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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 1. FORMATION AND BASIS OF PRESENTATION</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Organization</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Air Industries Group is a Nevada corporation (“AIRI”). As
of and for the three months ending March 31, 2021, the accompanying condensed consolidated financial statements presented are those of
AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corp. (“AIM”), Nassau Tool Works, Inc. (“NTW”),
and the Sterling Engineering Corporation (“Sterling”), (together, the “Company”).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Basis of Presentation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial
information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March
31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission,
from which the accompanying condensed consolidated balance sheet dated December 31, 2020 was derived.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Reclassifications</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reclassification occurred to certain 2020 amounts to conform to the
2021 classification. These reclassifications had no impact on the statement of operations.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Liquidity</b></p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0">At each reporting period, management evaluates whether there are conditions
or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date
that the financial statements are issued. The Company is required to make certain additional disclosures if management concludes that
substantial doubt exists about the Company’s ability to continue as a going concern and such doubt is not alleviated by the Company’s
plans or when the Company’s plans alleviate substantial doubt about its ability to continue as a going concern. The evaluation entails
analyzing prospective operating budgets and forecasts for expectations regarding cash needs and comparing those needs to the current cash
and cash equivalent balance and expectations regarding cash to be generated over the following year.</p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although the global outbreak of COVID-19 had a significant adverse
impact on the world economy and negatively impacted the Company’s revenues, earnings and operating cash flows in 2020, management
believes the Company’s operations substantially returned to normal in fiscal 2021 and the Company generated net cash from operations
of $567,000 in the quarter ended March 31, 2021. With the first quarter of fiscal 2021 now completed and the Company’s recent investments
in new machinery and equipment paying off, management believes the Company will continue to improve its liquidity. As such, based on current
best estimates of fiscal 2021 sales, confirmed and expected orders, the strength of existing backlog, overall market demand, expected
timing of future cash receipts and expenditures and the Company’s ability to access additional liquidity, if needed, the Company
believes it will have adequate cash to support operations through May 31, 2022.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Subsequent Events</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management has evaluated subsequent events through
the date of this filing.</p><br/>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Inventory Valuation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For annual periods, the Company values inventory
at the lower of cost on a first-in-first-out basis or estimated net realizable value. The Company does not take physical inventories at
interim quarterly reporting periods. For interim periods, substantially all of the inventory value has been estimated using a gross profit
percentage based on annual gross profit percentages of the immediately preceding year as applied to the net sales of the current period.
During the three months ended March 31, 2021, the Company determined that its gross profit for its Complex Machining segment was below
its 2020 gross profit percentages, and accordingly has adjusted margins to less than those of 2020. Adjustments to reconcile the annual
physical inventory to the Company’s books are recorded in the fourth quarter.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Credit and Concentration Risks</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Net Sales and Accounts Receivable</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were three customers that represented 77.9%
and 79.9% of total net sales for the three months ended March 31, 2021 and 2020, respectively. This is set forth in the table below.</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
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<td style="border-bottom: Black 1.5pt solid"><b>Customer</b></td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
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<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
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<td style="width: 76%; text-align: left">1</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">33.8</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">36.2</td><td style="width: 1%; text-align: left">%</td></tr>
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<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">31.5</td><td style="text-align: left">%</td></tr>
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<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.5</td><td style="text-align: left">%</td><td> </td>
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<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Percentage of Receivables</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
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<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Customer</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/>
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<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/>
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<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
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<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">4</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.2</td><td style="text-align: left">%</td></tr>
</table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">Customer was less than 10% of Gross Accounts Receivable at
December 31, 2020.</td>
</tr></table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left">**</td><td style="text-align: justify">Customer was less than 10% of Gross Accounts Receivable at
March 31, 2021.</td>
</tr></table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Cash and Cash Equivalents</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the period, the Company had occasionally maintained balances
in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Major Suppliers</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has several key sole-source suppliers
of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore,
in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Leases</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for leases under ASC 842,
“Leases.” All leases are required to be recorded on the balance sheet and are classified as either operating leases or finance
leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely
in operating expenses. Finance lease charges are split, where amortization of the right-of- use asset is recorded in operating expenses
and an implied interest component is recorded in interest expense. See Note 4.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Earnings (Loss) per share</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic earnings (loss) per share (“EPS”)
is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock
outstanding for the period.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For purposes of calculating diluted earnings per
common share, the numerator includes net income plus interest on convertible notes payable assumed converted as of the first day of the
period. The denominator includes both the weighted-average number of shares of common stock outstanding during the period and the number
of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially
include stock options and warrants using the treasury stock method and convertible notes payable using the if-converted method.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is the calculation of net income
(loss) applicable to common stockholders utilized to calculate EPS:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net (loss) income per statement of operations</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(152,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,058,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Add: Convertible Note Interest for Potential Note Conversion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">170,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">(Loss) income used to calculate diluted earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(152,000</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,228,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is a reconciliation of the denominators
of basic and diluted earnings per share computations:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 0.125in"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%">Weighted average shares outstanding used to compute basic earnings per share</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">31,971,922</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">30,380,234</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Effect of dilutive stock options and warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,137,769</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Effect of dilutive convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,003,451</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt">Weighted average shares outstanding and dilutive securities used to compute
dilutive earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">31,971,922</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">36,521,454</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following securities have been excluded from
the calculation as the exercise price was greater than the average market price of the common stock:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">191,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">234,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Warrants</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,614,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,657,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following securities have been excluded from
the calculation even though the exercise price was less than the average market price of the common shares because the effect of including
these potential shares was anti-dilutive due to the net loss incurred during that period:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,991,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">         -</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">760,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,058,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">6,809,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock-Based Compensation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for stock-based compensation
in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of
the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the
fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation expense
for employees amounted to $157,000 and $140,000 for the three months ended March 31, 2021 and 2020, respectively. Stock compensation expense
for directors amounted to $52,000 and $55,000 for the three months ended March 31, 2021 and 2020, respectively. Stock compensation expenses
for employees and directors were included in operating expenses on the accompanying Condensed Consolidated Statements of Operations.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Goodwill</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Goodwill represents the excess of the acquisition
cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $163,000 at both March 31, 2021
and December 31, 2020 relates to the acquisition of NTW.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Goodwill is not amortized, but is tested at least
annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying
amount.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has determined that there has been
no impairment of goodwill at March 31, 2021 and 2020.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recently Issued Accounting Pronouncements</b></p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit
Losses (Topic 326) (“ASU 2016- 13”), which significantly changes how entities will account for credit losses for most financial
assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred
loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets
and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct
write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized
cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is
adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date.
The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit
losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require
an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate
an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including
interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies. Early adoption is permitted.
The Company will evaluate the impact of ASU 2016-13 on the Company’s consolidated financial statements in a future period closer
to the date of adoption.</p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2020, the FASB issued ASU No.
2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06), which is intended to address issues identified as a result of the
complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. For
convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible
preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible
instruments and earnings-per-share guidance on the basis of feedback from financial statement users. ASU 2020-06 is effective for
fiscal years, and interim periods in those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no
earlier than fiscal years beginning after December 15, 2020, including interim periods with those fiscal years. The Company is
evaluating the effect of adopting this new accounting guidance on its financial statements.</p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 1, 2021, the Company adopted ASU
No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to
simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in
Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption
of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 1, 2021, the Company adopted ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for
a limited time to ease the potential burden in accounting for reference rate reform. In January 2021, the FASB issued ASU 2021-01, “Reference
Rate Reform (Topic 848): Scope: which clarified the scope of ASU 2020-04. The new guidance provides optional expedients and exceptions
for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria
are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be
discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications
made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of these ASU’s did not have
a material impact on the Company’s condensed consolidated financial statements.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not believe that any other recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated
financial statements.</p><br/>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Inventory Valuation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For annual periods, the Company values inventory
at the lower of cost on a first-in-first-out basis or estimated net realizable value. The Company does not take physical inventories at
interim quarterly reporting periods. For interim periods, substantially all of the inventory value has been estimated using a gross profit
percentage based on annual gross profit percentages of the immediately preceding year as applied to the net sales of the current period.
During the three months ended March 31, 2021, the Company determined that its gross profit for its Complex Machining segment was below
its 2020 gross profit percentages, and accordingly has adjusted margins to less than those of 2020. Adjustments to reconcile the annual
physical inventory to the Company’s books are recorded in the fourth quarter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Credit and Concentration Risks</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Net Sales and Accounts Receivable</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were three customers that represented 77.9%
and 79.9% of total net sales for the three months ended March 31, 2021 and 2020, respectively. This is set forth in the table below.</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Percentage of Sales</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid"><b>Customer</b></td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">1</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">33.8</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">36.2</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">31.5</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.2</td><td style="text-align: left">%</td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were three customers that represented
77.8% and 80.3% of gross accounts receivable at March 31, 2021 and December 31, 2020, respectively. This is set forth in the table below.</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Percentage of Receivables</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Customer</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/>
2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/>
2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">1</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">46.7</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">57.1</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">4</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.2</td><td style="text-align: left">%</td></tr>
</table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">Customer was less than 10% of Gross Accounts Receivable at
December 31, 2020.</td>
</tr></table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0%"></td><td style="width: 0.25in; text-align: left">**</td><td style="text-align: justify">Customer was less than 10% of Gross Accounts Receivable at
March 31, 2021.</td>
</tr></table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Cash and Cash Equivalents</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the period, the Company had occasionally maintained balances
in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="text-decoration:underline">Major Suppliers</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has several key sole-source suppliers
of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore,
in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed.</p>
3
3
0.779
0.799
3
3
0.778
0.803
0.10
0.10
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Leases</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for leases under ASC 842,
“Leases.” All leases are required to be recorded on the balance sheet and are classified as either operating leases or finance
leases. The lease classification affects the expense recognition in the income statement. Operating lease charges are recorded entirely
in operating expenses. Finance lease charges are split, where amortization of the right-of- use asset is recorded in operating expenses
and an implied interest component is recorded in interest expense. See Note 4.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Earnings (Loss) per share</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic earnings (loss) per share (“EPS”)
is computed by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock
outstanding for the period.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For purposes of calculating diluted earnings per
common share, the numerator includes net income plus interest on convertible notes payable assumed converted as of the first day of the
period. The denominator includes both the weighted-average number of shares of common stock outstanding during the period and the number
of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially
include stock options and warrants using the treasury stock method and convertible notes payable using the if-converted method.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is the calculation of net income
(loss) applicable to common stockholders utilized to calculate EPS:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net (loss) income per statement of operations</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(152,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,058,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Add: Convertible Note Interest for Potential Note Conversion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">170,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">(Loss) income used to calculate diluted earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(152,000</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,228,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is a reconciliation of the denominators
of basic and diluted earnings per share computations:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 0.125in"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%">Weighted average shares outstanding used to compute basic earnings per share</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">31,971,922</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">30,380,234</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Effect of dilutive stock options and warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,137,769</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Effect of dilutive convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,003,451</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt">Weighted average shares outstanding and dilutive securities used to compute
dilutive earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">31,971,922</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">36,521,454</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following securities have been excluded from
the calculation as the exercise price was greater than the average market price of the common stock:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">191,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">234,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Warrants</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,614,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,657,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following securities have been excluded from
the calculation even though the exercise price was less than the average market price of the common shares because the effect of including
these potential shares was anti-dilutive due to the net loss incurred during that period:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,991,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">         -</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">760,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,058,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">6,809,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock-Based Compensation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for stock-based compensation
in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of
the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the
fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation expense
for employees amounted to $157,000 and $140,000 for the three months ended March 31, 2021 and 2020, respectively. Stock compensation expense
for directors amounted to $52,000 and $55,000 for the three months ended March 31, 2021 and 2020, respectively. Stock compensation expenses
for employees and directors were included in operating expenses on the accompanying Condensed Consolidated Statements of Operations.</p>
157000
140000
52000
55000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Goodwill</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Goodwill represents the excess of the acquisition
cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $163,000 at both March 31, 2021
and December 31, 2020 relates to the acquisition of NTW.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Goodwill is not amortized, but is tested at least
annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying
amount.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has determined that there has been
no impairment of goodwill at March 31, 2021 and 2020.</p>
163000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recently Issued Accounting Pronouncements</b></p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit
Losses (Topic 326) (“ASU 2016- 13”), which significantly changes how entities will account for credit losses for most financial
assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred
loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets
and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct
write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized
cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is
adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date.
The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit
losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require
an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate
an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including
interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies. Early adoption is permitted.
The Company will evaluate the impact of ASU 2016-13 on the Company’s consolidated financial statements in a future period closer
to the date of adoption.</p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2020, the FASB issued ASU No.
2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06), which is intended to address issues identified as a result of the
complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. For
convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible
preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible
instruments and earnings-per-share guidance on the basis of feedback from financial statement users. ASU 2020-06 is effective for
fiscal years, and interim periods in those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no
earlier than fiscal years beginning after December 15, 2020, including interim periods with those fiscal years. The Company is
evaluating the effect of adopting this new accounting guidance on its financial statements.</p><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 1, 2021, the Company adopted ASU
No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to
simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in
Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption
of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 1, 2021, the Company adopted ASU 2020-04, Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for
a limited time to ease the potential burden in accounting for reference rate reform. In January 2021, the FASB issued ASU 2021-01, “Reference
Rate Reform (Topic 848): Scope: which clarified the scope of ASU 2020-04. The new guidance provides optional expedients and exceptions
for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria
are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be
discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications
made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of these ASU’s did not have
a material impact on the Company’s condensed consolidated financial statements.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not believe that any other recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated
financial statements.</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Percentage of Sales</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid"><b>Customer</b></td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">1</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">33.8</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">36.2</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">31.5</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.2</td><td style="text-align: left">%</td></tr>
</table><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Percentage of Receivables</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">Customer</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/>
2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; border-bottom: Black 1.5pt solid"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/>
2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">1</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">46.7</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">57.1</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">2</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17.6</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">3</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13.5</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12.0</td><td style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">4</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</font></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.2</td><td style="text-align: left">%</td></tr>
</table>
0.338
0.362
0.266
0.315
0.175
0.122
0.467
0.571
0.176
0.135
0.120
0.112
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net (loss) income per statement of operations</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(152,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,058,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Add: Convertible Note Interest for Potential Note Conversion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">170,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">(Loss) income used to calculate diluted earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(152,000</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,228,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
-152000
1058000
170000
-152000
1228000
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.125in; text-indent: -0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 0.125in"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%">Weighted average shares outstanding used to compute basic earnings per share</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">31,971,922</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">30,380,234</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Effect of dilutive stock options and warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,137,769</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Effect of dilutive convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,003,451</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt">Weighted average shares outstanding and dilutive securities used to compute
dilutive earnings per share</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">31,971,922</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">36,521,454</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
31971922
30380234
1137769
5003451
31971922
36521454
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">191,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">234,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Warrants</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,423,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,614,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">1,657,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Stock Options</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">1,991,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">         -</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Warrants</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">760,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Convertible notes payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,058,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">6,809,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
191000
234000
1423000
1423000
1614000
1657000
1991000
760000
4058000
6809000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 3. PROPERTY AND EQUIPMENT</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The components of property and equipment at March
31, 2021 and December 31, 2020 consisted of the following:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td><td> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%">Land</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">300,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">300,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="text-align: center; width: 11%"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Buildings and Improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,720,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,683,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">31.50 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Machinery and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,838,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,738,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Finance Lease Machinery and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Tools and Instruments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,246,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,116,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">1.50 - 7 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Automotive Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">148,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">148,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Furniture and Fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">290,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">290,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Leasehold Improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">861,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">855,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">Term of Lease</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Computers and Software</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">436,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">436,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt">4 - 6 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Total Property and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,917,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,644,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Accumulated Depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28,776,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28,063,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 4pt">Property and Equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,141,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,581,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="text-align: center; padding-bottom: 4pt"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense for the three months ended
March 31, 2021 and 2020 was approximately $713,000 and $656,000, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Assets held under finance lease obligations are
depreciated over the shorter of their related lease terms or their estimated productive lives. Depreciation of assets under finance leases
is included in depreciation expense for 2021 and 2020. Accumulated depreciation on these assets was approximately $30,000 and $28,000
as of March 31, 2021 and December 31, 2020, respectively.</p><br/>
30000
28000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td><td> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%">Land</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">300,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">300,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="text-align: center; width: 11%"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Buildings and Improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,720,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,683,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">31.50 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Machinery and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,838,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">21,738,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Finance Lease Machinery and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Tools and Instruments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,246,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">12,116,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">1.50 - 7 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Automotive Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">148,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">148,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Furniture and Fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">290,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">290,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">5 - 8 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Leasehold Improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">861,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">855,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center">Term of Lease</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Computers and Software</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">436,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">436,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt">4 - 6 years</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Total Property and Equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,917,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">37,644,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Accumulated Depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28,776,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(28,063,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: center; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 4pt">Property and Equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,141,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9,581,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="text-align: center; padding-bottom: 4pt"> </td></tr>
</table>
300000
300000
1720000
1683000
31.50
21838000
21738000
5
8
78000
78000
5
8
12246000
12116000
1.50
7
148000
148000
5
290000
290000
5
8
861000
855000
Term of Lease
436000
436000
4
6
37917000
37644000
28776000
28063000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 4. LEASES</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has operating and finance leases for
leased office and manufacturing facilities and equipment leases. The Company leases certain machinery and equipment under finance leases
and leases its offices and manufacturing facilities under operating leases. The leases have remaining lease terms of one to five years,
some of which include options to extend or terminate the leases.</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap"> </td><td style="white-space: nowrap; font-weight: bold"> </td>
<td colspan="4" style="white-space: nowrap; font-weight: bold; text-align: center">March 31,</td><td style="white-space: nowrap; font-weight: bold"> </td><td style="white-space: nowrap; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">December 31,</td><td style="white-space: nowrap; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold"> </td>
<td colspan="4" style="font-weight: bold; text-align: center">(unaudited)</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Weighted Average Remaining Lease Term - in years</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td colspan="3" style="text-align: right">5.19</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">5.53</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Weighted Average discount rate - %</td><td> </td>
<td style="text-align: left"> </td><td colspan="3" style="text-align: right">8.31</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.90</td><td style="text-align: left">%</td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The aggregate undiscounted cash flows of operating lease payments as
of March 31, 2021, with remaining terms greater than one year are as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">808,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,007,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,038,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,070,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">992,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">730,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total future minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,645,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,189,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total operating lease maturities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,456,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion of operating lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(693,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total long term portion of operating lease maturities</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,763,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 29, 2021 the Company entered into an agreement to surrender
the possession of the premises of the former corporate office, located in Hauppauge, NY. The Company made a one-time payment of 40% of
the remaining balance due to the landlord as of May 1, 2021, of approximately $37,000. The Company had previously recognized a lease impairment
of $275,000 to its Operating Lease Right-of-Use-Asset for the year-ended December 31, 2019.</p><br/>
The leases have remaining lease terms of one to five years, some of which include options to extend or terminate the leases.
P1Y
0.40
37000
275000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap"> </td><td style="white-space: nowrap; font-weight: bold"> </td>
<td colspan="4" style="white-space: nowrap; font-weight: bold; text-align: center">March 31,</td><td style="white-space: nowrap; font-weight: bold"> </td><td style="white-space: nowrap; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">December 31,</td><td style="white-space: nowrap; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center; font-weight: bold"> </td>
<td colspan="4" style="font-weight: bold; text-align: center">(unaudited)</td>
<td style="font-weight: bold; text-align: center"> </td>
<td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Weighted Average Remaining Lease Term - in years</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td colspan="3" style="text-align: right">5.19</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">5.53</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Weighted Average discount rate - %</td><td> </td>
<td style="text-align: left"> </td><td colspan="3" style="text-align: right">8.31</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8.90</td><td style="text-align: left">%</td></tr>
</table>
P5Y69D
P5Y193D
0.0831
0.0890
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">808,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,007,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,038,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,070,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">992,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">730,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total future minimum lease payments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,645,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,189,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total operating lease maturities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,456,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: current portion of operating lease liabilities</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(693,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total long term portion of operating lease maturities</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,763,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
808000
1007000
1038000
1070000
992000
730000
5645000
-1189000
4456000
-693000
3763000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 5. NOTES PAYABLE, RELATED PARTY NOTES
PAYABLE AND FINANCE LEASE OBLIGATIONS</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Notes payable, related party notes payable and
finance lease obligations consist of the following:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-indent: -0.125in; padding-left: 0.125in"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: -0.125in; padding-left: 0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 0.125in"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Revolving credit note payable to Sterling National Bank (“SNB”)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">14,781,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">15,649,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Term loan, SNB</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,558,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Finance lease obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Loans Payable - financed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">48,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Related party notes payable, net of debt discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,412,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,012,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in">Subtotal</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,605,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">27,273,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: Current portion of notes payable, related party notes payable and finance lease obligations</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(15,606,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(16,475,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Notes payable, related party notes
payable and finance lease obligations, net of current portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,999,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,798,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Sterling National Bank (“SNB”)</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 31, 2019, the Company entered into
a loan facility (“SNB Facility”) with SNB expiring on December 30, 2022. The new loan facility provides for a $16,000,000
revolving loan (“SNB revolving line of credit”) and a term loan (“SNB term loan”).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2020, the Company entered into the First Amendment
to Loan and Security Agreement (“First Amendment”). The terms of the amendment increase the Term Loan to $5,685,000. The repayment
terms of the term loan were amended to provide monthly principal installments in the amount of $67,679 beginning on December 1, 2020,
with a final payment of any unpaid balance of principal and interest payable on December 30, 2022. Additionally, the date by which certain
subordinated third-party notes need to be extended by was changed from September 30, 2020 to November 30, 2020. The Company has paid an
amendment fee of $20,000.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The terms of the SNB Facility require that, among
other things, the Company maintain a specified Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each Fiscal Quarter beginning
with the Fiscal Quarter ending March 31, 2020. In addition, the Company is limited in the amount of Capital Expenditures it can make.
As of March 31, 2021, the Company was in compliance with all loan covenants. The SNB Facility also restricts the amount of dividends the
Company may pay to its stockholders. Substantially all of the Company’s assets are pledged as collateral under the SNB Facility.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2021 the future minimum principal
payments for the SNB term loan are as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">For the twelve months ending</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">609,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,805,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">SNB Term Loan payable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,414,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: debt issuance costs</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(52,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total SNB Term loan payable, net of debt issuance costs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion of SNB term loan payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(812,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total long-term portion of SNB term loan payable</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,550,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the terms of the SNB Facility, both the
SNB revolving line of credit and the SNB term loan will bear an interest rate equal to 30-day LIBOR (with a 1% floor) plus 2.5%. The average
interest rate charged during the period ended March 31, 2021 was 3.5%.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2021, our debt to SNB in the amount
of $20,143,000 consisted of the SNB revolving line of credit note in the amount of $14,781,000 and the SNB term loan in the amount of
$5,362,000. As of December 31, 2020, our debt to SNB in the amount of $21,207,000 consisted of the SNB revolving line of credit note in
the amount of $15,649,000 and the SNB term loan in the amount of $5,558,000.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Interest expense related to the SNB Facility amounted
to approximately $181,000 and $120,000 for the three months ended March 31, 2021 and 2020, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Loan Payable – Financed Asset</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company financed the purchase of a delivery
vehicle in July 2020. The loan obligation totaled $46,000 and $48,000 as of March 31, 2021 and December 31, 2020, respectively. The loan
bears no interest and a final payment is due and payable for all unpaid principal on July 20, 2026.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The future minimum loan payments, are as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">For the twelve months ending</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loans Payable - financed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Long-term portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">37,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Related Party Notes Payable</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Taglich Brothers, Inc. is a corporation co-founded
by two directors of the Company, Michael and Robert Taglich. In addition, a third director of the Company is a vice president of Taglich
Brothers, Inc.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Taglich Brothers, Inc. has acted as placement
agent for various debt and equity financing transactions and has received cash and equity compensation for their services.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">From 2016 through 2020, the Company entered into various
subordinated notes payable and convertible subordinated notes payable with Michael and Robert Taglich. These notes included proceeds totaling
$6,550,000. In connection with these notes, Michael and Robert were issued a total of 355,082 shares of common stock and Taglich Brothers
Inc. were issued promissory notes totaling $554,000 for placement agency fees.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 1, 2021, the related party subordinated
notes due to Michael and Robert Taglich and Taglich Brothers, Inc., were amended to include all accrued interest through December 31,
2020 in the principal balance of the notes. Per the terms of the SNB Facility, these notes remain subordinate to the SNB Facility and
are due on July 1, 2023. There are no principal payments due on these notes until such time. The Note Holders and the principal balance
of the notes as amended on January 1, 2021 are shown below:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Michael Taglich,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Robert Taglich,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Taglich Brothers,</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Chairman</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Director</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Inc.</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Convertible Subordinated Notes</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,666,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,905,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">241,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,812,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Subordinated Notes</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,250,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">350,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,600,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,916,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,255,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">241,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,412,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the three months ended March 31, 2021, no
principal payments have been made on these notes and the principal balances remain unchanged from the table above. Interest expense for
the three months ended March 31, 2021 and 2020 on all related party notes payable was $125,000 and $128,000, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Convertible Notes Payable – Third Parties</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of both March 31, 2021 and December 31, 2020
the notes payable to third parties totaled $0 as the notes were converted into shares of common stock in 2020. Interest incurred on these
amounted to approximately $42,000 for the three months ended March 31, 2020. Amortization of debt discount on these notes amounted to
approximately $4,000 for the three months ended March 31, 2020. These costs are included in interest and financing costs in the Condensed
Consolidated Statement of Operations.</p><br/>
16000000
the Company entered into the First Amendment to Loan and Security Agreement (“First Amendment”). The terms of the amendment increase the Term Loan to $5,685,000. The repayment terms of the term loan were amended to provide monthly principal installments in the amount of $67,679 beginning on December 1, 2020, with a final payment of any unpaid balance of principal and interest payable on December 30, 2022. Additionally, the date by which certain subordinated third-party notes need to be extended by was changed from September 30, 2020 to November 30, 2020. The Company has paid an amendment fee of $20,000.
The terms of the SNB Facility require that, among other things, the Company maintain a specified Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each Fiscal Quarter beginning with the Fiscal Quarter ending March 31, 2020.
the terms of the SNB Facility, both the SNB revolving line of credit and the SNB term loan will bear an interest rate equal to 30-day LIBOR (with a 1% floor) plus 2.5%. The average interest rate charged during the period ended March 31, 2021 was 3.5%.
20143000
14781000
5362000
21207000
15649000
5558000
181000
120000
46000
48000
From 2016 through 2020, the Company entered into various subordinated notes payable and convertible subordinated notes payable with Michael and Robert Taglich. These notes included proceeds totaling $6,550,000. In connection with these notes, Michael and Robert were issued a total of 355,082 shares of common stock and Taglich Brothers Inc. were issued promissory notes totaling $554,000 for placement agency fees. On January 1, 2021, the related party subordinated notes due to Michael and Robert Taglich and Taglich Brothers, Inc., were amended to include all accrued interest through December 31, 2020 in the principal balance of the notes. Per the terms of the SNB Facility, these notes remain subordinate to the SNB Facility and are due on July 1, 2023. There are no principal payments due on these notes until such time.
125000
128000
0
0
42000
42000
4000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-indent: -0.125in; padding-left: 0.125in"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">March 31,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: -0.125in; padding-left: 0.125in"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-left: 0.125in"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center">(unaudited)</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center"> </td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; width: 76%; text-align: left">Revolving credit note payable to Sterling National Bank (“SNB”)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">14,781,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">15,649,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Term loan, SNB</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,558,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Finance lease obligations</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Loans Payable - financed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">48,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Related party notes payable, net of debt discount</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,412,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,012,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in">Subtotal</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,605,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">27,273,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: Current portion of notes payable, related party notes payable and finance lease obligations</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(15,606,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(16,475,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Notes payable, related party notes
payable and finance lease obligations, net of current portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,999,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,798,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
14781000
15649000
5362000
5558000
4000
6000
46000
48000
6412000
6012000
26605000
27273000
15606000
16475000
10999000
10798000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">For the twelve months ending</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">609,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">4,805,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">SNB Term Loan payable</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,414,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: debt issuance costs</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(52,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total SNB Term loan payable, net of debt issuance costs</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion of SNB term loan payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(812,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total long-term portion of SNB term loan payable</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,550,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
609000
4805000
5414000
52000
5362000
812000
4550000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="font-weight: bold; border-bottom: Black 1.5pt solid">For the twelve months ending</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%">December 31, 2021 (remainder of the year)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>December 31, 2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>December 31, 2025</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loans Payable - financed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">46,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Long-term portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">37,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
7000
9000
9000
9000
9000
3000
9000
37000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Michael Taglich,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Robert Taglich,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">Taglich Brothers,</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Chairman</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Director</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Inc.</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Convertible Subordinated Notes</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,666,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,905,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">241,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,812,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 1.5pt">Subordinated Notes</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,250,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">350,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,600,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,916,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,255,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">241,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,412,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
2666000
1905000
241000
4812000
1250000
350000
1600000
3916000
2255000
241000
6412000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 6. LIABILITY RELATED TO THE SALE OF FUTURE PROCEEDS FROM DISPOSITION
OF SUBSIDIARY</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with the sale of the Company’s
wholly-owned subsidiary, AMK Welding, Inc. (“AMK”) to Meyer Tool, Inc., (“Meyer”) in 2017, Meyer was obligated
to pay the Company within 30 days after the end of each calendar quarter, commencing April 1, 2017, an amount equal to five (5%) percent
of the net sales of AMK for that quarter until the aggregate payments made to the Company (the “Meyer Agreement”) equals $1,500,000
(the “Maximum Amount”).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to increase liquidity, on January 15,
2019, the Company entered into a “Purchase Agreement” with 15 accredited investors (the “Purchasers”), including
Michael and Robert Taglich, pursuant to which the Company assigned to the Purchasers all of their rights, title and interest to the remaining
$1,137,000 of the $1,500,000 in payments due from Meyer for the sale of AMK (the “Remaining Amount”) for an immediate payment
of $800,000, including $100,000 from each of Michael and Robert Taglich, and $75,000 for the benefit of the children of Michael Taglich.
The timing of the payments is based upon the net sales of AMK. If the Purchasers have not received the entire Remaining Amount by March
31, 2023, they have the right to demand payment of their pro rata portion of the unpaid Remaining Amount from the Company (“Put
Right”). To the extent the Purchasers exercise their Put Right, the remaining payments from Meyer will be retained by the Company.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognized $104,000 and $92,000 of
non-cash income reflected in “other income, net” on the condensed consolidated statement of operations and recorded $31,000
and $28,000 of related non-cash interest expense related to the Purchase Agreement, for the three months ended March 31, 2021 and 2020,
respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below shows the activity within the
liability account for:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; padding-bottom: 1.5pt"> </td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2021</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31,<br/>
2020</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Liabilities related to sale of future proceeds from disposition of subsidiaries - beginning balance</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">322,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">602,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Non-Cash other income recognized</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(104,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(402,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Non-Cash interest expense recognized</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">31,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">122,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Liabilities related to sale of future proceeds from disposition of subsidiary - ending balance</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">249,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">322,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized transaction costs</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 4pt">Liability related to sale of future proceeds from disposition of subsidiary, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">246,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">319,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table><br/>
In connection with the sale of the Company’s wholly-owned subsidiary, AMK Welding, Inc. (“AMK”) to Meyer Tool, Inc., (“Meyer”) in 2017, Meyer was obligated to pay the Company within 30 days after the end of each calendar quarter, commencing April 1, 2017, an amount equal to five (5%) percent of the net sales of AMK for that quarter until the aggregate payments made to the Company (the “Meyer Agreement”) equals $1,500,000 (the “Maximum Amount”).
the Company entered into a “Purchase Agreement” with 15 accredited investors (the “Purchasers”), including Michael and Robert Taglich, pursuant to which the Company assigned to the Purchasers all of their rights, title and interest to the remaining $1,137,000 of the $1,500,000 in payments due from Meyer for the sale of AMK (the “Remaining Amount”) for an immediate payment of $800,000, including $100,000 from each of Michael and Robert Taglich, and $75,000 for the benefit of the children of Michael Taglich. The timing of the payments is based upon the net sales of AMK. If the Purchasers have not received the entire Remaining Amount by March 31, 2023, they have the right to demand payment of their pro rata portion of the unpaid Remaining Amount from the Company (“Put Right”). To the extent the Purchasers exercise their Put Right, the remaining payments from Meyer will be retained by the Company.
104000
92000
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="white-space: nowrap; padding-bottom: 1.5pt"> </td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31,<br/>
2021</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="white-space: nowrap; border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31,<br/>
2020</td><td style="white-space: nowrap; padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">(unaudited)</td><td style="font-weight: bold"> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Liabilities related to sale of future proceeds from disposition of subsidiaries - beginning balance</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">322,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">602,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Non-Cash other income recognized</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(104,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(402,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Non-Cash interest expense recognized</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">31,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">122,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Liabilities related to sale of future proceeds from disposition of subsidiary - ending balance</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">249,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">322,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: unamortized transaction costs</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(3,000</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left; padding-bottom: 4pt">Liability related to sale of future proceeds from disposition of subsidiary, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">246,000</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">319,000</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
322000
602000
104000
402000
31000
122000
249000
-3000
-3000
246000
319000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 7. STOCKHOLDERS’ EQUITY</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Common Stock – Sale of Securities</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company issued 41,960 and 43,771 shares
of common stock in payment of director fees totaling $52,000 and $55,000 for the three months ended March 31, 2021 and 2020,
respectively. Additionally, the Company issued 51,224 shares of common stock upon the cashless exercise of stock options during the
three months ended March 31, 2021.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2020, we issued and sold 419,597 shares
of our common stock for gross proceeds of $984,000 pursuant to our Form S-3 filed on October 10, 2019 as updated on January 15, 2020.
Costs of the sale amounted to $145,000.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the three months ended March 31, 2020,
the Company issued 590,243 shares of common stock to convert third party subordinated debt totaling $885,000 to equity.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the second quarter of 2021, the Company
issued 37,392 shares of common stock in payment of directors’ fees totaling $52,000.</p><br/>
41960
43771
419597
984000
145000
590243
37392
52000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 8. CONTINGENCIES</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A number of actions have been commenced against
the Company by vendors, landlords and former landlords, including a third party claim as a result of an injury suffered on a portion of
a leased property not occupied by the Company. As certain of these claims represent amounts included in accounts payable they are not
specifically discussed herein.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Contract Pharmacal Corp. (“Contact
Pharmacal”) commenced an action on October 2, 2018, relating to a Sublease entered into between the Company and Contract
Pharmacal in May 2018 with respect to the property at 110 Plant Avenue, Hauppauge, New York. In the action Contract Pharmacal seeks
damages for an amount in excess of $1,000,000 for our failure to make the entire premises available by the Sublease commencement
date. The Company disputes the validity of the claims asserted by Contract Pharmacal and believes it has meritorious defenses to
those claims and have recently submitted a motion in opposition to its motion for summary judgement. As of March 31, 2021, it is not
possible to estimate if a loss will be incurred, as such there has been no accrual.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time we also may be engaged in various
lawsuits and legal proceedings in the ordinary course of our business. We are currently not aware of any legal proceedings the ultimate
outcome of which, in our judgment based on information currently available, would have a material adverse effect on our business, financial
condition or operating results. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial
stockholder of our common stock, is an adverse party or has a material interest averse to our interest.</p><br/>
1000000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 9. INCOME TAXES</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recorded no income tax expense for
the three months ended March 31, 2021 and 2020 because the estimated annual effective tax rate was zero. In determining the estimated
annual effective income tax rate, the Company analyzes various factors, including projections of the Company’s annual earnings and
taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the ability to use tax credits
and net operating loss carry forwards, and available tax planning alternatives.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the passage of the CARES Act, the
Company filed for a net operating loss carryback claim of $1,416,000 in March 2020. The refund was received in April 2020.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2021 and December 31, 2020, the
Company provided a full valuation allowance against its net deferred tax assets since the Company believes it is more likely than not
that its deferred tax assets will not be realized.</p><br/>
0.00
1416000
0.00
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 10. SEGMENT REPORTING</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with FASB ASC 280, “Segment
Reporting” (“ASC 280”), the Company discloses financial and descriptive information about its reportable operating segments.
Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by
the chief operating decision maker in deciding how to allocate resources and in assessing performance.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows ASC 280, which establishes
standards for reporting information about operating segments in annual and interim financial statements, and requires that companies report
financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards
for related disclosures about products and services, geographic areas and major customers.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company currently divides its operations into
two operating segments: Complex Machining, which consists of AIM and NTW; and Turbine Engine Components, which consists of Sterling. Along
with its operating subsidiaries, the Company reports the results of its corporate division as an independent segment.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accounting policies of each of the segments
are the same as those described in the Summary of Significant Accounting Policies. Intersegment transfers are recorded at the transferors
cost, and there is no intercompany profit or loss on intersegment transfers. We evaluate performance based on revenue, gross profit contribution
and assets employed.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Financial information about the Company’s reporting segments
for the three months ended March 31, 2021 and 2020 are as follows: </p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Three Months</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(unaudited)</font></td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(unaudited)</font></td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">COMPLEX MACHINING</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net Sales</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,166,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,064,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,619,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,168,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Income before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">980,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,170,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51,703,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">48,732,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">TURBINE ENGINE COMPONENTS</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,546,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,383,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">178,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(126,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,582,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,569,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>CORPORATE</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,117,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,400,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,075,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>CONSOLIDATED</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,712,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,447,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,797,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,181,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(152,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(356,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Benefit from Income Taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,414,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Income (loss)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(152,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,058,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">57,360,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">54,051,000</td><td style="text-align: left"> </td></tr>
</table><br/>
2
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Three Months</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(unaudited)</font></td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center"> </td><td style="text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(unaudited)</font></td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">COMPLEX MACHINING</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net Sales</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,166,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,064,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,619,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,168,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Income before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">980,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,170,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51,703,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">48,732,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">TURBINE ENGINE COMPONENTS</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,546,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,383,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">178,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(126,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,582,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,569,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>CORPORATE</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,117,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,400,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,075,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">750,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>CONSOLIDATED</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Sales</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,712,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,447,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Gross Profit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,797,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,181,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Loss before benefit from income taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(152,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(356,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; ">
<td style="text-align: left">Benefit from Income Taxes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,414,000</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Net Income (loss)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(152,000</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,058,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; ">
<td>Assets</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">57,360,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">54,051,000</td><td style="text-align: left"> </td></tr>
</table>
12166000
12064000
1619000
2168000
980000
1170000
51703000
48732000
1546000
1383000
178000
13000
-15000
-126000
3582000
4569000
-1117000
-1400000
2075000
750000
13712000
13447000
1797000
2181000
-152000
-356000
-1414000
-152000
1058000
57360000
54051000