Torotel (TTLO) 10-Q 13 Mar 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jan. 31, 2018	Mar. 13, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	TOROTEL INC
Entity Central Index Key	98,752
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Jan. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		5,995,750

CONSOLIDATED CONDENSED BALANCE

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($)	Jan. 31, 2018	Apr. 30, 2017
Current assets:
Cash	$ 409,000	$ 298,000
Trade receivables, net	1,913,000	2,007,000
Inventories	2,953,000	2,739,000
Prepaid expenses and other current assets	204,000	217,000
Property held for sale	688,000	688,000
Assets, Current	6,167,000	5,949,000
Leasehold improvements	611,000	532,000
Equipment	3,916,000	3,718,000
Property, Plant and Equipment, Gross, Total	4,527,000	4,250,000
Less accumulated depreciation	3,170,000	2,937,000
Property, plant and equipment, net	1,357,000	1,313,000
Deferred income taxes	644,000	747,000
Other assets	256,000	256,000
Total Assets	8,424,000	8,265,000
Current liabilities:
Current maturities of long-term debt	1,736,000	603,000
Trade accounts payable	790,000	1,205,000
Accrued liabilities	643,000	319,000
Customer deposits	23,000	33,000
Liabilities, Current	3,192,000	2,160,000
Long-term debt, less current maturities	162,000	445,000
Stockholders' equity:
Common stock; par value $0.01; 6,000,000 shares authorized; 5,995,750 shares issued and outstanding	60,000	60,000
Capital in excess of par value	12,410,000	12,329,000
Accumulated deficit	(7,400,000)	(6,729,000)
Stockholders' Equity	5,070,000	5,660,000
Total Liabilities and Stockholders' Equity	$ 8,424,000	$ 8,265,000

CONSOLIDATED CONDENSED BALANCE3

CONSOLIDATED CONDENSED BALANCE SHEETS (PARENTHETICAL) - $ / shares	Jan. 31, 2018	Apr. 30, 2017
Stockholders' equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	6,000,000	6,000,000
Common stock, shares issued	5,995,750	5,995,750
Common stock, shares outstanding	5,995,750	5,995,750

CONSOLIDATED CONDENSED STATEMEN

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 4,529,000	$ 3,702,000	$ 13,742,000	$ 11,657,000
Cost of goods sold	3,091,000	2,657,000	9,686,000	7,920,000
Gross profit	1,438,000	1,045,000	4,056,000	3,737,000
Operating expenses:
Engineering	267,000	215,000	806,000	662,000
Selling, general and administrative	1,140,000	1,146,000	3,783,000	3,353,000
Operating expenses	1,407,000	1,361,000	4,589,000	4,015,000
Earnings (loss) from operations	31,000	(316,000)	(533,000)	(278,000)
Other expense:
Interest expense, net	28,000	5,000	53,000	16,000
Earnings (loss) before provision (credit) for income taxes	3,000	(321,000)	(586,000)	(294,000)
Provision (benefit) for income taxes	310,000	(130,000)	85,000	(118,000)
Net earnings (loss)	$ (307,000)	$ (191,000)	$ (671,000)	$ (176,000)
Basic earnings (loss) per share	$ (0.06)	$ (0.04)	$ (0.13)	$ (0.03)

CONSOLIDATED CONDENSED STATEME5

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017
Cash flows from operating activities:
Net earnings (loss)	$ (671,000)	$ (176,000)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Stock compensation cost amortized	81,000	33,000
Depreciation	233,000	194,000
Deferred income taxes	103,000	(118,000)
Increase (decrease) in cash flows from operations resulting from changes in:
Trade receivables	94,000	219,000
Inventories	(214,000)	(939,000)
Prepaid expenses and other assets	13,000	(75,000)
Trade accounts payable	(415,000)	140,000
Accrued liabilities	324,000	46,000
Customer deposits	(10,000)	(15,000)
Net cash provided by operating activities	(462,000)	(691,000)
Cash flows from investing activities:
Capital expenditures	(52,000)	(338,000)
Net cash used in investing activities	(52,000)	(338,000)
Cash flows from financing activities:
Principal payments on long-term debt	(99,000)	(66,000)
Proceeds from line of credit	750,000	124,000
Payments on capital lease obligations	(26,000)
Net cash provided by (used in) financing activities	625,000	58,000
Net decrease in cash	111,000	(971,000)
Cash, beginning of period	298,000	1,846,000
Cash, end of period	409,000	875,000
Cash paid during the year for:
Interest	53,000	16,000
Income taxes		$ 87,000
Non-cash investing and financing activities:
Equipment financed with proceeds from capital lease	$ 225,000

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Jan. 31, 2018
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE The consolidated condensed balance sheet as of April 30, 2017, which has been derived from the audited financial statements of Torotel, Inc. ("Torotel"), is accompanied by the unaudited interim consolidated condensed financial statements, which reflect the normal recurring adjustments that in the opinion of management are necessary to present fairly Torotel’s consolidated financial position at January 31, 2018, and the consolidated results of operations and cash flows for the three and nine months ended January 31, 2018, and 2017, respectively. The unaudited interim consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although management believes the disclosures made are adequate to make the information not misleading. The financial statements contained herein should be read in conjunction with Torotel’s consolidated financial statements and related notes filed on Torotel's Form 10-K for the year ended April 30, 2017 as filed with the SEC on July 28, 2017. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period and early adoption permitted for reporting periods beginning after December 15, 2016. The standard will supersede existing revenue recognition guidance, including industry-specific guidance, and will provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The provisions of this new guidance are effective as of the beginning of Torotel’s first quarter of fiscal year 2019. We commenced our evaluation of the impact of this standard this year, by evaluating its impact on selected sales orders. With this baseline understanding, we are developing a project plan and assessing any changes that may be needed in our internal control structure to adopt the standard on May 1, 2018. Based on the results of our preliminary evaluation, Torotel believes that this will have a material impact in our first quarter of fiscal 2019. At this time, Torotel is still assessing the adoption method to be utilized. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 requires expanded disclosures about the nature and terms of lease agreements and is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted. Torotel is currently evaluating the potential impact of this standard on its consolidated financial statements. Torotel anticipates the impact will be material to the consolidated financial statements for reporting periods beginning after December 15, 2018, due to the amendment to the lease for Torotel’s manufacturing facility that was executed on October 31, 2016. The status of the implementation effort is in the preliminary stage. No significant implementation matters have been identified as needing to be addressed.

NATURE OF OPERATIONS

NATURE OF OPERATIONS	9 Months Ended
	Jan. 31, 2018
NATURE OF OPERATIONS
NATURE OF OPERATIONS	NOTE Torotel conducts business primarily through its wholly owned subsidiary, Torotel Products, Inc. (“Torotel Products”). Torotel Products specializes in the custom design and manufacture of a wide variety of precision magnetic components, consisting of transformers, inductors, reactors, chokes, toroidal coils, high voltage transformers, dry-type transformers and electro-mechanical assemblies, for use in commercial, industrial and military electronics.

INVENTORIES

INVENTORIES	9 Months Ended
	Jan. 31, 2018
INVENTORIES
INVENTORIES	NOTE The following table summarizes the components of inventories: January 31, 2018 April 30, 2017 Raw materials $ 1,258,000 $ 1,305,000 Work in process 823,000 826,000 Finished goods 872,000 608,000 $ 2,953,000 $ 2,739,000

FINANCING AGREEMENTS

FINANCING AGREEMENTS	9 Months Ended
	Jan. 31, 2018
FINANCING AGREEMENTS
FINANCING AGREEMENTS	NOTE Torotel Products has a financing agreement (the “financing agreement”) with Commerce Bank, N.A. (the “Bank”). The financing agreement provides for a revolving line of credit, a guidance line of credit, and a real estate term loan. Torotel serves as the guarantor to all promissory notes described below. A summary of the notes outstanding under the financing agreement is provided below: January 31, 2018 April 30, 2017 4.05% mortgage note payable in monthly installments of $4,873, including interest, with final payment of $349,000 due January 27, 2019 $ 384,000 $ 415,000 4.00% working capital line of credit with a maturity date of October 20, 2018 750,000 465,000 4.00% building line of credit with a maturity date of March 31, 2018 465,000 - Capital lease obligations (see Note 11) 199,000 - Borrowings under an equipment financing line of credit: 4.75% note payable in monthly installments of $2,269, including interest, with final payment due May 27, 2018 6,000 28,000 3.75% note payable in monthly installments of $2,112, including interest, with final payment due April 10, 2018 9,000 25,000 4.05% note payable in monthly installments of $3,680, including interest, with final payment due January 10, 2020 85,000 115,000 Total long-term debt 1,898,000 1,048,000 Less current installments 1,736,000 603,000 Long-term debt, excluding current installments $ 162,000 $ 445,000 Under the financing agreement with the Bank, prepayment of the mortgage note up to $100,000 per year is allowed without penalty so long as these funds are generated through internal cash flow and not borrowed from a separate financial institution. The mortgage note is cross collateralized and cross defaulted with all other credit facilities of Torotel Products and is secured by a first real estate mortgage on the property located at 620 North Lindenwood Drive in Olathe, Kansas. Two separate promissory notes have been delivered by Torotel Products under the working capital line of credit, and amounts under this working capital revolving line of credit are available for working capital purposes. As of January 31, 2018 Torotel Products has only drawn upon the promissory note that matures on October 20, 2018 and no amounts had been borrowed under the promissory note scheduled to mature on April 30, 2018. The working capital revolving line of credit is renewable annually. The associated interest rate of both promissory notes is equal to the greater of the floating Commerce Bank Prime Rate (currently 4.25%) or a floor of 4% (as listed above). Monthly repayments of interest only are required under both promissory notes with the principal due at maturity. The maximum borrowing of this line of credit is $1,250,000. This revolving line of credit is cross collateralized and cross defaulted with all other credit facilities and arrangements of Torotel Products with the Bank and is secured by a first lien on all business assets of Torotel Products. On March 31, 2017, Torotel Products entered into a $500,000 building revolving line of credit, which is available for working capital purposes and is renewable annually. The associated interest rate is equal to the greater of the floating Commerce Bank Prime Rate (currently 4.25%) or a floor of 4% (as listed above). Monthly repayments of interest only are required with the principal due at maturity. The maximum borrowing of this line of credit is $500,000. This facility is cross collateralized and cross defaulted with all other facilities and is secured by a first lien on the building located at 620 North Lindenwood Drive in Olathe, Kansas. This revolving line of credit is scheduled to mature on March 31, 2018, and Torotel Products expects to negotiate an extension of that maturity date. The equipment note is a guidance line of credit to be used for equipment purchases. Monthly repayments consisting of both interest and principal are required. This note is cross collateralized and cross defaulted with all other facilities of Torotel Products and is secured by a purchase money security interest in the assets purchased as well as a first lien on all business assets of Torotel Products. The maximum borrowing of this line of credit is $500,000. Torotel Products is required to comply with specified financial covenants of the financing agreement with Commerce Bank. As of January 31, 2018, Torotel Products was not in compliance with the covenant in such financing agreement that requires a ratio of EBITDA (as defined in the financing agreement) to fixed charge coverage (as defined in the financing agreement) in excess of 1.100 to 1.000. A waiver for non-compliance with this covenant was received from Commerce Bank for the period ending January 31, 2018. Irrevocable Standby Letter of Credit Under the terms of a lease amendment for its manufacturing facility located in Olathe, Kansas (see Note 11), Torotel provided the landlord an irrevocable standby letter of credit in the original amount of $350,000 as additional security. The balance under the letter of credit will automatically reduce in accordance with the below schedule if not drawn upon: Date of Reduction Amount of Reduction Balance of Letter of Credit January 1, 2020 $ 75,000 $ 275,000 January 1, 2021 75,000 200,000 January 1, 2022 75,000 125,000 January 1, 2023 75,000 50,000 January 1, 2024 50,000 -

INCOME TAXES

INCOME TAXES	9 Months Ended
	Jan. 31, 2018
INCOME TAXES
INCOME TAXES	NOTE As of January 31, 2018, the federal tax returns for the fiscal years ended 2015 through 2017 are open to audit until the statute of limitations closes for the years in which our net operating losses are utilized. We would recognize interest and penalties accrued on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21% effective January 31, 2018; (2) extending bonus depreciation that will allow for full expensing of qualified property; and (3) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized. In the third quarter of the 2018 fiscal year, we revised our estimated annual effective rate to reflect a change in the federal statutory rate from 34% to 21%. The rate change is administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, the blended statutory tax rate for the year is 30.40%, resulting in $198,000 of current income tax benefit. In addition, we recognized tax expense in our tax provision for the period related to adjusting our existing deferred tax balance to reflect the new corporate tax rate, resulting in $283,000 of current income tax expense. As a result, our total income tax expense reported for the first nine months of the 2018 fiscal year was an overall increase in income tax expense of $85,000 during the third quarter. We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Act and refining our calculations, which would potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The SEC issued Staff Accounting Bulletin No. 118 (‘SAB 118’) to address the application of accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. Pursuant to the guidance within SAB 118, at January 31, 2018, we recognized the provisional effects of the enactment of the Tax Act for which measurement could be reasonably determined. As we continue to analyze certain aspects of the Tax Act and refine our assessment, the ultimate impact of the Tax Act may differ from these estimates due to our continued analysis or further regulatory guidance that may be issued as a result of the Tax Act. Pursuant to SAB 118, adjustments to the provisional amounts recorded at December 31, 2017 that are identified within a subsequent measurement period of up to one year from the enactment date will be included as an adjustment to tax expense from continuing operations in the period the amounts are determined.

RESTRICTED STOCK AGREEMENTS

RESTRICTED STOCK AGREEMENTS	9 Months Ended
	Jan. 31, 2018
RESTRICTED STOCK AGREEMENTS
RESTRICTED STOCK AGREEMENTS	NOTE Restricted Stock Agreements, and stock awards thereunder, are authorized by the Compensation and Nominating Committee (the "Committee") and the Board of Directors of Torotel (the "Board"). The terms of the Restricted Stock Agreements afford the grantees all of the rights of a stockholder with respect to the award shares, including the right to vote such shares and to receive dividends and other distributions payable with respect to such shares since the date of award. Under the terms of each agreement, the non-vested shares are restricted as to disposition and subject to forfeiture under certain circumstances. The Restricted Stock Agreements further provide, subject to certain conditions, that if prior to all of the restricted shares having vested, we undergo a change in control, then all of the restricted shares shall be vested and no longer subject to restrictions under the Restricted Stock Agreements. The restricted shares are treated as non-vested stock; accordingly, the fair value of the restricted stock at the date of award is offset against capital in excess of par value in the accompanying consolidated balance sheets under stockholders' equity. Restricted Stock Grants The Shares were granted subject to restrictions that prohibit them from being sold, assigned, pledged or otherwise disposed of until the restrictions lapse. The restrictions will lapse on the fifth anniversary of the date of grant if during the five year restriction period, (1) the Company's cumulative annual growth in revenue is at least 10%, and (2) the average economic value added as a percentage of revenue is at least 2%. The economic value added, which attempts to capture the true economic profit, will be calculated as the operating profit less the cost of capital with adjustments made for taxes. The restrictions will also lapse, if prior to the fifth anniversary of the date of grant, (1) the grantee's employment with the Company is terminated by reason of disability, (2) the grantee dies, or (3) the Committee, in its sole discretion, terminates the restrictions. If the restrictions on the Shares have not lapsed by the fifth anniversary of the date of grant, the Shares will be forfeited to the Company. Stock Compensation Costs and Restricted Stock Activity Total stock compensation cost for the nine months ended January 31, 2018 and 2017 was $81,000 and $33,000, respectively. Restricted stock activity for each nine month period through January 31 is summarized as follows: 2018 2017 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 350,000 $ 0.500 Granted — — 730,000 0.740 Vested — — — — Forfeited — — (350,000) 0.500 Outstanding at January 31 730,000 $ 0.740 730,000 $ 0.740

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
	Jan. 31, 2018
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY	NOTE The shares of common stock outstanding as of January 31 of each year are summarized as follows: 2018 2017 Balance, May 1 5,995,750 5,615,750 Shares released from treasury for restricted stock grants — 717,795 Newly issued shares for restricted stock grants — 12,205 Shares reverted to treasury for restricted stock forfeitures — (350,000) Balance, January 31 5,995,750 5,995,750

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Jan. 31, 2018
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE Basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income attributable to common shareholders by the weighted average shares outstanding during each period. The basic earnings per common share were computed as follows: Three Months Ended Nine Months Ended January 31, 2018 January 31, 2017 January 31, 2018 January 31, 2017 Net earnings (loss) $ (307,000) $ (191,000) $ (671,000) $ (176,000) Amounts allocated to participating securities (nonvested restricted shares) — — — — Net earnings (loss) attributable to common shareholders $ (307,000) $ (191,000) $ (671,000) $ (176,000) Basic weighted average common shares 5,265,750 4,915,750 5,265,750 5,077,171 Earnings per share attributable to common shareholders: Basic earnings (loss) per share $ (0.06) $ (0.04) $ (0.13) $ (0.03) ASC 260, Earnings per Share, provides that unvested share-based payment awards that contain non-forfeitable rights to dividends are considered to be participating securities and must be considered in the computation of earnings per share pursuant to the two-class method. Diluted earnings per share is not presented as we do not have any shares considered incremental and dilutive.

CUSTOMER DEPOSITS

CUSTOMER DEPOSITS	9 Months Ended
	Jan. 31, 2018
CUSTOMER DEPOSITS
CUSTOMER DEPOSITS	NOTE 9—CUSTOMER DEPOSITS For certain customers, we collect payment at the time the order is placed. These deposits are classified as a liability and will be recognized as revenue at the time of shipment in accordance with our revenue recognition policy. As of January 31, 2018 we had approximately $23,000 in customer deposits related to these arrangements.

CONCENTRATIONS OF CREDIT RISK

CONCENTRATIONS OF CREDIT RISK	9 Months Ended
	Jan. 31, 2018
CONCENTRATIONS OF CREDIT RISK
CONCENTRATIONS OF CREDIT RISK	NOTE 10 — CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable. We grant unsecured credit to most of our customers. We do not believe that we are exposed to any extraordinary credit risk as a result of this policy. At various times cash balances exceeded federally insured limits. However, we have incurred no losses in the cash accounts and we do not believe we are exposed to any significant credit risk with respect to our cash.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Jan. 31, 2018
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES	NOTE 11 — Torotel is obligated under several capital leases for the lease of various information technology and production equipment that expire at various dates during the next three years. All of these leases are non-cancellable and are presented in the accompanying consolidated financial statements as long-term debt. At January 31, 2018 and 2017, the gross amount of equipment under capital lease was $225,000 and $0, respectively. Related accumulated depreciation recorded under capital lease were $23,000 and $0, respectively. Amortization of assets held under capital lease is included with depreciation expense. On August 30, 2017, Torotel entered into a Third Amendment (“Amendment”) to the lease for its manufacturing facility located in Olathe, Kansas. The Amendment reconfigured the Suite 520 entry design, and granted Torotel a $37,500 lump sum net base rent abatement, to be applied at $18,750 per month from September 1, 2017 through October 31, 2017. The Amendment also reduced the current letter of credit requirement from $350,000 to $300,000. The Amendment did not change the term of the lease, which continues through December 31, 2026 (subject to early termination options and two separate options to extend the lease term for additional five year periods). Future minimum lease payments on the amended operating lease and future minimum capital lease payments as of January 31, 2018 are as follows: Capital Operating Fiscal Years Ending April 30, Leases Leases 2018 $ 27,000 $ 81,000 2019 90,000 329,000 2020 75,000 362,000 2021 37,000 402,000 2022 — 427,000 2023 — 442,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 229,000 3,768,000 Less: Amounts representing interest (30,000) — Total $ 199,000 $ 3,768,000

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Jan. 31, 2018
INVENTORIES
Table summarizing the components of inventories	January 31, 2018 April 30, 2017 Raw materials $ 1,258,000 $ 1,305,000 Work in process 823,000 826,000 Finished goods 872,000 608,000 $ 2,953,000 $ 2,739,000

FINANCING AGREEMENTS (Tables)

FINANCING AGREEMENTS (Tables)	9 Months Ended
	Jan. 31, 2018
FINANCING AGREEMENTS
Summary of the notes within the financing agreement	January 31, 2018 April 30, 2017 4.05% mortgage note payable in monthly installments of $4,873, including interest, with final payment of $349,000 due January 27, 2019 $ 384,000 $ 415,000 4.00% working capital line of credit with a maturity date of October 20, 2018 750,000 465,000 4.00% building line of credit with a maturity date of March 31, 2018 465,000 - Capital lease obligations (see Note 11) 199,000 - Borrowings under an equipment financing line of credit: 4.75% note payable in monthly installments of $2,269, including interest, with final payment due May 27, 2018 6,000 28,000 3.75% note payable in monthly installments of $2,112, including interest, with final payment due April 10, 2018 9,000 25,000 4.05% note payable in monthly installments of $3,680, including interest, with final payment due January 10, 2020 85,000 115,000 Total long-term debt 1,898,000 1,048,000 Less current installments 1,736,000 603,000 Long-term debt, excluding current installments $ 162,000 $ 445,000
Schedule of letter of credit outstanding balance	Date of Reduction Amount of Reduction Balance of Letter of Credit January 1, 2020 $ 75,000 $ 275,000 January 1, 2021 75,000 200,000 January 1, 2022 75,000 125,000 January 1, 2023 75,000 50,000 January 1, 2024 50,000 -

RESTRICTED STOCK AGREEMENTS (Ta

RESTRICTED STOCK AGREEMENTS (Tables)	9 Months Ended
	Jan. 31, 2018
RESTRICTED STOCK AGREEMENTS
Summary of restricted stock activity	2018 2017 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 350,000 $ 0.500 Granted — — 730,000 0.740 Vested — — — — Forfeited — — (350,000) 0.500 Outstanding at January 31 730,000 $ 0.740 730,000 $ 0.740

STOCKHOLDERS' EQUITY (Tables)

STOCKHOLDERS' EQUITY (Tables)	9 Months Ended
	Jan. 31, 2018
STOCKHOLDERS' EQUITY
Summary of changes in shares of common stock outstanding	2018 2017 Balance, May 1 5,995,750 5,615,750 Shares released from treasury for restricted stock grants — 717,795 Newly issued shares for restricted stock grants — 12,205 Shares reverted to treasury for restricted stock forfeitures — (350,000) Balance, January 31 5,995,750 5,995,750

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Jan. 31, 2018
EARNINGS PER SHARE
Computation of earnings per common share	Three Months Ended Nine Months Ended January 31, 2018 January 31, 2017 January 31, 2018 January 31, 2017 Net earnings (loss) $ (307,000) $ (191,000) $ (671,000) $ (176,000) Amounts allocated to participating securities (nonvested restricted shares) — — — — Net earnings (loss) attributable to common shareholders $ (307,000) $ (191,000) $ (671,000) $ (176,000) Basic weighted average common shares 5,265,750 4,915,750 5,265,750 5,077,171 Earnings per share attributable to common shareholders: Basic earnings (loss) per share $ (0.06) $ (0.04) $ (0.13) $ (0.03)

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Jan. 31, 2018
COMMITMENTS AND CONTINGENCIES.
Future minimum lease payments under non-cancellable operating leases	Capital Operating Fiscal Years Ending April 30, Leases Leases 2018 $ 27,000 $ 81,000 2019 90,000 329,000 2020 75,000 362,000 2021 37,000 402,000 2022 — 427,000 2023 — 442,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 229,000 3,768,000 Less: Amounts representing interest (30,000) — Total $ 199,000 $ 3,768,000

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	Jan. 31, 2018	Apr. 30, 2017
INVENTORIES
Raw materials	$ 1,258,000	$ 1,305,000
Work in process	823,000	826,000
Finished goods	872,000	608,000
Inventories	$ 2,953,000	$ 2,739,000

FINANCING AGREEMENTS (Details)

FINANCING AGREEMENTS (Details)	9 Months Ended
	Jan. 31, 2018USD ($)agreement	Apr. 30, 2017USD ($)	Mar. 31, 2017USD ($)	Feb. 21, 2014USD ($)
Long-term indebtedness
Total long-term debt	$ 1,898,000	$ 1,048,000
Less current installments	1,736,000	603,000
Long-term debt, excluding current installments	$ 162,000	445,000
Mortgage note payable
Long-term indebtedness
Annual prepayment limit				$ 100,000
Line of Credit
Long-term indebtedness
Number of agreements | agreement	2
Capital Leases
Long-term indebtedness
Total long-term debt	$ 199,000
Note payable 4.05 percent | Mortgage note payable
Long-term indebtedness
Total long-term debt	$ 384,000	415,000
Rate	4.05%
Monthly installments	$ 4,873
Final payment	349,000
Working line of credit 4.00 percent | Line of Credit
Long-term indebtedness
Total long-term debt	750,000	465,000
Maximum borrowing	$ 1,250,000
Working line of credit 4.00 percent | Line of Credit | Minimum
Long-term indebtedness
Rate	4.00%
Working line of credit 4.00 percent | Line of Credit | Prime Rate
Long-term indebtedness
Rate	4.25%
Building line of credit 4.00 percent | Line of Credit
Long-term indebtedness
Total long-term debt	$ 465,000
Maximum borrowing			$ 500,000
Building line of credit 4.00 percent | Line of Credit | Minimum
Long-term indebtedness
Rate			4.00%
Building line of credit 4.00 percent | Line of Credit | Prime Rate
Long-term indebtedness
Rate			4.25%
Note payable 4.75 percent | Note Payable
Long-term indebtedness
Total long-term debt	$ 6,000	28,000
Rate	4.75%
Monthly installments	$ 2,269
Note payable 3.75 percent | Note Payable
Long-term indebtedness
Total long-term debt	9,000	25,000
Notes Payable	$ 0
Rate	3.75%
Monthly installments	$ 2,112
Note payable 4.05 percent | Note Payable
Long-term indebtedness
Total long-term debt	$ 85,000	$ 115,000
Rate	4.05%
Monthly installments	$ 3,680
Equipment line of credit
Long-term indebtedness
Equipment financing maximum borrowing	$ 500,000

FINANCING AGREEMENTS (IRREVOCAB

FINANCING AGREEMENTS (IRREVOCABLE STANDBY LETTER OF CREDIT (Details)	Jan. 01, 2024USD ($)	Jan. 01, 2023USD ($)	Jan. 01, 2022USD ($)	Jan. 01, 2021USD ($)	Jan. 01, 2020USD ($)	Jan. 31, 2018USD ($)	Aug. 31, 2017USD ($)	Aug. 30, 2017USD ($)
Long-term indebtedness
Principal amount							$ 300,000	$ 350,000
Minimum
Long-term indebtedness
Ratio of EBITDA to fixed charge coverage						1.100
Maximum
Long-term indebtedness
Ratio of EBITDA to fixed charge coverage						1
Irrevocable Standby Letter of Credit
Long-term indebtedness
Principal amount						$ 350,000
Irrevocable Standby Letter of Credit | Forecast
Long-term indebtedness
Amount of Reduction	$ 50,000	$ 75,000	$ 75,000	$ 75,000	$ 75,000
Balance of Letter of Credit		$ 50,000	$ 125,000	$ 200,000	$ 275,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	Jan. 31, 2018	Dec. 22, 2017	May 01, 2017	Jan. 31, 2018	Jan. 31, 2018
INCOME TAXES
Federal statutory income tax rate (as a percent)	21.00%	35.00%
Blended statutory tax rate					30.40%
Current income tax benefit (expense)					$ (283,000)
Increase in income tax expense			$ 198,000	$ 85,000

RESTRICTED STOCK AGREEMENTS (De

RESTRICTED STOCK AGREEMENTS (Details) - Restricted Stock	Sep. 21, 2016employeeshares	Jan. 31, 2018USD ($)$ / sharesshares	Jan. 31, 2017USD ($)$ / sharesshares	Apr. 30, 2017shares
Share-based Compensation Arrangement by Share-based Payment Award
Stock compensation cost amortized | $		$ 81,000	$ 33,000
Restricted Shares Under Option
Outstanding at beginning of period		730,000	350,000
Granted			730,000
Forfeited			(350,000)
Outstanding at end of period		730,000	730,000
Weighted Average Grant Price
Outstanding at beginning of period, Weighted Average Grant Price (in dollars per share) | $ / shares		$ 0.740	$ 0.500
Granted, Weighted Average Grant Price (in dollars per share) | $ / shares			0.740
Forfeited, Weighted Average Grant Price (in dollars per share) | $ / shares			0.500
Outstanding at end of period, Weighted Average Grant Price (in dollars per share) | $ / shares		$ 0.740	$ 0.740
2016 Restricted Stock Grants | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Cumulative annual growth in revenue (as a percentage)	10.00%
Average economic value added as percentage of revenue (as a percentage)	2.00%
Stock Award Plan
Share-based Compensation Arrangement by Share-based Payment Award
Restriction period of awards	5 years
Stock Award Plan | Three Key Employees
Share-based Compensation Arrangement by Share-based Payment Award
Number of key employees receiving award under plan | employee	3
Aggregate amount of restricted stock awards authorized	730,000
Number of shares expected to revert during fiscal year				350,000

STOCKHOLDERS' EQUITY (Details)

STOCKHOLDERS' EQUITY (Details)	9 Months Ended
	Jan. 31, 2017shares
Increase (Decrease) in Stockholders' Equity
Balance beginning of year (in shares)	5,615,750
Shares released from treasury for restricted stock grants	717,795
Newly issued shares for restricted stock grants	12,205
Shares reverted to treasury for restricted stock forfeitures	(350,000)
Balance end of year (in shares)	5,995,750

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017
EARNINGS PER SHARE
Net earnings (loss)	$ (307,000)	$ (191,000)	$ (671,000)	$ (176,000)
Net earnings (loss) attributable to common shareholders	$ (307,000)	$ (191,000)	$ (671,000)	$ (176,000)
Basic weighted average common shares	5,265,750	4,915,750	5,265,750	5,077,171
Earnings per share attributable to common shareholders:
Basic earnings (loss) per share	$ (0.06)	$ (0.04)	$ (0.13)	$ (0.03)

CUSTOMER DEPOSITS (Details)

CUSTOMER DEPOSITS (Details) - USD ($)	Jan. 31, 2018	Apr. 30, 2017
CUSTOMER DEPOSITS
Customer Advances, Current	$ 23,000	$ 33,000

CONCENTRATIONS OF CREDIT RISK (

CONCENTRATIONS OF CREDIT RISK (Details)	9 Months Ended
	Jan. 31, 2018USD ($)
CONCENTRATIONS OF CREDIT RISK
Losses in the cash accounts	$ 0

COMMITMENTS AND CONTINGENCIES32

COMMITMENTS AND CONTINGENCIES (Details)	Aug. 30, 2017Option	Oct. 31, 2017USD ($)	Jan. 31, 2018USD ($)	Aug. 31, 2017USD ($)	Jan. 31, 2017USD ($)
COMMITMENTS AND CONTINGENCIES.
Capital Leased Assets, Gross			$ 225,000		$ 0
Accumulated depreciation			23,000		$ 0
Net base rent abatement				$ 37,500
Monthly rent payment		$ 18,750
Number Options To Extend Lease | Option	2
Extension of lease term	5 years
Future minimum lease payments under non-cancellable operating leases
2,018			81,000
2,019			329,000
2,020			362,000
2,021			402,000
2,022			427,000
2,023			442,000
2,024			452,000
2,025			456,000
2,026			467,000
2,027			350,000
Total			3,768,000
Capital Leases
2,018			27,000
2,019			90,000
2,020			75,000
2,021			37,000
Total			229,000
Interest Portion of Minimum Lease Payments			(30,000)
Presents value of minimum capital lease payments			$ 199,000