XML 18 R7.htm IDEA: XBRL DOCUMENT v3.7.0.1
Note 2 - Liquidity and Going Concern
3 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Substantial Doubt about Going Concern [Text Block]
Note 2 - Liquidity and Going Concern

These condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern. As discussed in Note 14 to the Notes to the Consolidated Financial Statements, the Company has recorded estimated damages of $2,800,000 as a result of the jury verdict associated with the Aeroflex litigation. The jury found no misappropriation of Aeroflex trade secrets but it did rule that the Company tortiously interfered with a prospective business opportunity and awarded damages. The jury also ruled that Tel tortiously interfered with Aeroflex’s non-disclosure agreements with two former Aeroflex employees. The jury also found that the former Aeroflex employees breached their non-disclosure agreements with Aeroflex. The court will conduct further hearings in the next few weeks which will include a punitive damages claim.  Subsequent to the jury verdict, the Company filed a motion with the Kansas court seeking to reduce the damages award. The court conducted the hearings on these motions and the Company is awaiting the decision of the court.

Given the uncertainty involving the final damages amount and the ability of the Company to secure adequate financing to support an appeal or satisfy the judgment, the Company has written off its deferred tax asset in the amount of $3.5 million. The damages, legal expense and write off of the deferred tax asset resulted in the Company incurring a net loss of $4.8 million for the fiscal year ended March 31, 2017.

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital to support the appeal process or pay any final damages amount and achieve profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company has been profitable from an operational standpoint for the last several years and should be able to obtain sufficient cash proceeds to support the planned appeal assuming the final judgment amount remains at or below the current $2.8 million accrual. The Company has retained OEM Capital with the goal of securing additional financing to finance the judgement or potential appeal. Financing discussions have been taking place with various parties but the Company has no commitment from any party to provide additional funding at this time. Moreover, there is no assurance that sufficient funding will be available, or if available, that its terms will be favorable to the Company.