Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Apr. 30, 2020 | Jul. 28, 2020 | Oct. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | TOROTEL INC | ||
Entity Central Index Key | 0000098752 | ||
Current Fiscal Year End Date | --04-30 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Fiscal Period Focus | FY | ||
Document Period End Date | Apr. 30, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Amendment Flag | false | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Common Stock, Shares Outstanding | 5,995,750 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 3,597,450 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Current assets: | ||
Cash | $ 2,263,000 | $ 58,000 |
Trade receivables, net | 2,104,000 | 2,590,000 |
Contract assets | 960,000 | 1,104,000 |
Inventories | 3,556,000 | 3,054,000 |
Prepaid expenses | 285,000 | 152,000 |
Total Current Assets | 9,168,000 | 6,958,000 |
Land | 265,000 | 265,000 |
Buildings and improvements | 1,586,000 | 1,569,000 |
Equipment | 4,520,000 | 4,045,000 |
Property, plant and equipment, gross | 6,371,000 | 5,879,000 |
Less accumulated depreciation | 4,388,000 | 4,056,000 |
Property, plant and equipment, net | 1,983,000 | 1,823,000 |
Operating lease right-of-use assets | 2,008,000 | |
Deferred income taxes | 34,000 | |
Other assets | 221,000 | 186,000 |
Total Assets | 13,380,000 | 9,001,000 |
Current liabilities: | ||
Current maturities of long-term debt | 795,000 | 1,121,000 |
Current maturities of operating lease liabilities | 395,000 | |
Current maturities of finance lease liabilities | 27,000 | |
Trade accounts payable | 1,933,000 | 1,625,000 |
Accrued liabilities | 899,000 | 824,000 |
Customer deposits | 16,000 | 24,000 |
Total current liabilities | 4,065,000 | 3,594,000 |
Long-term debt, less current maturities | 2,008,000 | 801,000 |
Operating lease liabilities, less current maturities | 1,879,000 | |
Total long-term debt | 3,887,000 | 801,000 |
Stockholders' equity: | ||
Common stock; par value $0.01; 6,000,000 shares authorized; 5,995,750 shares issued and outstanding | 60,000 | 60,000 |
Capital in excess of par value | 12,653,000 | 12,545,000 |
Accumulated deficit | (7,285,000) | (7,999,000) |
Stockholders' Equity | 5,428,000 | 4,606,000 |
Total Liabilities and Stockholders' Equity | $ 13,380,000 | $ 9,001,000 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares | Apr. 30, 2020 | Apr. 30, 2019 |
Stockholders' equity: | ||
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 6,000,000 | 6,000,000 |
Common stock, shares issued | 5,995,750 | 5,995,750 |
Common stock, shares outstanding | 5,995,750 | 5,995,750 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net sales | $ 26,133,000 | $ 20,555,000 |
Cost of goods sold | 17,124,000 | 13,591,000 |
Gross profit | 9,009,000 | 6,964,000 |
Operating expenses: | ||
Engineering | 1,462,000 | 1,316,000 |
Selling, general and administrative | 6,662,000 | 4,881,000 |
Operating expenses | 8,124,000 | 6,197,000 |
Income from operations | 885,000 | 767,000 |
Other expense: | ||
Interest expense, net | 96,000 | 112,000 |
Income before income tax expense | 789,000 | 655,000 |
Income tax expense | 75,000 | 13,000 |
Net income | $ 714,000 | $ 642,000 |
Basic earnings per share | $ 0.12 | $ 0.11 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Excess of Par Value | Accumulated Deficit | Total |
Balance beginning of year at Apr. 30, 2018 | $ 60,000 | $ 12,437,000 | $ (8,743,000) | $ 3,754,000 |
Balance beginning of year (in shares) at Apr. 30, 2018 | 5,995,750 | 5,995,750 | ||
Stock compensation earned | 108,000 | $ 108,000 | ||
Net income | 642,000 | 642,000 | ||
Cumulative effect of adoption of new accounting principle | ASU 2014-09 | 102,000 | 102,000 | ||
Balance end of year at Apr. 30, 2019 | $ 60,000 | 12,545,000 | (7,999,000) | $ 4,606,000 |
Balance end of year (in shares) at Apr. 30, 2019 | 5,995,750 | 5,995,750 | ||
Stock compensation earned | 108,000 | $ 108,000 | ||
Net income | 714,000 | 714,000 | ||
Balance end of year at Apr. 30, 2020 | $ 60,000 | $ 12,653,000 | $ (7,285,000) | $ 5,428,000 |
Balance end of year (in shares) at Apr. 30, 2020 | 5,995,750 | 5,995,750 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASHFLOWS - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 714,000 | $ 642,000 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Stock compensation cost amortized | 108,000 | 108,000 |
Depreciation | 367,000 | 353,000 |
Deferred income taxes | 34,000 | |
Changes in operating assets and liabilities: | ||
Trade receivables | 486,000 | (397,000) |
Contract assets | 144,000 | (1,002,000) |
Inventories | (502,000) | (692,000) |
Prepaid expenses and other assets | (134,000) | 109,000 |
Operating lease right-of-use assets | 259,000 | |
Trade accounts payable | 288,000 | 580,000 |
Accrued liabilities | 281,000 | 7,000 |
Current and long-term operating lease liabilities | (199,000) | |
Customer deposits | (8,000) | (195,000) |
Net cash provided by (used in) operating activities | 1,804,000 | (453,000) |
Cash flows from investing activities: | ||
Capital expenditures | (508,000) | (152,000) |
Proceeds from disposal of equipment | 1,000 | 2,000 |
Net cash used in investing activities | (507,000) | (150,000) |
Cash flows from financing activities: | ||
Principal payments on long-term debt | (33,000) | (1,677,000) |
Principal payments under capital and financing lease obligations | (71,000) | (71,000) |
Payments on line of credit | (13,399,000) | (4,581,000) |
Proceeds from line of credit | 12,426,000 | 5,556,000 |
Proceeds from long-term debt | 1,985,000 | 859,000 |
Net cash provided by financing activities | 908,000 | 86,000 |
Net increase (decrease) in cash | 2,205,000 | (517,000) |
Cash, beginning of period | 58,000 | 575,000 |
Cash, end of period | 2,263,000 | 58,000 |
Cash paid during the period for: | ||
Interest | 99,000 | 108,000 |
Income taxes | 70,750 | |
Non-cash investing and financing activities: | ||
Tax credit reclassified from deferred tax asset to a receivable | 34,000 | |
Property held for sale reclassified as property, plant and equipment | $ 694,000 | |
Capital leases reclassified from long-term debt to finance lease liabilities | 98,000 | |
Deferred rent reclassified from accrued liabilities to operating lease right-of-use assets | 206,000 | |
Equipment financed through accounts payable | $ 20,000 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Apr. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Torotel, Inc. ("Torotel") conducts business primarily through its wholly owned subsidiary, Torotel Products, Inc. ("Torotel Products"). The terms “we,” “us,” “our,” and the “Company” as used in these notes include Torotel and all of its subsidiaries, including Torotel Products, unless the context otherwise requires. Torotel specializes in the custom design and manufacture of a wide variety of precision magnetic components, consisting of transformers, inductors, reactors, chokes, toroidal coils, high voltage transformers, dry-type transformers and electro-mechanical assemblies for use in aerospace, industrial and military electronics. Principles of Consolidation The consolidated financial statements include the accounts of Torotel and its wholly owned subsidiary, Torotel Products. All significant inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these consolidated financial statements include those assumed in computing the valuation allowance of inventory, the allowance for doubtful accounts receivable, the valuation allowance on deferred income tax assets, and the reserve for warranty costs. Accordingly, actual results could differ from those estimates. Any changes in estimates are recorded in the period in which they become known. Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. We grant unsecured credit to most of our customers. We do not believe that we are exposed to any extraordinary credit risk as a result of this policy. Cash balances did exceed federally insured limits at April 30, 2020. At April 30, 2019, cash balances did not exceed federally insured limits. We have not experienced any losses in the cash accounts and we do not believe we are exposed to any significant credit risk with respect to our cash. Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash, trade receivables and trade accounts payable approximate fair value due to their short maturities. As of April 30, 2020 and 2019, the amount of our long-term debt approximates fair value based on the present value of estimated future cash flows using a discount rate commensurate with a borrowing rate available to us. Revenue Recognition We determine revenue recognition through the following steps: 1) Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services are separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. 3) Determination of the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's contracts as of April 30, 2020 and 2019, contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. 4) Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct goods or services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5) Recognition of revenue when, or as, we satisfy a performance obligation The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Performance Obligations Satisfied Over Time We recognize revenue on agreements for the sale of customized goods including magnetic components, consisting of transformers, inductors, reactors, chokes, toroidal coils, high voltage transformers, dry-type transformers and electro-mechanical assemblies for use in commercial aerospace and military electronics on an over time basis. Commercial Aerospace and Defense Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer, except for one long-term agreement which provides a contract for two specific parts if the ship date is within 21 days. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. Parts manufactured for customers in our aerospace and defense product revenue stream must be built to certain specifications that are then qualified by the customer. Due to the proprietary nature of our custom-built products designed for a specific use by our aerospace and defense customers, control is considered to be with the customer as the products are finalized and placed into finished goods. Goods within this revenue stream do not provide simultaneous receipt and benefit to the customer. The goods are controlled by our customers once the finished parts are created. The customers prevent any alternative use of the asset and an enforceable right to payment does exist. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these over-time contracts vary, but are generally based on ship date. Control is transferred as products are completed and closed to finished goods. Product fees and engineering and design services For product fees along with engineering and design services, transfer of control is determined by the revenue stream of the associated product. Percentage-of-completion revenue recognition is utilized when revenue recognized exceeds the amount billed to the customer for any project-related services, utilizing labor as the input method. Performance Obligations Satisfied at a Point in Time We recognize revenue on agreements for the sale of customized goods for use in the industrial and commercial market on point in time basis. Industrial and Commercial Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. For our commercial customers, control of the underlying product design is retained by Torotel, therefore the products are considered in our control until the moment of shipment. Also, upon shipment the customers have an obligation to pay for the asset and we have an enforceable right to payment. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these point in time sales are generally based on ship date. Control is transferred as products are shipped to the customers. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs do not have a material impact to the financial statements. No impairment losses were recognized in fiscal year 2020 relating to receivables or contract assets arising from contracts with customers. Allowance for Doubtful Accounts Gross trade accounts receivable are offset with an allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We review the allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance when placed for collection. Recoveries of receivables previously written off are recorded when received. The majority of the customer accounts are considered past due after the invoice becomes older than the customer's credit terms. Interest is not charged on past due accounts. The allowance for doubtful accounts as of April 30, 2020 and 2019 was $41,000 and $12,000, respectively. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a FIFO approximated weighted average cost method of valuation. Our industry is characterized by short-term customer commitments and changes in demand, as well as other market considerations. Provisions for obsolete and excess inventory are based on reviews of inventory usage, quantities on hand and latest product demand information from customers. Inventories are reviewed in detail utilizing a 12-month time horizon. Individual part numbers that have not had any usage or purchases in a 12-month time period and do not have any known usage requirements are categorized as obsolete; individual part numbers having more than a 12-month supply based on the current year's usage are categorized as excess. Once specific inventory has been identified as excess or obsolete, the cost of the identified inventory is fully reserved and the cost of the inventory is not recovered until it is sold. The reserve balance is analyzed for adequacy as part of the inventory review each quarter. The reserve for inventory as of April 30, 2020 and 2019 was $406,000 and $332,000, respectively. Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation and amortization are provided in amounts sufficient to relate the costs of depreciable assets to operations primarily using the straight-line method over estimated useful lives of three to ten years for equipment and three and a half to twenty years for buildings and improvements. Cash For purposes of the consolidated statements of cash flows, we consider all short-term investments and demand deposits purchased with original maturity dates of three months or less to be cash. Income Taxes Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and in evaluating our tax positions. An estimated effective tax rate for a year is applied to our quarterly operating results. In the event there is a significant or unusual item recognized in our quarterly operating results, the tax attributable to that item is separately calculated and recorded at the same time as that item. Tax law requires items to be included in our tax returns at different times than the items are reflected in our financial statements. As a result, our annual tax rate reflected in our financial statements is different than that reported in our tax returns (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax returns in future years for which we have already recorded the tax benefit in our statement of operations. We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred, or expense for which we have already taken a deduction in our tax return but have not yet recognized as expense in our financial statements. The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. If necessary, we record a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. If applicable in a given year, tax-related interest and penalties are classified as a component of income tax expense. Advertising Costs Advertising costs are expensed as incurred. For the year ended April 30, 2020 advertising costs were $9,000. For the year ended April 30, 2019 there were no advertising costs. Warranty Costs We maintain a reserve for estimated warranty costs associated with products returned from customers. A limited warranty is provided for a period of one year which requires us to repair or replace defective products at no cost to the customer. The warranty reserve is based on historical experience and reflects management's best estimate of probable liability under the product warranties. Share-Based Compensation We have a share-based compensation plan that provides for awards of restricted stock, which is described more fully in Note 8 of the Notes to the Consolidated Financial Statements. We account for the share-based compensation plan in accordance with authoritative guidance under which the estimated fair value of share-based awards granted under our share-based compensation plan is recognized as compensation expense over the vesting period of the award. Paycheck Protection Program We received funding from the Small Business Administration relating to the Paycheck Protection Program in the amount of $1,985,000 through a promissory note. The loan and the related interest are recorded as a financial liability. As of April 30, 2020, we have not obtained sufficient reasonable assurance that forgiveness conditions have been satisfied. For subsequent reporting periods, we will reevaluate if there is reasonable assurance that forgiveness conditions have been satisfied. Upon obtaining reasonable assurance that the forgiveness conditions have been satisfied, the earnings will be recorded on a systematic basis over the periods in which we recognize the expenses for which the funds are intended to compensate. In April 2020, we incurred $440,000 of eligible Paycheck Protection Program expenses. These expenses are classified as nondeductible for income tax purposes and are recorded as permanent differences. Accounting Pronouncements Recently Adopted The Company adopted the guidance of ASU No. 2016-02, Leases, (“ASC 842”) as of May 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. ASC 842 requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations and presentation of cash flows. See Note 4—Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases. Accounting Pronouncements Issued, Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13 Measurement of Credit Losses on Financial Instruments. Under this guidance, a financial asset is required to be measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses will be based on current, historical, and forecasted information that impacts the collectability of the reported amount. Additional disclosures will be required to provide information regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. The original effective date for this guidance, including subsequently issued amendments, was for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. In November 2019, the FASB deferred the effective date of this guidance to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating this guidance. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update removes certain exceptions and implements new requirements to help simplify the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020. We are currently evaluating this guidance. All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did not relate to accounting policies and procedures pertinent to us at this time or were not expected to have a material impact to the consolidated financial statements. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Apr. 30, 2020 | |
INVENTORIES | |
INVENTORIES | NOTE 2—INVENTORIES The following table summarizes the components of inventories, as of April 30 of each year: 2020 2019 Raw materials $ 2,417,000 $ 1,723,000 Work in process 961,000 1,052,000 Finished goods 178,000 279,000 $ 3,556,000 $ 3,054,000 |
REVENUE
REVENUE | 12 Months Ended |
Apr. 30, 2020 | |
REVENUE. | |
REVENUE | NOTE 3—REVENUE Disaggregation of Revenue The following tables summarize revenue from contracts with customers for the fiscal years ended April 30 of each year: 2020 2019 Markets Commercial Aerospace $ 10,208,000 $ 7,690,000 Defense 15,140,000 11,849,000 Industrial 785,000 1,016,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 2020 2019 Product Line Magnetic components $ 14,090,000 $ 10,600,000 Potted coil assembly 5,655,000 5,751,000 Electro-mechanical assemblies 6,388,000 3,920,000 Large transformers — 284,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 2020 2019 Geography Domestic $ 25,082,000 $ 18,472,000 Foreign 1,051,000 2,083,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 Torotel currently has a primary base of approximately 10 customers that historically provide nearly 95% of its annual sales volume. Sales to two major customers as a percentage of consolidated net sales for the fiscal year ended April 30, 2020 was 31% and 28% respectively. Sales to two major customers as a percentage of consolidated net sales for the fiscal year ended April 30, 2019 was 30% and 21% respectively. Trade receivables from three major customers as a percentage of consolidated net trade receivables for the fiscal year ended April 30, 2020 was 48%. Trade receivables from one major customer as a percentage of consolidated net trade receivables for the fiscal year ended April 30, 2019 was 15%. Contract balances All receivable balances relate to customer contracts entered into during the fiscal year 2020. We have no contract liabilities other than customer deposits which represent prepaid consideration for contracts with customers (see Note 13). There have been no significant adjustments to contract asset balances related to contract modifications. In fiscal year 2020 and 2019, we had certain customers totaling revenue of $7,973,000 and $4,301,000, respectively, with variable payment terms related to discounts in the amount of $59,000 and $32,000, respectively. Remaining performance obligation As of April 30, 2020, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $10,726,000. The balance of unsatisfied performance obligations excludes contracts with original maturities of one year or less. We expect to recognize revenue as we satisfy our remaining performance obligations. Total remaining performance obligation to be recognized in fiscal year 2021 is expected to be $4,659,000. Total remaining performance obligation to be recognized in fiscal year 2022 is expected to be $6,067,000. As of April 30, 2019, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $4,591,000. The balance of unsatisfied performance obligations excludes contracts with original maturities of one year or less. We expect to recognize revenue as we satisfy our remaining performance obligations. Total remaining performance obligation to be recognized in fiscal year 2020 is expected to be $4,571,000. Total remaining performance obligation to be recognized in fiscal year 2021 is expected to be $20,000. |
LEASES
LEASES | 12 Months Ended |
Apr. 30, 2020 | |
LEASES | |
LEASES | NOTE 4—LEASES The Company adopted ASC 842 on May 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the year ended April 30, 2019. Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company leases buildings and equipment under operating and finance leases. The majority of the Company’s operations are conducted in premises occupied under lease agreements with initial base terms ranging from 5 to 15 years, with certain leases containing options to extend the leases for up to an additional 10 years. The Company typically does not believe that exercise of the renewal options is reasonably assured at the inception of the lease agreements and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals or contingent escalating rentals based on the Consumer Price Index. Operating lease ROU assets and lease liabilities were recognized at commencement date based on the present value of minimum lease payments over the remaining lease term less the balance of our ASC 840 deferred rent liability. The minimum lease payments include base rent payments. The Company’s leases have remaining lease terms of approximately 1 year to 7 years, with an option to extend the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Operating lease expense is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees. The Company elected the practical expedient to not separate lease and non-lease components and also elected the short-term practical expedient for all leases that qualify. As a result, the Company will not recognize ROU assets or liabilities for short-term leases that qualify for the short-term practical expedient, but instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. As a result of adopting ASC 842, the Company’s consolidated balance sheet includes additional operating ROU lease assets and total operating lease liabilities of $2,008,000 and $2,274,000, respectively, at April 30, 2020. The initial measurement occurring on May 1, 2019, resulted in operating lease ROU assets of $2,267,000, finance lease ROU assets of $98,000, current operating lease liabilities of $380,000, current finance lease liabilities of $73,000, noncurrent operating lease liabilities of $2,093,000, and noncurrent finance lease liabilities of $25,000. The difference of $206,000 between the ROU assets and the lease liabilities results from a reclassification of deferred rent to the operating lease ROU asset of $206,000. The following table provides the operating and finance ROU assets and lease liabilities at April 30: Balance Sheet Classification 2020 Assets Operating lease right-of-use assets Operating right-of-use assets $ 2,008,000 Finance lease right-of-use assets Property, plant and equipment, net 27,000 Total leased assets $ 2,035,000 Liabilities Current Operating lease liabilities Current maturities of operating lease liabilities $ 395,000 Finance lease liabilities Current maturities of finance lease liabilities 27,000 Noncurrent Operating lease liabilities Operating lease liabilities, less current maturities 1,879,000 Total lease liabilities $ 2,301,000 The components of lease expense were as follows at April 30: 2020 Operating lease expense $ 532,000 Finance lease expense Amortization of right-of-use assets 71,000 Interest on lease liabilities 7,000 Total finance lease expense 78,000 Total lease expense $ 610,000 The supplemental components of cash flows were as follows at April 30: 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 472,000 Financing cash flows from finance leases 71,000 Total cash paid for amounts included in the measurement of lease liabilities $ 543,000 The following table represents the weighted-average remaining lease term and discount rate as of April 30, 2020: 2020 Weighted Average Weighted Average Remaining Discount Lease Term and Discount Rate Lease Term (years) Rate Operating leases 6.60 4.52% Finance leases 0.42 5.43% Future minimum lease payments on the amended operating lease and future minimum finance lease payments as of April 30, 2020 are as follows: Finance Lease Operating Lease Fiscal Years Ending April 30, Payments Payments 2021 $ 27,000 $ 436,000 2022 — 448,000 2023 — 452,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 $ 27,000 $ 3,061,000 |
FINANCING AGREEMENTS
FINANCING AGREEMENTS | 12 Months Ended |
Apr. 30, 2020 | |
FINANCING AGREEMENTS | |
FINANCING AGREEMENTS | NOTE 5—FINANCING AGREEMENTS On October 19, 2018, Torotel entered into three new business loan agreements (the “financing agreements”) with Cornerstone Bank (the “Bank”). The financing agreements provide for an asset-backed revolving line of credit, a guidance line of credit, and a real estate term loan. On October 19, 2019, Torotel renewed the asset-backed revolving line of credit. A summary of the notes issued under the financing agreements is provided below: 2020 2019 5.00% asset-based revolving line of credit with a maturity date of October 19, 2020 $ - $ 975,000 6.25% guidance line of credit with a maturity date of October 19, 2019 - 54,000 5.35% mortgage note payable in monthly installments of $5,573, including interest, with final payment of $690,829 due October 19, 2023 773,000 795,000 5.50% equipment term loan note payable in monthly installments of $1,034, including interest, with final payment of $1,034 due on May 13, 2024 45,000 - 1.00% Paycheck Protection Program loan note payable in monthly installments of $111,712 starting after the six month payment deferment period on October 30, 2020, with a final payment of $111,712 due April 29, 2022. Interest will accrue during the deferment period. 1,985,000 - Capital lease obligations (see Note 4) - 98,000 Total long-term debt 2,803,000 1,922,000 Less current installments 795,000 1,121,000 Long-term debt, excluding current installments $ 2,008,000 $ 801,000 The asset-based revolving line of credit is intended to be used for working capital purposes and has a capacity of $2,000,000. The asset-based revolving line of credit is renewable annually upon mutual agreement of Torotel and the Bank. The associated interest rate is equal to the greater of the floating Cornerstone Bank Corporate Base Rate (5.00% as of April 30, 2020) or a floor of 5%. Monthly repayments of interest only are required under the asset-based revolving line of credit promissory note with the principal due at maturity. The borrowing base of the revolving line of credit is limited to 80% of eligible accounts receivable, plus 50% of eligible inventory, plus 80% of eligible equipment. This asset-based revolving line of credit is cross collateralized and cross defaulted with all other financing agreements of Torotel with the Bank. Pursuant to a Commercial Security Agreement dated October 19, 2018, between Torotel and the Bank (the “Commercial Security Agreement”), which was entered into in connection with the financing agreements, the asset-based revolving line of credit is secured by a first lien on all business assets of Torotel. Under the revolving line of credit, if the aggregate principal amount of the outstanding advances exceeds the applicable borrowing base, Torotel must pay the Bank an amount equal to the difference between the outstanding principal balance of the revolving line of credit and the borrowing base. The real estate term loan is in the principal amount of $815,000 and has a 5-year term with a 20-year amortization period, with the balance at maturity on October 19, 2023. The associated interest rate is fixed at 5.35%. Monthly repayments of approximately $5,573, consisting of both interest and principal, are required. The final payment of approximately $690,829 is due on the maturity date. This real estate term loan is cross collateralized and cross defaulted with the other financing agreements. The real estate term loan is secured by a first lien priority real estate mortgage on the property located at 620 North Lindenwood Drive in Olathe, Kansas pursuant to the Commercial Security Agreement. The equipment note was a guidance line of credit to be used for equipment purchases and had a capacity of $250,000. On May 13, 2019, Torotel converted the guidance line of credit relating to the equipment note into an equipment term loan. The equipment term loan is in the principal amount of $54,000 and contains a 5-year term with a 5-year amortization period, with the balance at maturity on May 13, 2024. The associated interest rate is fixed at 5.50%. Monthly repayments of approximately $1,034, consisting of both interest and principal, are required. This final payment of approximately $1,034 is due on the maturity date. This equipment term loan is cross collateralized and cross defaulted with the other financing agreements of Torotel and is secured by a purchase money security interest in the assets purchased as well as a first lien on all business assets of Torotel. On April 15, 2020, Torotel entered into a promissory note with the Bank, which provides for a loan in the amount of $1,984,688 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Torotel Products intends to use the proceeds from the PPP Loan for qualifying expenses and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act. However, neither the Company nor Torotel Products can completely assure at this time that such forgiveness of the PPP Loan will occur. The financing agreements contain customary representations, warranties, and covenants of Torotel for the benefit of the Bank, as well as customary default provisions. Other than the borrowing base limitations under the asset-based revolving line of credit, none of the financing agreements requires Torotel to comply with any financial covenants. Prepayments are allowed without penalty under all of the financing agreements. The amount of long-term debt maturities by year is as follows: Year Ending April 30, Amount 2021 $ 795,000 2022 1,251,000 2023 38,000 2024 719,000 $ 2,803,000 Irrevocable Standby Letter of Credit Under the terms of a lease amendment for its manufacturing facility located in Olathe, Kansas (see Note 7), Torotel provided the landlord an irrevocable standby letter of credit in the original amount of $300,000 as additional security. On January 1, 2020, the letter of credit was reduced from $300,000 to $225,000. The balance under the letter of credit will automatically reduce in accordance with the below schedule if not drawn upon: Date of Reduction Amount of Reduction Balance of Letter of Credit January 1, 2021 $ 75,000 $ 150,000 January 1, 2022 75,000 75,000 January 1, 2023 75,000 - |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Apr. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 6—INCOME TAXES The components of the provision (benefit) for income taxes are as follows: 2020 2019 Current tax expense (benefit) Federal $ — $ (34,000) State 75,000 13,000 75,000 (21,000) Deferred tax expense Federal — 34,000 State — — — 34,000 Total income tax provision $ 75,000 $ 13,000 The effective tax rate as of April 30, 2020 and 2019 is 9.5% and 2.0%, respectively. The provision for income taxes reflected in the consolidated statements of operations differs from the amounts computed at the federal statutory tax rates. The principal differences between our statutory income tax expense and the effective provision for income taxes are summarized as follows: 2020 2019 Computed tax expense at statutory rates $ 166,000 $ 137,000 Permanent differences 98,000 6,000 State tax and credits 59,000 56,000 Adjustments required by change in method of accounting as a result of adopting ASC 606 (24,000) 31,000 Other (4,000) — Use of net operating loss carryforward (220,000) (217,000) $ 75,000 $ 13,000 We have available as benefits to reduce future income taxes, subject to applicable limitations, estimated federal net operating loss carryforward amounts as described below. Net Operating Loss Year of Expiration Carryforwards 2038 $ 92,000 The following table summarizes the components of the net deferred income tax asset: 2020 2019 Net operating loss carryforwards $ 19,000 $ 226,000 Inventory valuation reserve 109,000 89,000 Loss on equity and impairment in investee 301,000 301,000 Tax credit carryforward — 34,000 Adjustments required by change in method of accounting as a result of adopting ASC 606 — (31,000) Cost of sales adjustment from ASC 606 15,000 163,000 Depreciation expense (171,000) (111,000) Uniform capitalization — 19,000 Right-of-use asset (538,000) — Lease liability 609,000 — Bad debt reserve 11,000 3,000 Warranty reserve 5,000 9,000 Accrued vacation 35,000 7,000 Accrued bonuses 65,000 42,000 Accrued commissions 15,000 16,000 Claims reserve 7,000 7,000 Stock compensation 105,000 76,000 Deferred rent — 55,000 Other 2,000 — 589,000 905,000 Less: valuation allowance (589,000) (871,000) $ — $ 34,000 As of April 30, 2018, the Company had federal minimum tax credit carryforwards of $68,000. In 2019, 50% of the federal minimum tax credit carryforwards were refunded. In 2020, the remaining 50% of the federal minimum tax credit carryforwards were eligible for refund and applied towards future period tax due. We record deferred income tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence. Positive evidence includes, but is not limited to the following: cumulative earnings in recent years, earnings expected in future years, excess appreciated asset value over the tax basis and positive industry trends. Negative evidence includes, but is not limited to the following: cumulative losses in recent years, earnings expected in future years, a history of operating losses or tax credit carryforwards expiring, and adverse industry trends. Cumulative losses in recent years are significant negative evidence when determining the need for a valuation allowance. During the fourth quarter of the fiscal year ending April 30, 2018 the Company determined that is was no longer in a positive cumulative earnings position for the three-year period ended April 30, 2018. The net change in the valuation allowance for the year ended April 30, 2020 and 2019, was a decrease of $282,000 and $217,000, respectively. Valuation allowances are reviewed on a quarterly basis and adjustments made as appropriate. The decrease in the valuation allowance in 2020 and 2019 resulted primarily from utilization of NOLs and credits. The Company's determination of the realizable deferred tax assets requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of April 30, 2020 and 2019, the Company maintained a valuation allowance of $589,000 and $871,000, respectively, for its deferred tax assets. As of April 30, 2020, the federal tax returns for the fiscal years ended 2017 through 2019 remain subject to examination and assessment. Fiscal years ending before 2017 remain open solely for purposes of examination of our loss and credit carryforwards. As of April 30, 2020, the Company has no federal or state examinations ongoing. We recognize accrued interest and penalties related to unrecognized tax benefits, as well as interest received from favorable tax settlements, within income tax expense. As of April 30, 2020 and 2019, we recorded no accrued interest or penalties related to uncertain tax positions. We expect no significant change in the amount of unrecognized tax benefit, accrued interest or penalties within the next twelve months. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Apr. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 7—COMMITMENTS AND CONTINGENCIES As part of our ongoing operations, we enter into arrangements that obligate us to make future payments to various parties. Some of these contractual obligations are not reflected on the accompanying consolidated balance sheets due to the nature of the obligations. Such obligations include operating leases for production space and for equipment. On July 10, 2014, we entered into a real estate lease agreement in Hatfield, Pennsylvania to lease approximately 5,000 square feet for manufacturing electromechanical assemblies and other transformers. This agreement commenced on August 1, 2014 and continues through July 31, 2019. During fiscal year 2019, the lease was automatically extended, as stated within the original lease agreement, for an additional one year period to July 31, 2020. On June 17, 2020, Torotel entered into a new lease agreement adjusting the leased space to approximately 7,000 square feet and the monthly base rent to $4,241. On October 31, 2016, Torotel entered into the Second Amendment (“Second Amendment”) to the lease for its Rogers Road facility located in Olathe, Kansas. The Second Amendment became effective as of April 1, 2017, and served to extend the lease term through December 31, 2026 and expand the leased space from approximately 14,137 square feet to approximately 72,388 square feet. The Second Amendment provides that through December 31, 2018, the monthly base rate is $26,844, and subsequently through December 31, 2019 and 2020, the monthly base rate is $29,257 and $32,876, respectively, escalating annually thereafter as previously disclosed in our other public filings. The Second Amendment required Torotel to increase its security deposit from $12,750 to $55,000 and provide a letter of credit as additional security. Additionally, the Second Amendment addressed other terms and conditions by which Torotel is leasing the facility or may terminate the lease, and provided Torotel two separate options to extend the lease term for additional five year periods. The gross amount of assets recorded under capital leases amounted to $225,000 of equipment. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods free of rent. Total rent expense for all operating leases for the fiscal years ended April 30, 2020 and 2019 was $532,000 and $650,000, respectively. Torotel is subject to legal proceedings and claims that arise in the normal course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the financial position or results of operations of Torotel. |
EMPLOYEE INCENTIVE PLANS
EMPLOYEE INCENTIVE PLANS | 12 Months Ended |
Apr. 30, 2020 | |
EMPLOYEE INCENTIVE PLANS | |
EMPLOYEE INCENTIVE PLANS | NOTE 8—EMPLOYEE INCENTIVE PLANS Short-term Cash Incentive Plan The Short-term Cash Incentive Plan ("STIP") became effective for fiscal year 2008. The purpose of the STIP is to promote the long-term financial performance of Torotel by providing key employees with the opportunity to earn cash awards for accomplishing annual goals for Return on Capital Employed ("ROCE") as defined in the STIP. For the years ended April 30, 2020 and 2019 there were no short-term cash incentive plan expenses. Long-term Incentive Plans The Long-term Incentive Plans ("LTIPs"), which consist of a Stock Award Plan and a Long-term Cash Incentive Plan, also became effective for fiscal year 2008. The purpose of the LTIPs is to provide incentives that will attract and retain highly competent persons as key employees to promote the long-term financial performance of Torotel by providing key employees an opportunity to earn stock and cash awards for accomplishing long-range goals for sales growth, earnings growth, ROCE and debt to equity, as defined and measured in each of the Stock Award Plan and the Long-term Cash Incentive Plan. Stock Award Plan The Stock Award Plan ("SAP"), which did not require shareholder approval, provides key employees the opportunity to acquire common stock of Torotel pursuant to awards earned for accomplishing goals that promote the long-term financial performance of Torotel. Under the terms of the SAP, stock awards are in the form of restricted stock having a 5-year restriction period, which shall lapse, based on certain conditions as outlined in the SAP. All stock awards are represented by a Restricted Stock Agreement, which afford the grantees all of the rights of a stockholder with respect to the award shares, including the right to vote such shares and to receive dividends and other distributions payable with respect to such shares since the date of award. Long-term Cash Incentive Plan The Long-term Cash Incentive Plan ("LTCIP") provides key employees with the opportunity to earn cash awards for accomplishing plan goals based on predetermined targets for average annual sales and earnings growth, ROCE and debt to equity. Under the terms of the LTCIP, awards will not be paid if Torotel's performance on any LTCIP metric is less than the threshold level of performance defined for that LTCIP metric. For the years ended April 30, 2020 and 2020, there were no long-term cash incentive plan expenses for both years. Performance Bonus We provided discretionary performance bonuses for employees. Total expense for these bonuses was $226,000 and $209,000 for the years ended April 30, 2020 and 2019. 401(k) Retirement Plan We have a 401(k) Retirement Plan for Torotel’s employees. Employer contributions to that plan are at the discretion of the Board of Directors. Employer contributions to the plan for the years ended April 30, 2020 and 2019 were $169,000 and $148,000, respectively. |
RESTRICTED STOCK AGREEMENTS
RESTRICTED STOCK AGREEMENTS | 12 Months Ended |
Apr. 30, 2019 | |
RESTRICTED STOCK AGREEMENTS | |
RESTRICTED STOCK AGREEMENTS | NOTE 9—RESTRICTED STOCK AGREEMENTS Restricted Stock Agreements, and stock awards thereunder, are authorized by the Compensation and Nominating Committee (the "Committee") and the Board of Directors of Torotel (the "Board"). The terms of the Restricted Stock Agreements afford the grantees all of the rights of a stockholder with respect to the award shares, including the right to vote such shares and to receive dividends and other distributions payable with respect to such shares since the date of award. Under the terms of each agreement, the non-vested shares are restricted as to disposition and subject to forfeiture under certain circumstances. The Restricted Stock Agreements further provide, subject to certain conditions, that if prior to all of the restricted shares having vested, we undergo a change in control, then all of the restricted shares shall be vested and no longer subject to restrictions under the Restricted Stock Agreements. The restricted shares are treated as non-vested stock; accordingly, the fair value of the restricted stock at the date of award is offset against capital in excess of par value in the accompanying consolidated balance sheets under stockholders' equity. Restricted Stock Grants The Shares were granted subject to restrictions that prohibit them from being sold, assigned, pledged or otherwise disposed of until the restrictions lapse. The restrictions will lapse on the fifth anniversary of the date of grant if during the five year restriction period, (1) the Company's cumulative annual growth in revenue is at least 10%, and (2) the average economic value added as a percentage of revenue is at least 2%. The economic value added, which attempts to capture the true economic profit, will be calculated as the operating profit less the cost of capital with adjustments made for taxes. The restrictions will also lapse, if prior to the fifth anniversary of the date of grant, (1) the grantee's employment with the Company is terminated by reason of disability, (2) the grantee dies, or (3) the Committee, in its sole discretion, terminates the restrictions. If the restrictions on the Shares have not lapsed by the fifth anniversary of the date of grant, the Shares will be forfeited to the Company. For the years ended April 30, 2020 and 2019, there were no stock award plan expenses. Stock Compensation Costs and Restricted Stock Activity Total stock compensation cost for both years ended April 30, 2020 and 2019, was $108,000. . Restricted stock activity for each year ended through April 30 is summarized as follows: 2020 2019 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 730,000 $ 0.740 Granted — — — — Forfeited — — — — Outstanding at April 30 730,000 $ 0.740 730,000 $ 0.740 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Apr. 30, 2020 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 10—STOCKHOLDERS' EQUITY The changes in shares of common stock outstanding as of April 30 of each year are summarized as follows: 2020 2019 Balance, May 1 5,995,750 Shares released from treasury for restricted stock grants — — Newly issued shares for restricted stock grants — — Shares reverted to treasury for restricted stock forfeitures — — Balance, April 30 5,995,750 5,995,750 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Apr. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 11—EARNINGS PER SHARE Basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each period. The basic earnings per common share were computed as follows for the year ended April 30: 2020 2019 Net income $ 714,000 $ 642,000 Amounts allocated to participating securities (nonvested restricted shares) (87,000) (78,000) Net income attributable to common shareholders $ 627,000 $ 564,000 Basic weighted average common shares 5,265,750 5,265,750 Earnings per share attributable to common shareholders: Basic earnings per share $ 0.12 $ 0.11 ASC 260, Earnings per Share, provides that unvested share-based payment awards that contain non-forfeitable rights to dividends are considered to be participating securities and must be included in the computation of earnings per share pursuant to the two-class method. Diluted earnings per share is not presented as we do not have any shares considered incremental and dilutive. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Apr. 30, 2020 | |
ACCRUED LIABILITIES | |
ACCRUED LIABILITIES | NOTE 12—ACCRUED LIABILITIES Accrued liabilities as of April 30 of each year consist of the following: 2020 2019 Employee related expenses: Accrued payroll $ 454,000 $ 286,000 Accrued payroll taxes 36,000 22,000 Accrued employee benefits 252,000 165,000 $ 742,000 $ 473,000 Other, including interest: Warranty reserve $ 20,000 $ 22,000 Property taxes 38,000 20,000 Deferred rent — 206,000 Other 99,000 103,000 $ 157,000 $ 351,000 $ 899,000 $ 824,000 The changes in warranty reserve as of April 30 of each year are summarized as follows: 2020 2019 Balance, May 1 $ 22,000 $ 300,000 Credit memos issued (194,000) (212,000) Provision for warranty accrual 192,000 (66,000) Balance, April 30 $ 20,000 $ 22,000 |
CUSTOMER DEPOSITS
CUSTOMER DEPOSITS | 12 Months Ended |
Apr. 30, 2020 | |
CUSTOMER DEPOSITS | |
CUSTOMER DEPOSITS | NOTE 13—CUSTOMER DEPOSITS For certain customers, we collect payment at the time the order is placed. These deposits are classified as a liability and will be recognized as revenue at the time of shipment in accordance with our revenue recognition policy. As of April 30, 2020 and April 30, 2019 we had $16,000 and $24,000, respectively in customer deposits related to this arrangement. |
SELF-INSURANCE CAPTIVE
SELF-INSURANCE CAPTIVE | 12 Months Ended |
Apr. 30, 2020 | |
SELF-INSURANCE CAPTIVE | |
SELF-INSURANCE CAPTIVE | NOTE 14—SELF-INSURANCE CAPTIVE We are a member of a limited liability company formed as an insurance association captive (the "captive") in order to provide partially self-insured health benefits to our employees that elect coverage under the plan. Our membership percentage in this captive is approximately 0.5% and represents an investment of $87,000. Therefore, our investment is accounted for utilizing the cost method of accounting. Our risk of loss is limited to our investment in the captive and we are not required to fund additional capital to the captive in the event of negative capital accounts. Our share of net income from the captive is based on our ratio of contribution to the captive. No income has been allocated in either fiscal year 2020 or 2019. We maintain a reserve for incurred but not reported medical claims and claim development. Our reserve is an estimate based on historical experience and other assumptions, some of which are subjective. We adjust our self-insured medical benefits reserve as we experience changes due to medical inflation, changes in the number of plan participants and changes to specific cases. Our total reserve for these claims for both fiscal years ended April 30, 2020 and 2019 was $25,000. |
LEASED PROPERTY
LEASED PROPERTY | 12 Months Ended |
Apr. 30, 2020 | |
LEASED PROPERTY | |
LEASED PROPERTY | NOTE 15—LEASED PROPERTY On February 15, 2019, a lease agreement became effective for tenant occupancy of the 23,924 square foot building owned by Torotel. Monthly installment payments of $11,500 began to be paid to us on March 1, 2019. The lease is for a sixty-two month term with monthly payments escalating periodically from $11,500 to $15,500. The tenant has the right to elect to purchase the building. The election to purchase must be made within the lease term or Torotel is not prohibited from placing the building up for public sale. Torotel’s leased property by asset category was as follows: 2020 2019 Land $ 265,000 $ 265,000 Buildings and improvements 1,000,000 1,000,000 1,265,000 1,265,000 Less accumulated depreciation (707,000) (659,000) Net leased property $ 558,000 $ 606,000 Depreciation resulting from the leased property amounted to $48,000 and $35,000 during fiscal year 2020 and 2019, respectively. |
COVID-19 Impact
COVID-19 Impact | 12 Months Ended |
Apr. 30, 2020 | |
COVID-19 Impact | |
COVID-19 Impact | NOTE 16 – COVID-19 Impact The COVID-19 pandemic, first identified in Wuhan, Hubei Province, China, continues to spread worldwide, causing weakened international economic conditions. Torotel provides end products to the defense industry and is considered an essential business. We have been fully operating throughout the pandemic. Due to the concerns around the outbreak of COVID-19, we have implemented several new policies and procedures based on CDC recommendations. All of our employees who do not have critical functions requiring them to be on-site have been working remotely to lower the number of people within the facilities. For those employees required to work on-site, we have implemented new measures including increased distancing of workstations, closed access to common areas and meeting rooms, increased cleaning efforts, implemented face mask requirements, further restricted access to our premises by suppliers and customers, and other safety precautions. We expect to continue these changes for the foreseeable future. As a result of the pandemic, there is significant uncertainty around the U.S. and global economy, U.S. Department of Defense spending as a result of potential budget cuts, future customer demand, supply chain availability, oil price fluctuations, cash collections, and costs related to our changes to help ensure the safety and well-being of our employees. Late in the fourth quarter of fiscal 2020, we have experienced lower commercial aerospace sales as a result of COVID-19. Due to this change in sales and the significant uncertainties outlined above i n April 2020, we applied for a loan under the Paycheck Protection Program (the “ PPP ”) of the 2020 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the Small Business Association. On April 15, 2020, Torotel received $1.9 million in PPP funds. We intend to use these funds from this loan only for the purposes included in the PPP , including payroll, employee benefits, rent, utilities and interest on certain finance agreements (See Note 5). At the date of this filing, the full extent of which the COVID-19 pandemic may impact our financial condition or results of operations is uncertain. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Apr. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Torotel and its wholly owned subsidiary, Torotel Products. All significant inter-company accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates used in preparing these consolidated financial statements include those assumed in computing the valuation allowance of inventory, the allowance for doubtful accounts receivable, the valuation allowance on deferred income tax assets, and the reserve for warranty costs. Accordingly, actual results could differ from those estimates. Any changes in estimates are recorded in the period in which they become known |
Credit Risk | Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. We grant unsecured credit to most of our customers. We do not believe that we are exposed to any extraordinary credit risk as a result of this policy. Cash balances did exceed federally insured limits at April 30, 2020. At April 30, 2019, cash balances did not exceed federally insured limits. We have not experienced any losses in the cash accounts and we do not believe we are exposed to any significant credit risk with respect to our cash. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash, trade receivables and trade accounts payable approximate fair value due to their short maturities. As of April 30, 2020 and 2019, the amount of our long-term debt approximates fair value based on the present value of estimated future cash flows using a discount rate commensurate with a borrowing rate available to us. |
Revenue Recognition | Revenue Recognition We determine revenue recognition through the following steps: 1) Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services are separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. 3) Determination of the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's contracts as of April 30, 2020 and 2019, contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. 4) Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct goods or services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5) Recognition of revenue when, or as, we satisfy a performance obligation The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Performance Obligations Satisfied Over Time We recognize revenue on agreements for the sale of customized goods including magnetic components, consisting of transformers, inductors, reactors, chokes, toroidal coils, high voltage transformers, dry-type transformers and electro-mechanical assemblies for use in commercial aerospace and military electronics on an over time basis. Commercial Aerospace and Defense Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer, except for one long-term agreement which provides a contract for two specific parts if the ship date is within 21 days. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. Parts manufactured for customers in our aerospace and defense product revenue stream must be built to certain specifications that are then qualified by the customer. Due to the proprietary nature of our custom-built products designed for a specific use by our aerospace and defense customers, control is considered to be with the customer as the products are finalized and placed into finished goods. Goods within this revenue stream do not provide simultaneous receipt and benefit to the customer. The goods are controlled by our customers once the finished parts are created. The customers prevent any alternative use of the asset and an enforceable right to payment does exist. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these over-time contracts vary, but are generally based on ship date. Control is transferred as products are completed and closed to finished goods. Product fees and engineering and design services For product fees along with engineering and design services, transfer of control is determined by the revenue stream of the associated product. Percentage-of-completion revenue recognition is utilized when revenue recognized exceeds the amount billed to the customer for any project-related services, utilizing labor as the input method. Performance Obligations Satisfied at a Point in Time We recognize revenue on agreements for the sale of customized goods for use in the industrial and commercial market on point in time basis. Industrial and Commercial Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. For our commercial customers, control of the underlying product design is retained by Torotel, therefore the products are considered in our control until the moment of shipment. Also, upon shipment the customers have an obligation to pay for the asset and we have an enforceable right to payment. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these point in time sales are generally based on ship date. Control is transferred as products are shipped to the customers. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs do not have a material impact to the financial statements. No impairment losses were recognized in fiscal year 2020 relating to receivables or contract assets arising from contracts with customers. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Gross trade accounts receivable are offset with an allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We review the allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance when placed for collection. Recoveries of receivables previously written off are recorded when received. The majority of the customer accounts are considered past due after the invoice becomes older than the customer's credit terms. Interest is not charged on past due accounts. The allowance for doubtful accounts as of April 30, 2020 and 2019 was $41,000 and $12,000, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using a FIFO approximated weighted average cost method of valuation. Our industry is characterized by short-term customer commitments and changes in demand, as well as other market considerations. Provisions for obsolete and excess inventory are based on reviews of inventory usage, quantities on hand and latest product demand information from customers. Inventories are reviewed in detail utilizing a 12-month time horizon. Individual part numbers that have not had any usage or purchases in a 12-month time period and do not have any known usage requirements are categorized as obsolete; individual part numbers having more than a 12-month supply based on the current year's usage are categorized as excess. Once specific inventory has been identified as excess or obsolete, the cost of the identified inventory is fully reserved and the cost of the inventory is not recovered until it is sold. The reserve balance is analyzed for adequacy as part of the inventory review each quarter. The reserve for inventory as of April 30, 2020 and 2019 was $406,000 and $332,000, respectively. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation and amortization are provided in amounts sufficient to relate the costs of depreciable assets to operations primarily using the straight-line method over estimated useful lives of three to ten years for equipment and three and a half to twenty years for buildings and improvements |
Cash | Cash For purposes of the consolidated statements of cash flows, we consider all short-term investments and demand deposits purchased with original maturity dates of three months or less to be cash. |
Income Taxes | Income Taxes Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and in evaluating our tax positions. An estimated effective tax rate for a year is applied to our quarterly operating results. In the event there is a significant or unusual item recognized in our quarterly operating results, the tax attributable to that item is separately calculated and recorded at the same time as that item. Tax law requires items to be included in our tax returns at different times than the items are reflected in our financial statements. As a result, our annual tax rate reflected in our financial statements is different than that reported in our tax returns (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in our tax returns in future years for which we have already recorded the tax benefit in our statement of operations. We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax liabilities generally represent tax expense recognized in our financial statements for which payment has been deferred, or expense for which we have already taken a deduction in our tax return but have not yet recognized as expense in our financial statements. The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. If necessary, we record a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. If applicable in a given year, tax-related interest and penalties are classified as a component of income tax expense. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. For the year ended April 30, 2020 advertising costs were $9,000. For the year ended April 30, 2019 there were no advertising costs. |
Warranty Costs | Warranty Costs We maintain a reserve for estimated warranty costs associated with products returned from customers. A limited warranty is provided for a period of one year which requires us to repair or replace defective products at no cost to the customer. The warranty reserve is based on historical experience and reflects management's best estimate of probable liability under the product warranties. |
Share-Based Compensation | Share-Based Compensation We have a share-based compensation plan that provides for awards of restricted stock, which is described more fully in Note 8 of the Notes to the Consolidated Financial Statements. We account for the share-based compensation plan in accordance with authoritative guidance under which the estimated fair value of share-based awards granted under our share-based compensation plan is recognized as compensation expense over the vesting period of the award. |
Paycheck Protection Program | Paycheck Protection Program We received funding from the Small Business Administration relating to the Paycheck Protection Program in the amount of $1,985,000 through a promissory note. The loan and the related interest are recorded as a financial liability. As of April 30, 2020, we have not obtained sufficient reasonable assurance that forgiveness conditions have been satisfied. For subsequent reporting periods, we will reevaluate if there is reasonable assurance that forgiveness conditions have been satisfied. Upon obtaining reasonable assurance that the forgiveness conditions have been satisfied, the earnings will be recorded on a systematic basis over the periods in which we recognize the expenses for which the funds are intended to compensate. In April 2020, we incurred $440,000 of eligible Paycheck Protection Program expenses. These expenses are classified as nondeductible for income tax purposes and are recorded as permanent differences. |
Accounting Pronouncements Recently Adopted | Accounting Pronouncements Recently Adopted The Company adopted the guidance of ASU No. 2016-02, Leases, (“ASC 842”) as of May 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. ASC 842 requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations and presentation of cash flows. See Note 4—Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases. Accounting Pronouncements Issued, Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13 Measurement of Credit Losses on Financial Instruments. Under this guidance, a financial asset is required to be measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses will be based on current, historical, and forecasted information that impacts the collectability of the reported amount. Additional disclosures will be required to provide information regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. The original effective date for this guidance, including subsequently issued amendments, was for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. In November 2019, the FASB deferred the effective date of this guidance to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating this guidance. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update removes certain exceptions and implements new requirements to help simplify the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020. We are currently evaluating this guidance. All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did not relate to accounting policies and procedures pertinent to us at this time or were not expected to have a material impact to the consolidated financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
INVENTORIES | |
Table summarizing the components of inventories | 2020 2019 Raw materials $ 2,417,000 $ 1,723,000 Work in process 961,000 1,052,000 Finished goods 178,000 279,000 $ 3,556,000 $ 3,054,000 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
REVENUE. | |
Schedule of disaggregation of revenue | 2020 2019 Markets Commercial Aerospace $ 10,208,000 $ 7,690,000 Defense 15,140,000 11,849,000 Industrial 785,000 1,016,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 2020 2019 Product Line Magnetic components $ 14,090,000 $ 10,600,000 Potted coil assembly 5,655,000 5,751,000 Electro-mechanical assemblies 6,388,000 3,920,000 Large transformers — 284,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 2020 2019 Geography Domestic $ 25,082,000 $ 18,472,000 Foreign 1,051,000 2,083,000 Total consolidated net sales $ 26,133,000 $ 20,555,000 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
LEASES | |
Schedule of operating and finance ROU assets and lease liabilities | Balance Sheet Classification 2020 Assets Operating lease right-of-use assets Operating right-of-use assets $ 2,008,000 Finance lease right-of-use assets Property, plant and equipment, net 27,000 Total leased assets $ 2,035,000 Liabilities Current Operating lease liabilities Current maturities of operating lease liabilities $ 395,000 Finance lease liabilities Current maturities of finance lease liabilities 27,000 Noncurrent Operating lease liabilities Operating lease liabilities, less current maturities 1,879,000 Total lease liabilities $ 2,301,000 |
Schedule of lease expense | 2020 Operating lease expense $ 532,000 Finance lease expense Amortization of right-of-use assets 71,000 Interest on lease liabilities 7,000 Total finance lease expense 78,000 Total lease expense $ 610,000 |
Schedule of supplemental components of cash flow | 2020 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 472,000 Financing cash flows from finance leases 71,000 Total cash paid for amounts included in the measurement of lease liabilities $ 543,000 |
Schedule of weighted-average remaining lease term and discount rate | 2020 Weighted Average Weighted Average Remaining Discount Lease Term and Discount Rate Lease Term (years) Rate Operating leases 6.60 4.52% Finance leases 0.42 5.43% |
Schedule of future minimum lease payments on the amended operating lease and future minimum finance lease payments | Finance Lease Operating Lease Fiscal Years Ending April 30, Payments Payments 2021 $ 27,000 $ 436,000 2022 — 448,000 2023 — 452,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 $ 27,000 $ 3,061,000 |
FINANCING AGREEMENTS (Tables)
FINANCING AGREEMENTS (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
FINANCING AGREEMENTS | |
Summary of the notes within the financing agreement | 2020 2019 5.00% asset-based revolving line of credit with a maturity date of October 19, 2020 $ - $ 975,000 6.25% guidance line of credit with a maturity date of October 19, 2019 - 54,000 5.35% mortgage note payable in monthly installments of $5,573, including interest, with final payment of $690,829 due October 19, 2023 773,000 795,000 5.50% equipment term loan note payable in monthly installments of $1,034, including interest, with final payment of $1,034 due on May 13, 2024 45,000 - 1.00% Paycheck Protection Program loan note payable in monthly installments of $111,712 starting after the six month payment deferment period on October 30, 2020, with a final payment of $111,712 due April 29, 2022. Interest will accrue during the deferment period. 1,985,000 - Capital lease obligations (see Note 4) - 98,000 Total long-term debt 2,803,000 1,922,000 Less current installments 795,000 1,121,000 Long-term debt, excluding current installments $ 2,008,000 $ 801,000 |
Long-term debt maturities by year | Year Ending April 30, Amount 2021 $ 795,000 2022 1,251,000 2023 38,000 2024 719,000 $ 2,803,000 |
Schedule of letter of credit outstanding balance | Date of Reduction Amount of Reduction Balance of Letter of Credit January 1, 2021 $ 75,000 $ 150,000 January 1, 2022 75,000 75,000 January 1, 2023 75,000 - |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
INCOME TAXES | |
Components of the provision (benefit) for income taxes | 2020 2019 Current tax expense (benefit) Federal $ — $ (34,000) State 75,000 13,000 75,000 (21,000) Deferred tax expense Federal — 34,000 State — — — 34,000 Total income tax provision $ 75,000 $ 13,000 |
Summary of the principal differences between statutory income tax expense and effective provision for income taxes | 2020 2019 Computed tax expense at statutory rates $ 166,000 $ 137,000 Permanent differences 98,000 6,000 State tax and credits 59,000 56,000 Adjustments required by change in method of accounting as a result of adopting ASC 606 (24,000) 31,000 Other (4,000) — Use of net operating loss carryforward (220,000) (217,000) $ 75,000 $ 13,000 |
Summary of net operating loss carryforwards | Net Operating Loss Year of Expiration Carryforwards 2038 $ 92,000 |
Summary of the components of the net deferred income tax asset | 2020 2019 Net operating loss carryforwards $ 19,000 $ 226,000 Inventory valuation reserve 109,000 89,000 Loss on equity and impairment in investee 301,000 301,000 Tax credit carryforward — 34,000 Adjustments required by change in method of accounting as a result of adopting ASC 606 — (31,000) Cost of sales adjustment from ASC 606 15,000 163,000 Depreciation expense (171,000) (111,000) Uniform capitalization — 19,000 Right-of-use asset (538,000) — Lease liability 609,000 — Bad debt reserve 11,000 3,000 Warranty reserve 5,000 9,000 Accrued vacation 35,000 7,000 Accrued bonuses 65,000 42,000 Accrued commissions 15,000 16,000 Claims reserve 7,000 7,000 Stock compensation 105,000 76,000 Deferred rent — 55,000 Other 2,000 — 589,000 905,000 Less: valuation allowance (589,000) (871,000) $ — $ 34,000 |
RESTRICTED STOCK AGREEMENTS (Ta
RESTRICTED STOCK AGREEMENTS (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
RESTRICTED STOCK AGREEMENTS | |
Summary of restricted stock activity | 2020 2019 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 730,000 $ 0.740 Granted — — — — Forfeited — — — — Outstanding at April 30 730,000 $ 0.740 730,000 $ 0.740 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
STOCKHOLDERS' EQUITY | |
Summary of changes in shares of common stock outstanding | 2020 2019 Balance, May 1 5,995,750 Shares released from treasury for restricted stock grants — — Newly issued shares for restricted stock grants — — Shares reverted to treasury for restricted stock forfeitures — — Balance, April 30 5,995,750 5,995,750 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of basic earnings per common share | 2020 2019 Net income $ 714,000 $ 642,000 Amounts allocated to participating securities (nonvested restricted shares) (87,000) (78,000) Net income attributable to common shareholders $ 627,000 $ 564,000 Basic weighted average common shares 5,265,750 5,265,750 Earnings per share attributable to common shareholders: Basic earnings per share $ 0.12 $ 0.11 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
ACCRUED LIABILITIES | |
Accrued liabilities as of year end | 2020 2019 Employee related expenses: Accrued payroll $ 454,000 $ 286,000 Accrued payroll taxes 36,000 22,000 Accrued employee benefits 252,000 165,000 $ 742,000 $ 473,000 Other, including interest: Warranty reserve $ 20,000 $ 22,000 Property taxes 38,000 20,000 Deferred rent — 206,000 Other 99,000 103,000 $ 157,000 $ 351,000 $ 899,000 $ 824,000 |
Schedule of changes in warranty reserve | 2020 2019 Balance, May 1 $ 22,000 $ 300,000 Credit memos issued (194,000) (212,000) Provision for warranty accrual 192,000 (66,000) Balance, April 30 $ 20,000 $ 22,000 |
LEASED PROPERTY (Tables)
LEASED PROPERTY (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
LEASED PROPERTY | |
Schedule of Property Subject to or Available for Operating Lease [Table Text Block] | 2020 2019 Land $ 265,000 $ 265,000 Buildings and improvements 1,000,000 1,000,000 1,265,000 1,265,000 Less accumulated depreciation (707,000) (659,000) Net leased property $ 558,000 $ 606,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Significant accounting policies and useful lives | ||
Amount of impairment losses | $ 0 | |
Allowance for doubtful accounts | $ 41,000 | $ 12,000 |
Inventory time horizon for excess and obsolete review | 12 months | |
Individual parts time horizon to review for obsolete inventory | 12 months | |
Individual parts time horizon to review for excess inventory | 12 months | |
Inventory Reserves | $ 406,000 | $ 332,000 |
Equipment | Minimum | ||
Significant accounting policies and useful lives | ||
Estimated useful lives | 3 years | |
Equipment | Maximum | ||
Significant accounting policies and useful lives | ||
Estimated useful lives | 10 years | |
Buildings and improvements | Minimum | ||
Significant accounting policies and useful lives | ||
Estimated useful lives | 3 years 6 months | |
Buildings and improvements | Maximum | ||
Significant accounting policies and useful lives | ||
Estimated useful lives | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Warranty, PPP (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2020 | Apr. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Advertising costs | $ 9,000 | $ 0 | |
Provided limited warranty period | 1 year | ||
Amount of promissory note relating to PPP | $ 1,985,000 | $ 1,985,000 | |
Amount of PPP expenses | $ 440,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
INVENTORIES | ||
Raw materials | $ 2,417,000 | $ 1,723,000 |
Work in process | 961,000 | 1,052,000 |
Finished goods | 178,000 | 279,000 |
Inventories | $ 3,556,000 | $ 3,054,000 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Disaggregation of Revenue | ||
Net sales | $ 26,133,000 | $ 20,555,000 |
Domestic | ||
Disaggregation of Revenue | ||
Net sales | 25,082,000 | 18,472,000 |
Foreign | ||
Disaggregation of Revenue | ||
Net sales | 1,051,000 | 2,083,000 |
Commercial Aerospace | ||
Disaggregation of Revenue | ||
Net sales | 10,208,000 | 7,690,000 |
Defense | ||
Disaggregation of Revenue | ||
Net sales | 15,140,000 | 11,849,000 |
Industrial | ||
Disaggregation of Revenue | ||
Net sales | 785,000 | 1,016,000 |
Magnetic components | ||
Disaggregation of Revenue | ||
Net sales | 14,090,000 | 10,600,000 |
Potted coil assembly | ||
Disaggregation of Revenue | ||
Net sales | 5,655,000 | 5,751,000 |
Electro-mechanical assemblies | ||
Disaggregation of Revenue | ||
Net sales | $ 6,388,000 | 3,920,000 |
Large transformers | ||
Disaggregation of Revenue | ||
Net sales | $ 284,000 |
REVENUE - Concentration of sale
REVENUE - Concentration of sales (Details) - Customer Concentration Risk - customer | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Revenue | ||
Disaggregation of Revenue | ||
Number customers in the primary base | 10 | |
Concentration percentage | 95.00% | |
Number of major customers | 2 | 2 |
Revenue | Customer A | ||
Disaggregation of Revenue | ||
Concentration percentage | 31.00% | 30.00% |
Revenue | Customer B | ||
Disaggregation of Revenue | ||
Concentration percentage | 28.00% | 21.00% |
Trade Receivables | ||
Disaggregation of Revenue | ||
Concentration percentage | 48.00% | 15.00% |
Trade Receivables | Major customer | ||
Disaggregation of Revenue | ||
Number of major customers | 3 | 1 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
REVENUE. | ||
Contract liabilities | $ 0 | |
Revenue with variable payment terms | 7,973,000 | $ 4,301,000 |
Revenue discounts related to payment terms | $ 59,000 | $ 32,000 |
REVENUE - Remaining Performance
REVENUE - Remaining Performance Obligations (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Remaining performance obligations | ||
Amount of remaining performance obligations | $ 10,726,000 | $ 4,591,000 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-30 | ||
Remaining performance obligations | ||
Amount of remaining performance obligations | $ 4,571,000 | |
Remaining performance obligation | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-30 | ||
Remaining performance obligations | ||
Amount of remaining performance obligations | $ 4,659,000 | $ 20,000 |
Remaining performance obligation | 12 months | 24 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | ||
Remaining performance obligations | ||
Amount of remaining performance obligations | $ 6,067,000 | |
Remaining performance obligation | 24 months |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | May 01, 2019 | |
Leases | ||
Lease, Practical Expedients, Package [true false] | true | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | |
Operating lease right-of-use assets | $ 2,008,000 | |
Finance lease, Right-of-Use | 27,000 | |
Operating Lease, Liability, Current | 395,000 | |
Finance Lease, Liability, Current | 27,000 | |
Operating Lease, Liability, Noncurrent | 1,879,000 | |
Deferred rent reclassified from accrued liabilities to operating lease right-of-use assets | 206,000 | |
Restatement Adjustment | ||
Leases | ||
Deferred rent reclassified from accrued liabilities to operating lease right-of-use assets | $ 206,000 | |
ASU 2016-02 | ||
Leases | ||
Operating lease right-of-use assets | 2,008,000 | 2,267,000 |
Finance lease, Right-of-Use | 98,000 | |
Operating Lease, Liability, Current | 380,000 | |
Finance Lease, Liability, Current | 73,000 | |
Operating Lease, Liability, Noncurrent | 2,093,000 | |
Finance Lease, Liability, Noncurrent | $ 25,000 | |
Operating lease liability | $ 2,274,000 | |
Minimum | ||
Leases | ||
Initial lease agreement term | 1 year | |
Maximum | ||
Leases | ||
Remaining lease term | 7 years | |
Land and Building | Minimum | ||
Leases | ||
Initial lease agreement term | 5 years | |
Land and Building | Maximum | ||
Leases | ||
Option to extend term | P10Y | |
Remaining lease term | 15 years |
LEASES - Operating and finance
LEASES - Operating and finance ROU assets and lease liabilities (Details) | Apr. 30, 2020USD ($) |
LEASES | |
Operating lease right-of-use assets | $ 2,008,000 |
Finance Lease, Right-of-Use Asset | $ 27,000 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net |
Total leased assets | $ 2,035,000 |
Operating Lease, Liability, Current | 395,000 |
Finance Lease, Liability, Current | 27,000 |
Operating Lease, Liability, Noncurrent | 1,879,000 |
Total lease liabilities | $ 2,301,000 |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) | 12 Months Ended |
Apr. 30, 2020USD ($) | |
LEASES | |
Operating lease expense | $ 532,000 |
Amortization of right-to-use assets | 71,000 |
Interest on lease liabilities | 7,000 |
Total finance lease expense | 78,000 |
Total lease expense | $ 610,000 |
LEASES - Supplemental component
LEASES - Supplemental components of cash flow (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
LEASES | ||
Operating cash flows from operating leases | $ 472,000 | |
Financing cash flows from finance leases | 71,000 | $ 71,000 |
Total cash paid for amounts included in the measurement of leases | $ 543,000 | |
Weighted average remaining lease term, operating leases | 6 years 7 months 6 days | |
Weighted average remaining lease term, finance leases | 5 months 1 day | |
Weighted average discount rate, operating leases | 4.52% | |
Weighted average discount rate, finance leases | 5.43% |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) | Apr. 30, 2020USD ($) |
Operating lease payments | |
2021 | $ 436,000 |
2022 | 448,000 |
2023 | 452,000 |
2024 | 452,000 |
2025 | 456,000 |
2026 | 467,000 |
2027 | 350,000 |
Total | 3,061,000 |
Finance lease payments | |
2021 | 27,000 |
Total | $ 27,000 |
FINANCING AGREEMENTS (Details)
FINANCING AGREEMENTS (Details) | Oct. 19, 2018agreement |
FINANCING AGREEMENTS | |
Number of new business loan agreements | 3 |
FINANCING AGREEMENTS - Debt Tab
FINANCING AGREEMENTS - Debt Table (Details) - USD ($) | Apr. 15, 2020 | May 13, 2019 | Apr. 30, 2020 | Apr. 30, 2019 |
Long-term indebtedness | ||||
Total long-term debt | $ 2,803,000 | $ 1,922,000 | ||
Less current installments | 795,000 | 1,121,000 | ||
Long-term debt, excluding current installments | 2,008,000 | 801,000 | ||
Capital Leases | ||||
Long-term indebtedness | ||||
Total long-term debt | 98,000 | |||
Asset Based Line Of Credit 5.00 Percent Due October 2020 | Line of Credit | ||||
Long-term indebtedness | ||||
Total long-term debt | $ 975,000 | |||
Rate | 5.00% | |||
Maximum borrowing | $ 2,000,000 | |||
Percentage on eligible accounts receivable to calculate borrowing base of revolving line of credit | 80.00% | |||
Percentage on eligible inventory to calculate borrowing base of revolving line of credit | 50.00% | |||
Percentage on eligible equipment to calculate borrowing base of revolving line of credit | 80.00% | |||
Asset Based Line Of Credit 5.00 Percent Due October 2020 | Line of Credit | Prime Rate | ||||
Long-term indebtedness | ||||
Rate | 5.00% | |||
Asset Based Line Of Credit 5.00 Percent Due October 2020 | Line of Credit | Prime Rate | Minimum | ||||
Long-term indebtedness | ||||
Rate | 5.00% | |||
Guidance Line Of Credit 6.25 Percent Due October 2019 | Line of Credit | ||||
Long-term indebtedness | ||||
Total long-term debt | $ 54,000 | |||
Rate | 6.25% | |||
Maximum borrowing | $ 250,000 | |||
Mortgage note payable 5.35 percent due October 2023 | Mortgage note payable | ||||
Long-term indebtedness | ||||
Total long-term debt | 773,000 | $ 795,000 | ||
Notes Payable | $ 815,000 | |||
Rate | 5.35% | 5.35% | ||
Monthly installments | $ 5,573 | $ 5,573 | ||
Final payment | $ 690,829 | $ 690,829 | ||
Real estate term loan period | 5 years | |||
Amortization period | 20 years | |||
Term Loan Note Payable 5.50 Percent Due May 2024 | Note Payable | ||||
Long-term indebtedness | ||||
Total long-term debt | $ 45,000 | |||
Notes Payable | $ 54,000 | |||
Rate | 5.50% | 5.50% | ||
Monthly installments | $ 1,034 | $ 1,034 | ||
Final payment | $ 1,034 | 1,034 | ||
Term of loan | 5 years | |||
Amortization period of term loan | 5 years | |||
Paycheck Protection Program Loan Note Payable 1.00 Percent Due April 2022 | Note Payable | ||||
Long-term indebtedness | ||||
Total long-term debt | $ 1,985,000 | |||
Notes Payable | $ 1,984,688 | |||
Rate | 1.00% | 1.00% | ||
Monthly installments | $ 111,712 | |||
Final payment | $ 111,712 | |||
Term of loan | 2 years |
FINANCING AGREEMENTS - Long-ter
FINANCING AGREEMENTS - Long-term debt maturities (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Long-term debt maturities by year | ||
2021 | $ 795,000 | |
2022 | 1,251,000 | |
2023 | 38,000 | |
2024 | 719,000 | |
Total long-term debt | $ 2,803,000 | $ 1,922,000 |
FINANCING AGREEMENTS - Irrevoca
FINANCING AGREEMENTS - Irrevocable Standby Letters of Credit (Details) - Irrevocable Standby Letter of Credit - USD ($) | Jan. 01, 2023 | Jan. 01, 2022 | Jan. 01, 2021 | Jan. 01, 2020 | Dec. 31, 2019 |
Long-term indebtedness | |||||
Principal amount | $ 300,000 | ||||
Balance of Letter of Credit | $ 225,000 | ||||
Forecast | |||||
Long-term indebtedness | |||||
Amount of Reduction | $ 75,000 | $ 75,000 | $ 75,000 | ||
Balance of Letter of Credit | $ 75,000 | $ 150,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
INCOME TAXES | ||
Effective Income Tax Rate, Percent | 9.50% | 2.00% |
Current tax expense | ||
Federal | $ (34,000) | |
State | $ 75,000 | 13,000 |
Current tax expense (benefit) | 75,000 | (21,000) |
Deferred tax expense (benefit) | ||
Federal | 34,000 | |
Deferred tax expense | 34,000 | |
Total income tax provision (benefit) | $ 75,000 | $ 13,000 |
INCOME TAXES - Statutory Rate R
INCOME TAXES - Statutory Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Income Tax Reconciliation | ||
Computed tax expense at statutory rates | $ 166,000 | $ 137,000 |
Permanent differences | 98,000 | 6,000 |
State tax and credits | 59,000 | 56,000 |
Adjustments required by change in method of accounting as a result of adopting ASC 606 | (24,000) | 31,000 |
Other | (4,000) | |
Use of valuation allowance | (220,000) | (217,000) |
Total income tax provision (benefit) | $ 75,000 | $ 13,000 |
INCOME TAXES - Net operating lo
INCOME TAXES - Net operating loss carryforward (Details) | Apr. 30, 2020USD ($) |
Federal | Tax Year 2038 | |
Estimated federal net operating | |
Net Operating Loss Carryforwards | $ 92,000 |
INCOME TAXES - Components of th
INCOME TAXES - Components of the net deferred income tax asset (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
INCOME TAXES | ||
Net operating loss carryforwards | $ 19,000 | $ 226,000 |
Inventory valuation reserve | 109,000 | 89,000 |
Loss on equity and impairment in investee | 301,000 | 301,000 |
Tax credit carryforward | 34,000 | |
Adjustments required by change in method of accounting as a result of adopting ASC 606 | (31,000) | |
Cost of sales adjustment from ASC 606 | 15,000 | 163,000 |
Depreciation expense | (171,000) | (111,000) |
Uniform capitalization | 19,000 | |
Right-of-use asset | (538,000) | |
Lease liability | 609,000 | |
Bad debt reserve | 11,000 | 3,000 |
Warranty reserve | 5,000 | 9,000 |
Accrued vacation | 35,000 | 7,000 |
Accrued bonuses | 65,000 | 42,000 |
Accrued commissions | 15,000 | 16,000 |
Claims reserve | 7,000 | 7,000 |
Stock compensation | 105,000 | 76,000 |
Deferred rent | 55,000 | |
Other | 2,000 | |
Gross deferred income tax asset | 589,000 | 905,000 |
Less: valuation allowance | $ (589,000) | (871,000) |
Net deferred income tax assets | $ 34,000 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 12 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2018 | |
INCOME TAXES | |||
Federal tax credit carryforwards | $ 68,000 | ||
Decrease in valuation allowance | $ 282,000 | $ 217,000 | |
Valuation allowance | 589,000 | 871,000 | |
Accrued interest and penalties | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 17, 2020USD ($)ft² | Feb. 15, 2019USD ($) | Jan. 01, 2017USD ($)ft² | Oct. 31, 2016USD ($)ft² | Jul. 10, 2014ft² | Apr. 30, 2020USD ($) | Apr. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($) |
Lessee, Lease, Description [Line Items] | ||||||||||
Real estate lease agreement (in square feet) | ft² | 7,000 | 72,388 | 14,137 | 5,000 | ||||||
Monthly base rate | $ 4,241 | $ 11,500 | $ 26,844 | $ 29,257 | $ 32,876 | |||||
Security deposit | $ 55,000 | $ 12,750 | ||||||||
Extension of lease term | 5 years | 1 year | ||||||||
Equipment | $ 4,520,000 | $ 4,045,000 | ||||||||
Operating lease expense | 532,000 | |||||||||
Finance Lease Asset, Equipment | ||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||
Equipment | 225,000 | |||||||||
Operating Leases | ||||||||||
Lessee, Lease, Description [Line Items] | ||||||||||
Operating Leases, Rent Expense, Net | $ 532,000 | $ 650,000 |
EMPLOYEE INCENTIVE PLANS (Detai
EMPLOYEE INCENTIVE PLANS (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
401(k) Retirement Plan | ||
Employee incentive plans | ||
Employer contributions | $ 169,000 | $ 148,000 |
Performance Bonus | ||
Employee incentive plans | ||
Discretionary bonus expense | 226,000 | 209,000 |
Short Term Cash Incentive Plan | ||
Employee incentive plans | ||
Incentive plan expense | $ 0 | 0 |
Stock Award Plan | Restricted Stock | ||
Employee incentive plans | ||
Restriction period of awards | 5 years | |
Long Term Cash Incentive Plan | ||
Employee incentive plans | ||
Incentive plan expense | $ 0 | $ 0 |
RESTRICTED STOCK AGREEMENTS (De
RESTRICTED STOCK AGREEMENTS (Details) | Sep. 21, 2016employeeshares | Apr. 30, 2020USD ($)$ / sharesshares | Apr. 30, 2019USD ($)$ / sharesshares | Apr. 30, 2017shares |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock compensation cost amortized | $ | $ 108,000 | $ 108,000 | ||
Restricted Shares Under Option | ||||
Outstanding at beginning of period | 730,000 | 730,000 | ||
Outstanding at end of period | 730,000 | 730,000 | ||
Weighted Average Grant Price | ||||
Outstanding at beginning of period, Weighted Average Grant Price (in dollars per share) | $ / shares | $ 0.740 | $ 0.740 | ||
Outstanding at end of period, Weighted Average Grant Price (in dollars per share) | $ / shares | $ 0.740 | $ 0.740 | ||
2016 Restricted Stock Grants | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Restriction period of awards | 5 years | |||
2016 Restricted Stock Grants | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Cumulative annual growth in revenue (as a percentage) | 10.00% | |||
Average economic value added as percentage of revenue (as a percentage) | 2.00% | |||
2016 Restricted Stock Grants | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of key employees receiving award under plan | employee | 3 | |||
Aggregate amount of restricted stock awards authorized | 730,000 | |||
Restricted Shares Under Option | ||||
Granted | 350,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - shares | Apr. 30, 2020 | Apr. 30, 2019 |
Increase (Decrease) in Stockholders' Equity | ||
Balance beginning of year (in shares) | 5,995,750 | 5,995,750 |
Balance end of year (in shares) | 5,995,750 | 5,995,750 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
EARNINGS PER SHARE | ||
Net income | $ 714,000 | $ 642,000 |
Amounts allocated to participating securities (nonvested restricted shares) | (87,000) | (78,000) |
Net income attributable to common shareholders | $ 627,000 | $ 564,000 |
Basic weighted average common shares | 5,265,750 | 5,265,750 |
Earnings (loss) per share attributable to common shareholders: | ||
Basic earnings per share | $ 0.12 | $ 0.11 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Employee related expenses: | ||
Accrued payroll | $ 454,000 | $ 286,000 |
Accrued payroll taxes | 36,000 | 22,000 |
Accrued employee benefits | 252,000 | 165,000 |
Total employee related expenses | 742,000 | 473,000 |
Other, including interest: | ||
Warranty reserve | 20,000 | 22,000 |
Property taxes | 38,000 | 20,000 |
Deferred rent | 206,000 | |
Other | 99,000 | 103,000 |
Total other | 157,000 | 351,000 |
Total accrued liabilities | 899,000 | 824,000 |
Changes in warranty reserve | ||
Balance, May 1 | 22,000 | 300,000 |
Credit memos issued | (194,000) | (212,000) |
Provision for warranty accrual | 192,000 | (66,000) |
Balance, April 30 | $ 20,000 | $ 22,000 |
CUSTOMER DEPOSITS (Details)
CUSTOMER DEPOSITS (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
CUSTOMER DEPOSITS | ||
Customer deposits | $ 16,000 | $ 24,000 |
SELF-INSURANCE CAPTIVE (Details
SELF-INSURANCE CAPTIVE (Details) - Captive Insurance LLC - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Self-insurance captive | ||
Membership percentage | 0.50% | |
Investment | $ 87,000 | |
Investment income | 0 | $ 0 |
Self-insured medical benefits reserve | $ 25,000 | $ 25,000 |
LEASED PROPERTY (Details)
LEASED PROPERTY (Details) | Jun. 17, 2020USD ($) | Feb. 15, 2019USD ($)ft² | Apr. 30, 2020USD ($) | Apr. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($) |
Leased property | |||||||
Square feet (in area) | ft² | 23,924 | ||||||
Monthly base rate | $ 4,241 | $ 11,500 | $ 26,844 | $ 29,257 | $ 32,876 | ||
Number Of Years For Which Monthly Base Rates Fixed | 62 months | ||||||
Asset category | |||||||
Property, plant and equipment, gross | $ 6,371,000 | $ 5,879,000 | |||||
Less accumulated depreciation | (4,388,000) | (4,056,000) | |||||
Property, plant and equipment, net | 1,983,000 | 1,823,000 | |||||
Depreciation on leased asset | 48,000 | 35,000 | |||||
Assets Leased to Others | |||||||
Asset category | |||||||
Property, plant and equipment, gross | 1,265,000 | 1,265,000 | |||||
Less accumulated depreciation | (707,000) | (659,000) | |||||
Property, plant and equipment, net | 558,000 | 606,000 | |||||
Land | |||||||
Asset category | |||||||
Property, plant and equipment, gross | 265,000 | 265,000 | |||||
Buildings and improvements | |||||||
Asset category | |||||||
Property, plant and equipment, gross | $ 1,000,000 | $ 1,000,000 | |||||
Minimum | |||||||
Leased property | |||||||
Monthly base rate | $ 11,500 | ||||||
Maximum | |||||||
Leased property | |||||||
Monthly base rate | $ 15,500 |
COVID-19 Impact (Details)
COVID-19 Impact (Details) | Apr. 30, 2020USD ($) |
COVID-19 Impact | |
Amount of promissory note relating to PPP | $ 1,985,000 |