
Proceeds from Lines of Credit | $ 800,000 | |
Long-term Line of Credit | $ 200,000 | $ 1,000,000 |
London Interbank Offered Rate (LIBOR) [Member] | ||
Note 8 - Line of Credit (Details) [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 3.75% |
Note 9 - Deferred Revenues (Det
Note 9 - Deferred Revenues (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Deferred Revenue Disclosure [Abstract] | ||||
Deferred Revenue, Additions | $ 679,935 | |||
Deferred Revenue, Revenue Recognized | $ 70,000 | $ 73,302 | $ 342,836 |
Note 10 - Segment Information35
Note 10 - Segment Information (Details) | 6 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Number of Reportable Segments | 2 |
Note 10 - Segment Information
Note 10 - Segment Information (Details) - Schedule of Segment Reporting Information, by Segment - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,787,165 | $ 5,076,029 | $ 5,329,242 | $ 10,418,398 |
Cost of sales | 1,387,295 | 3,250,441 | 3,688,082 | 6,716,157 |
Gross margin | 399,870 | 1,825,588 | 1,641,160 | 3,702,241 |
Engineering, research, and development | 529,667 | 583,771 | 1,144,940 | 1,168,648 |
Selling, general and administrative | 626,395 | 687,013 | 1,332,681 | 1,460,042 |
Litigation costs | 43,333 | 188,125 | 425,845 | 326,840 |
Legal damages | 2,100,000 | 0 | 2,100,000 | 0 |
Amortization of deferred financing costs | 1,357 | 1,357 | 2,714 | 2,713 |
Change in fair value of common stock warrants | 5,000 | (34,000) | (90,000) | (251,203) |
Proceeds from life insurance | 0 | 0 | (92,678) | 0 |
Interest expense, net | 14,707 | 17,507 | 24,338 | 35,333 |
Total expenses | 3,320,459 | 1,443,773 | 4,847,840 | 2,742,373 |
Income (loss) before income taxes | (2,920,589) | 381,815 | (3,206,680) | 959,868 |
Avionics Government [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,028,693 | 4,338,764 | 4,001,019 | 9,210,384 |
Cost of sales | 660,589 | 2,665,561 | 2,475,742 | 5,770,479 |
Gross margin | 368,104 | 1,673,203 | 1,525,277 | 3,439,905 |
Avionics Commercial [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 758,472 | 737,265 | 1,328,223 | 1,208,014 |
Cost of sales | 726,706 | 584,880 | 1,212,340 | 945,678 |
Gross margin | 31,766 | 152,385 | 115,883 | 262,336 |
Avionics Total [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,787,165 | 5,076,029 | 5,329,242 | 10,418,398 |
Cost of sales | 1,387,295 | 3,250,441 | 3,688,082 | 6,716,157 |
Gross margin | 399,870 | 1,825,588 | 1,641,160 | 3,702,241 |
Engineering, research, and development | 529,667 | 583,771 | 1,144,940 | 1,168,648 |
Selling, general and administrative | 277,518 | 346,108 | 636,185 | 689,990 |
Amortization of deferred financing costs | 0 | 0 | 0 | 0 |
Change in fair value of common stock warrants | 0 | 0 | 0 | 0 |
Interest expense, net | 0 | 0 | 0 | 0 |
Total expenses | 807,185 | 929,879 | 1,781,125 | 1,858,638 |
Income (loss) before income taxes | (407,315) | 895,709 | (139,965) | 1,843,603 |
Corporate Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Cost of sales | 0 | 0 | 0 | 0 |
Gross margin | 0 | 0 | 0 | 0 |
Engineering, research, and development | 0 | 0 | 0 | 0 |
Selling, general and administrative | 348,877 | 340,905 | 696,496 | 770,052 |
Litigation costs | 43,333 | 188,125 | 425,845 | 326,840 |
Legal damages | 2,100,000 | 2,100,000 | ||
Amortization of deferred financing costs | 1,357 | 1,357 | 2,714 | 2,713 |
Change in fair value of common stock warrants | 5,000 | (34,000) | (90,000) | (251,203) |
Proceeds from life insurance | 0 | (92,678) | ||
Interest expense, net | 14,707 | 17,507 | 24,338 | 35,333 |
Total expenses | 2,513,274 | 513,894 | 3,066,715 | 883,735 |
Income (loss) before income taxes | $ (2,513,274) | $ (513,894) | $ (3,066,715) | $ (883,735) |
Note 12 - Fair Value Measurem37
Note 12 - Fair Value Measurements (Details) - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Note 12 - Fair Value Measurements (Details) [Line Items] | ||
Derivative Liability, Noncurrent | $ 5,000 | $ 95,000 |
Warrants Held by Outside Investor [Member] | ||
Note 12 - Fair Value Measurements (Details) [Line Items] | ||
Warrants and Rights Outstanding | $ 50,000 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ 3.35 | |
Derivative Liability, Noncurrent | $ 95,000 | |
Warrants Held by BCA [Member] | ||
Note 12 - Fair Value Measurements (Details) [Line Items] | ||
Derivative Liability, Noncurrent | $ 5,000 |
Note 12 - Fair Value Measurem38
Note 12 - Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Note 12 - Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total Assets | $ 0 | $ 0 |
Warrant liability | 5,000 | 95,000 |
Total Liabilities | 5,000 | 95,000 |
Fair Value, Inputs, Level 1 [Member] | ||
Note 12 - Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total Assets | 0 | 0 |
Warrant liability | 0 | 0 |
Total Liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Note 12 - Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total Assets | 0 | 0 |
Warrant liability | 0 | 0 |
Total Liabilities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Note 12 - Fair Value Measurements (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Total Assets | 0 | 0 |
Warrant liability | 5,000 | 95,000 |
Total Liabilities | $ 5,000 | $ 95,000 |
Note 12 - Fair Value Measurem39
Note 12 - Fair Value Measurements (Details) - Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation - Fair Value, Inputs, Level 3 [Member] | 6 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at beginning of period | $ 95,000 |
Gains and losses for the period (realized and unrealized) | (90,000) |
Purchases, issuances, sales and settlements, net | 0 |
Transfers in or out of Level 3 | 0 |
Balance at the end of period | 5,000 |
Warrant [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at beginning of period | 95,000 |
Gains and losses for the period (realized and unrealized) | (90,000) |
Purchases, issuances, sales and settlements, net | 0 |
Transfers in or out of Level 3 | 0 |
Balance at the end of period | $ 5,000 |
Note 14 - Litigation (Details)
Note 14 - Litigation (Details) - USD ($) | Nov. 10, 2017 | Oct. 31, 2017 | Mar. 31, 2017 | Sep. 30, 2017 |
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Awarded, Value | $ 2,100,000 | |||
Aeroflex [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Awarded, Value | $ 2,800,000 | |||
Loss Contingency, Damages Sought | the Company has approximately 30 days to file an appeal or request a new trial. If the Company files the appeal on its own, it will be required to post a bond equal to the lesser of: (1) the final damages award; or (2) $1 million plus 25% of the amount of the verdict in excess of $1 million, which would currently total $1.975 million. | |||
Business Opportunity [Member] | Aeroflex [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Awarded, Value | $ 1,300,000 | |||
Non-Disclosure Agreements [Member] | Aeroflex [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Awarded, Value | 525,000 | |||
Loss Contingency, Damages Sought, Value | 1,500,000 | |||
Maximum [Member] | Aeroflex [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Sought, Value | $ 5,000,000 | |||
Subsequent Event [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Proceeds from Issuance of Convertible Preferred Stock | $ 3,000,000 | |||
Subsequent Event [Member] | Aeroflex [Member] | ||||
Note 14 - Litigation (Details) [Line Items] | ||||
Loss Contingency, Damages Awarded, Value | $ 2,100,000 | |||
Loss Contingency, Estimate of Possible Loss | $ 4,900,000 |
Note 16 - Subsequent Event (Det
Note 16 - Subsequent Event (Details) - USD ($) $ in Millions | Nov. 10, 2017 | Jan. 01, 2018 | Sep. 30, 2017 | Mar. 31, 2017 |
Note 16 - Subsequent Event (Details) [Line Items] | ||||
Common Stock, Shares Authorized | 4,000,000 | 4,000,000 | ||
Subsequent Event [Member] | ||||
Note 16 - Subsequent Event (Details) [Line Items] | ||||
Proceeds from Issuance of Convertible Preferred Stock | $ 3 | |||
Preferred Stock, Dividend Rate, Percentage | 8.00% | |||
Convertible Preferred Stock, Terms of Conversion | convertible into shares of common stock at a price of $3.00 per share | |||
Preferred Stock, Voting Rights | The holders of the Series A Preferred Stock will vote together with the holders of the Company’s Common Stock on an as-converted basis on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a Holder shall be equal to one (1) vote for each Conversion Share underlying such Holder’s outstanding shares of Series A Preferred, subject to adjustment based on the applicable Maximum Conversion Amount, as of the record date for such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent. Each Holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. | |||
Subsequent Event [Member] | Scenario, Forecast [Member] | ||||
Note 16 - Subsequent Event (Details) [Line Items] | ||||
Common Stock, Shares Authorized | 6,000,000 | |||
Convertible Preferred Stock, Shares Issued upon Conversion | 1,000,000 |