Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 11, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-11398 | |
Entity Registrant Name | CPI AEROSTRUCTURES, INC. | |
Entity Central Index Key | 0000889348 | |
Entity Tax Identification Number | 11-2520310 | |
Entity Incorporation, State or Country Code | NY | |
Entity Address, Address Line One | 91 Heartland Blvd. | |
Entity Address, City or Town | Edgewood | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11717 | |
City Area Code | (631) | |
Local Phone Number | 586-5200 | |
Title of 12(b) Security | Common stock, $0.001 par value per share | |
Trading Symbol | CVU | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,566,784 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash | $ 3,997,924 | $ 3,847,225 |
Accounts receivable, net | 5,483,915 | 4,857,772 |
Insurance recovery receivable | 3,600,000 | 3,600,000 |
Contract assets | 30,362,951 | 27,384,540 |
Inventory | 2,334,567 | 2,493,069 |
Refundable income taxes | 40,000 | 40,000 |
Prepaid expenses and other current assets | 969,116 | 975,830 |
Total Current Assets | 46,788,473 | 43,198,436 |
Operating lease right-of-use assets | 6,071,158 | 6,526,627 |
Property and equipment, net | 1,051,536 | 1,124,556 |
Deferred tax asset | 6,374,470 | 6,574,463 |
Goodwill | 1,784,254 | 1,784,254 |
Other assets | 227,243 | 238,744 |
Total Assets | 62,297,134 | 59,447,080 |
Current Liabilities: | ||
Accounts payable | 10,812,974 | 8,029,996 |
Accrued expenses | 5,779,242 | 7,344,590 |
Litigation settlement obligation | 3,600,000 | 3,600,000 |
Contract liabilities | 7,493,821 | 6,001,726 |
Loss reserve | 464,044 | 576,549 |
Current portion of line of credit | 1,920,000 | 1,200,000 |
Current portion of long-term debt | 1,097,841 | 1,719,766 |
Operating lease liabilities, current | 1,872,484 | 1,817,811 |
Income tax payable | 11,396 | 11,396 |
Total Current Liabilities | 33,051,802 | 30,301,834 |
Line of credit | 19,080,000 | 19,800,000 |
Long-term operating lease liabilities | 4,597,328 | 5,077,235 |
Long-term debt, net of current portion | 48,746 | 70,981 |
Total Liabilities | 56,777,876 | 55,250,050 |
Shareholders’ Equity: | ||
Common stock - $.001 par value; authorized 50,000,000 shares, 12,526,042 and 12,506,795 shares, respectively, issued and outstanding | 12,526 | 12,507 |
Additional paid-in capital | 73,528,353 | 73,189,449 |
Accumulated deficit | (68,021,621) | (69,004,926) |
Total Shareholders’ Equity | 5,519,258 | 4,197,030 |
Total Liabilities and Shareholders’ Equity | $ 62,297,134 | $ 59,447,080 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, outstanding | 12,526,042 | 12,506,795 |
Common stock, issued | 12,526,042 | 12,506,795 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue | $ 22,016,668 | $ 20,135,097 |
Cost of sales | 17,354,152 | 16,700,488 |
Gross profit | 4,662,516 | 3,434,609 |
Selling, general and administrative expenses | 2,869,058 | 3,137,657 |
Income from operations | 1,793,458 | 296,952 |
Interest expense | 610,896 | 328,608 |
Income (loss) before provision for income taxes | 1,182,562 | (31,656) |
Provision for income taxes | 199,257 | 1,275 |
Net income (loss) | $ 983,305 | $ (32,931) |
Income (loss) per common share, diluted: | ||
Income (loss) per common share, diluted | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic: | ||
Total shares | 12,520,299 | 12,363,143 |
Shares used in computing income (loss) per common share, diluted | 12,608,189 | 12,363,143 |
Unrestricted Shares [Member] | ||
Income (loss) per common share, basic: | ||
Income (loss) per common share, basic | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic: | ||
Total shares | 12,281,115 | 12,072,838 |
Restricted Shares [Member] | ||
Income (loss) per common share, basic: | ||
Income (loss) per common share, basic | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic: | ||
Total shares | 239,184 | 290,305 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (UNAUDITED) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 12,336 | $ 72,833,742 | $ (78,181,151) | $ (5,335,073) |
Beginning balance (in shares) at Dec. 31, 2021 | 12,335,683 | |||
Net Income | (32,931) | (32,931) | ||
Stock-based compensation expense | $ 47 | 25,835 | 25,882 | |
Stock-based compensation expense (in shares) | 47,527 | |||
Ending balance, value at Mar. 31, 2022 | $ 12,383 | 72,859,577 | (78,214,082) | (5,342,122) |
Ending balance (in shares) at Mar. 31, 2022 | 12,383,210 | |||
Beginning balance, value at Dec. 31, 2022 | $ 12,507 | 73,189,449 | (69,004,926) | $ 4,197,030 |
Beginning balance (in shares) at Dec. 31, 2022 | 12,506,795 | 12,506,795 | ||
Net Income | 983,305 | $ 983,305 | ||
Stock-based compensation expense | $ 19 | 338,904 | 338,923 | |
Stock-based compensation expense (in shares) | 19,247 | |||
Ending balance, value at Mar. 31, 2023 | $ 12,526 | $ 73,528,353 | $ (68,021,621) | $ 5,519,258 |
Ending balance (in shares) at Mar. 31, 2023 | 12,526,042 | 12,526,042 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 983,305 | $ (32,931) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 116,545 | 171,875 |
Amortization of debt issuance cost | 65,835 | 66,166 |
Stock-based compensation | 338,923 | 25,882 |
Deferred income taxes | 199,993 | |
Bad debt expense | 3,189 | |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (626,143) | 112,188 |
Increase in insurance receivable | (624,424) | |
Increase in contract assets | (2,978,411) | (1,296,830) |
Decrease in inventory | 158,502 | 331,795 |
Decrease in prepaid expenses and other assets | 6,714 | 209,163 |
Decrease in operating right-of-use assets | 455,469 | 435,968 |
Increase in accounts payable and accrued expenses | 1,217,630 | 111,453 |
Increase (decrease) in contract liabilities | 1,492,095 | (1,754,748) |
Increase in settlement of litigation obligation | 596,741 | |
Decrease in lease liabilities | (425,234) | (392,181) |
Decrease in loss reserve | (112,505) | (408,922) |
Net cash provided by (used in) operating activities | 892,718 | (2,445,616) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (43,525) | (25,317) |
Net cash used in investing activities | (43,525) | (25,317) |
Cash flows from financing activities: | ||
Payments on long-term debt | (644,160) | (905,023) |
Debt issuance costs paid | (54,334) | |
Net cash used in financing activities | (698,494) | (905,023) |
Net increase (decrease) in cash | 150,699 | (3,375,956) |
Cash at beginning of period | 3,847,225 | 6,308,866 |
Cash at end of period | 3,997,924 | 2,932,910 |
Cash paid during the period for: | ||
Interest | 651,984 | 331,441 |
Income taxes | $ 1,275 |
INTERIM FINANCIAL STATEMENTS
INTERIM FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
INTERIM FINANCIAL STATEMENTS | 1. INTERIM FINANCIAL STATEMENTS Basis of Presentation The Company consists of CPI Aerostructures, Inc. (“CPI Aero”), Welding Metallurgy, Inc. (“WMI”), a wholly owned subsidiary of CPI Aero, and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, the “Company”, “we”, “us”, or “our”). The condensed consolidated interim financial statements of the Company as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet at December 31, 2022 has been derived from audited consolidated financial statements, but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading. All adjustments that, in the opinion of the management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment. The Company maintains its cash in four financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed insurance limits. As of March 31, 2023, the Company had $ 3,830,183 Recently Issued Accounting Standards - Adopted In the first quarter of 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), using a modified retrospective method, which did not result in a significant impact on the Company’s financial statements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 2. REVENUE RECOGNITION The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. This is known as the over time revenue recognition. Under the over time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on actual costs incurred as a percentage of total estimated costs at completion of the contract. The Company also has contracts that are considered point in time. Under the point in time revenue recognition model, revenue is recognized when control of the components has transferred to the customer; in most cases this will be based on shipping terms. Contracts with Customers and Performance Obligations The majority of the Company’s revenues are from long-term contracts with the U.S. government as well military and commercial contractors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For the Company, the contract under Accounting Standards Codification Topic 606 (“ASC 606”) is typically established upon execution of a purchase order either in accordance with a long-term customer contract or on a standalone basis. To determine the proper revenue recognition for our contracts, we must evaluate whether two or more contracts should be combined and accounted for as a single contract, and whether the combined or single contract should be accounted for as one performance obligation or more than one performance obligation. This evaluation requires significant judgment, and the decision to combine a group of contracts or to separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a period. A performance obligation is a promise within a contract to transfer a distinct good or service to the customer in exchange for payment and is the unit of account for recognizing revenue. The Company’s performance obligations in its contracts with customers are typically the sale of each individual product contemplated in the contract or a single performance obligation representing a series of products when the contract contains multiple products that are substantially the same. The Company has elected to account for shipping performed after control over a product has transferred to a customer as fulfillment activities. When revenue is recognized in advance of incurring shipping costs, the costs related to the shipping are accrued. Shipping costs are included in costs of sales. The Company provides warranties on many of its products; however, since customers cannot purchase such warranties separately and they do not provide services beyond standard assurances, warranties are not separate performance obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. For contracts with more than one performance obligation, the Company allocates the transaction price to each performance obligation based on its estimated standalone selling price. When standalone selling prices are not available, the transaction price is allocated using an expected cost plus margin approach as pricing for such contracts is typically negotiated on the basis of cost. The contracts with the U.S. government and military contractors typically are subject to the Federal Acquisition Regulation, which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. The pricing for commercial contracts is based on the specific negotiations with each customer and any taxes imposed by governmental authorities are excluded from revenue. The transaction price is primarily comprised of fixed consideration as the customer typically pays a fixed fee for each product sold. The Company does not adjust the amount of revenue to be recognized under a customer contract for the effects of the time value of money when the timing difference between receipt of payment and transferring the good or service is less than one year. The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. The Company uses the cost-to-cost input method to measure progress for its performance obligations because it best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. The Company generally utilizes the portfolio approach to estimate the amount of revenue to recognize for its contracts and groups contracts together that have similar characteristics. Contract gross profit margins are calculated using the estimated costs for either the individual contract or the portfolio as applicable. Significant judgment is used to determine which contracts are grouped together to form a portfolio. The portfolio approach is utilized only when the result of the accounting is not expected to be materially different than if applied to individual contracts. The Company’s contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, are recognized prospectively when the remaining goods or services are distinct and on a cumulative catch-up basis when the remaining goods or services are not distinct. The Company also has contracts that are considered point in time. Under the point in time revenue recognition model, revenue is recognized when control of the components has transferred to the customer. Contract Estimates Certain contracts contain forms of variable consideration, such as price discounts and performance penalties. The Company generally estimates variable consideration using the most likely amount based on an assessment of all available information (i.e., historical experience, current and forecasted performance) and only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty is resolved. In applying the cost-to-cost input method, the Company compares the actual costs incurred relative to the total estimated costs expected at completion to determine its progress towards satisfying its performance obligation and to calculate the corresponding amount of revenue to recognize. For any costs incurred that do not depict the Company’s performance in transferring control of goods or services to the customer, the Company excludes such costs from its input method measure of progress as the amounts are not reflected in the price of the contract. Costs that are inputs to the satisfaction of a performance obligation include labor, materials and subcontractors’ costs, other direct costs and an allocation of indirect costs. Changes to the original estimates may be required during the life of the contract. Estimates are reviewed quarterly and the effect of any change in the total estimated costs expected at completion for a contract is reflected in revenue in the period the change becomes known. ASC 606 involves considerable use of estimates and judgment in determining revenues, costs and profits and in assigning the amounts to accounting periods. For instance, management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from the customer, and overhead cost rates, among other variables. The Company continually evaluates all of the factors related to the assumptions, risks and uncertainties inherent with the application of the cost-to-cost input method; however, it cannot be assured that estimates will be accurate. If estimates are not accurate, or a contract is terminated which will affect estimates at completion, the Company is required to adjust revenue in the period the change is determined. When changes are required for the estimated total revenue on a contract, these changes are recognized on a cumulative catch-up basis in the current period. A significant change in one or more estimates could affect the profitability of one or more of our performance obligations. If estimates of total costs to be incurred exceed estimates of total consideration the Company expects to receive, a provision for the remaining loss on the contract is recorded in the period in which the loss becomes evident. Capitalized Contract Acquisition Costs and Fulfillment Costs Contract acquisition costs are those incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company does not typically incur contract acquisition costs or contract fulfillment costs that are subject to capitalization in accordance with the guidance in Accounting Standards Codification Subtopic 340-40, “Other Assets and Deferred Costs—Contracts with Customers.” Disaggregation of Revenue The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method: Three months ended March 31, 2023 2022 Aerostructure $ 10,073,525 $ 9,186,793 Aerosystems 9,552,251 6,686,828 Kitting and Supply Chain Management 2,390,892 4,261,476 Total $ 22,016,668 $ 20,135,097 Three months ended March 31, 2023 2022 Revenue recognized using over time revenue recognition model $ 20,630,230 $ 18,495,197 Revenue recognized using point in time revenue recognition model 1,386,438 1,639,900 Total $ 22,016,668 $ 20,135,097 Transaction Price Allocated to Remaining Performance Obligations As of March 31, 2023, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $ 113.3 four years |
CONTRACT ASSETS AND LIABILITIES
CONTRACT ASSETS AND LIABILITIES | 3 Months Ended |
Mar. 31, 2023 | |
Contract Assets And Liabilities | |
CONTRACT ASSETS AND LIABILITIES | 3. CONTRACT ASSETS AND LIABILITIES Contract assets represent revenue recognized on contracts in excess of amounts invoiced to the customers and the Company’s right to consideration is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. Under the typical payment terms of our government as well as military contractor contracts, the customer retains a portion of the contract price until completion of the contract, as a measure of protection for the customer. Our government and military contractor contracts therefore typically result in revenue recognized in excess of billings, which we present as contract assets. Contract assets are classified as current assets. The Company’s contract liabilities represent customer payments received or due from the customer in excess of revenue recognized. Contract liabilities are classified as current liabilities. Schedule of contract assets and liabilities March 31, December 31, 2023 2022 Contract assets $ 30,362,951 $ 27,384,540 Contract liabilities 7,493,821 6,001,726 Net Contract assets $ 22,869,130 $ 21,382,814 Revenue recognized for the three months ended March 31, 2023 and 2022 that was included in the contract liabilities balance as of January 1, 2023 and 2022, respectively, was approximately $ 1.5 2.5 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 4. INVENTORY The components of inventory consisted of the following: March 31, 2023 December 31, 2022 Raw materials $ 1,921,845 $ 1,892,157 Work in progress 609,372 685,438 Finished goods 3,027,697 3,038,859 Gross inventory 5,558,914 5,616,454 Inventory reserves (3,224,347 ) (3,123,386 ) Inventory, net $ 2,334,567 $ 2,493,069 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | 5. STOCK-BASED COMPENSATION Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows: 2023 2022 Cost of sales $ 15,077 $ 13,534 Selling, general and administrative 323,846 12,348 Total stock-based compensation expense $ 338,923 $ 25,882 The Company grants restricted stock units (“RSUs”) to its board of directors as partial compensation. These RSUs vest quarterly on a straight-line basis over a one-year period. The Company grants shares of common stock (“Restricted Stock Awards”) to select employees. In the event that the employee’s employment is voluntarily terminated prior to certain vesting dates, portions of the shares may be forfeited. In addition, if certain Company performance criteria are not achieved, portions of these shares may be forfeited. 85,748 263,148 The following table summarizes activity related to outstanding RSUs and Restricted Stock Awards for the three months ended March 31, 2023: Restricted Stock Awards Weighted Average Grant Date Fair Value of Restricted Stock Awards RSUs Weighted Average Grant Date Fair Value of RSUs Non-vested – January 1, 2023 239,184 $ 2.32 — $ — Granted — $ — 162,188 $ 3.42 Vested — $ — (40,549 ) $ 3.42 Forfeited — $ — (33,749 ) $ 3.42 Non-vested – March 31, 2023 239,184 $ 2.32 87,890 $ 3.42 As of March 31, 2023, unamortized stock-based compensation costs related to restricted share arrangements was $ 313,582 |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | 6. FAIR VALUE Fair Value At March 31, 2023 and December 31, 2022, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. March 31, 2023 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 22,146,587 $ 22,146,587 December 31, 2022 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 22,790,747 $ 22,790,747 We estimated the fair value of debt using market quotes and calculations based on market rates. |
INCOME (LOSS) PER COMMON SHARE
INCOME (LOSS) PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
INCOME (LOSS) PER COMMON SHARE | 7. INCOME (LOSS) PER COMMON SHARE The Company complies with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share” and uses the two-class method in the calculation of earnings per share. Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. During the three months ended March 31, 2023 and 2022, respectively, and as of March 31, 2023 and 2022, respectively, the Company had restricted shares of common stock that were considered participating securities and unrestricted shares of common stock outstanding. Earnings and losses are shared pro rata. Basic and diluted income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted income (loss) per common share is adjusted for the incremental shares attributed to unvested RSUs. Incremental shares of 87,890 142,587 For the three months ended March 31, 2023 and 2022, respectively, our income (loss) per common share was calculated as follows: Three months Three months Net income (loss) $ 983,305 $ (32,931 ) Income (loss) per common share, basic: Income (loss) per common share-unrestricted shares $ 0.08 $ (0.00 ) Income (loss) per common share-restricted shares $ 0.08 $ (0.00 ) Income (loss) per common share, diluted $ 0.08 $ (0.00 ) Shares used in computing income (loss) per common share, basic: Unrestricted shares 12,281,115 12,072,838 Restricted shares 239,184 290,305 Total shares 12,520,299 12,363,143 Shares used in computing income (loss) per common share, diluted 12,608,189 12,363,143 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | 8. DEBT On March 24, 2016, the Company entered into the Amended and Restated Credit Agreement with the lenders named therein and BankUnited N.A. as Sole Arranger, Agent and Collateral Agent (as amended from time to time, the “Credit Agreement” or the “BankUnited Facility”). The BankUnited Facility originally provided for a revolving credit loan commitment of $ 30 10 On March 23, 2023, the Company entered into a Twelfth Amendment to the Credit Agreement (the “Twelfth Amendment”). Under the Twelfth Amendment, the parties amended the Credit Agreement by : (a) extending the maturity date of the Company’s existing revolving line of credit and its existing term loan to November 30, 2024 20,520,000 19,800,000 19,080,000 18,360,000 17,640,000 250,000 116,667 133,333 The Credit Agreement, as amended, requires us to maintain the following financial covenants (subject to the exclusions provided for in the previous paragraph): (a) minimum debt service coverage ratio of no less than 1.5 0.95 1.5 7.30 6.30 5.0 4.0 1.00 1 The BankUnited Facility is secured by all of the Company’s assets and both the Revolving Loan and Term Loan bear interest at the Prime Rate + 3.50 8.00 11.50 As of March 31, 2023 and December 31, 2022, the Company had $ 21,000,000 1,920,000 19,080,000 The Term Loan had an aggregate principal amount of $ 983,333 1,583,333 The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: For the Year Ending December 31, Remainder of 2023 $ 1,065,758 2024 51,801 2025 29,028 Total $ 1,146,587 Included in long-term debt are financing leases and other notes payable of $ 163,254 207,414 114,508 136,433 The Company has cumulatively paid approximately $ 962,000 119,000 |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 3 Months Ended |
Mar. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | 9. MAJOR CUSTOMERS During the three months ended March 31, 2023, our two largest customers accounted for 36 28 39 17 12 At March 31, 2023, 25 17 17 15 27 20 16 16 At March 31, 2023, 29 16 14 12 11 38 21 17 13 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
LEASES | 10. LEASES The Company leases manufacturing and office space under an agreement classified as an operating lease. On November 10, 2021, the Company executed the second amendment to the lease agreement for its manufacturing and office space, which extends the lease agreement’s expiration date to April 30, 2026. The lease agreement does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms. The Company also leases office equipment in agreements classified as operating leases. For the three months ended March 31, 2023 and 2022, the Company’s operating lease expense was $ 546,082 534,991 Future minimum lease payments under non-cancellable operating leases as of March 31, 2023 were as follows: For the Year Ending December 31, Remainder of 2023 $ 1,624,406 2024 2,222,280 2025 2,276,850 2026 843,772 2027 109,394 Thereafter 7,331 Total undiscounted operating lease payments 7,084,033 Less imputed interest (614,221 ) Present value of operating lease payments $ 6,469,812 The following table sets forth the ROU assets and operating lease liabilities as of: March 31, December 31, Assets ROU assets, net $ 6,071,158 $ 6,526,627 Liabilities Current operating lease liabilities $ 1,872,484 $ 1,817,811 Long-term operating lease liabilities 4,597,328 5,077,235 Total lease liabilities $ 6,469,812 $ 6,895,046 The amortization expense of these assets under operating leases was $ 455,392 435,968 The Company’s weighted average remaining lease term for its operating leases is 3.2 5.4 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 11. INCOME TAXES Income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the consolidated financial statements carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s policy is to record estimated interest and penalties related to uncertain tax positions in income tax expense. The provision for income tax for the three months ended March 31, 2023 and 2022 was $ 199,257 1,275 The effective income tax rate for the three months ended March 31, 2023 is 16.8 21 The difference between the Company’s statutory tax rate and its effective rate is due to R&D credit and permanent tax differences. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Class Action Lawsuit A consolidated class action lawsuit (captioned Rodriguez v. CPI Aerostructures, Inc., et al. On May 20, 2021, the parties reached a settlement in the amount of $ 3,600,000 Shareholder Derivative Action Four shareholder derivative actions, each based on substantially the same facts as those alleged in the class action discussed above, have been filed against current members of our board of directors and certain of our current and former officers. The first action (captioned Moulton v. McCrosson, et.al. The second action (captioned Woodyard v. McCrosson, et al. The third action (captioned Berger v. McCrosson, et al. On March 19, 2021, the parties to the Moulton and Berger In re CPI Aerostructures Stockholder Derivative Litigation The fourth action (captioned Wurst v. Bazaar, et al. On June 13, 2022, the plaintiffs in the consolidated federal action informed the court that the Company and all defendants had reached an agreement in principle with all plaintiffs to settle the shareholder derivative lawsuits described above. On June 16, 2022, the plaintiffs in the consolidated federal action filed an unopposed motion for preliminary approval of the settlement. On July 22, 2022, the court referred the motion to the magistrate judge. The magistrate judge held a conference on September 9, 2022 in the consolidated federal action. On February 14, 2023, the magistrate judge recommended that the court grant the motion in its entirety. On March 6, 2023, the court granted preliminary approval of the proposed settlement. The proposed settlement is subject to final approval by the court. In addition to requiring final approval by the court, the proposed settlement is subject to certain conditions, including the filing with the SEC of the stipulation of settlement agreed to by the Company and plaintiff (the “Stipulation of Settlement”), and sending notice to potential class members. The terms of the proposed settlement are set forth in the Stipulation of Settlement. Should the proposed settlement receive final approval from the Court, it will result in the dismissal of the shareholder derivative lawsuits. As part of the proposed settlement, the Company has agreed to undertake (or confirm that it has undertaken already) certain corporate governance reforms. In addition, the Company and/or its insurer have agreed to pay a total of $ 585,000 Litigation Settlement Obligation and Insurance Recovery Receivable Pertaining to the Class Action Lawsuit and Shareholder Derivative Action The attorneys’ fees for both the Class Action Lawsuit and the Shareholder Derivative Action will be covered and paid by our directors’ and officers’ insurance carrier, after satisfaction of our $ 750,000 750,000 750,000 3,600,000 3,600,000 following the transfer of the Settlement Amount to the Plaintiff from the escrow account established for this purpose. |
INTERIM FINANCIAL STATEMENTS (P
INTERIM FINANCIAL STATEMENTS (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company consists of CPI Aerostructures, Inc. (“CPI Aero”), Welding Metallurgy, Inc. (“WMI”), a wholly owned subsidiary of CPI Aero, and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, the “Company”, “we”, “us”, or “our”). The condensed consolidated interim financial statements of the Company as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet at December 31, 2022 has been derived from audited consolidated financial statements, but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading. All adjustments that, in the opinion of the management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment. The Company maintains its cash in four financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed insurance limits. As of March 31, 2023, the Company had $ 3,830,183 |
Recently Issued Accounting Standards - Adopted | Recently Issued Accounting Standards - Adopted In the first quarter of 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), using a modified retrospective method, which did not result in a significant impact on the Company’s financial statements. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method: | The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method: Three months ended March 31, 2023 2022 Aerostructure $ 10,073,525 $ 9,186,793 Aerosystems 9,552,251 6,686,828 Kitting and Supply Chain Management 2,390,892 4,261,476 Total $ 22,016,668 $ 20,135,097 Three months ended March 31, 2023 2022 Revenue recognized using over time revenue recognition model $ 20,630,230 $ 18,495,197 Revenue recognized using point in time revenue recognition model 1,386,438 1,639,900 Total $ 22,016,668 $ 20,135,097 |
CONTRACT ASSETS AND LIABILITI_2
CONTRACT ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Contract Assets And Liabilities | |
Schedule of contract assets and liabilities | Schedule of contract assets and liabilities March 31, December 31, 2023 2022 Contract assets $ 30,362,951 $ 27,384,540 Contract liabilities 7,493,821 6,001,726 Net Contract assets $ 22,869,130 $ 21,382,814 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
The components of inventory consisted of the following: | The components of inventory consisted of the following: March 31, 2023 December 31, 2022 Raw materials $ 1,921,845 $ 1,892,157 Work in progress 609,372 685,438 Finished goods 3,027,697 3,038,859 Gross inventory 5,558,914 5,616,454 Inventory reserves (3,224,347 ) (3,123,386 ) Inventory, net $ 2,334,567 $ 2,493,069 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows: | Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows: 2023 2022 Cost of sales $ 15,077 $ 13,534 Selling, general and administrative 323,846 12,348 Total stock-based compensation expense $ 338,923 $ 25,882 |
The following table summarizes activity related to outstanding RSUs and Restricted Stock Awards for the three months ended March 31, 2023: | The following table summarizes activity related to outstanding RSUs and Restricted Stock Awards for the three months ended March 31, 2023: Restricted Stock Awards Weighted Average Grant Date Fair Value of Restricted Stock Awards RSUs Weighted Average Grant Date Fair Value of RSUs Non-vested – January 1, 2023 239,184 $ 2.32 — $ — Granted — $ — 162,188 $ 3.42 Vested — $ — (40,549 ) $ 3.42 Forfeited — $ — (33,749 ) $ 3.42 Non-vested – March 31, 2023 239,184 $ 2.32 87,890 $ 3.42 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
At March 31, 2023 and December 31, 2022, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. | At March 31, 2023 and December 31, 2022, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. March 31, 2023 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 22,146,587 $ 22,146,587 December 31, 2022 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 22,790,747 $ 22,790,747 |
INCOME (LOSS) PER COMMON SHARE
INCOME (LOSS) PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
For the three months ended March 31, 2023 and 2022, respectively, our income (loss) per common share was calculated as follows: | For the three months ended March 31, 2023 and 2022, respectively, our income (loss) per common share was calculated as follows: Three months Three months Net income (loss) $ 983,305 $ (32,931 ) Income (loss) per common share, basic: Income (loss) per common share-unrestricted shares $ 0.08 $ (0.00 ) Income (loss) per common share-restricted shares $ 0.08 $ (0.00 ) Income (loss) per common share, diluted $ 0.08 $ (0.00 ) Shares used in computing income (loss) per common share, basic: Unrestricted shares 12,281,115 12,072,838 Restricted shares 239,184 290,305 Total shares 12,520,299 12,363,143 Shares used in computing income (loss) per common share, diluted 12,608,189 12,363,143 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: | The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: For the Year Ending December 31, Remainder of 2023 $ 1,065,758 2024 51,801 2025 29,028 Total $ 1,146,587 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Future minimum lease payments under non-cancellable operating leases as of March 31, 2023 were as follows: | Future minimum lease payments under non-cancellable operating leases as of March 31, 2023 were as follows: For the Year Ending December 31, Remainder of 2023 $ 1,624,406 2024 2,222,280 2025 2,276,850 2026 843,772 2027 109,394 Thereafter 7,331 Total undiscounted operating lease payments 7,084,033 Less imputed interest (614,221 ) Present value of operating lease payments $ 6,469,812 |
The following table sets forth the ROU assets and operating lease liabilities as of: | The following table sets forth the ROU assets and operating lease liabilities as of: March 31, December 31, Assets ROU assets, net $ 6,071,158 $ 6,526,627 Liabilities Current operating lease liabilities $ 1,872,484 $ 1,817,811 Long-term operating lease liabilities 4,597,328 5,077,235 Total lease liabilities $ 6,469,812 $ 6,895,046 |
INTERIM FINANCIAL STATEMENTS (D
INTERIM FINANCIAL STATEMENTS (Details Narrative) | Mar. 31, 2023 USD ($) |
Accounting Policies [Abstract] | |
Uninsured balance | $ 3,830,183 |
The following tables present th
The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method: (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 22,016,668 | $ 20,135,097 |
Transferred over Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 20,630,230 | 18,495,197 |
Transferred at Point in Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 1,386,438 | 1,639,900 |
Aerostructure [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10,073,525 | 9,186,793 |
Aerosystems [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,552,251 | 6,686,828 |
Kitting and Supply Chain Management [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 2,390,892 | $ 4,261,476 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 $ in Millions | Mar. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 113.3 |
Performance obligations duration | 4 years |
Schedule of contract assets and
Schedule of contract assets and liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Contract Assets And Liabilities | ||
Contract assets | $ 30,362,951 | $ 27,384,540 |
Contract liabilities | 7,493,821 | 6,001,726 |
Net Contract assets | $ 22,869,130 | $ 21,382,814 |
CONTRACT ASSETS AND LIABILITI_3
CONTRACT ASSETS AND LIABILITIES (Details Narrative) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Contract Assets And Liabilities | ||
Revenue recognized that was included in contract liabilities | $ 1.5 | $ 2.5 |
The components of inventory con
The components of inventory consisted of the following: (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,921,845 | $ 1,892,157 |
Work in progress | 609,372 | 685,438 |
Finished goods | 3,027,697 | 3,038,859 |
Gross inventory | 5,558,914 | 5,616,454 |
Inventory reserves | (3,224,347) | (3,123,386) |
Inventory, net | $ 2,334,567 | $ 2,493,069 |
Stock-based compensation expens
Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows: (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 338,923 | $ 25,882 |
Cost of Sales [Member] | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | 15,077 | 13,534 |
Selling, General and Administrative Expenses [Member] | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 323,846 | $ 12,348 |
The following table summarizes
The following table summarizes activity related to outstanding RSUs and Restricted Stock Awards for the three months ended March 31, 2023: (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Restricted Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Non vested January 1, 2022 | shares | 239,184 |
Non vested January 1, 2022 | $ / shares | $ 2.32 |
Granted | shares | |
Granted | $ / shares | |
Vested | shares | |
Vested | $ / shares | |
Forfeited | shares | |
Forfeited | $ / shares | |
Non vested December 31, 2022 | shares | 239,184 |
Non vested December 31, 2022 | $ / shares | $ 2.32 |
Restricted Stock Units (RSUs) [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Non vested January 1, 2022 | shares | |
Non vested January 1, 2022 | $ / shares | |
Granted | shares | 162,188 |
Granted | $ / shares | $ 3.42 |
Vested | shares | (40,549) |
Vested | $ / shares | $ 3.42 |
Forfeited | shares | (33,749) |
Forfeited | $ / shares | $ 3.42 |
Non vested December 31, 2022 | shares | 87,890 |
Non vested December 31, 2022 | $ / shares | $ 3.42 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares forfeited | 85,748 | |
Stock-based compensation | $ (338,923) | $ (25,882) |
Unamortized stock-based compensation costs | 313,582 | |
Selling, General and Administrative Expenses [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation | $ (323,846) | (12,348) |
Forfeited Restricted Stock [Member] | Selling, General and Administrative Expenses [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation | $ 263,148 |
At March 31, 2023 and December
At March 31, 2023 and December 31, 2022, the fair values of cash, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these instruments. (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term borrowings and long-term debt | $ 22,146,587 | $ 22,790,747 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term borrowings and long-term debt | $ 22,146,587 | $ 22,790,747 |
For the three months ended Marc
For the three months ended March 31, 2023 and 2022, respectively, our income (loss) per common share was calculated as follows: (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Net income (loss) | $ 983,305 | $ (32,931) |
Income (loss) per common share, diluted | ||
Income (loss) per common share, diluted | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic | ||
Total shares | 12,520,299 | 12,363,143 |
Shares used in computing income (loss) per common share, diluted | 12,608,189 | 12,363,143 |
Unrestricted Shares [Member] | ||
Income (loss) per common share, basic: | ||
Income (loss) per common share, basic | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic | ||
Total shares | 12,281,115 | 12,072,838 |
Restricted Shares [Member] | ||
Income (loss) per common share, basic: | ||
Income (loss) per common share, basic | $ 0.08 | $ 0 |
Shares used in computing income (loss) per common share, basic | ||
Total shares | 239,184 | 290,305 |
INCOME (LOSS) PER COMMON SHAR_2
INCOME (LOSS) PER COMMON SHARE (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 shares | |
Earnings Per Share [Abstract] | |
Incremental shares used in calculation of diluted income per common share | 87,890 |
Incremental shares not used in calculation of diluted income per common share | 142,587 |
The maturities of long-term deb
The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: (Details) | Mar. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 1,065,758 |
2024 | 51,801 |
2025 | 29,028 |
Total | $ 1,146,587 |
DEBT (Details Narrative)
DEBT (Details Narrative) | 3 Months Ended | 84 Months Ended | ||||
Mar. 23, 2023 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 24, 2016 USD ($) | |
Debt Instrument [Line Items] | ||||||
Current portion of line of credit | $ 1,920,000 | $ 1,920,000 | $ 1,200,000 | |||
Line of credit | 19,080,000 | 19,080,000 | 19,800,000 | |||
Financing leases and notes payable | 163,254 | 163,254 | 207,414 | |||
Financing leases and notes payable current | 114,508 | $ 114,508 | 136,433 | |||
Payments of debt issuance costs | $ 54,334 | |||||
Prime Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 8% | 8% | ||||
Term loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal balance | $ 983,333 | $ 983,333 | 1,583,333 | |||
Bank United [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum leverage ratio, period 1 | 7.30 | 7.30 | ||||
Maximum leverage ratio, period 2 | 6.30 | 6.30 | ||||
Maximum leverage ratio, period 3 | 5 | 5 | ||||
Maximum leverage ratio, period 4 | 4 | 4 | ||||
Payments of debt issuance costs | $ 962,000 | |||||
Debt issuance costs | $ 119,000 | $ 119,000 | ||||
Bank United [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Net income required under agreement | 1 | |||||
Minimum adjusted EBITDA | $ 1,000,000 | |||||
Bank United [Member] | Debt Instrument, Redemption, Period One [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Minimum debt service coverage ratio future periods | 1.5 | 1.5 | ||||
Bank United [Member] | Debt Instrument, Redemption, Period Two [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Minimum debt service coverage ratio future periods | 0.95 | 0.95 | ||||
Bank United [Member] | Debt Instrument, Redemption, Period Three [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Minimum debt service coverage ratio future periods | 1.5 | 1.5 | ||||
Bank United [Member] | Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | |||||
Amendment fee | $ 250,000 | |||||
Outstanding loans | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | |||
Current portion of line of credit | 1,920,000 | 1,920,000 | ||||
Line of credit | $ 19,080,000 | $ 19,080,000 | ||||
Bank United [Member] | Revolving Credit Facility [Member] | Period One [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 20,520,000 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | Period Two [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 19,800,000 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | Period Three [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 19,080,000 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | Period Four [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 18,360,000 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | Period Five [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 17,640,000 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | First Installment [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Amendment fee | 116,667 | |||||
Bank United [Member] | Revolving Credit Facility [Member] | Second Installment [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Amendment fee | $ 133,333 | |||||
Bank United [Member] | Term loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 | |||||
Bank United [Member] | Revolving Loan and Term Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Expiration Date | Nov. 30, 2024 | |||||
Interest rate | 11.50% | 11.50% | ||||
Bank United [Member] | Revolving Loan and Term Loan [Member] | Prime Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Prime rate Plus | 3.50% |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - Customer Concentration Risk [Member] | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Revenue Benchmark [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 36% | 39% | |
Revenue Benchmark [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 28% | 17% | |
Revenue Benchmark [Member] | Customer Three [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 12% | ||
Contract Assets [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 25% | 27% | |
Contract Assets [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 17% | 20% | |
Contract Assets [Member] | Customer Three [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 17% | 16% | |
Contract Assets [Member] | Customer Four [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 15% | 16% | |
Accounts Receivable [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 29% | 38% | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 16% | 21% | |
Accounts Receivable [Member] | Customer Three [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 14% | 17% | |
Accounts Receivable [Member] | Customer Four [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 12% | 13% | |
Accounts Receivable [Member] | Customer Five [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 11% |
Future minimum lease payments u
Future minimum lease payments under non-cancellable operating leases as of March 31, 2023 were as follows: (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Leases | ||
Remainder of 2023 | $ 1,624,406 | |
2024 | 2,222,280 | |
2025 | 2,276,850 | |
2026 | 843,772 | |
2027 | 109,394 | |
Thereafter | 7,331 | |
Total undiscounted operating lease payments | 7,084,033 | |
Less imputed interest | (614,221) | |
Present value of operating lease payments | $ 6,469,812 | $ 6,895,046 |
The following table sets forth
The following table sets forth the ROU assets and operating lease liabilities as of: (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
ROU assets, net | $ 6,071,158 | $ 6,526,627 |
Liabilities | ||
Current operating lease liabilities | 1,872,484 | 1,817,811 |
Long-term operating lease liabilities | 4,597,328 | 5,077,235 |
Total lease liabilities | $ 6,469,812 | $ 6,895,046 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases | ||
Operating lease expense | $ 546,082 | $ 534,991 |
Amortization of operating lease assets | $ 455,392 | $ 435,968 |
Weighted average remaining lease term operating leases | 3 years 2 months 12 days | |
Weighted average discount rate for its operating leases | 5.40% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 199,257 | $ 1,275 |
Effective income tax rate | 16.80% | |
Statutory income tax rate | 21% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 06, 2023 | May 20, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Settlement amount | $ 3,600,000 | |||
Legal Fees | $ 585,000 | |||
Covered settlement amount | $ 750,000 | |||
Directors and officers insurance retention amount | 750,000 | |||
Litigation settlement obligation | 3,600,000 | $ 3,600,000 | ||
Insurance recovery receivable | $ 3,600,000 | $ 3,600,000 |