Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 06, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BLONDER TONGUE LABORATORIES INC | |
Entity Central Index Key | 0001000683 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 9,634,163 | |
Entity File Number | 1-14120 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 79 | $ 572 |
Accounts receivable, net of allowance for doubtful accounts of $27 as of both March 31, 2020 and December 31,2019, respectively | 2,184 | 2,505 |
Inventories | 7,655 | 8,484 |
Prepaid benefit costs | 89 | 89 |
Prepaid and other current assets | 737 | 524 |
Total current assets | 10,744 | 12,174 |
Property, plant and equipment, net | 366 | 392 |
License agreements, net | 7 | 20 |
Intangible assets, net | 1,055 | 1,098 |
Goodwill | 493 | 493 |
Right of use assets, net | 2,977 | 3,167 |
Other assets, net | 1,002 | 1,003 |
Total assets | 16,644 | 18,347 |
Current liabilities: | ||
Line of credit | 3,070 | 2,705 |
Current portion of long-term debt | 32 | 33 |
Current portion of lease liability | 760 | 751 |
Accounts payable | 4,365 | 4,313 |
Accrued compensation | 458 | 397 |
Income taxes payable | 26 | 26 |
Other accrued expenses | 120 | 144 |
Total current liabilities | 8,831 | 8,369 |
Lease liability, net of current portion | 2,371 | 2,568 |
Long-term debt, net of current portion | 41 | 47 |
Total liabilities | 11,243 | 10,984 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $.001 par value; authorized 5,000 shares, no shares outstanding | ||
Common stock, $.001 par value; authorized 25,000 shares, 9,766 shares issued and outstanding as of both March 31, 2020 and December 31, 2019, respectively | 10 | 10 |
Paid-in capital | 28,276 | 28,158 |
Accumulated deficit | (22,000) | (19,920) |
Accumulated other comprehensive loss | (885) | (885) |
Total stockholders' equity | 5,401 | 7,363 |
Total liabilities and stockholders' equity | $ 16,644 | $ 18,347 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 27 | $ 27 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000 | 25,000 |
Common stock, shares issued | 9,766 | 9,766 |
Common stock, shares outstanding | 9,766 | 9,766 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 4,050 | $ 4,082 |
Cost of goods sold | 3,497 | 2,991 |
Gross profit | 553 | 1,091 |
Operating expenses: | ||
Selling | 728 | 727 |
General and administrative | 1,187 | 1,466 |
Research and development | 657 | 665 |
Total operating expenses | 2,572 | 2,858 |
Gain on building sale | 7,175 | |
(Loss) earnings from operations | (2,019) | 5,408 |
Other Expense - net | (61) | (83) |
(Loss) earnings before income taxes | (2,080) | 5,325 |
Provision for income taxes | ||
Net (loss) earnings | $ (2,080) | $ 5,325 |
Basic net (loss) earnings per share | $ (0.21) | $ 0.56 |
Diluted net (loss) earnings per share | $ (0.21) | $ 0.53 |
Basic weighted averages shares outstanding | 9,766 | 9,506 |
Diluted weighted averages shares outstanding | 9,766 | 10,076 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 9 | $ 27,910 | $ (19,178) | $ (832) | $ (742) | $ 7,167 |
Balance, Shares at Dec. 31, 2018 | 9,508 | |||||
Net earnings loss | 5,325 | 5,325 | ||||
Conversion of subordinated convertible debt | 140 | 140 | ||||
Conversion of subordinated convertible debt, Shares | 260 | |||||
Stock-based Compensation | 149 | 149 | ||||
Balance at Mar. 31, 2019 | $ 9 | 28,199 | (13,853) | (832) | (742) | 12,781 |
Balance, Shares at Mar. 31, 2019 | 9,768 | |||||
Balance at Dec. 31, 2019 | $ 10 | 28,158 | (19,920) | (885) | 7,363 | |
Balance, Shares at Dec. 31, 2019 | 9,766 | |||||
Net earnings loss | (2,080) | (2,080) | ||||
Stock-based Compensation | 118 | 118 | ||||
Balance at Mar. 31, 2020 | $ 10 | $ 28,276 | $ (22,000) | $ (885) | $ 5,401 | |
Balance, Shares at Mar. 31, 2020 | 9,766 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows From Operating Activities: | ||
Net (loss) earnings | $ (2,080) | $ 5,325 |
Adjustments to reconcile net earnings (loss) to cash used in operating activities: | ||
Gain on building sale | (7,175) | |
Stock based compensation expense | 118 | 149 |
Depreciation | 35 | 52 |
Amortization | 56 | 48 |
Recovery of bad debt expense | (4) | |
Amortization of deferred loan costs | 15 | 37 |
Non cash interest expense | 1 | |
Amortization of right of use assets | 190 | 58 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 321 | 794 |
Inventories | 829 | (57) |
Prepaid and other current assets | (213) | (276) |
Other assets | (13) | (782) |
Change in lease liability | (188) | (107) |
Accounts payable, accrued compensation and other accrued expenses | 88 | (1,087) |
Net cash used in operating activities | (842) | (3,024) |
Cash Flows From Investing Activities: | ||
Purchases of property and equipment | (6) | (10) |
Proceeds on sale of building | 9,765 | |
Acquisition of licenses | (1) | |
Net cash (used in) provided by investing activities | (6) | 9,754 |
Cash Flows From Financing Activities: | ||
Net proceeds (repayments) of line of credit | 365 | (2,603) |
Repayments of long-term debt | (10) | (3,058) |
Net cash provided by (used in) financing activities | 355 | (5,661) |
Net (decrease) increase in cash | (493) | 1,069 |
Cash, beginning of period | 572 | 559 |
Cash, end of period | 79 | 1,628 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | 49 | 76 |
Non cash investing and financing activities: | ||
Capital expenditures financed by notes payable | 3 | 5 |
Conversion of subordinated convertible debt to common stock | 140 | |
Right of uses assets obtained by lease obligations | $ 3,917 |
Company and Basis of Consolidat
Company and Basis of Consolidation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company and Basis of Consolidation | Note 1 – Company and Basis of Consolidation Blonder Tongue Laboratories, Inc. (together with its consolidated subsidiaries, the " Company The accompanying unaudited condensed consolidated interim financial statements as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP SEC |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies (a) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's significant estimates include stock-based compensation and reserves related to accounts receivable, inventories and deferred tax assets. Actual results could differ from those estimates. (b) Earnings (loss) Per Share Earnings (loss) per share is calculated in accordance with ASC Topic 260 "Earnings Per Share," which provides for the calculation of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect, in periods in which they have a dilutive effect, the effect of potential issuances of common shares. The following table shows the calculation of diluted shares using the treasury stock method: Three months ended 2020 2019 Weighted average shares used in computation of basic earnings (loss) per shares 9,766 9,506 Total dilutive effect of stock options - 570 Weighted average shares used in computation of diluted earnings (loss) per share 9,766 10,076 The diluted share base excludes the following potential common shares due to their antidilutive effect: Three months ended 2020 2019 Stock options 2,882 1,752 (c) Adoption of Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases Topic 842 Codification Improvements to Topic 842, Leases In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other Topic 350 Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses ("Topic 326" (d) Accounting Pronouncements Issued But Not Yet Effective In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes "Topic 740" (e) Liquidity and Ability to Continue as a Going Concern In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 21, 2020 the Governor of New Jersey declared a health emergency and issued an order to close all nonessential businesses until further notice. As a maker of telecommunication equipment, the Company is deemed to be an essential business. Nonetheless, out of concern for our workers and pursuant to the government order, the Company has reduced the scope of its operations and where possible, certain workers are telecommuting from their homes. While the Company expects this matter to negatively impact its results of operations, cash flows and financial position, the related impact cannot be reasonably estimated at this time. As disclosed in the Company's most recent Annual Report on Form 10-K, the Company experienced a decline in sales, a reduction in working capital, a loss from operations and net cash used in operating activities, in conjunction with liquidity constraints. The above factors raised substantial doubt about the Company's ability to continue as a going concern. As of March 31, 2020, the above factors still exist. Accordingly, there still exists substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. In response to lower than expected sales due to a slowdown in market activities experienced during the prior fiscal year, the Company implemented a multi-phase cost-reduction program during 2019 which is expected to reduce annualized expenses by approximately $2,000, including a decrease in workforce and a decrease in other operating expenses. The Company's primary sources of liquidity are its existing cash balances, cash generated from operations and the amounts available under the MidCap Facility (as such terms are defined in Note 5 below). As of March 31, 2020, the Company had approximately $3,070 outstanding under the MidCap Facility (as defined in Note 5 below) and $347 of additional availability for borrowing under the MidCap Facility. As previously announced, on April 7, 2020, the Company and MidCap agreed to amend the terms of the MidCap Facility to remove the $400 availability block. Removal of the block is subject to certain conditions, including the Company securing additional debt or equity financing of at least $500. The Company has obtained financing that meets the requirements for removal of the block. See Note 11 – Subsequent Events for additional information regarding the amendment of the MidCap Facility and the financing. If anticipated operating results are not achieved and/or the Company is unable to obtain additional financing, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations, which measures could have a material adverse effect on the Company's ability to achieve its intended business objectives and may be insufficient to enable the Company to continue as a going concern. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue Recognition | Note 3 – Revenue Recognition The Company recognizes revenue when it satisfies a performance obligation by transferring the product or service to the customer, typically at a point in time. Disaggregation of Revenue The Company is a technology-development and manufacturing company that delivers a wide range of products and services to the cable entertainment and media industry. Digital video headend products (including encoders) are used by a system operator for acquisition, processing, compression, encoding and management of digital video. DOCSIS data products give service providers, integrators, and premises owners a means to deliver data, video, and voice-over-coaxial in locations such as hospitality, MDU's, and college campuses, using IP technology. HFC distribution products are used to transport signals from the headend to their ultimate destination in a home, apartment unit, hotel room, office or other terminal location along a fiber optic, coax or HFC distribution network. Analog video headend products are used by a system operator for signal acquisition, processing and manipulation to create an analog channel lineup for further transmission. Contract-manufactured products provides manufacturing, research and development and product support services for other companies' products. CPE products are used by cable operators to provide video delivery to customers using IP technology. NXG is a two-way forward-looking platform that is used to deliver next generation entertainment services in both enterprise and residential locations. The Company also provides technical services, including hands-on training, system design engineering, on-site field support and complete system verification testing. The following table presents the Company's disaggregated revenues by revenue source: Three months ended 2020 2019 Digital video headend products $ 1,057 $ 1,946 CPE 646 191 DOCSIS data products 871 540 HFC distribution products 688 646 Analog video headend products 339 474 NXG 196 82 Contract manufactured products 44 28 Other 209 175 $ 4,050 $ 4,082 All of the Company's sales are to customers located primarily throughout the United States and Canada. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 4 – Inventories Inventories are summarized as follows: March 31, December 31, Raw Materials $ 1,737 $ 2,891 Work in process 1,626 1,252 Finished Goods 4,292 4,341 $ 7,655 $ 8,484 Inventories are stated at the lower of cost, determined by the first-in, first-out (" FIFO The Company periodically analyzes anticipated product sales based on historical results, current backlog and marketing plans. Based on these analyses, the Company anticipates that certain products will not be sold during the next twelve months. Inventories that are not anticipated to be sold in the next twelve months have been written down to net realizable value. The Company recorded a provision to reduce the carrying amounts of inventories to their net realizable value in the amount of $389 and $693 during the three months ended March 31, 2020 and 2019, respectively. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 – Debt On October 25, 2019, the Company entered into a Loan and Security Agreement (All Assets) (the " Loan Agreement MidCap MidCap Facility The Loan Agreement contains customary covenants, including restrictions on the incurrence of additional indebtedness, the payment of cash dividends or similar distributions, the repayment of any subordinated indebtedness and the encumbrance, sale or other disposition of assets. In addition, the Company is required to maintain minimum availability of $400. |
Subordinated Convertible Debt w
Subordinated Convertible Debt with Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Subordinated Borrowings [Abstract] | |
Subordinated Convertible Debt with Related Parties | Note 6 – Subordinated Convertible Debt with Related Parties On March 28, 2016, the Company and its wholly-owned subsidiary, R.L. Drake Holdings, LLC ( "Drake" Agent 2016 Subordinated Lenders 2016 Subordinated Loan Agreement 2016 Subordinated Loan Facility PIK Interest Subordinated Mortgage" On April 17, 2018, Robert J. Pallé and Carol Pallé exercised their conversion rights and converted $455 ($350 principal and $105 of accrued interest) of their loan (representing the entire amount of principal and interest outstanding and held by Mr. and Mrs. Pallé on that date) into 842 shares of the Company's common stock. On October 9, 2018, James H. Williams exercised his conversion right and converted $67 ($50 principal and $17 of accrued interest) of his loan (representing the entire amount of principal and interest outstanding and held by Mr. Williams on that date) into 125 shares of the Company's common stock. In connection with the anticipated completion of the sale of the Old Bridge Facility, on January 24, 2019, the Company and Drake (with the Company, collectively, the " Borrower Conversion and Termination Agreement RJP Initial Lenders Supplemental Lenders Lenders Agent As of the date of the Conversion and Termination Agreement, the Borrower was indebted to Steven L. Shea ( "Shea Shea Indebtedness Additional Commitment The Conversion and Termination Agreement provided for (i) the full payment of the Shea Indebtedness (unless such amounts were converted into shares of common stock prior to repayment), (ii) the termination of the Additional Commitment and (iii) the release and termination of all liens and security interests in the collateral under the 2016 Subordinated Loan Documents, including with respect to the Subordinated Mortgages, each to become effective as of the closing of the sale of the Old Bridge Facility. In connection with the execution and delivery of the Conversion and Termination Agreement, Shea provided the Company with a notice of conversion, and upon completion of the sale of the Old Bridge Facility was issued 260 shares of Company common stock in full satisfaction of the Shea Indebtedness. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7 – Related Party Transactions A director and shareholder of the Company is a partner of a law firm that serves as outside legal counsel for the Company. During the three month periods ended March 31, 2020 and 2019, this law firm billed the Company approximately $152 and $151, respectively for legal services provided by this firm. Included in accounts payable on the accompanying unaudited condensed balance sheet at March 31, 2020 is approximately $152 owed to this law firm. |
Concentration of Credit Risk
Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | Note 8 – Concentration of Credit Risk The following table summarizes credit risk with respect to customers as percentage of sales for the three month periods ended March 31, 2020 and 2019: Three months ended 2020 2019 Customer A 12 % 14 % Customer B 10 % - Customer C - 10 % Customer D - 12 % The following table summarizes credit risk with respect to customers as percentage of accounts receivable: March 31. December 31, 2020 2019 Customer A 12 % 19 % Customer B 17 % - Customer C - 17 % Customer D - - Customer E 13 % 11 % Customer F 10 % The following table summarizes credit risk with respect to vendors as percentage of purchases for the three-month periods ended March 31, 2020 and 2019: Three months ended March 31, 2020 2019 Vendor A 54 % - Vendor B 16 % - Vendor C - 35 % The following table summarizes credit risk with respect to vendors as percentage of accounts payable: March 31, December 31, 2020 2019 Vendor A 85 % 84 % |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies Leases The Company leases certain real estate, factory, and office equipment under non-cancellable operating leases at various dates through January 2024. Lease costs and cash paid for the three-month period ended March 31, 2020 were $190 and $188, respectively. Lease costs and cash paid for the three-month period ended March 31, 2019 were $58 and $107, respectively. Maturities of the lease liabilities are as follows: For the year ended December 31, Amount Amount remaining year ending December 31, 2020 $ 707 2021 939 2022 901 2023 922 2024 77 Thereafter - Total 3,546 Less present value discount 415 Total operating lease liabilities $ 3,131 As of March 31, 2020, the weighted average remaining lease term is 3.74 years and the weighted average discount rate used to determine the operating lease liabilities was 6.5%. Litigation The Company from time to time is a party to certain proceedings incidental to the ordinary course of its business, none of which, in the opinion of management, is likely to have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows. |
Building Sale and Leaseback
Building Sale and Leaseback | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Building Sale and Leaseback | Note 10 – Building Sale and Leaseback On February 1, 2019, the Company completed the sale of the Old Bridge Facility to Jake Brown Road, LLC (the " Buyer Lease The sale of the Old Bridge Facility was made pursuant to an Agreement of Sale dated as of August 3, 2018 as amended and extended (collectively, the " Sale Agreement The Lease has an initial term of five years and allows the Company to extend the term for an additional five years following the initial term. The Company is obligated to pay base rent of approximately $837 for the first year of the Lease with the amount of base rent adjusted for each subsequent year to equal 102.5% of the preceding year's base rent. The Lease was accounted for under Topic 842 as a sale and leaseback. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events On April 7, 2020, the Company entered into a certain Consent and Amendment to Loan Agreement and Loan Documents with Midcap (the " MidCap First Amendment On April 8, 2020, the Company, as borrower, together with Livewire Ventures, LLC (wholly owned by the Company's Chief Executive Officer, Edward R. Grauch), MidAtlantic IRA, LLC FBO Steven L. Shea IRA (an IRA account for the benefit of the Company's Chairman of the Board, Steven Shea), Carol M. Pallé and Robert J. Pallé, Anthony J. Bruno, and Stephen K. Necessary, as lenders (collectively, the " Initial Lenders Agent Subordinated Loan Agreement Subordinated Loan Facility PIK Interest On April 8, 2020, Initial Lenders agreed to provide the Company with a Tranche A term loan facility of $800 of which $600 was advanced to the Company on April 8, 2020, $100 was advanced to the Company on April 17, 2020 and $100 of which remains committed and undrawn. The Initial Lenders participating in the Tranche A term loan facility have the option of converting the principal balance of the loan held by each of them, in whole (unless otherwise agreed by the Company), into shares of the Company's common stock at a conversion price equal to the volume weighted average price of the Common Stock as reported by the NYSE American, during the five trading days preceding April 8, 2020 (the " Tranche A Conversion Price On April 24, 2020, the Company, the Initial Lenders Ronald V. Alterio (the Company's Senior Vice President-Engineering, Chief Technology Officer) and certain additional unaffiliated investors (the " Additional Lenders Lenders Amendment Tranche B Conversion Price The Subordinated Loan Agreement provides for up to $1,500 of subordinated convertible loans, with $500 to be designated as "Tranche C" term loans thereunder, together with the Tranche A term loans of $800 and the Tranche B term loans of $200, previously committed. Additional loans under the Subordinated Loan Agreement are in all cases subject to the mutual agreement of the Company and the existing Lenders, and neither the Company nor the existing Lenders are obligated to make any additional loans under the Subordinated Loan Agreement. If any Tranche C term loans are advanced under the Subordinated Loan Facility, the conversion price applicable to such loans may be different than the Tranche A and Tranche B Conversion Prices. The obligations of the Company under the Subordinated Loan Agreement are guaranteed by Drake and are secured by substantially all of the Company's and Drake's assets. The Subordinated Loan Agreement has a maturity date three years from the date of closing, at which time the accreted principal balance of the loan (by virtue of the PIK Interest) plus any other accrued unpaid interest, would be due and payable in full. In connection with the Subordinated Loan Agreement, the Company, Drake, the Lenders and MidCap entered into a Subordination Agreement (the " Subordination Agreement On April 10, 2020, the Company received loan proceeds of approximately $1,769 (" PPP Loan PPP CARES Act The PPP Loan is evidenced by a promissory note, dated as of April 5, 2020 (the " Note Lender Deferral Period As noted above, the principal and accrued interest under the Note evidencing the PPP Loan are forgivable after eight weeks as long the Company has used the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the Company terminates employees or reduces salaries during the eight-week period. The Company intends to use the proceeds for purposes consistent with the PPP. In order to obtain full or partial forgiveness of the PPP Loan, the Company must request forgiveness and must provide satisfactory documentation in accordance with applicable Small Business Administration (" SBA Beginning one month following expiration of the Deferral Period, and continuing monthly until 24 months from the date of the Note (the " Maturity Date |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | (a) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's significant estimates include stock-based compensation and reserves related to accounts receivable, inventories and deferred tax assets. Actual results could differ from those estimates. |
Earnings (loss) Per Share | (b) Earnings (loss) Per Share Earnings (loss) per share is calculated in accordance with ASC Topic 260 "Earnings Per Share," which provides for the calculation of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect, in periods in which they have a dilutive effect, the effect of potential issuances of common shares. The following table shows the calculation of diluted shares using the treasury stock method: Three months ended 2020 2019 Weighted average shares used in computation of basic earnings (loss) per shares 9,766 9,506 Total dilutive effect of stock options - 570 Weighted average shares used in computation of diluted earnings (loss) per share 9,766 10,076 The diluted share base excludes the following potential common shares due to their antidilutive effect: Three months ended 2020 2019 Stock options 2,882 1,752 |
Adoption of Recent Accounting Pronouncements | (c) Adoption of Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases Topic 842 Codification Improvements to Topic 842, Leases In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other Topic 350 Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses ("Topic 326" |
Accounting Pronouncements Issued But Not Yet Effective | (d) Accounting Pronouncements Issued But Not Yet Effective In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes "Topic 740" |
Liquidity | (e) Liquidity and Ability to Continue as a Going Concern In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 21, 2020 the Governor of New Jersey declared a health emergency and issued an order to close all nonessential businesses until further notice. As a maker of telecommunication equipment, the Company is deemed to be an essential business. Nonetheless, out of concern for our workers and pursuant to the government order, the Company has reduced the scope of its operations and where possible, certain workers are telecommuting from their homes. While the Company expects this matter to negatively impact its results of operations, cash flows and financial position, the related impact cannot be reasonably estimated at this time. As disclosed in the Company's most recent Annual Report on Form 10-K, the Company experienced a decline in sales, a reduction in working capital, a loss from operations and net cash used in operating activities, in conjunction with liquidity constraints. The above factors raised substantial doubt about the Company's ability to continue as a going concern. As of March 31, 2020, the above factors still exist. Accordingly, there still exists substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. In response to lower than expected sales due to a slowdown in market activities experienced during the prior fiscal year, the Company implemented a multi-phase cost-reduction program during 2019 which is expected to reduce annualized expenses by approximately $2,000, including a decrease in workforce and a decrease in other operating expenses. The Company's primary sources of liquidity are its existing cash balances, cash generated from operations and the amounts available under the MidCap Facility (as such terms are defined in Note 5 below). As of March 31, 2020, the Company had approximately $3,070 outstanding under the MidCap Facility (as defined in Note 5 below) and $347 of additional availability for borrowing under the MidCap Facility. As previously announced, on April 7, 2020, the Company and MidCap agreed to amend the terms of the MidCap Facility to remove the $400 availability block. Removal of the block is subject to certain conditions, including the Company securing additional debt or equity financing of at least $500. The Company has obtained financing that meets the requirements for removal of the block. See Note 11 – Subsequent Events for additional information regarding the amendment of the MidCap Facility and the financing. If anticipated operating results are not achieved and/or the Company is unable to obtain additional financing, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations, which measures could have a material adverse effect on the Company's ability to achieve its intended business objectives and may be insufficient to enable the Company to continue as a going concern. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of diluted shares using the treasury stock method | Three months ended 2020 2019 Weighted average shares used in computation of basic earnings (loss) per shares 9,766 9,506 Total dilutive effect of stock options - 570 Weighted average shares used in computation of diluted earnings (loss) per share 9,766 10,076 |
Schedulr of diluted potential common shares due to their antidilutive effect | Three months ended 2020 2019 Stock options 2,882 1,752 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of disaggregation of revenue | Three months ended 2020 2019 Digital video headend products $ 1,057 $ 1,946 CPE 646 191 DOCSIS data products 871 540 HFC distribution products 688 646 Analog video headend products 339 474 NXG 196 82 Contract manufactured products 44 28 Other 209 175 $ 4,050 $ 4,082 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | March 31, December 31, Raw Materials $ 1,737 $ 2,891 Work in process 1,626 1,252 Finished Goods 4,292 4,341 $ 7,655 $ 8,484 |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Concentration Of Credit Risk [Abstract] | |
Schedule of credit risk with respect to customers as percentage of sales | Three months ended 2020 2019 Customer A 12 % 14 % Customer B 10 % - Customer C - 10 % Customer D - 12 % |
Schedule of credit risk with respect to customers as percentage of accounts receivable | March 31. December 31, 2020 2019 Customer A 12 % 19 % Customer B 17 % - Customer C - 17 % Customer D - - Customer E 13 % 11 % Customer F 10 % - |
Schedule of credit risk with respect to customers as percentage of purchases | Three months ended March 31, 2020 2019 Vendor A 54 % - Vendor B 16 % - Vendor C - 35 % |
Schedule of credit risk with respect to customers as accounts payable | March 31, December 31, 2020 2019 Vendor A 85 % 84 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of maturities of the lease liabilities | For the year ended December 31, Amount Amount remaining year ending December 31, 2020 $ 707 2021 939 2022 901 2023 922 2024 77 Thereafter - Total 3,546 Less present value discount 415 Total operating lease liabilities $ 3,131 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Weighted average shares used in computation of basic earnings (loss) per shares | 9,766 | 9,506 |
Total dilutive effect of stock options | 570 | |
Weighted average shares used in computation of diluted earnings (loss) per share | 9,766 | 10,076 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock options [Member] | ||
Incremental shares due to their antidilutive effect | 2,882 | 1,752 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | Apr. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Jan. 02, 2019 |
Summary of Significant Accounting Policies (Textual) | |||||
Right to use asset and liability | $ 2,977 | $ 3,167 | $ 290 | ||
Weighted average remaining lease term | 3 years 8 months 26 days | ||||
Operating lease liabilities, weighted average discount rate | 6.50% | ||||
Loss from operations | $ (2,019) | $ 5,408 | |||
Net cash used in operating activities | (842) | $ (3,024) | |||
Operating expenses | 2,000 | ||||
Borrowing outstanding | $ 3,070 | ||||
Subordinated Loan Agreement [Member] | Subsequent Event [Member] | |||||
Summary of Significant Accounting Policies (Textual) | |||||
Term Loan, description | The Company and MidCap agreed to amend the terms of the MidCap Facility to remove the $400 availability block. Removal of the block is subject to certain conditions, including the Company securing additional debt or equity financing of at least $500. |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Digital video headend products | $ 1,057 | $ 1,946 |
CPE | 646 | 191 |
DOCSIS data products | 871 | 540 |
HFC distribution products | 688 | 646 |
Analog video headend products | 339 | 474 |
NXG | 196 | 82 |
Contract manufactured products | 44 | 28 |
Other | 209 | 175 |
Total | $ 4,050 | $ 4,082 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Summary of inventories | ||
Raw Materials | $ 1,737 | $ 2,891 |
Work in process | 1,626 | 1,252 |
Finished Goods | 4,292 | 4,341 |
Inventories, net | $ 7,655 | $ 8,484 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Carrying amount of inventories to net realizable | $ 389 | $ 693 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Oct. 25, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Debt (Textual) | |||
Outstanding balances under revolver | $ 3,070 | $ 2,705 | |
Loan Agreement [Member] | |||
Debt (Textual) | |||
Aggregate amount of credit facility | $ 5,000 | ||
Interest on revolver - margin | 4.75% | ||
Loan agreement, description | In addition, the Company is required to maintain minimum availability of $400. |
Subordinated Convertible Debt_2
Subordinated Convertible Debt with Related Parties (Details) - Subordinated Loan Facility [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Oct. 09, 2018 | Apr. 17, 2018 | Mar. 28, 2016 | Mar. 31, 2020 | |
Subordinated Convertible Debt with Related Parties (Textual) | ||||
Subordinated lenders advanced amount | $ 50 | |||
Term loan facility | $ 750 | |||
Subordinated loan facility, interest accrues | 12.00% | |||
Conversion price | $ 0.54 | |||
Conversion of loan amount | $ 67 | $ 455 | ||
Principal amount | 50 | 350 | ||
Accrued interest | $ 17 | $ 105 | ||
Conversion rights and converted common stock | 125 | 842 | ||
Conversion and termination agreement, description | The Borrower was indebted to Steven L. Shea ("Shea") for the principal and accrued interest relating to a $100 loan advanced by Shea under the 2016 Subordinated Loan Agreement (the "Shea Indebtedness"). In addition, as of the date of the Conversion and Termination Agreement the Initial Lenders remained subject to a commitment to lend Borrowers up to an additional $250 (the "Additional Commitment"). | |||
Subordinated loan agreement maturity term | 3 years | |||
Common stock shares facility issued | 260 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transactions (Textual) | ||
Legal services | $ 152 | $ 151 |
Accounts payable | $ 152 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Net Sales [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 14.00% | |
Net Sales [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Net Sales [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Net Sales [Member] | Customer D [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | ||
Accounts Receivable [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 19.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 17.00% | ||
Accounts Receivable [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 17.00% | ||
Accounts Receivable [Member] | Customer D [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | |||
Accounts Receivable [Member] | Customer E [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% | 11.00% | |
Accounts Receivable [Member] | Customer F [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Purchases [Member] | Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 54.00% | ||
Purchases [Member] | Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 16.00% | ||
Purchases [Member] | Vendor C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 35.00% | ||
Accounts payable [Member] | Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 85.00% | 85.00% |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Amount remaining year ending December 31, 2020 | $ 707 |
2021 | 939 |
2022 | 901 |
2023 | 922 |
2024 | 77 |
Thereafter | |
Total | 3,546 |
Less present value discount | 415 |
Total operating lease liabilities | $ 3,131 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies (Textual) | ||
Lease expiration date | Jan. 31, 2024 | |
Lease costs | $ 190 | $ 58 |
Cash paid | $ (188) | $ (107) |
Weighted average remaining lease term | 3 years 8 months 26 days | |
Weighted average discount rate | 6.50% |
Building Sale and Leaseback (De
Building Sale and Leaseback (Details) - USD ($) $ in Thousands | Aug. 03, 2018 | Mar. 31, 2020 |
Building Sale and Leaseback (Textual) | ||
Proceeds from sale | $ 10,500 | |
Advance to buyer | 130 | |
Gain on sale | $ 7,175 | |
Lease obligation, description | The Lease has an initial term of five years and allows the Company to extend the term for an additional five years following the initial term. The Company is obligated to pay base rent of approximately $837 for the first year of the Lease with the amount of base rent adjusted for each subsequent year to equal 102.5% of the preceding year's base rent. |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 10, 2020 | Apr. 08, 2020 | Apr. 07, 2020 | Apr. 05, 2020 | Apr. 24, 2020 | Mar. 31, 2020 |
Subsequent Events (Textual) | ||||||
Subordinated convertible loans | $ 500 | |||||
Loans and subordinated loan agreement | 1,500 | |||||
Tranche A [Member] | ||||||
Subsequent Events (Textual) | ||||||
Term loan facility | 800 | |||||
Tranche B [Member] | ||||||
Subsequent Events (Textual) | ||||||
Term loan facility | $ 200 | |||||
Subsequent Event [Member] | ||||||
Subsequent Events (Textual) | ||||||
Term Loan, description | The Company entered into a certain Consent and Amendment to Loan Agreement and Loan Documents with Midcap (the "MidCap First Amendment"), which amended the MidCap Facility to, among other things, remove the existing $400 availability block, subject to the same being re-imposed at the rate of approximately $7 per month. | |||||
Term loan facility | $ 600 | |||||
Subordinated loan facility, interest accrued | 1.00% | |||||
Loans and subordinated loan agreement | $ 200 | |||||
Proceeds from loan | $ 1,769 | |||||
Maturity period | 24 months | |||||
Interest rate | 0.98% | |||||
Subsequent Event [Member] | Subordinated Loan Agreement [Member] | ||||||
Subsequent Events (Textual) | ||||||
Term Loan, description | Initial Lenders agreed to provide the Company with a Tranche A term loan facility of $800 of which $600 was advanced to the Company on April 8, 2020, $100 was advanced to the Company on April 17, 2020 and $100 of which remains committed and undrawn. The Initial Lenders participating in the Tranche A term loan facility have the option of converting the principal balance of the loan held by each of them, in whole (unless otherwise agreed by the Company), into shares of the Company's common stock at a conversion price equal to the volume weighted average price of the Common Stock as reported by the NYSE American, during the five trading days preceding April 8, 2020 (the "Tranche A Conversion Price") which was calculated at $0.593. | |||||
Term loan facility | $ 1,500 | |||||
Subordinated loan facility, interest accrued | 12.00% | |||||
Conversion price | $ 0.55 |