IEH Corp
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
IEHCStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-13.
0001213900-24-013296
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001213900-24-067648
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 33 current paragraphs.
14 unchanged; 16 reworded; 3 added; 9 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Critical Accounting Policies and Estimates
Current report
Selling, general and administrative expenses for the three months ended June 30, 2024 was $1,689,210, reflecting an increase of $131,641, or 8.5%, as compared to $1,557,569 for the three months ended June 30, 2023. The increase was principally due to an increase in accounting fees and the costs of additional sales personnel.
Current report
Net cash provided by operating activities was $1,070,656 for the three months ended June 30, 2024 and net cash used in operating activities was $1,376,666 for the three months ended June 30, 2023. The period over period increase in cash provided by operating activities of $2,447,322 was primarily due to the $1,708,689 improvement in net income (loss), the $333,499 reduction in inventories, the $286,445 increase in customer advanced payments and the $198,477 reduction in accounts receivable.
Removed paragraphs (9)
Previous report
Critical Accounting Policies
Previous report
Selling, general and administrative expense for the three months ended December 31, 2023 was $1,379,996 reflecting a decrease of $339,959, or 19.8%, as compared to $1,719,955 for the three months ended December 31, 2022. The decrease was principally due to a reduction in accounting and consulting fees, which were higher in the comparable prior year quarter in connection with bringing the Company’s public filings current.
Previous report
Comparison of the Nine Months Ended December 31, 2023 and 2022
Previous report
Revenue for the nine months ended December 31, 2023 was $14,598,590, reflecting an increase of $755,069, or 5.5%, as compared to $13,843,521 for the nine months ended December 31, 2022. The increase in revenue for the period was principally attributable to the recovery in consumer aviation traffic resulting in an increase in revenue from commercial aerospace customers. We have also seen an increase in orders from our defense customers. Our defense revenues have benefitted from increased defense related spending on programs in which we participate. Our period over period space revenues have remained steady in spite of fluctuations among quarters within the fiscal year.
Previous report
Cost of products sold for the nine months ended December 31, 2023 was $12,615,605, reflecting a decrease of $958,284, or 7.1%, as compared to $13,573,889 for the nine months ended December 31, 2022. The decrease in our cost of products sold is attributable to improved margins due to changes in product mix.
Previous report
Selling, general and administrative expenses for the nine months ended December 31, 2023 was $4,758,979, reflecting an increase of $799,269 or 20.2%, as compared to $3,959,710 for the nine months ended December 31, 2022. The increase was primarily due to increased consulting and accounting fees incurred in connection with bringing our public filings current.
Previous report
Total other income (expense) for the nine months ended December 31, 2023 was income of $81,458 reflecting an increase of $3,686, as compared to income of $77,772 for the nine months ended December 31, 2022. The increase was primarily attributable to an increase in interest income of $66,367 attributable to interest earned on our cash and cash equivalents, offset by a decrease in other income of $62,579.
Previous report
Net cash used in operating activities was $3,332,087 and $4,500,077 for the nine months ended December 31, 2023 and 2022, respectively. The period over period decrease in cash used of $1,167,990 was primarily due to the decrease in net loss of $1,844,961 and an increase in cash provided by accounts receivable of $684,964, offset by the decrease in the deferred tax provision of $806,380 and increases in cash used for increases in inventories of $289,049, decreases in accounts payable of $247,103 and other current liabilities of $398,823.
Previous report
Net cash provided by financing activities was $56,550 and $0 for the nine months ended December 31, 2023 and 2022, respectively. The increase in cash provided by financing activities during the nine months ended December 31, 2023 was due to proceeds from the exercise of stock options.
Reworded paragraphs (16)
Previous wording
The following discussion and analysis should be read in conjunction with our audited financial statements and related footnotes included elsewhere in this report, which provide additional information concerning the Company’s financial activities and condition.
Current wording
The following discussion and analysis should be read in conjunction with our condensed financial statements and related footnotes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which provide additional information concerning the Company’s financial activities and condition.
Previous wording
Our customers consist of Original Equipment Manufacturers (“OEMs”) and distributors who resell our products to OEMs. We sell our products directly and through 22 independent sales representatives and distributors located in all regions of the United States, Canada, the European Union, Southeast Asia, Central Asia and the Middle East.
Current wording
Our customers consist of Original Equipment Manufacturers (“OEMs”) and distributors who resell our products to OEMs. We sell our products directly and through 21 independent sales representatives and distributors located in all regions of the United States, Canada, the European Union, Southeast Asia, Central Asia and the Middle East.
Previous wording
The customers we service are in the Defense, Aerospace, Space, Medical, Oil and Gas, Industrial, Test Equipment and Commercial Electronics markets. We appear on the Military Qualified Product Listing (“QPL”) MIL-DTL-55302 and supply customer requested modifications to this specification.
Current wording
The customers we service are in the defense, aerospace, space, medical, oil and gas, industrial, test equipment and commercial electronics markets. We appear on the Military DLA Qualified Product Listing (“QPL”) MIL-DTL-55302 and supply customer requested modifications to this specification.
Previous wording
The Company’s disaggregated revenue by industry as a percentage of total revenue is provided below:
Current wording
The customers we service by industry as a percentage of total revenue is provided below:
Previous wording
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, valuation of inventories, accounting for income taxes and stock-based compensation expense.
Current wording
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, valuation of inventories, accounting for income taxes and stock-based compensation expense.
Previous wording
Revenue for the three months ended December 31, 2023 was $5,107,757, reflecting a decrease of $463,534, or 8.3%, as compared to $5,571,291 for the three months ended December 31, 2022. The decrease in revenue for the period was principally on account of a decline in the shipment of defense orders. Our quarter over quarter commercial aerospace revenues have continued to grow both as a percentage of revenue and in dollars, consistent with the post COVID-19 recovery of consumer aviation traffic.
Current wording
Revenue for the three months ended June 30, 2024 was $7,104,977, reflecting an increase of $2,425,132, or 51.8%, as compared to $4,679,845 for the three months ended June 30, 2023. The increase in revenue for the period was principally on account of a 72% increase in defense revenues driven principally by recent conditions of geopolitical uncertainty. Our quarter over quarter commercial aerospace revenues have increased 45% driven principally by recoveries in commercial aviation.
Previous wording
Cost of products sold for the three months ended December 31, 2023 was $4,479,750, reflecting an increase of $34,306, or 0.8%, as compared to $4,445,444 for the three months ended December 31, 2022. The increase in our cost of products sold is attributable to changes in product mix.
Current wording
Cost of products sold for the three months ended June 30, 2024 was $4,894,518, reflecting an increase of $653,086, or 15.4%, as compared to $4,241,432 for the three months ended June 30, 2023. The increase in our cost of products sold is attributable to the quarterly increase in order volume, offset in part by the realization of production efficiencies driven by the higher volumes of production.
Previous wording
Depreciation and amortization for the three months ended December 31, 2023 was $217,200, reflecting a decrease of $46,039, or 17.5%, as compared to $263,239 for the three months ended December 31, 2022. The decrease was principally attributable to reduced amortization in the current period for certain fully amortized assets.
Current wording
Depreciation and amortization for the three months ended June 30, 2024 was $188,270, reflecting a decrease of $29,966, or 12.6%, as compared to $215,236 for the three months ended June 30, 2023. The decrease was principally attributable to reduced amortization in the current period for certain fully amortized assets.
Previous wording
Total other income (expense) for the three months ended December 31, 2023 was income of $43,136, reflecting an increase of $24,190, as compared to income of $18,946 for the three months ended December 31, 2022. The increase was principally attributable to an increase in interest income earned on our cash and cash equivalents.
Current wording
Total other income (expense) for the three months ended June 30, 2024 was income of $59,808, reflecting an increase of $41,318, as compared to income of $18,490 for the three months ended June 30, 2023. The increase was principally attributable to an increase in interest income earned on our cash and cash equivalents.
Previous wording
Provision for income taxes for the nine months ended December 31, 2023 was $0, reflecting a decrease of $806,380 as compared to a provision of $806,380 for the nine months ended December 31, 2022. The provision for income taxes of $0 for the nine months ended December 31, 2023 was attributable to the loss before provision for income taxes incurred for the period and the impact of recording a full valuation allowance on our deferred tax assets, net. The tax provision for the nine months ended December 31, 2022 of $806,380 represents a charge to record a full valuation allowance of our deferred income tax assets, net as of April 1, 2022.
Current wording
Provision for income taxes was $0 for the three months ended June 30, 2024 and 2023. The provision for income taxes for the three months ended June 30, 2024 was principally attributable to the utilization of net operating loss carryforwards to offset taxable income and the impact of maintaining a full valuation allowance on the Company’s deferred tax assets, net. The provision for income taxes for the three months ended June 30, 2023 was attributable to the loss before provision for income taxes incurred for the period and the impact of recording a full valuation allowance on the Company’s deferred tax assets, net.
Previous wording
Our primary requirements for liquidity and capital are working capital, inventory, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. For the nine months ended December 31, 2023, our primary source of liquidity came from existing cash. Based on our current plans and business conditions, we believe that existing cash, together with cash generated from operations will be sufficient to satisfy our anticipated cash requirements, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflationary pressures and interest rates, and the conflicts in Eastern Europe and the Middle East have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, which may reduce our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.
Current wording
Our primary requirements for liquidity and capital are working capital, inventory, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. For the three months ended June 30, 2024, our primary sources of liquidity came from existing cash. Based on our current plans and business conditions, we believe that existing cash, together with cash generated from operations will be sufficient to satisfy our anticipated cash requirements in fiscal year 2025 and into fiscal year 2026, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflationary pressures and increased interest rates, and the conflicts between Russia and Ukraine and in the Middle East have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.
Previous wording
As of December 31, 2023 and March 31, 2023, the Company’s cash and cash equivalents on hand was $4,939,983 and $8,344,706, respectively. The Company has recorded net losses of $3,342,558 and $5,187,519 for the nine months ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and March 31, 2023, the Company had working capital of $17,836,324 and $20,303,090 and stockholders’ equity of $21,339,962 and $24,316,570, respectively.
Current wording
As of June 30, 2024, and March 31, 2024, the Company’s cash and cash equivalents on hand was $7,146,928 and $6,139,823, respectively. The Company has recorded net income of $392,787 and net loss of $1,315,902 for the three months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, and March 31, 2024, the Company had working capital of $18,932,399 and $18,295,711 and shareholders’ equity of $22,317,405 and $21,799,518, respectively.
Previous wording
Cash Flow Activities for the Nine Months Ended December 31, 2023 Compared to the Nine Months Ended December 31, 2022
Current wording
Cash Flow Activities for the Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023
Previous wording
The following table summarizes our sources and uses of cash for the nine months ended December 31, 2023 and 2022:
Current wording
The following table summarizes our sources and uses of cash for the three months ended June 30, 2024 and 2023:
Previous wording
Net cash used in investing activities was $129,186 and $488,639 for the nine months ended December 31, 2023 and 2022, respectively. The decrease in cash used in investing activities during the nine months ended December 31, 2023 was principally due to decreases in purchases of property and equipment.
Current wording
Net cash used in investing activities was $63,551 and $28,313 for the three months ended June 30, 2024 and 2023, respectively. The increase in cash used in investing activities during the three months ended June 30, 2024 was principally due to increases in purchases of property and equipment.
Previous wording
The backlog of orders for the Company’s products amounted to approximately $16,990,000 at December 31, 2023 as compared to approximately $10,598,000 at December 31, 2022. The orders in backlog at December 31, 2023 are expected to ship over the next 12 months depending on customer requirements and product availability.
Current wording
The backlog of orders for the Company’s products amounted to approximately $17,290,000 at June 30, 2024 as compared to approximately $13,837,000 at June 30, 2023. The orders in backlog at June 30, 2024 are expected to ship over the next 12 months depending on customer requirements and product availability.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Provision for income taxes was $0 for the three months ended December 31, 2023 and 2022, attributable to the loss before provision for income taxes incurred for the period and the impact of recording a full valuation allowance on our deferred tax assets, net.
Previous report — wording carried elsewhere
The following table summarizes our results of operations for the nine months ended December 31, 2023 and 2022:
Previous report — wording carried elsewhere
Depreciation and amortization for the nine months ended December 31, 2023 was $648,022, reflecting a decrease of $120,811, or 15.7%, as compared to $768,833 for the nine months ended December 31, 2022. The decrease was principally attributable to reduced amortization in the current period for certain fully amortized assets.