What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-17 compared with 2020-12-18 · 137 added, 144 removed, 421 unchanged (40% of the section changed)

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INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

G ENCOR I NDUSTRIES , I NC .

Report of Independent Registered Public Accounting Firm

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To the Board of Directors and Shareholders of Gencor Industries, Inc.:

Opinion on the Financial Statements

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Gencor Industries, Inc.

(the “Company”) as of September 30, 2020 and 2019, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the two-year

period ended September 30, 2020, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the years in the two-year

period ended September 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of September 30, 2021 and 2020, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years ended September 30, 2021 and 2020, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years ended September 30, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinions.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Slow-moving and Obsolete Inventories

As disclosed in Note 1 of the notes to the Company’s consolidated financial statements, the Company records an estimated allowance for slow-moving and obsolete inventories to state the Company’s inventories at the lower of cost or net realizable value.

The Company relies on, among other things, past usage, sales experience, recent order and quote activity, possible alternative uses, future sales forecasts, and its strategic business plan to develop the estimate.

As a result of management’s assessment, the Company recorded an allowance for slow-moving and obsolete inventories of approximately $5,397,000 as of September 30, 2021.

Auditing management’s estimate of the allowance for slow-moving and obsolete inventories, including those acquired in a business combination, involved subjective evaluation and high degree of auditor judgement due to significant assumptions involved in estimating future inventory turnover and sales.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding of the design of internal controls that address the risks of material misstatement relating to recording inventory at the lower of cost or net realizable value.

We tested the accuracy and completeness of the underlying data used in calculating the inventory allowance, including testing of a sample of inventory usage transactions, and recomputed the allowance calculation.

We also evaluated the Company’s ability to accurately estimate the assumptions used to develop the estimate by comparing historical allowance amounts to the history of actual inventory write-offs.

Furthermore, we reviewed management’s business plan and forecasts of future sales.

evenue from Contracts with Customers where Revenue is Recognized over Time

As disclosed in Note 1 of the notes to the Company’s consolidated financial statements, the Company recognizes revenues from contracts with customers for the design, manufacture and sale of custom equipment over time when the performance obligation is satisfied by transferring control of the equipment.

Control of the equipment transfers over time, as the equipment is unique to the specific contract and thus does not create an asset with an alternative use to the Company.

Revenues and costs are recognized in proportion to actual labor costs incurred, as compared with total estimated labor costs expected to be incurred, during the entire contract.

Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.

The Company recorded approximately $24,093,000 in revenue from custom equipment sales contracts during the year ended September 30, 2021.

Auditing management’s estimate of total estimated labor costs expected to be incurred for the entire contract with respect to incomplete contracts, and the percentage of completion on those contracts as of the end of the year involved subjective evaluation and high degree of auditor judgement due to significant assumptions involved in estimating total labor costs to complete.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

We obtained an understanding of the design of internal controls that address the risks of material misstatement relating to recording revenue from contracts with customers where revenue is recognized over time.

We tested the accuracy and completeness of the underlying data used in calculating the percentage of completion on incomplete contracts, including review of contracts, change orders, and underlying labor and material costs, and recomputed the percentage of completion on individual contracts.

We also evaluated the Company’s ability to accurately estimate the assumptions used to develop the estimate by comparing historical cost estimates to actual costs on completed contracts.

/s/ MSL, P.A.

Certified Public Accountants

We have served as the Company’s auditor since 2001.

e have served as the Company’s auditor since 2001.

Orlando, Florida

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Deferred and other income taxes

Non-current operating lease liabilities

operating lease liabilities

Total liabilities

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6,000,000 shares authorized;

2,318,857 shares and 2,308,857 shares issued and outstanding at September 30, 2020 and 2019, respectively

2,318,857 shares issued and outstanding at September 30, 2021 and 2020

Capital in excess of par value

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September 30, 2020

Stock-based compensation

Stock options exercised

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See accompanying Notes to Consolidated Financial Statements

The balances as of September 30, 2018, have been adjusted to reflect the change in inventory accounting method, as described in Notes 1 and 2 to the Consolidated Financial Statements.

GENCOR INDUSTRIES, INC.

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Provision for doubtful accounts

Loss on disposal of assets

Stock-based compensation

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Cash flows provided by operating activities

Cash flows from investing activities:

Cash flows used in

investing activities:

Acquisition of Blaw-Knox assets

Capital expenditures

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Cash flows provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at:

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Gencor Industries, Inc.

and its subsidiaries (collectively, the “Company”) is a diversified, heavy machinery manufacturer for the production of highway construction materials and environmental control machinery and equipment.

and its subsidiaries (collectively, the “Company”) is a diversified,

heavy machinery manufacturer for the produc t

ion of highway construction materials and environmental control machinery and equipment.

The Company’s core products include asphalt plants, combustion systems, fluid heat transfer systems and asphalt pavers.

The Company’s products are manufactured at three facilities in the United States.

These consolidated financial statements include the accounts of Gencor Industries, Inc.

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All significant intercompany accounts and transactions have been eliminated in consolidation.

On October 1, 2020, the Company acquired the Blaw-Knox paver line and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE.

The acquisition provided the Company entry into the asphalt paver sector of the asphalt industry.

The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The initial purchase price of approximately $ 14.4 million, which was subject to post-closing adjustments, was funded by cash on hand.

After post-closing adjustments transacted during quarter ended March 31, 2021, the final purchase price was $ 13.8 million, including $ 10.4 million in inventory and $ 3.4 million in fixed assets.

There were no liabilities assumed.

The accompanying consolidated financial statements as of September 30, 2021, include the assets, liabilities and operating results of the paver line for the year then ended.

Accounting Pronouncements and Policies

In May 2014, the FASB issued ASU No.

Revenue from Contracts with Customers

(Topic 606) (“ASU 2014-09”),

amending its accounting guidance related to revenue recognition.

Under this ASU and subsequently issued amendments, revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Additional disclosures are required to provide the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017.

The Company adopted ASU 2014-09

in the first quarter of fiscal 2019.

The Company elected to adopt the standard using the modified retrospective method.

The adoption of ASU 2014-09

did not have a significant impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No.

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must be applied on a modified retrospective basis and is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted.

The Company adopted ASU 2016-02 in the first quarter of fiscal 2020.

The initial adoption of ASU 2016-02 did not have a significant impact on its consolidated financial statements.

During the fourth quarter of fiscal 2020, the Company entered into a new operating lease which resulted in reporting a right-of-use (“ROU”) asset and related lease liabilities of approximately $ 970,000 (see Note 9 – Leases) .

In May 2017, the FASB issued ASU 2017-09,

Compensation - Stock Compensation

Scope of Modification Accounting

(“ASU 2017-09”).

The new guidance clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification.

is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted.

The Company adopted ASU 2016-02

in the first quarter of fiscal 2020.

The adoption of ASU 2017-09

The initial adoption of ASU 2016-02

did not have a significant impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) (ASU 2018-13).

The updated guidance improves the disclosure requirements on fair value measurements, including, among other things, addition of certain disclosures related to level 3 fair value measurements, and removal of disclosure requirements for (i) the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, and (ii) policy and timing of transfers between fair value hierarchy levels.

The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company adopted ASU 2018-13 for the quarter ended December 31, 2020.

The application of this guidance did not have a material effect on our disclosures.

No other accounting pronouncements recently issued or newly effective have had, or are expected to have, a material impact on the Company’s consolidated financial statements.

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For the year ended September 30, 2020, the weighted-average shares issuable upon the exercise of stock options included in the diluted EPS calculation were 256,000 , which equates to 125,000 dilutive common stock equivalents.

Weighted-average shares issuable upon the exercise of stock options, which were not included in the diluted EPS calculation because they were anti-dilutive, were 7,000 in 2020 and zero in 2019.

Weighted-average shares issuable upon the exercise of stock options, which were not included in the diluted EPS calculation because they were anti-dilutive, were zero in 2021 and 7,000 in 2020.

The following presents the calculation of the basic and diluted EPS for the years ended September 30, 2021 and 2020:

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From time to time the Company may transfer cash between its marketable securities portfolio and operating cash and cash equivalents.

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2020:

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of Sept e

mber 30, 2021:

Fair Value Measurements

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Cash and Money Funds

Net unrealized losses reported during fiscal 2020 on trading securities still held as of September 30, 2020, were $( 1,091,000 ).

Net unrealized gains reported during

fiscal 2021 on trading securities still held as of September 30, 2021, were $ 1,302,000 .

There were no transfers of investments between Level 1 and Level 2 during the year ended September 30, 2021 .

In the fourth quarter of fiscal 2020, the Company liquidated approximately $ 17.0 million of its investments.

The cash was used to fund the acquisition of the Blaw-Knox paver business and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE (see Note 12 - Subsequent Events for additional information).

The following table sets forth by level, within the fair value hierarchy, the Company’s assets measured at fair value as of September 30, 2020:

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Cash and Money Funds

Net unrealized gains reported during fiscal 2019 on trading securities still held as of September 30, 2019, were $ 737,000 .

Net unrealized losses reported during fiscal 2020 on trading securities still held as of September 30, 2020, were $( 1,091,000 ).

There were no transfers of investments between Level 1 and Level 2 during the year ended September 30, 2020.

In fiscal 2019, the Company transferred a net $ 2.0 million from the marketable securities portfolio to operating cash and cash equivalents.

In the fourth quarter of fiscal 2020, the Company liquidated approximately $ 17.0 million of its investments.

The cash was primarily used to fund the acquisition of the Blaw-Knox assets, including inventory, fixed assets and related intellectual property, from Volvo CE.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, customer deposits and accrued expenses approximate fair value because of the short-term nature of these items.

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The Company maintains its cash accounts in various domestic financial institutions which may from time to time exceed federally insured limits.

Operating cash is retained overnight in non-interest-bearing accounts which allow for offsets to treasury service charges.

Operating cash is retained in overnight sweep accounts which allow for offsets to treasury service charges.

The marketable securities include investments in cash and money funds, mutual funds, exchange traded funds (“ETF’s”), corporate bonds, government securities and stocks through professional investment management firms.

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The Company extends limited credit on parts sales to its customers based upon their credit-worthiness.

Generally, the Company requires a significant up-front deposit before beginning manufacturing on complete asphalt plant and component orders, and requires full payment subject to hold-back provisions prior to shipment.

The Company establishes an allowance for doubtful accounts based upon the credit risk of specific customers, historical trends and other pertinent information.

Inventories are valued at the lower of cost or net realizable value.

Net realizable value is defined as the estimated selling price of goods less reasonable costs of completion and delivery.

During the fourth quarter of fiscal 2019, the Company changed its method for accounting for cost of inventories from the last-in,

(“LIFO”) method to the first-in,

(“FIFO”) method.

As required by accounting principles generally accepted in the United States of America (“GAAP”), the Company reflected this change in accounting principle on a retrospective basis, resulting in changes to the historical periods presented.

Generally, the Company requires a significant up-front

deposit before beginning manufacturing on complete asphalt plant and component orders, and requires full payment subject to hold-back provisions prior to shipment.

The Company establishes an allowance for doubtful accounts based upon the credit risk of specific customers, historical

trends and other pertinent information.

Inventories are valued at the lower of cost or net realizable value, with cost being determined under the FIFO method and net realizable value defined as the estimated selling price of goods less reasonable costs of completion and delivery.

Appropriate consideration is given to obsolescence, excessive levels, deterioration, possible alternative uses and other factors in determining net realizable value.

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from customers is carried at estimated net realizable value.

Unless specific circumstances warrant different treatment regarding inventory obsolescence, an allowance is established to reduce

the cost basis of inventories three to four years old by 50 %,

the cost basis of inventories four to five years old by 75 %, and the cost basis of inventories greater than five years old to zero .

Unless specific circumstances warrant different treatment regarding inventory obsolescence, an allowance is established to reduce the cost basis of inventories three to four years old by 50 %, the cost basis of inventories four to five years old by 75 %, and the cost basis of inventories greater than five years old to zero .

Inventory is typically reviewed for obsolescence on an annual basis computed as of September 30, the Company’s fiscal year end.

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Revenues and Expenses

The Company adopted the provisions of ASU No.

and related amendments effective for the quarter ended December 31, 2018 using the modified retrospective method.

The adoption of this standard did not have a material impact on the timing or amounts of revenues recognized by the Company, and, as such, no cumulative effect adjustment was recorded with the adoption of the standard.

The Company accounts for revenues and related expenses under the provisions of ASU No.

The following table disaggregates the Company’s net revenue by major source for the years ended September 30, 2021 and 2020:

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Freight revenue

Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the performance obligation is satisfied by transferring control of the equipment.

Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the per f

ormance obligation is satisfied by transferring control of the equipment.

Control of the equipment transfers over time, as the equipment is unique to the specific contract and thus does not create an asset with an alternative use to the Company.

Revenues and costs are recognized in proportion to actual labor costs incurred, as compared with total estimated labor costs expected to be incurred, during the entire contract.

All incremental costs related to obtaining a contract are expensed as incurred, as the amortization period is less than one year.

All incremental costs related to obtaining a contract are expensed as incurred, as the amortization period is less than

Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.

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Payment for equipment under contract with customers is typically due prior to shipment.

Payment for services under contract with customers is due as s

are completed.

Payment for services under contract with customers is due as services are completed.

Accounts receivable related to contracts with customers for equipment sales were $ 210,000 and $ 223,000 at September 30, 2021 and September 30, 2020, respectively.

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Reporting Segments and Geographic Areas

The Company has one reportable segment.

For fiscal 2020 and 2019, total revenues of $ 77,420,000 and $ 81,329,000 , and total long-term assets of $ 9,336,000 and $ 8,442,000 , respectively, were attributed to the United States.

The Company has one reporting segment, equipment for the highway construction industry.

Based on evaluation of the criteria of ASC 280 – Se g

ment Reporting, including the nature of products and services, the nature of the production processes, the type of customers and the methods used to distribute products and services, the Company determined that its operating segments meet the requirements for aggregation.

The Company designs, manufactures and sells asphalt plants and pavers, combustion systems and fluid heat transfer systems, for the highway construction industry and environmental and petrochemical markets.

The Company’s products are manufactured at three facilities in the United States.

The Company also services and sells spare parts for its equipment.

For fiscal 2021 and 2020, total revenues of

$ 85,278,000 and $ 77,420,000 , and total long-term assets of $ 12,639,000 and $ 9,336,000 , respectively, were attributed to the United States.

Revenues are attributed to geographic areas based on the location of the assets producing the revenues.

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Management has evaluated events occurring from September 30, 2021 through the date these consolidated financial statements were filed with the Securities and Exchange Commission for proper recording and disclosure herein.

On October 1, 2020, the Company acquired the Blaw-Knox paver business and associated assets, including inventory, fixed assets and related intellectual property,

from Volvo CE.

The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The purchase price of approximately $ 14.4 million was funded by cash on hand (see Note 12 - Subsequent Events for additional information).

On November 1, 2021, by unanimous vote of the Board of Directors of the Company and pursuant to the Company’s By-Laws, John

Elliott was removed as CEO of the Company.

As a result, the 30,000 fully vested, outstanding Class B stock options issued under the 2009 Plan (see Note 11 – Shareholders’ Equity and Stock-Based Compensation) were cancelled.

The impact of the exclusion of these outstanding stock options on the earnings per share calculation for the year ended September 30, 2021, would have been immaterial.

NOTE 2 – INVENTORIES

Inventories are valued at the lower of cost or net realizable value.

During the fourth quarter of fiscal 2019, the Company changed its method for accounting for cost of inventories from the LIFO method to the FIFO method.

The Company believes the FIFO method improves financial reporting by better reflecting the current value of inventory on the consolidated balance sheets, by more closely aligning the flow of physical inventory with the accounting for the inventory, and by providing better matching of revenues and ex p

Net inventories consist of the following:

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Warranty and related accruals

Professional fees

Property tax accruals

Income tax accruals

Professional fees

Accrued expenses

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Income tax expense

A reconciliation of the federal statutory tax rate to the total tax provision is as follows:

A reconciliation of the

federal statutory tax rate to the total tax provision is as follows:

Year Ended September 30,

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Dividend received deduction

263A Section 481(a) adjustment

Effective income tax rate

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Domestic international sales corporation

Percentage of completion

Property and equipment

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Total income taxes paid in fiscal 2021 and 2020 were $ 1,963,000 and $ 3,850,000 , respectively.

The fiscal 2020 income taxes paid includes $ 2,050,000 of tax payments due on the filing of the Company’s Form 3115 with the Internal Revenue Service to reflect the revenue recognition method change to the percentage of completion method for tax purposes pursuant to Internal Revenue Code Sections 460 and 451(b).

The fiscal 2020 income taxes p a

id includes $ 2,050,000 of tax payments due on the filing of the Company’s Form 3115 with the Internal Revenue Service to reflect the revenue recognition method change to the percentage of completion method for tax purposes pursuant to Internal Revenue Code Sections 460 and 451(b) .

GAAP prescribes a comprehensive model for the financial recognition, measurement, classification, and disclosure of

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The Company recognizes interest and penalties accrued related to UTB’s as a component of income tax expense.

There were no additional accruals of interest expense nor penalties during fiscal years ended September 30, 2020 and 2019.

There were no additional accruals of interest expense nor penalties of significance during fiscal years ended September 30, 2021 and 2020.

It is reasonably possible that the amount of the UTB’s with respect to certain unrecognized tax positions will increase or decrease during the next 12 months.

The Company does not expect the change to have a material effect on its results of operations or its financial position.

The only expected potential reason for change would be the ultimate results stemming from any examinations by taxing authorities.

The only expected potential r e

ason for change would be the ultimate results stemming from any examinations by taxing authorities.

If recognized, the entire amount of UTB’s would have an impact on the Company’s effective income tax rate.

The effective income tax rate for fiscal 2021 was 12.5 % versus 17.2 % in fiscal 2020.

In fiscal 2019, the Company generated $ 241,000 of federal research and development credits (“R&D Credits”), all of which were used.

In fiscal 2020, the Company generated $ 421,000 of R&D Credits, all of which were used.

There were no R&D Credits carryforwards as of September 30, 2020.

As of September 30, 2018, the Company had $ 87,000 in Florida state research and development tax credits (“Florida R&D Credits”) carryforwards.

The Company did no t receive any additional Florida R&D Credits in fiscal 2020 or fiscal 2019.

The Company used the $ 87,000 of Florida R&D Credits carryforwards from fiscal 2018 in fiscal 2019.

There were no Florida R&D Credits carryforwards at September 30, 2020.

In fiscal 2021, the Company generated $ 335,000 of federal research and development tax credits (“R&D Credits”), all of which were used in fiscal 2021.

In fiscal 2020, the Company generated

R&D Credits, all of which were used in fiscal 2020.

There were no R&D Credits carryforwards as of September 30, 2021 or September 30, 2020.

The Company files U.S.

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NOTE 9 - LEASES

The Company leases certain equipment under non-cancelable operating leases.

Future minimum rental payments under these leases at September 30, 2020 are immaterial.

Total rental expense for the fiscal years ended September

30, 2020 and 2019 was $ 37,000 and $ 40,000 , respectively.

On August 28, 2020, the Company entered into a three -year

operating lease for property related to the manufactur ing

and warehousing of the Blaw-Knox paver business

which was acquired after September 30, 2020 (refer to Note 12 – Subsequent Events for additional information

The lease term is for the period September 1, 2020 through August 31, 2023 .

In accordance with ASU 2016-02, the Company recorded a ROU asset totaling

$ 970,000 and

related lease liabilities at inception.

For the year ended September 30, 2020, operating lease cost was

$ 28,000 which was accrued at September 30, 2020 and paid in October 2020.

The Company leases certain equipment under non-cancelable

operating leases.

Future minimum rental payments under these leases at Sep t

ember 30, 2021 are immaterial.

Total rental expense for the fiscal years ended September 30, 2021 and 2020 was $ 78,000 and $ 37,000 , respectively.

On August 28, 2020, the Company entered

into a three-year operating lease for property related to the manufacturing and warehousing of the Blaw-Knox assets.

The lease term is for the period beginning on September 1, 2020 through

August 31, 2023 .

In accordance with ASU 2016-02,

the Company recorded a ROU asset totaling $ 970,000 and related lease liabilities at inception.

On October 9, 2020, the Company entered into an operating lease for additional warehousing space for paver inventory.

The lease term is for one year beginning November 2020 with automatic one-year

In accordance with ASU 2016-02,

the Company recorded a ROU asset totaling $ 254,000 and related lease liabilities at inception.

For the year ended September 30, 2021, operating lease costs were $ 440,000 and cash payments related to these operating leases were $ 468,000 .

For the year ended September 30, 2020, operating lease cost was $ 28,000 which was accrued at September 30, 2020 and paid in October 2020.

There were no cash payments related to this operating lease in fiscal 2020 .

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines is as follows:

As of September 30, 2020

Other information concerning the Company’s operating lease accounted for under ASC 842 guidelines as of September 30, 2021 and September 30, 2020, is as follows:

September 30, 2021

September 30, 2020

Operating lease ROU asset included in other long-term assets

Current operating lease liability

Non-current operating lease liability

operating lease liability

Weighted average remaining lease term (in years)

Weighted average discount rate used in calculating ROU

Weighted average discount rate used in calculating ROU asset

Future annual minimum lease payments as of September 30, 2021 are as follows:

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As such, the full magnitude that the COVID-19

pandemic will have on

the Company’s financi a

l condition and future results of operations is uncertain.

Management is actively monitoring the situation on the Company’s financial condition, operations, suppliers, industry, customers, and workforce.

As the spread of COVID-19

pandemic will have on the Company’s financial condition and future results of operations is uncertain.

Management continues to monitor the Company’s financial condition, operations, suppliers, industry, customers, and workforce.

If the spread of COVID-19

continues, the Company’s ability to meet customer demands for products may be impacted or its customers may experience adverse business consequences due to COVID-19.

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Under the Company’s Certificate of Incorporation, as amended, certain rights of the holders of the Company’s common stock are modified by shares of Class B stock for as long as such shares shall remain outstanding.

During that period, holders of common stock will have the right to elect approximately 25 % of the Company’s Board of Directors, and conversely, holders of Class B stock will be entitled to elect approximately 75 %

of the Company’s Board of Directors.

During the period when shares of common stock and Class B stock are outstanding, certain matters submitted to a vote of shareholders will also require approval of the holders of common stock and Class B stock, each voting separately as a class.

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On March 17, 2009, the shareholders of the Company approved the 2009 Incentive Compensation Plan (the “2009 Plan”).

The 2009 Plan provides that the total number of shares of Company stock that may be subject to the granting of awards under the 2009 Plan (“Awards”)

800,000 shares of common stock and 160,000 shares of Class B stock

, subject to adjustment pursuant to the terms of

the 2009 Plan.

Persons eligible to receive Awards under the 2009 Plan include employees, directors, consultants and other persons who provide services to the Company.

The 2009 Plan imposes individual limitations on the amount of certain Awards, in part, to comply with Internal Revenue Code, Section 162(m).

As of September 30, 2020 and 2019

, all outstanding common stock options

issued under the 2009 Plan

had been fully vested.

These options amounted to 177,492 at September 30, 2020.

As long as the employees remain

employed by the Company, these options are exercisable through October 1, 2021.

As of September 30, 2020 and 2019

, 45,000 outstanding Class B stock options

issued under the 2009 Plan

were fully vested and are exercisable through October 1, 2021 as long as the employee remains employed by the Company.

In addition, 30,000 outstanding Class B stock options

issued under the 2009 Plan

were fully vested at September 30, 2020, and were 75 % vested as of September 30, 2019,

and are exercisable through September 26, 2026 as long as the employee remains employed by the Company.

As of September 30, 2020,

are available for granting of Awards under the 2009 Plan.

following table summarizes option activity under the 2009

As of September 30, 2021 and 2020, all outstanding common stock options issued under the 2009 Plan were fully vested.

All remaining unexercised, outstanding common stock options issued under the 2009 Plan expired as of September 30, 2021.

As of September 30, 2021 and 2020, 45,000 outstanding Class B stock options issued under the 2009 Plan were fully vested.

These options expired as of September 30, 2021 .

In addition, 30,000 outstanding Class B stock options issued under the 2009 Plan were fully vested at September 30, 2021, and remain exercisable through September 26, 2026 as long as the employee remains employed by the Company (however, refer to Subsequent Events

under Note 1 – Nature of Operations and Summary of Significant Accounting Policies).

As of September 30, 2021, no

options were available for granting of Awards under the 2009 Plan.

The following table summarizes option activity under the 2009 Plan:

Exercise Price

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Options exercised during fiscal 2021

Options expired on September 30, 2021

Options outstanding at September 30, 2021

No options were granted, forfeited or cancelled during the years ended September 30, 2021 or September 30, 2020.

The weighted average remaining contractual life on the options outstanding as of September 30, 2020 is

1.6 years under the 2009 Plan.

NOTE 12 - SUBSEQUENT EVENTS

October 1, 2020, the Company acquired the Blaw-Knox paver business and associated assets, including inventory, fixed assets and related intellectual property, from Volvo CE .

The acquisition was accounted for as a business combination under ASC 805, “Business Combinations.” The purchase price of approximately $ 14.4 million, which is subject to post-closing adjustments, was funded by cash on hand.

Due to COVID-19 constraints, as well as limited time since the acquisition date, the Company is still in the process of completing the initial accounting for the business combination.

As a result, the specific amounts for the major classes of assets acquired are not provided.

There were no liabilities assumed.

This acquisition provides the Company entry into the hot mix paver segment of the asphalt industry.

The weighted average remaining contractual life on the options outstanding as of September 30, 2021 is 5.0 years under the 2009 Plan (however, refer to Subsequent Events

under Note 1 – Nature of Operations and Summary of Significant Accounting Policies).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data