Note 8 - Segment Information

6 Months Ended

Sep. 30, 2012

Segment Reporting Disclosure [Text Block]

Note 8 – Segment Information

In accordance with FASB ASC 280, “Disclosures about Segments of an Enterprise and related information”, the Company determined it has two reportable segments - avionics government and avionics commercial.  There are no inter-segment revenues.

The Company is organized primarily on the basis of its avionics products.  The avionics government segment consists primarily of the design, manufacture, and sale of test equipment to the U.S. and foreign governments and militaries either directly or through distributors.  The avionics commercial segment consists of design, manufacture, and sale of test equipment to domestic and foreign airlines, directly or through commercial distributors, and to general aviation repair and maintenance shops.  The Company develops and designs test equipment for the avionics industry and as such, the Company’s products and designs cross segments.

Management evaluates the performance of its segments and allocates resources to them based on gross margin.  The Company’s general and administrative costs and sales and marketing expenses, and engineering costs are not segment specific.  As a result, all operating expenses are not managed on a segment basis.  Net interest includes expenses on debt and income earned on cash balances, both maintained at the corporate level.

The table below presents information about reportable segments within the avionics business for the three and six month periods ending September 30, 2012 and 2011:

Three Months Ended September 30, 2012	Avionics Government		Avionics Commercial		Avionics Total			Corporate Items			Total
Net sales		1,847,545		547,405		2,394,950			-			2,394,950
Cost of Sales		1,296,733		495,794		1,792,527			-			1,792,527
Gross Margin		550,812		51,611		602,423			-			602,423
Engineering, research, and development						548,800						548,800
Selling, general, and admin.						310,147			376,199			686,346
Amortization of debt discount									31,009			31,009
Amortization of debt expense									56,711			56,711
Financing costs									26,477			26,477
Change in fair value of common stock warrants									337			337
Interest  expense, net									131,019			131,019
Total expenses						858,947			621,752			1,480,699
Loss before income taxes						(256,524	)		(621,752	)		(878,276	)

Three Months Ended September 30, 2011	Avionics Government		Avionics Commercial		Avionics Total		Corporate Items			Total
Net sales		3,161,291		513,063		3,674,354		-			3,674,354
Cost of Sales		1,826,234		364,893		2,191,127		-			2,191,127
Gross Margin		1, 335,057		148,170		1,483,227		-			1,483,227
Engineering, research, and development						677,933					677,933
Selling, general, and admin.						326,027		341,847			667,874
Amortization of debt discount						-		13,396			13,396
Amortization of debt expense						-		27,080			27,080
Change in fair value of      common stock warrants						-		(104,891	)		(104,891	)
Interest expense, net						-		96,315			96,315
Total expenses						1,003,960		373,747			1,377,707
Income (loss) before income taxes					$	479,267	$	(373,747	)	$	105,520

Six Months Ended September 30, 2012	Avionics Government		Avionics Commercial		Avionics Total			Corporate Items			Total
Net sales		2,397,509		1,174,729		3,572,238			-			3,572,238
Cost of Sales		1,571,288		1,114,833		2,686,121			-			2,686,121
Gross Margin		826,221		59,896		886,117			-			886,117
Engineering, research, and development						1,127,404						1,127,404
Selling, general, and admin.						627,137			713,097			1,340,234
Amortization of debt discount									44,401			44,401
Amortization of debt expense									83,791			83,791
Financing costs									26,477			26,477
Change in fair value of common stock warrants									(249,057	)		(249,057	)
Interest expense, net									223,487			223,487
Total expenses						1,754,541			842,196			2,596,737
Loss before income						(868,424	)		(842,196	)		(1,710,620	)

Six Months Ended September 30, 2011	Avionics Gov’t		Avionics Comm’l.		Avionics Total		Corporate Items			Total
Net sales		6,306,883		1,357,682		7,664,565		-			7,664,565
Cost of Sales		3,501,047		818,660		4,319,707		-			4,319,707
Gross Margin		2,805,836		539,022		3,344,858		-			3,344,858
Engineering, research, and development						1,526,971					1,526,971
Selling, general, and admin.						687,843		778,853			1,466,696
Amortization of debt discount						-		26,791			26,791
Amortization of debt expense						-		54,160			54,160
Change in fair value of      Common stock warrants						-		63,695			63,695
Proceeds from life insurance						-		(300,029	)		(300,029	)
Interest expense, net						-		198,916			198,916
Total expenses						2,214,814		822,386			3,037,200
Income (loss) before income taxes					$	1,130,044	$	(822,386	)	$	307,658