Insert after first sentence, second paragraph of release issued
July 16, 2018: The audit opinion included in the Company’s Annual
Report on Form 10-K for the year ended March 31, 2018 contains a
going concern explanatory paragraph. The Company is exploring
various financing options.
The corrected release reads:
TEL-INSTRUMENT ELECTRONICS CORP. REPORTS
FINANCIAL RESULTS FOR FISCAL YEAR 2018
Tel-Instrument Electronics Corp. (“Tel”, “Tel-Instrument” or the
“Company”) (NYSE American:TIK), a leading designer and manufacturer
of avionics test and measurement solutions, today reported a net
loss of $4.4 million on revenues of $10 million for the fiscal year
ended March 31, 2018. This loss included legal damages and
litigation costs relating to the Aeroflex litigation matter
totaling approximately $2.8 million.
Mr. Jeffrey O’Hara, President and CEO of Tel, stated, “Fiscal
year 2018 was an extremely difficult year due to the unexpected
decision by the Kansas Court as well as delays in the award of
several expected contracts. The audit opinion included in the
Company’s Annual Report on Form 10-K for the year ended March 31,
2018 contains a going concern explanatory paragraph. The Company is
exploring various financing options. In response, the Company has
significantly reduced its manufacturing and administrative costs
over the last four months. At the same time, we have increased our
direct marketing visits with key international Mode 5 customers,
which have confirmed that our test sets are highly regarded. We
expect to win the majority of the international Mode 5 flight-line
business, which has been estimated at up to 2,000 test sets. The
Company is currently working on several large international
contracts, including a multi-million dollar 200-unit competitive
German solicitation that could be awarded this summer. The Company
is starting to see international orders for its new T-47/M5 Mode 5
test set with additional volume orders expected once AIMS
certification is secured for this new test set later this year. In
addition, we have several large potential domestic opportunities in
the pipe-line including a possible multi-million dollar follow-on
test set order from the U.S. DOD, which if secured, should lead to
improved revenues and profitability. We also expect a large order
from Lockheed Martin for the F-35 program this summer. These
expected orders are believed to generate improved gross margins
going forward as prices will be higher, and improved manufacturing
efficiency and lower manufacturing overhead costs. The Company
projects that revenues and profitability will start to improve
starting in the second half of this fiscal year with much stronger
growth expected starting next calendar year as we get closer to the
January 1, 2020 deadline for Mode 5 implementation. We expect the
international Mode 5 business to remain strong for a number of
years.”
“The Company believes its key long-term growth potential is in
our new line of SDR/OMNI modular hand-held test sets which provides
unmatched capabilities in a market leading form factor. Our
development team has been working hard to complete development and
testing of the first product, while providing the foundation for
future enhancements. The plan is to introduce the first avionics
related commercial product in the fourth quarter of this calendar
year and add further avionic test capabilities to this product via
software download every three to six months. This will allow us to
replace two Aeroflex market leading commercial test sets with
multi-purpose test set. The goal is to dominate commercial avionics
similar to what we have done in Mode 5 flight-line testing. The
Company is currently working on a marketing and advertising
program, and will begin product demonstrations to key customers
later this summer. Once the commercial avionics software is
completed, we plan to expand into the secure communications radio
market which is the key to TIC’s long-term growth. We continue to
seek a partner for this new market. We expect to face stiff
competition from Aeroflex which has been the dominant supplier in
these markets.”
“With respect to the Aeroflex litigation, the Company has posted
a $2,000,000 appeal bond. The Company believes it has solid grounds
to appeal this verdict. The appeal process would be expected to
take up to three years to complete and the costs should be a
fraction of what we have spent litigating this case to date.”
“To support the near-term growth in business and improve our
balance sheet, the Company is actively working to secure additional
equity funding, and is in discussions with several potential
investors. The Company believes its core position in Mode 5 testing
to be extremely strong and we believe the new SDR/OMNI product will
allow the Company to regain its position in the commercial
market-place and allow us to effectively compete in upcoming
military secure communication test set solicitations.”
Year Ended March 31, 2018 as Compared to March 31, 2017
For the year ended March 31, 2018 sales decreased $8,720,686
(46.5%) to $10,024,588 as compared to $18,745,456 for the year
ended March 31, 2017. Avionics government sales decreased
$9,136,189 (55.3%) to $7,395,724 for the year ended March 31,
2018 as compared to $16,531,913 for the year ended March 31, 2017.
The decrease in sales is mostly attributed to the decrease in
shipment of the U.S. Army TS-4530A Kits and Sets, and the CRAFT and
ITATS units associated with the U.S. Navy programs, which contracts
have now been completed. Commercial sales increased $415,321
(18.8%) to $2,628,864 for the year ended March 31, 2018 as compared
to $2,213,543 for the year ended March 31, 2017. This increase is
attributed to the increased sales of the TR-220 and the
increase in sales from our repair business.
Gross margin decreased $3,554,306 (53.2%) to $3,129,809 for the
year ended March 31, 2018 as compared to $6,684,115 for the year
ended March 31, 2017, primarily as a result of the lower volume as
well as labor and overhead variances as a result of the lower
volume. This decrease is mostly attributed to the lower volume
offset partially by increased prices on CRAFT and the change in
sales mix. The gross margin percentage for the year ended March 31,
2018 was 31.2%, as compared to 35.7% for the year ended March 31,
2017.
Selling, general and administrative expenses decreased $89,269
(3.5%) to $2,491,816, for the year ended March 31, 2018 as compared
to $2,581,085 for the year ended March 31, 2017. This decrease was
primarily attributed to lower salaries and related expenses due to
a reduction in headcount offset partially by higher commission
fees, and professional and consulting fees.
Litigation expenses decreased $634,514 to $610,125 for the year
ended March 31, 2018 as compared to $1,244,639 for the year ended
March 31, 2017 as a result of less activity associated with the
Aeroflex litigation. The Company recorded $2.159 million in
additional legal damages for the year ended March 31, 2018 as
compared to the $2.8 million recorded for the year ended March 31,
2017 as a result of the court’s decision regarding punitive damages
as a result of the Aeroflex litigation.
Engineering, research and development expenses decreased
$154,814 (6.4%) to $2,275,508 for the year ended March 31, 2018 as
compared to $2,430,322 for the year ended March 31, 2017. The
Company continues to invest in new products. The Company has
completed its development of the T-47/M5 Mode 5 test set, which
began initial shipments in the quarter ended December 31, 2017, and
which we believe will compete effectively in the international
market. The Company also continues to heavily invest in the
development of the Company’s SDR/OMNI hand-held product line, the
enhanced remote client, and the incorporation of other product
enhancements in existing designs.
The Company encourages investors to read its full results of
operations as contained in our Annual Report on Form 10-K filed on
July 16, 2018 at www.sec.gov.
About Tel-Instrument Electronics
Corp.
Tel-Instrument is a leading designer and manufacturer of
avionics test and measurement solutions for the global commercial
air transport, general aviation, and government/military aerospace
and defense markets. Tel-Instrument provides instruments to test,
measure, calibrate, and repair a wide range of airborne navigation
and communication equipment. For further information please visit
our website at www.telinstrument.com.
This press release includes statements that are not historical
in nature and may be characterized as “forward-looking statements,”
including those related to future financial and operating results,
benefits, and synergies of the combined companies, statements
concerning the Company’s outlook, pricing trends, and forces within
the industry, the completion dates of capital projects, expected
sales growth, cost reduction strategies, and their results,
long-term goals of the Company and other statements of
expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that
are not historical facts. All predictions as to future results
contain a measure of uncertainty and, accordingly, actual results
could differ materially. Among the factors which could cause a
difference are: changes in the general economy; changes in demand
for the Company’s products or in the cost and availability of its
raw materials; the actions of its competitors; the success of our
customers; technological change; changes in employee relations;
government regulations; litigation, including its inherent
uncertainty; difficulties in plant operations and materials;
transportation, environmental matters; and other unforeseen
circumstances. A number of these factors are discussed in the
Company’s previous filings with the U.S. Securities and Exchange
Commission. The Company disclaims any intention or obligation to
update any forward-looking statements as a result of developments
occurring after the date of this press release. The safe harbor for
forward-looking statements contained in the Securities Litigation
Reform Act of 1995 (the “Act”) protects companies from liability
for their forward-looking statements if they comply with the
requirements of the Act.
TEL-INSTRUMENT ELECTRONICS
CORP.
Consolidated Balance Sheets
ASSETS March 31, 2018 March 31, 2017
Current assets: Cash $ 307,812 $ 287,873 Accounts receivable, net
of allowance for doubtful accounts
of $7,500 and $7,500, respectively
1,095,049 1,556,382 Inventories, net 4,269,934 4,208,179 Restricted
cash to support appeal bond 2,000,866 - Prepaid expenses and other
current assets 147,746 188,578 Total current assets
7,821,407 6,241,012 Equipment and leasehold improvements,
net 180,763 161,427 Deferred tax asset, net 63,500 - Other assets
35,109 33,509 Total assets $ 8,100,779 $
6,435,948
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities: Current portion of long-term debt $
2,124 $ 291,991 Line of credit 1,000,000 200,000 Capital lease
obligations – current portion 6,875 6,268 Accounts payable
2,307,813 1,428,320 Deferred revenues – current portion 60,051
123,720 Federal and state taxes payable - 4,105 Accrued expenses -
vacation pay, payroll and payroll withholdings 447,863 527,413
Accrued legal damages 5,059,990 2,800,000 Accrued expenses -
related parties 31,151 45,586 Accrued expenses – other
241,419 599,049 Total current liabilities 9,157,286
6,026,452 Capital lease obligations – long-term 6,885 13,760
Long-term debt, net of debt discount - 2,124 Warrant liability -
95,000 Deferred revenues – long-term 337,676 352,973
Total liabilities 9,501,847 6,490,309
Commitments and contingencies Stockholders’ deficit
Preferred stock, 1,000,000 shares authorized, par value $0.10 per
share,
500,000 shares 8% Cumulative Series A
Convertible Preferred issued and outstanding
3,035,998 - Common stock, 4,000,000 shares authorized, par value
$.10 per share,
3,255,887 and 3,255,887 shares issued and
outstanding, respectively
325,586 325,586 Additional paid-in capital 8,046,975 8,107,369
Accumulated deficit (12,809,627 ) (8,487,316 )
Total stockholders’ deficit (1,401,068 ) (54,361 )
Total liabilities and stockholders’ deficit $ 8,100,779 $
6,435,948
TEL-INSTRUMENT ELECTRONICS
CORP.
Consolidated Statements of Operations
For the years ended March 31, 2018
2017 Net sales $ 10,024,588 $ 18,745,456
Cost of sales 6,894,779 12,061,341
Gross margin 3,129,809 6,684,115 Operating
expenses: Selling, general and administrative 2,491,816 2,581,085
Litigation expenses 610,125 1,244,639 Legal damages 2,159,000
2,800,000 Engineering, research and development 2,275,508
2,430,322 Total operating expenses 7,536,449
9,056,046 Loss from operations (4,406,640 )
(2,371,931 ) Other income (expense): Proceeds from life
insurance 92,678 - Interest income 866 - Amortization of deferred
financing costs (3,363 ) (5,429 ) Change in fair value of common
stock warrants 95,000 321,203 Interest expense (59,787 ) (40,431 )
Interest expense - judgment (100,960 ) - Interest expense - related
parties (3,605 ) (18,736 ) Total other income
20,829 256,607 Loss before income taxes
(4,385,811 ) (2,115,324 ) (Benefit) provision for income
taxes (63,500 ) 2,644,115 Net loss (4,322,311
) (4,759,439 ) Preferred dividends (90,667 ) -
Net loss attributable to common shareholders $ (4,412,978 )
$ (4,759,439 ) Basic loss per common share $ (1.36 )
$ (1.46 ) Diluted loss per common share $ (1.36 ) $ (1.49 )
Weighted average number of shares outstanding Basic
3,255,887 3,255,887 Diluted 3,255,887
3,266,842
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version on businesswire.com: https://www.businesswire.com/news/home/20180716005845/en/
Tel-Instrument Electronics Corp.Joseph P. Macaluso,
201-933-1600
Tel Instrument Electronics (QB) (USOTC:TIKK)
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