Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2024 | May 10, 2024 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-41503 | |
Entity Registrant Name | INNOVATIVE SOLUTIONS AND SUPPORT, INC. | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 23-2507402 | |
Entity Address, Address Line One | 720 Pennsylvania Drive | |
Entity Address, City or Town | Exton | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19341 | |
City Area Code | 610 | |
Local Phone Number | 646-9800 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | ISSC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,493,705 | |
Entity Central Index Key | 0000836690 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Sep. 30, 2023 |
Current assets | ||
Cash and cash equivalents | $ 574,079 | $ 3,097,193 |
Accounts receivable | 6,061,185 | 9,743,714 |
Contract assets | 1,230,607 | 487,139 |
Inventories | 9,120,870 | 6,139,713 |
Prepaid inventory | 6,775,822 | 12,069,114 |
Prepaid expenses and other current assets | 711,772 | 1,073,012 |
Assets held for sale | 2,063,818 | |
Total current assets | 24,474,335 | 34,673,703 |
Goodwill | 3,557,886 | 3,557,886 |
Intangible assets, net | 15,648,321 | 16,185,321 |
Property and equipment, net | 12,450,425 | 7,892,427 |
Deferred income taxes | 1,173,227 | 456,392 |
Other assets | 319,704 | 191,722 |
Total assets | 57,623,898 | 62,957,451 |
Current liabilities | ||
Current portion of long-term debt | 10,642,885 | 2,000,000 |
Accounts payable | 2,647,123 | 1,337,275 |
Accrued expenses | 2,415,095 | 2,918,325 |
Contract liability | 96,650 | 143,359 |
Total current liabilities | 15,801,753 | 6,398,959 |
Long-term debt | 17,500,000 | |
Other liabilities | 444,440 | 421,508 |
Total liabilities | 16,246,193 | 24,320,467 |
Commitments and contingencies (See Note 6) | ||
Shareholders' equity | ||
Preferred stock, 10,000,000 shares authorized, $.001 par value, of which 200,000 shares are authorized as Class A Convertible stock. No shares issued and outstanding at March 31, 2024 and September 30, 2023 | ||
Common stock, $.001 par value: 75,000,000 shares authorized, 19,556,434 and 19,543,441 issued at March 31, 2024 and September 30, 2023, respectively | 19,556 | 19,543 |
Additional paid-in capital | 54,792,307 | 54,317,265 |
Retained earnings | 7,934,379 | 5,668,713 |
Treasury stock, at cost, 2,096,451 shares at March 31, 2024 and at September 30, 2023 | (21,368,537) | (21,368,537) |
Total shareholders' equity | 41,377,705 | 38,636,984 |
Total liabilities and shareholders' equity | $ 57,623,898 | $ 62,957,451 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Sep. 30, 2023 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 19,556,434 | 19,543,441 |
Treasury stock, shares (in shares) | 2,096,451 | 2,096,451 |
Class A Convertible stock | ||
Preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Net Sales: | ||||
Total net sales | $ 10,739,516 | $ 7,340,454 | $ 20,047,579 | $ 13,856,709 |
Cost of sales: | ||||
Total cost of sales | 5,157,154 | 2,600,303 | 8,942,055 | 5,392,755 |
Gross profit | 5,582,362 | 4,740,151 | 11,105,524 | 8,463,954 |
Operating expenses: | ||||
Research and development | 1,031,119 | 866,198 | 1,932,263 | 1,536,643 |
Selling, general and administrative | 2,908,193 | 2,446,635 | 5,915,012 | 4,708,498 |
Total operating expenses | 3,939,312 | 3,312,833 | 7,847,275 | 6,245,141 |
Operating income | 1,643,050 | 1,427,318 | 3,258,249 | 2,218,813 |
Interest expense | (171,470) | (531,483) | ||
Interest income | 36,200 | 130,951 | 115,679 | 246,843 |
Other income | 26,472 | 23,258 | 44,171 | 41,455 |
Income before income taxes | 1,534,252 | 1,581,527 | 2,886,616 | 2,507,111 |
Income tax expense | 325,936 | 310,424 | 620,950 | 537,357 |
Net income | $ 1,208,316 | $ 1,271,103 | $ 2,265,666 | $ 1,969,754 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.13 | $ 0.11 |
Diluted (in dollars per share) | $ 0.07 | $ 0.07 | $ 0.13 | $ 0.11 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 17,456,120 | 17,352,340 | 17,453,741 | 17,334,553 |
Diluted(in shares) | 17,487,527 | 17,354,030 | 17,481,217 | 17,340,104 |
Product | ||||
Net Sales: | ||||
Total net sales | $ 4,895,589 | $ 5,945,151 | $ 9,319,697 | $ 11,035,358 |
Cost of sales: | ||||
Total cost of sales | 2,347,695 | 2,202,750 | 4,129,040 | 4,618,694 |
Customer Service | ||||
Net Sales: | ||||
Total net sales | 5,098,222 | 1,395,303 | 9,325,469 | 2,454,452 |
Cost of sales: | ||||
Total cost of sales | 2,462,260 | $ 397,553 | 4,189,221 | 716,655 |
Engineering development contracts | ||||
Net Sales: | ||||
Total net sales | 745,705 | 1,402,413 | 366,899 | |
Cost of sales: | ||||
Total cost of sales | $ 347,199 | $ 623,794 | $ 57,406 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | Treasury Stock | Total |
Balance, beginning at Sep. 30, 2022 | $ 19,413 | $ 52,458,121 | $ (359,042) | $ (21,368,537) | $ 30,749,955 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 233,125 | 233,125 | |||
Exercise of stock options | 57 | 408,789 | 408,846 | ||
Net income | 698,651 | 698,651 | |||
Balance, ending at Dec. 31, 2022 | 19,470 | 53,100,035 | 339,609 | (21,368,537) | 32,090,577 |
Balance, beginning at Sep. 30, 2022 | 19,413 | 52,458,121 | (359,042) | (21,368,537) | 30,749,955 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 1,969,754 | ||||
Balance, ending at Mar. 31, 2023 | 19,518 | 53,883,433 | 1,610,712 | (21,368,537) | 34,145,126 |
Balance, beginning at Dec. 31, 2022 | 19,470 | 53,100,035 | 339,609 | (21,368,537) | 32,090,577 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 48 | 783,398 | 783,446 | ||
Net income | 1,271,103 | 1,271,103 | |||
Balance, ending at Mar. 31, 2023 | 19,518 | 53,883,433 | 1,610,712 | (21,368,537) | 34,145,126 |
Balance, beginning at Sep. 30, 2023 | 19,543 | 54,317,265 | 5,668,713 | (21,368,537) | 38,636,984 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 6 | 205,710 | 205,716 | ||
Net income | 1,057,350 | 1,057,350 | |||
Balance, ending at Dec. 31, 2023 | 19,549 | 54,522,975 | 6,726,063 | (21,368,537) | 39,900,050 |
Balance, beginning at Sep. 30, 2023 | 19,543 | 54,317,265 | 5,668,713 | (21,368,537) | 38,636,984 |
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 2,265,666 | ||||
Balance, ending at Mar. 31, 2024 | 19,556 | 54,792,307 | 7,934,379 | (21,368,537) | 41,377,705 |
Balance, beginning at Dec. 31, 2023 | 19,549 | 54,522,975 | 6,726,063 | (21,368,537) | 39,900,050 |
Increase (Decrease) in Stockholders' Equity | |||||
Share-based compensation | 7 | 269,332 | 269,339 | ||
Net income | 1,208,316 | 1,208,316 | |||
Balance, ending at Mar. 31, 2024 | $ 19,556 | $ 54,792,307 | $ 7,934,379 | $ (21,368,537) | $ 41,377,705 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,265,666 | $ 1,969,754 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 826,077 | 171,389 |
Share-based compensation expense | ||
Stock options | 230,535 | 536,142 |
Stock awards | 244,520 | 480,429 |
Gain on disposal of property and equipment | (160,577) | |
Deferred income taxes | (691,803) | (546,370) |
(Increase) decrease in: | ||
Accounts receivable | 3,682,529 | 330,811 |
Contract assets | (743,468) | |
Inventories | (2,227,708) | (550,731) |
Prepaid expenses and other current assets | 393,246 | (77,192) |
Other non-current assets | (134,544) | (107,228) |
Increase (decrease) in: | ||
Accounts payable | 1,309,848 | 790,336 |
Accrued expenses | (382,070) | (736,604) |
Income taxes | (148,703) | 18,821 |
Contract liabilities | (46,709) | (67,452) |
Net cash provided by operating activities | 4,416,839 | 2,212,105 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (308,648) | (80,151) |
Proceeds from the sale of property and equipment | 2,225,810 | |
Net cash provided by (used in) investing activities | 1,917,162 | (80,151) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments of term note | (19,500,000) | |
Proceeds from line of credit note | 24,491,634 | |
Repayments of line of credit note | (13,848,749) | |
Proceeds from exercise of stock options | 408,846 | |
Net cash (used in) provided by financing activities | (8,857,115) | 408,846 |
Net (decrease) increase in cash and cash equivalents | (2,523,114) | 2,540,800 |
Cash and cash equivalents, beginning of year | 3,097,193 | 17,250,546 |
Cash and cash equivalents, end of year | 574,079 | 19,791,346 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for income taxes | 1,461,456 | $ 1,065,506 |
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION | ||
Transfer from prepaid inventory to purchases of property and equipment | 4,539,843 | |
Transfer from prepaid inventory to inventory | $ 753,449 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Certain of Innovative Solutions and Support, Inc.’s (the “Company,” “IS&S,” “we” or “us”) significant accounting policies are described below. All of the Company’s significant accounting policies are disclosed in the notes to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Description of the Company The Company was incorporated in Pennsylvania on February 12, 1988. The Company operates in one business segment as a systems integrator that designs, develops, manufactures, sells and services air data equipment, engine display systems, standby equipment, primary flight guidance, autothrottles and cockpit display systems for retrofit applications and original equipment manufacturers (“OEMs”). The Company supplies integrated flight management systems (“FMS”), flat panel display systems (“FPDS”), FPDS with autothrottle, air data equipment, integrated standby units, integrated standby units with autothrottle and advanced Global Positioning System (“GPS”) receivers that enable reduced carbon footprint navigation, communication and navigation products and inertial reference units. The Company has continued to position itself as a system integrator, which capability provides the Company with the potential to generate more substantive orders over a broader product base. This strategy, as both a manufacturer and integrator, is designed to leverage the latest technologies developed for the computer and telecommunications industries into advanced and cost-effective solutions for the general aviation, commercial air transport and, United States Department of Defense (“DoD”)/governmental and foreign military markets. This approach, combined with the Company’s industry experience, is designed to enable IS&S to develop high-quality products and systems, to reduce product time to market and to achieve cost advantages over products offered by its competitors. On June 30, 2023 (the “Acquisition Date”), the Company entered into an Asset Purchase and License Agreement with Honeywell International, Inc. (“Honeywell”) whereby Honeywell sold certain assets and granted perpetual license rights to manufacture and sell licensed products related to its inertial, communication and navigation product lines (the “Product Lines”) to the Company (the “Transaction”). The Transaction involved a sale of certain inventory, equipment and customer-related documents; an assignment of certain customer contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its inertial, communication and navigation product lines to repair, overhaul, manufacture sell, import, export and distribute certain products to the Company. See Acquisition within Note 2, “Supplemental Balance Sheet Disclosures” below for more details. Basis of Presentation The accompanying unaudited condensed consolidated financial statements are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) in accordance with the disclosure requirements for the quarterly report on Form 10-Q and, therefore, do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete annual financial statements. In the opinion of Company management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the results for the interim periods presented. The condensed consolidated balance sheet as of September 30, 2023 is derived from the audited financial statements of the Company. Operating results for the three- and six-month periods ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024 which cannot be determined at this time. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The financial statements of the Company have been prepared in accordance with GAAP, which require management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Estimates are used in accounting for, among other items, valuation of tangible and intangible assets acquired, long term contracts, evaluation of allowances for doubtful accounts, inventory obsolescence, product warranty cost liabilities, income taxes, engineering and material costs on Engineering Development Contract (“EDC”) programs, percentage of completion on EDC contracts, the useful lives of long-lived assets for depreciation and amortization, the recoverability of long-lived assets, evaluation of goodwill impairment and contingencies. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the condensed consolidated statements of operations in the period they are determined. Principles of Acquisitions The Company evaluates each of its acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “ Business Combinations” The Company accounts for business acquisitions using the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the Company’s condensed consolidated statements of operations. Intangible Assets The Company’s identifiable intangible assets primarily consist of license agreement and customer relationships. Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired and are reported separately from any goodwill recognized. Intangible assets with a finite life are amortized over their estimated useful life and are reported net of accumulated amortization. They are assessed for impairment in accordance with the Company’s policy on assessing long-lived assets for impairment described in the notes of the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Indefinite-lived intangible assets are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-lived intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying amount, the indefinite-lived intangible asset is not considered impaired. Goodwill Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The recorded amounts of goodwill from business combinations are based on management’s best estimates of the fair values of assets acquired and liabilities assumed at the date of acquisition. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company’s goodwill impairment test is performed at the reporting unit level. Reporting units are determined based on an evaluation of the Company’s operating segments and the components making up those operating segments. Goodwill is tested for impairment at fiscal year-end September 30 or in an interim period if certain changes in circumstances indicate a possibility that an impairment may exist. Factors to consider that may indicate an impairment may exist are: ● macroeconomic conditions; ● industry and market considerations, such as a significant adverse change in the business climate; ● cost factors; ● overall financial performance, such as current-period operating results or cash flow declines combined with a history of operating results or cash flow declines; ● a projection or forecast that demonstrates continuing declines in the cash flow or the inability to improve the operations to forecasted levels; and ● any entity-specific events. If the Company determines that it is more likely than not that the fair value of the reporting unit is below the carrying amount as part of its qualitative assessment, a quantitative assessment of goodwill is required. In the quantitative evaluation, the fair value of the reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the goodwill is deemed not to be impaired and no further action is required. If the fair value is less than the carrying value, goodwill is considered impaired and a charge is reported as impairment of goodwill in the condensed consolidated statements of operations. Fair Value of Financial Instruments The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value as the interest rate is variable and approximates current market levels. For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value as follows: Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: ● Quoted prices for similar assets or liabilities in active markets; ● Quoted prices for identical or similar assets in non-active markets; ● Inputs other than quoted prices that are observable for the asset or liability; and ● Inputs that are derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and September 30, 2023, according to the valuation techniques the Company used to determine their fair values. Fair Value Measurement on March 31, 2024 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 501,471 $ — $ — Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — The March 31, 2024 money market funds balance differs from the cash and cash equivalents balance on the condensed consolidated balance sheet due to the timing of sweep transactions within the PNC cash investment accounts. Revenue Recognition The Company enters into sales arrangements with customers that, in general, provide for the Company to design, develop, manufacture, deliver and service large flat-panel display systems, flight information computers, autothrottles and advanced monitoring systems that measure and display critical flight information, including data relative to aircraft separation, airspeed, altitude and engine and fuel data measurements. Revenue from Contracts with Customers The Company accounts for revenue in accordance with ASC 606, “ Revenue from Contracts with Customers” 1) Identify the contract with a customer The Company’s contract with its customers typically is in the form of a purchase order issued to the Company by its customers and, to a lesser degree, in the form of a purchase order issued in connection with a formal contract executed with a customer. For the purpose of accounting for revenue under ASC 606, a contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. Most of our revenue is derived from purchases under which we provide a specific product or service and, as a result, there is only one 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. If the contract contains multiple performance obligation, the Company determines standalone selling price based on the price at which each performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions as well as the cost of the goods or services and the Company’s normal margins for similar performance obligations. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. The Company has also recognized revenue from EDC contracts and is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Contract costs include material, components and third-party avionics purchased from suppliers, direct labor and overhead costs. Contract Estimates Accounting for performance obligations in long-term contracts that are satisfied over time involves the use of various techniques to estimate progress towards satisfaction of the performance obligation. The Company typically measures progress based on costs incurred compared to estimated total contract costs. Contract cost estimates are based on various assumptions to project the outcome of future events that often span more than a single year. These assumptions include the amount of labor and labor costs, the quantity and cost of raw materials used in the completion of the performance obligation and the complexity of the work to be performed. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter in which it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates did not change our revenue and operating earnings (and diluted earnings per share) for the three- and six-month periods ended March 31, 2024 and 2023. Therefore, no adjustment on any contract was material to our condensed consolidated financial statements for the three- and six-month periods ended March 31, 2024 and 2023. Contract Balances Contract assets consist of the right to consideration in exchange for product offerings that we have transferred to a customer under the contract. Contract liabilities primarily relate to consideration received in advance of performance under the contract. The following table reflects the Company’s contract assets and contract liabilities: Contract Contract Assets Liabilities September 30, 2023 $ 487,139 $ 143,359 Amount transferred to receivables from contract assets (363,719) — Contract asset additions 1,107,187 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (92,108) Increases due to invoicing prior to satisfaction of performance obligations — 45,399 March 31, 2024 $ 1,230,607 $ 96,650 Concentrations Major Customers and Products In the three-month period ended March 31, 2024, two customers, Pilatus Aircraft Ltd (“Pilatus”) and Textron Aviation, Inc. (“Textron”), accounted for 28% and 17% of net sales, respectively. In the six-month period ended Mach 31, 2024, one customer, Pilatus accounted for 29% of net sales. In the three-month period ended March 31, 2023, four customers, Pilatus, Challenge Airlines, Air Transport Services Group and Textron, accounted for 21%, 18%, 16% and 10% of net sales, respectively. In the six-month period ended March 31, 2023, four customers, Pilatus, Air Transport Services Group, Textron and Challenge Airlines, accounted for 29%, 15%, 11% and 10% of net sales, respectively. Major Suppliers The Company buys several of its components from sole source suppliers. Although there are a limited number of suppliers of particular components, management believes other suppliers could provide similar components on comparable terms. For the three- and six-month periods ended March 31, 2024, the Company had one and two suppliers, respectively, that were individually responsible for greater than 10% of the Company’s total inventory related purchases. For the three- and six-month periods ended March 31, 2023, the Company had three and four suppliers, respectively, that were individually responsible for greater than 10% of the Company’s total inventory related purchases. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash balances and accounts receivable. The Company invests its excess cash where preservation of principal is the major consideration. Cash balances are maintained with two major banks. Balances on deposit with certain money market accounts and operating accounts may exceed the Federal Deposit Insurance Corporation limits. The Company’s customer base consists principally of companies within the aviation industry. The Company requests advance payments and/or letters of credit from customers that it considers to be credit risks. Recent Accounting Pronouncements In June 2016, FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument” |
Supplemental Balance Sheet Disc
Supplemental Balance Sheet Disclosures | 6 Months Ended |
Mar. 31, 2024 | |
Supplemental Balance Sheet Disclosures | |
Supplemental Balance Sheet Disclosures | 2. Supplemental Balance Sheet Disclosures Acquisition On June 30, 2023, the Company entered into an Asset Purchase and License Agreement with Honeywell whereby Honeywell sold certain assets and granted perpetual license rights to manufacture and sell licensed products related to its inertial, communication and navigation product lines to the Company. The Transaction involves a sale of certain inventory, equipment and customer-related documents; an assignment of certain customer contracts; and a grant of exclusive and non-exclusive licenses to use certain Honeywell intellectual property related to its inertial, communication and navigation product lines to repair, overhaul, manufacture sell, import, export and distribute certain products to the Company. The Transaction allows the Company to diversify its product offerings in the aerospace industry. The Company determined that the Transaction met the definition of a business under ASC 805; therefore, the Company accounted for the Transaction as a business combination and applied the acquisition method of accounting. In connection with the Transaction, the Company entered into a term loan with PNC Bank, National Association for $20.0 million to fund a portion of the Transaction (the “Term Loan”) – refer to Note 9, “Loan Agreement” for further details. The preliminary purchase consideration transferred at the Acquisition Date was $35.9 million, which was entirely cash. The allocation of the purchase price is based upon certain preliminary valuations and other analyses. The allocation of the purchase price has not been finalized as of the date of this filing due to the fact that, while legal control has been transferred, the Company has not received physical possession of all of the prepaid inventory, equipment and construction in progress and thus these assets will be subject to settlement adjustments upon transfer as outlined in the Asset Purchase and License Agreement. The transfer of the prepaid inventory, equipment and construction in progress is expected to occur within the measurement period. As a result, the purchase price amount for the Transaction and the allocation of the preliminary purchase consideration for prepaid inventory, equipment, construction in progress and goodwill are preliminary estimates, may be subject to change within the measurement period. The preliminary allocation of the purchase consideration as of the Acquisition Date is as follows: Amounts Recognized as of Acquisition Date Measurement Purchase Price (as previously reported) Period Adjustments Allocation Cash consideration $ 35,860,000 $ — $ 35,860,000 Total consideration $ 35,860,000 $ — $ 35,860,000 — Prepaid inventory (a) $ 10,036,160 $ 2,032,954 (d) $ 12,069,114 Equipment 2,609,000 (54,000) (d) 2,555,000 Construction in progress 1,238,000 — 1,238,000 Intangible assets (b) 20,900,000 (4,460,000) (d) 16,440,000 Goodwill (c) 4,608,041 (1,050,155) (d)(e) 3,557,886 Assets acquired 39,391,201 (3,531,201) 35,860,000 Accrued expenses (3,531,201) 3,531,201 (e) — Liabilities assumed (3,531,201) 3,531,201 — Net assets acquired $ 35,860,000 $ — $ 35,860,000 (a) Prepaid inventory consists of raw materials and finished goods acquired by the Company but not in the Company’s physical possession as of the Acquisition Date. The fair value of raw materials was estimated to equal the replacement cost. The fair value of finished goods was determined based on the estimated selling price, net of selling costs and a margin on the selling activities, which resulted in a step-up in the value of the finished goods. (b) Intangible assets consist of license agreement related to the license rights to use certain Honeywell intellectual property and customer relationships and are recorded at provisional estimated fair values. The provisional estimated fair value of the license agreement is based on a variation of the income valuation approach and is determined using the relief from royalty method. The provisional estimated fair value of the customer relationships is based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Intangible assets within Note 2, “Supplemental Balance Sheet Disclosures” for further details. (c) Goodwill represents the excess of the preliminary purchase consideration over the provisional fair value of the assets acquired and liabilities assumed. The goodwill recognized is primarily attributable to the expected synergies from the Transaction. Goodwill resulting from the Transaction has been provisionally assigned to the Company’s one operating segment and one reporting unit. The goodwill is not expected to be deductible for income tax purposes. Further, the Company determined that the preliminary goodwill was not impaired as of March 31, 2024 and as such, no impairment charges have been recorded for the three- and six-month periods ended March 31, 2024; the Company also determined that the preliminary goodwill was not impaired as of September 30, 2023. (d) During the fourth quarter of 2023, the Company identified measurement period adjustments related to preliminary fair value estimates. The measurement period adjustments were due to the refinement of inputs used to calculate the fair value of the prepaid inventory, equipment, license agreement and customer relationships, with the assistance of an independent third-party valuation firm based on facts and circumstances that existed as of the Acquisition Date. The adjustments resulted in an overall increase to goodwill of $2.5 million. Additionally, the change to the preliminary fair value estimates did not have a material impact to the condensed consolidated statement of operations. (e) During the fourth quarter of 2023, the Company identified measurement period adjustments related to the preliminary fair value estimates for accrued expenses. While the Asset Purchase and License Agreement indicated an amount of liabilities related to open supplier purchase orders to be assumed by the Company as of the Acquisition Date, it was determined that there were no actual liabilities outstanding related to these open supplier purchase orders as of the Acquisition Date; therefore, the $3.5 million assumed liabilities preliminarily recorded were reversed. The adjustments resulted in an overall decrease to goodwill of $3.5 million; the adjustments have no impact to the condensed consolidated statement of operations. Transition services agreement Concurrent with the Transaction, the Company entered into a transition services agreement (the “TSA”) with Honeywell, at no additional costs, to receive certain transitional services and technical support during the transition service period. The Company accounted for the TSA separate from business combination and have recognized $140,000 in prepaid expenses and other current assets at September 30, 2023 within the condensed consolidated balance sheets for the services to be received in the future from Honeywell. The prepaid expense related to the TSA was determined using the with and without method. Acquisition and related costs In connection with the Transaction, the Company incurred acquisition costs of $408,961, which were expensed as incurred and included in selling, general and administrative expenses in the condensed consolidated statement of operations for the year ended September 30, 2023; the debt issuance costs related to the Term Loan were not material. For the three- and six-month periods ended March 31, 2024, the Company incurred no acquisition costs. Unaudited actual and pro forma information The following unaudited pro forma summary presents consolidated information of the Company, including the Product Lines, as if the Transaction had occurred on October 1, 2021: Three Months Ended Six Months Ended March 31, 2023 Net sales $ 12,213,137 $ 24,811,043 Net income $ 2,740,693 $ 5,072,071 These pro forma results are for illustrative purposes and are not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations. The unaudited pro forma information for all periods presented was adjusted to give effect to pro forma events that are directly attributable to the Transaction and is factually supportable. The adjustments are based on information available to the Company at this time. Accordingly, the adjustments are subject to change and the impact of such changes may be material. The unaudited pro forma results do not include any incremental cost savings that may result from the integration. Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value, net of write-downs for excess and obsolete inventory and consist of the following: March 31, September 30, 2024 2023 Raw materials $ 7,611,331 $ 5,162,177 Work-in-process 1,443,189 966,888 Finished goods 66,350 10,648 $ 9,120,870 $ 6,139,713 Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the following: March 31, September 30, 2024 2023 Prepaid insurance $ 386,743 $ 623,186 Other 325,029 449,826 $ 711,772 $ 1,073,012 Intangible assets The Company’s intangible assets other than goodwill are as follows: As of March 31, 2024 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (805,500) 9,934,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (1,443,785) $ 15,648,321 As of September 30, 2023 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (268,500) 10,471,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (906,785) $ 16,185,321 (a) As part of the Transaction, the Company acquired intangible assets related to the license agreement for the license rights to use certain Honeywell intellectual property and customer relationships. The gross carrying values are preliminary estimates and may be subject to change within the measurement period – refer to Acquisition within this Note 2, “Supplemental Balance Sheet Disclosures” for further details. The license agreement has an indefinite life and is not subject to amortization; the customer relationships have an estimated weighted average life of nine years and three months. The Company determined that the preliminary intangible assets were not impaired as of March 31, 2024 and September 30, 2023; no impairment charges have been recorded for the three- and six-month periods ended March 31, 2024. (b) The licensing and certification rights are amortized over a defined number of units. No impairment charges were recorded during the three- and six-month periods ended March 31, 2024 and 2023. Intangible asset amortization expense was $268,500 and $0 for the three-month periods ended March 31, 2024 and 2023, respectively. Intangible asset amortization expense was charged to selling, general and administrative expense. Intangible asset amortization expense was $537,000 and $0 for the six-month periods ended March 31, 2024 and 2023, respectively. Intangible asset amortization expense was charged to selling, general and administrative expense. The timing of future amortization expense is not determinable for the licensing and certification rights because they are amortized over a defined number of units. The expected future amortization expense related to the customer relationships as of March 31, 2024 is as follows: 2024 (six months remaining) $ 537,000 2025 1,074,000 2026 1,074,000 2027 1,074,000 2028 1,074,000 Thereafter 5,101,500 Total $ 9,934,500 Assets Held for Sale As of September 30, 2023, the Company classified $2.1 million of net property and equipment as “assets held for sale” on the condensed consolidated balance sheet. During the fourth quarter 2023, management of the Company implemented a plan to sell a Company-owned aircraft and commenced efforts to locate a buyer for the aircraft. On November 20, 2023, the Company sold its assets held for sale, the King Air aircraft, for $2.3 million. The resultant gain on the sale of $162,000 is a reduction to selling, general and administrative expense in the quarter ended December 31, 2023. Property and equipment Property and equipment, net consists of the following: March 31, September 30, 2024 2023 Computer equipment $ 3,602,893 $ 2,343,996 Furniture and office equipment 977,224 970,230 Manufacturing facility 6,048,349 5,926,584 Equipment 12,593,072 9,554,197 Land 1,021,245 1,021,245 24,242,783 19,816,252 Less accumulated depreciation and amortization (11,792,358) (11,923,825) $ 12,450,425 $ 7,892,427 Depreciation and amortization related to property and equipment was $146,156 and $85,981 for the three-month periods ended March 31, 2024 and 2023, respectively. Depreciation and amortization related to property and equipment was approximately $289,077 and $171,390 for the six-month periods ended March 31, 2024 and 2023, respectively. Other assets Other assets consist of the following: March 31, September 30, 2024 2023 Operating lease right-of-use assets $ 8,503 $ 15,065 Other non-current assets 311,201 176,657 $ 319,704 $ 191,722 Other non-current assets as of March 31, 2024 includes deferred ERP implementation costs, a supplier credit from one of our suppliers and a deposit for medical claims required under the Company’s medical plan. Other non-current assets as of September 30, 2023 includes a supplier credit from one of our suppliers, a deposit for medical claims required under the Company’s medical plan and an airplane hanger deposit. In addition, other non-current assets as of March 31, 2024 and September 30, 2023 includes $44,072 and $53,585, respectively, of prepaid software licenses that will be earned upon the shipment of a certain product to a customer. Other non-current assets amortization expense was $4,905 and $0 for the three-month periods ended March 31, 2024 and 2023, respectively. Other non-current assets amortization expense was $9,513 and $0 for the six-month periods ended March 31, 2024 and 2023, respectively. Accrued expenses Accrued expenses consist of the following: March 31, September 30, 2024 2023 Warranty $ 574,971 $ 562,645 Salary, benefits and payroll taxes 1,074,812 1,181,219 Professional fees 145,421 200,668 Operating lease 8,503 12,965 Income tax payable — 116,697 Other 611,388 844,131 $ 2,415,095 $ 2,918,325 Warranty cost and accrual information for the three- and six-month periods ended March 31, 2024 is highlighted below: Three Months Ending Six Months Ended March 31, 2024 March 31, 2024 Warranty accrual, beginning of period $ 541,450 $ 562,645 Accrued expense 53,707 73,211 Warranty cost (20,186) (60,885) Warranty accrual, end of period $ 574,971 $ 574,971 |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2024 | |
Income Taxes | |
Income Taxes | 3. Income Taxes The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets. If the Company were to determine that it would be able to realize additional state deferred tax assets in the future, it would make an adjustment to the valuation allowance which would reduce the provision for income taxes. As a result of the 2017 Tax Cuts and Jobs Act, the Company must amortize amounts paid or incurred for specified research and development expenditures, including software development expenses, ratably over 60 months, beginning at the mid-point of the tax year in which the expenditures are paid or incurred. The effective tax rate for the three-month period ended March 31, 2024 was 21.2% and differs from the statutory tax rate primarily due to higher state taxes due to a taxable gain from the sale of the Company’s King Air aircraft. The effective tax rate for the three-month period ended March 31, 2023 was 19.6% and differs from the statutory tax rate primarily due to an increased R&D credit, as well as permanent items and state taxes. The effective tax rate for the six-month period ended March 31, 2024 was 21.5% and differs from the statutory tax rate primarily due to higher state taxes due to a taxable gain from the sale of the Company’s King Air aircraft. The effective tax rate for the six-month period ended March 31, 2023 was 21.4% and differs from the statutory tax rate primarily due to an increased R&D credit, as well as permanent items and state taxes. |
Shareholders' Equity and Share-
Shareholders' Equity and Share-Based Payments | 6 Months Ended |
Mar. 31, 2024 | |
Shareholders' Equity and Share-Based Payments | |
Shareholders' Equity and Share-Based Payments | 4. Shareholders’ Equity and Share-Based Payments At March 31, 2024, the Company’s Amended and Restated Articles of Incorporation provides the Company authority to issue 75,000,000 shares of common stock and 10,000,000 shares of preferred stock. Share-Based Compensation The Company accounts for share-based compensation under the provisions of ASC Topic 718 by using the fair value method for expensing stock options and stock awards. Amended and Restated 2019 Stock-Based Incentive Compensation Plan The Company’s Amended and Restated 2019 Stock-Based Incentive Compensation Plan was approved by the Company’s shareholders at the Company’s Annual Meeting of Shareholders held on April 18, 2024, which amended and restated the 2019 Stock-Based Incentive Compensation Plan approved by the Company’s shareholders on April 2, 2019 (as Amended, the “Amended and Restated 2019 Plan”). The Amended and Restated 2019 Plan authorizes the grant of stock appreciation rights, restricted stock, options and other equity-based awards. Options granted under the Amended and Restated 2019 Plan may be either “incentive stock options” as defined in section 422 of the Code or nonqualified stock options, as determined by the Compensation Committee. Subject to an adjustment necessary upon a stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution, or similar corporate transaction or event, the maximum number of shares of common stock available for awards under the Amended and Restated 2019 Plan is 1,950,000, plus the shares that were authorized to be granted but have not been issued under the Company’s 2009 Stock-Based Incentive Compensation Plan as of the effective date of the Amended and Restated 2019 Plan (i.e., April 18, 2024). If any award is forfeited, terminates or otherwise is settled for any reason without an actual distribution of shares to the participant, the related shares of common stock subject to such award will again be available for future grant. Any shares tendered by a participant in payment of the exercise price of an option or the tax liability with respect to an award (including, in any case, shares withheld from any such award) will not be available for future grant under the Amended and Restated 2019 Plan. If there is any change in the Company’s corporate capitalization, the Compensation Committee must proportionately and equitably adjust the number and kind of shares of common stock which may be issued in connection with future awards, the number and kind of shares of common stock covered by awards then outstanding under the Amended and Restated 2019 Plan, the aggregate number and kind of shares of common stock available under the Amended and Restated 2019 Plan, any applicable individual limits on the number of shares of common stock available for awards under the Amended and Restated 2019 Plan, the exercise or grant price of any award, or if deemed appropriate, make provision for a cash payment with respect to any outstanding award. In addition, the Compensation Committee may make adjustments in the terms and conditions of any awards, including any performance goals, in recognition of unusual or nonrecurring events affecting the Company or any subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. The compensation expense related to stock options and awards issued to employees under the Amended and Restated 2019 Plan was $219,748 and $375,328 for the three- and six-month periods ended March 31, 2024, respectively. The compensation expense related to stock options and awards issued to employees under the Amended and Restated 2019 Plan was $556,673 and $789,798 for the three- and six-month periods ended March 31, 2023, respectively. The compensation expense under the Amended and Restated 2019 Plan related to stock awards issued to non-employee members of the Board was $49,590 and $99,726 for the three- and six-month periods ended March 31, 2024, respectively. The compensation expense under the Amended and Restated 2019 Plan related to stock awards issued to non-employee members of the Board was $176,703 and $226,773 for the three- and six-month periods ended March 31, 2023, respectively. Total compensation expense associated with the Amended and Restated 2019 Plan was $269,338 and $733,376 for the three-month periods ended March 31, 2024 and 2023, respectively. Total compensation expense associated with the Amended and Restated 2019 Plan was $475,055 and $1,016,571 for the six-month periods ended March 31, 2024 and 2023, respectively. At March 31, 2024, unrecognized compensation expense of approximately $1,425,821, net of forfeitures, related to non-vested stock options under the Amended and Restated 2019 Plan, will be recognized. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share | |
Earnings Per Share | 5. Earnings Per Share Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Numerator: Net income $ 1,208,316 $ 1,271,103 $ 2,265,666 $ 1,969,754 Denominator: Basic 17,456,120 17,352,340 17,453,741 17,334,553 Dilutive effect of share-based awards 31,407 1,690 27,476 5,551 Diluted weighted average shares 17,487,527 17,354,030 17,481,217 17,340,104 Net income per common share: Basic $ 0.07 $ 0.07 $ 0.13 $ 0.11 Diluted $ 0.07 $ 0.07 $ 0.13 $ 0.11 Net income per share is calculated pursuant to ASC Topic 260, “ Earnings per Share” The number of incremental shares from the assumed exercise of stock options and RSUs is calculated by using the treasury stock method. As of March 31, 2024 and 2023, there were 297,014 and 25,000 options to purchase common stock outstanding, respectively, and 173,555 and 82,886 shares subject to vesting of restricted stock units outstanding, respectively. The average outstanding diluted shares calculation excludes options with an exercise price that exceeds the average market price of shares during the period. For the three-month periods ended March 31, 2024 and 2023, respectively, 243,749 and 277,520 diluted weighted-average shares outstanding were excluded from the computation of diluted EPS because the effect would be anti-dilutive. For the six-month periods ended March 31, 2024 and 2023, respectively, 228,579 and 138,760 diluted weighted-average shares outstanding were excluded from the computation of diluted EPS because the effect would be anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | 6. Commitments and Contingencies In the ordinary course of business, the Company is at times subject to various legal proceedings and claims. The Company does not believe any such matters that are currently pending will, individually or in aggregate, have a material effect on the results of operations or financial position. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions | |
Related Party Transactions | 7. Related Party Transactions In recent years, the Company has had sales to AML Global Eclipse, LLC (“Eclipse”), whose principal shareholder is also a principal shareholder in the Company. Prior balances are disclosed below for comparability. Sales to Eclipse amounted to approximately $9,000 and $42,000 for the three-month periods ended March 31, 2024 and 2023, respectively. Sales to Eclipse amounted to approximately $93,000 and $76,000 for the six-month periods ended March 31, 2024 and 2023, respectively. A company in which Parizad Olver (Parchi), a former member of the Board of Directors, is the managing partner and has an ownership interest, received a consulting fee of $72,990 in November 2023 for services provided in connection with the sale of the Company’s 2008 Super King Air B200GT SN BY-50. |
Leases
Leases | 6 Months Ended |
Mar. 31, 2024 | |
Leases | |
Leases | 8. Leases The Company accounts for leases in accordance with ASU 2016-02 and records “right-of-use” assets and corresponding lease liabilities on the balance sheet for most leases with an initial term of greater than one year. Consistent with previous accounting guidance, we will recognize payments for leases with a term of less than one year in the statement of operations on a straight-line basis over the lease term. We lease real estate and equipment under various operating leases. A lease exists when a contract or part of a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In determining whether a lease exists, we consider whether a contract provides us with both: (a) the right to obtain substantially all of the economic benefits from the use of the identified asset and (b) the right to direct the use of the identified asset. Some of our leases include base rental periods coupled with options to renew or terminate the lease, generally at our discretion. In evaluating the lease term, we consider whether we are reasonably certain to exercise such options. To the extent a significant economic incentive exists to exercise an option, that option is included within the lease term. However, based on the nature of our lease arrangements, options generally do not provide us with a significant economic incentive and are therefore excluded from the lease term for the majority of our arrangements. Our leases typically include a combination of fixed and variable payments. Fixed payments are generally included when measuring the right-of-use asset and lease liability. Variable payments, which primarily represent payments based on usage of the underlying asset, are generally excluded from such measurement and expensed as incurred. In addition, certain of our lease arrangements may contain a lease coupled with an arrangement to provide other services, such as maintenance, or may require us to make other payments on behalf of the lessor related to the leased asset, such as payments for taxes or insurance. As permitted by ASU 2016-02, we have elected to account for these non-lease components together with the associated lease component if included in the lease payments. This election has been made for each of our asset classes. The measurement of “right-of-use” assets and lease liabilities requires us to estimate appropriate discount rates. To the extent the rate implicit in the lease is readily determinable, such a rate is utilized. However, based on information available at lease commencement for our leases, the rate implicit in the lease is not known. In these instances, we utilize an incremental borrowing rate, which represents the rate of interest that we would pay to borrow on a collateralized basis over a similar term. The following table presents the lease-related assets and liabilities reported in the Condensed Consolidated Balance Sheet as of March 31, 2024: Classification on the Consolidated Balance Sheet on March 31, 2024 Assets Operating leases Other assets $ 8,503 Liabilities Operating leases - current Accrued expenses $ 8,503 Operating leases - noncurrent Other liabilities $ — Total lease liabilities $ 8,503 Rent expense and cash paid for various operating leases in aggregate are $7,338 for the six-month period ended March 31, 2024. The weighted average remaining lease term is 0.7 years and the weighted average discount rate is 5.0% as of March 31, 2024. Future minimum lease payments under operating leases are as follows at March 31, 2024: Twelve Months Ending Operating March 31, Leases 2025 9,784 Total minimum lease payments $ 9,784 Amount representing interest (1,281) Present value of minimum lease payments $ 8,503 Current portion 8,503 Long-term portion of lease obligations $ — |
Loan Agreement
Loan Agreement | 6 Months Ended |
Mar. 31, 2024 | |
Loan Agreement | |
Loan Agreement | 9. Loan Agreement On June 28, 2023, the Company and one of its subsidiaries entered into an Amendment to Loan Documents (the “Loan Amendment”) with PNC Bank, National Association (“PNC”), which amends certain terms of that certain Loan Agreement entered into by the parties on May 11, 2023 (the “Loan Agreement” and, as amended, the “Amended Loan Agreement”) and (ii) a corresponding Term Note in favor of PNC (the “Term Note”), which together provide for a senior secured term loan in an aggregate principal amount of $20.0 million, with a maturity date of June 28, 2028. Availability of funds under the Term Loan was conditioned upon the closing of the transactions contemplated by the Amended Loan Agreement and was used to fund a portion of the Transaction. Under the agreement, the Company has the right to prepay any amounts outstanding at any time and from time to time, whole or in part; subject to payment of any break funding indemnification amounts. The interest rate applicable to loans outstanding under the Term Loan is a floating interest rate equal to the sum of (A) the Term SOFR Rate (as defined in the Term Note) plus (B) an unadjusted spread of the Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio. Commencing on June 30, 2023, the Term Loan will consist of sixty In addition to providing for the Term Loan, the Loan Agreement, together with a corresponding Revolving Line of Credit Note in favor of PNC, executed May 11, 2023 (“Line of Credit Note”), provides for a senior secured revolving line of credit in an aggregate principal amount of $10,000,000, with an expiration date of May 11, 2028 (the “Revolving Line of Credit”). The interest rate applicable to loans outstanding under the Revolving Line of Credit was a rate per annum equal to the sum of (A) Daily SOFR (as defined in the Line of Credit Note) plus (B) an unadjusted spread of Applicable SOFR Margin plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio. The Company will pay an annual commitment fee of 0.15% on the amount available for borrowing under the revolving credit facility. On December 19, 2023, the Company and PNC entered into an Amendment to the Loan (the “Restated Loan Amendment”) and a corresponding Amended and Restated Revolving Line of Credit Note (“Restated Line of Credit Note”) and Amended and Restated Line of Credit and Investment Sweep Rider (the “Restated Rider”), to increase the aggregate principal amount available under the Company’s senior secured revolving line of credit from $10,000,000 to $30,000,000 and extend the maturity date until December 19, 2028. Under the terms of the Restated Rider, at the end of each business day any cash balance will be applied by PNC to the outstanding principal balance under the terms of the Restated Line of Credit Note. The proceeds of the Restated Line of Credit Note will be used for working capital and other general corporate purposes, for acquisitions as permitted under the Restated Loan Amendment and to pay off and close the loan evidenced by the Term Note. The Interest rate applicable to loans outstanding under the Restated Line of Credit is a rate per annum equal to the sum of (A) Daily SOFR (as defined in the Restated Line of Credit Note) plus (B) an unadjusted spread of Applicable SOFR Margin (as defined in the Restated Line of Credit Note) plus (C) a SOFR adjustment of ten basis points. The Applicable SOFR Margin ranges from 1.5% to 2.5% depending on the Company’s funded debt to EBITDA ratio, as defined in the Restated Line of Credit Note. The foregoing descriptions of the Restated Loan Amendment, Restated Line of Credit Note and Restated Rider do not purport to be complete and are qualified in their entirety by reference to the full text of the Restated Loan Amendment, Restated Line of Credit Note and Restated Rider, which are filed as Exhibit 10.1 Exhibit 10.2 Exhibit 10.3 The Company was in compliance with all applicable covenants throughout the year and at March 31, 2024. The outstanding balance drawn on the Line of Credit was $10,642,885 at March 31, 2024. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) in accordance with the disclosure requirements for the quarterly report on Form 10-Q and, therefore, do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete annual financial statements. In the opinion of Company management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the results for the interim periods presented. The condensed consolidated balance sheet as of September 30, 2023 is derived from the audited financial statements of the Company. Operating results for the three- and six-month periods ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2024 which cannot be determined at this time. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. |
Principles of Consolidation | Principles of Consolidation The Company’s condensed consolidated financial statements include the accounts of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The financial statements of the Company have been prepared in accordance with GAAP, which require management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Estimates are used in accounting for, among other items, valuation of tangible and intangible assets acquired, long term contracts, evaluation of allowances for doubtful accounts, inventory obsolescence, product warranty cost liabilities, income taxes, engineering and material costs on Engineering Development Contract (“EDC”) programs, percentage of completion on EDC contracts, the useful lives of long-lived assets for depreciation and amortization, the recoverability of long-lived assets, evaluation of goodwill impairment and contingencies. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the condensed consolidated statements of operations in the period they are determined. |
Principles of Acquisitions | Principles of Acquisitions The Company evaluates each of its acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “ Business Combinations” The Company accounts for business acquisitions using the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their respective fair values at the date of the acquisition. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company adjusts the provisional amounts of assets acquired and liabilities assumed with the corresponding offset to goodwill to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded within the Company’s condensed consolidated statements of operations. |
Intangible Assets | Intangible Assets The Company’s identifiable intangible assets primarily consist of license agreement and customer relationships. Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired and are reported separately from any goodwill recognized. Intangible assets with a finite life are amortized over their estimated useful life and are reported net of accumulated amortization. They are assessed for impairment in accordance with the Company’s policy on assessing long-lived assets for impairment described in the notes of the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Indefinite-lived intangible assets are not amortized, but are subject to an annual impairment test, or when events or circumstances dictate, more frequently. The impairment review for indefinite-lived intangible assets can be performed using a qualitative or quantitative impairment assessment. The quantitative assessment consists of a comparison of the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If the fair value exceeds its carrying amount, the indefinite-lived intangible asset is not considered impaired. |
Goodwill | Goodwill Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The recorded amounts of goodwill from business combinations are based on management’s best estimates of the fair values of assets acquired and liabilities assumed at the date of acquisition. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company’s goodwill impairment test is performed at the reporting unit level. Reporting units are determined based on an evaluation of the Company’s operating segments and the components making up those operating segments. Goodwill is tested for impairment at fiscal year-end September 30 or in an interim period if certain changes in circumstances indicate a possibility that an impairment may exist. Factors to consider that may indicate an impairment may exist are: ● macroeconomic conditions; ● industry and market considerations, such as a significant adverse change in the business climate; ● cost factors; ● overall financial performance, such as current-period operating results or cash flow declines combined with a history of operating results or cash flow declines; ● a projection or forecast that demonstrates continuing declines in the cash flow or the inability to improve the operations to forecasted levels; and ● any entity-specific events. If the Company determines that it is more likely than not that the fair value of the reporting unit is below the carrying amount as part of its qualitative assessment, a quantitative assessment of goodwill is required. In the quantitative evaluation, the fair value of the reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the goodwill is deemed not to be impaired and no further action is required. If the fair value is less than the carrying value, goodwill is considered impaired and a charge is reported as impairment of goodwill in the condensed consolidated statements of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The net carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value because of the short-term nature of these instruments. The carrying value of our debt approximates fair value as the interest rate is variable and approximates current market levels. For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value as follows: Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: ● Quoted prices for similar assets or liabilities in active markets; ● Quoted prices for identical or similar assets in non-active markets; ● Inputs other than quoted prices that are observable for the asset or liability; and ● Inputs that are derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and September 30, 2023, according to the valuation techniques the Company used to determine their fair values. Fair Value Measurement on March 31, 2024 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 501,471 $ — $ — Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — The March 31, 2024 money market funds balance differs from the cash and cash equivalents balance on the condensed consolidated balance sheet due to the timing of sweep transactions within the PNC cash investment accounts. |
Revenue Recognition | Revenue Recognition The Company enters into sales arrangements with customers that, in general, provide for the Company to design, develop, manufacture, deliver and service large flat-panel display systems, flight information computers, autothrottles and advanced monitoring systems that measure and display critical flight information, including data relative to aircraft separation, airspeed, altitude and engine and fuel data measurements. Revenue from Contracts with Customers The Company accounts for revenue in accordance with ASC 606, “ Revenue from Contracts with Customers” 1) Identify the contract with a customer The Company’s contract with its customers typically is in the form of a purchase order issued to the Company by its customers and, to a lesser degree, in the form of a purchase order issued in connection with a formal contract executed with a customer. For the purpose of accounting for revenue under ASC 606, a contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. Most of our revenue is derived from purchases under which we provide a specific product or service and, as a result, there is only one 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. If the contract contains multiple performance obligation, the Company determines standalone selling price based on the price at which each performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions as well as the cost of the goods or services and the Company’s normal margins for similar performance obligations. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. The Company has also recognized revenue from EDC contracts and is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Contract costs include material, components and third-party avionics purchased from suppliers, direct labor and overhead costs. Contract Estimates Accounting for performance obligations in long-term contracts that are satisfied over time involves the use of various techniques to estimate progress towards satisfaction of the performance obligation. The Company typically measures progress based on costs incurred compared to estimated total contract costs. Contract cost estimates are based on various assumptions to project the outcome of future events that often span more than a single year. These assumptions include the amount of labor and labor costs, the quantity and cost of raw materials used in the completion of the performance obligation and the complexity of the work to be performed. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter in which it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates did not change our revenue and operating earnings (and diluted earnings per share) for the three- and six-month periods ended March 31, 2024 and 2023. Therefore, no adjustment on any contract was material to our condensed consolidated financial statements for the three- and six-month periods ended March 31, 2024 and 2023. Contract Balances Contract assets consist of the right to consideration in exchange for product offerings that we have transferred to a customer under the contract. Contract liabilities primarily relate to consideration received in advance of performance under the contract. The following table reflects the Company’s contract assets and contract liabilities: Contract Contract Assets Liabilities September 30, 2023 $ 487,139 $ 143,359 Amount transferred to receivables from contract assets (363,719) — Contract asset additions 1,107,187 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (92,108) Increases due to invoicing prior to satisfaction of performance obligations — 45,399 March 31, 2024 $ 1,230,607 $ 96,650 |
Concentrations | Concentrations Major Customers and Products In the three-month period ended March 31, 2024, two customers, Pilatus Aircraft Ltd (“Pilatus”) and Textron Aviation, Inc. (“Textron”), accounted for 28% and 17% of net sales, respectively. In the six-month period ended Mach 31, 2024, one customer, Pilatus accounted for 29% of net sales. In the three-month period ended March 31, 2023, four customers, Pilatus, Challenge Airlines, Air Transport Services Group and Textron, accounted for 21%, 18%, 16% and 10% of net sales, respectively. In the six-month period ended March 31, 2023, four customers, Pilatus, Air Transport Services Group, Textron and Challenge Airlines, accounted for 29%, 15%, 11% and 10% of net sales, respectively. Major Suppliers The Company buys several of its components from sole source suppliers. Although there are a limited number of suppliers of particular components, management believes other suppliers could provide similar components on comparable terms. For the three- and six-month periods ended March 31, 2024, the Company had one and two suppliers, respectively, that were individually responsible for greater than 10% of the Company’s total inventory related purchases. For the three- and six-month periods ended March 31, 2023, the Company had three and four suppliers, respectively, that were individually responsible for greater than 10% of the Company’s total inventory related purchases. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash balances and accounts receivable. The Company invests its excess cash where preservation of principal is the major consideration. Cash balances are maintained with two major banks. Balances on deposit with certain money market accounts and operating accounts may exceed the Federal Deposit Insurance Corporation limits. The Company’s customer base consists principally of companies within the aviation industry. The Company requests advance payments and/or letters of credit from customers that it considers to be credit risks. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument” |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Schedule of financial assets and liabilities accounted for at fair value on a recurring basis | Fair Value Measurement on March 31, 2024 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 501,471 $ — $ — Fair Value Measurement on September 30, 2023 Quoted Price in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents: Money market funds $ 3,665,128 $ — $ — |
Summary of contract assets and contract liabilities balances | Contract Contract Assets Liabilities September 30, 2023 $ 487,139 $ 143,359 Amount transferred to receivables from contract assets (363,719) — Contract asset additions 1,107,187 — Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period — (92,108) Increases due to invoicing prior to satisfaction of performance obligations — 45,399 March 31, 2024 $ 1,230,607 $ 96,650 |
Supplemental Balance Sheet Di_2
Supplemental Balance Sheet Disclosures (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Supplemental Balance Sheet Disclosures | |
Schedule of preliminary allocation of the purchase consideration | Amounts Recognized as of Acquisition Date Measurement Purchase Price (as previously reported) Period Adjustments Allocation Cash consideration $ 35,860,000 $ — $ 35,860,000 Total consideration $ 35,860,000 $ — $ 35,860,000 — Prepaid inventory (a) $ 10,036,160 $ 2,032,954 (d) $ 12,069,114 Equipment 2,609,000 (54,000) (d) 2,555,000 Construction in progress 1,238,000 — 1,238,000 Intangible assets (b) 20,900,000 (4,460,000) (d) 16,440,000 Goodwill (c) 4,608,041 (1,050,155) (d)(e) 3,557,886 Assets acquired 39,391,201 (3,531,201) 35,860,000 Accrued expenses (3,531,201) 3,531,201 (e) — Liabilities assumed (3,531,201) 3,531,201 — Net assets acquired $ 35,860,000 $ — $ 35,860,000 (a) Prepaid inventory consists of raw materials and finished goods acquired by the Company but not in the Company’s physical possession as of the Acquisition Date. The fair value of raw materials was estimated to equal the replacement cost. The fair value of finished goods was determined based on the estimated selling price, net of selling costs and a margin on the selling activities, which resulted in a step-up in the value of the finished goods. (b) Intangible assets consist of license agreement related to the license rights to use certain Honeywell intellectual property and customer relationships and are recorded at provisional estimated fair values. The provisional estimated fair value of the license agreement is based on a variation of the income valuation approach and is determined using the relief from royalty method. The provisional estimated fair value of the customer relationships is based on a variation of the income valuation approach known as the multi-period excess earnings method. Refer to Intangible assets within Note 2, “Supplemental Balance Sheet Disclosures” for further details. (c) Goodwill represents the excess of the preliminary purchase consideration over the provisional fair value of the assets acquired and liabilities assumed. The goodwill recognized is primarily attributable to the expected synergies from the Transaction. Goodwill resulting from the Transaction has been provisionally assigned to the Company’s one operating segment and one reporting unit. The goodwill is not expected to be deductible for income tax purposes. Further, the Company determined that the preliminary goodwill was not impaired as of March 31, 2024 and as such, no impairment charges have been recorded for the three- and six-month periods ended March 31, 2024; the Company also determined that the preliminary goodwill was not impaired as of September 30, 2023. (d) During the fourth quarter of 2023, the Company identified measurement period adjustments related to preliminary fair value estimates. The measurement period adjustments were due to the refinement of inputs used to calculate the fair value of the prepaid inventory, equipment, license agreement and customer relationships, with the assistance of an independent third-party valuation firm based on facts and circumstances that existed as of the Acquisition Date. The adjustments resulted in an overall increase to goodwill of $2.5 million. Additionally, the change to the preliminary fair value estimates did not have a material impact to the condensed consolidated statement of operations. (e) During the fourth quarter of 2023, the Company identified measurement period adjustments related to the preliminary fair value estimates for accrued expenses. While the Asset Purchase and License Agreement indicated an amount of liabilities related to open supplier purchase orders to be assumed by the Company as of the Acquisition Date, it was determined that there were no actual liabilities outstanding related to these open supplier purchase orders as of the Acquisition Date; therefore, the $3.5 million assumed liabilities preliminarily recorded were reversed. The adjustments resulted in an overall decrease to goodwill of $3.5 million; the adjustments have no impact to the condensed consolidated statement of operations. |
Summary of unaudited pro forma consolidated information | Three Months Ended Six Months Ended March 31, 2023 Net sales $ 12,213,137 $ 24,811,043 Net income $ 2,740,693 $ 5,072,071 |
Schedule of inventories | March 31, September 30, 2024 2023 Raw materials $ 7,611,331 $ 5,162,177 Work-in-process 1,443,189 966,888 Finished goods 66,350 10,648 $ 9,120,870 $ 6,139,713 |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following: March 31, September 30, 2024 2023 Prepaid insurance $ 386,743 $ 623,186 Other 325,029 449,826 $ 711,772 $ 1,073,012 |
Summary of intangible assets other than goodwill | The Company’s intangible assets other than goodwill are as follows: As of March 31, 2024 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (805,500) 9,934,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (1,443,785) $ 15,648,321 As of September 30, 2023 Gross Carrying Accumulated Accumulated Net Carrying Value Impairment Amortization Value License agreement acquired from the Transaction (a) $ 5,700,000 $ — $ — $ 5,700,000 Customer relationships acquired from the Transaction (a) 10,740,000 — (268,500) 10,471,500 Licensing and certification rights (b) 696,506 (44,400) (638,285) 13,821 Total $ 17,136,506 $ (44,400) $ (906,785) $ 16,185,321 (a) As part of the Transaction, the Company acquired intangible assets related to the license agreement for the license rights to use certain Honeywell intellectual property and customer relationships. The gross carrying values are preliminary estimates and may be subject to change within the measurement period – refer to Acquisition within this Note 2, “Supplemental Balance Sheet Disclosures” for further details. The license agreement has an indefinite life and is not subject to amortization; the customer relationships have an estimated weighted average life of nine years and three months. The Company determined that the preliminary intangible assets were not impaired as of March 31, 2024 and September 30, 2023; no impairment charges have been recorded for the three- and six-month periods ended March 31, 2024. (b) The licensing and certification rights are amortized over a defined number of units. No impairment charges were recorded during the three- and six-month periods ended March 31, 2024 and 2023. |
Summary of expected future amortization expense related to the customer relationships | 2024 (six months remaining) $ 537,000 2025 1,074,000 2026 1,074,000 2027 1,074,000 2028 1,074,000 Thereafter 5,101,500 Total $ 9,934,500 |
Schedule of property and equipment, net | March 31, September 30, 2024 2023 Computer equipment $ 3,602,893 $ 2,343,996 Furniture and office equipment 977,224 970,230 Manufacturing facility 6,048,349 5,926,584 Equipment 12,593,072 9,554,197 Land 1,021,245 1,021,245 24,242,783 19,816,252 Less accumulated depreciation and amortization (11,792,358) (11,923,825) $ 12,450,425 $ 7,892,427 |
Schedule of other assets | March 31, September 30, 2024 2023 Operating lease right-of-use assets $ 8,503 $ 15,065 Other non-current assets 311,201 176,657 $ 319,704 $ 191,722 |
Schedule of accrued expenses | March 31, September 30, 2024 2023 Warranty $ 574,971 $ 562,645 Salary, benefits and payroll taxes 1,074,812 1,181,219 Professional fees 145,421 200,668 Operating lease 8,503 12,965 Income tax payable — 116,697 Other 611,388 844,131 $ 2,415,095 $ 2,918,325 |
Schedule of warranty cost and accrual information | Three Months Ending Six Months Ended March 31, 2024 March 31, 2024 Warranty accrual, beginning of period $ 541,450 $ 562,645 Accrued expense 53,707 73,211 Warranty cost (20,186) (60,885) Warranty accrual, end of period $ 574,971 $ 574,971 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share | |
Schedule of earnings per share | Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Numerator: Net income $ 1,208,316 $ 1,271,103 $ 2,265,666 $ 1,969,754 Denominator: Basic 17,456,120 17,352,340 17,453,741 17,334,553 Dilutive effect of share-based awards 31,407 1,690 27,476 5,551 Diluted weighted average shares 17,487,527 17,354,030 17,481,217 17,340,104 Net income per common share: Basic $ 0.07 $ 0.07 $ 0.13 $ 0.11 Diluted $ 0.07 $ 0.07 $ 0.13 $ 0.11 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Leases | |
Schedule of lease-related assets and liabilities reported in the Consolidated Balance Sheet | Classification on the Consolidated Balance Sheet on March 31, 2024 Assets Operating leases Other assets $ 8,503 Liabilities Operating leases - current Accrued expenses $ 8,503 Operating leases - noncurrent Other liabilities $ — Total lease liabilities $ 8,503 |
Schedule of future minimum lease payments under operating leases | Future minimum lease payments under operating leases are as follows at March 31, 2024: Twelve Months Ending Operating March 31, Leases 2025 9,784 Total minimum lease payments $ 9,784 Amount representing interest (1,281) Present value of minimum lease payments $ 8,503 Current portion 8,503 Long-term portion of lease obligations $ — |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Mar. 31, 2024 segment | |
Number of business segments | |
Number of operating segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Fair Value, Warranty Reserve, Self-Insurance Reserves (Details) - USD ($) | Mar. 31, 2024 | Sep. 30, 2023 |
Fair Value, Measurements, Recurring | Quoted Price in Active Markets for Identical Assets (Level 1) | Money Market Funds | ||
Assets | ||
Cash and cash equivalents | $ 501,471 | $ 3,665,128 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 6 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition. | |
Revenue, remaining performance obligation, optional exemption, performance obligation [true false] | true |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 item customer | Mar. 31, 2023 item customer | Mar. 31, 2024 customer item | Mar. 31, 2023 customer item | |
Concentration of Credit Risk | ||||
Number of banks for maintenance of cash balances | 2 | 2 | ||
Revenues Net | Customer Concentration Risk | ||||
Concentrations | ||||
Number of major customers | customer | 2 | 4 | 1 | 4 |
Revenues Net | Customer Concentration Risk | Pilatus Aircraft Ltd ("Pilatus") | ||||
Concentrations | ||||
Concentration of risk (as a percent) | 28% | 21% | 29% | 29% |
Revenues Net | Customer Concentration Risk | Challenge Airlines | ||||
Concentrations | ||||
Concentration of risk (as a percent) | 18% | 10% | ||
Revenues Net | Customer Concentration Risk | Air Transport Services Group | ||||
Concentrations | ||||
Concentration of risk (as a percent) | 16% | 15% | ||
Revenues Net | Customer Concentration Risk | Textron Aviation, Inc | ||||
Concentrations | ||||
Concentration of risk (as a percent) | 17% | 10% | 11% | |
Inventory | Supplier Concentration Risk | ||||
Concentrations | ||||
Number of major suppliers | 1 | 3 | 2 | 4 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Contract Balances (Details) | 6 Months Ended |
Mar. 31, 2024 USD ($) | |
Contract Balances | |
Balance at beginning of the period (Contract Assets) | $ 487,139 |
Balance at beginning of the period (Contract Liabilities) | 143,359 |
Amount transferred to receivables from contract assets | (363,719) |
Contract asset additions | 743,468 |
Contract asset additions | 1,107,187 |
Performance obligations satisfied during the period that were included in the contract liability balance at the beginning of the period (Contract Liabilities) | (92,108) |
Increases due to invoicing prior to satisfaction of performance obligations (Contract Liabilities) | 45,399 |
Balance at end of the period (Contract Assets) | 1,230,607 |
Balance at end of the period (Contract Liabilities) | $ 96,650 |
Supplemental Balance Sheet Di_3
Supplemental Balance Sheet Disclosures - Acquisition (Details) - Honeywell International, Inc - USD ($) | Jun. 30, 2023 | Mar. 31, 2024 | Sep. 30, 2023 |
Business Acquisition [Line Items] | |||
Preliminary purchase consideration transferred | $ 35,860,000 | ||
Asset Purchase and License Agreement (the "Honeywell Agreement") | |||
Business Acquisition [Line Items] | |||
Preliminary purchase consideration transferred | 35,900,000 | ||
Incurred acquisition costs | $ 0 | $ 408,961 | |
Asset Purchase and License Agreement (the "Honeywell Agreement") | PNC Bank [Member] | Term loan | |||
Business Acquisition [Line Items] | |||
Debt instrument face amount | $ 20,000,000 | ||
Transition services agreement | |||
Business Acquisition [Line Items] | |||
Business combination recognized prepaid expenses and other current assets | $ 140,000 |
Supplemental Balance Sheet Di_4
Supplemental Balance Sheet Disclosures - Preliminary allocation of the purchase consideration (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2024 USD ($) segment | Sep. 30, 2023 USD ($) | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 3,557,886 | $ 3,557,886 | $ 3,557,886 | |
Number of Operating Segments | segment | 1 | |||
Asset Purchase and License Agreement (the "Honeywell Agreement") | Measurement Period Adjustments | Adjustment of preliminary fair value estimates of liabilities | ||||
Business Acquisition [Line Items] | ||||
Goodwill | (3,500,000) | $ (3,500,000) | ||
Honeywell International, Inc | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | $ 35,860,000 | |||
Total consideration | 35,860,000 | |||
Prepaid inventory | 12,069,114 | |||
Equipment | 2,555,000 | |||
Intangible assets | 16,440,000 | |||
Goodwill | 3,557,886 | |||
Assets acquired | 35,860,000 | |||
Net assets acquired | 35,860,000 | |||
Number of Operating Segments | segment | 1 | |||
Number of reportable unit | segment | 1 | |||
Goodwill impairment charges | 0 | $ 0 | ||
Honeywell International, Inc | Amounts Recognized as of Acquisition Date (as previously reported) | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | 35,860,000 | |||
Total consideration | 35,860,000 | |||
Prepaid inventory | 10,036,160 | |||
Equipment | 2,609,000 | |||
Intangible assets | 20,900,000 | |||
Goodwill | 4,608,041 | |||
Assets acquired | 39,391,201 | |||
Accrued expenses | (3,531,201) | |||
Liabilities assumed | (3,531,201) | |||
Net assets acquired | 35,860,000 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 3,531,201 | |||
Honeywell International, Inc | Measurement Period Adjustments | ||||
Business Acquisition [Line Items] | ||||
Prepaid inventory | 2,032,954 | |||
Equipment | (54,000) | |||
Intangible assets | (4,460,000) | |||
Goodwill | (1,050,155) | |||
Assets acquired | (3,531,201) | |||
Accrued expenses | 3,531,201 | |||
Liabilities assumed | 3,531,201 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | (3,531,201) | |||
Honeywell International, Inc | Measurement Period Adjustments | Adjustment of preliminary fair value estimates of assets | ||||
Business Acquisition [Line Items] | ||||
Goodwill | 2,500,000 | 2,500,000 | ||
Honeywell International, Inc | Measurement Period Adjustments | Adjustment of preliminary fair value estimates of liabilities | ||||
Business Acquisition [Line Items] | ||||
Liabilities assumed | 3,500,000 | 3,500,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | $ (3,500,000) | $ (3,500,000) | ||
Honeywell International, Inc | Asset Purchase and License Agreement (the "Honeywell Agreement") | ||||
Business Acquisition [Line Items] | ||||
Total consideration | 35,900,000 | |||
Construction in progress | Honeywell International, Inc | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 1,238,000 | |||
Construction in progress | Honeywell International, Inc | Amounts Recognized as of Acquisition Date (as previously reported) | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 1,238,000 |
Supplemental Balance Sheet Di_5
Supplemental Balance Sheet Disclosures - Summary of unaudited pro forma consolidated information (Details) - Honeywell International, Inc - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2023 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | ||
Net sales | $ 12,213,137 | $ 24,811,043 |
Net income | $ 2,740,693 | $ 5,072,071 |
Supplemental Balance Sheet Di_6
Supplemental Balance Sheet Disclosures - Inventories and Prepaid expenses and other current assets (Details) - USD ($) | Mar. 31, 2024 | Sep. 30, 2023 |
Inventory Valuation | ||
Raw materials | $ 7,611,331 | $ 5,162,177 |
Work-in-process | 1,443,189 | 966,888 |
Finished goods | 66,350 | 10,648 |
Total inventories | 9,120,870 | 6,139,713 |
Prepaid expenses and other current assets | ||
Prepaid insurance | 386,743 | 623,186 |
Other | 325,029 | 449,826 |
Total prepaid expenses and other current assets | $ 711,772 | $ 1,073,012 |
Supplemental Balance Sheet Di_7
Supplemental Balance Sheet Disclosures - Intangible assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Finite-Lived Intangible Assets, Net | |||||||
Accumulated Impairment | $ (44,400) | $ (44,400) | $ (44,400) | ||||
Accumulated Amortization | (1,443,785) | (1,443,785) | (906,785) | ||||
Intangible asset amortization expense | 268,500 | $ 0 | 537,000 | $ 0 | |||
Intangible Assets, Net (Excluding Goodwill) | |||||||
Gross Carrying Value | 17,136,506 | 17,136,506 | 17,136,506 | ||||
Accumulated Impairment | (44,400) | (44,400) | (44,400) | ||||
Accumulated Amortization | (1,443,785) | (1,443,785) | (906,785) | ||||
Net Carrying Value | 15,648,321 | 15,648,321 | 16,185,321 | ||||
Customer relationships acquired from the Transaction | |||||||
Finite-Lived Intangible Assets, Net | |||||||
Gross Carrying Value | 10,740,000 | 10,740,000 | 10,740,000 | ||||
Accumulated Amortization | (805,500) | (805,500) | (268,500) | ||||
Total | $ 9,934,500 | $ 9,934,500 | 10,471,500 | ||||
Estimated weighted average life | 9 years 3 months | 9 years 3 months | 9 years 3 months | 9 years 3 months | |||
Intangible Assets, Net (Excluding Goodwill) | |||||||
Accumulated Amortization | $ (805,500) | $ (805,500) | (268,500) | ||||
Licensing and certification rights | |||||||
Finite-Lived Intangible Assets, Net | |||||||
Gross Carrying Value | 696,506 | 696,506 | 696,506 | ||||
Accumulated Impairment | (44,400) | (44,400) | (44,400) | ||||
Accumulated Amortization | (638,285) | (638,285) | (638,285) | ||||
Total | 13,821 | 13,821 | 13,821 | ||||
Impairment charges | $ 0 | $ 0 | 0 | $ 0 | |||
Intangible Assets, Net (Excluding Goodwill) | |||||||
Accumulated Impairment | (44,400) | (44,400) | (44,400) | ||||
Accumulated Amortization | (638,285) | (638,285) | (638,285) | ||||
Licensing and certification rights | |||||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | |||||||
Gross Carrying Value | 5,700,000 | 5,700,000 | 5,700,000 | ||||
Net Carrying Value | 5,700,000 | 5,700,000 | $ 5,700,000 | ||||
Honeywell International, Inc | Asset Purchase and License Agreement (the "Honeywell Agreement") | Customer relationships acquired from the Transaction | |||||||
Finite-Lived Intangible Assets, Net | |||||||
Impairment charges | $ 0 | $ 0 |
Supplemental Balance Sheet Di_8
Supplemental Balance Sheet Disclosures - Intangible assets timing of future amortization expense (Details) - Customer relationships acquired from the Transaction - USD ($) | Mar. 31, 2024 | Sep. 30, 2023 |
Expected future amortization expense | ||
2024 (six months remaining) | $ 537,000 | |
2025 | 1,074,000 | |
2026 | 1,074,000 | |
2027 | 1,074,000 | |
2028 | 1,074,000 | |
Thereafter | 5,101,500 | |
Total | $ 9,934,500 | $ 10,471,500 |
Supplemental Balance Sheet Di_9
Supplemental Balance Sheet Disclosures - Assets held for sale (Details) - USD ($) | 6 Months Ended | ||
Nov. 20, 2023 | Mar. 31, 2024 | Sep. 30, 2023 | |
Assets Held for Sale | |||
Assets held for sale | $ 2,063,818 | ||
Proceeds from assets held for sale | $ 2,225,810 | ||
Gain loss on sale of property and equipment | 160,577 | ||
King Air aircraft | |||
Assets Held for Sale | |||
Proceeds from assets held for sale | $ 2,300,000 | ||
Gain loss on sale of property and equipment | $ 162,000 |
Supplemental Balance Sheet D_10
Supplemental Balance Sheet Disclosures - Property and Equipment & Other Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Property and Equipment | |||||
Property and equipment, gross | $ 24,242,783 | $ 24,242,783 | $ 19,816,252 | ||
Less: accumulated depreciation and amortization | (11,792,358) | (11,792,358) | (11,923,825) | ||
Property and equipment, net | 12,450,425 | 12,450,425 | 7,892,427 | ||
Depreciation and amortization for property and equipment | 146,156 | $ 85,981 | 289,077 | $ 171,390 | |
Other assets | |||||
Operating lease right-of-use asset | 8,503 | 8,503 | 15,065 | ||
Other non-current assets | 311,201 | 311,201 | 176,657 | ||
Total other assets | 319,704 | 319,704 | 191,722 | ||
Accumulated amortization of intangible assets | 1,443,785 | 1,443,785 | 906,785 | ||
Intangible asset amortization expense | 268,500 | 0 | 537,000 | 0 | |
Prepaid software licenses | 44,072 | 44,072 | 53,585 | ||
Computer equipment | |||||
Property and Equipment | |||||
Property and equipment, gross | 3,602,893 | 3,602,893 | 2,343,996 | ||
Furniture and office equipment | |||||
Property and Equipment | |||||
Property and equipment, gross | 977,224 | 977,224 | 970,230 | ||
Manufacturing facility | |||||
Property and Equipment | |||||
Property and equipment, gross | 6,048,349 | 6,048,349 | 5,926,584 | ||
Equipment | |||||
Property and Equipment | |||||
Property and equipment, gross | 12,593,072 | 12,593,072 | 9,554,197 | ||
Land | |||||
Property and Equipment | |||||
Property and equipment, gross | 1,021,245 | 1,021,245 | $ 1,021,245 | ||
Prepaid software licenses | |||||
Other assets | |||||
Intangible asset amortization expense | $ 4,905 | $ 0 | $ 9,513 | $ 0 |
Supplemental Balance Sheet D_11
Supplemental Balance Sheet Disclosures - Accrued Expenses (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2024 | Sep. 30, 2023 | |
Accrued expenses | |||
Warranty | $ 574,971 | $ 574,971 | $ 562,645 |
Salary, benefits and payroll taxes | 1,074,812 | 1,074,812 | 1,181,219 |
Professional fees | 145,421 | 145,421 | 200,668 |
Operating lease | 8,503 | 8,503 | 12,965 |
Income tax payable | 116,697 | ||
Other | 611,388 | 611,388 | 844,131 |
Total accrued expenses | 2,415,095 | 2,415,095 | $ 2,918,325 |
Warranty cost and accrual information | |||
Warranty accrual, beginning of period | 541,450 | 562,645 | |
Accrued expense | 53,707 | 73,211 | |
Warranty cost | (20,186) | (60,885) | |
Warranty accrual, end of period | $ 574,971 | $ 574,971 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Income Taxes | ||||
Effective tax rate (as a percent) | 21.20% | 19.60% | 21.50% | 21.40% |
Shareholders' Equity and Shar_2
Shareholders' Equity and Share-Based Payments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Shareholders' Equity and Share-Based Payments | |||||
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 | 75,000,000 | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||
Amended and Restated 2019 Plan | |||||
Shareholders' Equity and Share-Based Payments | |||||
Share-based compensation expense | $ 269,338 | $ 475,055 | $ 733,376 | $ 1,016,571 | |
Unrecognized compensation cost, related to non-vested stock options | $ 1,425,821 | $ 1,425,821 | |||
Amended and Restated 2019 Plan | Maximum | |||||
Shareholders' Equity and Share-Based Payments | |||||
Number of shares of common stock available for awards | 1,950,000 | 1,950,000 | |||
Amended and Restated 2019 Plan | Employee | |||||
Shareholders' Equity and Share-Based Payments | |||||
Share-based compensation expense | $ 219,748 | 556,673 | $ 375,328 | 789,798 | |
Amended and Restated 2019 Plan | Non Employee Director | |||||
Shareholders' Equity and Share-Based Payments | |||||
Share-based compensation expense | $ 49,590 | $ 176,703 | $ 99,726 | $ 226,773 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator: | ||||||
Net income | $ 1,208,316 | $ 1,057,350 | $ 1,271,103 | $ 698,651 | $ 2,265,666 | $ 1,969,754 |
Denominator: | ||||||
Basic weighted average shares | 17,456,120 | 17,352,340 | 17,453,741 | 17,334,553 | ||
Dilutive effect of share-based awards | 31,407 | 1,690 | 27,476 | 5,551 | ||
Diluted weighted average shares | 17,487,527 | 17,354,030 | 17,481,217 | 17,340,104 | ||
Net income per common share: | ||||||
Basic EPS | $ 0.07 | $ 0.07 | $ 0.13 | $ 0.11 | ||
Diluted EPS | $ 0.07 | $ 0.07 | $ 0.13 | $ 0.11 | ||
Options to purchase common stock outstanding (in shares) | 297,014 | 25,000 | 297,014 | 25,000 | ||
Restricted stock units outstanding (in shares) | 173,555 | 82,886 | 173,555 | 82,886 | ||
Diluted weighted-average shares outstanding excluded from computation of diluted EPS (in shares) | 243,749 | 277,520 | 228,579 | 138,760 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Related Party Transactions | |||||
Net sales | $ 10,739,516 | $ 7,340,454 | $ 20,047,579 | $ 13,856,709 | |
Principal shareholder | Eclipse | |||||
Related Party Transactions | |||||
Net sales | $ 9,000 | $ 42,000 | $ 93,000 | $ 76,000 | |
Director | |||||
Related Party Transactions | |||||
Professional Fees | $ 72,990 |
Leases - Schedule of lease-rela
Leases - Schedule of lease-related assets and liabilities (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2024 | Sep. 30, 2023 | |
Leases | ||
Operating leases | $ 8,503 | $ 15,065 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | |
Operating leases- current | $ 8,503 | $ 12,965 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | |
Present value of minimum lease payments | $ 8,503 | |
Operating leases expenses | $ 7,338 | |
Weighted average remaining lease term | 8 months 12 days | |
Weighted average discount rate | 5% |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) - USD ($) | Mar. 31, 2024 | Sep. 30, 2023 |
Future minimum lease payments under operating leases | ||
2025 | $ 9,784 | |
Total minimum lease payments | 9,784 | |
Amount representing interest | (1,281) | |
Present value of minimum lease payments | 8,503 | |
Operating leases- current | $ 8,503 | $ 12,965 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent |
Loan Agreement (Details)
Loan Agreement (Details) - USD ($) | 6 Months Ended | |||||
Jun. 30, 2023 | Mar. 31, 2024 | Dec. 19, 2023 | Dec. 18, 2023 | Jun. 28, 2023 | May 11, 2023 | |
Loan Agreement | ||||||
Amount drawn | $ 24,491,634 | |||||
Senior secured revolving line of credit | ||||||
Loan Agreement | ||||||
Aggregate principal amount | $ 10,000,000 | |||||
Annual commitment fee (in percent) | 0.15% | |||||
Amount drawn | $ 10,642,885 | |||||
Senior secured revolving line of credit | PNC Bank | ||||||
Loan Agreement | ||||||
Aggregate principal amount | $ 30,000,000 | $ 10,000,000 | ||||
SOFR | Senior secured revolving line of credit | ||||||
Loan Agreement | ||||||
Adjustment to variable interest rate | 0.10% | |||||
SOFR | Minimum | Senior secured revolving line of credit | ||||||
Loan Agreement | ||||||
Applicable Margin | 1.50% | |||||
SOFR | Maximum | Senior secured revolving line of credit | ||||||
Loan Agreement | ||||||
Applicable Margin | 2.50% | |||||
Senior secured term loan | ||||||
Loan Agreement | ||||||
Aggregate principal amount | $ 20,000,000 | |||||
Adjustment to variable interest rate | 0.10% | |||||
Amortization period of debt | 10 years | |||||
Senior secured term loan | Maximum | ||||||
Loan Agreement | ||||||
Amortization period of debt in equal monthly principal installments | 60 months | |||||
Senior secured term loan | SOFR | Minimum | ||||||
Loan Agreement | ||||||
Applicable Margin | 1.50% | |||||
Senior secured term loan | SOFR | Maximum | ||||||
Loan Agreement | ||||||
Applicable Margin | 2.50% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ 1,208,316 | $ 1,057,350 | $ 1,271,103 | $ 698,651 | $ 2,265,666 | $ 1,969,754 |
Insider Trading Arrangements
Insider Trading Arrangements | 6 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Item 5. Other Information During the quarter ended March 31, 2024, no officer or director of the Company adopted terminated Rule 10b5-1(c) non-Rule 10b5-1 |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |