0001174947-16-003409.txt : 20161114 0001174947-16-003409.hdr.sgml : 20161111 20161114170009 ACCESSION NUMBER: 0001174947-16-003409 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 54 CONFORMED PERIOD OF REPORT: 20160923 FILED AS OF DATE: 20161114 DATE AS OF CHANGE: 20161114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEH CORPORATION CENTRAL INDEX KEY: 0000050292 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 135549345 STATE OF INCORPORATION: NY FISCAL YEAR END: 0330 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05278 FILM NUMBER: 161995784 BUSINESS ADDRESS: STREET 1: 140 58TH ST BLDG B UNIT 8E CITY: BROOKLYN STATE: NY ZIP: 11220 BUSINESS PHONE: 7184924440 MAIL ADDRESS: STREET 1: 369 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL ELECTRONIC HARDWARE CORP DATE OF NAME CHANGE: 19890123 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL HEAT TREATING CO INC DATE OF NAME CHANGE: 19670926 10-Q 1 form10q-16666_ieh.htm 10-Q

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

 

FORM 10-Q

 

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 23, 2016

 

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________ to _______________

 

Commission File No. 0-5278

 

IEH CORPORATION

(Exact name of registrant as specified in its charter)

 

New York 13-5549348
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

 

 

140 58th Street, Suite 8E, Brooklyn, New York 11220

(Address of principal executive office)

 

Registrant's telephone number, including area code: (718) 492-4440

 

____________________________________________

Former name, former address and former fiscal year,

if changed since last report.

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes   þ                    No  o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes  þ                     No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     
Large accelerated filer  o   Accelerated filer o 
     
Non-accelerated filer  o
(Do not check if a smaller reporting company)
  Smaller Reporting Company þ

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  o NO þ

 

2,303,468 shares of Common Shares, par value $.01 per share, were outstanding as of September 23, 2016.

1 

 

IEH CORPORATION

 

TABLE OF CONTENTS

 

 

    Page
    Number
     
PART I – FINANCIAL INFORMATION  
     
ITEM 1- FINANCIAL STATEMENTS  
     
  Balance Sheets as of September 23, 2016 (Unaudited) and March 25, 2016 4
     
  Statements of Operations (Unaudited) for the three and six months ended September 23, 2016 and September 25, 2015 6
     
  Statements of Cash Flows (Unaudited) for the six months ended  September 23, 2016 and September 25, 2015 7
     
  Notes to Financial Statements (Unaudited) 9
     
     
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 21
     
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISK 30
     
ITEM 4 – CONTROLS AND PROCEDURES 30
     
PART II – OTHER INFORMATION  
     
ITEM 1 LEGAL PROCEEDINGS 31
     
ITEM 1A – RISK FACTORS 31
     
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 33
     
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES 33
     
ITEM 4 – MINE SAFETY DISCLOSURE 33
     
ITEM 5 – OTHER INFORMATION 33
     
ITEM 6 – EXHIBITS 33
     
     
SIGNATURES 35

 

 -2-

Exhibits

 

 

Exhibit 31.1 Certification Pursuant to 17CFR240.13a-14(a) or 17CFR240.15d-14(a) 36
     
Exhibit 31.2 Certification Pursuant to 17CFR240.13a-14(a) or 17CFR240.15d-14(a) 37
     
Exhibit 32.1 Certification Pursuant to 17CFR240.13a-14(b) or 17CFR240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code 38
     
Exhibit 101 Instance Document  
     
Exhibit 101 Schema Document  
     
Exhibit 101 Calculation Linkbase Document  
     
Exhibit 101 Labels Linkbase Document  
     
Exhibit 101 Presentation Linkbase Document  
     
Exhibit 101 Definition Linkbase Document  

 

 

 

 -3-

 

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

IEH CORPORATION

 

BALANCE SHEETS

 

As of September 23, 2016 and March 25, 2016

 

 

   Sept. 23,   March 25, 
   2016   2016 
   (Unaudited)     
         
ASSETS
           
CURRENT ASSETS:          
Cash  $1,514,177   $1,753,749 
Accounts receivable, less allowances for doubtful accounts of 
 $11,562 at September 23, 2016 and March 25, 2016
   2,278,384    2,212,508 
Inventories (Note 3)   8,032,420    7,250,300 
Excess payments to accounts receivable factor (Note 6)   335,963    186,114 
Prepaid expenses and other current assets (Note 4)   1,671,429    1,377,868 
           
          Total Current Assets   13,832,373    12,780,539 
           
           
PROPERTY, PLANT AND EQUIPMENT, less accumulated
     depreciation and amortization of $8,761,692 at September 23,
     2016 and $8,603,892 at March 25, 2016 (Note 5)
   2,068,704    1,867,191 
    2,068,704    1,867,191 
           
OTHER ASSETS:          
  Other assets   54,386    54,361 
    54,386    54,361 
           
Total Assets  $15,955,463   $14,702,091 

 

The accompanying notes should be read in conjunction with the financial statements.

 -4-

IEH CORPORATION

 

BALANCE SHEETS (Continued)

 

As of September 23, 2016 and March 25, 2016

 

 

   Sept. 23,   March 25, 
   2016   2016 
   (Unaudited)     
         
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Accounts payable  $226,027   $195,831 
Accrued corporate income taxes   504,274    294,412 
Other current liabilities (Note 7)   770,347    631,280 
          Total Current Liabilities   1,500,648    1,121,523 
           
          Total Liabilities   1,500,648    1,121,523 
           
STOCKHOLDERS’ EQUITY:          
Common stock, $.01 par value; 10,000,000 shares authorized;
     2,303,468 shares issued and outstanding at September 23, 2016
     and March 25, 2016
   23,035    23,035 
Capital in excess of par value   2,744,573    2,744,573 
Retained earnings (Note 8)   11,687,207    10,812,960 
           
          Total Stockholders’ Equity   14,454,815    13,580,568 
           
          Total Liabilities and Stockholders’ Equity  $15,955,463   $14,702,091 
           

 

The accompanying notes should be read in conjunction with the financial statements.

 -5-

IEH CORPORATION

 

STATEMENTS OF OPERATIONS

(Unaudited)

 

For the Six and Three Months Ended September 23, 2016 and September 25, 2015

 

 

   Six Months Ended   Three Months Ended 
  

 

Sept. 23,

   Sept. 25,  

 

Sept. 23,

   Sept. 25, 
   2016   2015   2016   2015 
                 
REVENUE, net sales  $9,719,421   $10,269,162   $5,259,784   $5,094,267 
                     
COSTS AND EXPENSES                    
                     
Cost of products sold   6,091,642    6,624,149    3,257,646    3,407,514 
Selling, general and administrative   1,821,165    1,466,634    914,648    788,811 
Interest expense   37,483    10,120    25,971    5,620 
Depreciation   157,800    158,000    72,000    75,000 
    8,108,090    8,258,903    4,270,265    4,276,945 
                     
OPERATING INCOME   1,611,331    2,010,259    989,519    817,322 
                     
OTHER INCOME   465    455    249    226 
                     
INCOME BEFORE INCOME TAXES   1,611,796    2,010,714    989,768    817,548 
                     
PROVISION FOR INCOME TAXES   737,549    1,128,689    453,117    682,126 
                     
NET INCOME  $874,247   $882,025   $536,651   $135,422 
                     
BASIC AND DILUTED EARNINGS PER SHARE (Note 2)  $.38   $.38   $.23   $.06 
                     
WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING
   (in thousands)
   2,303    2,303    2,303    2,303 

 

 

 

The accompanying notes should be read in conjunction with the financial statements.

 -6-

IEH CORPORATION

 

STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Six Months Ended September 23, 2016 and September 25, 2015

 

 

   Six Months Ended 
   Sept. 23,   Sept. 25, 
   2016   2015 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $874,247   $882,025 
           
Adjustments to reconcile net income to net cash provided (used) by
     operating activities:
          
           
Depreciation   157,800    158,000 
           
Changes in assets and liabilities:          
(Increase) in accounts receivable   (65,875)   (405,152)
(Increase) in inventories   (782,120)   (168,676)
(Increase) decrease in excess payments to accounts receivable factor   (149,849)   241,670 
(Increase) in prepaid expenses and other current assets   (293,561)    
(Increase) in other assets   (23)    
Increase (decrease) in accounts payable   30,196    (16,230)
Increase (decrease) in other current liabilities   139,064    (114,749)
Increase in accrued corporate taxes   209,862    30,861 
           
          Total adjustments   (754,506)   (274,276)
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   119,741    607,749 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Acquisition of fixed assets   (359,313)   (258,948)
           
NET CASH (USED) BY INVESTING ACTIVITIES  $(359,313)  $(258,948)

 

The accompanying notes should be read in conjunction with the financial statements.

 -7-

IEH CORPORATION

 

STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

 

For the Six Months Ended September 23, 2016 and September 25, 2015

 

   Six Months Ended 
   Sept. 23,   Sept. 25, 
   2016   2015 
         
CASH FLOWS FROM FINANCING ACTIVITIES:          
Net activity on accounts receivable financing  $   $(822,788)
           
NET CASH (USED) BY FINANCING ACTIVITIES       (822,788)
           
(DECREASE) IN CASH   (239,572)   (473,987)
           
CASH, beginning of period   1,753,749    1,721,410 
           
CASH, end of period  $1,514,177   $1,247,423 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the six months for:
          
     Interest  $30,420   $9,120 
           
     Income Taxes  $808,783   $863,000 

 

The accompanying notes should be read in conjunction with the financial statements.

 -8-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 1-  INTERIM RESULTS AND BASIS OF PRESENTATION: 

 

The accompanying unaudited financial statements as of September 23, 2016 and September 25, 2015 and for the six and three months then ended have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 23, 2016 and September 25, 2015 and the results of operations and cash flows for the six and three months then ended. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six and three months ended September 23, 2016, are not necessarily indicative of the results to be expected for any subsequent quarter or the entire fiscal year. The balance sheet at March 25, 2016 has been derived from the audited financial statements at that date.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes, however, that the disclosures in this report are adequate to make the information presented not misleading in any material respect. The accompanying financial statements should be read in conjunction with the audited financial statements and notes thereto of IEH Corporation for the fiscal year ended March 25, 2016 included in the Company’s Annual Report on Form 10-K as filed with the SEC and the attached Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: 

 

Description of Business:

 

The Company designs, develops and manufactures printed circuit connectors for high performance applications. We have also developed a high performance plastic circular connector line. All of our products utilize the HYPERBOLOID contact design, a rugged high-reliability contact system ideally suited for high-stress environments. We are the only independent producer of HYPERBOLOID in the United States.

 

Our customers consist of OEM’s (Original Equipment Manufacturers), companies manufacturing medical equipment, and distributors who resell our products to OEMs. We sell our products directly and through regional representatives located in all regions of the United States, Canada, Israel, India, various Pacific Rim countries, South Korea and the European Union (EU).

 -9-

 

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)

 

Description of Business: (continued)

 

The customers of the Company services are in the following markets: Government, Military, Aerospace, Medical, Automotive, Industrial, Test Equipment and Commercial Electronics. The Company appears on the Military Qualified Product Listing “QPL” to MIL-DTL-55302 and supply customer requested modifications to this specification. Sales to the Commercial Electronic and Military markets were 39% and 53%, respectively, of the Company’s net sales for the year ended March 25, 2016. The Company’s offering of “QPL” items has recently been expanded to include additional products.

 

In order to remain competitive, the Company has an internal program to upgrade, add and maintain machinery, review material costs and increase labor force productivity. We recently purchased several machines to increase the productivity of certain processes. This will help us meet this goal.

 

Business New Product Development:

 

The Company is sought after by many of its customers to design and manufacture custom connectors. This has created many new products that are innovative designs and employ new technologies. The Company continues to be successful because of its ability to assist its customers and create a new design, including engineering drawing packages, in a relatively short period of time. We will continue to support our customers to the best of our ability.

 

The circular product line of connectors introduced several years ago for the medical industry continues to be very rewarding for the Company. The line has been expanded to include connector cable assemblies utilizing the circular connectors.

 

A new product line featuring high density connectors is being added to the Company’s product offering. This offering should be available within the next few months. The Company expects the new product line to generate additional revenue.

 

The standard printed circuit board connectors we produce are continually being expanded and utilized in many of the military programs being built today. We have recently received approval for additional products that we can offer under the Military Qualified Product Listing “QPL.”

 

Accounting Period:

 

The Company maintains an accounting period based upon a 52-53 week year, which ends on the nearest Friday in business days to March 31. The year ended March 25, 2016 was comprised of 52 weeks. The current fiscal year, ending on March 31, 2017, will be comprised of 53 weeks.

 -10-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)

 

Revenue Recognition:

 

Revenues are recognized at the shipping date of the Company's products. The Company has historically adopted the shipping terms that title to merchandise passes to the customer at the shipping point (FOB Shipping Point). At this juncture, title has passed, the Company has recognized the sale, inventory has been relieved, and the customer has been invoiced. The Company does not offer any discounts, credits or other sales incentives.

 

The Company’s policy with respect to customer returns and allowances as well as product warranty is as follows:

 

The Company will accept a return of defective product within one year from shipment for repair or replacement at the Company’s option. If the product is repairable, the Company at its own cost, will repair and return it to the customer. If unrepairable, the Company will either offer an allowance against payment or will reimburse the customer for the total cost of product.

 

Most of the Company’s products are custom ordered by customers for a specific use. The Company provides engineering services as part of the relationship with its customers in developing the custom product. The Company is not obligated to provide such engineering service to its customers. The Company does not invoice its customers separately for these services.

 

Inventories:

 

Inventories are stated at cost, on a first-in, first-out basis which does not exceed market value.

 

The Company manufactures products pursuant to specific technical and contractual requirements.

 

The Company historically purchases material in excess of its requirements to avail itself of favorable pricing as well as the possibility of receiving additional orders from customers. This excess may result in material not being used in subsequent periods, which may result in this material being deemed obsolete.

 

The Company annually reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company based upon historical experience has determined that if a part has not been used and purchased or an item of finished goods has not been sold in three years, it is deemed to be obsolete. The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience, is made to inventory in recognition of this impairment.

 

 -11-

 

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued

 

Concentration of Credit Risk:

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

 

Under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law on July 21, 2010, the Federal Deposit Insurance Corporation (FDIC) will permanently insure all accounts maintained with each financial institution up to $250,000 in the aggregate.

 

As of September 23, 2016, the Company had funds on deposit in the amount of $1,514,177 in one financial institution comprised of the following:

 

Non-interest bearing accounts  $625,942 
Interest bearing account   888,235 
   $1,514,177 

 

The Company has not experienced any losses in such accounts and believes its cash balances are not exposed to any significant risk.

 

Property, Plant and Equipment:

 

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the Double Declining Balance method over the estimated useful lives (5-7 years) of the related assets.

 

Maintenance and repair expenditures are charged to operations, and renewals and betterments are capitalized. Items of property, plant and equipment, which are sold, retired or otherwise disposed of, are removed from the asset and accumulated depreciation or amortization accounts. Any gain or loss thereon is either credited or charged to operations.

 

Income Taxes:

 

The Company follows the policy of treating investment tax credits as a reduction in the provision for federal income tax in the year in which the credit arises or may be utilized. Deferred income taxes arise from temporary differences resulting from different depreciation methods used for financial and income tax purposes. The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, which includes the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.”

 

 

 -12-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued

  

Net Income Per Share:

 

The Company has adopted the provisions of ASC Topic 260, Earnings per Share, which includes the provisions of SFAS No. 128, “Earnings Per Share,” which requires the disclosure of “basic” and “diluted” earnings (loss) per share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share is similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to reflect the dilutive effect of potential common shares, such as those issuable upon the exercise of stock or warrants, as if they had been issued. For the six and three months ended September 23, 2016 and September 25, 2015, respectively, there were no items of potential dilution that would impact on the computation of diluted earnings or loss per share.

 

Fair Value of Financial Instruments:

 

The carrying value of the Company’s financial instruments, consisting of accounts receivable, accounts payable, and borrowings, approximate their fair value due to the relatively short maturity (three months) of these instruments.

  

Use of Estimates:

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual amounts could differ from those estimates.

 

Impairment of Long-Lived Assets:

 

The Company has adopted the provisions of ASC Topic, 360, Property, Plant and Equipment-Impairment or Disposal of Long-Lived Assets which includes the provisions of SFAS No. 144, “Accounting for The Impairment or Disposal of Long-Lived Assets,” and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has adopted SFAS No. 144. There were no long-lived asset impairments recognized by the Company for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

 -13-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) 

 

Reporting Comprehensive Income:

 

The Company has adopted the provisions of ASC Topic, 220, Comprehensive Income which includes the provisions of SFAS No. 130, “Reporting Comprehensive Income.” This Statement established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in an entity’s financial statements. This Statement requires an entity to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of balance sheet. There were no material items of comprehensive income to report for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

Segment Information:

 

The Company has adopted the provisions of ASC Topic, 280, Segment Reporting which includes the provisions of SFAS No. 131, “Disclosures About Segment of An Enterprise and Related Information.” This Statement requires public enterprises to report financial and descriptive information about its reportable operating segments and establishes standards for related disclosures about product and services, geographic areas, and major customers. The adoption of ASC Topic 280 did not affect the Company’s presentation of its results of operations or financial position.

 

Research and Development:

 

The Company provides personalized engineering services to its customers by designing connectors for specific customer applications. The employment of electromechanical engineers is the anticipated cornerstone of the Company’s future growth. The Company maintains a testing laboratory where its engineers experiment with new connector designs based on changes in technology and in an attempt to create innovative, more efficient connector designs.

 

The Company did not expend any funds on nor receive any revenues related to customer sponsored research and development activities relating to the development of new designs, techniques and the improvement of existing designs during the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

 -14-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

 

 

Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) 

 

Recent Accounting Pronouncements:

 

The Financial Accounting Standards Board (“FASB”) has issued certain accounting standards updates as of June 24, 2016 that will become effective in subsequent periods. The Company believes that none of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during the six and three months ended September 23, 2016 and September 25, 2015, and it does not believe that any of those pronouncements will have a significant impact on the Company’s financial statements at the time that they become effective.

 

Note 3-  INVENTORIES: 

 

Inventories are stated at cost, on a first-in, first-out basis, which does not exceed market value.

 

The Company manufactures products pursuant to specific technical and contractual requirements. The Company historically purchases material in excess of its requirements to avail itself of favorable pricing as well as the possibility of receiving additional orders from customers. This excess may result in material not being used in subsequent periods, which may result in this material being deemed obsolete.

 

The Company annually reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company based upon historical experience has determined that if a part has not been used and purchased or an item of finished goods has not been sold in three years, it is deemed to be obsolete.

 

The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience, is made to inventory in recognition of this impairment.

 

Inventories were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Raw materials  $5,367,107   $4,844,510 
Work in progress   660,704    596,371 
Finished goods   2,004,609    1,809,419 
   $8,032,420   $7,250,300 

 

 -15-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

  

 

Note 4-  PREPAID EXPENSES AND OTHER CURRENT ASSETS: 

 

Prepaid expenses and other current assets were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Prepaid insurance  $42,145   $22,834 
Prepaid corporate taxes   1,626,493    1,345,459 
Other current assets   2,791    9,575 
   $1,671,429   $1,377,868 

 

 

Note 5-  PROPERTY, PLANT AND EQUIPMENT: 

 

Property, plant and equipment were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Computers  $401,724   $394,175 
Leasehold improvements   866,939    845,589 
Machinery and equipment   6,012,406    5,767,672 
Tools and dies   3,369,633    3,283,953 
Furniture and fixture   170,644    170,644 
Website development cost   9,050    9,050 
    10,830,396    10,471,083 
Less: accumulated depreciation and amortization   (8,761,692)   (8,603,892)
   $2,068,704   $1,867,191 

 

 

Note 6-  ACCOUNTS RECEIVABLE FINANCING: 

 

The Company entered into an accounts receivable financing agreement with a non-bank lending institution (“Factor”) whereby it can borrow up to 80 percent of its eligible receivables (as defined in the financing agreement) at an interest rate of 2.5% above JP Morgan Chase’s publicly announced rate with a minimum rate of 12% per annum. The financing agreement has an initial term of one year and will automatically renew for successive one-year terms, unless terminated by the Company or the Factor upon receiving 60 days prior notice. Funds advanced by the Factor are secured by the Company’s accounts receivable and inventories.

 

 -16-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 6-  ACCOUNTS RECEIVABLE FINANCING: (continued)

 

At September 23, 2016, the Company had reported excess payments to the Factor of $335,963. As of March 25, 2016, the Company had reported excess payments to the Factor of $186,114. These excess payments are reported in the accompanying financial statements as of September 23, 2016 and March 25, 2016 as “Excess payments to accounts receivable factor.”

 

 

Note 7-  OTHER CURRENT LIABILITIES: 

 

Other current liabilities were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Payroll and vacation accruals  $690,277   $560,995 
Sales commissions   62,542    50,357 
Insurance   17,528    17,014 
Other       2,914 
   $770,347   $631,280 

 

 

Note 8-  CHANGES IN STOCKHOLDERS’ EQUITY: 

 

The accumulated retained earnings increased by $874,247, which represents the net income for the six months ended September 23, 2016. Accordingly, the Company reported accumulated retained earnings of $11,687,207 as of September 23, 2016.

 

 

Note 9-  2011 EQUITY INCENTIVE PLAN: 

 

On August 31, 2011, the Company’s shareholders approved the adoption of the Company’s 2011 Equity Incentive Plan (“2011 Plan”) to provide for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Company’s common stock to all employees, consultants and other eligible participants including senior management and members of the Board of Directors of the Company. The 2011 Plan replaced the prior 2002 Employee Stock Option Plan which had expired in accordance with its terms.

 

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).

 

 -17-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 9-  2011 EQUITY INCENTIVE PLAN: (continued)

 

Under the 2011 Plan, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (10%) or greater shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value of the Company’s common stock and the option must not be exercisable after the expiration of five years from the day of the grant. The 2011 Plan also provides that holders of options that wish to pay for the exercise price of their options with shares of the Company’s common stock must have beneficially owned such stock for at least six months prior to the exercise date.

 

Exercise prices of non-incentive stock options may be less than the fair market value of the Company’s common stock.

 

The aggregate fair market value of shares subject to options granted to a participant(s) that are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $100,000

 

On July 1, 2015, our Board of Directors granted 245,000 options to purchase shares of the Company’s common stock under the 2011 Plan as follows: (i) Michael Offerman, our Chief Executive Officer, was granted 75,000 options; (ii) Robert Knoth, our Chief Financial Officer, was granted 50,000 options; (iii) four non-executive officer key employees were granted 110,000 options; and (iv) each of our non-management directors, Allen Gottlieb and Gerald Chafetz, was granted 5,000 options. The stock options (i) have a ten-year term; (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($6.00), except that the options granted to Michael Offerman has an exercise price equal to 110% of such fair market value because he owns ten percent (10%) or greater of the Company’s outstanding common stock; and (iii) were all immediately vested. In the event of the termination of each recipient’s employment by, or association with, the Company (as applicable), the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

Effective July 15, 2016, the Board of Directors of the Company unanimously voted to increase the number of directors from three to six directors and elected David Offerman as a Class II director and Dr. Sonia Marciano and Eric C. Hugel as Class II Directors.

 

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors will receive a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares will vest immediately (August 15, 2016); (ii) 2,000 shares will vest on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

The table below summarizes the option awards for the named executive officers and non-management directors:

 

Name  Stock Option Grants
Michael Offerman  75,000  
Robert Knoth  50,000  
Allen Gottlieb  5,000
Gerald Chafetz  5,000
Eric C. Hugel  5,000
Sonia Marciano  5,000

 

 -18-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 9-  2011 EQUITY INCENTIVE PLAN: (continued)

 

The Company intends to provide additional information regarding the compensation awarded to the named executive officers and non-management directors in respect of and during the fiscal year ended March 25, 2016, in the proxy statement for the Company’s 2016 annual meeting of stockholders.

 

 

Note 10-  CASH BONUS PLAN: 

 

In 1987, the Company adopted a cash bonus plan (“Cash Bonus Plan”) for executive officers. Contributions to the Cash Bonus Plan are made by the Company only after pre-tax operating profits exceed $150,000 for a fiscal year, and then to the extent of 10% of the excess of the greater of $150,000 or 25% of pre-tax operating profits. Accordingly, the Company has accrued a contribution provision of $171,700 for the six months ended September 23, 2016. For the year ended March 25, 2016, the Company’s contribution was $227,700.

 

 

Note 11-  COMMITMENTS AND CONTINGENCIES: 

 

The Company leases space for its corporate offices (including its manufacturing facility) at 140 58th Street, Suite 8E, Brooklyn, New York. The lease term runs from December 1, 2010 through November 30, 2020. The basic minimum annual rentals are as follows:

 

Fiscal year ending March:    
     
2017  $87,440 
2018   178,360 
2019   183,720 
2020   189,200 
2021   128,640 
   $767,360 

 

The rental expense for the six months ended September 23, 2016 was $85,740 and $83,220 for the six months ended September 25, 2015.

 

The Company has a collective bargaining multi-employer pension plan (“Multi-Employer Plan”) with the United Auto Workers of America, Local 259 (“UAW”). Contributions are made by the Company in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the Multi-Employer Pension Plan Amendment Act of 1990 (the “1990 Act”), the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. Generally, these are contingent upon termination, withdrawal, or partial withdrawal from the Multi-Employer Plan.

 

 -19-

IEH CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Note 11-  COMMITMENTS AND CONTINGENCIES: (continued)

 

The Company has not taken any action to terminate, withdraw or partially withdraw from the Multi-Employer Plan, nor does it intend to do so in the future. Under the 1990 Act, liabilities would be based upon the Company’s proportional share of the Multi-Employer Plan’s unfunded vested benefits which is currently not available. The amount of accumulated benefits and net assets of such Plan also is not currently available to the Company. The total contributions charged to operations under the provisions of the Multi-Employer Plan were $65,265 for the six months ended September 23, 2016 and $61,977 for the six months ended September 25, 2015.

 

 

Note 12- SUBSEQUENT EVENTS:

 

Election of New Directors. Effective July 15, 2016, the Board of Directors of the Company unanimously voted to increase the number of directors from three to six directors and elected David Offerman as a Class II director and Dr. Sonia Marciano and Eric C. Hugel as Class II Directors.

 

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors will receive a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares will vest immediately (August 15, 2016); (ii) 2,000 shares will vest on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

Biographical information of the three new directors:

 

David Offerman, 41, is the Vice President – Sales and Marketing of the Company. He joined the Company in September 2004 as the National Sales Manager and was appointed to his current position in April 2011. Prior to joining IEH, David worked as an account executive and sales manager in the telecommunication industry. David graduated from the University of Michigan in 1993 with a Bachelor of Arts in film and communications. In 2016 he received an MBA from the NYU Stern School of Business with a concentration in leadership and management. David is the son of Michael Offerman, President and Chief Executive Officer of the Company.

 

Dr. Sonia Marciano, 54, is a clinical professor at the NYU Stern School of Business since July 2007 where she teaches courses and manages academic programs. She graduated from the University of Chicago in 1984 with a Bachelor of Arts degree. In 2000, Dr. Marciano received from the University of Chicago her MBA in Economics and Finance and her PhD in Business Economics.

 

Eric C. Hugel, 46, is the Co-Chief Executive Officer and Chief Financial Officer of Deb’s Buried Treasure, an online retailer, since July 2014. He is also the owner of Eric C. Hugel, CPA, CFA, a business that provides tax and business advisory services. From March 2013 to February 2014, Mr. Hugel held the position of Senior Institutional Specialist in U.S. Fundamental Equity Research Analyst at McGraw Hill Financial – S&P Capital IQ providing investment advisory services. In particular he provided research and analysis in the U.S. aerospace and defense and industrial conglomerates sectors. From July 2002 through June 2012 he was a managing director at Stephens Inc. providing investment banking services in the U.S. aerospace and defenses sectors. Mr. Hugel graduated from Lehigh University in 1993 with a Bachelor of Science in accounting.

 

Amendment to Accounts Receivable Financing Agreement. Effective November 1, 2016, the Company and the Factor executed an amendment to the accounts receivable financing agreement dated March 14, 1990 to provide that (i) the applicable interest under such agreement is reduced from 12% to 6% per annum; and (ii) the current term of such agreement is extended to March 14, 2018 provided that each subsequent renewal term shall remain one (1) year thereafter in accordance with the terms of such agreement.

 

 -20-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This report contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933 (the “Securities Act”). Statements contained in this report which are not statements of historical facts may be considered forward-looking information with respect to plans, projections, or future performance of the Company as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected. The words “anticipate”, “believe”, “estimate”, “expect”, “objective”, and “think” or similar expressions used herein are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the effects of the Company’s business, actions of competitors, changes in laws and regulations, including accounting standards, employee relations, customer demand, prices of purchased raw material and parts, domestic economic conditions, including housing starts and changes in consumer disposable income, and foreign economic conditions, including currency rate fluctuations. Some or all of the facts are beyond the Company’s control.

 

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business. The following discussion and analysis should be read in conjunction with the financial statements and related footnotes included elsewhere in this quarterly report which provide additional information concerning the Company’s financial activities and condition.

 

Critical Accounting Policies

 

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company believes the following are the critical accounting policies, which could have the most significant effect on the Company's reported results and require the most difficult, subjective or complex judgments by management.

 

Impairment of Long-Lived Assets: 

The Company reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value. The Company makes estimates of its future cash flows related to assets subject to impairment review.

 

 -21-

 

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Critical Accounting Policies (continued)

 

Inventory Valuation: 

Raw materials and supplies are stated at cost on first-in, first-out basis, which does not exceed market value. Finished goods and work in process are valued at the lower of actual cost, determined on a specific identification basis, or market. The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost, and adjusts their inventory value accordingly. Future periods could include either income or expense items if estimates change and for differences between the estimated and actual amount realized from the sale of inventory.

 

Income Taxes: 

The Company records a liability for potential tax assessments based on its estimate of the potential exposure. Due to the subjectivity and complex nature of the underlying issues, actual payments or assessments may differ from estimates. Income tax expense in future periods could be adjusted for the difference between actual payments and the Company's recorded liability based on its assessments and estimates.

 

Revenue Recognition: 

Revenues are recognized at the shipping date of the Company's products. The Company has historically adopted the shipping terms that title merchandise passes to the customer at the shipping point (FOB Shipping Point). At this juncture, title has passed, the Company has recognized the sale, inventory has been relieved, and the customer has been invoiced. The Company does not offer any discounts, credits or other sales incentives.

 

The Company’s policy with respect to customer returns and allowances as well as product warranty is as follows:

 

The Company will accept a return of defective product within one year from shipment for repair or replacement at the Company’s option. If the product is repairable, the Company at its own cost will repair and return it to the customer. If unrepairable, the Company will either offer an allowance against payment or will reimburse the customer for the total cost of the product.

 

Most of the Company’s products are custom ordered by customers for a specific use. The Company provides engineering services as part of the relationship with its customers in developing the custom product. The Company is not obligated to provide such engineering service to its customers. The Company does not charge separately for these services.

 

Research & Development: 

The Company provides personalized engineering services to its customers by designing connectors for specific customer applications. The employment of electromechanical engineers is the anticipated cornerstone of the Company’s future growth. The Company maintains a testing laboratory where its engineers experiment with new connector designs based on changes in technology and in an attempt to create innovative, more efficient connector designs.

 

 

 -22-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Critical Accounting Policies (continued)

 

The Company did not expend any funds on, nor receiving any revenues related to, customer sponsored research and development activities, relating to the development of new designs, techniques and the improvement of existing designs, for the six and three months ended September 23, 2016 and September 25, 2015, respectively, relating to the development of new designs, techniques and the improvement of existing designs.

 

Comparative Analysis-Six Months Ended September 23, 2016 and September 25, 2015

 

Results of Operations

 

The following table sets forth for the periods indicated, percentages for certain items reflected in the financial data as such items relate to the revenues of the Company:

 

Relationship to Total Revenues  Sept. 23,   Sept. 25, 
   2016   2015 
         
Operating Revenues (in thousands)  $9,719   $10,269 
           
Operating Expenses:          
  (as a percentage of Operating Revenues)          
           
            Costs of Products Sold   62.67%    64.51% 
            Selling, General and Administrative   18.74%    14.28% 
            Interest Expense   .39%    .10% 
            Depreciation and amortization   1.62%    1.54% 
           
                   TOTAL COSTS AND EXPENSES   83.42%    80.43% 
           
Operating Income   16.58%    19.57% 
           
Other Income        
           
Income (loss) before Income Taxes   16.58%    19.57% 
           
Income Taxes   (7.59%)   (10.99%)
           
Net Income   8.99%    8.58% 

 

Operating revenues for the six months ended September 23, 2016 amounted to $9,719,421 reflecting a 5.35% decrease versus $10,269,162 for the six months ended September 25, 2015. The decrease in revenues for the current six-month period can be attributed to lower sales in the current first quarter as compared to the first quarter of the prior year.

 -23-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Comparative Analysis - Six Months Ended September 23, 2016 and September 25, 2015 (continued)

 

Cost of products sold were $6,091,642 for the six months ended September 25, 2015, or 62.67% of operating revenues. This reflected a $532,507 or 8.04% decrease in the cost of products sold from $6,624,149 or 64.51% of operating revenues for the six months ended September 25, 2015. The decrease in cost of products sold can be attributed to the decrease in sales in the first quarter.

 

Selling, general and administrative expenses were $1,821,165 or 18.74% of operating revenues for the six months ended September 23, 2016 compared to $1,466,634 or 14.28% of operating revenues for the six months ended September 25, 2015. This category of expense increased by $354,731 or 24.19% from the prior six month period. The increase can be attributed to an increase in operating expenses inclusive of expenses incurred for a Company sponsored conference for all of its sales representatives during the first quarter of the current fiscal year.

 

Interest expense was $37,483 for the six months ended September 23, 2016 or .39% of operating revenues. For the fiscal six months ended September 25, 2015, interest expense was $10,120 or .10% of operating revenues. The increase can be attributed to increased advances from the Factor during the quarter ended September 23, 2016.

 

Depreciation and amortization of $157,800 or 1.62% of operating revenues was reported for the six months ended September 23, 2016 as compared to the six month period ended September 25, 2015 of $158,000 or 1.54% of operating revenues.

 

The Company reported net income of $874,247 for the six months ended September 23, 2016 representing basic earnings of $.38 per share as compared to net income of $882,025 or $.38 per share for the six months ended September 25, 2015. Net income for the current six month period decreased slightly as compared to the net income for the prior year’s six months.

 

 

 -24-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Comparative Analysis-Three Months Ended September 23, 2016 and September 25, 2015

 

Results of Operations

 

The following table sets forth for the periods indicated, percentages for certain items reflected in the financial data as such items relate to the revenues of the Company:

 

Relationship to Total Revenues
   Sept. 23,   Sept. 25, 
   2016   2015 
         
Operating Revenues (in thousands)  $5,260   $5,094 
           
Operating Expenses:          
  (as a percentage of Operating Revenues)          
           
            Costs of Products Sold   61.93%    66.89% 
            Selling, General and Administrative   17.39%    15.48% 
            Interest Expense   .49%    .11% 
            Depreciation and amortization   1.37%    1.47% 
           
                   TOTAL COSTS AND EXPENSES   81.18%    83.95% 
           
Operating Income   18.82%    16.05% 
           
Other Income        
           
Income (loss) before Income Taxes   18.82%    16.05% 
           
Income Taxes   (8.61%)   (13.39%)
           
Net Income   10.21%    2.66% 

 

 -25-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Comparative Analysis-Three Months Ended September 23, 2016 and September 25, 2015 (continued)

 

Results of Operations (continued)

 

Operating revenues for the three months ended September 23, 2016 amounted to $5,259,784, reflecting a 3.25% increase when compared to revenues of $5,094,267 for the three months ended September 25, 2015. The increase was due to an increase in commercial billings.

 

Cost of products sold were $3,257,646 for the three months ended September 23, 2016, or 61.93% of operating revenues. This reflected a $149,868 or 4.40% decrease in the cost of products sold from $3,407,514 or 66.89% of operating revenues for the three months ended September 25, 2015. The decrease in cost of goods sold can be attributed to the Company’s array of products shipped during the three months ended September 23, 2016.

 

Selling, general and administrative expenses were $914,648 or 17.39% of operating revenues for the three months ended September 23, 2016 compared to $788,811 or 15.48% of operating revenues for the three months ended September 25, 2015. This category of expense increased by $125,837 or 15.95% from the prior comparable three month period. The increase in this category of expenses was primarily due to an increase in sales commissions.

 

Interest expense was $25,971 for the three months ended September 23, 2016 or .49% of operating revenues. For the fiscal three months ended September 25, 2015, interest expense was $5,620 or .12% of operating revenues. Interest expenses increased by $20,351 or 362.12% over the comparable prior period. The increase can be attributed to increased advances from the Factor during the current quarter.

 

Depreciation and amortization of $72,000 or 1.37% of operating revenues was reported for the three months ended September 23, 2016 as compared to the three month period ended September 25, 2015, in which depreciation and amortization of $75,000 or 1.92% of operating revenues was reported.

 

The Company reported net income of $536,651 for the three months ended September 23, 2016 representing basic earnings of $.23 per share as compared to net income of $135,422 or $.06 per share for the three months ended June 26, 2015. The increase in net income for the current three month period can be attributed primarily to the cumulative effect of the aforementioned differences.

 

 -26-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Liquidity and Capital Resources

 

The Company reported working capital of $12,331,725 as of September 23, 2016 compared to a working capital of $11,659,016 as of March 25, 2016. The increase in working capital of $672,709 was attributable to the following items:

 

Net income  $874,247 
Depreciation and amortization   157,800 
Capital expenditures   (359,313)
Other   (25)
   $672,709 

 

As a result of the above, the current ratio (current assets to current liabilities) was 9.22 to 1 at September 23, 2016 as compared to 11.40 to 1 at March 25, 2016. Current liabilities at September 23, 2016 were $1,500,648 compared to $1,121,523 at March 25, 2016.

 

For the six months ended September 23, 2016, the Company reported $359,313 in capital expenditures and depreciation of $157,800.

 

The net income of $874,247 for the six months ended September 23, 2016 resulted in an increase in total stockholders’ equity to $14,454,815 as compared to total stockholders’ equity of $13,580,568 at March 25, 2016.

 

The Company has an accounts receivable financing agreement with a non-bank lending institution (“Factor”) whereby it can borrow up to 80 percent of its eligible receivables (as defined in the financing agreement) at an interest rate of 2.5% above JP Morgan Chase’s publicly announced prime rate with a minimum rate of 12% per annum.

 

The financing agreement has an initial term of one year and will automatically renew for successive one-year terms, unless terminated by the Company or its lender upon receiving 60 days prior notice.

 

Funds advanced by the Factor are secured by the Company’s accounts receivable and inventories. At September 23, 2016, the Company reported excess payments to the Factor of $335,963. The Company reported excess payment to the Factor of $186,114 at March 25, 2016. These excess payments are reported in the accompanying financial statements as “Excess payments to accounts receivable factor.”

 

Amendment to Accounts Receivable Financing Agreement. Effective November 1, 2016, the Company and the Factor executed an amendment to the accounts receivable financing agreement dated March 14, 1990 to provide that (i) the applicable interest under such agreement is reduced from 12% to 6% per annum; and (ii) the current term of such agreement is extended to March 14, 2018 provided that each subsequent renewal term shall remain one (1) year thereafter in accordance with the terms of the agreement.

 

In the past two fiscal years management has been reviewing its collection practices and policies for outstanding receivables and has revised its collection procedures to a more aggressive collection policy. As a consequence of this new policy the Company’s experience is that its customers have been remitting payments on a more consistent and timely basis. The Company reviews the collectability of all accounts receivable on a monthly basis. The reserve is less than 2% of average gross accounts receivable and is considered to be conservatively adequate.

 

 -27-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

 

Liquidity and Capital Resources (continued)

 

The Company has the Multi-Employer Plan with the UAW. Contributions are made by the Company in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the 1990 Act, the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. Generally, these are contingent upon termination, withdrawal, or partial withdrawal from the Multi-Employer Plan. The Company has not taken any action to terminate, withdraw or partially withdraw from the Multi-Employer Plan, nor does it intend to do so in the future. Under the 1990 Act, liabilities would be based upon the Company’s proportional share of the Multi-Employer Plan’s unfunded vested benefits which is currently not available. The amount of accumulated benefits and net assets of such Plan also is not currently available to the Company. The total contributions charged to operations under the provisions of the Multi-Employer Plan were $65,296 and $61,977 for the six months ended September 23, 2016 and September 25, 2015, respectively.

 

On August 31, 2011, the Company’s shareholders approved the adoption of the Company’s 2011 Equity Incentive Plan (“2011 Plan”) to provide for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Company’s common stock to all employees, consultants and other eligible participants including senior management and members of the Board of Directors of the Company. The 2011 Plan replaced the prior 2002 Employee Stock Option Plan which had expired on its terms.

 

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).

 

Under the 2011 Plan, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (10%) or greater shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value of the Company’s common stock and the option must not be exercisable after the expiration of five years from the day of the grant. The 2011 Plan also provides that holders of options that wish to pay for the exercise price of their options with shares of the Company’s common stock must have beneficially owned such stock for at least six months prior to the exercise date.

 

Exercise prices of non-incentive stock options may be less than the fair market value of the Company’s common stock. The aggregate fair market value of shares subject to options granted to a participant(s), which are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $100,000.

 

 -28-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) 

 

Liquidity and Capital Resources (continued)

  

On July 1, 2015, our Board of Directors granted 245,000 options to purchase shares of the Company’s common stock under the 2011 Plan as follows: (i) Michael Offerman, our Chief Executive Officer, was granted 75,000 options; (ii) Robert Knoth, our Chief Financial Officer, was granted 50,000 options; (iii) four non-executive officer key employees were granted 110,000 options; and (iv) each of our non-management directors, Allen Gottlieb and Gerald Chafetz, was granted 5,000 options. The stock options (i) have a ten-year term; (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($6.00), except that the options granted to Michael Offerman has an exercise price equal to 110% of such fair market value because he owns ten percent (10%) or greater of the Company’s outstanding common stock; and (iii) were all immediately vested. In the event of the termination of each recipient’s employment by, or association with, the Company (as applicable), the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

Effective July 15, 2016, the Board of Directors of the Company unanimously voted to increase the number of directors from three to six directors and elected David Offerman as a Class II director and Dr. Sonia Marciano and Eric C. Hugel as Class II Directors.

 

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors will receive a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares will vest immediately (August 15, 2016); (ii) 2,000 shares will vest on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

The table below summarizes the option awards for the named executive officers and non-management directors:

 

Name  Stock Option Grants
Michael Offerman  75,000  
Robert Knoth  50,000  
Allen Gottlieb  5,000
Gerald Chafetz  5,000
Eric C. Hugel  5,000
Sonia Marciano  5,000

 

The Company intends to provide additional information regarding the compensation awarded to the named executive officers and non-management directors in respect of and during the fiscal year ended March 25, 2016, in the proxy statement for the Company’s 2016 annual meeting of stockholders.

 

In 1987, the Company adopted the Cash Bonus Plan for executive officers. Contributions to the Cash Bonus Plan are made by the Company only after pre-tax operating profits exceed $150,000 for a fiscal year, and then to the extent of 10% of the excess of the greater of $150,000 or 25% of pre-tax operating profits. The Company accrued $171,700 for the six months ended September 23, 2016. For the year ended March 25, 2016, the Company’s contribution was $227,700.

 

 -29-

IEH CORPORATION

 

PART I: FINANCIAL INFORMATION

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide this information contained in this item pursuant to Regulation S-K.

 

We do not believe that any of our financial instruments have significant risk associated with market sensitivity. For more information on these investments see Note 2 to our financial statements included in this Form 10-Q. We are not exposed to significant financial market risks from changes in foreign currency exchange rates and are only minimally impacted by changes in interest rates. We have not used, and currently do not contemplate using, any derivative financial instruments.

 

Interest Rate Risk

At any time, fluctuations in interest rates could affect interest earnings on our cash and marketable securities. We believe that the effect, if any, of reasonably possible near term changes in interest rates on our financial position, results of operations, and cash flows would not be material. Currently, we do not hedge these interest rate exposures. The primary objective of our investment activities is to preserve capital. We have not used derivative financial instruments in our investment portfolio.

 

As of September 23, 2016, our unrestricted cash was $1,514,177 of which $888,235 was in an interest bearing money market account with and the balance of $625,942 was maintained in non-interest bearing checking accounts used to pay operating expenses.

 

Item 4. Controls and Procedures

 

Based on an evaluation of the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), the Company’s Chief Executive Officer (who is also our President) and its Chief Financial Officer (who is also our controller and principal accounting officer) have concluded that, as of the end of the period covered by this Report on Form 10-Q, the Company’s disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in this Report that it files or submit under the Exchange Act is, recorded, processed, summarized and reported within the time periods specified within the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. Our management, however, believes our disclosure controls and procedures are in fact effective to provide reasonable assurance that the objectives of the control system are met. In connection with their review and assessment of our disclosure controls and procedures, the Company has retained the services of an outside consultant to further assist management in its annual evaluation of such controls and procedures. There have been no changes in our internal control over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act) during the quarter ended September 23, 2016 that have been materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

 

 -30-

IEH CORPORATION

 

PART II: OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company is not a party to or aware of any pending or threatened legal proceedings which, in the opinion of the Company’s management, would result in any material adverse effect on its results of operations or its financial condition.

 

Item 1a. Risk Factors

 

You should carefully consider the risks described below, together with all of following risk factors and the other information included in this report, in considering our business herein as well as the information included in other reports and prospects. The risks and uncertainties described below are not the only ones facing our Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations, financial condition and/or operating results. If any of the matters or events described in the following risks actually occurs, our business, financial condition or results of operations could be harmed. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment due to any of these risks.

 

Risks Related to Our Business

 

Failure to increase our revenue and keep our expenses consistent with revenues could prevent us from achieving and maintaining profitability.

 

We have generated net income of $1,690,110, $1,809,555, and $1,453,707, respectively, for the fiscal years ended March 25, 2016, March 27, 2015, and March 28, 2014 and $874,247 for the six months ended September 23, 2016. We have expended, and will continue to be required to expend, substantial funds to pursue product development projects, enhance our marketing and sales efforts and to effectively maintain business operations. Therefore, we will need to generate higher revenues to achieve and maintain profitability and cannot assure you that we will be profitable in any future period.

 

Our capital requirements are significant and we have historically partially funded our operations through the financing of our accounts receivable.

 

We have an existing accounts receivable financing agreement with a non-lending institution (“Factor”) whereby we can borrow up to 80 percent of our eligible receivables at an interest rate of 2.5% above JP Morgan Chase’s publicly announced prime rate. No assurances can be given that this financing agreement will continue into the future. If we are unable to continue with this agreement, our cash flow might adversely be affected.

 

 -31-

IEH CORPORATION

 

PART II: OTHER INFORMATION

 

Our success is dependent on the performance of our management and the cooperation, performance and retention of our executive officers and key employees.

 

Our business and operations are substantially dependent on the performance of our senior management team and executive officers. If our management team is unable to perform it may adversely impact our results of operations and financial condition. We do not maintain “key person” life insurance on any of our executive officers. The loss of one or several key employees could seriously harm our business. Any reorganization or reduction in the size of our employee base could harm our ability to attract and retain other valuable employees critical to the success of our business.

 

If we lose key personnel or fail to integrate replacement personnel successfully, our ability to manage our business could be impaired.

 

Our future success depends upon the continued service of our key management, technical, sales, finance, and other critical personnel. We cannot assure you that we will be able to retain them. Key personnel have left our Company in the past and there likely will be additional departures of key personnel from time to time in the future. The loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of Company initiatives, the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, and the results of our operations. In addition, hiring, training, and successfully integrating replacement sales and other personnel could be time consuming, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact future revenues.

 

Our reported financial results could be adversely affected by changes in financial accounting standards or by the application of existing or future accounting standards to our business as it evolves.

 

As a result of the enactment of the Sarbanes-Oxley Act and the review of accounting policies by the SEC and national and international accounting standards bodies, the frequency of accounting policy changes may accelerate. Possible future changes to accounting standards, could adversely affect our reported results of operations.

  

Risks Related to Our Common Stock

 

Our stock price is volatile and could decline; we have a very limited trading market.

 

The price of our common stock has been, and is likely to continue to be, volatile. For example, our stock price during the fiscal year ended March 25, 2016 traded as low as $2.76 per share and as high as $5.99 per share. During the six month period ended September 23, 2016, our common stock traded in the range of $5.25 per share to $6.79 per share. We cannot assure you that your initial investment in our common stock will not decline.

  

 -32-

IEH CORPORATION

 

PART II: OTHER INFORMATION

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosure

 

None

 

Item 5. Other Information

 

None

 

 Item 6. Exhibits

 

(a) Exhibits

 

Exhibit 31.1  Certification Pursuant to 17CFR240.13a-14(a) or 17CFR240.15d-14(a)* 

 

Exhibit  31.2 Certification Pursuant to 17CFR240.13a-14(a) or 17CFR240.15d-14(a)* 

 

Exhibit 32.1  Certification Pursuant to 17CFR240.13a-14(b) or 17CFR240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code* 

 

Exhibit 101.INS  XBRL Instance Document* 

 

Exhibit 101.SCH  XBRL Taxonomy Extension Schema* 

 

Exhibit 101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document* 

 

Exhibit 101.LAB  XBRL Taxonomy Extension Label Linkbase Document* 

 

Exhibit 101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document* 

 

Exhibit 101.DEF  XBRL Taxonomy Extension Definition Label Document* 

 

*Submitted electronically herewith.

 

Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following formatted in XBRL (Extensible Business Reporting Language): (i) Statement of Operations for the three months ended September 23, 2016 and September 25, 2015; (ii) Balance Sheets as of September 23, 2016 and March 25, 2016; (iii) Statement of Cash Flows for the six months ended September 23, 2016 and September 25, 2015; and (iv) Notes to Financial Statements for the three months ended September 23, 2016.

 

 -33-

IEH CORPORATION

 

PART II: OTHER INFORMATION

 

Item 6. Exhibits (continued)

 

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to the Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

(b) Reports on Form 8-K during Quarter.

 

None.

 

 -34-

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  IEH CORPORATION
  (Registrant)
   
   
November 14, 2016 /s/ Michael Offerman
  Michael Offerman
  President (Principal Executive Officer)
   
   
November 14, 2016 /s/ Robert Knoth
  Robert Knoth
  Chief Financial Officer (Principal Accounting Officer)
   
   

 

 

 -35-

 

EX-31.1 2 ex31-1.htm EX-31.1

 

Exhibit 31.1

 

CERTIFICATION

 

 

I, Michael Offerman, certify that:

 

1.       I have reviewed this quarterly report of Form 10-Q of IEH Corporation for the quarter ended September 23, 2016.

 

2.       Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

 

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

 

4.       The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and we have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; and

 

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

 

c)       evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based upon such evaluation; and

 

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5.       The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2016

 

/s/ Michael Offerman

Michael Offerman

President and Chief Executive Officer (Principal Executive Officer)

 -36-

 

EX-31.2 3 ex31-2.htm EX-31.2

 Exhibit 31.2

 

CERTIFICATION

 

 

I, Robert Knoth, certify that:

 

1.       I have reviewed this quarterly report of Form 10-Q of IEH Corporation for the quarter ended September 23, 2016.

 

2.       Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

 

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

 

4.       The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; and

 

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

 

c)       evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based upon such evaluation; and

 

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5.       The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2016

 

/s/ Robert Knoth

Robert Knoth

Chief Financial Officer (Principal Accounting Officer)

 

 -37-

 

EX-32.1 4 ex32-1.htm EX-32.1

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2004

 

 

In connection with the Quarterly Report of IEH Corporation (the “Company”) on Form 10-Q for the quarter ending September 23, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Offerman, President and Chief Executive Office (Principal Executive Officer) and Robert Knoth, Chief Financial Officer (Principal Accounting Officer) of the Company, respectfully certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2004, that:

 

1.  The Report fully complies with the requirements of the Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 

 

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

 

 

/s/ Michael Offerman /s/ Robert Knoth
Michael Offerman Robert Knoth
President and Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Accounting Officer)

 

Dated: November 14, 2016

 

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 has been provided to IEH Corporation and will be retained by IEH Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 -38-

 

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Hugel [Member] Sonia Marciano [Member] Subsequent Event [Member] Subsequent Event Type [Axis] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Filer Category Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS CURRENT ASSETS: Cash Accounts receivable, less allowances for doubtful accounts of $11,562 at September 23, 2016 and March 25, 2016 Inventories (Note 3) Excess payments to accounts receivable factor (Note 6) Prepaid expenses and other current assets (Note 4) Total Current Assets PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and amortization of $8,761,692 at September 23, 2016 and $8,603,892 at March 25, 2016 (Note 5) OTHER ASSETS: Other assets Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Accounts receivable 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Document and Entity Information
6 Months Ended
Sep. 23, 2016
shares
Document And Entity Information  
Entity Registrant Name IEH CORPORATION
Entity Central Index Key 0000050292
Document Type 10-Q
Document Period End Date Sep. 23, 2016
Amendment Flag false
Current Fiscal Year End Date --03-31
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 2,303,468
Document Fiscal Period Focus Q2
Document Fiscal Year Focus 2017
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BALANCE SHEETS - USD ($)
Sep. 23, 2016
Mar. 25, 2016
CURRENT ASSETS:    
Cash $ 1,514,177 $ 1,753,749
Accounts receivable, less allowances for doubtful accounts of $11,562 at September 23, 2016 and March 25, 2016 2,278,384 2,212,508
Inventories (Note 3) 8,032,420 7,250,300
Excess payments to accounts receivable factor (Note 6) 335,963 186,114
Prepaid expenses and other current assets (Note 4) 1,671,429 1,377,868
Total Current Assets 13,832,373 12,780,539
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and amortization of $8,761,692 at September 23, 2016 and $8,603,892 at March 25, 2016 (Note 5) 2,068,704 1,867,191
OTHER ASSETS:    
Other assets 54,386 54,361
Total Assets 15,955,463 14,702,091
CURRENT LIABILITIES:    
Accounts payable 226,027 195,831
Accrued corporate income taxes 504,274 294,412
Other current liabilities (Note 7) 770,347 631,280
Total Current Liabilities 1,500,648 1,121,523
Total Liabilities 1,500,648 1,121,523
STOCKHOLDERS' EQUITY:    
Common stock, $.01 par value; 10,000,000 shares authorized; 2,303,468 shares issued and outstanding at September 23, 2016 and March 25, 2016 23,035 23,035
Capital in excess of par value 2,744,573 2,744,573
Retained earnings (Note 8) 11,687,207 10,812,960
Total Stockholders' Equity 14,454,815 13,580,568
Total Liabilities and Stockholders' Equity $ 15,955,463 $ 14,702,091
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BALANCE SHEETS (Parenthetical) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Statement of Financial Position [Abstract]    
Allowances for doubtful accounts $ 11,562 $ 11,562
Accumulated depreciation and amortization $ 8,761,692 $ 8,603,892
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 10,000,000 10,000,000
Common stock, shares issued 2,303,468 2,303,468
Common stock, shares outstanding 2,303,468 2,303,468
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STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands
3 Months Ended 6 Months Ended
Sep. 23, 2016
Sep. 25, 2015
Sep. 23, 2016
Sep. 25, 2015
Income Statement [Abstract]        
REVENUE, net sales $ 5,259,784 $ 5,094,267 $ 9,719,421 $ 10,269,162
COSTS AND EXPENSES        
Cost of products sold 3,257,646 3,407,514 6,091,642 6,624,149
Selling, general and administrative 914,648 788,811 1,821,165 1,466,634
Interest expense 25,971 5,620 37,483 10,120
Depreciation 72,000 75,000 157,800 158,000
Total Costs and Expenses 4,270,265 4,276,945 8,108,090 8,258,903
OPERATING INCOME 989,519 817,322 1,611,331 2,010,259
OTHER INCOME 249 226 465 455
INCOME BEFORE INCOME TAXES 989,768 817,548 1,611,796 2,010,714
PROVISION FOR INCOME TAXES 453,117 682,126 737,549 1,128,689
NET INCOME $ 536,651 $ 135,422 $ 874,247 $ 882,025
BASIC AND DILUTED EARNINGS PER SHARE (Note 2) $ 0.23 $ 0.06 $ 0.38 $ 0.38
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (IN THOUSANDS) 2,303 2,303 2,303 2,303
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
STATEMENTS OF CASH FLOWS - USD ($)
6 Months Ended
Sep. 23, 2016
Sep. 25, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 874,247 $ 882,025
Adjustments to reconcile net income to net cash provided (used) by operating activities:    
Depreciation 157,800 158,000
Changes in assets and liabilities:    
(Increase) in accounts receivable (65,875) (405,152)
(Increase) in inventories (782,120) (168,676)
(Increase) decrease in excess payments to accounts receivable factor (149,849) 241,670
(Increase) in prepaid expenses and other current assets (293,561)
(Increase) in other assets (23)
Increase (decrease) in accounts payable 30,196 (16,230)
Increase (decrease) in other current liabilities 139,064 (114,749)
Increase in accrued corporate taxes 209,862 30,861
Total adjustments (754,506) (274,276)
NET CASH PROVIDED BY OPERATING ACTIVITIES 119,741 607,749
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisition of fixed assets (359,313) (258,948)
NET CASH (USED) BY INVESTING ACTIVITIES (359,313) (258,948)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Net activity on accounts receivable financing (822,788)
NET CASH (USED) BY FINANCING ACTIVITIES (822,788)
(DECREASE) IN CASH (239,572) (473,987)
CASH, beginning of period 1,753,749 1,721,410
CASH, end of period 1,514,177 1,247,423
Cash paid during the six months for:    
Interest 30,420 9,120
Income Taxes $ 808,783 $ 863,000
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INTERIM RESULTS AND BASIS OF PRESENTATION
6 Months Ended
Sep. 23, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
INTERIM RESULTS AND BASIS OF PRESENTATION
Note 1-  INTERIM RESULTS AND BASIS OF PRESENTATION: 

 

The accompanying unaudited financial statements as of September 23, 2016 and September 25, 2015 and for the six and three months then ended have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 23, 2016 and September 25, 2015 and the results of operations and cash flows for the six and three months then ended. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the six and three months ended September 23, 2016, are not necessarily indicative of the results to be expected for any subsequent quarter or the entire fiscal year. The balance sheet at March 25, 2016 has been derived from the audited financial statements at that date.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes, however, that the disclosures in this report are adequate to make the information presented not misleading in any material respect. The accompanying financial statements should be read in conjunction with the audited financial statements and notes thereto of IEH Corporation for the fiscal year ended March 25, 2016 included in the Company’s Annual Report on Form 10-K as filed with the SEC and the attached Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Sep. 23, 2016
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Note 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: 

 

Description of Business:

 

The Company designs, develops and manufactures printed circuit connectors for high performance applications. We have also developed a high performance plastic circular connector line. All of our products utilize the HYPERBOLOID contact design, a rugged high-reliability contact system ideally suited for high-stress environments. We are the only independent producer of HYPERBOLOID in the United States.

 

Our customers consist of OEM’s (Original Equipment Manufacturers), companies manufacturing medical equipment, and distributors who resell our products to OEMs. We sell our products directly and through regional representatives located in all regions of the United States, Canada, Israel, India, various Pacific Rim countries, South Korea and the European Union (EU).

 

The customers of the Company services are in the following markets: Government, Military, Aerospace, Medical, Automotive, Industrial, Test Equipment and Commercial Electronics. The Company appears on the Military Qualified Product Listing “QPL” to MIL-DTL-55302 and supply customer requested modifications to this specification. Sales to the Commercial Electronic and Military markets were 39% and 53%, respectively, of the Company’s net sales for the year ended March 25, 2016. The Company’s offering of “QPL” items has recently been expanded to include additional products.

 

In order to remain competitive, the Company has an internal program to upgrade, add and maintain machinery, review material costs and increase labor force productivity. We recently purchased several machines to increase the productivity of certain processes. This will help us meet this goal.

 

Business New Product Development:

 

The Company is sought after by many of its customers to design and manufacture custom connectors. This has created many new products that are innovative designs and employ new technologies. The Company continues to be successful because of its ability to assist its customers and create a new design, including engineering drawing packages, in a relatively short period of time. We will continue to support our customers to the best of our ability.

 

The circular product line of connectors introduced several years ago for the medical industry continues to be very rewarding for the Company. The line has been expanded to include connector cable assemblies utilizing the circular connectors.

 

A new product line featuring high density connectors is being added to the Company’s product offering. This offering should be available within the next few months. The Company expects the new product line to generate additional revenue.

 

The standard printed circuit board connectors we produce are continually being expanded and utilized in many of the military programs being built today. We have recently received approval for additional products that we can offer under the Military Qualified Product Listing “QPL.”

 

Accounting Period:

 

The Company maintains an accounting period based upon a 52-53 week year, which ends on the nearest Friday in business days to March 31. The year ended March 25, 2016 was comprised of 52 weeks. The current fiscal year, ending on March 31, 2017, will be comprised of 53 weeks.

 

Revenue Recognition:

 

Revenues are recognized at the shipping date of the Company's products. The Company has historically adopted the shipping terms that title to merchandise passes to the customer at the shipping point (FOB Shipping Point). At this juncture, title has passed, the Company has recognized the sale, inventory has been relieved, and the customer has been invoiced. The Company does not offer any discounts, credits or other sales incentives.

 

The Company’s policy with respect to customer returns and allowances as well as product warranty is as follows:

 

The Company will accept a return of defective product within one year from shipment for repair or replacement at the Company’s option. If the product is repairable, the Company at its own cost, will repair and return it to the customer. If unrepairable, the Company will either offer an allowance against payment or will reimburse the customer for the total cost of product.

 

Most of the Company’s products are custom ordered by customers for a specific use. The Company provides engineering services as part of the relationship with its customers in developing the custom product. The Company is not obligated to provide such engineering service to its customers. The Company does not invoice its customers separately for these services.

 

Inventories:

 

Inventories are stated at cost, on a first-in, first-out basis which does not exceed market value.

 

The Company manufactures products pursuant to specific technical and contractual requirements.

 

The Company historically purchases material in excess of its requirements to avail itself of favorable pricing as well as the possibility of receiving additional orders from customers. This excess may result in material not being used in subsequent periods, which may result in this material being deemed obsolete.

 

The Company annually reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company based upon historical experience has determined that if a part has not been used and purchased or an item of finished goods has not been sold in three years, it is deemed to be obsolete. The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience, is made to inventory in recognition of this impairment.

 

Concentration of Credit Risk:

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

 

Under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law on July 21, 2010, the Federal Deposit Insurance Corporation (FDIC) will permanently insure all accounts maintained with each financial institution up to $250,000 in the aggregate.

 

As of September 23, 2016, the Company had funds on deposit in the amount of $1,514,177 in one financial institution comprised of the following:

 

Non-interest bearing accounts  $625,942 
Interest bearing account   888,235 
   $1,514,177 

 

The Company has not experienced any losses in such accounts and believes its cash balances are not exposed to any significant risk.

 

Property, Plant and Equipment:

 

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the Double Declining Balance method over the estimated useful lives (5-7 years) of the related assets.

 

Maintenance and repair expenditures are charged to operations, and renewals and betterments are capitalized. Items of property, plant and equipment, which are sold, retired or otherwise disposed of, are removed from the asset and accumulated depreciation or amortization accounts. Any gain or loss thereon is either credited or charged to operations.

 

Income Taxes:

 

The Company follows the policy of treating investment tax credits as a reduction in the provision for federal income tax in the year in which the credit arises or may be utilized. Deferred income taxes arise from temporary differences resulting from different depreciation methods used for financial and income tax purposes. The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, which includes the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.”

 

Net Income Per Share:

 

The Company has adopted the provisions of ASC Topic 260, Earnings per Share, which includes the provisions of SFAS No. 128, “Earnings Per Share,” which requires the disclosure of “basic” and “diluted” earnings (loss) per share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share is similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to reflect the dilutive effect of potential common shares, such as those issuable upon the exercise of stock or warrants, as if they had been issued. For the six and three months ended September 23, 2016 and September 25, 2015, respectively, there were no items of potential dilution that would impact on the computation of diluted earnings or loss per share.

 

Fair Value of Financial Instruments:

 

The carrying value of the Company’s financial instruments, consisting of accounts receivable, accounts payable, and borrowings, approximate their fair value due to the relatively short maturity (three months) of these instruments.

  

Use of Estimates:

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual amounts could differ from those estimates.

 

Impairment of Long-Lived Assets:

 

The Company has adopted the provisions of ASC Topic, 360, Property, Plant and Equipment-Impairment or Disposal of Long-Lived Assets which includes the provisions of SFAS No. 144, “Accounting for The Impairment or Disposal of Long-Lived Assets,” and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has adopted SFAS No. 144. There were no long-lived asset impairments recognized by the Company for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

Reporting Comprehensive Income:

 

The Company has adopted the provisions of ASC Topic, 220, Comprehensive Income which includes the provisions of SFAS No. 130, “Reporting Comprehensive Income.” This Statement established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in an entity’s financial statements. This Statement requires an entity to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of balance sheet. There were no material items of comprehensive income to report for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

Segment Information:

 

The Company has adopted the provisions of ASC Topic, 280, Segment Reporting which includes the provisions of SFAS No. 131, “Disclosures About Segment of An Enterprise and Related Information.” This Statement requires public enterprises to report financial and descriptive information about its reportable operating segments and establishes standards for related disclosures about product and services, geographic areas, and major customers. The adoption of ASC Topic 280 did not affect the Company’s presentation of its results of operations or financial position.

 

Research and Development:

 

The Company provides personalized engineering services to its customers by designing connectors for specific customer applications. The employment of electromechanical engineers is the anticipated cornerstone of the Company’s future growth. The Company maintains a testing laboratory where its engineers experiment with new connector designs based on changes in technology and in an attempt to create innovative, more efficient connector designs.

 

The Company did not expend any funds on nor receive any revenues related to customer sponsored research and development activities relating to the development of new designs, techniques and the improvement of existing designs during the six and three months ended September 23, 2016 and September 25, 2015, respectively.

 

Recent Accounting Pronouncements:

 

The Financial Accounting Standards Board (“FASB”) has issued certain accounting standards updates as of June 24, 2016 that will become effective in subsequent periods. The Company believes that none of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during the six and three months ended September 23, 2016 and September 25, 2015, and it does not believe that any of those pronouncements will have a significant impact on the Company’s financial statements at the time that they become effective.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVENTORIES
6 Months Ended
Sep. 23, 2016
Inventory Disclosure [Abstract]  
INVENTORIES
Note 3-  INVENTORIES: 

 

Inventories are stated at cost, on a first-in, first-out basis, which does not exceed market value.

 

The Company manufactures products pursuant to specific technical and contractual requirements. The Company historically purchases material in excess of its requirements to avail itself of favorable pricing as well as the possibility of receiving additional orders from customers. This excess may result in material not being used in subsequent periods, which may result in this material being deemed obsolete.

 

The Company annually reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company based upon historical experience has determined that if a part has not been used and purchased or an item of finished goods has not been sold in three years, it is deemed to be obsolete.

 

The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience, is made to inventory in recognition of this impairment.

 

Inventories were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Raw materials  $5,367,107   $4,844,510 
Work in progress   660,704    596,371 
Finished goods   2,004,609    1,809,419 
   $8,032,420   $7,250,300 
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
PREPAID EXPENSES AND OTHER CURRENT ASSETS
6 Months Ended
Sep. 23, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
PREPAID EXPENSES AND OTHER CURRENT ASSETS
Note 4-  PREPAID EXPENSES AND OTHER CURRENT ASSETS: 

 

Prepaid expenses and other current assets were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Prepaid insurance  $42,145   $22,834 
Prepaid corporate taxes   1,626,493    1,345,459 
Other current assets   2,791    9,575 
   $1,671,429   $1,377,868 
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
PROPERTY, PLANT AND EQUIPMENT
6 Months Ended
Sep. 23, 2016
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT
Note 5-  PROPERTY, PLANT AND EQUIPMENT: 

 

Property, plant and equipment were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Computers  $401,724   $394,175 
Leasehold improvements   866,939    845,589 
Machinery and equipment   6,012,406    5,767,672 
Tools and dies   3,369,633    3,283,953 
Furniture and fixture   170,644    170,644 
Website development cost   9,050    9,050 
    10,830,396    10,471,083 
Less: accumulated depreciation and amortization   (8,761,692)   (8,603,892)
   $2,068,704   $1,867,191 

 

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCOUNTS RECEIVABLE FINANCING
6 Months Ended
Sep. 23, 2016
Receivables [Abstract]  
ACCOUNTS RECEIVABLE FINANCING
Note 6-  ACCOUNTS RECEIVABLE FINANCING: 

 

The Company entered into an accounts receivable financing agreement with a non-bank lending institution (“Factor”) whereby it can borrow up to 80 percent of its eligible receivables (as defined in the financing agreement) at an interest rate of 2.5% above JP Morgan Chase’s publicly announced rate with a minimum rate of 12% per annum. The financing agreement has an initial term of one year and will automatically renew for successive one-year terms, unless terminated by the Company or the Factor upon receiving 60 days prior notice. Funds advanced by the Factor are secured by the Company’s accounts receivable and inventories.

 

At September 23, 2016, the Company had reported excess payments to the Factor of $335,963. As of March 25, 2016, the Company had reported excess payments to the Factor of $186,114. These excess payments are reported in the accompanying financial statements as of September 23, 2016 and March 25, 2016 as “Excess payments to accounts receivable factor.”

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER CURRENT LIABILITIES
6 Months Ended
Sep. 23, 2016
Other Liabilities Disclosure [Abstract]  
OTHER CURRENT LIABILITIES
Note 7-  OTHER CURRENT LIABILITIES: 

 

Other current liabilities were comprised of the following:

 

   Sept. 23,   March 25, 
   2016   2016 
         
Payroll and vacation accruals  $690,277   $560,995 
Sales commissions   62,542    50,357 
Insurance   17,528    17,014 
Other       2,914 
   $770,347   $631,280 
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
CHANGES IN STOCKHOLDERS' EQUITY
6 Months Ended
Sep. 23, 2016
Equity [Abstract]  
CHANGES IN STOCKHOLDERS' EQUITY
Note 8-  CHANGES IN STOCKHOLDERS’ EQUITY: 

 

The accumulated retained earnings increased by $874,247, which represents the net income for the six months ended September 23, 2016. Accordingly, the Company reported accumulated retained earnings of $11,687,207 as of September 23, 2016.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
2011 EQUITY INCENTIVE PLAN
6 Months Ended
Sep. 23, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
2011 EQUITY INCENTIVE PLAN

Note 9-  2011 EQUITY INCENTIVE PLAN: 

 

On August 31, 2011, the Company’s shareholders approved the adoption of the Company’s 2011 Equity Incentive Plan (“2011 Plan”) to provide for the grant of stock options and restricted stock awards to purchase up to 750,000 shares of the Company’s common stock to all employees, consultants and other eligible participants including senior management and members of the Board of Directors of the Company. The 2011 Plan replaced the prior 2002 Employee Stock Option Plan which had expired in accordance with its terms.

 

Options granted to employees under the 2011 Plan may be designated as options which qualify for incentive stock option treatment under Section 422A of the Internal Revenue Code, or options which do not qualify (non-qualified stock options).

 

Under the 2011 Plan, the exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s common stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten percent (10%) or greater shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value of the Company’s common stock and the option must not be exercisable after the expiration of five years from the day of the grant. The 2011 Plan also provides that holders of options that wish to pay for the exercise price of their options with shares of the Company’s common stock must have beneficially owned such stock for at least six months prior to the exercise date.

 

Exercise prices of non-incentive stock options may be less than the fair market value of the Company’s common stock.

 

The aggregate fair market value of shares subject to options granted to a participant(s) that are designated as incentive stock options, and which become exercisable in any calendar year, shall not exceed $100,000

 

On July 1, 2015, our Board of Directors granted 245,000 options to purchase shares of the Company’s common stock under the 2011 Plan as follows: (i) Michael Offerman, our Chief Executive Officer, was granted 75,000 options; (ii) Robert Knoth, our Chief Financial Officer, was granted 50,000 options; (iii) four non-executive officer key employees were granted 110,000 options; and (iv) each of our non-management directors, Allen Gottlieb and Gerald Chafetz, was granted 5,000 options. The stock options (i) have a ten-year term; (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($6.00), except that the options granted to Michael Offerman has an exercise price equal to 110% of such fair market value because he owns ten percent (10%) or greater of the Company’s outstanding common stock; and (iii) were all immediately vested. In the event of the termination of each recipient’s employment by, or association with, the Company (as applicable), the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

Effective July 15, 2016, the Board of Directors of the Company unanimously voted to increase the number of directors from three to six directors and elected David Offerman as a Class II director and Dr. Sonia Marciano and Eric C. Hugel as Class II Directors.

 

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors will receive a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares will vest immediately (August 15, 2016); (ii) 2,000 shares will vest on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

The table below summarizes the option awards for the named executive officers and non-management directors:

 

Name  Stock Option Grants
Michael Offerman  75,000  
Robert Knoth  50,000  
Allen Gottlieb  5,000
Gerald Chafetz  5,000
Eric C. Hugel  5,000
Sonia Marciano  5,000

 

The Company intends to provide additional information regarding the compensation awarded to the named executive officers and non-management directors in respect of and during the fiscal year ended March 25, 2016, in the proxy statement for the Company’s 2016 annual meeting of stockholders.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
CASH BONUS PLAN
6 Months Ended
Sep. 23, 2016
Compensation Related Costs [Abstract]  
CASH BONUS PLAN
Note 10-  CASH BONUS PLAN: 

 

In 1987, the Company adopted a cash bonus plan (“Cash Bonus Plan”) for executive officers. Contributions to the Cash Bonus Plan are made by the Company only after pre-tax operating profits exceed $150,000 for a fiscal year, and then to the extent of 10% of the excess of the greater of $150,000 or 25% of pre-tax operating profits. Accordingly, the Company has accrued a contribution provision of $171,700 for the six months ended September 23, 2016. For the year ended March 25, 2016, the Company’s contribution was $227,700.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Sep. 23, 2016
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
Note 11-  COMMITMENTS AND CONTINGENCIES: 

 

The Company leases space for its corporate offices (including its manufacturing facility) at 140 58th Street, Suite 8E, Brooklyn, New York. The lease term runs from December 1, 2010 through November 30, 2020. The basic minimum annual rentals are as follows:

 

Fiscal year ending March:    
     
2017  $87,440 
2018   178,360 
2019   183,720 
2020   189,200 
2021   128,640 
   $767,360 

 

The rental expense for the six months ended September 23, 2016 was $85,740 and $83,220 for the six months ended September 25, 2015.

 

The Company has a collective bargaining multi-employer pension plan (“Multi-Employer Plan”) with the United Auto Workers of America, Local 259 (“UAW”). Contributions are made by the Company in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the Multi-Employer Pension Plan Amendment Act of 1990 (the “1990 Act”), the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. Generally, these are contingent upon termination, withdrawal, or partial withdrawal from the Multi-Employer Plan.

 

The Company has not taken any action to terminate, withdraw or partially withdraw from the Multi-Employer Plan, nor does it intend to do so in the future. Under the 1990 Act, liabilities would be based upon the Company’s proportional share of the Multi-Employer Plan’s unfunded vested benefits which is currently not available. The amount of accumulated benefits and net assets of such Plan also is not currently available to the Company. The total contributions charged to operations under the provisions of the Multi-Employer Plan were $65,265 for the six months ended September 23, 2016 and $61,977 for the six months ended September 25, 2015.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUBSEQUENT EVENTS
6 Months Ended
Sep. 23, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

Note 12- SUBSEQUENT EVENTS:

 

Election of New Directors. Effective July 15, 2016, the Board of Directors of the Company unanimously voted to increase the number of directors from three to six directors and elected David Offerman as a Class II director and Dr. Sonia Marciano and Eric C. Hugel as Class II Directors.

 

Effective August 15, 2016, the Board of Directors also approved the granting of stock options to purchase shares of the Company’s common stock under the 2011 Plan to each of Dr. Marciano and Mr. Hugel as follows: Each of the new non-management directors will receive a grant of options totaling 5,000 shares each subject to the following vesting schedule: (i) 1,000 shares will vest immediately (August 15, 2016); (ii) 2,000 shares will vest on August 15, 2017; and (iii) 2,000 shares will vest on August 15, 2018. The stock options (i) have a ten-year term; and (ii) have an exercise price equal to the fair market value of the Company’s common stock as determined under the 2011 Plan, as reported in the OTCBB, on the date of grant ($5.30). In the event of the termination of each recipient’s association with the Company, the options will remain exercisable in accordance with the terms of the 2011 Plan.

 

Biographical information of the three new directors:

 

David Offerman, 41, is the Vice President – Sales and Marketing of the Company. He joined the Company in September 2004 as the National Sales Manager and was appointed to his current position in April 2011. Prior to joining IEH, David worked as an account executive and sales manager in the telecommunication industry. David graduated from the University of Michigan in 1993 with a Bachelor of Arts in film and communications. In 2016 he received an MBA from the NYU Stern School of Business with a concentration in leadership and management. David is the son of Michael Offerman, President and Chief Executive Officer of the Company.

 

Dr. Sonia Marciano, 54, is a clinical professor at the NYU Stern School of Business since July 2007 where she teaches courses and manages academic programs. She graduated from the University of Chicago in 1984 with a Bachelor of Arts degree. In 2000, Dr. Marciano received from the University of Chicago her MBA in Economics and Finance and her PhD in Business Economics.

 

Eric C. Hugel, 46, is the Co-Chief Executive Officer and Chief Financial Officer of Deb’s Buried Treasure, an online retailer, since July 2014. He is also the owner of Eric C. Hugel, CPA, CFA, a business that provides tax and business advisory services. From March 2013 to February 2014, Mr. Hugel held the position of Senior Institutional Specialist in U.S. Fundamental Equity Research Analyst at McGraw Hill Financial – S&P Capital IQ providing investment advisory services. In particular he provided research and analysis in the U.S. aerospace and defense and industrial conglomerates sectors. From July 2002 through June 2012 he was a managing director at Stephens Inc. providing investment banking services in the U.S. aerospace and defenses sectors. Mr. Hugel graduated from Lehigh University in 1993 with a Bachelor of Science in accounting.

 

Amendment to Accounts Receivable Financing Agreement. Effective November 1, 2016, the Company and the Factor executed an amendment to the accounts receivable financing agreement dated March 14, 1990 to provide that (i) the applicable interest under such agreement is reduced from 12% to 6% per annum; and (ii) the current term of such agreement is extended to March 14, 2018 provided that each subsequent renewal term shall remain one (1) year thereafter in accordance with the terms of such agreement.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Sep. 23, 2016
Accounting Policies [Abstract]  
Business New Product Development

Business New Product Development:

 

The Company is sought after by many of its customers to design and manufacture custom connectors. This has created many new products that are innovative designs and employ new technologies. The Company continues to be successful because of its ability to assist its customers and create a new design, including engineering drawing packages, in a relatively short period of time. We will continue to support our customers to the best of our ability.

 

The circular product line of connectors introduced several years ago for the medical industry continues to be very rewarding for the Company. The line has been expanded to include connector cable assemblies utilizing the circular connectors.

 

A new product line featuring high density connectors is being added to the Company’s product offering. This offering should be available within the next few months. The Company expects the new product line to generate additional revenue.

 

The standard printed circuit board connectors we produce are continually being expanded and utilized in many of the military programs being built today. We have recently received approval for additional products that we can offer under the Military Qualified Product Listing “QPL.”

Accounting Period

Accounting Period:

 

The Company maintains an accounting period based upon a 52-53 week year, which ends on the nearest Friday in business days to March 31. The year ended March 25, 2016 was comprised of 52 weeks. The current fiscal year, ending on March 31, 2017, will be comprised of 53 weeks.

Revenue Recognition

Revenue Recognition:

 

Revenues are recognized at the shipping date of the Company's products. The Company has historically adopted the shipping terms that title to merchandise passes to the customer at the shipping point (FOB Shipping Point). At this juncture, title has passed, the Company has recognized the sale, inventory has been relieved, and the customer has been invoiced. The Company does not offer any discounts, credits or other sales incentives.

 

The Company’s policy with respect to customer returns and allowances as well as product warranty is as follows:

 

The Company will accept a return of defective product within one year from shipment for repair or replacement at the Company’s option. If the product is repairable, the Company at its own cost, will repair and return it to the customer. If unrepairable, the Company will either offer an allowance against payment or will reimburse the customer for the total cost of product.

 

Most of the Company’s products are custom ordered by customers for a specific use. The Company provides engineering services as part of the relationship with its customers in developing the custom product. The Company is not obligated to provide such engineering service to its customers. The Company does not invoice its customers separately for these services.

Inventories

Inventories:

 

Inventories are stated at cost, on a first-in, first-out basis which does not exceed market value.

 

The Company manufactures products pursuant to specific technical and contractual requirements.

 

The Company historically purchases material in excess of its requirements to avail itself of favorable pricing as well as the possibility of receiving additional orders from customers. This excess may result in material not being used in subsequent periods, which may result in this material being deemed obsolete.

 

The Company annually reviews its purchase and usage activity of its inventory of parts as well as work in process and finished goods to determine which items of inventory have become obsolete within the framework of current and anticipated orders. The Company based upon historical experience has determined that if a part has not been used and purchased or an item of finished goods has not been sold in three years, it is deemed to be obsolete. The Company estimates which materials may be obsolete and which products in work in process or finished goods may be sold at less than cost. A periodic adjustment, based upon historical experience, is made to inventory in recognition of this impairment.

Concentration of Credit Risk

Concentration of Credit Risk:

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

 

Under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law on July 21, 2010, the Federal Deposit Insurance Corporation (FDIC) will permanently insure all accounts maintained with each financial institution up to $250,000 in the aggregate.

 

As of September 23, 2016, the Company had funds on deposit in the amount of $1,514,177 in one financial institution comprised of the following:

 

Non-interest bearing accounts  $625,942 
Interest bearing account   888,235 
   $1,514,177 

 

The Company has not experienced any losses in such accounts and believes its cash balances are not exposed to any significant risk.

Property, Plant and Equipment

Property, Plant and Equipment:

 

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the Double Declining Balance method over the estimated useful lives (5-7 years) of the related assets.

 

Maintenance and repair expenditures are charged to operations, and renewals and betterments are capitalized. Items of property, plant and equipment, which are sold, retired or otherwise disposed of, are removed from the asset and accumulated depreciation or amortization accounts. Any gain or loss thereon is either credited or charged to operations.

Income Taxes

Income Taxes:

 

The Company follows the policy of treating investment tax credits as a reduction in the provision for federal income tax in the year in which the credit arises or may be utilized. Deferred income taxes arise from temporary differences resulting from different depreciation methods used for financial and income tax purposes. The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, which includes the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.”

Net Income Per Share

Net Income Per Share:

 

The Company has adopted the provisions of ASC Topic 260, Earnings per Share, which includes the provisions of SFAS No. 128, “Earnings Per Share,” which requires the disclosure of “basic” and “diluted” earnings (loss) per share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share is similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to reflect the dilutive effect of potential common shares, such as those issuable upon the exercise of stock or warrants, as if they had been issued. For the six and three months ended September 23, 2016 and September 25, 2015, respectively, there were no items of potential dilution that would impact on the computation of diluted earnings or loss per share.

Fair Value of Financial Instruments

Fair Value of Financial Instruments:

 

The carrying value of the Company’s financial instruments, consisting of accounts receivable, accounts payable, and borrowings, approximate their fair value due to the relatively short maturity (three months) of these instruments.

Use of Estimates

Use of Estimates:

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual amounts could differ from those estimates.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets:

 

The Company has adopted the provisions of ASC Topic, 360, Property, Plant and Equipment-Impairment or Disposal of Long-Lived Assets which includes the provisions of SFAS No. 144, “Accounting for The Impairment or Disposal of Long-Lived Assets,” and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has adopted SFAS No. 144. There were no long-lived asset impairments recognized by the Company for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

Reporting Comprehensive Income

Reporting Comprehensive Income:

 

The Company has adopted the provisions of ASC Topic, 220, Comprehensive Income which includes the provisions of SFAS No. 130, “Reporting Comprehensive Income.” This Statement established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in an entity’s financial statements. This Statement requires an entity to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of balance sheet. There were no material items of comprehensive income to report for the six and three months ended September 23, 2016 and September 25, 2015, respectively.

Segment Information

Segment Information:

 

The Company has adopted the provisions of ASC Topic, 280, Segment Reporting which includes the provisions of SFAS No. 131, “Disclosures About Segment of An Enterprise and Related Information.” This Statement requires public enterprises to report financial and descriptive information about its reportable operating segments and establishes standards for related disclosures about product and services, geographic areas, and major customers. The adoption of ASC Topic 280 did not affect the Company’s presentation of its results of operations or financial position.

Research and Development

Research and Development:

 

The Company provides personalized engineering services to its customers by designing connectors for specific customer applications. The employment of electromechanical engineers is the anticipated cornerstone of the Company’s future growth. The Company maintains a testing laboratory where its engineers experiment with new connector designs based on changes in technology and in an attempt to create innovative, more efficient connector designs.

 

The Company did not expend any funds on nor receive any revenues related to customer sponsored research and development activities relating to the development of new designs, techniques and the improvement of existing designs during the six and three months ended September 23, 2016 and September 25, 2015, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements:

 

The Financial Accounting Standards Board (“FASB”) has issued certain accounting standards updates as of June 24, 2016 that will become effective in subsequent periods. The Company believes that none of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during the six and three months ended September 23, 2016 and September 25, 2015, and it does not believe that any of those pronouncements will have a significant impact on the Company’s financial statements at the time that they become effective.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
6 Months Ended
Sep. 23, 2016
Accounting Policies [Abstract]  
Schedule of funds on deposit
Non-interest bearing accounts  $625,942 
Interest bearing account   888,235 
   $1,514,177 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVENTORIES (Tables)
6 Months Ended
Sep. 23, 2016
Inventory Disclosure [Abstract]  
Schedule of inventories
   Sept. 23,   March 25, 
   2016   2016 
         
Raw materials  $5,367,107   $4,844,510 
Work in progress   660,704    596,371 
Finished goods   2,004,609    1,809,419 
   $8,032,420   $7,250,300 
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)
6 Months Ended
Sep. 23, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Schedule of prepaid expenses and other current assets
   Sept. 23,   March 25, 
   2016   2016 
         
Prepaid insurance  $42,145   $22,834 
Prepaid corporate taxes   1,626,493    1,345,459 
Other current assets   2,791    9,575 
   $1,671,429   $1,377,868 
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
PROPERTY, PLANT AND EQUIPMENT (Tables)
6 Months Ended
Sep. 23, 2016
Property, Plant and Equipment [Abstract]  
Schedule of property, plant and equipment
   Sept. 23,   March 25, 
   2016   2016 
         
Computers  $401,724   $394,175 
Leasehold improvements   866,939    845,589 
Machinery and equipment   6,012,406    5,767,672 
Tools and dies   3,369,633    3,283,953 
Furniture and fixture   170,644    170,644 
Website development cost   9,050    9,050 
    10,830,396    10,471,083 
Less: accumulated depreciation and amortization   (8,761,692)   (8,603,892)
   $2,068,704   $1,867,191 
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER CURRENT LIABILITIES (Tables)
6 Months Ended
Sep. 23, 2016
Other Liabilities Disclosure [Abstract]  
Schedule of other current liabilities
   Sept. 23,   March 25, 
   2016   2016 
         
Payroll and vacation accruals  $690,277   $560,995 
Sales commissions   62,542    50,357 
Insurance   17,528    17,014 
Other       2,914 
   $770,347   $631,280 
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
2011 EQUITY INCENTIVE PLAN (Tables)
6 Months Ended
Sep. 23, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Options Awarded to Officers and Directors

 

Name  Stock Option Grants
Michael Offerman  75,000  
Robert Knoth  50,000  
Allen Gottlieb  5,000
Gerald Chafetz  5,000
Eric C. Hugel  5,000
Sonia Marciano  5,000

 

XML 35 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Tables)
6 Months Ended
Sep. 23, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of basic minimum annual rental payments
Fiscal year ending March:    
     
2017  $87,440 
2018   178,360 
2019   183,720 
2020   189,200 
2021   128,640 
   $767,360 
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($)
6 Months Ended 12 Months Ended
Sep. 23, 2016
Sep. 25, 2015
Mar. 25, 2016
Property, Plant and Equipment [Line Items]      
Number of days in fiscal period 371 days 364 days  
FDIC coverage of deposits $ 250,000    
Commercial Electronic Markets [Member] | Sales Revenue, Net [Member]      
Property, Plant and Equipment [Line Items]      
Percentage of sales     39.00%
Military Markets [Member] | Sales Revenue, Net [Member]      
Property, Plant and Equipment [Line Items]      
Percentage of sales     53.00%
Property, Plant and Equipment [Member] | Minimum [Member]      
Property, Plant and Equipment [Line Items]      
Useful lives of property plant and equipment 5 years    
Property, Plant and Equipment [Member] | Maximum [Member]      
Property, Plant and Equipment [Line Items]      
Useful lives of property plant and equipment 7 years    
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Funds on Deposit) (Details) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Sep. 25, 2015
Mar. 27, 2015
Cash and Cash Equivalents [Line Items]        
Cash $ 1,514,177 $ 1,753,749 $ 1,247,423 $ 1,721,410
Non-interest bearing accounts [Member]        
Cash and Cash Equivalents [Line Items]        
Cash 625,942      
Interest bearing account [Member]        
Cash and Cash Equivalents [Line Items]        
Cash $ 888,235      
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVENTORIES (Details) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Inventory Disclosure [Abstract]    
Raw materials $ 5,367,107 $ 4,844,510
Work in progress 660,704 596,371
Finished goods 2,004,609 1,809,419
Inventories $ 8,032,420 $ 7,250,300
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Prepaid insurance $ 42,145 $ 22,834
Prepaid corporate taxes 1,626,493 1,345,459
Other current assets 2,791 9,575
Prepaid expenses and other current assets $ 1,671,429 $ 1,377,868
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Property, Plant and Equipment, Gross $ 10,830,396 $ 10,471,083
Less: accumulated depreciation and amortization (8,761,692) (8,603,892)
Property, Plant and Equipment, Net 2,068,704 1,867,191
Computers [Member]    
Property, Plant and Equipment, Gross 401,724 394,175
Leasehold improvements [Member]    
Property, Plant and Equipment, Gross 866,939 845,589
Machinery and equipment [Member]    
Property, Plant and Equipment, Gross 6,012,406 5,767,672
Tools and dies [Member]    
Property, Plant and Equipment, Gross 3,369,633 3,283,953
Furniture and fixture [Member]    
Property, Plant and Equipment, Gross 170,644 170,644
Website development cost [Member]    
Property, Plant and Equipment, Gross $ 9,050 $ 9,050
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
ACCOUNTS RECEIVABLE FINANCING (Narrative) (Details) - USD ($)
6 Months Ended
Sep. 23, 2016
Mar. 25, 2016
Short-term Debt [Line Items]    
Excess payments to the Factor $ 335,963 $ 186,114
Accounts Receivable Financing Agreement [Member]    
Short-term Debt [Line Items]    
Financing agreement - percentage of eligible receivables that may be borrowed 80.00%  
Interest rate above JPMC rate, ceiling 2.50%  
Interest rate floor 12.00%  
Financing agreement term (years) 1 year  
Financing agreement notice (days) 60 days  
Excess payments to the Factor $ 335,963 $ 186,114
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
OTHER CURRENT LIABILITIES (Details) - USD ($)
Sep. 23, 2016
Mar. 25, 2016
Other Liabilities Disclosure [Abstract]    
Payroll and vacation accruals $ 690,277 $ 560,995
Sales commissions 62,542 50,357
Insurance 17,528 17,014
Other 2,914
Total other current liabilities $ 770,347 $ 631,280
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
CHANGES IN STOCKHOLDERS' EQUITY (Details) - USD ($)
3 Months Ended 6 Months Ended
Sep. 23, 2016
Sep. 25, 2015
Sep. 23, 2016
Sep. 25, 2015
Mar. 25, 2016
Equity [Abstract]          
Net income $ 536,651 $ 135,422 $ 874,247 $ 882,025  
Retained earnings $ 11,687,207   $ 11,687,207   $ 10,812,960
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
2011 EQUITY INCENTIVE PLAN (Narrative) (Details) - USD ($)
6 Months Ended
Jul. 01, 2015
Sep. 23, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]    
Number of Stock Options and Restricted Stock Awards authorized under 2011 Equity Incentive Plan   750,000
Incentive stock options, granted to shareholder holdings (percent)   10.00%
Incentive stock options, exercise price as compared to fair market value (percent) to majority shareholder   110.00%
Expiration period from grant date 5 years 5 years
FMV of shares subject to options granted to participants and designated as incentive stock options, maximum amount   $ 100,000
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
2011 EQUITY INCENTIVE PLAN (Grants Under Plan) (Details) - $ / shares
6 Months Ended
Aug. 15, 2016
Jul. 01, 2015
Sep. 23, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   245,000  
Expiration period from grant date   5 years 5 years
Incentive stock options, exercise price as compared to fair market value (percent) to majority shareholder     110.00%
Incentive stock options, granted to shareholder holdings (percent)     10.00%
Exercise price   $ 6.00  
Michael Offerman [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   75,000  
Expiration period from grant date   10 years  
Incentive stock options, exercise price as compared to fair market value (percent) to majority shareholder   110.00%  
Incentive stock options, granted to shareholder holdings (percent)   10.00%  
Robert Knoth [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   50,000  
Expiration period from grant date   10 years  
Exercise price   $ 6.00  
Four non-executive officer key employees [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   110,000  
Expiration period from grant date   10 years  
Exercise price   $ 6.00  
Gerald Chafetz [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   5,000  
Expiration period from grant date   10 years  
Exercise price   $ 6.00  
Allen Gottlieb [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period   5,000  
Expiration period from grant date   10 years  
Exercise price   $ 6.00  
Eric C. Hugel [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period 5,000    
Expiration period from grant date 10 years    
Exercise price $ 5.30    
Sonia Marciano [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period 5,000    
Expiration period from grant date 10 years    
Exercise price $ 5.30    
Non-management director [Member] | Share-based Compensation Award, Tranche One [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period 1,000    
Non-management director [Member] | Share-based Compensation Award, Tranche Two [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period 2,000    
Non-management director [Member] | Share-based Compensation Award, Tranche Three [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Options granted in period 2,000    
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
CASH BONUS PLAN (Narrative) (Details) - USD ($)
6 Months Ended 12 Months Ended
Sep. 23, 2016
Mar. 25, 2016
Compensation Related Costs [Abstract]    
Cash Bonus Plan, threshold of pre-tax operating profits $ 150,000  
Cash Bonus Plan, contribution tier 1 10.00%  
Cash Bonus Plan, contribution tier 2 25.00%  
Cash Bonus Plan, contribution $ 171,700 $ 227,700
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($)
6 Months Ended
Sep. 23, 2016
Sep. 25, 2015
Commitments and Contingencies Disclosure [Abstract]    
Rental expense $ 85,740 $ 83,220
Pension plan contributions $ 65,265 $ 61,977
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
COMMITMENTS AND CONTINGENCIES (Basic Minimum Annual Rentals) (Details)
Sep. 23, 2016
USD ($)
Future Minimum Rental Payments  
2017 $ 87,440
2018 178,360
2019 183,720
2020 189,200
2021 128,640
Total $ 767,360
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
SUBSEQUENT EVENTS (Details) - $ / shares
1 Months Ended 6 Months Ended
Aug. 15, 2016
Jul. 01, 2015
Nov. 01, 2016
Sep. 23, 2016
Options granted in period   245,000    
Expiration period from grant date   5 years   5 years
Exercise price   $ 6.00    
Accounts Receivable Financing Agreement [Member]        
Interest rate floor       12.00%
Subsequent Event [Member] | Accounts Receivable Financing Agreement [Member]        
Interest rate floor     6.00%  
Eric C. Hugel [Member]        
Options granted in period 5,000      
Expiration period from grant date 10 years      
Exercise price $ 5.30      
Sonia Marciano [Member]        
Options granted in period 5,000      
Expiration period from grant date 10 years      
Exercise price $ 5.30      
Non-management director [Member] | Share-based Compensation Award, Tranche One [Member]        
Options granted in period 1,000      
Non-management director [Member] | Share-based Compensation Award, Tranche Two [Member]        
Options granted in period 2,000      
Non-management director [Member] | Share-based Compensation Award, Tranche Three [Member]        
Options granted in period 2,000      
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