Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 31, 2020 | Mar. 17, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | SOLITRON DEVICES INC | |
Entity Central Index Key | 0000091668 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Document Type | 10-Q | |
Document Period End Date | Aug. 31, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Entity Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 001-04978 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,083,462 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Aug. 31, 2020 | Feb. 29, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,819 | $ 1,332 |
Securities | 193 | 164 |
Accounts receivable | 1,782 | 1,379 |
Inventories, net | 3,168 | 2,870 |
Prepaid expenses and other current assets | 249 | 118 |
Total current assets | 8,211 | 5,863 |
Property, plant and equipment, net | 353 | 405 |
Operating lease - right-of-use asset | 535 | 723 |
Other assets | 44 | 45 |
Total assets | 9,143 | 7,036 |
CURRENT LIABILITIES | ||
Accounts payable | 325 | 269 |
Customer deposits | 29 | 53 |
Operating lease liability | 437 | 417 |
Accrued expenses and other current liabilities | 894 | 437 |
Total current liabilities | 1,685 | 1,176 |
Notes payable (PPP Loan) | 807 | 0 |
Operating lease liability | 153 | 377 |
Capital lease liability | 17 | 0 |
Total liabilities | 2,662 | 1,553 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $.01 par value, authorized 500,000 shares, none issued | 0 | 0 |
Common stock, $.01 par value, authorized 10,000,000 shares, 2,060,456 shares outstanding, net of 510,807 treasury shares at August 31, 2020; 2,062,949 shares outstanding, net of 508,314 treasury shares at February 29, 2020, respectively | 21 | 21 |
Additional paid-in capital | 1,834 | 1,834 |
Retained earnings | 6,113 | 5,109 |
Less treasury stock | (1,487) | (1,481) |
Total stockholders' equity | 6,481 | 5,483 |
Total liabilities and stockholders' equity | $ 9,143 | $ 7,036 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Aug. 31, 2020 | Feb. 29, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .01 | $ 0.01 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ .01 | $ .01 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares outstanding | 2,060,456 | 2,062,949 |
Treasury stock, shares | 510,807 | 508,314 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 3,103 | $ 2,420 | $ 5,601 | $ 4,977 |
Cost of sales | 1,978 | 1,958 | 3,620 | 4,324 |
Gross profit | 1,125 | 462 | 1,981 | 653 |
Selling, general and administrative expenses | 526 | 779 | 1,012 | 1,223 |
Operating income (loss) | 599 | (317) | 969 | (570) |
Other income (loss): | ||||
Interest income | 0 | 1 | 0 | 1 |
Dividend income | 1 | 0 | 7 | 1 |
Realized gain (loss) on investments | 11 | (4) | 26 | (20) |
Unrealized gain (loss) on investments | 24 | 0 | 2 | 19 |
Total other income (loss) | 36 | (3) | 35 | 1 |
Net income (loss) | $ 635 | $ (320) | $ 1,004 | $ (569) |
Net income (loss) per common share - basic and diluted | $ 0.31 | $ (0.16) | $ 0.49 | $ (0.29) |
Weighted average common shares outstanding - basic and diluted | 2,060,457 | 2,013,959 | 2,061,703 | 1,957,959 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Total |
Beginning balance, shares at Feb. 28, 2019 | 2,571,263 | (669,304) | |||
Beginning balance at Feb. 28, 2019 | $ 19 | $ (1,761) | $ 1,834 | $ 5,806 | $ 5,898 |
Adjustment for Adoption of ASC 842 | (91) | (91) | |||
Net income (loss) | (249) | (249) | |||
Ending balance, shares at May. 31, 2019 | 2,571,263 | (669,304) | |||
Ending balance at May. 31, 2019 | $ 19 | $ (1,761) | 1,834 | 5,466 | 5,558 |
Beginning balance, shares at Feb. 28, 2019 | 2,571,263 | (669,304) | |||
Beginning balance at Feb. 28, 2019 | $ 19 | $ (1,761) | 1,834 | 5,806 | 5,898 |
Adjustment for Adoption of ASC 842 | (91) | ||||
Net income (loss) | (569) | ||||
Ending balance, shares at Aug. 31, 2019 | 2,571,263 | (508,304) | |||
Ending balance at Aug. 31, 2019 | $ 21 | $ (1,481) | 1,834 | 5,146 | 5,520 |
Beginning balance, shares at May. 31, 2019 | 2,571,263 | (669,304) | |||
Beginning balance at May. 31, 2019 | $ 19 | $ (1,761) | 1,834 | 5,466 | 5,558 |
Stock based compensation, shares | 161,000 | ||||
Stock based compensation | 2 | $ 280 | 282 | ||
Net income (loss) | (320) | (320) | |||
Ending balance, shares at Aug. 31, 2019 | 2,571,263 | (508,304) | |||
Ending balance at Aug. 31, 2019 | $ 21 | $ (1,481) | 1,834 | 5,146 | 5,520 |
Beginning balance, shares at Feb. 29, 2020 | 2,571,263 | (508,314) | |||
Beginning balance at Feb. 29, 2020 | $ 21 | $ (1,481) | 1,834 | 5,109 | 5,483 |
Adjustment for Adoption of ASC 842 | 0 | ||||
Net income (loss) | 369 | 369 | |||
Ending balance, shares at May. 31, 2020 | 2,571,263 | (508,314) | |||
Ending balance at May. 31, 2020 | $ 21 | $ (1,481) | 1,834 | 5,478 | 5,852 |
Beginning balance, shares at Feb. 29, 2020 | 2,571,263 | (508,314) | |||
Beginning balance at Feb. 29, 2020 | $ 21 | $ (1,481) | 1,834 | 5,109 | 5,483 |
Adjustment for Adoption of ASC 842 | 0 | ||||
Net income (loss) | 1,004 | ||||
Ending balance, shares at Aug. 31, 2020 | 2,571,263 | (510,807) | |||
Ending balance at Aug. 31, 2020 | $ 21 | $ (1,487) | 1,834 | 6,113 | 6,481 |
Beginning balance, shares at May. 31, 2020 | 2,571,263 | (508,314) | |||
Beginning balance at May. 31, 2020 | $ 21 | $ (1,481) | 1,834 | 5,478 | 5,852 |
Purchase of common stock, shares | (2,493) | ||||
Purchase of common stock | $ (6) | (6) | |||
Net income (loss) | 635 | 635 | |||
Ending balance, shares at Aug. 31, 2020 | 2,571,263 | (510,807) | |||
Ending balance at Aug. 31, 2020 | $ 21 | $ (1,487) | $ 1,834 | $ 6,113 | $ 6,481 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Net income (loss) | $ 1,004 | $ (569) |
Adjustments to reconcile net income (loss) to net cash provided in operating activities: | ||
Depreciation and amortization | 119 | 108 |
Operating lease expense | 188 | 185 |
Net realized and unrealized losses (gains) on investments | (28) | 1 |
Stock based compensation | 0 | 282 |
Changes in operating assets and liabilties: | ||
Accounts receivable | (403) | 152 |
Inventories | (298) | 909 |
Prepaid expenses and other current assets | (131) | (35) |
Other assets | 1 | |
Payments on operating lease liabilities | (204) | (186) |
Accounts payable | 54 | (303) |
Customer deposits | (24) | 33 |
Accrued expenses and other current and non-current liabilities | 448 | (103) |
Net cash provided by operating activities | 726 | 474 |
Investing Activities: | ||
Proceeds from sale of securities | 272 | 45 |
Purchases of securities | (272) | (32) |
Purchases of property and equipment | (40) | (68) |
Net cash (used in) investing activities | (40) | (55) |
Financing Activities: | ||
Proceeds from SBA Paycheck Protection Program loan | 807 | 0 |
Purchase of treasury stock | (6) | 0 |
Net cash provided by financing activities | 801 | 0 |
Net increase in cash and cash equivalents | 1,487 | 419 |
Cash and cash equivalents - beginning of the year | 1,332 | 394 |
Cash and cash equivalents - end of period | 2,819 | 813 |
Non-cash Transactions: | ||
Capitalization of ROU asset and liability | 26 | 1,081 |
Adjustment for Adoption of ASC 842 | $ 0 | $ (91) |
THE COMPANY AND OPERATIONS
THE COMPANY AND OPERATIONS | 6 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
THE COMPANY AND OPERATIONS | Solitron Devices, Inc., a Delaware corporation (“Solitron,” the “Company,” “we,” “us,” or “our”), designs, develops, manufactures, and markets solid-state semiconductor components and related devices primarily for the military and aerospace markets. The Company was incorporated under the laws of the State of New York in 1959 and reincorporated under the laws of the State of Delaware in August 1987. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The unaudited financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three and six months ended August 31, 2020 are not necessarily indicative of the results to be expected for the year ended February 28, 2021. The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended February 29, 2020. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and money market accounts. Investment in Securities Investment in Securities includes investments in common stocks and bonds. Investments in securities are reported at fair value with changes in unrecognized gains or losses included in other income on the income statement. The following table summarizes available-for-sale investments (in $000’s): August 31, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 200 15 (22 ) 193 February 29, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 155 16 (7 ) 164 At August 31, 2020 and February 29, 2020, the deferred tax liability related to unrecognized gains and losses on short-term investments was $0. Fair Value of Financial Instruments Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also sets forth a valuation hierarchy of the inputs (assumptions that market participants would use in pricing an asset or liability) used to measure fair value. This hierarchy prioritizes the inputs into the following three levels: Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company’s securities are subject to level 1 fair value measurement. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses and other liabilities approximate their fair value due to the relatively short period to maturity for these instruments. Accounts Receivable Accounts receivable consists of unsecured credit extended to the Company’s customers in the ordinary course of business. The Company reserves for any amounts deemed to be uncollectible based on past collection experiences and an analysis of outstanding balances, using an allowance account. The allowance amount was $0 as of August 31, 2020 and February 29, 2020. Shipping and Handling Shipping and handling costs billed to customers are recorded in net sales. Shipping costs incurred by the Company are recorded in cost of sales. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the “first-in, first-out” (FIFO) method. The Company buys raw material only to fill customer orders. Excess raw material is created only when a vendor imposes a minimum quantity buy in excess of actual requirements. Such excess material will usually be utilized to meet the requirements of the customer’s subsequent orders. If excess material is not utilized after two fiscal years it is fully reserved. Any inventory item once designated as reserved is carried at zero value in all subsequent valuation activities. The Company maintains a three inch wafer fab which procures raw wafers and produces finished wafers based on management’s estimates of projected future demand. Finished wafers are considered work-in-process since they are usable for many years, and in some circumstances can be used on more than one finished product depending on customer parameters. The Company does not classify a portion of inventories as non-current since we cannot reasonably estimate based on the length of our operating cycle which items will or will not be used within twelve months. The Company’s inventory valuation policy is as follows: Raw material /Work in process: All material acquired or processed in the last two fiscal years is valued at the lower of its acquisition cost or net realizable value, except for wafers which function under a three- year policy. All material not used after two fiscal years is fully reserved for except wafers which are reserved for after three years. Finished wafers produced m our wafer fab are stored in the wafer bank and are considered work-in-process. Raw material in excess of five years’ usage that cannot be restocked, and slow-moving work in process are reserved for. Finished goods: All finished goods with firm orders for later delivery are valued (material and overhead) at the lower of cost or net realizable value. All finished goods with no orders are fully reserved. Direct labor costs: Direct labor costs are allocated to finished goods and work in process inventory based on engineering estimates of the number of man-hours required from the different direct labor departments to bring each device to its particular level of completion. Manufacturing overhead costs are allocated to finished goods and work in process inventory as a ratio to direct labor costs. Property, Plant, Equipment, and Leasehold Improvements Property, plant, and equipment is recorded at cost. Major renewals and improvements are capitalized, while Leasehold Improvements 10 years Machinery and Equipment 5 years Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and account receivables. The Company places its cash with high credit quality institutions. At times, such amounts may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on the accounts. As of August 31, 2020, all non-interest bearing checking accounts were FDIC insured to a limit of $250,000. Deposits in excess of FDIC insured limits were approximately $2,344,000 at August 31, 2020. With respect to the account receivables, most of the Company’s products are custom made pursuant to contracts with customers whose end-products are sold to the United States Government. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains allowances for potential credit losses. Actual losses and allowances have historically been within management’s expectations. Net Income (Loss) Per Common Share Net income (loss) per common share is presented in accordance with ASC 260-10 “Earnings per Share.” Basic earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the incremental shares issuable upon the assumed exercise of stock options to the extent they are not anti-dilutive using the treasury stock method. The Company had no stock options outstanding during fiscal 2020 and 2021; therefore, there is no effect from dilution on earnings per share. Revenue Recognition On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Based on a review of its customer contracts, the Company has determined that revenue on the majority of its customer contracts will continue to be recognized at a point in time, generally upon shipment of products, consistent with the Company’s historical revenue recognition model. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applied the following steps: 1. Identify the contract(s) with a customer. The Company designs, develops, manufactures and markets solid-state semiconductor components and related devices. The Company’s products are used as components primarily in the military and aerospace markets. The Company’s revenues are from purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 2. Identify the performance obligations in the contract. The majority of the Company’s purchase orders or contracts with customers contain a single performance obligation, the shipment of products. 3. Determine the transaction price. The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that was negotiated, we will generate more or less profit or could incur a loss. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the Company satisfies a performance obligation. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders for products to be delivered over multiple dates that may extend across reporting periods. The Company’s accounting policy treats shipping and handling activities as a fulfillment cost. In addition, the Company may have a contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed and performance obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied Effective January 1, 2018, we adopted Topic 606. Since all open contracts at that time were based on a point-in-time recognition model for revenue, there was no impact to retained earnings or revenue. The future impact of Topic 606 is dependent on the mix and nature of specific customer contracts. We recognize revenue on sales to distributors when the distributor takes control of the products ("sold-to" model). We have agreements with distributors that allow distributors a limited credit for unsaleable products, which we refer to as a "scrap allowance." Consistent with industry practice, we also have a "stock, ship and debit" program whereby we consider requests by distributors for credits on previously purchased products that remain in distributors' inventory, to enable the distributors to offer more competitive pricing. We have contractual arrangements whereby we provide distributors with protection against price reductions initiated by us after product is sold by us to the distributor and prior to resale by the distributor. In addition, we have a termination clause in one of our distributor agreements that would allow for a full credit for all inventory upon 60 days notice of terminating the agreement. We recognize the estimated variable consideration to be received as revenue and record a related accrued expense for the consideration not expected to be received, based upon an estimate of product returns, scrap allowances, "stock, ship and debit" credits, and price protection credits that will be attributable to sales recorded through the end of the period. We make these estimates based upon sales levels to our customers during the period, inventory levels at the distributors, current and projected market conditions, and historical experience under the programs. Our estimates require the exercise of significant judgments. We believe that we have a reasonable basis to estimate future credits under the programs. Related Party Transactions The Company currently purchases and has purchased in the past die and wafers, as specified by the Company's customers, from ES Components. Mr. Aubrey, a director of the Company is a minority owner, and an immediate family member of Mr. Aubrey is the majority owner of ES Components. For the six months ended August 31, 2020, the Company purchased $44,792 of die from ES Components. For the six months ended August 31, 2019, the Company purchased $19,425 of die from ES Components. The Company has included these expenses in cost of goods sold in the accompanying statement of operations. The Company occasionally makes sales to ES Components. For the six months ended August 31, 2020 and August 31, 2019, sales were $0. Stock based compensation The Company records stock-based compensation in accordance with the provisions of ASC Topic 718, "Compensation-Stock Compensation," which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. Under ASC Topic 718, the Company recognizes an expense for the fair value of outstanding stock options and grants as they vest, whether held by employees or others. No vesting of stock options or grants occurred during the three and six month periods ended August 31, 2020 or August 31, 2019. Financial Statement Estimates The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates, and the differences could be material. Such estimates include depreciable life, valuation allowance, and allowance for inventory obsolescence. Recent Accounting Pronouncements No recent accounting pronouncements affecting the Company were issued by the Financial Accounting Standards Board or other standards-setting bodies. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Aug. 31, 2020 | |
Revenue Recognition [Abstract] | |
REVENUE RECOGNITION | As of August 31, 2020, and August 31, 2019, sales returns and allowances accrual activity is shown below: August 31, 2020 August 31, 2019 Beginning Balance $ 261,000 $ 72,000 Accrued Allowances 64,000 14,000 Credits Issued Ending Balance $ 325,000 $ 86,000 As noted in Note 2 above, one of our distributor agreements has a termination clause that would allow for a full credit for all inventory upon 60 days notice of terminating the agreement. As of August 31, 2020, and February 29, 2020, the inventory balance at that distributor was believed to be $1,758,000 and $1,387,000, respectively. Based upon sales levels to and by the distributor during the period, inventory levels at the distributors, current and projected market conditions, and historical experience under the programs, we believe it is highly unlikely that the distributor would exercise termination. Should termination occur, we believe the products could be sold to other distributors or held in inventory for future sale. The Company warrants that its products, when delivered, will be free from defects in material workmanship under normal use and service. The obligations are limited to replacing, repairing, or reimbursing for, at the option of the Company, any products that are returned within one year after the date of shipment. The Company does not reserve for potential warranty costs based on historical experience and the nature of its cost tracking system. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Aug. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | As of August 31, 2020, and February 29, 2020, inventories, net of reserves, consist of the following: August 31, 2020 February 29, 2020 Raw Materials $ 899,000 $ 766,000 Work-In-Process 2,164,000 2,058,000 Finished Goods 105,000 46,000 Totals $ 3,168,000 $ 2,870,000 Wafer related inventory, which includes raw wafers, work-in-process wafers, and wafer bank (completed wafers that are available to be consumed in the Company’s products), net of reserves, totaled $1,244,000 as of August 31, 2020 and $1,239,000 as of February 29, 2020. Wafer production was temporarily curtailed during fiscal 2020 due to implementation of an improvement plan, which was completed in the first quarter of fiscal 2021. As of August 31, 2020, 100% of the wafer bank inventory consisted of wafers manufactured between calendar year 2016 and 2021. We do not expect all of our wafer inventory to be consumed within twelve months; however, since it is not possible to know which wafers will or will not be used, we classify all our inventory as current. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 6 Months Ended |
Aug. 31, 2020 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | As of August 31, 2020, and February 29, 2020, accrued expenses and other current liabilities consist of the following: August 31, 2020 February 29, 2020 Payroll and related employee benefits $ 337,000 $ 303,000 Legal fees 1,000 Property taxes 22,000 8,000 Return Allowance 325,000 126,000 Bonus Accrual 200,000 Other liabilities 9,000 Totals $ 894,000 $ 437,000 |
DISAGGREGATION OF REVENUES AND
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS | 6 Months Ended |
Aug. 31, 2020 | |
Disaggregation of Revenue [Abstract] | |
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS | Revenues from domestic and export sales are attributed to a global geographic region according to the location of the customer’s primary manufacturing or operating facilities. Revenues from domestic and export sales to unaffiliated customers for the three months ended August 31, 2020 and August 31, 2019, respectively are as follows: Geographic Region August 31, 2020 August 31, 2019 Europe and Australia Canada and Latin America 7,000 Far East and Middle East United States 3,096,000 2,420,000 Totals $ 3,103,000 $ 2,420,000 Revenues from domestic and export sales are attributed to a global geographic region according to the location of the customer’s primary manufacturing or operating facilities. Revenues from domestic and export sales to unaffiliated customers for the six months ended August 31, 2020 and August 31, 2019, respectively are as follows: Geographic Region August 31, 2020 August 31, 2019 Europe and Australia Canada and Latin America 13,000 4,000 Far East and Middle East 9,000 United States 5,579,000 4,973,000 Totals $ 5,601,000 $ 4,977,000 For the three months ended August 31, 2020 and August 31, 2019, approximately 72% and 74%, respectively, of the Company’s sales have been attributable to contracts with customers whose products are sold to the United States government. The remaining 28% and 26%, respectively of sales are for non-military, scientific and industrial applications, or to distributors where we do not have end user information. For the six months ended August 31, 2020 and August 31, 2019, approximately 67% and 76%, respectively, of the Company’s sales have been attributable to contracts with customers whose products are sold to the United States government. The remaining 33% and 24%, respectively of sales are for non-military, scientific and industrial applications, or to distributors where we do not have end user information. Revenues from the Company’s top two customers for the three months ended August 31, 2020 and August 31, 2019, respectively are as follows: Customer August 31, 2020 August 31, 2019 Raytheon 60 % 55 % Avnet / USI Electronics 12 % 17 % Totals 72 % 72 % Revenues from the Company’s top two customers for the six months ended August 31, 2020 and August 31, 2019, respectively are as follows: Customer August 31, 2020 August 31, 2019 Raytheon 56 % 56 % Avnet / USI Electronics 18 % 14 % Totals 74 % 70 % |
MAJOR SUPPLIERS
MAJOR SUPPLIERS | 6 Months Ended |
Aug. 31, 2020 | |
Major Suppliers [Abstract] | |
MAJOR SUPPLIERS | For the three months ended August 31, 2020, Stellar Industries accounted for 14% of purchases of production materials, and all other suppliers were individually less than 10% of purchases. For the three months ended August 31, 2019, no supplier accounted for 10% or more of purchases of production materials. For the six months ended August 31, 2020, purchases from the Company’s top supplier, Egide USA, accounted for 24% of the Company's total purchases of production materials, with all other suppliers individually less than 10% of purchases. For the six months ended August 31, 2019, purchases from the Company’s top supplier, Egide USA, accounted for 23% of the Company’s total purchases of production materials, with all other suppliers individually less than 10% of purchases. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | The balance sheet classification of lease assets and liabilities as of August 31, 2020 was as follows: Balance Sheet Classification August 31, 2020 Assets Operating lease right-of-use assets, March 1, 2020 $ 723,000 Amortization for the six months ended August 31, 2020 (188,000 ) Total operating lease right-of-use asset, August 31, 2020 $ 535,000 Liabilities Current Operating lease liability, short-term $ 437,000 Non-current Operating lease liability, long-term 153,000 Total lease liabilities $ 590,000 Future minimum lease payments as of August 31, 2020 for the Company’s manufacturing facility are as follows: Fiscal Year Ending February 28/29 Amount 2021 $ 228,000 2022 388,000 Total Future Undiscounted Cash Flows $ 616,000 Less Imputed Interest to be recognized in lease expense 26,000 Operating Lease Liabilities, as reported $ 590,000 The balance sheet classification of lease assets and liabilities as of February 29, 2020 was as follows: Balance Sheet Classification February 29, 2020 Assets Operating lease right-of-use assets, March 1, 2019 $ 1,081,000 Amortization for the fiscal year ended February 29, 2020 (358,000 ) Total operating lease right-of-use asset, February 29, 2020 $ 723,000 Liabilities Current Operating lease liability, short-term $ 417,000 Non-current Operating lease liability, long-term 377,000 Total lease liabilities $ 794,000 Future minimum lease payments as of February 29, 2020 for the Company’s manufacturing facility was as follows: Fiscal Year Ending February 28/29 Amount 2021 $ 454,000 2022 388,000 Total Future Undiscounted Cash Flows $ 842,000 Less Imputed Interest to be recognized in lease expense 48,000 Operating Lease Liabilities, as reported $ 794,000 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Aug. 31, 2020 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | On July 22, 2020, the Company received loan proceeds of $807,415 under the Paycheck Protection Program (the “PPP Loan”). The Paycheck Protection Program (“PPP”) was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). The PPP Loan to the Company is being made through Bank of America, N.A., a national banking association. The PPP Loan matures on July 21, 2025 and bears interest at a rate of 1% per annum. Payments of principal and interest on the loan will be deferred through October 31, 2021. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on certain other debt obligations. The Company intends to use the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. |
EQUITY
EQUITY | 6 Months Ended |
Aug. 31, 2020 | |
Equity [Abstract] | |
EQUITY | Repurchase Program The Board of Directors has authorized a stock repurchase program of up to $1.0 million of its outstanding common stock. Purchases under the program may be made through the open market or privately negotiated transactions as determined by the Company’s management, and in accordance with the requirements of the Securities and Exchange Commission. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other conditions. The Company repurchased 2,493 shares under the stock repurchase program during the three months ended August 31, 2020, at a total cost of $5,734, or $2.30 per share. Stock Compensation On June 28, 2019 the Board approved restricted stock grants totaling 161,000 shares: 120,000 shares to COO and President Mark Matson, 15,000 shares to CEO Tim Eriksen, 8,000 shares to Board Chairman David Pointer, and 6,000 shares each to Directors John Chiste, Dwight Aubrey, and Charles Gillman. Fair value was approximately $282,000 based on then current price of $1.75 per share. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Aug. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On November 13, 2020, the Company granted Mr. Eriksen and Mr. Matson the option to receive half of their bonuses in shares instead of cash, which both elected. Mr. Eriksen received 7,669 shares and Mr. Matson received 15,337 shares. Shares were issued under the 2019 Stock Incentive Plan. On March 1, 2021, the Company entered into a Commercial Contract with 901 Sansbury LLC to purchase a facility and real estate property in West Palm Beach, Florida for a purchase price of $4,200,000. Subject to due diligence, the Company expects to close the transaction on April 15, 2021, unless extended. Assuming the Company closes the contract, it expects to begin making the necessary improvements to the property in order to completely relocate its manufacturing operation and corporate headquarters later in the 2021 calendar year. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three and six months ended August 31, 2020 are not necessarily indicative of the results to be expected for the year ended February 28, 2021. The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended February 29, 2020. |
Cash and Cash Equivalents | Cash and cash equivalents include demand deposits and money market accounts. |
Investment in Securities | Investment in Securities includes investments in common stocks and bonds. Investments in securities are reported at fair value with changes in unrecognized gains or losses included in other income on the income statement. The following table summarizes available-for-sale investments (in $000’s): August 31, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 200 15 (22 ) 193 February 29, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 155 16 (7 ) 164 At August 31, 2020 and February 29, 2020, the deferred tax liability related to unrecognized gains and losses on short-term investments was $0. |
Fair Value of Financial Instruments | Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also sets forth a valuation hierarchy of the inputs (assumptions that market participants would use in pricing an asset or liability) used to measure fair value. This hierarchy prioritizes the inputs into the following three levels: Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company’s securities are subject to level 1 fair value measurement. The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses and other liabilities approximate their fair value due to the relatively short period to maturity for these instruments. |
Accounts Receivable | Accounts receivable consists of unsecured credit extended to the Company’s customers in the ordinary course of business. The Company reserves for any amounts deemed to be uncollectible based on past collection experiences and an analysis of outstanding balances, using an allowance account. The allowance amount was $0 as of August 31, 2020 and February 29, 2020. |
Shipping and Handling | Shipping and handling costs billed to customers are recorded in net sales. Shipping costs incurred by the Company are recorded in cost of sales. |
Inventories | Inventories are stated at the lower of cost and net realizable value. Cost is determined using the “first-in, first-out” (FIFO) method. The Company buys raw material only to fill customer orders. Excess raw material is created only when a vendor imposes a minimum quantity buy in excess of actual requirements. Such excess material will usually be utilized to meet the requirements of the customer’s subsequent orders. If excess material is not utilized after two fiscal years it is fully reserved. Any inventory item once designated as reserved is carried at zero value in all subsequent valuation activities. The Company maintains a three inch wafer fab which procures raw wafers and produces finished wafers based on management’s estimates of projected future demand. Finished wafers are considered work-in-process since they are usable for many years, and in some circumstances can be used on more than one finished product depending on customer parameters. The Company does not classify a portion of inventories as non-current since we cannot reasonably estimate based on the length of our operating cycle which items will or will not be used within twelve months. The Company’s inventory valuation policy is as follows: Raw material /Work in process: All material acquired or processed in the last two fiscal years is valued at the lower of its acquisition cost or net realizable value, except for wafers which function under a three- year policy. All material not used after two fiscal years is fully reserved for except wafers which are reserved for after three years. Finished wafers produced m our wafer fab are stored in the wafer bank and are considered work-in-process. Raw material in excess of five years’ usage that cannot be restocked, and slow-moving work in process are reserved for. Finished goods: All finished goods with firm orders for later delivery are valued (material and overhead) at the lower of cost or net realizable value. All finished goods with no orders are fully reserved. Direct labor costs: Direct labor costs are allocated to finished goods and work in process inventory based on engineering estimates of the number of man-hours required from the different direct labor departments to bring each device to its particular level of completion. Manufacturing overhead costs are allocated to finished goods and work in process inventory as a ratio to direct labor costs. |
Property, Plant, Equipment, and Leasehold Improvements | Property, plant, and equipment is recorded at cost. Major renewals and improvements are capitalized, while Leasehold Improvements 10 years Machinery and Equipment 5 years |
Concentrations of Credit Risk | Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and account receivables. The Company places its cash with high credit quality institutions. At times, such amounts may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on the accounts. As of August 31, 2020, all non-interest bearing checking accounts were FDIC insured to a limit of $250,000. Deposits in excess of FDIC insured limits were approximately $2,344,000 at August 31, 2020. With respect to the account receivables, most of the Company’s products are custom made pursuant to contracts with customers whose end-products are sold to the United States Government. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains allowances for potential credit losses. Actual losses and allowances have historically been within management’s expectations. |
Net Income (Loss) Per Common Share | Net income (loss) per common share is presented in accordance with ASC 260-10 “Earnings per Share.” Basic earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the incremental shares issuable upon the assumed exercise of stock options to the extent they are not anti-dilutive using the treasury stock method. The Company had no stock options outstanding during fiscal 2020 and 2021; therefore, there is no effect from dilution on earnings per share. |
Revenue Recognition | On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Based on a review of its customer contracts, the Company has determined that revenue on the majority of its customer contracts will continue to be recognized at a point in time, generally upon shipment of products, consistent with the Company’s historical revenue recognition model. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applied the following steps: 1. Identify the contract(s) with a customer. The Company designs, develops, manufactures and markets solid-state semiconductor components and related devices. The Company’s products are used as components primarily in the military and aerospace markets. The Company’s revenues are from purchase orders and/or contracts with customers associated with manufacture of products. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 2. Identify the performance obligations in the contract. The majority of the Company’s purchase orders or contracts with customers contain a single performance obligation, the shipment of products. 3. Determine the transaction price. The transaction price reflects the Company’s expectations about the consideration it will be entitled to receive from the customer at a fixed price per unit shipped based on the terms of the contract or purchase order with the customer. To the extent our actual costs vary from the fixed price that was negotiated, we will generate more or less profit or could incur a loss. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the Company satisfies a performance obligation. This performance obligation is satisfied when control of the product is transferred to the customer, which occurs upon shipment or delivery. The Company receives purchase orders for products to be delivered over multiple dates that may extend across reporting periods. The Company’s accounting policy treats shipping and handling activities as a fulfillment cost. In addition, the Company may have a contract or purchase order to provide a non-recurring engineering service to a customer. These contracts are reviewed and performance obligations are determined and we recognize revenue at the point in time in which each performance obligation is fully satisfied Effective January 1, 2018, we adopted Topic 606. Since all open contracts at that time were based on a point-in-time recognition model for revenue, there was no impact to retained earnings or revenue. The future impact of Topic 606 is dependent on the mix and nature of specific customer contracts. We recognize revenue on sales to distributors when the distributor takes control of the products ("sold-to" model). We have agreements with distributors that allow distributors a limited credit for unsaleable products, which we refer to as a "scrap allowance." Consistent with industry practice, we also have a "stock, ship and debit" program whereby we consider requests by distributors for credits on previously purchased products that remain in distributors' inventory, to enable the distributors to offer more competitive pricing. We have contractual arrangements whereby we provide distributors with protection against price reductions initiated by us after product is sold by us to the distributor and prior to resale by the distributor. In addition, we have a termination clause in one of our distributor agreements that would allow for a full credit for all inventory upon 60 days notice of terminating the agreement. We recognize the estimated variable consideration to be received as revenue and record a related accrued expense for the consideration not expected to be received, based upon an estimate of product returns, scrap allowances, "stock, ship and debit" credits, and price protection credits that will be attributable to sales recorded through the end of the period. We make these estimates based upon sales levels to our customers during the period, inventory levels at the distributors, current and projected market conditions, and historical experience under the programs. Our estimates require the exercise of significant judgments. We believe that we have a reasonable basis to estimate future credits under the programs. |
Related Party Transactions | The Company currently purchases and has purchased in the past die and wafers, as specified by the Company's customers, from ES Components. Mr. Aubrey, a director of the Company is a minority owner, and an immediate family member of Mr. Aubrey is the majority owner of ES Components. For the six months ended August 31, 2020, the Company purchased $44,792 of die from ES Components. For the six months ended August 31, 2019, the Company purchased $19,425 of die from ES Components. The Company has included these expenses in cost of goods sold in the accompanying statement of operations. The Company occasionally makes sales to ES Components. For the six months ended August 31, 2020 and August 31, 2019, sales were $0. |
Stock Based Compensation | The Company records stock-based compensation in accordance with the provisions of ASC Topic 718, "Compensation-Stock Compensation," which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. Under ASC Topic 718, the Company recognizes an expense for the fair value of outstanding stock options and grants as they vest, whether held by employees or others. No vesting of stock options or grants occurred during the three and six month periods ended August 31, 2020 or August 31, 2019. |
Financial Statement Estimates | The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates, and the differences could be material. Such estimates include depreciable life, valuation allowance, and allowance for inventory obsolescence. |
Recent Accounting Pronouncements | No recent accounting pronouncements affecting the Company were issued by the Financial Accounting Standards Board or other standards-setting bodies. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Available-for-sale investments | August 31, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 200 15 (22 ) 193 February 29, 2020 Gross Gross Marketable Securities: Cost Unrealized Gains Unrealized Losses Fair Value Common Stocks 155 16 (7 ) 164 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Revenue Recognition [Abstract] | |
Sales returns and allowances accrual activity | August 31, 2020 August 31, 2019 Beginning Balance $ 261,000 $ 72,000 Accrued Allowances 64,000 14,000 Credits Issued Ending Balance $ 325,000 $ 86,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | August 31, 2020 February 29, 2020 Raw Materials $ 899,000 $ 766,000 Work-In-Process 2,164,000 2,058,000 Finished Goods 105,000 46,000 Totals $ 3,168,000 $ 2,870,000 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other current liabilities | August 31, 2020 February 29, 2020 Payroll and related employee benefits $ 337,000 $ 303,000 Legal fees 1,000 Property taxes 22,000 8,000 Return Allowance 325,000 126,000 Bonus Accrual 200,000 Other liabilities 9,000 Totals $ 894,000 $ 437,000 |
DISAGGREGATION OF REVENUES AN_2
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Disaggregation of Revenue [Abstract] | |
Revenues from domestic and export sales to unaffiliated customers | Revenues from domestic and export sales to unaffiliated customers for the three months ended August 31, 2020 and August 31, 2019, respectively are as follows: Geographic Region August 31, 2020 August 31, 2019 Europe and Australia Canada and Latin America 7,000 Far East and Middle East United States 3,096,000 2,420,000 Totals $ 3,103,000 $ 2,420,000 Revenues from domestic and export sales to unaffiliated customers for the six months ended August 31, 2020 and August 31, 2019, respectively are as follows: Geographic Region August 31, 2020 August 31, 2019 Europe and Australia Canada and Latin America 13,000 4,000 Far East and Middle East 9,000 United States 5,579,000 4,973,000 Totals $ 5,601,000 $ 4,977,000 |
Revenues by customers | Revenues from the Company’s top two customers for the three months ended August 31, 2020 and August 31, 2019, respectively are as follows: Customer August 31, 2020 August 31, 2019 Raytheon 60 % 55 % Avnet / USI Electronics 12 % 17 % Totals 72 % 72 % Revenues from the Company’s top two customers for the six months ended August 31, 2020 and August 31, 2019, respectively are as follows: Customer August 31, 2020 August 31, 2019 Raytheon 56 % 56 % Avnet / USI Electronics 18 % 14 % Totals 74 % 70 % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Balance sheet classification of lease assets and liabilities | The balance sheet classification of lease assets and liabilities as of August 31, 2020 was as follows: Balance Sheet Classification August 31, 2020 Assets Operating lease right-of-use assets, March 1, 2020 $ 723,000 Amortization for the six months ended August 31, 2020 (188,000 ) Total operating lease right-of-use asset, August 31, 2020 $ 535,000 Liabilities Current Operating lease liability, short-term $ 437,000 Non-current Operating lease liability, long-term 153,000 Total lease liabilities $ 590,000 The balance sheet classification of lease assets and liabilities as of February 29, 2020 was as follows: Balance Sheet Classification February 29, 2020 Assets Operating lease right-of-use assets, March 1, 2019 $ 1,081,000 Amortization for the fiscal year ended February 29, 2020 (358,000 ) Total operating lease right-of-use asset, February 29, 2020 $ 723,000 Liabilities Current Operating lease liability, short-term $ 417,000 Non-current Operating lease liability, long-term 377,000 Total lease liabilities $ 794,000 |
Future minimum lease payments | Future minimum lease payments as of August 31, 2020 for the Company’s manufacturing facility are as follows: Fiscal Year Ending February 28/29 Amount 2021 $ 228,000 2022 388,000 Total Future Undiscounted Cash Flows $ 616,000 Less Imputed Interest to be recognized in lease expense 26,000 Operating Lease Liabilities, as reported $ 590,000 Future minimum lease payments as of February 29, 2020 for the Company’s manufacturing facility was as follows: Fiscal Year Ending February 28/29 Amount 2021 $ 454,000 2022 388,000 Total Future Undiscounted Cash Flows $ 842,000 Less Imputed Interest to be recognized in lease expense 48,000 Operating Lease Liabilities, as reported $ 794,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Common Stock - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Aug. 31, 2020 | Feb. 29, 2020 | |
Marketable Securities | ||
Cost | $ 200 | $ 155 |
Gross unrealized gains | 15 | 16 |
Gross unrealized losses | (22) | (7) |
Fair value | $ 193 | $ 164 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Feb. 29, 2020 | |
Allowance for doubtful accounts | $ 0 | $ 0 | |
FDIC insured limit | 250,000 | ||
Deposits in excess of FDIC insured limits | 2,344,000 | ||
ES Components | |||
Related party purchases | 44,792 | $ 19,425 | |
Related party sales | $ 0 | $ 0 | |
Leasehold Improvements | |||
Estimated useful lives | 10 years | ||
Machinery and Equipment | |||
Estimated useful lives | 5 years |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Revenue Recognition [Abstract] | ||
Sales return and allowances, beginning | $ 261 | $ 72 |
Accrued allowances | 64 | 14 |
Credits issued | 0 | 0 |
Sales return and allowances, ending | $ 325 | $ 86 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) - USD ($) $ in Thousands | Aug. 31, 2020 | Feb. 29, 2020 |
Inventory | $ 3,168 | $ 2,870 |
Distributor | ||
Inventory | $ 1,758 | $ 1,387 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | Feb. 29, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 899 | $ 766 |
Work-in-process | 2,164 | 2,058 |
Finished goods | 105 | 46 |
Totals | $ 3,168 | $ 2,870 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | Feb. 29, 2020 |
Payables and Accruals [Abstract] | ||
Payroll and related employee benefits | $ 337 | $ 303 |
Legal fees | 1 | 0 |
Property taxes | 22 | 8 |
Return allowance | 325 | 126 |
Bonus accrual | 200 | 0 |
Other liabilities | 9 | 0 |
Totals | $ 894 | $ 437 |
DISAGGREGATION OF REVENUES AN_3
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Net sales | $ 3,103 | $ 2,420 | $ 5,601 | $ 4,977 |
Europe and Australia | ||||
Net sales | 0 | 0 | 0 | 0 |
Canada and Latin America | ||||
Net sales | 7 | 0 | 13 | 4 |
Far East and Middle East | ||||
Net sales | 0 | 0 | 9 | 0 |
United States | ||||
Net sales | $ 3,096 | $ 2,420 | $ 5,579 | $ 4,973 |
DISAGGREGATION OF REVENUES AN_4
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS (Details 1) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Sales from major customers | 72.00% | 72.00% | 74.00% | 70.00% |
Raytheon | ||||
Sales from major customers | 60.00% | 55.00% | 56.00% | 56.00% |
Avnet / USI Electronics | ||||
Sales from major customers | 12.00% | 17.00% | 18.00% | 14.00% |
DISAGGREGATION OF REVENUES AN_5
DISAGGREGATION OF REVENUES AND MAJOR CUSTOMERS (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | Aug. 31, 2020 | Aug. 31, 2019 | |
Sales from major customers | 72.00% | 72.00% | 74.00% | 70.00% |
United States Government | ||||
Sales from major customers | 72.00% | 74.00% | 67.00% | 76.00% |
Non-Military, Scientific and industrial Applications | ||||
Sales from major customers | 28.00% | 26.00% | 33.00% | 24.00% |
MAJOR SUPPLIERS (Details Narrat
MAJOR SUPPLIERS (Details Narrative) | 3 Months Ended | 6 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2020 | Aug. 31, 2019 | |
Stellar Industries | |||
Purchases from major suppliers | 14.00% | ||
Egide USA | |||
Purchases from major suppliers | 24.00% | 23.00% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Aug. 31, 2020 | Feb. 29, 2020 | |
Assets | ||
Operating lease right-of-use assets | $ 723 | $ 1,081 |
Amortization | (188) | (358) |
Total operating lease right-of-use-asset | 535 | 723 |
Liabilities | ||
Operating lease liability, short-term | 437 | 417 |
Operating lease liability, long-term | 153 | 377 |
Total lease liabilities | $ 590 | $ 794 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) $ in Thousands | Aug. 31, 2020 | Feb. 29, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 228 | $ 454 |
2022 | 388 | 388 |
Total future undiscounted cash flows | 616 | 842 |
Less: imputed interest to be recognized in lease expense | 26 | 48 |
Operating lease liabilities, as reported | $ 590 | $ 794 |