Torotel (TTLO) 10-Q 13 Sep 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Jul. 31, 2019	Sep. 13, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	TOROTEL INC
Entity Central Index Key	0000098752
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Fiscal Period Focus	Q1
Document Period End Date	Jul. 31, 2019
Document Fiscal Year Focus	2019
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		5,995,750
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Jul. 31, 2019	Apr. 30, 2019
Current assets:
Cash	$ 353,000	$ 58,000
Trade receivables, net	2,468,000	2,590,000
Contract assets	1,173,000	1,104,000
Inventories	3,256,000	3,054,000
Prepaid expenses	385,000	152,000
Total Current Assets	7,635,000	6,958,000
Land	265,000	265,000
Buildings and improvements	1,578,000	1,569,000
Equipment	4,152,000	4,045,000
Property, Plant and Equipment, Gross, Total	5,995,000	5,879,000
Less accumulated depreciation	4,148,000	4,056,000
Property, plant and equipment, net	1,847,000	1,823,000
Operating Right-of-use assets, net	2,214,000
Deferred income taxes	34,000	34,000
Other assets	152,000	186,000
Total Assets	11,882,000	9,001,000
Current liabilities:
Current maturities of long-term debt	666,000	1,121,000
Current maturities of operating lease liabilities	378,000
Current maturities of finance lease liabilities	73,000
Trade accounts payable	1,671,000	1,625,000
Accrued liabilities	1,129,000	824,000
Customer deposits	26,000	24,000
Total current liabilities	3,943,000	3,594,000
Long-term debt, less current maturities	811,000	801,000
Operating lease liabilities, less current maturities	2,042,000
Finance lease liabilities, less current maturities	9,000
Total long-term debt	2,862,000	801,000
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	12,572,000	12,545,000
Accumulated deficit	(7,555,000)	(7,999,000)
Stockholders' Equity	5,077,000	4,606,000
Total Liabilities and Stockholders' Equity	$ 11,882,000	$ 9,001,000

CONSOLIDATED BALANCE SHEETS (PA

CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares	Jul. 31, 2019	Apr. 30, 2019
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 STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 6,346,000	$ 4,473,000
Cost of goods sold	3,953,000	2,994,000
Gross profit	2,393,000	1,479,000
Operating expenses:
Engineering	388,000	302,000
Selling, general and administrative	1,423,000	1,211,000
Operating expenses	1,811,000	1,513,000
Income (loss) from operations	582,000	(34,000)
Other expense:
Interest expense, net	27,000	24,000
Income (loss) before income tax expense	555,000	(58,000)
Income tax expense (benefit)	111,000	(15,000)
Net income (loss)	$ 444,000	$ (43,000)
Basic earnings (loss) per share	$ 0.07	$ (0.01)

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Capital in excess of par value	Accumulated Deficit	Total
Balance beginning of year at Apr. 30, 2018	$ 60,000	$ 12,437,000	$ (8,743,000)	$ 3,754,000
Balance beginning of year (in shares) at Apr. 30, 2018	5,995,750			5,995,750
Stock compensation earned		27,000		$ 27,000
Net income (loss)			(43,000)	(43,000)
Balance end of year at Jul. 31, 2018	$ 60,000	12,464,000	(8,684,000)	$ 3,840,000
Balance end of year (in shares) at Jul. 31, 2018	5,995,750			5,995,750
Cumulative effect of adoption of new accounting principle (see Note 1)			102,000	$ 102,000
Balance beginning of year at Apr. 30, 2019	$ 60,000	12,545,000	(7,999,000)	$ 4,606,000
Balance beginning of year (in shares) at Apr. 30, 2019	5,995,750			5,995,750
Stock compensation earned		27,000		$ 27,000
Net income (loss)			444,000	444,000
Balance end of year at Jul. 31, 2019	$ 60,000	$ 12,572,000	$ (7,555,000)	$ 5,077,000
Balance end of year (in shares) at Jul. 31, 2019	5,995,750			5,995,750

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASHFLOWS - USD ($)	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
Cash flows from operating activities:
Net income (loss)	$ 444,000	$ (43,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation cost amortized	27,000	27,000
Depreciation	92,000	84,000
Deferred income taxes		(15,000)
Changes in operating assets and liabilities:
Trade receivables	122,000	174,000
Contract assets	(69,000)	(233,000)
Inventories	(202,000)	(539,000)
Prepaid expenses and other assets	(199,000)	71,000
Operating lease right-of-use assets	(53,000)
Trade accounts payable	46,000	59,000
Accrued liabilities	511,000	218,000
Current and long-term operating lease liabilities	(53,000)
Customer deposits	2,000	(61,000)
Net cash used in operating activities	774,000	(258,000)
Cash flows from investing activities:
Capital expenditures	(116,000)	(50,000)
Net cash used in investing activities	(116,000)	(50,000)
Cash flows from financing activities:
Principal payments on long-term debt	(7,000)	(19,000)
Payments on capital lease obligations	(16,000)	(27,000)
Payments on line of credit	(3,777,000)
Proceeds from line of credit	3,437,000
Net cash provided by financing activities	(363,000)	(46,000)
Net increase (decrease) in cash	295,000	(354,000)
Cash, beginning of period	58,000	575,000
Cash, end of period	353,000	221,000
Cash paid during the period for:
Interest	27,000	$ 24,000
Capital leases reclassified from long-term debt to finance lease liabilities	98,000
Deferred lease reclassified from accrued liabilities to operating right-of-use assets	$ 206,000

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Jul. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION	NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1 — BASIS OF PRESENTATION The consolidated condensed balance sheet as of April 30, 2019, which has been derived from the audited financial statements of Torotel, Inc. ("Torotel" or the “Company”), 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 July 31, 2019, and the consolidated results of operations and cash flows for the three months ended July 31, 2019, and 2018, 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, 2019 as filed with the SEC on July 23, 2019. Accounting Pronouncements Recently Adopted The Company adopted the guidance of ASU No. 2016-02, Leases, (“ASC 842”) as of May 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. ASC 842 requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations and presentation of cash flows. See Note 5 — Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases.

NATURE OF OPERATIONS

NATURE OF OPERATIONS	3 Months Ended
	Jul. 31, 2019
NATURE OF OPERATIONS
NATURE OF OPERATIONS	NOTE 2 — NATURE OF OPERATIONS Torotel conducts business 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	3 Months Ended
	Jul. 31, 2019
INVENTORIES
INVENTORIES	NOTE 3—INVENTORIES The following table summarizes the components of inventories: July 31, 2019 April 30, 2019 Raw materials $ 1,786,000 $ 1,723,000 Work in process 1,345,000 1,052,000 Finished goods 125,000 279,000 $ 3,256,000 $ 3,054,000

REVENUE

REVENUE	3 Months Ended
	Jul. 31, 2019
REVENUE
REVENUE	NOTE 4—REVENUE We determine revenue recognition through the following steps: 1) Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the goods or services are separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation. 3) Determination of the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's contracts as of July 31, 2019 contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. 4) Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct goods or services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. 5) Recognition of revenue when, or as, we satisfy a performance obligation The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Performance Obligations Satisfied Over Time We recognize revenue on agreements for the sale of customized goods for use in commercial aerospace and military electronics on an over time basis. Commercial Aerospace and Defense Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer, except for one long-term agreement which provides a contract for two specific parts if the ship date is within 21 days. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. Parts manufactured for customers in our aerospace and defense product revenue stream must be built to certain specifications that are then qualified by the customer. Due to the proprietary nature of our custom-built products designed for a specific use by our aerospace and defense customers, control is considered to be with the customer as the products are finalized and placed into finished goods. Goods within this revenue stream do not provide simultaneous receipt and benefit to the customer. The goods are controlled by our customers once the finished parts are created. The customers prevent any alternative use of the asset and an enforceable right to payment does exist. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these over-time contracts vary, but are generally based on ship date. Control is transferred as products are completed and closed to finished goods. Product fees and engineering and design services For product fees along with engineering and design services, transfer of control is determined by the revenue stream of the associated product. Percentage-of-completion revenue recognition is utilized when revenue recognized exceeds the amount billed to the customer for any project-related services, utilizing labor as the input method. Performance Obligations Satisfied at a Point in Time We recognize revenue on agreements for the sale of customized goods for use in the industrial and commercial market on point in time basis. Industrial and Commercial Parts Performance obligations under long-term agreements are considered to be under contract at the time that authorization to ship has been obtained from the customer. Performance obligations under standalone purchase orders are considered to be under contract at the time that the purchase order is received. For our commercial customers, control of the underlying product design is retained by Torotel, therefore the products are considered in our control until the moment of shipment. Also, upon shipment the customers have an obligation to pay for the asset and we have an enforceable right to payment. We provide for potential losses on any of these agreements when it is probable that we will incur the loss. Our billing terms for these point in time sales are generally based on ship date. Control is transferred as products are shipped to the customers. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs do not have a material impact to the financial statements. No impairment losses were recognized in the three months ending July 31, 2019 and 2018, relating to receivables or contract assets arising from contracts with customers. Disaggregation of Revenue The following tables summarize revenue from contracts with customers for the three months ended July 31, 2019 and 2018. Three Months Ended July 31, 2019 July 31, 2018 Markets Commercial Aerospace $ 2,410,000 $ 1,760,000 Defense 3,823,000 2,277,000 Industrial 113,000 436,000 Total consolidated net sales $ 6,346,000 $ 4,473,000 Three Months Ended July 31, 2019 July 31, 2018 Product Line Magnetic components $ 3,254,000 $ 2,157,000 Potted coil assembly 1,519,000 1,279,000 Electro-mechanical assemblies 1,573,000 757,000 Large transformers — 280,000 Total consolidated net sales $ 6,346,000 $ 4,473,000 Three Months Ended July 31, 2019 July 31, 2018 Geography Domestic $ 6,098,000 $ 4,094,000 Foreign 248,000 379,000 Total consolidated net sales $ 6,346,000 $ 4,473,000 Contract balances All contract asset balances relate to customer contracts entered into during the fiscal year ending April 30, 2020. We have no contract liabilities other than customer deposits which represent prepaid consideration for contracts with customers. There have been no significant adjustments to contract asset balances related to contract modifications. We have certain customers totaling revenue of $1,592,000 with variable payment terms related to discounts in the amount of $12,000 in the fiscal year ending April 30, 2020. Remaining performance obligation As of July 31, 2019, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $5,043,000. The balance of unsatisfied performance obligations excludes contracts with original maturities of one year or less. We expect to recognize revenue as we satisfy our remaining performance obligations. Total remaining performance obligation to be recognized in the fiscal year ending April 30, 2020 is expected to be $4,298,000. Total remaining performance obligation to be recognized in the fiscal year ending April 30, 2021 is expected to be $745,000.

LEASES

LEASES	3 Months Ended
	Jul. 31, 2019
LEASES
LEASES	NOTE 5—LEASES The Company adopted ASC 842 on May 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the three months ended July 31, 2018 or as of April 30, 2019. Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company leases buildings and equipment under operating and finance leases. The majority of the Company’s operations are conducted in premises occupied under lease agreements with initial base terms ranging from 5 to 15 years, with certain leases containing options to extend the leases for up to an additional 10 years. The Company typically does not believe that exercise of the renewal options is reasonably assured at the inception of the lease agreements and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals or contingent escalating rentals based on the Consumer Price Index. Operating lease ROU assets and lease liabilities were recognized at commencement date based on the present value of minimum lease payments over the remaining lease term. The minimum lease payments include base rent payments. The Company’s leases have remaining lease terms of approximately 1 year to 8 years, which may include the option to extend the lease when it is reasonably certain the Company will exercise that option. The present value of the lease payments is calculated using the incremental borrowing rate for operating leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Operating lease expense is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees. The Company elected the practical expedient to not separate lease and non-lease components and also elected the short-term practical expedient for all leases that qualify. As a result, the Company will not recognize ROU assets or liabilities for short-term leases that qualify for the short-term practical expedient, but instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. As a result of adopting ASC 842, the Company’s consolidated balance sheet includes additional operating ROU lease assets and total operating lease liabilities of $2,214,000 and $2,420,000, respectively, at July 31, 2019. The initial measurement occurring on May 1, 2019, resulted in operating lease ROU assets of $2,267,000, finance lease ROU assets of $98,000, current operating lease liabilities of $380,000, current finance lease liabilities of $73,000, noncurrent operating lease liabilities of $2,093,000, and noncurrent finance lease liabilities of $25,000. The difference of $206,000 between the ROU assets and the lease liabilities results from a reclassification of deferred rent to the operating lease ROU asset of $206,000. The following table provides the operating and finance ROU assets and lease liabilities: Balance Sheet Classification July 31, 2019 Assets Operating lease right-of-use assets Operating right-of-use assets $ 2,214,000 Finance lease right-of-use assets Property, plant and equipment, net 82,000 Total leased assets $ 2,296,000 Liabilities Current Operating lease liabilities Current maturities of operating lease liabilities $ 378,000 Finance lease liabilities Current maturities of finance lease liabilities 73,000 Noncurrent Operating lease liabilities Operating lease liabilities, less current maturities 2,042,000 Finance lease liabilities Finance lease liabilities, less current maturities 9,000 Total lease liabilities $ 2,502,000 The components of lease expense were as follows: July 31, 2019 Operating lease expense $ 112,000 Finance lease expense Amortization of right-to-use assets 10,000 Interest on lease liabilities 3,000 Total finance lease expense 13,000 Total lease expense $ 125,000 The supplemental components of cash flows were as follows: July 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 112,000 Financing cash flows from finance leases 16,000 Total cash paid for amounts included in the measurement of lease liabilities $ 128,000 The following table respresents the weighted-average remaining lease term and discount rate as of July 31, 2019: July 31, 2019 Weighted Average Weighted Average Remaining Discount Lease Term and Discount Rate Lease Term (years) Rate Operating leases 7.24 Finance leases 1.12 Future minimum lease payments on the amended operating lease and future minimum finance lease payments as of July 31, 2019 are as follows: Finance Lease Operating Lease Fiscal Years Ending April 30, Payments Payments 2020 $ 55,000 $ 342,000 2021 27,000 418,000 2022 — 430,000 2023 — 442,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 82,000 3,357,000

FINANCING AGREEMENTS

FINANCING AGREEMENTS	3 Months Ended
	Jul. 31, 2019
FINANCING AGREEMENTS
FINANCING AGREEMENTS	NOTE 6—FINANCING AGREEMENTS On October 19, 2018, Torotel entered into three new business loan agreements (the “financing agreements”) with Cornerstone Bank (the “Bank”). The financing agreements provide for an asset-backed revolving line of credit, a guidance line of credit, and a real estate term loan. A summary of the notes issued under the financing agreements is provided below: July 31, 2019 April 30, 2019 6.25% asset-based revolving line of credit with a maturity date of October 19, 2019 $ 636,000 $ 975,000 6.25% guidance line of credit with a maturity date of October 19, 2019 - 54,000 5.35% mortgage note payable in monthly installments of $5,573, including interest, with final payment of $690,829 due October 19, 2023 789,000 795,000 5.50% equipment term loan note payable in monthly installments of $1,034, including interest, with final payment of $1,034 due on May 13, 2024 52,000 - Capital lease obligations (see Note 5) - 98,000 Total long-term debt 1,477,000 1,922,000 Less current installments 666,000 1,121,000 Long-term debt, excluding current installments $ 811,000 $ 801,000 The asset-based revolving line of credit is intended to be used for working capital purposes and has a capacity of $1,500,000. The asset-based revolving line of credit is renewable annually upon mutual agreement of Torotel and the Bank. The Company intends to renew the asset-based revolving line of credit. The associated interest rate is equal to the greater of the floating Cornerstone Bank Corporate Base Rate (6.25% as of July 31, 2019) or a floor of 5% (as listed above). Monthly repayments of interest only are required under the asset-based revolving line of credit promissory note with the principal due at maturity. The borrowing base of the revolving line of credit is limited to 80% of eligible accounts receivable, plus 50% of eligible inventory, plus 80% of eligible equipment. This asset-based revolving line of credit is cross collateralized and cross defaulted with all other financing agreements of Torotel with the Bank. Pursuant to a Commercial Security Agreement dated October 19, 2018, between Torotel and the Bank (the “Commercial Security Agreement”), which was entered into in connection with the financiang agreements, the asset-based revolving line of credit is secured by a first lien on all business assets of Torotel. Under the revolving line of credit, if the aggregate principal amount of the outstanding advances exceeds the applicable borrowing base, Torotel must pay the Bank an amount equal to the difference between the outstanding principal balance of the revolving line of credit and the borrowing base. The equipment note was a guidance line of credit to be used for equipment purchases and had a capacity of $250,000. On May 13, 2019, Torotel converted the guidance line of credit relating to the equipment note into an equipment term loan. The equipment term loan is in the principal amount of $54,000 and contains a 5-year term with a 5-year amortization period, with the balance at maturity on May 13, 2024. The associated interest rate is fixed at 5.50%. Monthly repayments of approximately $1,034, consisting of both interest and principal, are required. This final payment of approximately $1,034 is due on the maturity date. This equipment term loan is cross collateralized and cross defaulted with the other financing agreements of Torotel 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. The real estate term loan is in the principal amount of $815,000 and contains a 5-year term with a 20-year amortization period, with the balance at maturity on October 19, 2023. The associated interest rate is fixed at 5.35%. Monthly repayments of approximately $5,573, consisting of both interest and principal, are required. The final payment of approximately $690,829 is due on the maturity date. This real estate term loan is cross collateralized and cross defaulted with the other financing agreements. The real estate term loan is secured by a first lien priority real estate mortgage on the property located at 620 North Lindenwood Drive in Olathe, Kansas pursuant to the Commercial Security Agreement. The financing agreements contain customary representations, warranties, and covenants of Torotel for the benefit of the Bank, as well as customary default provisions. Other than the borrowing base limitations under the asset-based revolving line of credit, none of the financing agreements requires Torotel to comply with any financial covenants. Prepayments are allowed without penalty under all of the financing agreements. Irrevocable Standby Letter of Credit Under the terms of a lease amendment for its manufacturing facility located in Olathe, Kansas, Torotel provided the landlord an irrevocable standby letter of credit in the original amount of $300,000 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 $ 225,000 January 1, 2021 75,000 150,000 January 1, 2022 75,000 75,000 January 1, 2023 75,000 -

INCOME TAXES

INCOME TAXES	3 Months Ended
	Jul. 31, 2019
INCOME TAXES
INCOME TAXES	NOTE 7—INCOME TAXES The Company incurred income tax expense of $111,000 during the three months ended July 31, 2019 with an effective tax rate of 19.9%, compared to income tax benefit of $15,000 during the three months ended July 31, 2018. As of July 31, 2019, the federal tax returns for the fiscal years ended 2017 through 2019 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. As of July 31, 2019, we recorded no accrued interest or penalties related to uncertain tax positions. We expect no significant change in the amount of unrecognized tax benefit, accrued interest or penalties within the next twelve months.

RESTRICTED STOCK AGREEMENTS

RESTRICTED STOCK AGREEMENTS	3 Months Ended
	Jul. 31, 2019
RESTRICTED STOCK AGREEMENTS
RESTRICTED STOCK AGREEMENTS	NOTE 8—RESTRICTED STOCK AGREEMENTS 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 was $27,000 for each of the three months ended July 31, 2019 and 2018. Restricted stock activity for each three month period through July 31 is summarized as follows: 2019 2018 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 730,000 $ 0.740 Granted — — — — Forfeited — — — — Outstanding at July 31 730,000 $ 0.740 730,000 $ 0.740

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	3 Months Ended
	Jul. 31, 2019
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY	NOTE 9—STOCKHOLDERS' EQUITY The shares of common stock outstanding as each three month period ended as of July 31 are summarized as follows: 2019 2018 Balance, May 1 5,995,750 5,995,750 Shares released from treasury for restricted stock grants — — Newly issued shares for restricted stock grants — — Shares reverted to treasury for restricted stock forfeitures — — Balance, July 31 5,995,750 5,995,750

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Jul. 31, 2019
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 10—EARNINGS PER SHARE 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 (loss) per common share were computed as follows: Three Months Ended July 31, 2019 July 31, 2018 Net income (loss) $ 444,000 $ (43,000) Amounts allocated to participating securities (nonvested restricted shares) (54,000) — Net income (loss) attributable to common shareholders $ 390,000 $ (43,000) Basic weighted average common shares 5,265,750 5,265,750 Earnings (loss) per share attributable to common shareholders: Basic earnings (loss) per share $ 0.07 $ (0.01) 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.

CONTRACT ASSETS

CONTRACT ASSETS	3 Months Ended
	Jul. 31, 2019
CONTRACT ASSETS
CONTRACT ASSETS	NOTE 11—CONTRACT ASSETS For each of our contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Contract assets consist of unbilled receivables typically resulting from revenue recognition under contracts when either control has passed to the customer but the product has not yet shipped or the percentage-of-completion of revenue recognition is utilized when revenue recognized exceeds the amount billed to the customer for any project-related services, utilizing labor as the input method. July 31, 2019 April 30, 2019 Contract assets $ 1,173,000 $ 1,104,000 Contract assets increased $69,000 between April 30, 2019 and July 31, 2019 due to increased customer contracts, and relates to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for which we have not yet billed.

CUSTOMER DEPOSITS

CUSTOMER DEPOSITS	3 Months Ended
	Jul. 31, 2019
CUSTOMER DEPOSITS
CUSTOMER DEPOSITS	NOTE 12 — 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 performance obligations are satisfied in accordance with our revenue recognition policy. As of July 31, 2019 and April 30, 2019, we had approximately $26,000 and $24,000, respectively, in customer deposits related to these arrangements.

CONCENTRATIONS OF CREDIT RISK

CONCENTRATIONS OF CREDIT RISK	3 Months Ended
	Jul. 31, 2019
CONCENTRATIONS OF CREDIT RISK
CONCENTRATIONS OF CREDIT RISK	NOTE 13 — 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.

LEASED PROPERTY

LEASED PROPERTY	3 Months Ended
	Jul. 31, 2019
LEASED PROPERTY
LEASES	NOTE 14 – LEASED PROPERTY The Company adopted ASC 842 on May 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the three months ended July 31, 2018 or as of April 30, 2019. Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. On February 15, 2019, a lease agreement became effective for tenant occupancy of the 23,924 square foot building owned by Torotel. Monthly installment payments of $11,500 began to be paid to us on March 1, 2019. The lease is for a sixty-two month term with monthly payments escalating periodically from $11,500 to $15,500. The tenant has the right to elect to purchase the building. The election to purchase must be made within the lease term or Torotel is not prohibited from placing the building up for public sale. Future minimum lease payments on the operating lease as of July 31, 2019 are as follows: Operating Lease Fiscal Years Ending April 30, Payments 2020 $ 107,500 2021 154,000 2022 166,000 2023 178,000 2024 124,000 Total $ 729,500 Torotel’s leased property (where Torotel is the leesor) by asset category was as follows: July 31, 2019 April 30, 2019 Land $ 265,000 $ 265,000 Buildings and improvements 1,000,000 1,000,000 1,265,000 1,265,000 Less accumulated depreciation (672,000) (659,000) Net leased property $ 593,000 $ 606,000 Depreciation resulting from the leased property amounted to $13,000 during the three months ending July 31, 2019.

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Jul. 31, 2019
INVENTORIES
Table summarizing the components of inventories	July 31, 2019 April 30, 2019 Raw materials $ 1,786,000 $ 1,723,000 Work in process 1,345,000 1,052,000 Finished goods 125,000 279,000 $ 3,256,000 $ 3,054,000

REVENUE (Tables)

REVENUE (Tables)	3 Months Ended
	Jul. 31, 2019
REVENUE
Schedule of disaggregation of revenue	Three Months Ended July 31, 2019 July 31, 2018 Markets Commercial Aerospace $ 2,410,000 $ 1,760,000 Defense 3,823,000 2,277,000 Industrial 113,000 436,000 Total consolidated net sales $ 6,346,000 $ 4,473,000 Three Months Ended July 31, 2019 July 31, 2018 Product Line Magnetic components $ 3,254,000 $ 2,157,000 Potted coil assembly 1,519,000 1,279,000 Electro-mechanical assemblies 1,573,000 757,000 Large transformers — 280,000 Total consolidated net sales $ 6,346,000 $ 4,473,000 Three Months Ended July 31, 2019 July 31, 2018 Geography Domestic $ 6,098,000 $ 4,094,000 Foreign 248,000 379,000 Total consolidated net sales $ 6,346,000 $ 4,473,000

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Jul. 31, 2019
LEASES
Schedule of operating and finance ROU assets and lease liabilities	Balance Sheet Classification July 31, 2019 Assets Operating lease right-of-use assets Operating right-of-use assets $ 2,214,000 Finance lease right-of-use assets Property, plant and equipment, net 82,000 Total leased assets $ 2,296,000 Liabilities Current Operating lease liabilities Current maturities of operating lease liabilities $ 378,000 Finance lease liabilities Current maturities of finance lease liabilities 73,000 Noncurrent Operating lease liabilities Operating lease liabilities, less current maturities 2,042,000 Finance lease liabilities Finance lease liabilities, less current maturities 9,000 Total lease liabilities $ 2,502,000
Schedule of lease expense	July 31, 2019 Operating lease expense $ 112,000 Finance lease expense Amortization of right-to-use assets 10,000 Interest on lease liabilities 3,000 Total finance lease expense 13,000 Total lease expense $ 125,000
Schedule of supplemental components of cash flow	July 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 112,000 Financing cash flows from finance leases 16,000 Total cash paid for amounts included in the measurement of lease liabilities $ 128,000
Schedule of weighted-average remaining lease term and discount rate	July 31, 2019 Weighted Average Weighted Average Remaining Discount Lease Term and Discount Rate Lease Term (years) Rate Operating leases 7.24 Finance leases 1.12
Schedule of Future minimum lease payments on the amended operating lease and future minimum finance lease payments	Finance Lease Operating Lease Fiscal Years Ending April 30, Payments Payments 2020 $ 55,000 $ 342,000 2021 27,000 418,000 2022 — 430,000 2023 — 442,000 2024 — 452,000 2025 — 456,000 2026 — 467,000 2027 — 350,000 82,000 3,357,000

FINANCING AGREEMENTS (Tables)

FINANCING AGREEMENTS (Tables)	3 Months Ended
	Jul. 31, 2019
FINANCING AGREEMENTS
Summary of the notes within the financing agreement	July 31, 2019 April 30, 2019 6.25% asset-based revolving line of credit with a maturity date of October 19, 2019 $ 636,000 $ 975,000 6.25% guidance line of credit with a maturity date of October 19, 2019 - 54,000 5.35% mortgage note payable in monthly installments of $5,573, including interest, with final payment of $690,829 due October 19, 2023 789,000 795,000 5.50% equipment term loan note payable in monthly installments of $1,034, including interest, with final payment of $1,034 due on May 13, 2024 52,000 - Capital lease obligations (see Note 5) - 98,000 Total long-term debt 1,477,000 1,922,000 Less current installments 666,000 1,121,000 Long-term debt, excluding current installments $ 811,000 $ 801,000
Schedule of letter of credit outstanding balance	Date of Reduction Amount of Reduction Balance of Letter of Credit January 1, 2020 $ 75,000 $ 225,000 January 1, 2021 75,000 150,000 January 1, 2022 75,000 75,000 January 1, 2023 75,000 -

RESTRICTED STOCK AGREEMENTS (Ta

RESTRICTED STOCK AGREEMENTS (Tables)	3 Months Ended
	Jul. 31, 2019
RESTRICTED STOCK AGREEMENTS
Summary of restricted stock activity	2019 2018 Restricted Weighted Restricted Weighted Shares Average Shares Average Under Grant Under Grant Option Price Option Price Outstanding at May 1 730,000 $ 0.740 730,000 $ 0.740 Granted — — — — Forfeited — — — — Outstanding at July 31 730,000 $ 0.740 730,000 $ 0.740

STOCKHOLDERS' EQUITY (Tables)

STOCKHOLDERS' EQUITY (Tables)	3 Months Ended
	Jul. 31, 2019
STOCKHOLDERS' EQUITY
Summary of changes in shares of common stock outstanding	2019 2018 Balance, May 1 5,995,750 5,995,750 Shares released from treasury for restricted stock grants — — Newly issued shares for restricted stock grants — — Shares reverted to treasury for restricted stock forfeitures — — Balance, July 31 5,995,750 5,995,750

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Jul. 31, 2019
EARNINGS PER SHARE
Schedule of basic earnings per common share	Three Months Ended July 31, 2019 July 31, 2018 Net income (loss) $ 444,000 $ (43,000) Amounts allocated to participating securities (nonvested restricted shares) (54,000) — Net income (loss) attributable to common shareholders $ 390,000 $ (43,000) Basic weighted average common shares 5,265,750 5,265,750 Earnings (loss) per share attributable to common shareholders: Basic earnings (loss) per share $ 0.07 $ (0.01)

CONTRACT ASSETS (Tables)

CONTRACT ASSETS (Tables)	3 Months Ended
	Jul. 31, 2019
CONTRACT ASSETS
Schedule of contract assets	July 31, 2019 April 30, 2019 Contract assets $ 1,173,000 $ 1,104,000

LEASED PROPERTY (Tables)

LEASED PROPERTY (Tables)	3 Months Ended
	Jul. 31, 2019
LEASED PROPERTY
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]	Operating Lease Fiscal Years Ending April 30, Payments 2020 $ 107,500 2021 154,000 2022 166,000 2023 178,000 2024 124,000 Total $ 729,500
Schedule of Property Subject to or Available for Operating Lease [Table Text Block]	July 31, 2019 April 30, 2019 Land $ 265,000 $ 265,000 Buildings and improvements 1,000,000 1,000,000 1,265,000 1,265,000 Less accumulated depreciation (672,000) (659,000) Net leased property $ 593,000 $ 606,000

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Jul. 31, 2019	Apr. 30, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accumulated deficit	$ (7,555,000)	$ (7,999,000)

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New Accounting Guidance (Details) - USD ($)	Jul. 31, 2019	May 01, 2019
New Accounting Pronouncements or Change in Accounting Principle
Operating Right-of-use assets, net	$ 2,214,000
Restatement Adjustment
New Accounting Pronouncements or Change in Accounting Principle
Lease liabilities	206,000
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle
Lease liabilities	2,420,000
Operating Right-of-use assets, net	$ 2,214,000	$ 2,267,000

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	Jul. 31, 2019	Apr. 30, 2019
INVENTORIES
Raw materials	$ 1,786,000	$ 1,723,000
Work in process	1,345,000	1,052,000
Finished goods	125,000	279,000
Inventories	$ 3,256,000	$ 3,054,000

REVENUE - Narrative (Details)

REVENUE - Narrative (Details) - USD ($)	Jul. 31, 2019	Apr. 30, 2019	Jul. 31, 2018
Assets
Contract assets	$ 1,173,000	$ 1,104,000	$ 1,104,000
Equity
Accumulated deficit	$ (7,555,000)	$ (7,999,000)

REVENUE - Disaggregation of Rev

REVENUE - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
Disaggregation of Revenue
Net sales	$ 6,346,000	$ 4,473,000
Domestic
Disaggregation of Revenue
Net sales	6,098,000	4,094,000
Foreign
Disaggregation of Revenue
Net sales	248,000	379,000
Commercial Aerospace
Disaggregation of Revenue
Net sales	2,410,000	1,760,000
Defense
Disaggregation of Revenue
Net sales	3,823,000	2,277,000
Industrial
Disaggregation of Revenue
Net sales	113,000	436,000
Magnetic components
Disaggregation of Revenue
Net sales	3,254,000	2,157,000
Potted coil assembly
Disaggregation of Revenue
Net sales	1,519,000	1,279,000
Electro-mechanical assemblies
Disaggregation of Revenue
Net sales	$ 1,573,000	757,000
Large transformers
Disaggregation of Revenue
Net sales		$ 280,000

REVENUE - Contract Balances (De

REVENUE - Contract Balances (Details) - USD ($)	Apr. 30, 2020	Jul. 31, 2019	Apr. 30, 2019
REVENUE
Contract liabilities		$ 0
Revenue with variable payment terms	$ 1,592,000	69,000	$ 69,000
Revenue discounts related to payment terms		$ 12,000

REVENUE - Remaining Performance

REVENUE - Remaining Performance Obligations (Details)	Jul. 31, 2019USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Amount of remaining performace obligations	$ 5,043,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Amount of remaining performace obligations	$ 4,298,000
Remaining performance obligation	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Amount of remaining performace obligations	$ 745,000
Remaining performance obligation	24 months

LEASES (Details)

LEASES (Details) - USD ($)	3 Months Ended
	Jul. 31, 2019	May 01, 2019
Leases
Lease, Practical Expedients, Package [true false]	false
Option to extend term	P10Y
Operating Right-of-use assets, net	$ 2,214,000
Finance lease, Right-of-Use	82,000
Operating Lease, Liability, Current	378,000
Finance Lease, Liability, Current	73,000
Operating Lease, Liability, Noncurrent	2,042,000
Finance Lease, Liability, Noncurrent	9,000
Restatement Adjustment
Leases
Lease liabilities	206,000
Deferred rent	206,000
Operating lease liability	206,000
ASU 2016-02
Leases
Operating Right-of-use assets, net	2,214,000	$ 2,267,000
Lease liabilities	2,420,000
Finance lease, Right-of-Use		98,000
Operating Lease, Liability, Current		380,000
Finance Lease, Liability, Current		73,000
Operating Lease, Liability, Noncurrent		2,093,000
Finance Lease, Liability, Noncurrent		$ 25,000
Operating lease liability	$ 2,420,000
Minimum
Leases
Initial lease agreement term	5 years
Remaining lease term	1 year
Maximum
Leases
Initial lease agreement term	15 years
Remaining lease term	8 years

LEASES - Operating and finance

LEASES - Operating and finance ROU assets and lease liabilities (Details)	Jul. 31, 2019USD ($)
LEASES
Operating Right-of-use assets, net	$ 2,214,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Operating Right-of-use assets, net
Finance Lease, Right-of-Use Asset	$ 82,000
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Property, Plant and Equipment, Net
Total leased assets	$ 2,296,000
Operating Lease, Liability, Current	$ 378,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	is-gaap:OperatingLeaseLiabilityCurrent
Finance Lease, Liability, Current	$ 73,000
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Finance Lease, Liability, Current
Operating Lease, Liability, Noncurrent	$ 2,042,000
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Operating Lease, Liability, Noncurrent
Finance Lease, Liability, Noncurrent	$ 9,000
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Finance Lease, Liability, Noncurrent
Total lease liabilities	$ 2,502,000

LEASES - Components of lease ex

LEASES - Components of lease expense (Details)	3 Months Ended
	Jul. 31, 2019USD ($)
LEASES
Operating lease expense	$ 112,000
Amortization of right-to-use assets	10,000
Interest on lease liabilities	3,000
Total finance lease expense	13,000
Total lease expense	$ 125,000

LEASES - Supplemental component

LEASES - Supplemental components of cash flow (Details)	3 Months Ended
	Jul. 31, 2019USD ($)
LEASES
Operating cash flows from operating leases	$ 112,000
Financing cash flows from finance leases	16,000
Total cash paid for amounts included in the measurement of leases	$ 128,000
Weighted average remaining lease term, operating leases	7 years 2 months 27 days
Weighted average remaining lease term, finance leases	1 year 1 month 13 days
Weighted average discount rate, operating leases	4.51%
Weighted average discount rate, finance leases	5.45%

LEASES - Future minimum lease p

LEASES - Future minimum lease payments (Details)	Jul. 31, 2019USD ($)
Operating lease payments
2020	$ 342,000
2021	418,000
2022	430,000
2023	442,000
2024	452,000
2025	456,000
2026	467,000
2027	350,000
Total	3,357,000
Finance lease payments
2020	55,000
2021	27,000
Total	$ 82,000

FINANCING AGREEMENTS (Details)

FINANCING AGREEMENTS (Details)	Oct. 19, 2018agreement
FINANCING AGREEMENTS
Number of new business loan agreements	3

FINANCING AGREEMENTS - Debt Tab

FINANCING AGREEMENTS - Debt Table (Details) - USD ($)	May 13, 2019	Jul. 31, 2019	Apr. 30, 2019
Long-term indebtedness
Total long-term debt		$ 1,477,000	$ 1,922,000
Less current installments		666,000	1,121,000
Long-term debt, excluding current installments		811,000	801,000
Capital Leases
Long-term indebtedness
Capital lease obligations			98,000
Asset Based Line Of Credit 6.25 Percent Due October 2019 | Line of Credit
Long-term indebtedness
Total long-term debt		$ 636,000	975,000
Rate		6.25%
Maximum borrowing		$ 1,500,000
Asset Based Line Of Credit 6.25 Percent Due October 2019 | Line of Credit | Prime Rate
Long-term indebtedness
Rate		6.25%
Asset Based Line Of Credit 6.25 Percent Due October 2019 | Line of Credit | Prime Rate | Minimum
Long-term indebtedness
Rate		5.00%
Guidance Line Of Credit 6.25 Percent Due October 2019 [Member] | Line of Credit
Long-term indebtedness
Total long-term debt			54,000
Rate		6.25%
Maximum borrowing		$ 250,000
Mortgage note payable 5.35 percent due October 2023 | Mortgage note payable
Long-term indebtedness
Total long-term debt		789,000	$ 795,000
Notes Payable		$ 815,000
Rate		5.35%
Monthly installments		$ 5,573
Final payment		$ 690,829
Real estate term loan period		5 years
Amortization period		20 years
Term Loan Note Payable 5.50 Percent Due May 2024
Long-term indebtedness
Total long-term debt		$ 52,000
Term Loan Note Payable 5.50 Percent Due May 2024 | Note Payable
Long-term indebtedness
Total long-term debt	$ 54,000
Rate	5.50%	5.50%
Monthly installments	$ 1,034	$ 1,034
Final payment	$ 1,034	$ 1,034
Term	5 years
Amortization period	5 years

FINANCING AGREEMENTS - Irrevoca

FINANCING AGREEMENTS - Irrevocable Standby Letters of Credit (Details) - Irrevocable Standby Letter of Credit - USD ($)	Jan. 01, 2023	Jan. 01, 2022	Jan. 01, 2021	Jan. 01, 2020	Jul. 31, 2019
Long-term indebtedness
Principal amount					$ 300,000
Forecast
Long-term indebtedness
Amount of Reduction	$ 75,000	$ 75,000	$ 75,000	$ 75,000
Balance of Letter of Credit		$ 75,000	$ 150,000	$ 225,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
INCOME TAXES
Income tax expense (benefit)	$ 111,000	$ (15,000)
Effective Income Tax Rate, Percent	19.90%
Expected change in the amount of unrecognized tax benefit, accrued interest or penalties within the next twelve months	$ 0

RESTRICTED STOCK AGREEMENTS (De

RESTRICTED STOCK AGREEMENTS (Details)	Sep. 21, 2016employeeshares	Jul. 31, 2019USD ($)$ / sharesshares	Jul. 31, 2018USD ($)$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award
Stock compensation cost amortized | $		$ 27,000	$ 27,000
Restricted Stock
Restricted Shares Under Option
Outstanding at beginning of period		730,000	730,000
Granted		0	0
Forfeited		0	0
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	$ 0.740
Granted, Weighted Average Grant Price (in dollars per share) | $ / shares		0	0
Forfeited, Weighted Average Grant Price (in dollars per share) | $ / shares		0	0
Outstanding at end of period, Weighted Average Grant Price (in dollars per share) | $ / shares		$ 0.740	$ 0.740
2016 Restricted Stock Grants | Restricted Stock | 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 | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Restriction period of awards	5 years
Stock Award Plan | Restricted Stock | 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

STOCKHOLDERS' EQUITY (Details)

STOCKHOLDERS' EQUITY (Details) - shares	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
Increase (Decrease) in Stockholders' Equity
Balance beginning of year (in shares)	5,995,750	5,995,750
Shares released from treasury for restricted stock grants	0	0
Balance end of year (in shares)	5,995,750	5,995,750

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended
	Jul. 31, 2019	Jul. 31, 2018
EARNINGS PER SHARE
Net income (loss)	$ 444,000	$ (43,000)
Amounts allocated to participating securities (nonvested restricted shares)	(54,000)
Net income (loss) attributable to common shareholders	$ 390,000	$ (43,000)
Basic weighted average common shares	5,265,750	5,265,750
Earnings (loss) per share attributable to common shareholders:
Basic earnings (loss) per share	$ 0.07	$ (0.01)

CONTRACT ASSETS (Details)

CONTRACT ASSETS (Details) - USD ($)	Apr. 30, 2020	Jul. 31, 2019	Apr. 30, 2019	Jul. 31, 2018
CONTRACT ASSETS
Contract assets		$ 1,173,000	$ 1,104,000	$ 1,104,000
Increase in contract assets	$ 1,592,000	69,000	$ 69,000
Decrease in contract liabilities		$ 0

CUSTOMER DEPOSITS (Details)

CUSTOMER DEPOSITS (Details) - USD ($)	Jul. 31, 2019	Apr. 30, 2019
CUSTOMER DEPOSITS
Customer deposits	$ 26,000	$ 24,000

CONCENTRATIONS OF CREDIT RISK (

CONCENTRATIONS OF CREDIT RISK (Details)	3 Months Ended
	Jul. 31, 2019USD ($)
CONCENTRATIONS OF CREDIT RISK
Losses in the cash accounts	$ 0

LEASED PROPERTY (Details)

LEASED PROPERTY (Details)	Mar. 15, 2019USD ($)	Mar. 01, 2019USD ($)	Jul. 31, 2019USD ($)	Apr. 30, 2019USD ($)	Feb. 15, 2019ft²
LEASED PROPERTY
Square feet (in area) | ft²					23,924
Monthly base rate		$ 11,500
Number of months for which monthly base rate is fixed	62 months
Capital Leases
2020			$ 107,500
2021			154,000
2022			166,000
2023			178,000
2024			124,000
Total			729,500
Leased property by asset category
Leased property, gross			1,265,000	$ 1,265,000
Less accumulated depreciation			(672,000)	(659,000)
Net leased property			593,000	606,000
Depreciation resulting from the leased property			13,000
Land.
Leased property by asset category
Leased property, gross			265,000	265,000
Buildings and Improvements.
Leased property by asset category
Leased property, gross			$ 1,000,000	$ 1,000,000
Minimum
LEASED PROPERTY
Monthly base rate	$ 11,500
Maximum
LEASED PROPERTY
Monthly base rate	$ 15,500