| Significant Accounting Policies [Text Block] | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES UPDATE Our significant accounting policies are detailed in “Note 2: Significant Accounting Policies” of our Form 10-K for the year ended December 31, 2017. Significant changes to our accounting policies as a result of changes in functional currency, the impact of changes to tax legislation, and adopting Accounting Standards Codification (“ASC”) 606 are discussed below: Functional Currency: The United States dollar (“U.S. dollar”) is the currency of the primary economic environment in which the Company’s U.S. subsidiaries operate and the Company has adopted and are using the U.S. dollar as our functional currency. Transactions and balances originally denominated in U.S. dollars are presented at the original amounts. Accordingly, monetary accounts maintained in currencies other than dollars are re-measured into dollars, with resulting gains and losses reflected in the consolidated statements of operations and comprehensive income as financial income or expenses, as appropriate. In the first quarter of 2018, the Company concluded that the functional currency for our Israeli subsidiary, Epsilor-EFL, changed from the New Israeli Shekel (“NIS”) to the U.S. dollar. The primary reason for the change in functional currencies is due to a change in Epsilor-EFL operations whereby the majority of its contracts and material costs are anticipated to be sourced in U.S. dollars. The Company believes that the change in functional currency for this business was necessary as it reflects the primary economic environment in which Epsilor-EFL now operates. The change in functional currency for Epsilor-EFL is accounted for prospectively from January 1, 2018, and prior year financial statements have not been restated for the change in functional currency. The financial statements of Epsilor-EFL are now reported in U.S. dollars. All balance sheet accounts were translated using the exchange rates in effect at the time of the change in functional currency. The statements of comprehensive income and cash flows are also reported in U.S. dollars. Income Taxes: The U.S. Tax Cuts and Jobs Act (“Tax Act”) was enacted on December 22, 2017. The Tax Act makes broad complex changes to the U.S. tax code including, but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21%, requiring companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creating new taxes on certain foreign sourced earnings and additional limitations on the deductibility of interest. The SEC issued Staff Accounting Bulletin No. 118 (SAB 118) in December, 2017, to provide guidance on accounting for the effects of the Tax Act. SAB 118 provides for a measurement period of up to one year from the Tax Act enactment date for companies to complete their assessment of and accounting for those effects of the Tax Act. Under SAB 118, a company must first reflect the income tax effects of the Tax Act for which the accounting is complete in the period of the date of enactment. To the extent the accounting for other income tax effects is incomplete, but a reasonable estimate can be determined, companies must record a provisional estimate to be included in their financial statements. For any income tax effect for which a reasonable estimate cannot be determined, an entity must continue to apply ASC 740 based on the provisions of the tax laws in effect immediately prior to the Tax Act being enacted until such time as a reasonable estimate can be determined. The Company requires additional time to complete its analysis of the impacts of the Tax Act and therefore its accounting for the Tax Act is provisional but is a reasonable estimate based on available information. The Company will complete its analysis and finalize its accounting for this provisional estimate during the one year measurement period as prescribed by SAB 118. Revenue recognition: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as a new Topic, ASC 606. The new revenue recognition standard relates to revenue from contracts with customers, which, along with amendments issued in 2016 and 2015, supersedes nearly all current U.S. GAAP guidance on this topic and eliminates industry-specific guidance. The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified retrospective method. The Company evaluated the distinct performance obligations and the pattern of revenue recognition of its significant contracts upon adoption of the standard. Consequently, after our review of contracts in each revenue stream, the Company concluded that the impact of adopting the standard did not have an impact to its consolidated balance sheets, statements of operations, changes in stockholders’ equity, or cash flows. During 2018 and 2017, the Company recognized revenues from (i) the sale and customization of interactive training systems (Training and Simulation Division); (ii) maintenance services in connection with such systems (Training and Simulation Division); (iii) the sale of batteries, chargers and adapters, and under certain development contracts (Power Systems Division); and (iv) the sale of lifejacket lights (Power Systems Division). The Company determines its revenue recognition through the following steps:
·
Identification of the contract, or contracts, with a customer
·
Identification of the performance obligations within the contract
·
Determination of the transaction price
·
Allocation of the transaction price to the performance obligations within the contract
·
Recognition of revenue when, or as the performance obligation has been satisfied Performance Obligations. The Company also offers one to two year maintenance and support agreements (“warranties”) for many of its products. The specific terms and conditions of those warranties vary depending upon the product sold and country in which the product was sold. The warranty revenue is recognized on a straight-line basis over the term of the maintenance and support services. The standalone selling price is determined based on the price charged when sold separately or upon renewal. The Company’s performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for 92% percent and 93% percent of our revenue for the three-month periods ended March 31, 2018, and March 31, 2017, respectively. Substantially all of our revenue in the Training and Simulation Division and the US Power Systems Division is recognized over time. Typically, revenue 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 labor, material, and overhead. On March 31, 2018, we had $54.0 million of expected future revenue relating to performance obligations currently in progress, which we also refer to as total backlog. We expect to recognize approximately 78% percent of our backlog as revenue in 2018, and the remaining 22% percent by the end of 2019 and thereafter. Contract Estimates. Contract estimates are based on various assumptions to project the outcome of future events that can exceed a year. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer. 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 quarterly. The Company recognizes 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 it is identified. The aggregate impact of adjustments in contract estimates to net income (loss) are presented below:
March 31, 2018
March 31, 2017
Training and Simulation
Power
Training and Simulation
Power
Net income (loss)
$
71,440
$
(119,778
)
$
280,630
$
662,101 Revenue by Category. Revenue by major product line was as follows:
March 31, 2018
March 31, 2017
Product Revenue
Air Warfare Simulation
$
5,032,659
$
4,323,813
Vehicle Simulation
5,463,998
2,860,645
Use-of-Force
3,260,049
2,338,113
Service Revenue
Warranty
801,158
828,618
Total Training and Simulation Division
$
14,557,864
$
10,351,189
Contract Manufacturing
$
4,164,324
$
2,612,572
Power Distribution and Generation
3,275,380
1,028,951
Batteries
4,146,112
5,888,186
Engineering Services and Other
1,104,829
2,466,547
Total Power Division
$
12,690,645
$
11,996,256 The table below details the percentage of total recognized revenue by type of arrangement for the three months ended March 31, 2018 and 2017:
Three months ended March 31,
Type of Revenue
2018
2017
Sale of products
96.4
%
96.2
%
Maintenance and support agreements
2.9
%
3.7
%
Long term research and development contracts
0.7
%
0.1
%
Total
100.0
%
100.0
% Revenue by contract type was as follows:
March 31, 2018
March 31, 2017
Training and Simulation
Power
Training and Simulation
Power
Fixed Price
$
12,209,969
$
12,072,168
$
8,091,871
$
10,259,119
Cost Reimbursement (Cost Plus)
1,338,951
388,749
1,397,266
831,012
Time and Materials
1,008,944
229,728
862,052
906,125
Total
$
14,557,864
$
12,690,645
$
10,351,189
$
11,996,256 Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Cost-reimbursement contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under time and materials contracts, our profit may fluctuate if actual labor-hour costs vary significantly from the negotiated rates. Revenue by customer was as follows:
March 31, 2018
March 31, 2017
U.S. Government
Training and Simulation
Power
Training and Simulation
Power
Department of Defense (DoD)
$
3,432,193
$
512,212
$
2,286,904
$
1,836,589
Non-DoD
2,738,807
–
2,762,869
–
Foreign Military Sales (FMS)
584,781
–
288,371
–
Total U.S. Government
$
6,755,781
$
512,212
$
5,338,144
$
1,836,589
U.S. Commercial
$
6,028,998
$
7,717,964
$
3,724,695
$
4,213,262
Non-U.S. Government
926,164
1,517,816
603,765
5,399,436
Non-U.S. Commercial
846,921
2,942,653
684,585
546,969
Total Revenue
$
14,557,864
$
12,690,645
$
10,351,189
$
11,996,256 Contract Balances.
March 31, 2018
December 31, 2017
Training and Simulation
Power
Training and Simulation
Power
Unbilled Receivables – Current
$
8,560,498
$
10,047,969
$
7,263,461
$
8,831,055
Deferred Revenues – Current
(5,694,581
)
(805,465
)
(5,860,345
)
(917,968
)
Net Contract Assets and Liabilities:
$
2,865,917
$
9,242,504
$
1,403,116
$
7,913,087 The $2.8 million increase in our net contract assets (liabilities) from December 31, 2017 to March 31, 2018 was due to the timing of milestone payments on certain US Government and commercial contracts. During the three months ended March 31, 2018 and March 31, 2017, the Company recognized $2.9 million and $2.3 million in revenue related to our contract liabilities at December 31, 2017 and December 31, 2016, respectively. The Company did not record any provisions for impairment of its unbilled receivables during the three months ended March 31, 2018 or March 31, 2017, respectively. Trade Receivables Trade Receivables include amounts billed and currently due from customers. The amounts are recorded at net estimated realizable value. The value of our trade receivables when appropriate includes an allowance for estimated uncollectible amounts. The Company calculates an allowance based on its history of write-offs, the assessment of customer creditworthiness, and the age of the outstanding receivables. As of March 31, 2018 and December 31, 2017, our trade receivables recorded in the consolidated balance sheets were $14.3 million and $19.3 million, respectively. The Company has not recorded any provisions for doubtful accounts and no reserves have been established for March 31, 2018 or December 31, 2017, respectively. The Company believes its exposure to concentrations of credit risk is limited due to the nature of its operations, where a significant number of its contracts are typically a customized customer specific solution. Practical Expedients and Exemptions The Company has elected the following practical expedients and exemptions as allowed under the new revenue guidance: Sales Commissions The Company has elected to expense its sales commissions when incurred because the amortization period is less than one year. These costs are recorded within selling and marketing expenses. Financing The Company has elected to not adjust the consideration for the effects of a significant financing component as the term of the majority of contracts is twelve months or less. Sales Tax The Company acts as an agent in the collection and remittance of sales taxes. Historically, we have excluded these amounts from the calculation of revenue. These taxes will continue to be excluded from the transaction price. Shipping and Handling Costs The Company has elected to account for shipping and handling activities that are incurred after the customer obtained control of the product as fulfillment costs rather that a separate service provided to the customer for which consideration would need to be allocated. The Company will continue to account for shipping and handling as fulfillment costs when these costs are incurred prior to the customer obtaining control. Contract costs The Company does not currently incur significant incremental costs for obtaining a contract. The Company will assess the election under the new revenue recognition standard if it ever incurs significant incremental costs. |
