| SIGNIFICANT ACCOUNTING POLICIES | Revenue
Recognition Revenues
are recorded as shipments are made based upon contract prices. Any losses anticipated on fixed price contracts are provided for
currently. Sales are recorded net of sales returns, allowances and discounts. Deferred
Revenue represents prepayments from customers and will be recognized as revenue when the products are shipped per the terms of
the contract. On May 28,
2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Short-Term
Investments The Company
has $2,038,000 in short-term investments at February 24, 2018. Short-term investments consist of certificates of deposits with
maturities greater than 90 days. These investments are reported at historical cost, which approximates fair value. All highly
liquid investments with maturities of 90 days or less are classified as cash equivalents. All short-term investments are securities
which the Company has the ability and intent to hold to maturity and mature within one year. Inventories Inventories
are stated at lower of cost or net realizable value and include material, labor and manufacturing overhead. All inventories are
valued using the FIFO (first-in, first-out) method of inventory valuation. The Company determines the need to write inventory
down to the lower of cost or net realizable value via an analysis based on the usage of inventory over a three year period and
projected usage based on current backlog. In July 2015,
the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Income
Taxes The Company
accounts for income taxes using the asset and liability method. Under this method the Company records deferred income taxes for
the temporary differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates
expected to be in effect when such amounts are realized or settled. The resulting deferred tax liabilities and assets are adjusted
to reflect changes in tax law or rates in the period that includes the enactment date. The Company
records a liability for an unrecognized tax benefit for a tax position that is not “more-likely-than-not” to be sustained.
The Company did not record any liability for uncertain tax positions as of February 24, 2018 and November 30, 2017. On December
22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into United States tax law, which among other provisions
lowered the corporate tax rate to 21%. Our effective
tax rate decreased from 32% for the three months ended February 25, 2017 to 20% for the three months ended
February 24, 2018 due primarily to the enactment of the Tax Act on December 22, 2017. In December
2017, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") 118 to provide guidance for companies
that allows for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the
related tax impacts under ASC 740. In accordance with SAB 118, a company must reflect the income tax effect of those aspects of
the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax
effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, the company must record a provisional
estimate in the financial statements. ASC 740 requires
the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation
is enacted. Consequently, as of the date of enactment, and during the three months ended February 24, 2018, we revalued all deferred
tax assets and liabilities at the newly enacted Federal corporate US income tax rate. This revaluation as of enactment resulted
in a non-cash provisional estimate of $77,000 to income tax expense and a corresponding reduction in the net deferred
tax asset. Property,
Plant, and Equipment Property,
plant, and equipment are carried at cost, and depreciation is provided using the straight-line method at rates based upon the
following estimated useful lives (in years) of the assets:
Buildings 15
Facility improvements 8-15
Machinery and equipment 5-10
Furniture and fixtures 5-8 The Company
assesses long-lived assets for impairment in accordance with Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement Repairs and
maintenance are expensed as incurred. Improvements which extend the useful lives of property, plant, and equipment are capitalized. Research
and Development Costs Costs for
the design and development of new products are expensed as incurred. |
