Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 18, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | AIR INDUSTRIES GROUP | |
Trading Symbol | AIRI | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 32,364,670 | |
Amendment Flag | false | |
Entity Central Index Key | 0001009891 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-35927 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 80-0948413 | |
Entity Address, Address Line One | 1460 Fifth Avenue | |
Entity Address, Address Line Two | Bay Shore | |
Entity Address, State or Province | NY | |
Entity Address, City or Town | New York | |
Entity Address, Postal Zip Code | 11706 | |
City Area Code | (631) | |
Local Phone Number | 968-5000 | |
Title of 12(b) Security | Common Stock | |
Security Exchange Name | NYSEAMER | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash | $ 930,000 | $ 627,000 |
Accounts Receivable, Net of Allowance for Doubtful Accounts of $477,000 and $594,000 | 9,078,000 | 10,473,000 |
Inventory | 32,988,000 | 29,532,000 |
Prepaid Expenses and Other Current Assets | 226,000 | 226,000 |
Prepaid Taxes | 27,000 | 22,000 |
Total Current Assets | 43,249,000 | 40,880,000 |
Property and Equipment, Net | 8,423,000 | 8,404,000 |
Operating Lease Right-Of-Use-Asset | 2,753,000 | 3,018,000 |
Deferred Financing Costs, Net, Deposits and Other Assets | 1,020,000 | 960,000 |
Goodwill | 163,000 | 163,000 |
TOTAL ASSETS | 55,608,000 | 53,425,000 |
Current Liabilities | ||
Debt - Current Portion | 14,066,000 | 14,112,000 |
Accounts Payable and Accrued Expenses | 7,781,000 | 6,723,000 |
Operating Lease Liabilities - Current Portion | 731,000 | 686,000 |
Deferred Gain on Sale - Current Portion | 38,000 | 38,000 |
Customer Deposits | 1,417,000 | 1,470,000 |
Liability Related to the Sale of Future Proceeds from Disposition of Subsidiary | 59,000 | |
Deferred payroll tax liability - CARES Act | 314,000 | 314,000 |
Total Current Liabilities | 24,347,000 | 23,402,000 |
Long Term Liabilities | ||
Debt - Net of Current Portion | 4,191,000 | 2,838,000 |
Subordinated Notes Payable - Related Party | 6,412,000 | 6,412,000 |
Operating Lease Liabilities - Net of Current Portion | 2,865,000 | 3,241,000 |
Deferred Gain on Sale - Net of Current Portion | 124,000 | 143,000 |
TOTAL LIABILITIES | 37,939,000 | 36,036,000 |
Commitments and Contingencies (Notes 4 and 8) | ||
Stockholders’ Equity | ||
Preferred Stock, par value $.001 - Authorized 3,000,000 shares, 0 shares outstanding, at both June 30, 2022 and December 31, 2021. | ||
Common Stock - Par Value $.001 - Authorized 60,000,000 Shares, 32,247,513 and 32,128,006 Shares Issued and Outstanding as of June 30, 2022 and December 31, 2021, respectively | 32,000 | 32,000 |
Additional Paid-In Capital | 82,206,000 | 81,891,000 |
Accumulated Deficit | (64,569,000) | (64,534,000) |
TOTAL STOCKHOLDERS’ EQUITY | 17,669,000 | 17,389,000 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 55,608,000 | $ 53,425,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts (in Dollars) | $ 477,000 | $ 594,000 |
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 32,247,513 | 32,128,006 |
Common stock, shares outstanding | 32,247,513 | 32,128,006 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Sales | $ 14,008,000 | $ 15,453,000 | $ 26,070,000 | $ 29,165,000 |
Cost of Sales | 11,586,000 | 12,850,000 | 21,570,000 | 24,765,000 |
Gross Profit | 2,422,000 | 2,603,000 | 4,500,000 | 4,400,000 |
Operating Expenses | 2,172,000 | 2,163,000 | 4,043,000 | 3,933,000 |
Income from Operations | 250,000 | 440,000 | 457,000 | 467,000 |
Interest and Financing Costs | (163,000) | (208,000) | (361,000) | (380,000) |
Interest Expense - Related Parties | (126,000) | (125,000) | (251,000) | (250,000) |
Other Income, Net | 32,000 | 132,000 | 120,000 | 250,000 |
(Loss) Income before Provision for Income Taxes | (7,000) | 239,000 | (35,000) | 87,000 |
Provision for Income Taxes | ||||
Net (Loss) Income | $ (7,000) | $ 239,000 | $ (35,000) | $ 87,000 |
(Loss) Income per share - Basic (in Dollars per share) | $ 0 | $ 0.01 | $ 0 | $ 0 |
(Loss) Income per share - Diluted (in Dollars per share) | $ 0 | $ 0.01 | $ 0 | $ 0.01 |
Weighted Average Shares Outstanding - basic (in Shares) | 32,213,769 | 32,021,522 | 32,212,853 | 31,996,589 |
Weighted Average Shares Outstanding - diluted (in Shares) | 32,213,769 | 37,991,914 | 32,212,853 | 38,805,251 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 32,000 | $ 81,238,000 | $ (66,161,000) | $ 15,109,000 |
Balance (in Shares) at Dec. 31, 2020 | 31,906,971 | |||
Common Stock issued for directors fees | 52,000 | 52,000 | ||
Common Stock issued for directors fees (in Shares) | 41,960 | |||
Stock Options exercised | ||||
Stock Options exercised (in Shares) | 51,224 | |||
Stock Compensation expense | 157,000 | 157,000 | ||
Net Income (loss) | (152,000) | (152,000) | ||
Balance at Mar. 31, 2021 | $ 32,000 | 81,447,000 | (66,313,000) | 15,166,000 |
Balance (in Shares) at Mar. 31, 2021 | 32,000,155 | |||
Balance at Dec. 31, 2020 | $ 32,000 | 81,238,000 | (66,161,000) | 15,109,000 |
Balance (in Shares) at Dec. 31, 2020 | 31,906,971 | |||
Net Income (loss) | 87,000 | |||
Balance at Jun. 30, 2021 | $ 32,000 | 81,556,000 | (66,074,000) | 15,514,000 |
Balance (in Shares) at Jun. 30, 2021 | 32,037,547 | |||
Balance at Mar. 31, 2021 | $ 32,000 | 81,447,000 | (66,313,000) | 15,166,000 |
Balance (in Shares) at Mar. 31, 2021 | 32,000,155 | |||
Common Stock issued for directors fees | 52,000 | 52,000 | ||
Common Stock issued for directors fees (in Shares) | 37,392 | |||
Stock Compensation expense | 57,000 | 57,000 | ||
Net Income (loss) | 239,000 | 239,000 | ||
Balance at Jun. 30, 2021 | $ 32,000 | 81,556,000 | (66,074,000) | 15,514,000 |
Balance (in Shares) at Jun. 30, 2021 | 32,037,547 | |||
Balance at Dec. 31, 2021 | $ 32,000 | 81,891,000 | (64,534,000) | 17,389,000 |
Balance (in Shares) at Dec. 31, 2021 | 32,128,006 | |||
Common Stock issued for directors fees | 54,000 | 54,000 | ||
Common Stock issued for directors fees (in Shares) | 55,215 | |||
Stock Compensation expense | 66,000 | 66,000 | ||
Net Income (loss) | (28,000) | (28,000) | ||
Balance at Mar. 31, 2022 | $ 32,000 | 82,011,000 | (64,562,000) | 17,481,000 |
Balance (in Shares) at Mar. 31, 2022 | 32,183,221 | |||
Balance at Dec. 31, 2021 | $ 32,000 | 81,891,000 | (64,534,000) | 17,389,000 |
Balance (in Shares) at Dec. 31, 2021 | 32,128,006 | |||
Net Income (loss) | (35,000) | |||
Balance at Jun. 30, 2022 | $ 32,000 | 82,206,000 | (64,569,000) | 17,669,000 |
Balance (in Shares) at Jun. 30, 2022 | 32,247,513 | |||
Balance at Mar. 31, 2022 | $ 32,000 | 82,011,000 | (64,562,000) | 17,481,000 |
Balance (in Shares) at Mar. 31, 2022 | 32,183,221 | |||
Common Stock issued for directors fees | 54,000 | 54,000 | ||
Common Stock issued for directors fees (in Shares) | 64,292 | |||
Stock Compensation expense | 141,000 | 141,000 | ||
Net Income (loss) | (7,000) | (7,000) | ||
Balance at Jun. 30, 2022 | $ 32,000 | $ 82,206,000 | $ (64,569,000) | $ 17,669,000 |
Balance (in Shares) at Jun. 30, 2022 | 32,247,513 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (Loss) Income | $ (35,000) | $ 87,000 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities | ||
Depreciation of property and equipment | 1,308,000 | 1,417,000 |
Non-cash employee compensation expense | 207,000 | 214,000 |
Non-cash directors compensation | 108,000 | 104,000 |
Non-cash other income recognized | (94,000) | (195,000) |
Non-cash interest expense | 58,000 | |
Amortization of Right-of-Use Asset | 265,000 | 240,000 |
Deferred gain on sale of real estate | (19,000) | (19,000) |
Bad debt (recovery) expense | (117,000) | 23,000 |
Amortization of deferred financing costs | 31,000 | 78,000 |
Decrease (Increase) in Operating Assets: | ||
Accounts receivable | 1,512,000 | (3,435,000) |
Inventory | (3,456,000) | 1,911,000 |
Prepaid expenses and other current assets | (49,000) | |
Prepaid taxes | (5,000) | |
Deposits and other assets | (99,000) | (4,000) |
Increase (Decrease) in Operating Liabilities: | ||
Accounts payable and accrued expenses | 1,093,000 | (894,000) |
Operating lease liabilities | (331,000) | (390,000) |
Customer deposits | (53,000) | 673,000 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 315,000 | (181,000) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (1,327,000) | (631,000) |
NET CASH USED IN INVESTING ACTIVITIES | (1,327,000) | (631,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Note payable - revolver - net - Webster Bank | 888,000 | (393,000) |
Proceeds from - term loan - Webster Bank | 1,945,000 | |
Payments of term loan - Webster Bank | (1,251,000) | (778,000) |
Payments of finance lease obligations | (263,000) | (3,000) |
Payments of loan payable - financed asset | (4,000) | (4,000) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 1,315,000 | (1,178,000) |
NET INCREASE (DECREASE) IN CASH | 303,000 | (1,990,000) |
CASH AT BEGINNING OF PERIOD | 627,000 | 2,505,000 |
CASH AT END OF PERIOD | 930,000 | 515,000 |
Supplemental cash flow information | ||
Cash paid during the period for interest | 572,000 | 612,000 |
Supplemental disclosure of non-cash investing and financing activities | ||
Capitalization of related party note interest to principal | $ 400,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | Note 1. ORGANIZATION AND BASIS OF PRESENTATION Organization Air Industries Group is a Nevada corporation (“AIRI”). As of June 30,2022 and for the three and six months ended June 30, 2022 and 2021, the accompanying condensed consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corp. (“AIM”), Nassau Tool Works, Inc. (“NTW”), and the Sterling Engineering Corporation (“Sterling”), (together, the “Company”). Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission, from which the accompanying condensed consolidated balance sheet dated December 31, 2021 was derived. Effective with the Company’s first quarter ended March 31, 2022, the Company is presenting its operations as one reportable operating segment. Historically the Company operated its businesses and reported its results as two separate segments with AIM and NTW comprising the Complex Machining segment (“CMS”) and Sterling as the Turbine & Engine Component segment (“TEC”). The CMS segment specialized in flight critical components including flight controls and landing gear. The TEC segment focused on manufacturing components for jet engines. Along with its operating subsidiaries, the Company reported the results of its corporate division as an independent segment. In recent years the Company integrated and consolidated the business of AIM and NTW into one facility on Long Island and the operations of its CMS and TEC segments have become increasingly integrated. The Company also made significant capital expenditures and all of its operations now share the same manufacturing facilities and use most, if not all, of the same sales and marketing functions. The Company made these changes to take advantage of the long-term growth opportunities it sees in the aerospace and defense market. In early fiscal 2022, the Company further changed its management approach and is now making decisions about resources to be allocated and assesses performance based on one integrated business rather than two reporting segments. As such, effective with the first quarter ended March 31, 2022, the Company is presenting its operations as one reportable operating segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure of Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Inventory Valuation For annual periods, the Company values inventory at the lower of cost on a first-in-first-out basis or estimated net realizable value. The Company does not take physical inventories at interim quarterly reporting periods. For interim periods, substantially all of the inventory value has been estimated using a gross profit percentage based on the annual gross profit percentage of the immediately preceding year as applied to the net sales of the current period. Adjustments to reconcile the annual physical inventory to the Company’s books are recorded in the fourth quarter. Credit and Concentration Risks There were three customers that represented 66.2% and 76.2% of total net sales for the three months ended June 30, 2022 and 2021, respectively. This is set forth in the table below. Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 29.5 % 41.3 % 2 26.4 % 20.8 % 3 10.3 % * 4 ** 14.1 % * Customer was less than 10% of sales for the three months ended June 30, 2021. ** Customer was less than 10% of sales for the three months ended June 30, 2022. There were four customers that represented 77.9% and three customers that represented 77.0% of total net sales for the six months ended June 30, 2022 and 2021, respectively. This is set forth in the table below. Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 28.4 % 34.4 % 2 25.8 % 26.9 % 3 13.7 % 15.7 % 4 10.0 % * * Customer was less than 10% of sales for the six months ended June 30, 2021. There were three customers that represented 67.7% and 74.7% of gross accounts receivable at June 30, 2022 and December 31, 2021, respectively. This is set forth in the table below. Percentage of Receivables Customer June 30, December 31, 1 43.4 % 50.3 % 2 12.5 % 12.7 % 3 11.8 % 11.7 % Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the three and six month periods ending June 30, 2022 and 2021: Three Months Ended Six Months Ended Product June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Military $ 11,801,000 $ 13,332,000 $ 22,134,000 $ 25,835,000 Commercial 2,207,000 2,121,000 3,936,000 3,330,000 Total $ 14,008,000 $ 15,453,000 $ 26,070,000 $ 29,165,000 Concentration of Credit Risk During the period, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. Major Suppliers The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed. Customer Deposits The Company receives advance payments on certain contracts with the remainder of the contract balance due upon the shipment of the final product once the customer inspects and approves the product for shipment. At that time, the entire amount will be recognized as revenue and the deposit will be applied to the customer’s invoice. At June 30, 2022 and December 31, 2021, customer deposits were $1,417,000 and $1,470,000 respectively. The Company recognized revenue of $0 and $53,000 during the three and six months ended June 30, 2022, respectively, that was included in the customer deposits balance as of December 31, 2021. The Company recognized revenue of $370,000 and $375,000 during the three and six months ended June 30, 2021, respectively, that was included in the customer deposits balance as of December 31, 2020. Backlog Backlog represents executed non-cancellable contracts that represent firm orders that are deliverable over the next 18- month period. As of June 30, 2022, backlog relating to remaining performance obligations in contracts was approximately $73,000,000. We expect to recognize revenue amounts in future periods related to these remaining performance obligations as follows: approximately $25,000,000 to $30,000,000 of our backlog during the remainder of 2022, approximately $25,000,000 to $30,000,000 from January 1, 2023 - June 30, 2023, and approximately $13,000,000 to $18,000,000 from July 1, 2023 through December 31, 2023. This expectation is based on the Company’s belief that raw material will be delivered on time from its suppliers, and that its customers will accept delivery as scheduled. Leases The Company accounts for leases under ASC 842, “Leases.” All leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of- use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. See Note 4. Earnings (Loss) per share Basic earnings (loss) per share (“EPS”) is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. For purposes of calculating diluted earnings per common share, the numerator includes net income (loss) plus interest on convertible notes payable assumed converted as of the first day of the period. The denominator includes both the weighted-average number of shares of common stock outstanding during the period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially include stock options and warrants using the treasury stock method and convertible notes payable using the if-converted method. The following is the calculation of net income (loss) applicable to common stockholders utilized to calculate EPS: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net (Loss) Income - Basic $ (7,000 ) $ 239,000 $ (35,000 ) $ 87,000 Add: Convertible Note Interest for Potential Note Conversion - 77,000 - 155,000 (Loss) Income used to calculate diluted earnings per share $ (7,000 ) $ 316,000 $ (35,000 ) $ 242,000 The following is a reconciliation of the denominators of basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 32,213,769 32,021,522 32,212,853 31,996,859 Effect of dilutive stock options and warrants - 1,912,500 - 2,750,500 Effect of dilutive convertible notes payable - 4,057,892 - 4,057,892 Weighted average shares outstanding and dilutive securities The following securities have been excluded from the calculation as the exercise price was greater than the average market price of the common shares: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Stock Options 2,364,332 456,000 2,364,332 98,000 Warrants 760,000 1,903,000 760,000 1,423,000 3,124,332 2,359,000 3,124,332 1,521,000 The following securities have been excluded from the calculation because the effect of including these potential shares was anti-dilutive due to the net loss incurred during that period: Three and Six Months Ended June 30, 2022 June 30, (Unaudited) (Unaudited) Convertible notes payable 4,058,000 - 4,058,000 - Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation expense for employees amounted to $141,000 and $57,000 for the three months ended June 30, 2022 and 2021, respectively, and $207,000 and $214,000 for the six months ended June 30, 2022 and 2021, respectively. Stock compensation expense for directors amounted to $54,000 and $52,000 for the three months ended June 30, 2022 and 2021, respectively and $108,000 and $104,000 for the six months ended June 30, 2022 and 2021, respectively. Stock compensation expense for employees and directors was included in operating expenses on the accompanying Condensed Consolidated Statements of Operations. Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $163,000 at both June 30, 2022 and December 31, 2021 relates to the acquisition of NTW. Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. Recently Issued Accounting Pronouncements Effective January 1, 2022, the Company adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06), which is intended to address issues identified as a result of the complexity associated with applying accounting principles generally accepted in the United States of America for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance on the basis of feedback from financial statement users. The adoption of ASU 2020-06 did not have a material effect on the Company’s financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies. The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Note 3. PROPERTY AND EQUIPMENT The components of property and equipment at June 30, 2022 and December 31, 2021 consisted of the following: June 30, December 31, 2022 2021 Land $ 300,000 $ 300,000 Buildings and Improvements 1,902,000 1,723,000 Machinery and Equipment 22,638,000 22,013,000 Finance Lease Machinery and Equipment 375,000 375,000 Tools and Instruments 13,302,000 12,866,000 Automotive Equipment 266,000 200,000 Furniture and Fixtures 290,000 290,000 Leasehold Improvements 882,000 882,000 Computers and Software 604,000 583,000 Total Property and Equipment 40,559,000 39,232,000 Less: Accumulated Depreciation (32,136,000 ) (30,828,000 ) Property and Equipment, net $ 8,423,000 $ 8,404,000 Depreciation expense for the three months ended June 30, 2022 and 2021 was $643,000 and $704,000, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $1,308,000 and $1,417,000, respectively. Assets held under financed lease obligations are depreciated over the shorter of their related lease terms or their estimated productive lives. Depreciation of assets under finance leases is included in depreciation expense for 2022 and 2021. Accumulated depreciation on these assets was approximately $10,000 and $36,000 as of June 30, 2022 and December 31, 2021, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases Disclosure [Abstract] | |
LEASES | Note 4. LEASES The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. The Company leases certain machinery and equipment under finance leases and leases its offices and manufacturing facilities under operating leases. The leases have remaining lease terms of one to five years, some of which include options to extend or terminate the leases. June 30, December 31, 2022 2021 (unaudited) Weighted Average Remaining Lease Term - in years 4.14 4.53 Weighted Average discount rate - % 8.95 % 8.89 % The aggregate undiscounted cash flows of operating lease payments for leases with remaining terms greater than one year are as follows: Amount December 31, 2022 (remainder of year) $ 507,000 December 31, 2023 1,038,000 December 31, 2024 1,070,000 December 31, 2025 992,000 December 31, 2026 730,000 Total future minimum lease payments 4,337,000 Less: discount (741,000 ) Total operating lease maturities 3,596,000 Less: current portion of operating lease liabilities (731,000 ) Total long term portion of operating lease maturities $ 2,865,000 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt [Abstract] | |
DEBT | Note 5. DEBT Notes payable, related party notes payable and finance lease obligations consist of the following: June 30, December 31, 2022 2021 (unaudited) Revolving loan payable to Webster Bank (F/K/A Sterling National Bank) (“Webster”) $ 13,344,000 $ 12,456,000 Term loan, Webster 4,879,000 4,192,000 Finance lease obligations - 263,000 Loans payable - financed assets 35,000 39,000 Related party subordinated notes payable 6,412,000 6,412,000 Subtotal 24,670,000 23,362,000 Less: Current portion (14,066,000 ) (14,112,000 ) Long Term Portion $ 10,604,000 $ 9,250,000 Webster Bank (F/K/A Sterling National Bank) (“Webster”) The Company has a loan facility (“Webster Facility”) with Webster Bank that expires on December 30, 2025. The Webster Facility, which was first entered into on December 31, 2019, was amended several times, and now provides for a $20,000,000 revolving loan (“Revolving Line of Credit”), a $5,000,000 term loan (“Term Loan”) and a $2,000,000 Equipment Line of Credit, which as it is drawn upon will be added to the balance of the Term Loan. As of June 30, 2022, there is currently $13,343,000 outstanding under the Revolving Loan and $4,879,000 under the Term Loan. The below table shows the timing of payments due under the Term Loan: For the period ending Amount December 31, 2022 (remainder of the year) $ 357,000 December 31, 2023 714,000 December 31, 2024 714,000 December 31, 2025 3,156,000 Webster Term Loan payable 4,941,000 Less: debt issuance costs (62,000 ) Total Webster Term Loan payable, net of debt issuance costs 4,879,000 Less: Current portion of Webster Term Loan payable (714,000 ) Total long-term portion of Webster Term Loan payable $ 4,165,000 As of December 31, 2021, our debt to Webster in the amount of $16,648,000 consisted of the Webster Revolving Loan in the amount of $12,456,000 and the Webster term loan in the amount of $4,192,000. Interest expense related to the Webster Facility amounted to approximately $147,000 and $180,000 for the three months ended June 30, 2022 and 2021, respectively, and $302,000 and $261,000 for the six months ended June 30, 2022 and 2021. The below summarizes historical amendments to the Webster Facility and various terms: In 2020, the Company entered into the First Amendment to the Webster Facility which increased the Term Loan to $5,685,000 and required the Company to make monthly principal installments in the amount of $67,679 beginning on December 1, 2020. Other minor modifications were made and the Company paid an amendment fee of $20,000. In June 2021, the Company entered into the Second Amendment to the Webster Facility, which clarified the definition and calculation of Excess Cash Flow, and to confirm the due date of required payment of the Excess Cash Flow payment. For so long as the Webster term loan remains outstanding, if Excess Cash Flow (as defined) is a positive number for any fiscal year the Company shall pay to Webster an amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow for such fiscal year and (ii) the outstanding principal balance of the term loan. Such payment shall be made to Webster and applied to the outstanding principal balance of the term loan, on or prior to the close of the fiscal year immediately following such fiscal year. The Company made Excess Cash Flow payments of $558,750 in 2021 (for the fiscal year ended December 31, 2020) and paid $854,000 in April 2022 (for fiscal year ended December 31, 2021). In connection with these changes, the Company paid an amendment fee of $10,000. On December 7, 2021, the Company entered into the Third Amendment to the Webster Facility (“Third Amendment”). The purpose of the amendment was to provide a maturity date for the Webster Facility of December 30, 2025 as compared to the original maturity date of December 30, 2022. Such amendment also increased the Revolving Line of Credit to its current limit of $20,000,000 (up from the original $16,000,000) and also provided for a similar increase in the inventory sublimit to $14,000,000 (up from the original $11,000,000). The Third Amendment, also allows the Company, subject to certain limitations, to begin amortizing $250,000 of its related party subordinated notes payable each quarter as long as certain conditions are met. In connection with these changes, the Company paid an amendment fee of $75,000. On May 17, 2022, the Company entered into the Fourth Amendment to the Webster Facility (“Fourth Amendment”). The purpose of the amendment was to increase the Term Loan to $5,000,000, generating proceeds of $1,945,000 and establish a capital expenditure line of credit in the amount of $2,000,000 which the Company can draw upon from time to time to finance purchases of machinery and equipment, reduce the monthly principal installments to be made in respect to the term loan and increase the amount of capital expenditures that the Company may make each year. The principle payments are $59,524 per month commencing in June 2022 with a balloon payment due on December 30, 2025. In connection with these changes, the Company paid an amendment fee of $20,000. Under the terms of the Webster Facility, both the Webster revolving line of credit and the Webster term loan will bear an interest rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum. The average interest rate charged was 3.60% and 3.50% the three months ended June 30, 2022 and 2021, respectively and was 3.55% and 3.50% for the six months ended June 30, 2022 and 2021, respectively. All amendment fees paid in connection with the Webster Facility are included in Deferred Financing Costs, Net, Deposits and Other Assets, in the accompanying Condensed Consolidated Balance Sheets and are amortized over the term of the loan. In connection with the Webster Facility, the Company is required to maintain a defined Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each Fiscal Quarter. The Webster Facility limits the amount of Capital Expenditures and dividends the Company can pay to its stockholders. Substantially all of the Company’s assets are pledged as collateral under the Webster Facility. As of June 30, 2022, the Company was in compliance with all financial loan covenants. Finance Lease Obligations The Company entered into a Finance lease in December of 2021 for the purchase of new manufacturing equipment. The obligation for the Finance lease totaled $0 and $263,000 as of June 30, 2022 and December 31, 2021, respectively. The lease had an imputed interest rate of 4.2% per annum and was payable monthly with the final payment due on December 17, 2026. In connection with the Fourth Amendment, this Finance Lease was paid in full. Loan Payable – Financed Asset The Company financed the purchase of a delivery vehicle in July 2020. The loan obligation totaled $35,000 and $39,000 as of June 30, 2022 and December 31, 2021, respectively. The loan bears no interest and a final payment is due and payable for all unpaid principal on July 20, 2026. The future minimum loan payments are as follows: For the period ending Amount December 31, 2022 (remainder of the year) $ 4,000 December 31, 2023 9,000 December 31, 2024 9,000 December 31, 2025 9,000 December 31, 2026 4,000 Loans Payable - financed assets 35,000 Less: Current portion (9,000 ) Long-term portion $ 26,000 Related Party Notes Payable Taglich Brothers, Inc. is a corporation co-founded by two directors of the Company, Michael and Robert Taglich. Taglich Brothers, Inc. has acted as placement agent for various debt and equity financing transactions and has received cash and equity compensation for their services. From 2016 through 2020, the Company entered into various subordinated notes payable and convertible subordinated notes payable with Michael and Robert Taglich. These notes resulted in proceeds to the Company totaling $6,550,000. In connection with these notes, Michael and Robert were issued a total of 355,082 shares of common stock and Taglich Brothers Inc. was issued promissory notes totaling $554,000 for placement agency fees. At December 31, 2020, related party notes payable totaled $6,012,000 and accrued interest totaled $400,000. On January 1, 2021, the related party subordinated notes due to Michael and Robert Taglich and Taglich Brothers, Inc., were amended to include all accrued interest through December 31, 2020 in the principal balance of the notes. Per the terms of the Webster Facility, these notes remain subordinate to the Webster Facility and are due on July 1, 2026. Approximately $2,732,000 of the related party convertible subordinated notes can be converted at the option of the holder into Common Stock of the Company at $1.50 per share, while the remaining $2,080,000 of the related party convertible subordinated notes can be converted at the option of the holder into common stock of the Company at $0.93 per share. There are no principal payments due on these notes. Under the terms of the Third Amendment to the Webster Facility, the Company is now allowed, subject to certain limitations, to begin making principal payments of $250,000 per quarter of this subordinated debt. The note holders and the principal balance of the notes as amended on January 1, 2021 are shown below: Michael Taglich, Robert Taglich, Taglich Brothers, Chairman Director Inc. Total Convertible Subordinated Notes $ 2,666,000 $ 1,905,000 $ 241,000 $ 4,812,000 Subordinated Notes 1,250,000 350,000 - 1,600,000 Total $ 3,916,000 $ 2,255,000 $ 241,000 $ 6,412,000 For the three and six months ended June 30, 2022, no principal payments have been made on these notes and the principal balances remain unchanged from the table above. Interest expense for the three months ended June 30, 2022 and 2021 on all related party notes payable was $126,000 and $125,000, respectively, and $251,000 and $250,000 for the six months ended June 30, 2022 and 2021, respectively. On July 14, 2022, a principal payment in the amount of $250,000 was made against the Subordinated Notes due to Michael Taglich. This payment was made pursuant to the conditions set forth in the Third Amendment to the Webster Facility. |
Liability Related to the Sale o
Liability Related to the Sale of Future Proceeds from Disposition of Subsidiary | 6 Months Ended |
Jun. 30, 2022 | |
Liability Related To Sale Of Future Proceeds From Disposition Of Subsidiary Abstract | |
LIABILITY RELATED TO THE SALE OF FUTURE PROCEEDS FROM DISPOSITION OF SUBSIDIARY | Note 6. LIABILITY RELATED TO THE SALE OF FUTURE PROCEEDS FROM DISPOSITION OF SUBSIDIARY In connection with the sale of the Company’s wholly-owned subsidiary, AMK Welding, Inc. (“AMK”) to Meyer Tool, Inc., (“Meyer”) in 2017, Meyer was obligated to pay the Company within 30 days after the end of each calendar quarter, commencing April 1, 2017, an amount equal to five (5%) percent of the net sales of AMK for that quarter until the aggregate payments made to the Company (the “Meyer Agreement”) equals $1,500,000 (the “Maximum Amount”). In order to increase liquidity, on January 15, 2019, the Company entered into a “Purchase Agreement” with 15 accredited investors (the “Purchasers”), including Michael and Robert Taglich, pursuant to which the Company assigned to the Purchasers all of its rights, title and interest to the remaining $1,137,000 of the $1,500,000 in payments due from Meyer for the sale of AMK (the “Remaining Amount”) for an immediate payment of $800,000, including $100,000 from each of Michael and Robert Taglich, and $75,000 for the benefit of the children of Michael Taglich. The timing of the payments is based upon the net sales of AMK. If the Purchasers have not received the entire Remaining Amount by March 31, 2023, they have the right to demand payment of their pro rata portion of the unpaid Remaining Amount from the Company (“Put Right”). To the extent the Purchasers exercise their Put Right, the remaining payments from Meyer will be retained by the Company. The Company recognized $5,000 and $91,000 of non-cash income for the three months ended June 30, 2022 and 2021, respectively, and $94,000 and $195,000 of non-cash income for the six months ended June 30, 2022 and 2021, respectively, reflected in “other income, net” on the condensed consolidated statements of operations and recorded $0 and $27,000 of related non-cash interest expense related to the Purchase Agreement for the three months ended June 30, 2022 and 2021, respectively, and $38,000 and $58,000 for the six months ended June 30, 2022 and 2021, respectively. The table below shows the activity within the liability account for: June 30, 2022 December 31, 2021 (unaudited) Liabilities related to sale of future proceeds from disposition of subsidiaries - beginning balance $ 59,000 $ 322,000 Non-Cash other income recognized (94,000 ) (360,000 ) Non-Cash interest expense recognized 35,000 97,000 Liabilities related to sale of future proceeds from disposition of subsidiary - ending balance - 59,000 Less: unamortized transaction costs - (3,000 ) Liability related to sale of future proceeds from disposition of subsidiary, net $ - $ 56,000 The accredited investors have received the entire $1,137,000 due from Meyer and the Company has no remaining liability to the purchasers pursuant to the Purchase Agreement. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Note 7. STOCKHOLDERS’ EQUITY Common Stock – Sale and Other Issuances The Company issued 64,292 and 37,392 shares of common stock in payment of director fees totaling $54,000 and $52,000 for the three months ended June 30, 2022 and 2021, respectively, and 119,507 and 79,352 shares totaling $108,000 and $104,000 for the six months ended June 30, 2022 and 2021, respectively. Additionally, the Company issued 51,224 shares of common stock upon the cashless exercise of stock options during the six months ended June 30, 2021. During the third quarter of 2022, the Company issued 77,157 shares of common stock in payment of directors’ fees totaling $54,000. Issuance of Stock Options Issued in 2022 On January 31, 2022, the Company granted certain employees, stock options to purchase an aggregate of 30,000 shares of the Company’s common stock at a price of $0.85 per share. The options expire on the fifth anniversary of the grant date and vest over a term of three years. On April 6, 2022, the Company granted to its directors, stock options to purchase an aggregate of 60,000 shares of the Company’s common stock at a price of $0.84 per share. The options expire on the fifth anniversary of the grant date and vest over a term of one year. On April 11, 2022, the Company granted to certain members of management and certain employees, stock options to purchase an aggregate of 530,000 shares of the Company’s common stock at a price of $0.84 per share. The options expire on the fifth anniversary of the grant date and vest over a term of three years. Issued in 2021 On January 11, 2021, the Company granted to its directors, stock options to purchase an aggregate of 70,000 shares of the Company’s common stock at a price of $1.32 per share. The options expire on the seventh anniversary of the grant date and vested over a term of one year. On March 24, 2021, the Company granted to certain members of management and certain employees, stock options to purchase an aggregate of 327,500 shares of the Company’s common stock at a price of $1.39 per share. The options expire on the fifth anniversary of the grant date and vest over a term of three years. On July 30, 2021, the Company granted to certain members of management and certain employees, stock options to purchase an aggregate of 415,000 shares of the Company’s common stock at a price of $1.22 per share. The options expire on the fifth anniversary of the grant date and vest over a term of one to three years. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Contingencies [Abstract] | |
CONTINGENCIES | Note 8. CONTINGENCIES A number of actions have been commenced against the Company by vendors, landlords and former landlords, including a third party claim as a result of an injury suffered on a portion of a leased property not occupied by the Company. As certain of these claims represent amounts included in accounts payable they are not specifically discussed herein. On October 2, 2018, Contract Pharmacal Corp. (“Contract Pharmacal”) commenced an action, relating to a Sublease entered into between the Company and Contract Pharmacal in May 2018 with respect to the property that was formerly occupied by its subsidiary WMI, at 110 Plant Avenue, Hauppauge, New York. In the action Contract Pharmacal sought damages for an amount in excess of $1,000,000 for the Company’s failure to make the entire premises available by the Sublease commencement date. On July 8, 2021, the Court denied Contract Phamacal’s motion for summary judgement. In the Order, the court granted Contract Pharmacal’s Motions to drop its claim for specific performance and to amend its Complaint to reduce its claim for damages to $700,000. Contract Pharmacal filed a Motion to reargue which the Court denied on November 30, 2021. On March 10, 2022, Contract Pharmacal filed an appeal to the Court’s decision with the Appellate Division which the Company will oppose. The Company disputes the validity of the claims asserted by Contract Pharmacal and intends to dispute the validity of the claim asserted by Contract Pharmacal. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Note 9. INCOME TAXES The Company recorded no income tax expense for the three and six months ended June 30, 2022 and 2021 because the estimated annual effective tax rate was zero. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits and net operating loss carry forwards, and available tax planning alternatives. As of June 30, 2022, and December 31, 2021, the Company provided a full valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 10. SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of this filing. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Inventory Valuation | Inventory Valuation For annual periods, the Company values inventory at the lower of cost on a first-in-first-out basis or estimated net realizable value. The Company does not take physical inventories at interim quarterly reporting periods. For interim periods, substantially all of the inventory value has been estimated using a gross profit percentage based on the annual gross profit percentage of the immediately preceding year as applied to the net sales of the current period. Adjustments to reconcile the annual physical inventory to the Company’s books are recorded in the fourth quarter. |
Credit and Concentration Risks | Credit and Concentration Risks There were three customers that represented 66.2% and 76.2% of total net sales for the three months ended June 30, 2022 and 2021, respectively. This is set forth in the table below. Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 29.5 % 41.3 % 2 26.4 % 20.8 % 3 10.3 % * 4 ** 14.1 % * Customer was less than 10% of sales for the three months ended June 30, 2021. ** Customer was less than 10% of sales for the three months ended June 30, 2022. There were four customers that represented 77.9% and three customers that represented 77.0% of total net sales for the six months ended June 30, 2022 and 2021, respectively. This is set forth in the table below. Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 28.4 % 34.4 % 2 25.8 % 26.9 % 3 13.7 % 15.7 % 4 10.0 % * * Customer was less than 10% of sales for the six months ended June 30, 2021. There were three customers that represented 67.7% and 74.7% of gross accounts receivable at June 30, 2022 and December 31, 2021, respectively. This is set forth in the table below. Percentage of Receivables Customer June 30, December 31, 1 43.4 % 50.3 % 2 12.5 % 12.7 % 3 11.8 % 11.7 % |
Disaggregation of Revenue | Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the three and six month periods ending June 30, 2022 and 2021: Three Months Ended Six Months Ended Product June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Military $ 11,801,000 $ 13,332,000 $ 22,134,000 $ 25,835,000 Commercial 2,207,000 2,121,000 3,936,000 3,330,000 Total $ 14,008,000 $ 15,453,000 $ 26,070,000 $ 29,165,000 |
Concentration of Credit Risk | Concentration of Credit Risk During the period, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. |
Major Suppliers | Major Suppliers The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed. |
Customer Deposits | Customer Deposits The Company receives advance payments on certain contracts with the remainder of the contract balance due upon the shipment of the final product once the customer inspects and approves the product for shipment. At that time, the entire amount will be recognized as revenue and the deposit will be applied to the customer’s invoice. At June 30, 2022 and December 31, 2021, customer deposits were $1,417,000 and $1,470,000 respectively. The Company recognized revenue of $0 and $53,000 during the three and six months ended June 30, 2022, respectively, that was included in the customer deposits balance as of December 31, 2021. The Company recognized revenue of $370,000 and $375,000 during the three and six months ended June 30, 2021, respectively, that was included in the customer deposits balance as of December 31, 2020. |
Backlog | Backlog Backlog represents executed non-cancellable contracts that represent firm orders that are deliverable over the next 18- month period. As of June 30, 2022, backlog relating to remaining performance obligations in contracts was approximately $73,000,000. We expect to recognize revenue amounts in future periods related to these remaining performance obligations as follows: approximately $25,000,000 to $30,000,000 of our backlog during the remainder of 2022, approximately $25,000,000 to $30,000,000 from January 1, 2023 - June 30, 2023, and approximately $13,000,000 to $18,000,000 from July 1, 2023 through December 31, 2023. This expectation is based on the Company’s belief that raw material will be delivered on time from its suppliers, and that its customers will accept delivery as scheduled. |
Leases | Leases The Company accounts for leases under ASC 842, “Leases.” All leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of- use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. See Note 4. |
Earnings (Loss) per share | Earnings (Loss) per share Basic earnings (loss) per share (“EPS”) is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. For purposes of calculating diluted earnings per common share, the numerator includes net income (loss) plus interest on convertible notes payable assumed converted as of the first day of the period. The denominator includes both the weighted-average number of shares of common stock outstanding during the period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially include stock options and warrants using the treasury stock method and convertible notes payable using the if-converted method. The following is the calculation of net income (loss) applicable to common stockholders utilized to calculate EPS: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net (Loss) Income - Basic $ (7,000 ) $ 239,000 $ (35,000 ) $ 87,000 Add: Convertible Note Interest for Potential Note Conversion - 77,000 - 155,000 (Loss) Income used to calculate diluted earnings per share $ (7,000 ) $ 316,000 $ (35,000 ) $ 242,000 The following is a reconciliation of the denominators of basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 32,213,769 32,021,522 32,212,853 31,996,859 Effect of dilutive stock options and warrants - 1,912,500 - 2,750,500 Effect of dilutive convertible notes payable - 4,057,892 - 4,057,892 Weighted average shares outstanding and dilutive securities The following securities have been excluded from the calculation as the exercise price was greater than the average market price of the common shares: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Stock Options 2,364,332 456,000 2,364,332 98,000 Warrants 760,000 1,903,000 760,000 1,423,000 3,124,332 2,359,000 3,124,332 1,521,000 The following securities have been excluded from the calculation because the effect of including these potential shares was anti-dilutive due to the net loss incurred during that period: Three and Six Months Ended June 30, 2022 June 30, (Unaudited) (Unaudited) Convertible notes payable 4,058,000 - 4,058,000 - |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation expense for employees amounted to $141,000 and $57,000 for the three months ended June 30, 2022 and 2021, respectively, and $207,000 and $214,000 for the six months ended June 30, 2022 and 2021, respectively. Stock compensation expense for directors amounted to $54,000 and $52,000 for the three months ended June 30, 2022 and 2021, respectively and $108,000 and $104,000 for the six months ended June 30, 2022 and 2021, respectively. Stock compensation expense for employees and directors was included in operating expenses on the accompanying Condensed Consolidated Statements of Operations. |
Goodwill | Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $163,000 at both June 30, 2022 and December 31, 2021 relates to the acquisition of NTW. Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Effective January 1, 2022, the Company adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06), which is intended to address issues identified as a result of the complexity associated with applying accounting principles generally accepted in the United States of America for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance on the basis of feedback from financial statement users. The adoption of ASU 2020-06 did not have a material effect on the Company’s financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies. The Company is currently assessing the impact ASU 2016-13 will have on its consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of credit and concentration risks | Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 29.5 % 41.3 % 2 26.4 % 20.8 % 3 10.3 % * 4 ** 14.1 % Percentage of Sales Customer June 30, June 30, (Unaudited) (Unaudited) 1 28.4 % 34.4 % 2 25.8 % 26.9 % 3 13.7 % 15.7 % 4 10.0 % * Percentage of Receivables Customer June 30, December 31, 1 43.4 % 50.3 % 2 12.5 % 12.7 % 3 11.8 % 11.7 % |
Schedule of revenue from contracts with customers | Three Months Ended Six Months Ended Product June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Military $ 11,801,000 $ 13,332,000 $ 22,134,000 $ 25,835,000 Commercial 2,207,000 2,121,000 3,936,000 3,330,000 Total $ 14,008,000 $ 15,453,000 $ 26,070,000 $ 29,165,000 |
Schedule of net income (loss) applicable to common stockholders | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net (Loss) Income - Basic $ (7,000 ) $ 239,000 $ (35,000 ) $ 87,000 Add: Convertible Note Interest for Potential Note Conversion - 77,000 - 155,000 (Loss) Income used to calculate diluted earnings per share $ (7,000 ) $ 316,000 $ (35,000 ) $ 242,000 |
Schedule of basic and diluted earnings per share | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 32,213,769 32,021,522 32,212,853 31,996,859 Effect of dilutive stock options and warrants - 1,912,500 - 2,750,500 Effect of dilutive convertible notes payable - 4,057,892 - 4,057,892 Weighted average shares outstanding and dilutive securities |
Schedule of exercise price was greater than the average market price | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (Unaudited) (Unaudited) (Unaudited) (Unaudited) Stock Options 2,364,332 456,000 2,364,332 98,000 Warrants 760,000 1,903,000 760,000 1,423,000 3,124,332 2,359,000 3,124,332 1,521,000 |
Schedule of anti-dilutive due to the net loss | Three and Six Months Ended June 30, 2022 June 30, (Unaudited) (Unaudited) Convertible notes payable 4,058,000 - 4,058,000 - |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, 2022 2021 Land $ 300,000 $ 300,000 Buildings and Improvements 1,902,000 1,723,000 Machinery and Equipment 22,638,000 22,013,000 Finance Lease Machinery and Equipment 375,000 375,000 Tools and Instruments 13,302,000 12,866,000 Automotive Equipment 266,000 200,000 Furniture and Fixtures 290,000 290,000 Leasehold Improvements 882,000 882,000 Computers and Software 604,000 583,000 Total Property and Equipment 40,559,000 39,232,000 Less: Accumulated Depreciation (32,136,000 ) (30,828,000 ) Property and Equipment, net $ 8,423,000 $ 8,404,000 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure Text Block [Abstract] | |
Schedule of operating and finance leases | June 30, December 31, 2022 2021 (unaudited) Weighted Average Remaining Lease Term - in years 4.14 4.53 Weighted Average discount rate - % 8.95 % 8.89 % |
Schedule of aggregate undiscounted cash flows of operating lease payments | Amount December 31, 2022 (remainder of year) $ 507,000 December 31, 2023 1,038,000 December 31, 2024 1,070,000 December 31, 2025 992,000 December 31, 2026 730,000 Total future minimum lease payments 4,337,000 Less: discount (741,000 ) Total operating lease maturities 3,596,000 Less: current portion of operating lease liabilities (731,000 ) Total long term portion of operating lease maturities $ 2,865,000 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt [Abstract] | |
Schedule of notes payable, related party notes payable and finance lease obligations | June 30, December 31, 2022 2021 (unaudited) Revolving loan payable to Webster Bank (F/K/A Sterling National Bank) (“Webster”) $ 13,344,000 $ 12,456,000 Term loan, Webster 4,879,000 4,192,000 Finance lease obligations - 263,000 Loans payable - financed assets 35,000 39,000 Related party subordinated notes payable 6,412,000 6,412,000 Subtotal 24,670,000 23,362,000 Less: Current portion (14,066,000 ) (14,112,000 ) Long Term Portion $ 10,604,000 $ 9,250,000 |
Schedule of payments due under the term loan | For the period ending Amount December 31, 2022 (remainder of the year) $ 357,000 December 31, 2023 714,000 December 31, 2024 714,000 December 31, 2025 3,156,000 Webster Term Loan payable 4,941,000 Less: debt issuance costs (62,000 ) Total Webster Term Loan payable, net of debt issuance costs 4,879,000 Less: Current portion of Webster Term Loan payable (714,000 ) Total long-term portion of Webster Term Loan payable $ 4,165,000 |
Schedule of future minimum loan payments | For the period ending Amount December 31, 2022 (remainder of the year) $ 4,000 December 31, 2023 9,000 December 31, 2024 9,000 December 31, 2025 9,000 December 31, 2026 4,000 Loans Payable - financed assets 35,000 Less: Current portion (9,000 ) Long-term portion $ 26,000 |
Schedule of amortizing a portion of this subordinated debt | Michael Taglich, Robert Taglich, Taglich Brothers, Chairman Director Inc. Total Convertible Subordinated Notes $ 2,666,000 $ 1,905,000 $ 241,000 $ 4,812,000 Subordinated Notes 1,250,000 350,000 - 1,600,000 Total $ 3,916,000 $ 2,255,000 $ 241,000 $ 6,412,000 |
Liability Related to the Sale_2
Liability Related to the Sale of Future Proceeds from Disposition of Subsidiary (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Liability Related To Sale Of Future Proceeds From Disposition Of Subsidiary Abstract | |
Schedule of activity within the liability account | June 30, 2022 December 31, 2021 (unaudited) Liabilities related to sale of future proceeds from disposition of subsidiaries - beginning balance $ 59,000 $ 322,000 Non-Cash other income recognized (94,000 ) (360,000 ) Non-Cash interest expense recognized 35,000 97,000 Liabilities related to sale of future proceeds from disposition of subsidiary - ending balance - 59,000 Less: unamortized transaction costs - (3,000 ) Liability related to sale of future proceeds from disposition of subsidiary, net $ - $ 56,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customers | 3 | ||||
Customer deposits | $ 1,417,000 | $ 1,417,000 | $ 1,470,000 | ||
Revenue recognized | 0 | $ 370,000 | $ 53,000 | $ 375,000 | |
Backlog represents executed non-cancellable contracts description | Backlog represents executed non-cancellable contracts that represent firm orders that are deliverable over the next 18- month period. As of June 30, 2022, backlog relating to remaining performance obligations in contracts was approximately $73,000,000. We expect to recognize revenue amounts in future periods related to these remaining performance obligations as follows: approximately $25,000,000 to $30,000,000 of our backlog during the remainder of 2022, approximately $25,000,000 to $30,000,000 from January 1, 2023 - June 30, 2023, and approximately $13,000,000 to $18,000,000 from July 1, 2023 through December 31, 2023. This expectation is based on the Company’s belief that raw material will be delivered on time from its suppliers, and that its customers will accept delivery as scheduled. | ||||
Stock based compensation expense | 141,000 | $ 57,000 | $ 207,000 | $ 214,000 | |
Goodwill | $ 163,000 | $ 163,000 | $ 163,000 | ||
Three Customers [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customers | 3 | ||||
Concentration risk percentage | 66.20% | 76.20% | 77% | ||
Four Customers [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customers | 4 | ||||
Concentration risk percentage | 77.90% | ||||
Customer [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Concentration risk percentage | 10% | ||||
Accounts Receivable [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Number of customers | 3 | ||||
Concentration risk percentage | 67.70% | 74.70% | |||
Director [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Stock based compensation expense | $ 54,000 | $ 52,000 | $ 108,000 | $ 104,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of credit and concentration risks | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | ||||
Receivables [Member] | Customer One [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 43.40% | 50.30% | ||||||
Receivables [Member] | Customers Two [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 12.50% | 12.70% | ||||||
Receivables [Member] | Customers Three [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 11.80% | 11.70% | ||||||
Sales [Member] | Customer One [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 29.50% | 41.30% | 28.40% | 34.40% | ||||
Sales [Member] | Customers Two [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 26.40% | 20.80% | 25.80% | 26.90% | ||||
Sales [Member] | Customers Three [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | 10.30% | [1] | 13.70% | 15.70% | ||||
Sales [Member] | Customers Four [Member] | ||||||||
Concentration Risk [Line Items] | ||||||||
Credit and Concentration Risks | [2] | 14.10% | 10% | [1] | ||||
[1]Customer was less than 10% of sales for the three months ended June 30, 2021.[2]Customer was less than 10% of sales for the three months ended June 30, 2022. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of revenue from contracts with customers - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total | $ 14,008,000 | $ 15,453,000 | $ 26,070,000 | $ 29,165,000 |
Military [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 11,801,000 | 13,332,000 | 22,134,000 | 25,835,000 |
Commercial [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | $ 2,207,000 | $ 2,121,000 | $ 3,936,000 | $ 3,330,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of net income (loss) applicable to common stockholders - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule Of Net Income Loss Applicable To Common Stockholders Abstract | ||||
Net (Loss) Income - Basic | $ (7,000) | $ 239,000 | $ (35,000) | $ 87,000 |
Add: Convertible Note Interest for Potential Note Conversion | 77,000 | 155,000 | ||
(Loss) Income used to calculate diluted earnings per share | $ (7,000) | $ 316,000 | $ (35,000) | $ 242,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of basic and diluted earnings per share - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule Of Basic And Diluted Earnings Per Share Abstract | ||||
Weighted average shares outstanding used to compute basic earnings per share | 32,213,769 | 32,021,522 | 32,212,853 | 31,996,859 |
Effect of dilutive stock options and warrants | $ 1,912,500 | $ 2,750,500 | ||
Effect of dilutive convertible notes payable | $ 4,057,892 | $ 4,057,892 | ||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share | 32,213,769 | 37,991,914 | 32,212,853 | 38,805,251 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details) - Schedule of exercise price was greater than the average market price - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule Of Exercise Price Was Greater Than The Average Market Price Abstract | ||||
Stock Options | $ 2,364,332 | $ 456,000 | $ 2,364,332 | $ 98,000 |
Warrants | 760,000 | 1,903,000 | 760,000 | 1,423,000 |
Total | $ 3,124,332 | $ 2,359,000 | $ 3,124,332 | $ 1,521,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details) - Schedule of anti-dilutive due to the net loss - Convertible Notes Payable [Member] - USD ($) | Jun. 30, 2022 | Jun. 30, 2021 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Convertible notes payable | $ 4,058,000 | |
Total | $ 4,058,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Property and Equipment (Details) [Line Items] | |||||
Depreciation expense | $ 643,000 | $ 704,000 | $ 1,308,000 | $ 1,417,000 | |
Property, Plant and Equipment [Member] | |||||
Property and Equipment (Details) [Line Items] | |||||
Accumulated depreciation | $ 10,000 | $ 10,000 | $ 36,000 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | $ 40,559,000 | $ 39,232,000 |
Less: Accumulated Depreciation | (32,136,000) | (30,828,000) |
Property and Equipment, net | 8,423,000 | 8,404,000 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 300,000 | 300,000 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 1,902,000 | 1,723,000 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 22,638,000 | 22,013,000 |
Finance Lease Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 375,000 | 375,000 |
Tools and Instruments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 13,302,000 | 12,866,000 |
Automotive Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 266,000 | 200,000 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 290,000 | 290,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | 882,000 | 882,000 |
Computers and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total Property and Equipment | $ 604,000 | $ 583,000 |
Leases (Details)
Leases (Details) | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure Text Block [Abstract] | |
Operating lease term description | The leases have remaining lease terms of one to five years, some of which include options to extend or terminate the leases. |
Remaining lease term | 1 year |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating and finance leases | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule Of Operating And Finance Leases Abstract | ||
Weighted Average Remaining Lease Term - in years | 4 years 1 month 20 days | 4 years 6 months 10 days |
Weighted Average discount rate - % | 8.95% | 8.89% |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of aggregate undiscounted cash flows of operating lease payments | Jun. 30, 2022 USD ($) |
Schedule Of Aggregate Undiscounted Cash Flows Of Operating Lease Payments Abstract | |
December 31, 2022 (remainder of year) | $ 507,000 |
December 31, 2023 | 1,038,000 |
December 31, 2024 | 1,070,000 |
December 31, 2025 | 992,000 |
December 31, 2026 | 730,000 |
Total future minimum lease payments | 4,337,000 |
Less: discount | (741,000) |
Total operating lease maturities | 3,596,000 |
Less: current portion of operating lease liabilities | (731,000) |
Total long term portion of operating lease maturities | $ 2,865,000 |
Debt (Details)
Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Jul. 14, 2022 | Dec. 07, 2021 | Nov. 04, 2020 | May 17, 2022 | Apr. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 30, 2025 | Dec. 01, 2020 | |
Debt (Details) [Line Items] | |||||||||||||
Expires date | Dec. 30, 2025 | ||||||||||||
Outstanding under the revolving loan | $ 13,343,000 | $ 13,343,000 | |||||||||||
Revolving loan | 4,879,000 | ||||||||||||
Webster revolving loan, description | As of December 31, 2021, our debt to Webster in the amount of $16,648,000 consisted of the Webster Revolving Loan in the amount of $12,456,000 and the Webster term loan in the amount of $4,192,000. | ||||||||||||
Interest expense | 147,000 | $ 180,000 | $ 302,000 | $ 261,000 | |||||||||
Line of credit, description | On December 7, 2021, the Company entered into the Third Amendment to the Webster Facility (“Third Amendment”). The purpose of the amendment was to provide a maturity date for the Webster Facility of December 30, 2025 as compared to the original maturity date of December 30, 2022. Such amendment also increased the Revolving Line of Credit to its current limit of $20,000,000 (up from the original $16,000,000) and also provided for a similar increase in the inventory sublimit to $14,000,000 (up from the original $11,000,000). The Third Amendment, also allows the Company, subject to certain limitations, to begin amortizing $250,000 of its related party subordinated notes payable each quarter as long as certain conditions are met. In connection with these changes, the Company paid an amendment fee of $75,000. | In 2020, the Company entered into the First Amendment to the Webster Facility which increased the Term Loan to $5,685,000 and required the Company to make monthly principal installments in the amount of $67,679 beginning on December 1, 2020. Other minor modifications were made and the Company paid an amendment fee of $20,000. | On May 17, 2022, the Company entered into the Fourth Amendment to the Webster Facility (“Fourth Amendment”). The purpose of the amendment was to increase the Term Loan to $5,000,000, generating proceeds of $1,945,000 and establish a capital expenditure line of credit in the amount of $2,000,000 which the Company can draw upon from time to time to finance purchases of machinery and equipment, reduce the monthly principal installments to be made in respect to the term loan and increase the amount of capital expenditures that the Company may make each year. The principle payments are $59,524 per month commencing in June 2022 with a balloon payment due on December 30, 2025. In connection with these changes, the Company paid an amendment fee of $20,000. | ||||||||||
Term loan | $ 5,000,000 | $ 5,685,000 | |||||||||||
Principle payments | 59,524 | $ 67,679 | |||||||||||
Amendment fee | $ 75,000 | $ 10,000 | 20,000 | ||||||||||
Excess cash flow percentage | 25% | ||||||||||||
Excess cash flow payments | $ 854,000 | $ 558,750 | |||||||||||
Loan proceeds | 1,945,000 | ||||||||||||
Capital expenditure line of credit | 2,000,000 | ||||||||||||
Amendment fee paid | $ 20,000 | ||||||||||||
Webster facility, description | Under the terms of the Webster Facility, both the Webster revolving line of credit and the Webster term loan will bear an interest rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum. The average interest rate charged was 3.60% and 3.50% the three months ended June 30, 2022 and 2021, respectively and was 3.55% and 3.50% for the six months ended June 30, 2022 and 2021, respectively. | ||||||||||||
Finance lease | $ 0 | 263,000 | |||||||||||
Interest rate | 4.20% | ||||||||||||
Loan obligation | 35,000 | $ 35,000 | $ 39,000 | ||||||||||
Number of directors | 2 | ||||||||||||
Related party notes payable, description | From 2016 through 2020, the Company entered into various subordinated notes payable and convertible subordinated notes payable with Michael and Robert Taglich. These notes resulted in proceeds to the Company totaling $6,550,000. In connection with these notes, Michael and Robert were issued a total of 355,082 shares of common stock and Taglich Brothers Inc. was issued promissory notes totaling $554,000 for placement agency fees. At December 31, 2020, related party notes payable totaled $6,012,000 and accrued interest totaled $400,000. | ||||||||||||
Related party convertible amount | $ 2,732,000 | ||||||||||||
Subordinated debt | $ 250,000 | $ 250,000 | |||||||||||
Interest expense | $ 125,000 | $ 126,000 | $ 251,000 | $ 250,000 | |||||||||
Common Stock [Member] | |||||||||||||
Debt (Details) [Line Items] | |||||||||||||
Price per share (in Dollars per share) | $ 1.5 | ||||||||||||
Forecast [Member] | |||||||||||||
Debt (Details) [Line Items] | |||||||||||||
Revolving loan | $ 20,000,000 | ||||||||||||
Related Party [Member] | |||||||||||||
Debt (Details) [Line Items] | |||||||||||||
Related party convertible amount | $ 2,080,000 | ||||||||||||
Price per share (in Dollars per share) | $ 0.93 | ||||||||||||
Webster Facility [Member] | |||||||||||||
Debt (Details) [Line Items] | |||||||||||||
Loan facility, description | In connection with the Webster Facility, the Company is required to maintain a defined Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each Fiscal Quarter. |
Debt (Details) - Schedule of no
Debt (Details) - Schedule of notes payable, related party notes payable and finance lease obligations - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Schedule Of Notes Payable Related Party Notes Payable And Finance Lease Obligations Abstract | ||
Revolving loan payable to Webster Bank (F/K/A Sterling National Bank) (“Webster”) | $ 13,344,000 | $ 12,456,000 |
Term loan, Webster | 4,879,000 | 4,192,000 |
Finance lease obligations | 263,000 | |
Loans payable - financed assets | 35,000 | 39,000 |
Related party subordinated notes payable | 6,412,000 | 6,412,000 |
Subtotal | 24,670,000 | 23,362,000 |
Less: Current portion | (14,066,000) | (14,112,000) |
Long Term Portion | $ 10,604,000 | $ 9,250,000 |
Debt (Details) - Schedule of pa
Debt (Details) - Schedule of payments due under the term loan - Term Loans [Member] | Jun. 30, 2022 USD ($) |
Debt Instrument [Line Items] | |
December 31, 2022 (remainder of the year) | $ 357,000 |
December 31, 2023 | 714,000 |
December 31, 2024 | 714,000 |
December 31, 2025 | 3,156,000 |
Webster Term Loan payable | 4,941,000 |
Less: debt issuance costs | (62,000) |
Total Webster Term Loan payable, net of debt issuance costs | 4,879,000 |
Less: Current portion of Webster Term Loan payable | (714,000) |
Total long-term portion of Webster Term Loan payable | $ 4,165,000 |
Debt (Details) - Schedule of fu
Debt (Details) - Schedule of future minimum loan payments - Loans Payable [Member] | Jun. 30, 2022 USD ($) |
Debt (Details) - Schedule of future minimum loan payments [Line Items] | |
December 31, 2022 (remainder of the year) | $ 4,000 |
December 31, 2023 | 9,000 |
December 31, 2024 | 9,000 |
December 31, 2025 | 9,000 |
December 31, 2026 | 4,000 |
Loans Payable - financed assets | 35,000 |
Less: Current portion | (9,000) |
Long-term portion | $ 26,000 |
Debt (Details) - Schedule of am
Debt (Details) - Schedule of amortizing a portion of this subordinated debt | Jun. 30, 2022 USD ($) |
Debt (Details) - Schedule of amortizing a portion of this subordinated debt [Line Items] | |
Convertible Subordinated Notes | $ 4,812,000 |
Subordinated Notes | 1,600,000 |
Total | 6,412,000 |
Michael Taglich, Chairman [Member] | |
Debt (Details) - Schedule of amortizing a portion of this subordinated debt [Line Items] | |
Convertible Subordinated Notes | 2,666,000 |
Subordinated Notes | 1,250,000 |
Total | 3,916,000 |
Robert Taglich, Director [Member] | |
Debt (Details) - Schedule of amortizing a portion of this subordinated debt [Line Items] | |
Convertible Subordinated Notes | 1,905,000 |
Subordinated Notes | 350,000 |
Total | 2,255,000 |
Taglich Brothers, Inc. [Member] | |
Debt (Details) - Schedule of amortizing a portion of this subordinated debt [Line Items] | |
Convertible Subordinated Notes | 241,000 |
Subordinated Notes | |
Total | $ 241,000 |
Liability Related to the Sale_3
Liability Related to the Sale of Future Proceeds from Disposition of Subsidiary (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jan. 15, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Liability Related To Sale Of Future Proceeds From Disposition Of Subsidiary Abstract | |||||
Sale of subsidiary, description | In connection with the sale of the Company’s wholly-owned subsidiary, AMK Welding, Inc. (“AMK”) to Meyer Tool, Inc., (“Meyer”) in 2017, Meyer was obligated to pay the Company within 30 days after the end of each calendar quarter, commencing April 1, 2017, an amount equal to five (5%) percent of the net sales of AMK for that quarter until the aggregate payments made to the Company (the “Meyer Agreement”) equals $1,500,000 (the “Maximum Amount”). | ||||
Purchase agreement, description | In order to increase liquidity, on January 15, 2019, the Company entered into a “Purchase Agreement” with 15 accredited investors (the “Purchasers”), including Michael and Robert Taglich, pursuant to which the Company assigned to the Purchasers all of its rights, title and interest to the remaining $1,137,000 of the $1,500,000 in payments due from Meyer for the sale of AMK (the “Remaining Amount”) for an immediate payment of $800,000, including $100,000 from each of Michael and Robert Taglich, and $75,000 for the benefit of the children of Michael Taglich. The timing of the payments is based upon the net sales of AMK. If the Purchasers have not received the entire Remaining Amount by March 31, 2023, they have the right to demand payment of their pro rata portion of the unpaid Remaining Amount from the Company (“Put Right”). To the extent the Purchasers exercise their Put Right, the remaining payments from Meyer will be retained by the Company. | ||||
Non-cash income | $ 5,000 | $ 91,000 | $ 94,000 | $ 195,000 | |
Non-cash interest expense | 0 | $ 27,000 | 38,000 | $ 58,000 | |
Investors received due from meyer | $ 1,137,000 | $ 1,137,000 |
Liability Related to the Sale_4
Liability Related to the Sale of Future Proceeds from Disposition of Subsidiary (Details) - Schedule of activity within the liability account - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Schedule Of Activity Within The Liability Account Abstract | ||
Liabilities related to sale of future proceeds from disposition of subsidiaries - beginning balance | $ 59,000 | $ 322,000 |
Non-Cash other income recognized | (94,000) | (360,000) |
Non-Cash interest expense recognized | 35,000 | 97,000 |
Liabilities related to sale of future proceeds from disposition of subsidiary - ending balance | 59,000 | |
Less: unamortized transaction costs | (3,000) | |
Liability related to sale of future proceeds from disposition of subsidiary, net | $ 56,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||
Apr. 11, 2022 | Apr. 06, 2022 | Jul. 30, 2021 | Mar. 24, 2021 | Jan. 11, 2021 | Jan. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Stockholders' Equity (Details) [Line Items] | ||||||||||||
Shares issued of common stock for cashless exercise of stock options | 51,224 | |||||||||||
Common stock shares issued | 32,247,513 | 32,247,513 | 32,128,006 | |||||||||
Aggregate of stock options | 530,000 | 60,000 | 415,000 | 327,500 | 70,000 | 30,000 | ||||||
Common stock price per share (in Dollars per share) | $ 0.84 | $ 0.84 | $ 1.22 | $ 1.39 | $ 1.32 | $ 0.85 | ||||||
Vest term | 3 years | 1 year | 3 years | 1 year | 3 years | |||||||
Common Stock [Member] | ||||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||||
Shares issued | 64,292 | 37,392 | 119,507 | 79,352 | ||||||||
Director fees (in Dollars) | $ 54,000 | $ 52,000 | $ 108,000 | $ 104,000 | ||||||||
Minimum [Member] | ||||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||||
Vest term | 1 year | |||||||||||
Maximum [Member] | ||||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||||
Vest term | 3 years | |||||||||||
Third Quarter [Member] | ||||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||||
Common stock shares issued | 77,157 | |||||||||||
Directors fees totaling (in Dollars) | $ 54,000 |
Contingencies (Details)
Contingencies (Details) - USD ($) | Jul. 08, 2021 | Oct. 02, 2018 |
Contingencies [Abstract] | ||
Damages amount | $ 1,000,000 | |
Damages claim | $ 700,000 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Annual effective tax rate | 0% | 0% | 0% | 0% |