-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GDGiLpfy5OBsGi+vt58b9lMiuQ49Nq4UvhtpfmORxixjGrRUtcQKDb9g0/dmIsX3 D46tsqqNxGOERENfbhYLSw== 0000891092-96-000152.txt : 19960816 0000891092-96-000152.hdr.sgml : 19960816 ACCESSION NUMBER: 0000891092-96-000152 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEL INSTRUMENT ELECTRONICS CORP CENTRAL INDEX KEY: 0000096885 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 221441806 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-18978 FILM NUMBER: 96612059 BUSINESS ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 BUSINESS PHONE: 2019331600 MAIL ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 10-Q 1 QUARTERLY REPORT ON FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q __X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 33-18978 TEL INSTRUMENT ELECTRONICS CORPORATION (Exact name of the Registrant as specified in Charter) New Jersey 22-1441806 (State of Incorporation) (I.R.S. Employer ID Number) 728 Garden Street, Carlstadt, New Jersey 07072 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone No. including Area Code: 201-933-1600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No_____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 1,603,806 shares of Common stock, $.10 par value as of July 30, 1996. TEL-INSTRUMENT ELECTRONICS CORPORATION TABLE OF CONTENTS ----------------- PAGE ---- Financial Statements (Unaudited) Condensed Comparative Balance Sheets June 30, 1996 and March 31, 1996 1 Condensed Comparative Statements of Operations - Three Months Ended - June 30, 1996 and 1995 2 Condensed Comparative Statements of Cash Flows - Three Months Ended June 30, 1996 and 1995 3 - 4 Notes to Condensed Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 7 Signature 8 TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE BALANCE SHEETS (Unaudited) June 30, March 31, 1996 1996 -------- --------- ASSETS Current assets: Cash $ 116,378 22,625 Accounts receivable, net 351,245 359,494 Inventories 336,108 346,874 Other current assets 5,054 7,135 ----------- ----------- Total current assets 808,785 736,128 Office and manufacturing equipment, net 41,983 41,825 Other assets, net 46,653 46,653 ----------- ----------- Total assets 897,421 824,606 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Convertible subordinated note - related party 30,000 30,000 Convertible subordinated note 35,000 35,000 Accrued payroll, deferred wages and vacation pay 590,074 590,353 Accounts payable and accrued expenses 643,332 580,974 ----------- ----------- Total current liabilities 1,298,406 1,236,327 Note payable - related party 100,000 100,000 Redeemable preferred stock 606,643 606,643 ----------- ----------- Total liabilities 2,005,049 1,942,970 ----------- ----------- Stockholders' deficiency: Common stock 160,383 160,383 Additional paid-in capital 3,151,432 3,151,432 Accumulated deficit (4,419,443) (4,430,179) ----------- ----------- Total stockholders' deficiency (1,107,628) (1,118,364) ----------- ----------- Total liabilities and stockholders' deficiency $ 897,421 824,606 =========== =========== See accompanying notes to condensed financial statements. -1- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, 1996 1995 ----------- ----------- Sales: Government, net $ 431,039 342,338 Commercial, net 202,568 285,030 ----------- ----------- Total sales 633,607 627,368 Cost of sales 279,594 261,338 ----------- ----------- Gross margin 354,013 366,030 Operating expenses: Selling, general and administrative 215,365 202,310 Engineering,research and development 111,251 90,047 ----------- ----------- Total operating expenses 326,616 292,357 ----------- ----------- Profit from operations 27,397 73,673 Other income (expenses): Interest income 225 0 Interest expense (16,886) (17,511) ----------- ----------- Net profit $ 10,736 56,162 =========== =========== Net profit per common share $ 0.01 0.04 =========== =========== Dividends per share None None Weighted average shares outstanding 1,603,806 1,603,806 See accompanying notes to condensed financial statements -2- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, 1996 1995 ---- ---- Increase (decrease) in cash: Cash flows from operating activities: Cash received from customers $ 641,856 581,010 Cash paid to vendors and employees (529,123) (563,805) Interest received 225 -- Interest paid (13,586) (1,328) ----------- ----------- Net cash provided by operating activities 99,372 15,877 Cash flows from investing activities: Cash purchases of property, plant and equipment (5,619) -- ----------- ----------- Net cash used in investing activities (5,619) -- ----------- ----------- Cash flows from financing activities: Repurchase of shares -- (12) Repayment of debt -- (12,500) ----------- ----------- Net cash used in financing activities -- (12,512) ----------- ----------- Net increase (decrease) in cash 93,753 3,365 Cash at beginning of period 22,625 38,768 ----------- ----------- Cash at end of period $ 116,378 42,133 =========== =========== See accompanying notes to condensed financial statements. -3- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS, continued (Unaudited) Three Months Ended June 30, 1996 1995 ----------- ----------- Net profit $ 10,736 56,162 Adjustments: Depreciation 5,461 4,097 Changes in assets and liabilities: (Increase) decrease in accounts receivable 8,249 (85,795) Decrease (increase) in inventories 10,766 (5,397) Decrease in other current assets 2,081 5,797 (Increase) decrease in other assets 0 (1,128) Increase in progress billings 0 35,914 (Decrease)in accrued payroll, deferred wages and vacation pay (279) (1,185) Increase in accounts payable and accrued expenses 62,358 7,412 ----------- ----------- Net cash provided by operating activities $ 99,372 15,877 =========== =========== Non-cash investing and financing activities: Redeemable preferred stock dividends accrued (1) 7,500 Note (1): Company ceased accruing dividends due to negotiations to convert redeemable preferred stock to common stock. See accompanying notes to condensed financial statements. -4- TEL-INSTRUMENT ELECTRONICS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS Note 1 In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position of Tel Instrument Electronics Corp as of June 30, 1996, the results of operations for the three months ended June 30, 1996 and June 30, 1995 and statements of cash flows for the three months ended June 30, 1996 and June 30, 1995. These results are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended March 31, 1996. Note 2 Certain reclassifications have been made to the 1996 financial statements to be consistent with the fiscal year 1997 presentation. Note 3 If the redemption of the Preferred Stock, as discussed in Liquidity and Capital Resources on page 7, had occured on June 30, 1996, instead of on or about August 9, 1996, the Company's June 30, 1996 balance sheet would have changed has shown below: June 30, 1996 ------------- As Pro Forma Reported Effect -------- -------- Current assets $ 808,785 $ 697,085 Total assets 897,421 785,721 Current liabilities 1,298,406 1,193,406 Total liabilities 2,005,049 1,293,406 Total stockholders' deficiency (1,107,628) (507,685) Total liabilities and stockholders' deficiency 897,421 785,721 -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION RESULTS OF OPERATIONS Sales Net sales increased $6,239 (1%) for the three months ended June 30, 1996 as compared to the same period in the prior fiscal year. The increase in sales for the period is primarily attributed to the government segment, particularly shipments associated with the contract with the United States Air Force. The uncertainty of the commercial segment continues and resulted in a decline in commercial sales which offset the increase in government sales. While sales increased slightly, the stagnant conditions experienced in both the commercial airline and government segments continue. In fiscal year 1995 the Company was awarded an open quantity contract by the U.S. Air Force for which firm orders have been received in the amount of $1,815,305. Shipments against this contract began in May 1995 and will continue beyond this fiscal year. A contract for $324,795 has been received from the U.S. Army for the model T-36M and a contract of $132,000 for the T-49C was received from the U.S. Coast Guard in the first quarter of fiscal year 1997. The future growth and profitability continue to be dependent on a turnaround of the commercial airline industry, introduction and acceptance of new products, and the award of additional government contracts. Gross Margin Gross margin decreased $12,017 (3.3%) for the three months ended June 30, 1996 as compared to the corresponding period in the prior fiscal year. This decrease is attributed to the increased sale of lower margin military products. The gross margin percentage was 55.9% for the three months ended June 30, 1996 as compared to 58.3% for the same period last year. The lower percentage gross margin is expected to continue as Tel continues shipping the lower margin products for the Air Force contract. Operating Expenses Total selling, general and administrative expenses increased $13,055 (6.5%) for the three months ended June 30, 1996 as compared to the same period in the prior fiscal year. The increase is attributed to an increase in selling expenses associated with greater trade show participation and commissions associated with government sales. Engineering, research and development expenditures increased $21,204 (23.5%) for the same period due to increased development efforts associated with the T-36M contract. The net income for the three months ended June 30, 1996 was $10,736 or $0.01 per share as compared to a net income of $56,162 or $0.04 per share for the three months ended June 30, 1995. -6- LIQUIDITY AND CAPITAL RESOURCES The working capital deficiency decreased $10,578 for the first three months of fiscal year 1997 to $489,621. The Company's ability to continue is dependent upon its ability to generate sufficient cash flow from operations or to obtain additional financing. Since securing financing from traditional sources is difficult, short term liquidity must continue to be provided by cash generated from operations. Management's plans to improve profitability and cash flow are based on cost reduction measures, continued sales efforts, and incremental revenues derived from new product developments. In addition, the Company's liquidity and capital position were improved by the redemption of the outstanding redeemable preferred stock (the "Preferred Stock"). In July, 1996 a qroup of the Company's employees and creditor's agreed to purchase the Preferred Stock from the preferred stockholder for $111,700 and to exchange the Preferred Stock for common stock. At June 30, 1996, the Preferred Stock and accrued dividends had a face value of $606,643, as reflected on the accompanying financials. The effect of the redemption, which was completed on or about August 9, 1996, was to reduce the liabilities by approximately $700,000 and the negative net worth by approximately $600,000, as shown in Note 2 to the financials. Also, as a result of canceling the Preferred Stock, the annual dividends of $30,000 will no longer accrue. The Company's Board of Directors approved the exchange of the Preferred Stock and dividends for 178,720 shares of newly issued common stock and stock purchase warrants for an additional 35,744 shares of common stock. The purchase warrants are exercisable at a price per share of $0.75 until March 31, 1997, $1.50 until March 31, 1998, and $2.25, until March 31, 1999. The Board of Directors also authorized the Company to offer all shareholders the right to purchase an additional 178,720 shares of common stock at $0.75 per share and to issue, to such paticipating shareholders, up to 35,744 in stock purchase warrants with the same terms as those described above. There was no significant impact on the Company's operations as a result of inflation for the three months ended June 30, 1996. These statements should be read in conjunction with the Company's annual report to the Securities and Exchange Commission on Form 10-K for fiscal year ending March 31, 1996. -7- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TEL-INSTRUMENT ELECTRONICS CORP Date 9 August 1996 By:/s/ Harold K. Fletcher ---------------------- /s/ Harold K. Fletcher Chairman and President EX-27 2 FDS --
5 1,000 3-MOS MAR-31-1997 APR-01-1996 JUN-30-1996 116 0 417 66 336 809 42 5 897 1,298 0 607 0 160 1,267 897 634 634 280 280 327 0 17 11 0 11 0 0 0 11 .01 .01
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