Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 05, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Entity File Number | 1-5332 | |
Entity Registrant Name | P&F INDUSTRIES, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-1657413 | |
Entity Address, Address Line One | 445 Broadhollow Road, Suite 100 | |
Entity Address, City or Town | Melville | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11747 | |
City Area Code | 631 | |
Local Phone Number | 694-9800 | |
Title of 12(b) Security | Class A common stock, $1.00 par value | |
Trading Symbol | PFIN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,181,286 | |
Entity Central Index Key | 0000075340 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash | $ 642,000 | $ 539,000 |
Accounts receivable - net | 9,043,000 | 7,550,000 |
Inventories | 27,548,000 | 24,021,000 |
Prepaid expenses and other current assets | 4,558,000 | 4,566,000 |
TOTAL CURRENT ASSETS | 41,791,000 | 36,676,000 |
PROPERTY AND EQUIPMENT | ||
Land | 507,000 | 507,000 |
Buildings and improvements | 3,767,000 | 3,605,000 |
Machinery and equipment | 26,665,000 | 25,675,000 |
Property, Plant and Equipment, Gross | 30,939,000 | 29,787,000 |
Less accumulated depreciation and amortization | 22,121,000 | 21,707,000 |
NET PROPERTY AND EQUIPMENT | 8,818,000 | 8,080,000 |
GOODWILL | 5,275,000 | 4,447,000 |
OTHER INTANGIBLE ASSETS - net | 5,427,000 | 5,592,000 |
DEFERRED INCOME TAXES - net | 446,000 | 349,000 |
RIGHT-OF-USE ASSETS - OPERATING LEASES | 3,771,000 | 2,969,000 |
OTHER ASSETS - net | 73,000 | 77,000 |
TOTAL ASSETS | 65,601,000 | 58,190,000 |
CURRENT LIABILITIES | ||
Short-term borrowings | 12,522,000 | 5,765,000 |
Accounts payable | 3,845,000 | 2,920,000 |
Accrued compensation and benefits | 790,000 | 1,475,000 |
Accrued other liabilities | 1,350,000 | 1,078,000 |
Current leased liabilities - operating leases | 909,000 | 840,000 |
TOTAL CURRENT LIABILITIES | 19,416,000 | 12,078,000 |
Noncurrent leased liabilities - operating leases | 2,915,000 | 2,176,000 |
Other liabilities | 89,000 | 96,000 |
TOTAL LIABILITIES | 22,420,000 | 14,350,000 |
SHAREHOLDERS' EQUITY | ||
Preferred stock - $10 par; authorized - 2,000,000 shares; no shares issued | ||
Additional paid-in capital | 14,176,000 | 14,167,000 |
Retained earnings | 35,428,000 | 36,046,000 |
Treasury stock, at cost - 1,273,000 shares on December 31, 2021 and 2020 | (10,213,000) | (10,213,000) |
Accumulated other comprehensive loss | (663,000) | (613,000) |
TOTAL SHAREHOLDERS' EQUITY | 43,181,000 | 43,840,000 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 65,601,000 | 58,190,000 |
Common Class A | ||
SHAREHOLDERS' EQUITY | ||
Common stock | 4,453,000 | 4,453,000 |
Common Class B | ||
SHAREHOLDERS' EQUITY | ||
Common stock | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par value (in dollars per share) | $ 10 | $ 10 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury stock, shares | 1,273,000 | 1,273,000 |
Common Class A | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 7,000,000 | 7,000,000 |
Common stock, shares issued | 4,453,000 | 4,453,000 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||
Net revenue | $ 14,021,000 | $ 13,945,000 |
Cost of sales | 9,510,000 | 9,309,000 |
Gross profit | 4,511,000 | 4,636,000 |
Selling, general and administrative expenses | 5,173,000 | 4,991,000 |
Operating loss | (662,000) | (355,000) |
Interest expense | (52,000) | (22,000) |
Loss income before income taxes | (714,000) | (377,000) |
Income tax benefit | 96,000 | 70,000 |
Net income (loss) | $ (618,000) | $ (307,000) |
Basic earnings (loss) per share | $ (0.19) | $ (0.10) |
Diluted earnings (loss) per share | $ (0.19) | $ (0.10) |
Weighted average common shares outstanding: | ||
Basic | 3,169,000 | 3,169,000 |
Diluted | 3,169,000 | 3,169,000 |
Net loss | $ (618,000) | $ (307,000) |
Other comprehensive (loss) income - foreign currency translation adjustment | (50,000) | 15,000 |
Total comprehensive income (loss) | $ (668,000) | $ (292,000) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Class ACommon Stock | Additional paid-in capital | Retained earnings | Treasury stock | Accumulated other comprehensive loss | Total |
Balance at Dec. 31, 2020 | $ 4,428,000 | $ 14,144,000 | $ 33,756,000 | $ (10,213,000) | $ (577,000) | $ 41,538,000 |
Balance (in shares) at Dec. 31, 2020 | 4,428,000 | (1,273,000) | ||||
Net Income | $ 0 | 0 | (307,000) | $ 0 | 0 | (307,000) |
Restricted common stock compensation | $ 25,000 | (12,000) | 0 | 0 | 0 | 13,000 |
Restricted common stock compensation (in shares) | 25,000 | |||||
Stock-based compensation | $ 0 | 2,000 | 0 | 0 | 0 | 2,000 |
Foreign currency translation adjustment | 0 | 0 | 0 | 0 | 15,000 | 15,000 |
Balance at Mar. 31, 2021 | $ 4,453,000 | 14,134,000 | 33,449,000 | $ (10,213,000) | (562,000) | 41,261,000 |
Balance (in shares) at Mar. 31, 2021 | 4,453,000 | (1,273,000) | ||||
Balance at Dec. 31, 2021 | $ 4,453,000 | 14,167,000 | 36,046,000 | $ (10,213,000) | (613,000) | 43,840,000 |
Balance (in shares) at Dec. 31, 2021 | 4,453,000 | (1,273,000) | ||||
Net Income | $ 0 | 0 | (618,000) | $ 0 | 0 | (618,000) |
Restricted common stock compensation | $ 0 | 8,000 | 0 | 0 | 0 | 8,000 |
Restricted common stock compensation (in shares) | 0 | |||||
Stock-based compensation | $ 0 | 1,000 | 0 | 0 | 0 | 1,000 |
Foreign currency translation adjustment | 0 | 0 | 0 | 0 | (50,000) | (50,000) |
Balance at Mar. 31, 2022 | $ 4,453,000 | $ 14,176,000 | $ 35,428,000 | $ (10,213,000) | $ (663,000) | $ 43,181,000 |
Balance (in shares) at Mar. 31, 2022 | 4,453,000 | (1,273,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (618,000) | $ (307,000) |
Non-cash and other charges: | ||
Depreciation | 443,000 | 451,000 |
Amortization of other intangible assets | 157,000 | 159,000 |
Amortization of operating lease assets | 232,000 | 224,000 |
Amortization of debt issue costs | 4,000 | 4,000 |
Amortization of consideration payable to a customer | 67,000 | 67,000 |
(Recovery of) Provision for losses on accounts receivable | (12,000) | 47,000 |
Stock-based compensation | 1,000 | 2,000 |
Restricted stock-based compensation | 8,000 | 13,000 |
Deferred income taxes | (102,000) | (70,000) |
Loss on disposal of fixed assets | 0 | 2,000 |
Changes in operating assets and liabilities, net of effects of acquisition | ||
Accounts receivable | (844,000) | (2,113,000) |
Inventories | (3,243,000) | (263,000) |
Prepaid expenses and other current assets | (144,000) | 335,000 |
Accounts payable | 716,000 | (483,000) |
Accrued compensation and benefits | 270,000 | 372,000 |
Accrued other liabilities and other current liabilities | (672,000) | (97,000) |
Operating lease liabilities | (226,000) | (219,000) |
Other liabilities | (9,000) | (20,000) |
Total adjustments | (3,354,000) | (1,589,000) |
Net cash used in operating activities | (3,972,000) | (1,896,000) |
Cash Flows from Investing Activities: | ||
Capital expenditures | (380,000) | (68,000) |
Purchase of net assets of the Jackson Gear Company business | (2,300,000) | |
Net cash used in investing activities | (2,680,000) | (68,000) |
Cash Flows from Financing Activities: | ||
Net proceeds from short-term borrowings | 6,757,000 | 2,107,000 |
Net cash provided by financing activities | 6,757,000 | 2,107,000 |
Effect of exchange rate changes on cash | (2,000) | 0 |
Net increase in cash | 103,000 | 143,000 |
Cash at beginning of period | 539,000 | 904,000 |
Cash at end of period | 642,000 | 1,047,000 |
Cash paid for: | ||
Interest | 36,000 | 8,000 |
Cash paid for amounts included in the measurement of operating lease liabilities | 0 | 2,000 |
Non-cash information: | ||
Right of Use ("ROU") assets recognized for new operating lease liabilities | $ 987,000 | $ 23,000 |
BUSINESS AND SUMMARY OF ACCOUNT
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES | |
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES | NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES Basis of Financial Statement Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all normal, recurring adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year. The consolidated balance sheet information as of December 31, 2021, was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Form 10-K”). The unaudited consolidated financial statements contained herein should be read in conjunction with the 2021 Form 10-K. The consolidated financial statements have been reported in U.S. dollars by translating asset and liability amounts of a foreign wholly-owned subsidiary at the closing exchange rate, equity amounts at historical rates and the results of operations and cash flow at the average of the prevailing exchange rates during the periods reported. As a result, the Company is exposed to foreign currency translation gains or losses. These gains or losses are presented in the Company’s consolidated financial statements as “Other comprehensive income (loss) - foreign currency translation adjustment.” Principles of Consolidation The unaudited consolidated financial statements contained herein include the accounts of P&F Industries, Inc., and its subsidiaries (“P&F” or the “Company”). All significant intercompany balances and transactions have been eliminated. The Company P&F, a Delaware corporation incorporated in 1963, conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech Machine, Inc. (“Hy-Tech”). Florida Pneumatic Florida Pneumatic directly, and through its wholly-owned subsidiaries Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”), and Jiffy Air Tool, Inc. (“Jiffy”) imports, manufactures, and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws, and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or a battery. Air tools, as they are more commonly referred to, generally offer better performance, and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from $50 to $1,000, under the names “Florida Pneumatic,” “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatic’s hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers. NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued) The Company - Continued Hy-Tech Hy-Tech designs, manufactures, and markets industrial tools, systems, gearing, accessories, and a wide variety of replacement parts under various brands including ATP, NUMATX, and Thaxton. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $300 to $42,000. Hy-Tech’s “Engineered Solutions” products are sold directly to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving the power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals industries, among others. Hy-Tech works directly with its industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names. Hy-Tech’s “Power Transmission Group", commonly referred to as "PTG", produces spiral bevel and straight bevel gears along with a wide variety of other gearing. These products are sold direct to OEMs, end-users and gearbox repair companies. PTG works directly with its customer's engineering departments to design or redesign gears or gearboxes to optimize a solution for functionality and manufacturability. Nearly all of Hy-Tech brands are manufactured in the United States of America. Hy-Tech markets ATP branded impact sockets, striking wrenches and accessories that are imported from Italy and Asia. Please refer to Note 2 for discussion related to the Company’s acquisition of the Jackson Gear Company business COVID-19 On March 11, 2020, the World Health Organization designated the recent novel coronavirus, or COVID-19, as a global pandemic. COVID-19 was first detected in Wuhan City, Hubei Province, China and continued to spread, significantly impacting various markets around the world, including the United States. Various policies and initiatives have been implemented to reduce the global transmission of COVID-19. The COVID-19 virus and the resultant global economic down-turn had a negative impact on our fiscal 2021 results and continues to negatively impact the Company during the first quarter of 2022. Additionally, we believe the on-going supply-chain crisis is related to a large degree to the pandemic. Beginning in early 2021, and worsening during the latter half of 2021, we encountered severe shipping / receiving delays of inventory / containers from our Asian suppliers, which has caused intermittent shortages of inventory. Further, the Company believes the COVID-19 global pandemic has been and continues to be the primary factor in the exorbitant increases in the cost of international ocean freight. In addition, the COVID-19 pandemic has caused many of the Company's customers and potential customers to refuse or delay on-site visits, which is critical to generating revenue. The Company believes that until the above issues subside, its business will likely continue to be adversely affected. NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued) Going Concern Assessment Management assesses going concern uncertainty to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued, which is referred to as the “look-forward period,” as defined in US GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, it considers various scenarios, forecasts, projections, estimates and makes certain key assumptions, including the timing and nature of projected cash expenditures, its ability to reduce, delay or curtail cash outflows and its ability to raise additional capital, if necessary, among other factors. Management has prepared estimates of operations covering the look-forward period and believes that sufficient funds will be generated from operations, working capital, and its existing credit facility to fund its operations. The Company has contingency plans in which it would further reduce or defer additional expenses and cash outlays, should operations weaken beyond current forecasts. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is unclear what the full impact of COVID-19 will be in the future or when the Company believes a return to more normal operations may occur. The accompanying consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Customer Concentration The Company had one customer that accounted for 30.6% and 36.8% of its consolidated accounts receivable at March 31, 2022 and December 31, 2021, respectively. Further, this customer accounted for 21.5% and 27.2% of the Company’s consolidated revenue during the three-month periods ended March 31, 2022 and 2021, respectively. There was no other customer that accounted for more than 10% of our consolidated revenue during these three -month periods. Management Estimates The preparation of financial statements and related disclosures in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill, intangible assets and other long-lived assets, contingent consideration, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2021 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Significant Accounting Policies The Company’s significant accounting policies are described in “Note 1: Summary of Significant Accounting Policies” of our 2021 Form 10-K. NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued) Lease Accounting The Company adheres to the standards set forth in Accounting Standards Codification (“ASC”) 842, “Leases If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency. The Company’s operating leases include vehicles, office space and the use of real property. The Company has not identified any new material finance leases during the three -month period ended March 31, 2022. The Company considers any options to extend the term of a lease when measuring the Right-of-Use lease asset. For the three -month periods ended March 31, 2022, and 2021, the Company had $232,000 and $224,000, respectively, in operating lease expense. Effective March 1, 2022, the Company and the landlord of the facility located in Punxsutawney, PA. agreed to modify the lease related to the approximate 42,000 square foot premises that was leased by Hy-Tech. This lease modification among other things, increased the rented space to approximately 62,000 square feet, extended the lease termination date to February 2027, and provided two three The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of March 31, 2022: As of March 31, 2022 2022 (excluding the three months ended March 31, 2022) $ 709,000 2023 945,000 2024 670,000 2025 375,000 2026 240,000 Thereafter 1,590,000 Total operating lease payments 4,529,000 Less imputed interest (705,000) Total operating lease liabilities $ 3,824,000 Weighted average remaining lease term 7.6 years Weighted average discount rate 5.96 % NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued) Revenue Recognition The Company’s revenue recognition policies are detailed in its 2021 Form 10-K. The following tables present the Company’s revenues recognized under ASC Topic 606, “Revenue from Contracts with Customers”, for the three -month periods ended March 31, 2022, and 2021. Florida Pneumatic Florida Pneumatic markets its air tool products to four primary sectors within the pneumatic tool market: Retail, Automotive, Industrial and Aerospace. It also generates revenue from its Berkley products line, as well as a line of air filters and other OEM parts , which are reported as Other. Three months ended March 31, 2022 2021 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % Automotive $ 3,881,000 37.7 % $ 4,102,000 37.6 % $ (221,000) (5.4) % Retail 3,020,000 29.5 3,790,000 34.8 (770,000) (20.2) Industrial 1,444,000 14.0 1,359,000 12.5 85,000 6.3 Aerospace 1,777,000 17.3 1,528,000 14.0 249,000 16.3 Other 159,000 1.5 122,000 1.1 37,000 30.3 Total $ 10,281,000 100.0 % $ 10,901,000 100.0 % $ (620,000) (5.7) % Hy-Tech Hy-Tech designs, manufactures, and sells a wide range of industrial products which are categorized as ATP for reporting purposes. In addition to Engineered Solutions, products and components manufactured for other companies under their brands are included in the OEM category in the table below. PTG revenue is comprised of products manufactured and sold by Hy-Tech’s gear business. NUMATX, Thaxton and other peripheral product lines, such as general machining, are reported as Other. Three months ended March 31, 2022 2021 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 1,965,000 52.6 % $ 1,611,000 52.9 % $ 354,000 22.0 % ATP 742,000 19.8 713,000 23.4 29,000 4.1 PTG 940,000 25.1 646,000 21.2 294,000 45.5 Other 93,000 2.5 74,000 2.5 19,000 25.7 Total $ 3,740,000 100.0 % $ 3,044,000 100.0 % $ 696,000 22.9 % Recently Adopted Accounting Pronouncements During the three-month period ended March 31, 2022, there were no accounting pronouncements or other authoritative guidance issued that the Company adopted. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITION | |
ACQUISITION | NOTE 2 - ACQUISITION Effective January 15, 2022, through a wholly-owned subsidiary of Hy-Tech, the Company acquired (the "Acquisition") substantially all the non-real estate assets comprising the business of Jackson Gear Company ("JGC"), a Pennsylvania-based corporation that manufactures and distributes custom gears and power transmission gear products. The purchase price consisted of an aggregate of approximately $2.3 million in cash, which was funded by Revolver (as defined in Note 8) borrowings, and the assumption of certain payables. The Company has incorporated this business into its PTG business and believes that the Acquisition will provide added market exposure into the market for larger gears. In connection with the Acquisition, the Company entered into the Consent, Joinder and Amendment No. 9 ("Amendment No. 9") to the Second Amended and Restated Loan and Security Agreement (the "Credit Agreement"), with Capital One, National Association. Amendment No. 9, among other things, provided consent to the Acquisition. Total Total purchase price $ 2,300,000 The following table presents preliminary purchase price allocation: Accounts receivable $ 490,000 Inventories 369,000 Machinery and equipment 823,000 Goodwill 833,000 Liabilities assumed (215,000) Total estimated purchase price $ 2,300,000 The excess of the total purchase price over the fair value of the net assets acquired is currently being presented as goodwill. The Company has not yet determined the fair value of the identifiable intangible assets. When finalized, any goodwill will be amortized over 15 years for tax purposes, but not deductible for financial reporting purposes. Any identifiable intangible assets subject to amortization will be amortized over 15 years for tax purposes. The following unaudited pro-forma combined financial information gives effect to the Acquisition as if the transaction was consummated on January 1, 2021. This unaudited pro-forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the Acquisition been completed as of January 1, 2021 (the beginning of the earliest period presented) or to project potential operating results as of any future date or for any future periods. For the Three-Month Period Ended March 31, 2021 Revenue $ 14,455,000 Net loss $ (363,000) Loss per share – basic and diluted $ (0.11) |
LOSS PER SHARE
LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
LOSS PER SHARE | |
LOSS PER SHARE | NOTE 3 - LOSS PER SHARE Basic loss per common share is based only on the weighted average number of shares of Common Stock outstanding for the periods. Diluted loss per common share reflects the effect of shares of Common Stock issuable upon the exercise of options unless the effect on earnings is anti-dilutive. Diluted loss per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of Common Stock. The average market value for the period is used as the assumed purchase price. The following table sets forth the elements of basic and diluted loss per common share: Three months ended March 31, 2022 2021 Numerator for basic and diluted loss per common share: Net loss $ (618,000) $ (307,000) Denominator: Denominator for basic loss per share - weighted average common shares outstanding 3,169,000 3,169,000 Dilutive securities (1) — — Denominator for diluted loss per share - weighted average common shares outstanding 3,169,000 3,169,000 (1) At March 31, 2022, and 2021, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period. The weighted average of anti-dilutive stock options outstanding was as follows: Three months ended March 31, 2022 2021 Weighted average anti-dilutive stock options outstanding 135,000 141,000 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 4 – STOCK-BASED COMPENSATION There were no options or shares of the Company's Common Stock granted or issued during the three-month period ended March 31, 2022. Weighted Weighted average average remaining Aggregate exercise contractual life Intrinsic Option shares price (years) Value Outstanding, January 1, 2022 178,499 $ 6.76 3.4 $ 60,643 Granted — — — — Exercised — — — — Forfeited — — — — Expired — — — — Outstanding, March 31, 2022 178,499 $ 6.76 3.2 $ 56,692 Vested, March 31, 2022 175,831 $ 6.73 3.1 $ 56,692 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 5 – FAIR VALUE MEASUREMENTS Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company is required to classify certain assets and liabilities based on the following hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets that can be assessed at the measurement date. Level 2: Inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The guidance requires the use of observable market data if such data is available without undue cost and effort. As of March 31, 2022, and December 31, 2021, the carrying amounts reflected in the accompanying consolidated balance sheets for current assets and current liabilities approximated fair value due to the short-term nature of these accounts. Assets and liabilities measured at fair value on a non-recurring basis include goodwill and intangible assets. Such assets are reviewed quarterly for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). |
ACCOUNTS RECEIVABLE AND ALLOWAN
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | 3 Months Ended |
Mar. 31, 2022 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | NOTE 6 – ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable - net consists of: March 31, 2022 December 31, 2021 Accounts receivable $ 9,293,000 $ 7,817,000 Allowance for doubtful accounts, sales discounts and chargebacks (250,000) (267,000) $ 9,043,000 $ 7,550,000 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORIES | |
INVENTORIES | NOTE 7 – INVENTORIES Inventories consist of: March 31, 2022 December 31, 2021 Raw material $ 2,163,000 $ 2,166,000 Work in process 2,181,000 1,360,000 Finished goods 23,204,000 20,495,000 $ 27,548,000 $ 24,021,000 Inventory increased to $27,548,000 at March 31, 2022, from $24,021,000 at December 31, 2021. This increase, most of which took place at Florida Pneumatic, was due primarily to two factors; to increase safety stock levels, and to fulfill a large retail order that was received in late 2021 that is scheduled to ship during the second quarter of 2022. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Changes in the carrying amount of goodwill are as follows: Balance, January 1, 2022 $ 4,447,000 Goodwill attributable to the acquisition of Jackson Gear Company business (See Note 2) 833,000 Currency translation adjustment (5,000) Balance, March 31, 2022 $ 5,275,000 Other intangible assets March 31, 2022 December 31, 2021 Accumulated Net book Accumulated Net book Cost amortization value Cost amortization value Other intangible assets: Customer relationships (1) $ 6,490,000 $ 3,669,000 $ 2,821,000 $ 6,495,000 $ 3,545,000 $ 2,950,000 Trademarks and trade names (1) 2,180,000 — 2,180,000 2,187,000 — 2,187,000 Trademarks and trade names 200,000 76,000 124,000 200,000 73,000 127,000 Engineering drawings 330,000 257,000 73,000 330,000 254,000 76,000 Non-compete agreements (1) 331,000 293,000 38,000 335,000 290,000 45,000 Patents 1,286,000 1,095,000 191,000 1,286,000 1,079,000 207,000 Totals $ 10,817,000 $ 5,390,000 $ 5,427,000 $ 10,833,000 $ 5,241,000 $ 5,592,000 (1) The weighted average amortization period for intangible assets was as follows: March 31, 2022 December 31, 2021 Customer relationships 6.5 6.7 Trademarks and trade names 9.3 9.5 Engineering drawings 4.9 5.1 Non-compete agreements 1.8 2.0 Patents 4.4 4.5 Amortization expense of intangible assets subject to amortization was as follows: Three months ended March 31, 2022 2021 $ 157,000 $ 159,000 NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS - (Continued) Amortization expense for the balance of 2022, and for each of the next five years and thereafter is estimated to be as follows: April 1 through December 31, 2022 $ 472,000 2023 625,000 2024 576,000 2025 546,000 2026 348,000 Thereafter 680,000 $ 3,247,000 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
DEBT | NOTE 9 – DEBT In October 2010, the Company entered into a Loan and Security Agreement (“Credit Agreement”) with an affiliate of Capital One, National Association (“Capital One” or the “Bank”). The Credit Agreement, as amended and restated in April 2017 and further amended from time-to-time, among other things, provides the ability to borrow funds under a $16,000,000 revolver line (“Revolver”), subject to certain borrowing base criteria. Additionally, there is a $2,000,000 line of credit for capital expenditures (“Capex Loan”), with $1,600,000 available for future borrowings. Revolver and Capex Loan borrowings are secured by the Company’s accounts receivable, inventory, equipment, and real property, among other things. P&F and certain of its subsidiaries are borrowers under the Credit Agreement, and their obligations are cross guaranteed by certain other subsidiaries. The Credit Agreement expires on February 8, 2024. On April 12, 2022, we entered into Amendment No. 10 ("Amendment No. 10") to the Credit Agreement. The substantive matters included in Amendment No. 10 include: ● Increasing the Revolving Commitment by $2,000,000 , to $18,000,000 until June 30, 2022. ● Removing a $10,000,000 cap on inventory availability through June 30, 2022. ● Prohibiting any Capex Loans through June 30, 2022. ● Implementing Secured Overnight Financing Rate ("SOFR") as the new benchmark interest rate immediately, in lieu of LIBOR. Until the effective date of Amendment No. 10, at the Company’s option, Revolver borrowings would bear interest at either LIBOR or the Base Rate, as the terms are defined in the Credit Agreement, plus an Applicable Margin, as defined in the Credit Agreement. Additionally, the Company was subject to limitations on the number of LIBOR borrowings. As noted above, Amendment No. 10, the Company would be required to use SOFR rates instead of LIBOR. The Company will continue to be subject to the number of SOFR borrowings. The Company does not believe that this change from LIBOR to SOFR will have a significant effect on its consolidated financial statements. The Company provides Capital One with monthly borrowing base certificates, and in certain circumstances, it is required to deliver monthly financial statements and certificates of compliance with various financial covenants. Should an event of default occur the interest rate would increase by two percent per annum during the period of default, in addition to other remedies provided to Capital One. At March 31, 2022, short-term or Revolver borrowing was $12,522,000, compared to $5,765,000 at December 31, 2021. (See Note 2, for further discussion related to this increase. Applicable Margin Rates at March 31, 2022 were 1.50% and 0.50%, respectively for LIBOR and Base Rate borrowings. At December 31, 2021, these rates were 1.50% and 0.50%, respectively for LIBOR and Base Rate borrowings. Additionally, at March 31, 2022, and December 31, 2021, there was approximately $3,360,000 and $9,578,000, respectively, available to the Company under its Revolver arrangement. The average balances of short-term borrowings from our Bank for the three -month periods ended March 31, 2022 and 2021, were $10,157,000 and $2,167,000, respectively. |
BUSINESS AND SUMMARY OF ACCOU_2
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES | |
Basis of Financial Statement Presentation | Basis of Financial Statement Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all normal, recurring adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year. The consolidated balance sheet information as of December 31, 2021, was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Form 10-K”). The unaudited consolidated financial statements contained herein should be read in conjunction with the 2021 Form 10-K. The consolidated financial statements have been reported in U.S. dollars by translating asset and liability amounts of a foreign wholly-owned subsidiary at the closing exchange rate, equity amounts at historical rates and the results of operations and cash flow at the average of the prevailing exchange rates during the periods reported. As a result, the Company is exposed to foreign currency translation gains or losses. These gains or losses are presented in the Company’s consolidated financial statements as “Other comprehensive income (loss) - foreign currency translation adjustment.” |
Principles of Consolidation | Principles of Consolidation The unaudited consolidated financial statements contained herein include the accounts of P&F Industries, Inc., and its subsidiaries (“P&F” or the “Company”). All significant intercompany balances and transactions have been eliminated. |
The Company | The Company P&F, a Delaware corporation incorporated in 1963, conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech Machine, Inc. (“Hy-Tech”). Florida Pneumatic Florida Pneumatic directly, and through its wholly-owned subsidiaries Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”), and Jiffy Air Tool, Inc. (“Jiffy”) imports, manufactures, and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws, and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or a battery. Air tools, as they are more commonly referred to, generally offer better performance, and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from $50 to $1,000, under the names “Florida Pneumatic,” “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatic’s hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers. NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued) The Company - Continued Hy-Tech Hy-Tech designs, manufactures, and markets industrial tools, systems, gearing, accessories, and a wide variety of replacement parts under various brands including ATP, NUMATX, and Thaxton. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $300 to $42,000. Hy-Tech’s “Engineered Solutions” products are sold directly to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving the power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals industries, among others. Hy-Tech works directly with its industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names. Hy-Tech’s “Power Transmission Group", commonly referred to as "PTG", produces spiral bevel and straight bevel gears along with a wide variety of other gearing. These products are sold direct to OEMs, end-users and gearbox repair companies. PTG works directly with its customer's engineering departments to design or redesign gears or gearboxes to optimize a solution for functionality and manufacturability. Nearly all of Hy-Tech brands are manufactured in the United States of America. Hy-Tech markets ATP branded impact sockets, striking wrenches and accessories that are imported from Italy and Asia. Please refer to Note 2 for discussion related to the Company’s acquisition of the Jackson Gear Company business COVID-19 On March 11, 2020, the World Health Organization designated the recent novel coronavirus, or COVID-19, as a global pandemic. COVID-19 was first detected in Wuhan City, Hubei Province, China and continued to spread, significantly impacting various markets around the world, including the United States. Various policies and initiatives have been implemented to reduce the global transmission of COVID-19. The COVID-19 virus and the resultant global economic down-turn had a negative impact on our fiscal 2021 results and continues to negatively impact the Company during the first quarter of 2022. Additionally, we believe the on-going supply-chain crisis is related to a large degree to the pandemic. Beginning in early 2021, and worsening during the latter half of 2021, we encountered severe shipping / receiving delays of inventory / containers from our Asian suppliers, which has caused intermittent shortages of inventory. Further, the Company believes the COVID-19 global pandemic has been and continues to be the primary factor in the exorbitant increases in the cost of international ocean freight. In addition, the COVID-19 pandemic has caused many of the Company's customers and potential customers to refuse or delay on-site visits, which is critical to generating revenue. The Company believes that until the above issues subside, its business will likely continue to be adversely affected. |
Going Concern Assessment | Going Concern Assessment Management assesses going concern uncertainty to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued, which is referred to as the “look-forward period,” as defined in US GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, it considers various scenarios, forecasts, projections, estimates and makes certain key assumptions, including the timing and nature of projected cash expenditures, its ability to reduce, delay or curtail cash outflows and its ability to raise additional capital, if necessary, among other factors. Management has prepared estimates of operations covering the look-forward period and believes that sufficient funds will be generated from operations, working capital, and its existing credit facility to fund its operations. The Company has contingency plans in which it would further reduce or defer additional expenses and cash outlays, should operations weaken beyond current forecasts. The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is unclear what the full impact of COVID-19 will be in the future or when the Company believes a return to more normal operations may occur. The accompanying consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. |
Customer Concentration | Customer Concentration The Company had one customer that accounted for 30.6% and 36.8% of its consolidated accounts receivable at March 31, 2022 and December 31, 2021, respectively. Further, this customer accounted for 21.5% and 27.2% of the Company’s consolidated revenue during the three-month periods ended March 31, 2022 and 2021, respectively. There was no other customer that accounted for more than 10% of our consolidated revenue during these three -month periods. |
Management Estimates | Management Estimates The preparation of financial statements and related disclosures in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill, intangible assets and other long-lived assets, contingent consideration, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2021 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Significant Accounting Policies The Company’s significant accounting policies are described in “Note 1: Summary of Significant Accounting Policies” of our 2021 Form 10-K. |
Revenue Recognition | Revenue Recognition The Company’s revenue recognition policies are detailed in its 2021 Form 10-K. The following tables present the Company’s revenues recognized under ASC Topic 606, “Revenue from Contracts with Customers”, for the three -month periods ended March 31, 2022, and 2021. Florida Pneumatic Florida Pneumatic markets its air tool products to four primary sectors within the pneumatic tool market: Retail, Automotive, Industrial and Aerospace. It also generates revenue from its Berkley products line, as well as a line of air filters and other OEM parts , which are reported as Other. Three months ended March 31, 2022 2021 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % Automotive $ 3,881,000 37.7 % $ 4,102,000 37.6 % $ (221,000) (5.4) % Retail 3,020,000 29.5 3,790,000 34.8 (770,000) (20.2) Industrial 1,444,000 14.0 1,359,000 12.5 85,000 6.3 Aerospace 1,777,000 17.3 1,528,000 14.0 249,000 16.3 Other 159,000 1.5 122,000 1.1 37,000 30.3 Total $ 10,281,000 100.0 % $ 10,901,000 100.0 % $ (620,000) (5.7) % Hy-Tech Hy-Tech designs, manufactures, and sells a wide range of industrial products which are categorized as ATP for reporting purposes. In addition to Engineered Solutions, products and components manufactured for other companies under their brands are included in the OEM category in the table below. PTG revenue is comprised of products manufactured and sold by Hy-Tech’s gear business. NUMATX, Thaxton and other peripheral product lines, such as general machining, are reported as Other. Three months ended March 31, 2022 2021 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 1,965,000 52.6 % $ 1,611,000 52.9 % $ 354,000 22.0 % ATP 742,000 19.8 713,000 23.4 29,000 4.1 PTG 940,000 25.1 646,000 21.2 294,000 45.5 Other 93,000 2.5 74,000 2.5 19,000 25.7 Total $ 3,740,000 100.0 % $ 3,044,000 100.0 % $ 696,000 22.9 % |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements During the three-month period ended March 31, 2022, there were no accounting pronouncements or other authoritative guidance issued that the Company adopted. |
BUSINESS AND SUMMARY OF ACCOU_3
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES | |
Schedule of operating lease liabilities | The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of March 31, 2022: As of March 31, 2022 2022 (excluding the three months ended March 31, 2022) $ 709,000 2023 945,000 2024 670,000 2025 375,000 2026 240,000 Thereafter 1,590,000 Total operating lease payments 4,529,000 Less imputed interest (705,000) Total operating lease liabilities $ 3,824,000 Weighted average remaining lease term 7.6 years Weighted average discount rate 5.96 % |
Schedule of Revenue | Hy-Tech Three months ended March 31, 2022 2021 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 1,965,000 52.6 % $ 1,611,000 52.9 % $ 354,000 22.0 % ATP 742,000 19.8 713,000 23.4 29,000 4.1 PTG 940,000 25.1 646,000 21.2 294,000 45.5 Other 93,000 2.5 74,000 2.5 19,000 25.7 Total $ 3,740,000 100.0 % $ 3,044,000 100.0 % $ 696,000 22.9 % |
Schedule of computation of basic and diluted (loss) per common share | The following table sets forth the elements of basic and diluted loss per common share: Three months ended March 31, 2022 2021 Numerator for basic and diluted loss per common share: Net loss $ (618,000) $ (307,000) Denominator: Denominator for basic loss per share - weighted average common shares outstanding 3,169,000 3,169,000 Dilutive securities (1) — — Denominator for diluted loss per share - weighted average common shares outstanding 3,169,000 3,169,000 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACQUISITION | |
Schedule of estimated purchase price of fair value of cash paid contingent consideration | Total Total purchase price $ 2,300,000 |
Schedule of purchase price allocation | The following table presents preliminary purchase price allocation: Accounts receivable $ 490,000 Inventories 369,000 Machinery and equipment 823,000 Goodwill 833,000 Liabilities assumed (215,000) Total estimated purchase price $ 2,300,000 |
Schedule of unaudited pro-forma combined financial information | For the Three-Month Period Ended March 31, 2021 Revenue $ 14,455,000 Net loss $ (363,000) Loss per share – basic and diluted $ (0.11) |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
LOSS PER SHARE | |
Schedule of computation of basic and diluted (loss) per common share | The following table sets forth the elements of basic and diluted loss per common share: Three months ended March 31, 2022 2021 Numerator for basic and diluted loss per common share: Net loss $ (618,000) $ (307,000) Denominator: Denominator for basic loss per share - weighted average common shares outstanding 3,169,000 3,169,000 Dilutive securities (1) — — Denominator for diluted loss per share - weighted average common shares outstanding 3,169,000 3,169,000 |
Schedule of weighted average of anti-dilutive stock options | At March 31, 2022, and 2021, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period. The weighted average of anti-dilutive stock options outstanding was as follows: Three months ended March 31, 2022 2021 Weighted average anti-dilutive stock options outstanding 135,000 141,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
STOCK-BASED COMPENSATION | |
Schedule of share-based compensation stock options | Weighted Weighted average average remaining Aggregate exercise contractual life Intrinsic Option shares price (years) Value Outstanding, January 1, 2022 178,499 $ 6.76 3.4 $ 60,643 Granted — — — — Exercised — — — — Forfeited — — — — Expired — — — — Outstanding, March 31, 2022 178,499 $ 6.76 3.2 $ 56,692 Vested, March 31, 2022 175,831 $ 6.73 3.1 $ 56,692 |
ACCOUNTS RECEIVABLE AND ALLOW_2
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
Schedule of accounts receivable - net | Accounts receivable - net consists of: March 31, 2022 December 31, 2021 Accounts receivable $ 9,293,000 $ 7,817,000 Allowance for doubtful accounts, sales discounts and chargebacks (250,000) (267,000) $ 9,043,000 $ 7,550,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORIES | |
Schedule of inventories | Inventories consist of: March 31, 2022 December 31, 2021 Raw material $ 2,163,000 $ 2,166,000 Work in process 2,181,000 1,360,000 Finished goods 23,204,000 20,495,000 $ 27,548,000 $ 24,021,000 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill are as follows: Balance, January 1, 2022 $ 4,447,000 Goodwill attributable to the acquisition of Jackson Gear Company business (See Note 2) 833,000 Currency translation adjustment (5,000) Balance, March 31, 2022 $ 5,275,000 |
Schedule of other intangible assets | March 31, 2022 December 31, 2021 Accumulated Net book Accumulated Net book Cost amortization value Cost amortization value Other intangible assets: Customer relationships (1) $ 6,490,000 $ 3,669,000 $ 2,821,000 $ 6,495,000 $ 3,545,000 $ 2,950,000 Trademarks and trade names (1) 2,180,000 — 2,180,000 2,187,000 — 2,187,000 Trademarks and trade names 200,000 76,000 124,000 200,000 73,000 127,000 Engineering drawings 330,000 257,000 73,000 330,000 254,000 76,000 Non-compete agreements (1) 331,000 293,000 38,000 335,000 290,000 45,000 Patents 1,286,000 1,095,000 191,000 1,286,000 1,079,000 207,000 Totals $ 10,817,000 $ 5,390,000 $ 5,427,000 $ 10,833,000 $ 5,241,000 $ 5,592,000 (1) The weighted average amortization period for intangible assets was as follows: March 31, 2022 December 31, 2021 Customer relationships 6.5 6.7 Trademarks and trade names 9.3 9.5 Engineering drawings 4.9 5.1 Non-compete agreements 1.8 2.0 Patents 4.4 4.5 |
Schedule of amortization expense of intangible assets | Amortization expense of intangible assets subject to amortization was as follows: Three months ended March 31, 2022 2021 $ 157,000 $ 159,000 Amortization expense for the balance of 2022, and for each of the next five years and thereafter is estimated to be as follows: April 1 through December 31, 2022 $ 472,000 2023 625,000 2024 576,000 2025 546,000 2026 348,000 Thereafter 680,000 $ 3,247,000 |
BUSINESS AND SUMMARY OF ACCOU_4
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - Maturity analysis of the annual undiscounted cash flows (Details) | Mar. 31, 2022USD ($) |
Operating lease liabilities | |
2022 (excluding the three months ended March 31, 2022) | $ 709,000 |
2023 | 945,000 |
2024 | 670,000 |
2025 | 375,000 |
2026 | 240,000 |
Thereafter | 1,590,000 |
Total operating lease payments | 4,529,000 |
Less imputed interest | (705,000) |
Total operating lease liabilities | $ 3,824,000 |
Weighted-average remaining lease term | 7 years 7 months 6 days |
Weighted-average discount rate | 5.96% |
BUSINESS AND SUMMARY OF ACCOU_5
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - Retail automotive industrial and aerospace (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 14,021,000 | $ 13,945,000 |
Florida Pneumatic | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 10,281,000 | $ 10,901,000 |
Percentage of revenue | 100.00% | 100.00% |
Increase (decrease) | $ (620,000) | |
Percentage of Increase (decrease) | (5.70%) | |
Florida Pneumatic | Automotive | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 3,881,000 | $ 4,102,000 |
Percentage of revenue | 37.70% | 37.60% |
Increase (decrease) | $ (221,000) | |
Percentage of Increase (decrease) | (5.40%) | |
Florida Pneumatic | Retail | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 3,020,000 | $ 3,790,000 |
Percentage of revenue | 29.50% | 34.80% |
Increase (decrease) | $ (770,000) | |
Percentage of Increase (decrease) | (20.20%) | |
Florida Pneumatic | Industrial | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 1,444,000 | $ 1,359,000 |
Percentage of revenue | 14.00% | 12.50% |
Increase (decrease) | $ 85,000 | |
Percentage of Increase (decrease) | 6.30% | |
Florida Pneumatic | Aerospace | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 1,777,000 | $ 1,528,000 |
Percentage of revenue | 17.30% | 14.00% |
Increase (decrease) | $ 249,000 | |
Percentage of Increase (decrease) | 16.30% | |
Florida Pneumatic | Other | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 159,000 | $ 122,000 |
Percentage of revenue | 1.50% | 1.10% |
Increase (decrease) | $ 37,000 | |
Percentage of Increase (decrease) | 30.30% | |
Hy-Tech [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 3,740,000 | $ 3,044,000 |
Percentage of revenue | 100.00% | 100.00% |
Increase (decrease) | $ 696,000 | |
Percentage of Increase (decrease) | 22.90% | |
Hy-Tech [Member] | OEM | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 1,965,000 | $ 1,611,000 |
Percentage of revenue | 52.60% | 52.90% |
Increase (decrease) | $ 354,000 | |
Percentage of Increase (decrease) | 22.00% | |
Hy-Tech [Member] | ATP | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 742,000 | $ 713,000 |
Percentage of revenue | 19.80% | 23.40% |
Increase (decrease) | $ 29,000 | |
Percentage of Increase (decrease) | 4.10% | |
Hy-Tech [Member] | PTG | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 940,000 | $ 646,000 |
Percentage of revenue | 25.10% | 21.20% |
Increase (decrease) | $ 294,000 | |
Percentage of Increase (decrease) | 45.50% | |
Hy-Tech [Member] | Other | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 93,000 | $ 74,000 |
Percentage of revenue | 2.50% | 2.50% |
Increase (decrease) | $ 19,000 | |
Percentage of Increase (decrease) | 25.70% |
BUSINESS AND SUMMARY OF ACCOU_6
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - Customer Concentration (Details) - Accounts Receivable [Member] - Customer Concentration Risk [Member] | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Home depot | |||
Schedule Of Summary Of Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 30.60% | 36.80% | |
Amazon.com | |||
Schedule Of Summary Of Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 21.50% | 27.20% |
BUSINESS AND SUMMARY OF ACCOU_7
BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - Additional information (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)ft²item$ / product | Mar. 31, 2021USD ($) | |
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Area of Land | ft² | 42,000 | |
Number of renewal options | $ | 62,000 | |
Renewal term (in years) | 3 years | |
Operating Lease, Expense | $ | $ 232,000 | $ 224,000 |
Florida Pneumatic | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Number Of Types Of Pneumatic Hand Tools Imported Or Manufactured | item | 75 | |
Florida Pneumatic | Minimum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Sale Price Per Product | 50 | |
Florida Pneumatic | Maximum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Sale Price Per Product | 1,000 | |
Hy-Tech [Member] | Minimum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Sale Price Per Product | 300 | |
Hy-Tech [Member] | Maximum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Sale Price Per Product | 42,000 |
ACQUISITION - (Details)
ACQUISITION - (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Business of Jackson Gear Company | |
Business Acquisition [Line Items] | |
Total purchase price | $ 2,300,000 |
ACQUISITION - Purchase price al
ACQUISITION - Purchase price allocation (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||
Goodwill | $ 5,275,000 | $ 4,447,000 |
Business of Jackson Gear Company | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 490,000 | |
Inventories | 369,000 | |
Machinery and equipment | 823,000 | |
Goodwill | 833,000 | |
Liabilities assumed | (215,000) | |
Total estimated purchase price | $ 2,300,000 |
ACQUISITION - Unaudited pro-for
ACQUISITION - Unaudited pro-forma combined financial information (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)$ / shares | |
ACQUISITION | |
Revenue | $ | $ 14,455,000 |
Net income | $ | $ (363,000) |
Earnings per share - Basic | $ / shares | $ (0.11) |
Earnings per share - Diluted | $ / shares | $ (0.11) |
ACQUISITION - Additional inform
ACQUISITION - Additional information (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Business Acquisition [Line Items] | |
Goodwill amortization period (in years) | 15 years |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years |
Payments to Acquire Businesses, Gross | $ 2,300,000 |
Business of Jackson Gear Company | |
Business Acquisition [Line Items] | |
Payments to Acquire Businesses, Gross | $ 2,300,000 |
LOSS PER SHARE - Loss per share
LOSS PER SHARE - Loss per share basic and diluted (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator for basic and diluted loss per common share: | ||
Net loss | $ (618,000) | $ (307,000) |
Denominator: | ||
Denominator for basic loss per share - weighted average common shares outstanding | 3,169,000 | 3,169,000 |
Dilutive securities (1) | 0 | 0 |
Denominator for diluted loss per share - weighted average common shares outstanding | 3,169,000 | 3,169,000 |
LOSS PER SHARE - Weighted avera
LOSS PER SHARE - Weighted average anti-dilutive stock options (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted average antidilutive stock options outstanding | 135,000 | 141,000 |
STOCK-BASED COMPENSATION - Outs
STOCK-BASED COMPENSATION - Outstanding options (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
STOCK-BASED COMPENSATION | ||
Number of Shares, Outstanding | 178,499 | |
Number of Shares, Granted | 0 | |
Number of Shares, Exercised | 0 | |
Number of Shares, Forfeited | 0 | |
Number of Shares, Expired | 0 | |
Number of Shares, Outstanding | 178,499 | 178,499 |
Number of Shares, Vested | 175,831 | |
Weighted Average Exercise Price per share, Outstanding (in dollars per share) | $ 6.76 | |
Weighted Average Exercise Price per share, Granted (in dollars per share) | 0 | |
Weighted Average Exercise Price per share, Exercised (in dollars per share) | 0 | |
Weighted Average Exercise Price per share, Forfeited (in dollars per share) | 0 | |
Weighted Average Exercise Price per share, Expired (in dollars per share) | 0 | |
Weighted Average Exercise Price per share, Outstanding (in dollars per share) | 6.76 | $ 6.76 |
Weighted Average Exercise Price per share, Vested (in dollars per share) | $ 6.73 | |
Weighted Average Remaining Contractual Life, Outstanding (Years) | 3 years 2 months 12 days | 3 years 4 months 24 days |
Weighted Average Remaining Contractual Life, Vested (Years) | 3 years 1 month 6 days | |
Aggregate Intrinsic Value, Outstanding (in dollars) | $ 56,692 | $ 60,643 |
Aggregate Intrinsic Value, Vested (in dollars) | $ 56,692 |
ACCOUNTS RECEIVABLE AND ALLOW_3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||
Accounts receivable | $ 9,293,000 | $ 7,817,000 |
Allowance for doubtful accounts, sales discounts and chargebacks | (250,000) | (267,000) |
Accounts receivable - net | $ 9,043,000 | $ 7,550,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Raw material | $ 2,163,000 | $ 2,166,000 |
Work in process | 2,181,000 | 1,360,000 |
Finished goods | 23,204,000 | 20,495,000 |
Inventories | $ 27,548,000 | $ 24,021,000 |
INVENTORIES - Additional Inform
INVENTORIES - Additional Information (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Inventories | $ 27,548,000 | $ 24,021,000 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying amount of goodwill (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Balance, beginning | $ 4,447,000 |
Goodwill attributable to the acquisition of Jackson Gear Company business (See Note 2) | 833,000 |
Currency translation adjustment | (5,000) |
Balance, ending | $ 5,275,000 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Other intangible assets - (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Other intangible assets: | ||
Cost | $ 10,817,000 | $ 10,833,000 |
Accumulated amortization | 5,390,000 | 5,241,000 |
Net book value | $ 5,427,000 | 5,592,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |
Customer relationships [Member] | ||
Other intangible assets: | ||
Cost | $ 6,490,000 | 6,495,000 |
Accumulated amortization | 3,669,000 | 3,545,000 |
Net book value | $ 2,821,000 | $ 2,950,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years 6 months | 6 years 8 months 12 days |
Trademarks and trade names one [Member] | ||
Other intangible assets: | ||
Cost | $ 2,180,000 | $ 2,187,000 |
Accumulated amortization | 0 | 0 |
Net book value | $ 2,180,000 | $ 2,187,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 9 years 3 months 18 days | 9 years 6 months |
Trademarks and Trade Names Two [Member] | ||
Other intangible assets: | ||
Cost | $ 200,000 | $ 200,000 |
Accumulated amortization | 76,000 | 73,000 |
Net book value | 124,000 | 127,000 |
Engineering drawings [Member] | ||
Other intangible assets: | ||
Cost | 330,000 | 330,000 |
Accumulated amortization | 257,000 | 254,000 |
Net book value | $ 73,000 | $ 76,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years 10 months 24 days | 5 years 1 month 6 days |
Non-compete agreements [Member] | ||
Other intangible assets: | ||
Cost | $ 331,000 | $ 335,000 |
Accumulated amortization | 293,000 | 290,000 |
Net book value | $ 38,000 | $ 45,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year 9 months 18 days | 2 years |
Patents [Member] | ||
Other intangible assets: | ||
Cost | $ 1,286,000 | $ 1,286,000 |
Accumulated amortization | 1,095,000 | 1,079,000 |
Net book value | $ 191,000 | $ 207,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years 4 months 24 days | 4 years 6 months |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense of intangible assets - (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Amortization of Intangible Assets | $ 157,000 | $ 159,000 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated amortization expense (Details) | Mar. 31, 2022USD ($) |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
April 1 through December 31, 2022 | $ 472,000 |
2023 | 625,000 |
2024 | 576,000 |
2025 | 546,000 |
2026 | 348,000 |
Thereafter | 680,000 |
Total | $ 3,247,000 |
DEBT (Details)
DEBT (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Apr. 30, 2017 | |
Debt Instrument [Line Items] | |||||
Short-term Debt | $ 12,522,000 | $ 5,765,000 | |||
Increase in interest rate | 2.00% | ||||
Line of Credit Facility, Average Outstanding Amount | $ 10,157,000 | $ 2,167,000 | |||
Short-term Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 3,360,000 | $ 9,578,000 | |||
Short-term Debt [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | 0.50% | |||
Short-term Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | 1.50% | |||
Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 16,000,000 | ||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | 2,000,000 | ||||
Increase in Revolving Commitment | $ 2,000,000 | ||||
Revolving Credit Facility [Member] | Forecast [Member] | |||||
Debt Instrument [Line Items] | |||||
Increase in Revolving Commitment | $ 18,000,000 | ||||
Amount of cap on inventory availability | $ 10,000,000 | ||||
Capex Borrowing [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,600,000 |