-----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, UZ40FKyjHplQFUDtT5FAcsbiBkPAN9r6frOBpvR/xuWRMWgT68Mc98jMqn6ZJLdg L+8XK7humuDtCu4Nj3sIKw== 0000891092-96-000204.txt : 19961115 0000891092-96-000204.hdr.sgml : 19961115 ACCESSION NUMBER: 0000891092-96-000204 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96661514 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 September 28, 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: 1,961,246 shares of Common stock, $.10 par value as of November 5, 1996. TEL-INSTRUMENT ELECTRONICS CORPORATION TABLE OF CONTENTS PAGE ---- Financial Statements (Unaudited) Condensed Comparative Balance Sheets September 28, 1996 and March 31, 1996 1 Condensed Comparative Statements of Operations - Three and Six Months Ended September 28, 1996 and September 30,1995 2 Condensed Comparative Statements of Cash Flows - Three and Six Months Ended September 28, 1996 and September 30, 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) September 28, March 31, 1996 1996 ----------- ----------- ASSETS Current assets: Cash $ 206,489 22,625 Accounts receivable, net 126,540 359,494 Inventories 445,070 346,874 Other current assets 3,262 7,135 ----------- ----------- Total current assets 781,361 736,128 Office and manufacturing equipment, net 46,267 41,825 Other assets, net 45,526 46,653 ----------- ----------- Total assets 873,154 824,606 =========== =========== 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 422,130 590,353 Accounts payable and accrued expenses 597,581 580,974 ----------- ----------- Total current liabilities 1,084,711 1,236,327 Note payable - related pary 100,000 100,000 Redeemable preferred stock 0 606,643 ----------- ----------- Total liabilities 1,184,711 1,942,970 ----------- ----------- Stockholders' deficiency: Common stock 196,127 160,383 Additional paid-in capital 3,856,371 3,151,432 Accumulated deficit (4,364,055) (4,430,179) ----------- ----------- Total stockholders' deficiency (311,557) (1,118,364) ----------- ----------- Total liabilities and stockholders' deficiency 873,154 824,606 =========== =========== See accompanying notes to condensed financial statements 1 TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended September 28, September 30, September 28, September 30, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Sales: Government, net 353,355 259,403 784,374 601,741 Commercial, net 248,266 333,745 450,834 618,775 ---------- ---------- ---------- ---------- Total sales 601,601 593,148 1,235,208 1,220,516 Cost of sales 224,558 238,570 504,152 499,908 ---------- ---------- ---------- ---------- Gross margin 377,043 354,578 731,056 720,608 Operating expenses Selling, general and administrative 196,740 173,487 412,105 375,798 Engineering, research and development 109,078 89,246 220,329 179,293 ---------- ---------- ---------- ---------- Total operating expenses 305,818 262,733 632,434 555,091 ---------- ---------- ---------- ---------- Profit (loss) from operations 71,225 91,845 98,622 165,517 Other income (expenses): Interest income 384 185 609 185 Interest expense (16,221) (17,966) (33,107) (35,476) ---------- ---------- ---------- ---------- Net profit (loss) 55,388 74,064 66,124 130,226 ========== ========== ========== ========== Earnings per share 0.03 0.05 0.04 0.08 Dividends per share None None None None Weighted average shares outstanding 1,782,526 1,603,806 1,705,932 1,603,806
See accompanying notes to condensed financial statements 2 TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended September 28, September 30, 1996 1995 ---------- ---------- Increase (decrease) in cash: Cash flows from operating activities: Cash received from customers 1,479,138 1,194,547 Cash paid to vendors and employees (1,307,035) (1,168,197) Interest received 609 183 Interest paid (60,152) (1,494) ---------- ---------- Net cash provided by operating activities 112,560 25,039 Cash flows from investing activities: Cash purchases of property, plant and equipment (16,196) (3,455) Net cash used in investing activities (16,196) (3,455) Cash flows from financing activities: Repayment of debt 0 (16,667) Proceeds from issuance of common stock 87,500 0 ---------- ---------- Net cash provided by (used in) financing activities 87,500 (16,667) ---------- ---------- Net Increase in cash 183,864 4,917 Cash at beginning of period 22,625 38,768 ---------- ---------- Cash at end of period 206,489 43,685 ========== ========== Non Cash items: Preferred stock redeemed & exchanged for common stock 606,643 0 (See Liquidity and Common Resources Section) Stocks issued to related party for liabilities due 46,540 0
See accompanying notes to condensed financial statements. 3 TEL-INSTRUMENT ELECTRONICS CORP. CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS, Continued (Unaudited)
Six Months Ended September 28, September 30, 1996 1995 -------- -------- Net profit (loss) 66,124 130,226 Adjustments Depreciation 11,754 8,309 Changes in assets and liabilities: Decrease (increase) in accounts receivable 232,954 (33,698) (Increase) decrease in inventories (98,196) 37,066 Decrease in other current assets 3,873 2,292 Decrease (increase) in other assets 1,127 (1,129) Increase (decrease) in accounts payable and accrued expenses 16,607 (144,481) (Decrease) increase in accrued payroll, deferred wages and vacation pay (121,683) 26,454 -------- -------- Net cash provided by operating activities 112,560 25,039 ======== ========
4 See accompanying notes to condensed financial statements. 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 September 28, 1996, the results of operations for the three and six months ended September 28, 1996 and September 30, 1995 and statements of cash flows for the six months ended September 28, 1996 and September 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 In July, 1996 a group of employees and creditors agreed to purchase the preferred stock and to exchange such stock for common stock of the Company. (See Liquidity and Capital Resources Section). Note 4 The President of the Company obtained 62,053 shares as part of the offer made to all stockholders (See Liquidity and Capital Resources Section) in exchange for a reduction in liabilities due in the amount of $46,540. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION RESULTS OF OPERATION Sales Net sales increased $8,453 (1.4%) and $14,692 (1.2%) for the three and six months ended September 28, 1996, respectively, as compared to the same periods in the prior fiscal year. The increase in sales is attributed to the government segment for shipments associated with a contract with the United States Air Force. The uncertainty of the commercial segment continues and led to a decline in commercial sales which offset most of the increase in government sales. While sales increased, 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 to which firm orders have been received in the amount of $1,890,488. Shipments against this contract began in the first quarter of fiscal year 1996 and will continue beyond the current fiscal year. Both commercial and government sales were held down in the quarter because of missed shipments of key parts by one vendor whose problems have since been remedied. These missed shipments will be shipped in the next quarter causing better than expected sales for that quarter. The future growth and profitability continue to be dependent on a turnaround of the commercial airline market, the introduction and acceptance of new products, and the award of additional government contracts. Gross Margin Gross margin increased $22,465 (6.3%) and $10,448 (1.4%) for the three and six months ended September 28, 1996, respectively, as compared to the corresponding periods in the prior fiscal year. This increase is attributed to the higher volume, sale of higher margin products, and the additional absorption of overhead expenses. The gross margin percentage was 59.1% for the six months ended September 28, 1996 as compared to 59.0% for the same period last year. The higher percentage gross margin is not expected to continue as the lower margin products for the Air Force contract become a higher percentage of shipments. Operating Expenses Total selling, general and administrative expenses increased $23,253 (13.4%) and $36,307 (9.7%) for the three and six months ended September 28, 1996, respectively, as compared to the same periods in the prior fiscal year. The increase is attributed to an increase in selling expenses and commissions associated with government sales. Engineering, research and development expenditures increased $19,832 (22.2%) and $41,036 (22.9%) for the same period due to increased new product development efforts. The net income for the three months ended September 28, 1996 was $55,388 or $0.03 per share as compared to a net income of $74,064 or $0.05 per share for the three months ended September 30, 1995. The net income for the six months ended September 28, 1996 was $66,124 or $0.04 per share as compared to a net income of $130,226 or $0.08 per share for the six months ended September 30, 1995. 6 LIQUIDITY AND CAPITAL RESOURCES The working capital deficiency decreased $196,845 for the first six months of fiscal year 1996 to $303,354. Based upon the current backlog and cash on hand the Company believes it has sufficient funds for the remainder of the current year. 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 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. The Company's liquidity and capital position was improved by the redemption of the outstanding redeemable preferred stock (the "Preferred Stock"). In July, 1996 a group of the Company's employees and creditor's agreed to purchase the Preferred Stock and dividends from the preferred stockholder for $111,700 and exchanged the Preferred Stock for common stock. 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 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 issued, to such participating shareholders 35,744 in stock purchase warrants with the same terms as those described above. This stock has been fully subscribed and the stock certificates and warrants have been issued. The Company received $87,500 in cash and reduced its liabilities by $46,540 as a result of this transaction. There was no significant impact on the Company's operations as a result of inflation for the six months ended September 28, 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 11 NOVEMBER 96 s/s Harold K. Fletcher ------------------------ /s/ Harold K. Fletcher Chairman and President 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-mos MAR-31-1997 APR-01-1996 SEP-30-1996 206 0 192 66 445 781 46 12 873 1,085 0 0 0 196 (508) 873 1,235 1,235 504 504 632 0 33 66 0 66 0 0 0 66 .04 .04
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