Significant Accounting Policies (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation – Consolidated and Combined Financial Statements
The Company’s financial statements for periods through the Separation are combined financial statements prepared on a “carve-out” basis as discussed below. The Company’s financial statements for the period from October 7, 2022 through June 30, 2023 are consolidated financial statements based on the reported results of M-tron Industries, Inc. as a standalone company.
The Consolidated and Combined Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented.
Basis of Presentation – Prior to Separation
Through the Separation date, the Company's combined financial statements are prepared on a "carve-out" basis. The Consolidated and Combined Financial Statements have been derived from the consolidated financial statements and accounting records of LGL Group in conformity with GAAP.
The Consolidated and Combined Financial Statements include the accounts of the Company and all of its majority-owned subsidiaries. Intercompany transactions and accounts have been eliminated. Transactions between the Company and LGL Group have been included in these Consolidated and Combined Financial Statements. The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Consolidated and Combined Statements of Cash Flows as Net transfers from LGL Group, Inc. For additional information, see Note C – Related Party Transactions.
The debt and associated interest expense in these Consolidated and Combined Financial Statements relate to third-party borrowings under a revolving credit agreement specifically attributable to legal obligations of the Company.
The Consolidated and Combined Statements of Operations include an allocation for certain corporate and shared service functions historically provided by LGL Group, including, but not limited to, executive oversight, accounting, tax, and other shared services. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated sales or other measures considered to be a reasonable reflection of the historical utilization levels of these services. Management believes the assumptions underlying our Consolidated and Combined Financial Statements, including the assumptions regarding the allocation of general corporate expenses from LGL Group, are reasonable. Nevertheless, our Consolidated and Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect our results of operations, financial position and cash flows, had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.
During the periods presented in these Consolidated and Combined Financial statements, the Company’s income tax expense has been included in LGL Group’s income tax returns. Income tax expense contained in the Consolidated and Combined Financial Statements is presented on a separate return basis, as if the Company had filed its own income tax returns.
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Earnings Per Share, Policy [Policy Text Block] | Earnings per Share
Earnings per basic share is computed based on the weighted-average number of shares of common stock outstanding. Earnings per diluted share include the weighted-average effect of dilutive restricted stock and options on the weighted-average shares outstanding.
Earnings per share through the Distribution Date was calculated based on the 2,676,469 shares of the Company's common stock distributed to LGL Group stockholders on October 7, 2022. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. After the Separation, actual outstanding shares are used to calculate both basic and diluted weighted-average number of shares of common stock outstanding.
The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022:
Options to purchase 9,710 shares were excluded from the above calculation for the three and six months ended June 30, 2023 because they would have been anti-dilutive.
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Fiscal Period, Policy [Policy Text Block] | Interim Financial Statements
The Consolidated and Combined Financial Statements as of and for the three and six months ended June 30, 2023 and 2022 are unaudited. These Consolidated and Combined Financial Statements should be read in conjunction with the audited Consolidated and Combined Financial Statements and notes thereto for the fiscal years ended December 31, 2022 and 2021, contained within the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2023.
In the opinion of management, the accompanying Consolidated and Combined Financial Statements reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods.
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates
The preparation of the Consolidated and Combined Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
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Research and Development Expense, Policy [Policy Text Block] | Research and Development Costs
Research and development costs are charged to operations as incurred. Such costs were approximately $1,064,000 and $981,000 for the six months ended June 30, 2023 and 2022, respectively, and are included within engineering, selling and administrative expenses on the Consolidated and Combined Statements of Operations.
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Revenue from Contract with Customer [Policy Text Block] | Revenue Recognition
The Company recognizes revenue from the sale of its products in accordance with the criteria in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which are: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company meets these conditions upon the Company’s satisfaction of the performance obligation, usually at the time of shipment to the customer, because control passes to the customer at that time. Our standard terms for customers are net due within 30 days, with a few exceptions, none regularly exceeding 60 days.
The Company provides disaggregated revenue details by geographic markets in Note H – Domestic and Foreign Revenues.
The Company offers a limited right of return and/or authorized price protection provisions in its agreements with certain electronic component distributors who resell the Company's products to original equipment manufacturers or electronic manufacturing services companies. As a result, the Company estimates and records a reserve for future returns and other charges against revenue at the time of shipment consistent with the terms of sale. The reserve is estimated based on historical experience with each respective distributor. These reserves and charges are immaterial as the Company does not have a history of significant price protection adjustments or returns. The Company provides a standard assurance warranty that does not create a performance obligation.
Practical Expedients:
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentration Risks
For the three and six months ended June 30, 2023, the Company's largest customer accounted for $2,723,000, or 26.9%, and $5,057,000, or 25.9%, of the Company's total revenues, respectively, compared to $2,110,000, or 29.9%, and $4,173,000, or 28.3%, of the Company’s total revenues for the three and six months ended June 30, 2022, respectively. For the three months ended June 30, 2023 and 2022, the Company’s second largest customer accounted for $1,662,000, or 16.4%, compared to $884,000, or 11.3%, of the Company’s total revenues, respectively, and for the six months ended June 30, 2023 and 2022 the second largest customer accounted for $2,671,000, or 13.7%, compared to $1,803,000, or 12.2%, of the Company’s total revenues, respectively.
A significant portion of the Company's accounts receivable is concentrated with a relatively small number of customers. As of June 30, 2023, four of the Company's largest customers accounted for approximately $3,932,000, or 68.4%, of accounts receivable. As of December 31, 2022, of the Company's largest customers accounted for approximately $2,872,000, or 53.8%, of accounts receivable. The Company carefully evaluates the creditworthiness of its customers in deciding to extend credit. As a result, the Company has experienced very low historical bad debt expense and believes the related risk to be minimal.
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Segment Reporting, Policy [Policy Text Block] | Segment Information
The Company reports segment information in accordance with ASC 280, Segment Information ("ASC 280"). ASC 280 requires companies to report financial and descriptive information for each identified operating segment based on management's internal organizational decision-making structure. Management has identified the Company’s only segment as electronic components.
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairments of Long-Lived Assets
Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Long-lived assets are grouped with other assets to the lowest level to which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Management assesses the recoverability of the carrying cost of the assets based on a review of projected undiscounted cash flows. If an asset is held for sale, management reviews its estimated fair value less cost to sell. Fair value is determined using pertinent market information, including appraisals or broker's estimates, and/or projected discounted cash flows. In the event an impairment loss is identified, it is recognized based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset.
We performed an assessment to determine if there were any indicators of impairment at the end of the fiscal quarter ended June 30, 2023. We concluded that, while there were events and circumstances in the macro-environment that did impact us, we did not experience any entity-specific indicators of asset impairment and no triggering events occurred.
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments,” which changes the impairment model for most financial assets. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model to estimate credit losses for financial assets. The Company adopted the provisions of this standard on January 1, 2023, with minimal effect on its financial statements. |