-----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, AiJm1y66EmABiXiPptrTeKApcw1LbA6R/w1eO4Sik0A2HJi9OgGiKHojN658GshP aL26rmt/2pC5PibaBreAEQ== 0000891092-97-000323.txt : 19970815 0000891092-97-000323.hdr.sgml : 19970815 ACCESSION NUMBER: 0000891092-97-000323 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97663970 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 FORM 10-Q UNITED STATES 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, 1997 ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 33-18978 TEL-INSTRUMENT ELECTRONICS CORP. (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 the issuer's common stock, as of the latest practical date: 2,035,181 shares of Common stock, $.10 par value as of August 4, 1997. TEL-INSTRUMENT ELECTRONICS CORPORATION TABLE OF CONTENTS PAGE ---- Item 1. Financial Statements (Unaudited): Condensed Comparative Balance Sheets June 30, 1997 and March 31, 1997 1 Condensed Comparative Statements of Operations - Three Months Ended June 30, 1997 and 1996 2 Condensed Comparative Statements of Cash Flows - Three Months Ended June 30, 1997 and 1996 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-7 SIGNATURES 7 Item 1 - Financial Statements TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE BALANCE SHEETS June 30, 1997 and March 31, 1997 (Unaudited) (Unaudited) ASSETS June 30, March 31, 1997 1997 ----------- ----------- Current assets: Cash $ 328,480 528,636 Accounts receivable, net of allowance for doubtful accounts of $65,521 at June 30, 1997 and March 31, 1997, respectfully 506,306 302,737 Inventories 453,204 352,173 Other current assets 6,521 6,944 Deferred income tax benefit - current 78,300 78,300 ----------- ----------- Total current assets 1,372,811 1,268,790 Office and manufacturing equipment, net 42,521 45,492 Other assets, net 71,884 71,884 Deferred income tax benefit 203,561 261,900 ----------- ----------- Total assets 1,690,777 1,648,066 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accrued payroll, deferred wages and vacation pay 347,746 342,432 Accounts payable and accrued expenses 435,049 485,380 ----------- ----------- Total current liabilities 782,795 827,812 Convertible subordinated notes - related parties 365,000 365,000 ----------- ----------- Total liabilities 1,147,795 1,192,812 =========== =========== Stockholders' equity: Common stock 203,097 203,097 Additional paid-in capital 3,901,052 3,901,052 Accumulated deficit (3,561,167) (3,648,895) ----------- ----------- Total stockholders' equity 542,982 455,254 ----------- ----------- Total liabilities and stockholders' equity $ 1,690,777 1,648,066 =========== =========== See accompanying notes to condensed financial statements 1 TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, 1997 1996 ----------- ----------- Sales: Government, net $ 557,514 431,039 Commercial, net 313,309 202,568 ----------- ----------- Total sales 870,823 633,607 Cost of sales 336,220 279,594 ----------- ----------- Gross margin 534,603 354,013 Operating expenses: Selling, general and administrative 218,930 215,365 Engineering,research and development 157,945 111,251 ----------- ----------- Total operating expenses 376,875 326,616 ----------- ----------- Profit from operations 157,728 27,397 Other income (expenses): Interest income 6,082 225 Interest expense (17,743) (16,886) ----------- ----------- Income before incomes 146,067 10,736 Provision for income taxes 58,339 -- ----------- ----------- Net income 87,728 10,736 =========== =========== Net income per common share $ 0.04 0.01 =========== =========== Dividends per share None None Weighted average shares outstanding 2,091,071 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, 1997 1996 --------- --------- Increase (decrease) in cash: Cash flows from operating activities Net income $ 87,728 10,736 Adjustments to reconcile net income to cash provided by operating activities: Deferred income taxes 58,339 -- Depreciation 6,614 5,461 Changes in assets and liabilities: (Increase) decrease in accounts receivable (203,569) 8,249 (Increase) decrease in inventories (101,031) 10,766 Decrease in other current assets 423 2,081 (Increase) decrease in other assets -- -- (Increase (decrease) in accrued payroll, deferred wages and vacation pay 5,314 (279) (Decrease) increase in accounts payable and accrued expenses (50,331) 62,358 --------- --------- Net cash (used in) provided by operations (196,513) 99,372 --------- --------- Cash flows from investing activities: Cash purchases of property, plant and equipment (3,643) (5,619) --------- --------- Net cash used in investing activities (3,643) (5,619) --------- --------- Cash flows from financing activities: Repayment of debt -- -- --------- --------- Net cash used in financing activities -- -- --------- --------- Net (decrease) increase in cash (200,156) 93,753 Cash at beginning of period 528,636 22,625 --------- --------- Cash at end of period $ 328,480 116,378 ========= =========
See accompanying notes to condensed financial statements. 3 TEL-INSTRUMENT ELECTRONICS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS Note 1 Basis of Presentation 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, 1997, the results of operations for the three months ended June 30, 1997 and June 30, 1996, and statements of cash flows for the three months ended June 30, 1997 and June 30, 1996. These results are not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include disclosures normally made in an Annual Report on Form 10-K. The March 31, 1997 results included herein have been derived from the audited financial statements included in the Company's annual report on Form 10-K. Accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997. Note 2 Inventories Inventories consist of: June 30, March 31, 1997 1997 ---------------------------- Purchased parts $230,915 $ 213,842 Work-in-process 290,594 206,750 Less: Reserve for obsolescence (68,305) (68,419) ---------------------------- $453,204 $ 352,173 ============================ Note 3 Reclassifications Certain reclassifications have been made to the fiscal year 1997 financial statements to be consistent with the fiscal year 1998 presentation. Note 4 Income Taxes At March 31, 1997, the Company, in accordance with FASB 109, reduced the valuation allowance and recognized a deferred income tax benefit of $340,200. The recognized deferred income tax benefit is based upon the expected utilization of net operating loss carryforwards as the Company believes it is more likely than not that it will realize a portion of its net operating losses before they expire. For the three months ended June 30, 1997, the Company recorded a provision for income taxes of $58,339, which represents the effective federal and state tax rate on the Company's net income before taxes of $146,067. The Company has no tax liability. The $58,339 reduced the Company's deferred income tax benefit at June 30, 1997 and such amounts are reflected in the accompanying balance sheet. This amount represents a portion of the net operating loss tax benefit that the Company previously recognized for financial statement reporting purposes and expects to utilize for tax reporting purposes. 4 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Sales For the three months ended June 30, 1997 net sales increased $237,216 (37.4%) as compared to the three months ended June 30, 1996. Sales increased for both the government and commercial segments. Government sales increased $126,475 (29.3%) related to a contract with the USAF. Although commercial sales increased $110,741 (54.7%), the Company does not expect this to continue because the commercial market remains uncertain. The Company continues to focus its efforts in the government market and has been very active in responding to requests from the U.S. Government and has been adapting its product designs to respond to these requests. During the first quarter of Fiscal 1998, the Company identified technical issues with one of its products scheduled to be delivered during the second quarter of Fiscal 1998. The Company has corrected such technical issues, however, second quarter production and resulting shipments may be delayed. Accordingly, the Company believes that its second quarter results may be adversely affected. On August 12, 1997 the Company also received notice that it had been awarded a major contract from the U.S. Navy. The initial order is for $949,324 to provide 5 T-47M IFF test sets for Navy evaluation and for associated documentation. This work, to be completed within the next 12 months, represents a major milestone for the Company since it could be a source of significant future revenues. The contract includes options for up to 1,300 units which the Navy can exercise through the year 2001. There is no assurance that they will exercise these options. The Company continues to explore expanding into other markets in order to capitalize on its test equipment technology. However, there can be no assurance that the Company will be successful in its efforts. Gross Margin Gross margin increased $180,590 (51.0%), as compared to the same period in the prior fiscal year. Gross margin as a percent of sales was 61.4% for the three months ended June 30, 1997, as compared to 55.9% for the three months ended June 30, 1996. The higher gross margin is primarily attributed to the increase in sales volume and a shift in product mix which included a higher volume of commercial sales. There were no significant price increases for the first three months of fiscal year 1998. The Company does not expect to maintain this higher gross margin percentage due to the higher mix of lower margin government sales expected to be shipped during the remainder of the current fiscal year. Operating Expenses Selling, general and administrative expenses increased $3,565 (1.7%) for the three months ended June 30 , 1997 as compared to the same period last year. Increases in commissions associated with the higher government sales and in expenses incurred related to the Company's efforts to explore additional markets were partially offset by lower selling expenses. Engineering, research and development expenses increased $46,694 (42.0%) reflecting the Company's commitment and efforts to develop new products. 5 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (continued) Interest Interest income increased as a result of the Company's higher cash balances.. Income Before Taxes Income before taxes increased to $146,067 for the three months ended June 30, 1997, as compared to $10,736 for the three months ended June 30, 1996. Provision for Income Taxes A provision for income taxes was not recognized in the prior fiscal year first quarter because the Company applied a full valuation allowance. At March 31, 1997, the Company reduced the valuation allowance and recognized deferred income taxes. For the three months ended June 30, 1997 the Company has recorded a provision for income taxes utilizing the estimated effective Federal and State income tax rates for fiscal 1998. Net Income Net income for the three months ended June 30, 1997 was $87,728 or $0.04 per share, as compared to $10,736 or $0.01 per share for the three months ended June 30, 1996. The improvement in net income per common share was partially offset by the increase in the number of shares outstanding. Liquidity and Capital Resources At June 30, 1997 the Company had positive working capital of $590,016 as compared to $440,978 at March 31, 1997. As such the Company's liquidity position continues to improve. The Company's net worth increased to $542,982 at June 30, 1997, as compared to $455,254 at March 31, 1997 as a result of the Company's continued profitability. For the three months ended June 30, 1997, cash used in operations was $196,513 as compared to cash provided by operations of $99,372 for the three months ended June 30, 1997. This decrease in cash provided by operations is primarily a result of an increase in accounts receivable for items shipped late in the quarter, an increase in inventories associated with orders to be shipped in the current fiscal year, and a decrease in accounts payable and accrued expenses. The Company continues to explore opportunities to improve its profitability and cash flow. Based upon the current backlog and cash on hand, the Company believes that it should have sufficient working capital to fund its plans for the next year. At present, the Company does not expect to incur significant long-term needs for capital outside of its normal operating activities. There was no significant impact on the Company's operations as a result of inflation for the three months ended June 30, 1997. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended March 31, 1997. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Recent Pronouncements In June 1997 the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130 establishes the standards for reporting and displaying comprehensive income and its components (revenues, expenses, gains, and losses) as part of a full set of financial statements. This statement requires that all elements of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The statement is effective for fiscal years beginning after December 15, 1997. For this company, this means the standard is effective April 1, 1998. Since this standard applies only to the presentation of comprehensive income, it will not have any impact on the Company's results of operations, financial position or cash flows. 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 1997 By: /s/ Harold K. Fletcher ------------- ----------------------------- /s/ Harold K. Fletcher Chairman and President EX-27 2 FDS --
5 1,000 3-Mos MAR-31-1998 APR-01-1997 JUN-30-1997 328 0 572 66 453 1,373 43 7 1,691 783 0 0 0 203 340 1,691 871 871 336 713 377 0 18 146 58 88 0 0 0 88 .04 .04
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