| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition The core principle of revenue recognition
under accounting principles generally accepted in the Unites States of America (GAAP) is that the Company should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The Company's revenue on the majority
of its customer contracts are recognized at a point in time, generally upon shipment of products. To achieve that core principle, the
Company applies the following steps:
1. Identify the contract(s) with a customer. The Company designs, manufactures and
distributes various types of microelectronic circuits, optoelectronics, and sensors and displays. The Company’s products are used
as components and assemblies in a broad range of military, space, medical and industrial systems, including aircraft instrumentation and
navigation systems, satellite systems, power supplies, electronic controls, computers, medical devices, and high-temperature (200 o The Company’s revenues are from
purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval
and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial
substance and collectability of consideration is probable.
2. Identify the performance obligations in the contract. The majority of the Company’s
purchase orders or contracts with customers contain a single performance obligation, the shipment of products.
3. Determine the transaction price. The transaction price reflects the
Company’s expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped
based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that
was negotiated, we will generate more or less profit or could incur a loss.
4. Allocate the transaction price to the performance obligations in the contract. The Company’s transaction price
is the fixed price per unit per each delivery upon shipment.
5. Recognize revenue when (or as) the Company satisfies a performance obligation. This performance obligation is satisfied
when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders
for products to be delivered over multiple dates that may extend across reporting periods. The Company accounting policy treats shipping
and handling activities as a fulfillment cost. The Company invoices for each delivery upon shipment and recognizes revenues at the fixed
price for each distinct product delivered when transfer of control has occurred, which is generally upon shipment. For certain contracts under which the
Company produces products with no alternative use and for which the Company has an enforceable right to payment during the production
cycle, the Company recognizes revenue for the cost incurred of work in process plus a margin at the end of each period and records a contract
asset (unbilled receivable). The majority of these products are shipped weekly and monthly to the customers and the contracts require
us to manage and limit the level of work in process to meet the scheduled delivery dates. In addition, the Company may have a
contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed, and performance
obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied. Disaggregation of Revenue The following table summarizes the Company’s net sales by product
line.
Schedule of net sales by product line
Nov. 30, 2022 Nov. 30, 2021
Microelectronics $ 7,998 $ 7,803
Optoelectronics 7,913 7,124
Sensors and Displays 11,874 12,365
$ 27,785 $ 27,292
Timing of revenue recognition
Recognized at a point in time $ 23,678 $ 23,555
Recognized over time 4,107 3,737
Total Revenue $ 27,785 $ 27,292 The following table summarizes the Company’s net sales by major
market.
Schedule of net sales by major market
2022 Sales by Major Market
Military Space Medical Commercial Total
Domestic Direct $ 10,669 $ 1,148 $ 3,213 $ 1,403 $ 16,433
Domestic Distribution 7,993 1,508 - 829 10,330
International 233 351 - 438 1,022
$ 18,895 $ 3,007 $ 3,213 $ 2,670 $ 27,785
2021 Sales by Major Market
Military Space Medical Commercial Total
Domestic Direct $ 10,157 $ 2,364 $ 3,621 $ 498 $ 16,640
Domestic Distribution 7,945 861 - 644 9,450
International 222 751 - 229 1,202
$ 18,324 $ 3,976 $ 3,621 $ 1,371 $ 27,292 Receivables, net, Contract
Assets and Contract Liabilities The timing of revenue recognition, billings and cash collections results
in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities)
on the Consolidated Balance Sheet. Receivables, net, contract assets
and contract liabilities were as follows:
Schedule of Receivables, net, contract assets and contract liabilities
November
30, 2022 November
30, 2021 December
1, 2020
Receivables, net $ 3,644 $ 4,974 $ 2,639
Contract assets $ 408 $ 603 $ 512
Deferred Revenue $ 1,192 $ 1,258 $ 111 Revenue recognized in 2022 that was included in the deferred
revenue liability balance at the beginning of the year was $ 103,000 Contract costs The Company does not have material incremental costs to obtain a contract in
the form of sales commissions or bonuses. The Company incurs other immaterial costs to obtain and fulfill a contract; however, the Company
has elected the practical expedient under ASC 340-40-24-4 to recognize all incremental costs to obtain a contract as an expense when incurred
if the amortization period is one year or less. 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. 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 November 30, 2022 or November 30, 2021. 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:
Schedule of Property Plant and Equipment Useful Lives
Buildings 15 40
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 Construction in progress relates to multiple capital
projects ongoing during the years ended November 30, 2022 and 2021, including the construction of the new manufacturing facility. Construction
in progress also includes interest and fees on debt that are directly related to the financing of the Company’s capital projects. 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. Basic and Diluted Earnings Per Share Basic and diluted earnings per share are computed
based upon the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all dilutive
potential common shares. During 2022 and 2021, the Company had no Use of Estimates The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. |
