NOTES
TO FINANCIAL STATEMENTS
Note 1 - 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 connectors 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.
The Company’s customers
consist of OEM’s (Original Equipment Manufacturers), companies manufacturing medical equipment, and distributors who resell
the Company’s products to OEMs. The Company sells its 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 the Company
services are in the Government, Military, Aerospace, Medical, Automotive, Industrial, Test Equipment and Commercial Electronics
markets. 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 37% and 51%, respectively,
of the Company’s net sales for the year ended March 31, 2017. 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 productively.
During the fiscal year ended March 31, 2017, we 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 bring 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.”
IEH CORPORATION
NOTES
TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(continued)
:
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
st
. The
year ended March 31, 2017 was comprised of 53 weeks and the year ended March 25, 2016 was comprised of 52 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. Historically, the Company has had little or no collection issues with its customer base.
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 a 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 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 defective product.
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 its customers separately for these services.
Inventories:
Inventories
are stated at cost, on an average 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 and cash equivalents and accounts receivable.
IEH CORPORATION
NOTES TO
FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(continued)
:
Concentration of Credit
Risk
(continued
:
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 financial institutions up to $250,000 in the
aggregate.
As of March 31, 2017, the
Company had funds on deposit in the amount of $1,210,761 in one financial institution comprised of the following:
Non-interest bearing accounts
|
|
$
|
71,826
|
|
Interest bearing account
|
|
|
1,138,935
|
|
|
|
$
|
1,210,761
|
|
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 account. Any gain or
loss thereon is either credited or charged to operations.
Income Taxes:
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 years ended March 31, 2017 and
March 25, 2016, respectively,
there were no items of potential dilution that would impact on the computation of diluted earnings or loss per share.
IEH CORPORATION
NOTES TO
FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(continued)
:
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 generally accepted accounting principles 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 of Long-Lived Assets And Long-Lived Assets To Be Disposed Of”, 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 years ended March 31, 2017
and March 25, 2016, respectively.
Recent Accounting
Pronouncements
:
In December 2016, the FASB
issued ASU 2016-19; the amendments cover a wide range of topics in the Accounting Standards Codification, including differences
between original guidance and the Accounting Standards Codification, guidance clarification and reference corrections, simplification
and minor improvements. The adoption of ASU 2016-19 is effective for annual periods, including interim periods, within those annual
periods, beginning after December 15, 2016. The Company is currently evaluating the effect of this standard on its financial statements.
In December 2016, the FASB
issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments
in this update are of a similar nature to the items typically addressed in the ASU 2016-19, Technical Corrections and Improvements.
The FASB elected to issue a separate update for technical corrections and improvements to Topic 606 as well as other Topics amended
by ASU 2014-09 to increase public awareness of the proposals and to expedite improvements to ASU-2014-9. The adoption of ASU 2016-20
is effective from the periods beginning after December 31, 2017, including interim reporting periods within that reporting period.
Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting
periods within that reporting period. The Company is currently evaluating the effect of this standard on its financial statements.
In addition, the Financial
Accounting Standards Board (“FASB”) has issued certain accounting standards updates as of March 31, 2017 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 fiscal years ended March 31, 2017
or
IEH CORPORATION
NOTES TO
FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(continued)
:
Recent Accounting Pronouncements
(continued)
:
March 25, 2016, 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 2 - INVENTORIES:
Inventories are stated at
cost, on the average basis that 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 are comprised
of the following:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Raw materials
|
|
$
|
5,263,317
|
|
|
$
|
4,844,510
|
|
Work in progress
|
|
|
859,558
|
|
|
|
596,371
|
|
Finished goods
|
|
|
2,563,113
|
|
|
|
1,809,419
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,685,988
|
|
|
$
|
7,250,300
|
|
Note 3 - PREPAID EXPENSES
AND OTHER CURRENT ASSETS:
Prepaid expenses
and other current assets are comprised of the following:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Prepaid insurance
|
|
$
|
24,079
|
|
|
$
|
22,834
|
|
Prepaid corporate taxes
|
|
|
1,282,098
|
|
|
|
1,345,459
|
|
Prepaid other
|
|
|
1,861
|
|
|
|
9,575
|
|
|
|
$
|
1,308,038
|
|
|
$
|
1,377,868
|
|
IEH CORPORATION
NOTES TO FINANCIAL
STATEMENTS
Note 4 - PROPERTY, PLANT AND
EQUIPMENT:
Property, plant
and equipment are as follows:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Computers
|
|
$
|
444,184
|
|
|
$
|
394,175
|
|
Leasehold improvements
|
|
|
878,888
|
|
|
|
845,589
|
|
Machinery and equipment
|
|
|
6,079,401
|
|
|
|
5,767,672
|
|
Tools and dies
|
|
|
3,484,307
|
|
|
|
3,283,953
|
|
Furniture and fixture
|
|
|
170,644
|
|
|
|
170,644
|
|
Website development cost
|
|
|
9,050
|
|
|
|
9,050
|
|
|
|
|
11,066,474
|
|
|
|
10,471,083
|
|
|
|
|
|
|
|
|
|
|
Less: accumulated depreciation
and amortization
|
|
|
(9,047,324
|
)
|
|
|
(8,603,892
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,019,050
|
|
|
$
|
1,867,191
|
|
Note 5 - ACCOUNTS RECEIVABLE
FINANCING:
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 such financing agreement) at an interest rate of 2 ½% above JP Morgan Chase’s
publicly announced rate with a minimum rate of 6% per annum.
The financing agreement has
an initial term of one year and automatically renews 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.
As of
March 31, 2017, the Company
reported in the accompanying financial statements, excess payments to the Factor of $191,430 compared to March 25, 2016, when
the Company had reported excess payments to the Factor of $186,114.
Note 6 - OTHER CURRENT LIABILITIES:
Other current liabilities
are comprised of the following:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Payroll and vacation accruals
|
|
$
|
598,832
|
|
|
$
|
560,995
|
|
Sales commissions
|
|
|
85,523
|
|
|
|
50,357
|
|
Insurance
|
|
|
3,663
|
|
|
|
17,014
|
|
Other
|
|
|
—
|
|
|
|
2,914
|
|
|
|
$
|
688,018
|
|
|
$
|
631,280
|
|
IEH CORPORATION
NOTES TO FINANCIAL
STATEMENTS
Note 7 - INCOME TAXES:
The Company accounts for
income taxes under the provisions of ASC Topic 740, Income Taxes which includes the provisions of SFAS No. 109 (“SFAS 109”).
Under SFAS 109, deferred income tax assets or liabilities are computed based upon the temporary differences between the financial
statement and income tax bases of assets and liabilities using the currently enacted marginal income tax rates. Deferred income
tax expenses or credits are based on the changes in the deferred income tax assets or liabilities from period to period.
The provision for income
taxes consists of the following:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
532,892
|
|
|
$
|
639,476
|
|
State and local
|
|
|
429,785
|
|
|
|
406,379
|
|
Total current tax provision
|
|
|
962,677
|
|
|
|
1,045,855
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
262,469
|
|
|
|
236,519
|
|
State and local
|
|
|
81,864
|
|
|
|
150,305
|
|
Total deferred tax benefit
|
|
|
344,333
|
|
|
|
386,824
|
|
|
|
|
|
|
|
|
|
|
Total provision (benefit)
|
|
$
|
1,307,010
|
|
|
$
|
1,432,679
|
|
The
components of the Company’s deferred taxes at March 31, 2017 and March 25, 2016 are as follows:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Accounts receivable reserves
|
|
$
|
11,562
|
|
|
$
|
11,562
|
|
Accrued expenses
|
|
|
332,613
|
|
|
|
611,355
|
|
Prepaid expenses
|
|
|
1,308,038
|
|
|
|
1,345,459
|
|
|
|
|
1,652,213
|
|
|
|
1,968,376
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(47,341
|
)
|
|
|
221,715
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets before valuation allowance
|
|
|
1,604,872
|
|
|
|
2,190,091
|
|
Valuation allowance
|
|
|
(1,604,872
|
)
|
|
|
(2,190,091
|
)
|
Net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
The Company has fully utilized
its net operating loss carryovers in prior years.
IEH CORPORATION
NOTES TO FINANCIAL
STATEMENTS
Note 7 - INCOME TAXES
(continued)
:
The foregoing amounts are
management’s estimates and the actual results could differ from those estimates. Future profitability in this competitive
industry depends on continually obtaining and fulfilling net profitable contracts or the failure of the Company’s engineering
development efforts could reduce estimates of future profitability, which could affect the Company’s ability to realize
the deferred tax assets.
A reconciliation of the income
tax benefit at the statutory Federal tax rate of 34 % to the income tax benefit recognized in the financial statements is as follows:
|
|
March 31,
|
|
March 25,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Income tax expense (benefit) – statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
Income tax expenses – state and local, net of federal benefit
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
|
46
|
%
|
|
|
46
|
%
|
Note 8 -
CHANGES IN
STOCKHOLDERS’ EQUITY:
Stockholders’ equity
increased by $1,473,976 which represented the reported net income for the year ended March 31, 2017. Accordingly, the Company
reported accumulated retained earnings of $12,286,936 as of March 31, 2017.
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 ten 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.
IEH
CORPORATION
NOTES
TO FINANCIAL STATEMENTS
Note 9 - 2011 EQUITY INCENTIVE
PLAN
(continued):
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.
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, including, without
limitation, as follows: (i) Michael Offerman, our former 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 an aggregate
of 110,000 options including David Offerman (then Vice-President of Sales and Marketing) who was granted 50,000 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 I 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
|
|
David Offerman *
|
|
|
50,000
|
|
Robert Knoth
|
|
|
50,000
|
|
Allen Gottlieb
|
|
|
5,000
|
|
Gerald Chafetz
|
|
|
5,000
|
|
Sonia Marciano**
|
|
|
5,000
|
|
Eric Hugel**
|
|
|
5,000
|
|
IEH CORPORATION
NOTES TO FINANCIAL
STATEMENTS
Note 9 2011 EQUITY INCENTIVE
PLAN
(Continued)
:
*On
March 24, 2017, Michael Offerman died suddenly. On March 26, 2017, the Board of Directors
elected
David Offerman to the positions of Chairman of the Board, President and Chief Executive
Officer
of the Company.
**
Options
for 1,000 shares vested, options for 4,000 shares not yet vested.
Note 10 - CASH BONUS PLAN:
In 1987, the Company adopted
a cash bonus plan (“Cash Bonus Plan”) for Executive Officers. Contributions to the 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. For the year ended March 31, 2017, the Company’s contribution was $324,000.
For the year ended March 25, 2016, the Company’s contribution was $227,700.
Note 11 - COMMITMENTS AND
CONTINGENCIES:
The Company’s lease
term for its manufacturing facility located at 140 58
th
Street, Suite E, Brooklyn, New York, runs from December 1,
2010 through November 30, 2020. The basic minimum annual rentals are as follows:
|
Fiscal year ending March:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
$
|
178,360
|
|
|
2019
|
|
|
|
183,720
|
|
|
2020
|
|
|
|
189,200
|
|
|
Thereafter
|
|
|
|
128,640
|
|
|
|
|
|
$
|
679,920
|
|
The rental expense for the
years ended March 31, 2017 and March 25, 2016, was $173,180 and $162,403, respectively.
The Company
has a collective bargaining multi-employer pension plan (“Multi-Employer Plan”) with the United Auto Workers of America,
Local 259. Contributions are made 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 Amendments 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 liabilities are contingent upon the 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 this pension plan were $134,843
for the year ended March 31, 2017 and $134,036 for the year ended March 25, 2016.
IEH CORPORATION
NOTES TO FINANCIAL
STATEMENTS
Note
12 - REVENUES FROM MAJOR CUSTOMERS:
During
the year ended March 31, 2017 five customers accounted for $6,946,000 constituting approximately 34.5% of the Company’s
revenues. None of such customers accounted for over 10% of such revenues. During the year ended March 25, 2016 five customers
individually accounted for $5,569,000 constituting approximately 29% of the Company’s revenues. Two of such customers accounted
for 16% of such revenues.
As of March 31, 2017, amounts
due from two customers represented approximately 22.31% of the total amount of accounts receivable. Only one customer exceeded
10%.
IEH CORPORATION