Note 8 - Segment Information

9 Months Ended

Dec. 31, 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 nine month periods ending December 31, 2012 and 2011:

Three Months Ended  December 31, 2012	Avionics  Government		Avionics  Commercial		Avionics  Total			Corporate  Items			Total
Net sales		1,828,941		521,079		2,350,020			-			2,350,020
Cost of Sales		1,480,584		416,068		1,896,652			-			1,896,652
Gross Margin		348,357		105,011		453,368			-			453,368
Engineering, research, and development						481,055						481,055
Selling, general and administrative						264,627			322,519			587,146
Amortization of debt discount									37,948			37,948
Amortization of debt expense									68,384			68,384
Financing costs									21,441			21,441
Change in fair value of common stock warrants									(19,710	)		(19,710	)
Interest expense, net									126,069			126,069
Total expenses						745,682			556,651			1,302,333
Loss before income taxes						(292,314	)		(556,651	)		(848,965	)

Three Months Ended December 31, 2011	Avionics Government		Avionics Commercial		Avionics Total		Corporate Items			Total
Net sales		3,163,220		510,015		3,673,235		-			3,673,235
Cost of Sales		1,841,826		386,030		2,227,856		-			2,227,856
Gross Margin		1,321,394		123,985		1,445,379		-			1,445,379
Engineering, research, and development						633,136					633,136
Selling, general and administrative						358,388		366,248			724,636
Amortization of debt discount						-		13,386			13,386
Amortization of debt expense						-		27,081			27,081
Financing costs						-		-			-
Change in fair value of common stock warrants						-		(130,433	)		(130,433	)
Interest expense, net						-		102,431			102,431
Total expenses						991,524		378,713			1,370,237
Income (loss) before income taxes					$	453,855	$	(378,713	)	$	75,142

Nine Months Ended  December 31, 2012	Avionics  Government		Avionics  Commercial		Avionics  Total			Corporate  Items			Total
Net sales		4,226,451		1,695,807		5,922,258			-			5,922,258
Cost of Sales		3,051,873		1,530,900		4,582,773			-			4,582,773
Gross Margin		1,174,578		164,907		1,339,485			-			1,339,485
Engineering, research, and development						1,608,459			-			1,608,459
Selling, general and administrative						891,764			1,035,616			1,927,380
Amortization of debt discount									82,349			82,349
Amortization of debt expense									152,175			152,175
Financing costs									47,918			47,918
Change in fair value of common stock warrants									(268,767	)		(268,767	)
Proceeds from life insurance									-			-
Interest expense, net									349,556			349,556
Total expenses						2,500,223			1,398,847			3,899,070
Loss before income						(1,160,738	)		(1,398,847	)		(2,559,585	)

Nine Months Ended  December 31, 2011	Avionics Government		Avionics Commercial		Avionics Total		Corporate Items			Total
Net sales		9,470,103		1,867,697		11,337,800		-			11,337,800
Cost of Sales		5,342,873		1,204,690		6,547,563		-			6,547,563
Gross Margin		4,127,230		663,007		4,790,237		-			4,790,237
Engineering, research, and development						2,160,107		-			2,160,107
Selling, general and administrative						1,046,231		1,145,101			2,191,332
Amortization of debt discount						-		40,177			40,177
Amortization of debt expense						-		81,241			81,241
Financing costs						-		-			-
Change in fair value of common stock warrants						-		(66,738	)		(66,738	)
Proceeds from life insurance						-		(300,029	)		(300,029	)
Interest (income) expense, net						-		301,347			301,347
Total expenses						3,206,338		1,201,099			4,407,437
Income (loss) before income taxes					$	1,583,899	$	(1,201,099	)	$	382,800