New Jersey
|
22-1441806
|
(State of incorporation)
|
(IRS Employer Identification Number)
|
One Branca Road
East Rutherford, New Jersey
|
07073
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of Each Class
|
Name of Exchange on Which Registered
|
Common Stock $.10 par value
|
NYSE Amex
|
PART I.
|
Page
|
|
Item 1.
|
4 | |
Item 1A.
|
9 | |
Item 2.
|
9 | |
Item 3.
|
10 | |
Item 4.
|
10 | |
PART II.
|
||
Item 5.
|
11 | |
Item 6.
|
12 | |
Item 7.
|
13 | |
Item 7A.
|
18 | |
Item 8.
|
19 | |
Item 9.
|
50 | |
Item 9A.
|
50 | |
Item 9B.
|
50 | |
PART III.
|
||
Item 10.
|
51 | |
Item 11.
|
53 | |
Item 12.
|
56 | |
Item 13.
|
58 | |
Item 14.
|
59 | |
PART IV
|
||
Item 15.
|
60 | |
62 |
Commercial
|
Government
|
Total
|
||||||||||
March 31, 2013
|
$
|
388,941
|
$
|
35,974,074
|
$
|
36,363,015
|
||||||
March 31, 2012
|
$
|
229,530
|
$
|
39,131,357
|
$
|
39,360,887
|
Fiscal Year
|
||||||||
Ended March 31,
|
||||||||
2013
|
High
|
Low
|
||||||
First Quarter
|
$
|
6.35
|
$
|
3.40
|
||||
Second Quarter
|
4.27
|
3.25
|
||||||
Third Quarter
|
3.95
|
3.42
|
||||||
Fourth Quarter
|
3.87
|
3.22
|
||||||
2012
|
||||||||
First Quarter
|
$
|
9.23
|
$
|
7.03
|
||||
Second Quarter
|
9.18
|
7.60
|
||||||
Third Quarter
|
7.99
|
6.05
|
||||||
Fourth Quarter
|
7.92
|
6.04
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options
|
Weighted average exercise price of outstanding options
|
Number of options remaining available for future issuance under Equity Compensation Plans
|
|||||||||
Equity Compensation Plans approved by shareholders
|
114,600
|
$
|
5.53
|
218,978
|
||||||||
Equity Compensation Plans not approved by shareholders
|
--
|
--
|
--
|
|||||||||
Total
|
114,600
|
$
|
5.53
|
218,978
|
Pages
|
|
(1) Financial Statements:
|
|
20 | |
21 | |
22 | |
23 | |
24 | |
25-48 | |
(2) Financial Statement Schedule:
|
|
49 |
ASSETS
|
March 31, 2013
|
March 31, 2012
|
||||||
Current assets:
|
||||||||
Cash
|
$
|
310,297
|
$
|
413,195
|
||||
Accounts receivable, net of allowance for doubtful accounts
of $18,940 and $35,470, respectively
|
557,879
|
1,694,636
|
||||||
Unbilled government receivables
|
-
|
1,780,381
|
||||||
Inventories, net
|
6,241,181
|
5,023,975
|
||||||
Prepaid expenses and other current assets
|
115,852
|
220,255
|
||||||
Deferred financing costs
|
108,321
|
108,321
|
||||||
Deferred tax asset
|
1,238,421
|
1,288,631
|
||||||
Total current assets
|
8,571,951
|
10,529,394
|
||||||
Equipment and leasehold improvements, net
|
587,958
|
706,870
|
||||||
Deferred financing costs – long-term
|
156,463
|
264,784
|
||||||
Deferred tax asset – non-current
|
2,546,190
|
948,489
|
||||||
Other assets
|
56,872
|
56,872
|
||||||
Total assets
|
$
|
11,919,434
|
$
|
12,506,409
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt
|
$
|
1,229,643
|
$
|
542,382
|
||||
Capital lease obligations – current portion
|
74,508
|
64,675
|
||||||
Accounts payable
|
4,272,431
|
2,850,432
|
||||||
Deferred revenues – current portion
|
18,460
|
34,767
|
||||||
Accrued expenses - vacation pay, payroll and payroll withholdings
|
442,522
|
440,116
|
||||||
Accrued expenses - related parties
|
100,536
|
68,777
|
||||||
Accrued expenses – other
|
1,425,002
|
2,006,134
|
||||||
Total current liabilities
|
7,563,102
|
6,007,283
|
||||||
Subordinated notes payable – related parties
|
250,000
|
250,000
|
||||||
Capital lease obligations – long-term
|
76,055
|
149,582
|
||||||
Long-term debt, net of debt discount
|
1,134,549
|
1,490,302
|
||||||
Warrant liability
|
198,330
|
355,290
|
||||||
Deferred revenues – long-term
|
1,045
|
4,637
|
||||||
Total liabilities
|
9,223,081
|
8,257,094
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity
|
||||||||
Common stock, 4,000,000 shares authorized, par value $.10 per share,
3,011,739 and 2,684,215 shares issued and outstanding, respectively
|
301,171
|
268,421
|
||||||
Additional paid-in capital
|
7,108,300
|
5,921,441
|
||||||
Accumulated deficit
|
(4,713,118
|
)
|
(1,940,547
|
)
|
||||
Total stockholders’ equity
|
2,696,353
|
4,249,315
|
||||||
Total liabilities and stockholders’ equity
|
$
|
11,919,434
|
$
|
12,506,409
|
For the years ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Net sales
|
$
|
7,827,258
|
$
|
16,508,678
|
||||
Cost of sales
|
6,866,036
|
10,068,236
|
||||||
Gross margin
|
961,222
|
6,440,442
|
||||||
Operating expenses:
|
||||||||
Selling, general and administrative
|
2,564,637
|
2,969,956
|
||||||
Engineering, research and development
|
2,149,591
|
2,794,478
|
||||||
Total operating expenses
|
4,714,228
|
5,764,434
|
||||||
(Loss) income from operations
|
(3,753,006
|
)
|
676,008
|
|||||
Other income (expense):
|
||||||||
Amortization of debt discount
|
(129,763
|
)
|
(53,570
|
)
|
||||
Amortization of deferred financing costs
|
(219,662
|
)
|
(108,321
|
)
|
||||
Change in fair value of common stock warrants
|
294,785
|
10,847
|
||||||
Gain on sales of capital asset
|
-
|
500
|
||||||
Proceeds from life insurance policy
|
-
|
300,029
|
||||||
Interest income
|
434
|
616
|
||||||
Interest expense
|
(478,939
|
)
|
(367,410
|
)
|
||||
Interest expense - related parties
|
(30,000
|
)
|
(31,964
|
)
|
||||
Total other expense
|
(563,145
|
)
|
(249,273
|
)
|
||||
(Loss) income before income taxes
|
(4,316,151
|
)
|
426,735
|
|||||
(Benefit) provision for income taxes
|
(1,543,580
|
)
|
355,719
|
|||||
Net (loss) income
|
$
|
(2,772,571
|
)
|
$
|
71,016
|
|||
Basic (loss) income per common share
|
$
|
(0.98
|
)
|
$
|
0.03
|
|||
Diluted (loss) income per common share
|
$
|
(0.98
|
)
|
$
|
0.02
|
|||
Weighted average number of shares outstanding
|
||||||||
Basic
|
2,834,257
|
2,657,279
|
||||||
Diluted
|
2,834,257
|
2,717,820
|
Common Stock
|
Additional
|
|||||||||||||||||||
# of Shares
Issued
|
Amount
|
Paid-In
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balances at April 1, 2011
|
2,646,215
|
264,621
|
5,711,531
|
(2,011,563
|
)
|
3,964,589
|
||||||||||||||
Net income
|
-
|
-
|
71,016
|
71,016
|
||||||||||||||||
Stock-based compensation
|
-
|
-
|
89,079
|
-
|
89,079
|
|||||||||||||||
Issuance of common stock in connection with the exercise of stock options
|
38,000
|
3,800
|
120,831
|
-
|
124,631
|
|||||||||||||||
Balances at March 31, 2012
|
2,684,215
|
$
|
268,421
|
$
|
5,921,441
|
$
|
(1,940,547
|
)
|
$
|
4,249,315
|
||||||||||
Stock-based compensation
|
-
|
-
|
81,517
|
-
|
81,517
|
|||||||||||||||
Net loss
|
-
|
-
|
-
|
(2,772,571
|
)
|
(2,772,571
|
)
|
|||||||||||||
Issuance of new shares in connection with stock subscription agreements
|
288,424
|
28,840
|
971,162
|
-
|
1,000,002
|
|||||||||||||||
Issuance of common stock in connection with the exercise of stock options
|
39,100
|
3,910
|
134,180
|
-
|
138,090
|
|||||||||||||||
Balances at March 31, 2013
|
3,011,739
|
$
|
301,171
|
$
|
7,108,300
|
$
|
(4,713,118
|
)
|
$
|
2,696,353
|
For the years ended March 31,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(2,772,571
|
)
|
$
|
71,016
|
|||
Adjustments to reconcile net (loss) income to net cash
(Used in) provided by operating activities:
|
||||||||
Deferred income taxes
|
(1,547,491
|
)
|
352,219
|
|||||
Allowance for doubtful accounts
|
(16,530
|
)
|
(1,200
|
)
|
||||
Depreciation and amortization
|
228,069
|
168,667
|
||||||
Amortization of debt discount
|
129,763
|
53,570
|
||||||
Amortization of deferred financing costs
|
219,662
|
108,321
|
||||||
Change in fair value of common stock warrant
|
(294,785
|
)
|
(10,847
|
)
|
||||
Provision for inventory obsolescence
|
-
|
21,972
|
||||||
Proceeds from life insurance policy
|
-
|
(300,029
|
)
|
|||||
Gain on sale of asset
|
-
|
(500
|
)
|
|||||
Increase in cash surrender value of life insurance
|
-
|
2,011
|
||||||
Stock-based compensation
|
81,517
|
89,079
|
||||||
Changes in assets and liabilities:
|
||||||||
Decrease in accounts receivable
|
1,153,287
|
892,183
|
||||||
Decrease (increase) in unbilled government receivables
|
1,780,381
|
(313,758
|
)
|
|||||
Increase in inventories
|
(1,217,206
|
)
|
(2,075,569
|
)
|
||||
Dncrease (increase) in prepaid expenses and other
|
104,403
|
(182,087
|
)
|
|||||
Increase in accounts payable
|
1,421,999
|
1,251,753
|
||||||
Decrease in deferred revenues
|
(19,899
|
)
|
(4,359
|
)
|
||||
Increase (decrease) in accrued payroll, vacation pay & withholdings
|
2,406
|
(5,622
|
)
|
|||||
Increase (decrease) in accrued expenses – related party and other
|
(549,373
|
)
|
787,877
|
|||||
(Decrease) increase in progress billings
|
-
|
(424,202
|
)
|
|||||
Net cash provided by (used in) operating activities
|
(1,296,368
|
)
|
480,495
|
|||||
Cash flows from investing activities:
|
||||||||
Proceeds from sale of capital asset
|
-
|
500
|
||||||
Acquisition of equipment
|
(109,157
|
)
|
(300,857
|
)
|
||||
Net cash used in investing activities
|
(109,157
|
)
|
(300,357
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from exercise of stock options
|
138,090
|
124,631
|
||||||
Proceeds from the issuance of new shares of common stock
|
1,000,002
|
-
|
||||||
Proceeds from issuance of debt
|
600,000
|
-
|
||||||
Expenses associated with long-term debt
|
(111,341
|
)
|
-
|
|||||
Repayment of long-term debt
|
(260,430
|
)
|
(282,798
|
)
|
||||
Repayment of capitalized lease obligations
|
(63,694
|
)
|
(45,414
|
)
|
||||
Proceeds from life insurance policy
|
-
|
312,683
|
||||||
Net cash provided by financing activities
|
1,302,627
|
109,102
|
||||||
Net (decrease) increase in cash
|
(102,898
|
)
|
289,240
|
|||||
Cash, beginning of year
|
413,195
|
123,955
|
||||||
Cash, end of year
|
$
|
310,297
|
$
|
413,195
|
||||
Supplemental cash flow information:
|
||||||||
Taxes paid
|
$
|
-
|
$
|
1,542
|
||||
Interest paid
|
$
|
368,188
|
$
|
359,248
|
||||
Supplemental non-cash information
|
||||||||
Warrants issued in conjunction with long-term debt
|
$
|
66,193
|
$
|
-
|
||||
Warants issued to lender for waiver of debt covenants
|
$
|
71,632
|
$
|
-
|
||||
Capitalized lease obligations
|
$
|
-
|
$
|
243,986
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Government
|
$
|
423,165
|
$
|
1,272,436
|
||||
Commercial
|
153,654
|
457,670
|
||||||
Less: Allowance for doubtful accounts
|
(18,940
|
)
|
(35,470
|
)
|
||||
$
|
557,879
|
$
|
1,694,636
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Purchased parts
|
$
|
4,418,989
|
$
|
3,452,832
|
||||
Work-in-process
|
1,636,325
|
1,725,395
|
||||||
Finished goods
|
385,867
|
45,748
|
||||||
Less: Allowance for obsolete inventory
|
(200,000
|
)
|
(200,000
|
)
|
||||
$
|
6,241,181
|
$
|
5,023,975
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Leasehold Improvements
|
$
|
94,413
|
$
|
92,663
|
||||
Machinery and equipment
|
1,474,192
|
1,407,096
|
||||||
Automobiles
|
4,741
|
4,741
|
||||||
Sales equipment
|
591,109
|
561,571
|
||||||
Assets under capitalized leases
|
610,995
|
610,995
|
||||||
Less: Accumulated depreciation & amortization
|
(2,187,492
|
)
|
(1,970,196
|
)
|
||||
$
|
587,958
|
$
|
706,870
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Accrued vacation pay
|
$
|
273,612
|
$
|
269,490
|
||||
Accrued payroll and payroll withholdings
|
168,910
|
170,626
|
||||||
$
|
442,522
|
$
|
440,116
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Accrued interest
|
$
|
110,751
|
$
|
-
|
||||
Accrued outside contractor costs
|
882,351
|
1,178,232
|
||||||
Accrued commissions
|
8,448
|
148,731
|
||||||
Warranty Reserve
|
287,470
|
271,629
|
||||||
Accrued – other
|
135,982
|
407,542
|
||||||
$
|
1,425,002
|
$
|
2,006,134
|
March 31,
|
||||||||
2013
|
2012
|
|||||||
Interest due to the estate
of the Company’s former Chairman
|
$
|
46,518
|
$
|
31,518
|
||||
Interest and other expenses due to
the Company’s President/CEO
|
54,018
|
37,259
|
||||||
$
|
100,536
|
$
|
68,777
|
Fiscal Year Ended
|
||||||||
March 31,
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
Current:
|
||||||||
Federal
|
$
|
-
|
$
|
-
|
||||
State and local
|
3,911
|
3,500
|
||||||
Total current tax provision
|
3,911
|
3,500
|
||||||
Deferred:
|
||||||||
Federal
|
(1,561,076)
|
(32,698
|
)
|
|||||
State and local
|
13,585
|
384,917
|
||||||
|
||||||||
Total deferred tax (benefit) provision
|
(1,547,491
|
)
|
352,219
|
|||||
Total (benefit) provision
|
$
|
(1,543,580
|
)
|
$
|
355,719
|
March 31,
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$
|
3,086,000
|
$
|
1,761,000
|
||||
Tax credits
|
279,000
|
239,000
|
||||||
Allowance for doubtful accounts
|
7,000
|
13,000
|
||||||
Reserve for inventory obsolescence
|
69,000
|
72,000
|
||||||
Inventory capitalization
|
183,000
|
92,000
|
||||||
Deferred payroll and accrued interest
|
-
|
16,000
|
||||||
Vacation accrual
|
95,000
|
96,000
|
||||||
Warranty reserve
|
100,000
|
97,000
|
||||||
Deferred revenues
|
2,000
|
9,000
|
||||||
Stock options
|
32,000
|
29,000
|
||||||
Non-compete agreement
|
14,000
|
17,000
|
||||||
Depreciation
|
(82,000
|
)
|
(154,000
|
)
|
||||
Deferred tax asset
|
3,785,000
|
2,287,000
|
||||||
Less valuation allowance
|
1,000
|
50,000
|
||||||
Deferred tax asset, net
|
$
|
3,784,000
|
$
|
2,237,000
|
||||
Deferred tax asset – current
|
$
|
1,238,000
|
$
|
1,289,000
|
||||
Deferred tax asset – long-term
|
2,546,000
|
948,000
|
||||||
Total
|
$
|
3,784,000
|
$
|
2,237,000
|
March 31,
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
Income tax (benefit) provision – statutory rate
|
$
|
(1,467,491
|
)
|
$
|
145,088
|
|||
Income tax expenses – state and local, net of federal benefit
|
3,500
|
256,355
|
||||||
Permanent items
|
(38,350
|
)
|
(82,578
|
)
|
||||
Research credits
|
-
|
(18,057
|
)
|
|||||
True-up of prior years deferred taxes
|
(67,246
|
)
|
57,277
|
|||||
Change in state rate
|
85,945
|
-
|
||||||
Change in valuation allowance
|
(49,718
|
)
|
||||||
Other
|
(10,220
|
)
|
(2,366
|
)
|
||||
Income tax (benefit) provision
|
$
|
(1,543,580
|
)
|
$
|
355,719
|
1.
|
The Note has a term of five (5) years with an annual interest rate of 14% on the outstanding principal amount. Payments for the first year are interest only and amounted to $28,762 monthly. In September 2011, the Company began making monthly payments of approximately $69,000 for interest and principal for the remaining term of the loan. BCA had agreed to allow the Company to defer principal payments for the three months ended September 30, 2012. BCA has also agreed to allow the Company to defer principal payments due on October 31 and November 30, 2012. These amounts are deferred until September 2015. BCA has also agreed to allow the Company to defer principal payments due on December 31, 2012 and January 31, 2013 to February 2013, at which time the Company paid these deferred principal payments
|
|
|
2.
|
At inception, the Company issued BCA a nine-year warrant for 136,090 shares, based upon 4.5% of the fully –diluted outstanding shares of the Company’s common stock at $6.70 per share, the average closing price over the three days preceding the loan closing on the NYSE-MKT Exchange. In the event of specific major corporate events or the maturity of the five-year loan, BCA can require the Company to purchase the warrant and warrant shares at the higher of the then Exchange market price less the share exercise price, in the case of the warrant, or five times operating income per share. In connection with the warrant issued in conjunction with this debt, the Company recorded a debt discount (see above) and warrant liability, which is marked to fair value at the end of each period (see Note 18 to Notes to the Consolidated Financial Statements). The debt discount is being amortized over the life of the loan.
|
|
|
3.
|
Loan provisions also contain customary representations and warranties.
|
|
|
4.
|
BCA has a lien on all of the Company’s assets. In February 2011, BCA agreed to release part of its lien on Company assets to the U.S. Government to allow for progress billings up to $1,000,000.
|
|
|
5.
|
The Company was required to pay prepayment fees if the Company decided to prepay a portion of the principal amount during the first two years of the loan. The Company may now prepay a portion of the principal amount without any prepayment penalty. Each payment must be not less than $25,000 or multiples of $25,000 in excess thereof.
|
|
|
6.
|
Upon the occurrence of a Change of Control or within five (5) Business Days of an O’Hara Life Insurance Realization Event, the Company shall, in each case at the election of BCA, prepay by wire transfer the entire outstanding principal amount of the Note in accordance with the redemption prices (the “Mandatory Redemption Prices”) set forth below (expressed as a percentage of the outstanding principal amount being prepaid and shall pay 103% in the first loan year, 102% in the second loan year, and 100% thereafter), together with (x) Interest, if any, accrued and unpaid on the outstanding principal amount of the Note so prepaid through the date of such prepayment, (y) all reasonable out-of-pocket costs and expenses (including reasonable fees, charges and disbursements of counsel), if any, associated with such prepayment, and (z) all other costs, expenses and indemnities then payable under this Agreement (such amounts, collectively the “Mandatory Redemption Payment”). If a Change of Control or O’Hara Life Insurance Realization Event shall occur during any Loan Year set forth below, the Mandatory Redemption Price shall be determined based upon the percentage indicated above for such Loan Year multiplied by the principal amount which is being prepaid. At the election of BCA, all or any portion of the Mandatory Redemption Payment may be paid in the form of Marketable Securities in lieu of cash and to the extent available and to the extent not restricted by any SBIC Regulations. In the event BCA makes the election contemplated by the immediately preceding sentence, the Issuer shall issue to Purchaser that number of shares having an aggregate Current Market Price as of such issuance date equal to that portion of the Mandatory Redemption Payment subject to such election.
|
7.
|
The BCA notes contain a number of affirmative and negative covenants which could restrict our operations. For the quarter ended March 31, 2013, the Company was not in compliance with four covenants related to EBITDA and maintaining agreed upon financial ratios for fixed charges, total leverage and debt service. In consideration for the waiver for non-compliance of the financial covenants as of March 31, 2013 and for the deferral of principal payments, BCA received warrants to purchase 20,000 shares of the Company’s common stock. The common stock underlying the warrant is exercisable at a price of $3.33 per share and the warrants expire on September 10, 2019.
|
8.
|
The Company and BCA have amended certain provisions to ease some restrictions, including non-compliance with financial covenants, deferral of principal payments, and approval to obtain progress payments from the government.
|
2014
|
$
|
1,229,643
|
||
2015
|
673,486
|
|||
2016
|
678,643
|
|||
2017
|
-
|
|||
Total
|
$
|
2,581,772
|
Years Ended March 31,
|
||||
2014
|
$
|
269,853
|
||
2015
|
258,518
|
|||
2016
|
254,840
|
|||
2017
|
84,947
|
|||
2018
|
--
|
|||
$
|
868,158
|
2014
|
$
|
91,335
|
||
2015
|
59,592
|
|||
2016
|
18,685
|
|||
2017
|
4,670
|
|||
2018
|
--
|
|||
Total minimum lease payments
|
174,282
|
|||
Less amounts representing interest
|
(23,719
|
)
|
||
Present value of net minimum lease payments
|
150,563
|
|||
Less current portion
|
(74,508
|
)
|
||
Long-term capital lease obligation
|
$
|
76,055
|
2013
|
2012
|
|||||||
United States
|
$
|
6,893,832
|
$
|
14,776,451
|
||||
Foreign countries
|
933,426
|
1,732,227
|
||||||
Total
|
$
|
7,827,258
|
$
|
16,508,678
|
Year
|
Dividend Yield
|
Risk-free Interest rate
|
Volatility
|
Life
|
||||||||||||
2013
|
0.0
|
%
|
|
0.79%
|
|
45.3%
|
5 years
|
|||||||||
2012
|
0.0
|
%
|
0.86%
|
- |
1.08%
|
36.07%
|
- |
36.63%
|
5 years
|
Number of Options
|
Average Exercise Price
|
Average Remaining
Contractual Term
|
Aggregate Intrinsic
Value
|
||||||||||
Outstanding options at April 1, 2011
|
248,850
|
$
|
4.69
|
||||||||||
Options granted
|
18,000
|
$
|
7.28
|
||||||||||
Options exercised
|
(38,000
|
)
|
$
|
3.28
|
|||||||||
Options canceled/forfeited
|
(27,750
|
)
|
$
|
5.04
|
|||||||||
Outstanding options at March 31, 2012
|
201,100
|
$
|
5.14
|
2.1 years
|
$
|
321,114
|
|||||||
Options granted
|
10,000
|
$
|
3.50
|
||||||||||
Options exercised
|
(39,100
|
)
|
$
|
3.53
|
|||||||||
Options canceled/forfeited
|
(57,400
|
)
|
$
|
5.17
|
|||||||||
Outstanding options at March 31, 2013
|
114,600
|
$
|
5.53
|
2.0 years
|
$
|
-0-
|
|||||||
Vested Options:
|
|||||||||||||
March 31, 2013:
|
71,100
|
$
|
4.29
|
1.4 years
|
$
|
-0-
|
|||||||
March 31, 2012:
|
119,760
|
$
|
4.29
|
1.3 years
|
$
|
263,099
|
Non-vested Shares
|
Shares
|
Weighted-Average
Grant-Date
Fair value
|
||||||
Non-vested at April 1, 2012
|
81,340
|
$
|
6.40
|
|||||
Granted
|
10,000
|
$
|
3.50
|
|||||
Vested
|
(28,200
|
)
|
$
|
5.11
|
||||
Forfeited
|
(19,640
|
)
|
$
|
7.24
|
||||
Non-vested at March 31, 2013
|
43,500
|
$
|
6.25
|
March 31, 2013
|
March 31, 2012
|
|||||||
Basic net (loss) income per share computation:
|
||||||||
Net (loss) income
|
$
|
(2,772,571
|
)
|
$
|
71,016
|
|||
Weighted-average common shares outstanding
|
2,834,257
|
2,657,279
|
||||||
Basic net (loss) income per share
|
$
|
(0.98
|
)
|
$
|
0.03
|
|||
Diluted net (loss) income per share computation
|
||||||||
Net (loss) income
|
$
|
(2,772,571
|
)
|
$
|
60,169
|
(1) | ||
Weighted-average common shares outstanding
|
2,834,257
|
2,657,279
|
||||||
Incremental shares attributable to the assumed exercise of
outstanding stock options and warrants
|
-
|
60,541
|
||||||
Total adjusted weighted-average shares
|
2,834,257
|
2,717,820
|
||||||
Diluted net (loss) income per share
|
$
|
(0.98
|
)
|
$
|
0.02
|
2013
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate/
Reconciling Items
|
Total
|
|||||||||||||||
Net sales
|
$
|
5,779,947
|
$
|
2,047,311
|
$
|
7,827,258
|
$
|
-
|
$
|
7,827,258
|
||||||||||
Cost of Sales
|
4,934,322
|
1,931,714
|
6,866,036
|
-
|
6,866,036
|
|||||||||||||||
Gross Margin
|
845,625
|
115,597
|
961,222
|
-
|
961,222
|
|||||||||||||||
Engineering, research, and
development
|
2,149,591
|
2,149,591
|
||||||||||||||||||
Selling, general, and admin.
|
1,162,608
|
1,402,029
|
2,564,637
|
|||||||||||||||||
Amortization of debt discount
|
-
|
129,763
|
129,763
|
|||||||||||||||||
Amortization of deferred financing costs
|
-
|
219,662
|
219,662
|
|||||||||||||||||
Change in fair value of
common stock warrant
|
-
|
(294,785
|
)
|
(294,785
|
)
|
|||||||||||||||
Interest expense, net
|
-
|
508,505
|
508,505
|
|||||||||||||||||
3,312,199
|
1,965,174
|
5,277,373
|
||||||||||||||||||
(Loss) income before income taxes
|
$
|
(2,350,977
|
)
|
$
|
(1,965,174
|
)
|
$
|
(4,316,151
|
)
|
|||||||||||
Segment Assets
|
$
|
5,191,777
|
$
|
1,651,204
|
$
|
6,848,981
|
$
|
5,070,453
|
$
|
11,919,434
|
2012
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate/
Reconciling Items
|
Total
|
|||||||||||||||
Net sales
|
$
|
14,013,807
|
$
|
2,494,871
|
$
|
16,508,678
|
$
|
-
|
$
|
16,508,678
|
||||||||||
Cost of Sales
|
8,424,141
|
1,644,095
|
10,068,236
|
-
|
10,068,236
|
|||||||||||||||
Gross Margin
|
5,589,666
|
850,776
|
6,440,442
|
-
|
6,440,442
|
|||||||||||||||
Engineering, research, and
Development
|
2,794,478
|
2,794,478
|
||||||||||||||||||
Selling, general, and admin.
|
1,488,114
|
1,481,842
|
2,969,956
|
|||||||||||||||||
Amortization of debt discount
|
-
|
53,570
|
53,570
|
|||||||||||||||||
Amortization of deferred financing costs
|
-
|
108,321
|
108,321
|
|||||||||||||||||
Proceeds from life insurance | - | (300,029) | (300,029) | |||||||||||||||||
Change in fair value of
common stock warrant
|
-
|
(10,847
|
)
|
(10,847
|
)
|
|||||||||||||||
Gain on sale of asset
|
-
|
(500
|
)
|
(500
|
)
|
|||||||||||||||
Interest expense, net
|
-
|
398,758
|
398,758
|
|||||||||||||||||
4,282,592
|
1,731,115
|
6,013,707
|
||||||||||||||||||
Income (loss) before income taxes
|
$
|
2,157,850
|
$
|
(1,731,115
|
)
|
$
|
426,735
|
|||||||||||||
Segment Assets
|
$
|
7,743,372
|
$
|
755,620
|
$
|
8,498,992
|
$
|
4,007,417
|
$
|
12,506,409
|
FY 2013 | June 30 | September 30 | December 31 | March 31 | |||||||||||||
Net sales
|
$ | 1,177,288 | $ | 2,394,950 | $ | 2,350,020 | $ | 1,905,000 | |||||||||
Gross margin
|
283,694 | 602,423 | 453,368 | (378,263 | ) | (2) | |||||||||||
Loss before taxes
|
(832,344 | ) | (878,276 | ) | (848,965 | ) | (1,756,566 | ) | |||||||||
Net loss
|
(668,800 | ) | (429,705 | ) | (545,177 | ) | (1,128,889 | ) | |||||||||
Basic loss per share
|
(0.25 | ) | (0.16 | ) | (0.19 | ) | (0.38 | ) | |||||||||
Diluted loss per share
|
(0.25 | ) | (0.16 | ) | (0.19 | ) | (0.38 | ) |
Quarter Ended
|
|||||||||||||||||
FY 2012
|
June 30
|
September 30
|
December 31
|
March 31
|
|||||||||||||
(restated)
|
|||||||||||||||||
Net sales
|
$
|
3,990,211
|
$
|
3,674,354
|
$
|
3,673,235
|
$
|
5,170,878
|
|||||||||
Gross margin
|
1,861,631
|
1,483,227
|
1,445,379
|
1,650,205
|
|||||||||||||
Income before taxes
|
202,138
|
105,220
|
75,142
|
44,235
|
|||||||||||||
Net income (loss) (1)
|
(80,795
|
)
|
103,316
|
97,431
|
(48,936
|
)
|
|||||||||||
Basic income (loss) per share (1)
|
(0.03
|
)
|
0.04
|
0.04
|
(0.02
|
)
|
|||||||||||
Diluted income (loss) per share (1)
|
(0.03
|
)
|
0.04
|
0.04
|
(0.02
|
)
|
March 31, 2013
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Warrant Liability
|
$ |
-
|
$ |
-
|
$ |
198,330
|
$ |
198,330
|
||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
198,330
|
$
|
198,330
|
March 31, 2012
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Warrant Liability
|
$ |
-
|
$ |
-
|
$ |
355,290
|
$ |
355,290
|
||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
355,290
|
$
|
355,290
|
March 31, 2013
|
March 31, 2012
|
|||||||
Fair value, at beginning of period
|
$
|
355,290
|
$
|
366,137
|
||||
New issuances
|
137,825
|
-
|
||||||
Change in fair value
|
(294,785
|
)
|
(10,847
|
)
|
||||
Fair value, at end of period
|
$
|
198,330
|
$
|
355,290
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Expected
Volatility
|
Remaining Life in Years
|
Risk Free
Interest Rate
|
Warrant
Liability
|
|||||||||||||||||||||||
09-10-2010 |
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
6.70
|
28.51
|
%
|
9
|
2.81
|
%
|
$
|
267,848
|
||||||||||||||||||
09-10-2010 |
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
6.70
|
28.51
|
%
|
5
|
1.59
|
%
|
$
|
13,808
|
||||||||||||||||||
07-26-2012 |
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
3.90
|
42.04
|
%
|
7
|
0.94
|
%
|
$
|
66,193
|
||||||||||||||||||
07-26-2012 |
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
3.90
|
42.04
|
%
|
7
|
0.94
|
%
|
$
|
26,477
|
||||||||||||||||||
11-20-2012 |
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
3.50
|
42.45
|
%
|
6.83
|
1.09
|
%
|
21,441
|
|||||||||||||||||||
02-14-2013 |
09-10-2019
|
20,000
|
$
|
3.58
|
$
|
3.80
|
41.72
|
%
|
6.58
|
1.43
|
%
|
23,714
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Expected
Volatility
|
Remaining
Life in Years
|
Risk Free
Interest Rate
|
Warrant
Liability
|
|||||||||||||||||||||||
09-10-2010 |
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
6.33
|
53.19
|
%
|
7.45
|
2.23
|
%
|
$
|
338,116
|
||||||||||||||||||
09-10-2010 |
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
6.33
|
53.19
|
%
|
3.45
|
2.23
|
%
|
$
|
17,174
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Expected
Volatility
|
Remaining
Life in Years
|
Risk Free
Interest Rate
|
Warrant
Liability
|
|||||||||||||||||||||||
09-10-2010 |
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
3.50
|
41.45
|
%
|
6.45
|
1.24
|
%
|
$
|
81,080
|
||||||||||||||||||
09-10-2010 |
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
3.50
|
41.45
|
%
|
2.45
|
0.25
|
%
|
$
|
1,870
|
||||||||||||||||||
07-26-2012 |
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
3.50
|
41.45
|
%
|
6.33
|
1.24
|
%
|
$
|
53,269
|
||||||||||||||||||
07-26-2012 |
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
3.50
|
41.45
|
%
|
6.33
|
1.24
|
%
|
$
|
21,307
|
||||||||||||||||||
11-20-2012 |
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
3.50
|
41.45
|
%
|
6.50
|
1.24
|
%
|
$
|
20,664
|
||||||||||||||||||
02-14-2013 |
09-10-2019
|
20,000
|
$
|
3.67
|
$
|
3.50
|
41.45
|
%
|
6.45
|
1.24
|
%
|
20,140
|
Description
|
Balance at Beginning of the Year
|
Charged to Costs and Expenses
|
Deductions
|
Balance at End of the Year
|
||||||||||||
Year ended March 31, 2013:
|
||||||||||||||||
Allowance for doubtful
Accounts
|
$
|
35,470
|
$
|
-
|
(16,530
|
)
|
$
|
18,940
|
||||||||
Allowance for obsolete
Inventory
|
$
|
200,000
|
$
|
-
|
$
|
-
|
$
|
200,000
|
||||||||
Year ended March 31, 2012:
|
||||||||||||||||
Allowance for doubtful
Accounts
|
$
|
36,670
|
$
|
-
|
(1,200
|
)
|
$
|
35,470
|
||||||||
Allowance for obsolete
Inventory
|
$
|
445,000
|
$
|
21,972
|
(266,972
|
) (1)
|
$
|
200,000
|
Name (age)
|
Position
|
Year First
Elected a Director
|
||
Stephen A. Fletcher (1)
(52)
|
Director; General Manager of Kodak’s Digital Printers and Presses Strategic Group; General Manager of New Printing Technologies; Vice President of Consumer Digital Group since 2007
|
2011
|
||
George J. Leon (2) (3)
(69)
|
Director; Investment Manager and beneficiary of the George Leon Family Trust (Investments) since 1986.
|
1986
|
||
Jeffrey C. O’Hara, CPA (1)
(55)
|
Director; President since August 2007; Chief Executive Officer since December 2010; Chief Operating Officer since June 2006; Vice President since 2005
|
1998
|
||
Robert A. Rice (2) (3)
(57)
|
Director; President and Owner of Spurwink Cordage, Inc since1998 (textile manufacturing).
|
2004
|
||
Robert H. Walker (2) (3) (4)
(77)
|
Director and Chairman of the Board since April 2011; Retired Executive Vice President, Robotic Vision Systems, Inc. (design and manufacture of robotic vision systems) 1983-1998.
|
1984
|
(1)
|
Mr. Fletcher is the son of Mr. Harold K. Fletcher, the former Chairman of Tel-Instrument who passed away in April 2011, and the brother-in-law of Jeffrey C. O’Hara, the Company’s Chief Executive Officer
|
(2)
|
Member of the Audit Committee
|
(3)
|
Member of the Compensation Committee
|
(4)
|
Mr. Walker was elected Chairman of the Board in April 2011.
|
Name and Principal Position
|
Fiscal Year
|
Salary ($)
(1)
|
Incentive ($) (2)
|
Option Awards ($) (3)
|
All Other Compensation $ (4)
|
Total ($)
|
||||||||||||||||
Jeffrey C. O’Hara, CEO President (5)
|
2013
|
160,000
|
-
|
-
|
21,222
|
181,222
|
||||||||||||||||
2012
|
160,000
|
-
|
-
|
20,897
|
180,897
|
|||||||||||||||||
Joseph P. Macaluso PAO
|
2013
|
110,000
|
-
|
-
|
6,471
|
116,471
|
||||||||||||||||
2012
|
106,346
|
-
|
8,648
|
7,503
|
122,497
|
(1)
|
The amounts shown in this column represent the dollar value of base cash salary earned by each named executive officer (“NEO”).
|
(2)
|
No incentive compensation was made to the NEO’s in 2013 and 2012, and therefore no amounts are shown.
|
(3)
|
Amounts in this column represent the fair value required by ASC Topic 718 to be included in our financial statements for all options granted during that year (see Note 14 to Notes to the Consolidated Financial Statements).
|
(4)
|
The amounts shown in this column represent amounts for medical and life insurance as well as the Company’s match in the 401(k) Plan.
|
(5)
|
On December 15, 2010, Mr. O’Hara became CEO.
|
Name
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable (1)
|
Option Exercise Price ($)
|
Option Expiration Date
|
|||||||||
Joseph P. Macaluso
|
800
|
3,200
|
$
|
6.59
|
12/14/16
|
||||||||
Jeffrey C. O’Hara
|
15,000
|
-
|
$
|
3.58
|
03/02/14
|
||||||||
3,000
|
2,000
|
$
|
8.00
|
02/22/15
|
|||||||||
6,000
|
9,000
|
$
|
7.62
|
12/15/15
|
(1)
|
Options are exercisable, on a cumulative basis, 20% at or after each of the first, second, and third anniversary of the grant and 40% after the fourth year anniversary.
|
Name
|
Number of shares acquired on exercise
|
Value realized on exercise (1)
|
||||||
Jeffrey C. O’Hara
|
5,000 | $ | (100 | ) |
Name
|
Cash Compensation
|
Option Awards ($)(1)(2)
|
Total $
|
|||||||||
George J. Leon
|
$
|
16,250
|
$
|
-0-
|
$
|
16,250
|
||||||
Robert A. Rice
|
$
|
16,250
|
$
|
-0-
|
$
|
16,250
|
||||||
Robert H. Walker (3)
|
$
|
16,250
|
$
|
-0-
|
$
|
16,250
|
||||||
Stephen A. Fletcher
|
$
|
15,000
|
$
|
-0-
|
$
|
15,000
|
Name and Address
|
Number of Shares
Beneficially Owned
|
Percentage
of Class (1)
|
||||||
Named Directors and Officers
|
||||||||
Stephen A. Fletcher, Director
|
-0-
|
(2
|
)
|
0
|
%
|
|||
20 Windham Hill
|
||||||||
Mendon, NY 14506
|
||||||||
George J. Leon, Director
|
434,823
|
(3
|
)
|
13.5
|
%
|
|||
116 Glenview
|
||||||||
Toronto, Ontario, Canada M4R1P8
|
||||||||
Jeffrey C. O’Hara, Director
|
261,156
|
(4
|
)
|
8.1
|
%
|
|||
853 Turnbridge Circle
|
||||||||
Naperville, IL 60540
|
||||||||
Robert A. Rice, Director
|
116,504
|
(5
|
)
|
3.6
|
%
|
|||
5 Roundabout Lane
|
||||||||
Cape Elizabeth, ME 04107
|
||||||||
Robert H. Walker, Director
|
79,363
|
(6
|
)
|
2.5
|
%
|
|||
27 Vantage Court
|
||||||||
Port Jefferson, NY 11777
|
||||||||
Joseph P. Macaluso, PAO
|
24,313
|
(7
|
)
|
0.8
|
%
|
|||
167 Tennis Court
|
||||||||
Wall Township, NJ 07719
|
||||||||
All Officers and Directors as a Group (6 persons)
|
916,479
|
(8
|
)
|
28.0
|
%
|
|||
Mrs. Sadie Fletcher
|
656,907
|
(9
|
)
|
20.5
|
%
|
|||
657 Downing Lane
|
||||||||
Williamsville, NY 14221
|
(1)
|
The class includes 3,211,739 shares outstanding in the calculation of the percentage of shares owned by a party. The common stock deemed to be owned by the named party, includes stock which is not outstanding but subject to currently exercisable options held by the individual named in accordance with Rule 13d-3(d)c) of the Exchange Act. The foregoing information is based on reports made by the named individuals.
|
(2)
|
Mr. Stephen A. Fletcher is the son of Mr. Harold K. Fletcher, former Chief Executive Officer and director of the Company. Mr. Stephen A. Fletcher is the son of Mrs. Sadie Fletcher who beneficially owns 656,907 shares by virtue of the Estate of Harold K. Fletcher. Mr. Fletcher disclaims beneficial ownership of the shares owned by the Estate of Harold K. Fletcher.
|
(3)
|
Includes 299,517 shares owned by the George Leon Family Trust, of which Mr. Leon is a beneficiary, and 10,200 shares subject to currently exercisable stock options. Mr. Leon acts as manager of the trust assets pursuant to an informal family, oral arrangement, and disclaims beneficial ownership of the shares owned by the trust.
|
(4)
|
Includes 24,000 shares subject to currently exercisable stock options owned by Mr. O’Hara.
|
(5)
|
Includes 10,700 shares subject to currently exercisable stock options owned by Mr. Rice.
|
(6)
|
Includes 10,700 shares subject to currently exercisable stock options owned by Mr. Walker.
|
(7)
|
Includes 800 shares subject to currently exercisable stock options owned by Mr. Macaluso.
|
(8)
|
Includes 56,400 shares subject to currently exercisable options held by all executive officers and directors of the Company (including those individually named above).
|
(9)
|
Represents 656,907 shares owned by the Estate of Harold K. Fletcher, former Chief Executive Officer and director of the Company. Mrs. Fletcher is the mother of Stephen A. Fletcher, a director of the Company.
|
Plan category
|
Number of securities to
be issued upon exercise of options
|
Weighted average
exercise price of options
|
Number of options remaining available for future issuance under Equity Compensation Plans
|
|||||||||
Equity Compensation Plans approved by shareholders *
|
114,600
|
$
|
5.53
|
218,978
|
||||||||
Equity Compensation Plans not approved by shareholders
|
--
|
--
|
--
|
|||||||||
Total
|
114,600
|
$
|
5.53
|
218,978
|
2013
|
2012
|
|||||||
Audit Fees
|
$
|
117,500
|
$
|
117,500
|
||||
Audit-Related Fees
|
-
|
-
|
||||||
Total Audit and Audit-Related Fees
|
117,500
|
117,500
|
||||||
Tax Fees
|
-
|
-
|
||||||
All Other Fees
|
-
|
-
|
||||||
Total
|
$
|
117,500
|
$
|
117,500
|
Pages
|
|
Financial Statements:
|
|
20
|
|
21
|
|
22
|
|
23
|
|
24
|
|
25-48
|
|
Financial Statement Schedule:
|
|
49
|
*
|
(3.1)
|
Tel-Instrument Electronics Corp's Certificate of Incorporation, as amended.
|
*
|
(3.2)
|
Tel-Instrument Electronics Corp's By-Laws, as amended.
|
*
|
(3.3)
|
Tel-Instrument Electronics Corp's Restated Certificate of Incorporation dated November 8, 1996.
|
*
|
(4.1)
|
Specimen of Tel-Instrument Electronics Corp's Common Stock Certificate.
|
*
|
(10.2)
|
10% convertible subordinated note between Registrant and Harold K. Fletcher.
|
*
|
(10.3)
|
Purchase agreement between Registrant and Innerspace Technology
|
*
|
(10.4)
|
Agreement between Registrant and Semaphore Capital Advisors, LLC
|
*
|
(10.5)
|
2006 Stock Option Plan
|
*
|
(10.6)
|
Subordinated Note Between Registrant and Harold K. Fletcher
|
*
|
(10.7)
|
Subordinated Note Between Registrant and Jeffrey C. O’Hara
|
*
|
(10.8)
|
Shareholder Purchase Agreement between the Registrant and Harold K. Fletcher
|
*
|
(10.9)
|
Shareholder Purchase Agreement between the Registrant and Jeffrey C. O’Hara
|
*
|
(10.10)
|
Shareholder Purchase Agreement between the Registrant and George Leon
|
*
|
(10.11)
|
Loan Agreement with BCA Mezzanine Fund, LLP and Amendments 1-3
|
*
|
(10.12)
|
Intercreditor and Subordination Agreement among Harold. K. Fletcher, Jeffrey C. O’Hara and BCA Mezzanine Fund, LLP.
|
*
|
(10.13)
|
Subscription Agreement between Registrant and Subscriber, dated November 8, 2012
|
(23.1)
|
||
(31.1)
|
||
(31.2)
|
||
(32.1)
|
||
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
Taxonomy Extension Schema Document
|
|
101.CAL |
Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
Taxonomy Extension Presentation Linkbase Document
|
|
*
|
Incorporated by reference to previously filed documents.
|
|
The Company will furnish to a stockholder, upon request, any exhibit at cost.
|
TEL-INSTRUMENT ELECTRONICS CORP
|
|||
(Registrant)
|
|||
Dated: July 16, 2013
|
By:
|
/s/ Jeffrey C. O’Hara
|
|
Jeffrey C. O’Hara
|
|||
CEO and Director
|
|||
(Principal Executive Officer)
|
Signature
|
Title
|
Date
|
|||
/s/ Jeffrey C. O’Hara
|
CEO, President, COO and Director
|
July 16, 2013
|
|||
Jeffrey C. O’Hara
|
|||||
/s/ Joseph P. Macaluso
|
Principal Accounting Officer
|
July 16, 2013
|
|||
Joseph P. Macaluso
|
|||||
/s/ Stephen A. Fletcher
|
Director
|
July 16, 2013
|
|||
Stephen A. Fletcher
|
|||||
/s/ George J. Leon
|
Director
|
July 16, 2013
|
|||
George J. Leon
|
|||||
/s/ Robert A. Rice
|
Director
|
July 16, 2013
|
|||
Robert A. Rice
|
|||||
/s/ Robert H. Walker
|
Chairman of the Board, Director
|
July 16, 2013
|
|||
Robert H. Walker
|
1.
|
I have reviewed this annual report on Form 10-K of Tel-Instrument Electronics Corp;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a) and 15(f) and 15(d)-15(f) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Tel-Instrument Electronics Corp;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a) and 15(f) and 15(d)-15(f) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
17. Quarterly Results of Operations (Unaudited) (Details) - Schedule of Quarterly Financial Information (USD $)
|
3 Months Ended | 12 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2012
|
|||||||||||||
Schedule of Quarterly Financial Information [Abstract] | |||||||||||||||||||||||
Net sales | $ 1,905,000 | $ 2,350,020 | $ 2,394,950 | $ 1,177,288 | $ 5,170,878 | $ 3,673,235 | $ 3,674,354 | $ 3,990,211 | $ 7,827,258 | $ 16,508,678 | $ 16,508,678 | ||||||||||||
Gross margin | (378,263) | [1] | 453,368 | 602,423 | 283,694 | 1,650,205 | 1,445,379 | 1,483,227 | 1,861,631 | 961,222 | 6,440,442 | 6,440,442 | |||||||||||
Loss before taxes | (1,756,566) | (848,965) | (878,276) | (832,344) | 44,235 | 75,142 | 105,220 | 202,138 | (4,316,151) | 426,735 | 426,735 | ||||||||||||
Net loss | $ (1,128,889) | [2] | $ (545,177) | [2] | $ (429,705) | [2] | $ (668,800) | [2] | $ (48,936) | [2] | $ 97,431 | [2] | $ 103,316 | [2] | $ (80,795) | [2] | $ (2,772,571) | $ 71,016 | |||||
Basic loss per share (in Dollars per share) | $ (0.38) | [2] | $ (0.19) | [2] | $ (0.16) | [2] | $ (0.25) | [2] | $ (0.02) | [2] | $ 0.04 | [2] | $ 0.04 | [2] | $ (0.03) | [2] | $ (0.98) | $ 0.03 | |||||
Diluted loss per share (in Dollars per share) | $ (0.38) | [2] | $ (0.19) | [2] | $ (0.16) | [2] | $ (0.25) | [2] | $ (0.02) | [2] | $ 0.04 | [2] | $ 0.04 | [2] | $ (0.03) | [2] | $ (0.98) | $ 0.02 | |||||
|
18. Fair Value Measurements (Details) - Schedule of Changes in Fair Value of Plan Assets (USD $)
|
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2012
|
|
Schedule of Changes in Fair Value of Plan Assets [Abstract] | |||
Fair value, at beginning of period | $ 355,290 | $ 366,137 | |
New issuances | 137,825 | 0 | |
Change in fair value | (294,785) | (10,847) | (10,847) |
Fair value, at end of period | $ 198,330 | $ 355,290 | $ 355,290 |
11. Capitalized Lease Obligations
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Leases in Financial Statements of Lessee Disclosure [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Leases in Financial Statements of Lessee Disclosure [Text Block] |
11. Capitalized
Lease Obligations
The
Company has entered into lease commitments for furniture and
equipment that meet the requirements for capitalization. The
equipment has been capitalized and shown in equipment and
leasehold improvements in the accompanying balance
sheets. The related obligations are also recorded
in the accompanying consolidated balance sheets and are based
upon the present value of the future minimum lease payments
with interest rates ranging from 12% to 15%. The
net book value of equipment acquired under capitalized lease
obligations amounted to $192,386 and $248,611 at March 31,
2013 and 2012, respectively. There were no new capital lease
obligations during fiscal year 2013. As of March
31, 2013 and 2012, accumulated amortization under capital
leases was $418,609 and $362,384, respectively.
At
March 31, 2013, future payments under capital leases are as
follows over each of the next five fiscal years:
|
7. Income Taxes (Details) (USD $)
|
12 Months Ended |
---|---|
Mar. 31, 2013
|
|
7. Income Taxes (Details) [Line Items] | |
Operating Loss Carryforwards | $ 9,078,000 |
Operating Loss Carryforwards, Limitations on Use | $225,000 is subject to limitations under Section 382 of the Internal Revenue Code |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% |
New Jersey [Member]
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7. Income Taxes (Details) [Line Items] | |
Operating Loss Carryforwards | 7 |
State and Local Jurisdiction [Member]
|
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7. Income Taxes (Details) [Line Items] | |
Operating Loss Carryforwards, Valuation Allowance | $ 8,305,000 |
4. Inventories
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Inventory Disclosure [Text Block] |
4. Inventories
Inventories
consist of:
Work-in-process
inventory includes $1,236,593 and $1,231,751 for government
contracts at March 31, 2013 and 2012, respectively.
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18. Fair Value Measurements
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Fair Value Disclosures [Text Block] |
18.
Fair Value Measurements
FASB
ASC 820, “Fair Value Measurements” defines fair
value, establishes a framework for measuring fair value under
generally accepted accounting principles and prescribes
disclosures about fair value measurements.
As
defined in ASC 820, fair value is the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date (exit price). The Company utilizes market
data or assumptions that market participants would use in
pricing the asset or liability, including assumptions about
risk and the risks inherent in the inputs to the valuation
technique. These inputs can be readily observable, market
corroborated, or generally unobservable. The Company
classifies fair value balances based on the observability of
those inputs. ASC 820 establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities
(level 1 measurement) and the lowest priority to unobservable
inputs (level 3 measurement).
The
three levels of the fair value hierarchy defined by ASC 820
are as follows:
Level
1 – Quoted prices are available in active markets for
identical assets or liabilities as of the reporting date.
Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to
provide pricing information on an ongoing basis. Level 1
primarily consists of financial instruments such as
exchange-traded derivatives, marketable securities and listed
equities.
Level
2 – Pricing inputs are other than quoted prices in
active markets included in level 1, which are either directly
or indirectly observable as of the reported date. Level 2
includes those financial instruments that are valued using
models or other valuation methodologies. These models are
primarily industry-standard models that consider various
assumptions, including quoted forward prices for commodities,
time value, volatility factors, and current market and
contractual prices for the underlying instruments, as well as
other relevant economic measures. Substantially all of these
assumptions are observable in the marketplace throughout the
full term of the instrument, can be derived from observable
data or are supported by observable levels at which
transactions are executed in the marketplace. Instruments in
this category generally include non-exchange-traded
derivatives such as commodity swaps, interest rate swaps,
options and collars.
Level
3 – Pricing inputs include significant inputs that are
generally less observable from objective sources. These
inputs may be used with internally developed methodologies
that result in management’s best estimate of fair
value.
The
valuation techniques that may be used to measure fair value
are as follows:
Market
approach — Uses prices and other relevant information
generated by market transactions involving identical or
comparable assets or liabilities
Income
approach — Uses valuation techniques to convert future
amounts to a single present amount based on current market
expectations about those future amounts, including present
value techniques, option-pricing models and excess earnings
method
Cost
approach — Based on the amount that currently would be
required to replace the service capacity of an asset
(replacement cost)
The
carrying value of the Company’s borrowings is a
reasonable estimate of its fair value as borrowings under the
Company’s credit facility have variable rates that
reflect currently available terms and conditions for similar
debt.
The
Company’s assessment of the significance of a
particular input to the fair value measurement requires
judgment, and may affect the valuation of fair value assets
and liabilities and their placement within the fair value
hierarchy levels.
The
following table sets forth by level within the fair value
hierarchy the Company’s financial assets and
liabilities that were accounted for at fair value as of March
31, 2013 and March 31, 2012. As required by FASB ASC 820,
financial assets and liabilities are classified in their
entirety based on the lowest level of input that is
significant to the fair value measurement.
The
guidance in ASC 815, “Derivatives and Hedging”,
requires that we mark the value of our warrant liability (see
Note 11) to market and recognize the change in valuation in
our statement of operations each reporting period.
Determining the warrant liability to be recorded requires us
to develop estimates to be used in calculating the fair value
of the warrant. The fair value of the warrant is calculated
using the Black-Scholes valuation model.
The
following table provides a summary of the changes in fair
value of our Level 3 financial liabilities for the years
ended March 31, 2013 and 2012 as well as the unrealized gains
or losses included in income.
The
common stock warrant was not issued with the intent of
effectively hedging any future cash flow, fair value of any
asset, liability or any net investment in a foreign
corporation. The warrants do not qualify for hedge
accounting, and, as such, all changes in the fair value of
these warrants are recognized as other income/expense in the
statement of operations until such time as the warrants are
exercised or expire. Since these common stock warrants do not
trade in an active securities market, the Company recognizes
a warrant liability and estimates the fair value of these
warrants using the Black-Scholes options model using the
following assumptions:
Values
at Inception
Values
at March 31, 2012
Values
at March 31, 2013
The
volatility calculation was based on the 39 months of the
Company’s stock price prior to the measurement date,
utilizing January 1, 2010 as the initial period, as the
Company believes that this is the best indicator of future
performance. The source of the risk free interest rate is the
US Treasury rate related to 7 year notes. The exercise price
is per the agreement, the fair market value is the closing
price of our stock on the date of measurement, and the
expected life is based on management’s current estimate
of when the warrants will be exercised. All inputs to the
Black-Scholes options model are evaluated each reporting
period.
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7. Income Taxes (Details) - Schedule of Effective Income Tax Rate Reconciliation (USD $)
|
12 Months Ended | |
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Mar. 31, 2013
|
Mar. 31, 2012
|
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Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Income tax (benefit) provision – statutory rate | $ (1,467,491) | $ 145,088 |
Income tax expenses – state and local, net of federal benefit | 3,500 | 256,355 |
Permanent items | (38,350) | (82,578) |
Research credits | 0 | (18,057) |
True-up of prior years deferred taxes | (67,246) | 57,277 |
Change in state rate | 85,945 | 0 |
Change in valuation allowance | (49,718) | 0 |
Other | (10,220) | (2,366) |
Income tax (benefit) provision | $ (1,543,580) | $ 355,719 |
12. Significant Customer Concentrations
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Mar. 31, 2013
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Concentration Risk Disclosure [Text Block] | |||||||||||||||||||||||||||||||||||||
Concentration Risk Disclosure [Text Block] |
12.
Significant Customer
Concentrations
For
the years ended March 31, 2013 and 2012, sales to the U.S.
Government represented approximately 65% and 66%,
respectively of avionics net sales. No other
individual customer represented over 10% of net sales for
these years. No customer or distributor accounted
for more than 10% of commercial or government net
sales.
Net
sales to foreign customers were $933,426 and $1,732,227 for
the years ended March 31, 2013 and 2012,
respectively. All other sales were to customers
located in the U.S. The following table presents net sales by
U.S. and foreign countries:
Net
sales related to any single foreign country did not comprise
more than 10% of consolidated net sales. The Company had no
assets outside the United States.
As
of March 31, 2013 and 2012, one individual customer balance
represented 13% and 42%, respectively, of the Company’s
outstanding accounts receivable. Receivables from the U.S.
Government represented approximately 53% and 24%,
respectively, of total receivables at March 31, 2013 and
2012, respectively.
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5. Equipment and Leasehold Improvements (Details) - Property, Plant and Equipment (USD $)
|
Mar. 31, 2013
|
Mar. 31, 2012
|
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Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation & amortization | $ (2,187,492) | $ (1,970,196) |
587,958 | 706,870 | |
Leasehold Improvements [Member]
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 94,413 | 92,663 |
Machinery and Equipment [Member]
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,474,192 | 1,407,096 |
Automobiles [Member]
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,741 | 4,741 |
Office Equipment [Member]
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 591,109 | 561,571 |
Assets Held under Capital Leases [Member]
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Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 610,995 | $ 610,995 |
14. Stock Option Plans (Tables)
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The per share weighted-average fair value of stock options
granted for the years ended March 31, 2013 and 2012 was $1.40
and $2.42, respectively, on the date of grant using the Black
Scholes option-pricing model with the following
assumptions:
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the status of the Company’s stock option
plans for the fiscal years ended March 31, 2013 and 2012 and
changes during the years are presented below: (in number of
options):
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Schedule of Nonvested Share Activity [Table Text Block] | A summary of the Company’s non-vested shares as of March
31, 2013, and changes during the year ended March 31, 2013 is
presented below:
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Schedule II - Valuation and Qualifying Accounts
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Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] |
Schedule II - Valuation and
Qualifying Accounts
(1)
Deductions represent inventories written-off.
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20. Subsequent Events
|
12 Months Ended |
---|---|
Mar. 31, 2013
|
|
Subsequent Events [Text Block] | |
Subsequent Events [Text Block] |
20. Subsequent
Events
Effective
May 31, 2013, the Private Investor converted the
outstanding principal of $600,000, penalty of $25,000 and
accrued interest for the month of May in the amount of
$12,400 for a total of $637,400 in to 200,000 shares of
common stock at a price of $3.19 per share.
The
Company executed Waiver and Amendment No. 8, dated July
12, 2013, which stated that in consideration for the
waiver for non-compliance of the financial covenants as
of March 31, 2013 and for the deferral of principal
payments, BCA will receive warrants to purchase 20,000
shares of the Company’s common stock. The common
stock underlying the warrant is exercisable at a price of
$3.33 per share and the warrants expire on September 10,
2019.
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4. Inventories (Details) - Schedule of Inventory, Current (USD $)
|
Mar. 31, 2013
|
Mar. 31, 2012
|
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Schedule of Inventory, Current [Abstract] | ||
Purchased parts | $ 4,418,989 | $ 3,452,832 |
Work-in-process | 1,636,325 | 1,725,395 |
Finished goods | 385,867 | 45,748 |
Less: Allowance for obsolete inventory | (200,000) | (200,000) |
$ 6,241,181 | $ 5,023,975 |
9. Long-Term Debt (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt [Table Text Block] | The annual maturities of long-term debt for the five fiscal
years subsequent to March 31, 2013 are as follows:
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16. Segment Information (Tables)
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Segment Reporting Disclosure [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The table below presents information about reportable segments
for the years ended March 31:
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6. Accounts Payable and Accrued Expenses (Details) (USD $)
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Mar. 31, 2013
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Mar. 31, 2012
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6. Accounts Payable and Accrued Expenses (Details) [Line Items] | ||
Employee-related Liabilities, Current | $ 442,522 | $ 440,116 |
Officer [Member]
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6. Accounts Payable and Accrued Expenses (Details) [Line Items] | ||
Employee-related Liabilities, Current | $ 40,500 | $ 28,421 |
5. Equipment and Leasehold Improvements (Tables)
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Mar. 31, 2013
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Property, Plant and Equipment Disclosure [Text Block] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] | Equipment and leasehold improvements consist of the
following:
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12. Significant Customer Concentrations (Details)
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12 Months Ended | |
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Mar. 31, 2013
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Mar. 31, 2012
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U.S. Government [Member] | Government Contracts Concentration Risk [Member] | Sales Revenue, Net [Member]
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12. Significant Customer Concentrations (Details) [Line Items] | ||
Concentration Risk, Percentage | 65.00% | 66.00% |
U.S. Government [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member]
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12. Significant Customer Concentrations (Details) [Line Items] | ||
Concentration Risk, Percentage | 53.00% | 24.00% |
One Individual Customer [Member] | Credit Concentration Risk [Member] | Accounts Receivable [Member]
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12. Significant Customer Concentrations (Details) [Line Items] | ||
Concentration Risk, Percentage | 13.00% | 42.00% |
15. Net Diluted (Loss) Income Per Share (Details) - Schedule of Earnings Per Share, Basic and Diluted (USD $)
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3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
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Mar. 31, 2013
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Dec. 31, 2012
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Sep. 30, 2012
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Jun. 30, 2012
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Mar. 31, 2012
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Dec. 31, 2011
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Sep. 30, 2011
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Jun. 30, 2011
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Dec. 31, 2013
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Mar. 31, 2013
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Mar. 31, 2012
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Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||||||||||||||||||||||||
Net (loss) income (in Dollars) | $ (1,128,889) | [1] | $ (545,177) | [1] | $ (429,705) | [1] | $ (668,800) | [1] | $ (48,936) | [1] | $ 97,431 | [1] | $ 103,316 | [1] | $ (80,795) | [1] | $ (2,772,571) | $ 71,016 | ||||||
Weighted-average common shares outstanding | 2,834,257 | 2,657,279 | ||||||||||||||||||||||
Basic net (loss) income per share (in Dollars per share) | $ (0.38) | [1] | $ (0.19) | [1] | $ (0.16) | [1] | $ (0.25) | [1] | $ (0.02) | [1] | $ 0.04 | [1] | $ 0.04 | [1] | $ (0.03) | [1] | $ (0.98) | $ 0.03 | ||||||
Net (loss) income (in Dollars) | $ (1) | $ (2,772,571) | $ 60,169 | [2] | ||||||||||||||||||||
Weighted-average common shares outstanding | 2,834,257 | 2,657,279 | ||||||||||||||||||||||
Incremental shares attributable to the assumed exercise of outstanding stock options and warrants | 0 | 60,541 | ||||||||||||||||||||||
Total adjusted weighted-average shares | 2,834,257 | 2,717,820 | ||||||||||||||||||||||
Diluted net (loss) income per share (in Dollars per share) | $ (0.38) | [1] | $ (0.19) | [1] | $ (0.16) | [1] | $ (0.25) | [1] | $ (0.02) | [1] | $ 0.04 | [1] | $ 0.04 | [1] | $ (0.03) | [1] | $ (0.98) | $ 0.02 | ||||||
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11. Capitalized Lease Obligations (Details) - Schedule of Future Minimum Lease Payments for Capital Leases (USD $)
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Mar. 31, 2013
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Mar. 31, 2012
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Schedule of Future Minimum Lease Payments for Capital Leases [Abstract] | ||
2014 | $ 91,335 | |
2015 | 59,592 | |
2016 | 18,685 | |
2017 | 4,670 | |
2018 | 0 | |
Total minimum lease payments | 174,282 | |
Less amounts representing interest | (23,719) | |
Present value of net minimum lease payments | 150,563 | |
Less current portion | (74,508) | (64,675) |
Long-term capital lease obligation | $ 76,055 | $ 149,582 |
19. Litigation
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12 Months Ended |
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Mar. 31, 2013
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Legal Matters and Contingencies [Text Block] | |
Legal Matters and Contingencies [Text Block] |
19.
Litigation
On
March 24, 2009, Aeroflex Wichita, Inc.
(“Aeroflex”) filed a petition against the Company
and two of its employees in the District Court, Sedgwick
County, Kansas, Case No. 09 CV 1141 (the “Aeroflex
Action”), alleging that the Company and its two
employees misappropriated Aeroflex’s proprietary
technology in connection with the Company winning a
substantial contract from the U.S. Army (the
“Award”), to develop new Mode-5 radar test sets
and kits to upgrade the existing TS-4530 radar test sets to
Mode 5. Aeroflex’s petition alleges that in connection
with the Award, the Company and its named employees
misappropriated Aeroflex’s trade secrets; tortiously
interfered with its business relationship; conspired to harm
Aeroflex and tortiously interfered with its contract and
seeks injunctive relief and damages. The central basis of all
the claims in the Aeroflex Action is that the Company
misappropriated and used Aeroflex proprietary technology and
confidential information in winning the Award. In February
2009, subsequent to the Award to the Company, Aeroflex filed
a protest of the Award with the Government Accounting Office
(“GAO”). In its protest, Aeroflex alleged, inter
alia, that the Company used Aeroflex’s proprietary
technology in order to win the Award, the same material
allegations as were later alleged in the Aeroflex Action. On
or about March 17, 2009, the U.S. Army Contracts Attorney and
the U.S. Army Contracting Officer each filed a statement with
the GAO, expressly rejecting Aeroflex’s allegations
that the Company used or infringed Aeroflex proprietary
technology in winning the Award, and concluding that the
Company had used only its own proprietary technology. On
April 6, 2009, Aeroflex withdrew its protest.
In
December 2009, the Kansas district court dismissed on
jurisdiction grounds the Aeroflex Action. Aeroflex appealed
this decision. In May 2012, the Kansas Supreme Court
reversed the decision and remanded the Aeroflex Action to the
district court for further proceedings. The district court
has established discovery deadlines and the case is set for
trial on January 14, 2014. Tel is optimistic as to the
outcome of this litigation. However, the outcome of any
litigation is unpredictable and an adverse decision in this
matter could have a material adverse effect on our financial
condition, results of operations or liquidity.
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2. Summary of Significant Accounting Policies
|
12 Months Ended |
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Mar. 31, 2013
|
|
Significant Accounting Policies [Text Block] | |
Significant Accounting Policies [Text Block] |
2. Summary
of Significant Accounting Policies
Principles
of Consolidation:
The
consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in
the United States, and include the Company and its
wholly-owned subsidiary. All significant inter-company
accounts and transactions have been eliminated.
Revenue
Recognition:
Revenues
are recognized at the time of shipment to, or acceptance by
the customer, provided title and risk of loss is transferred
to the customer. Provisions, when appropriate, are
made where the right to return exists.
Revenues
for repairs and calibrations of the Company’s products
represent 14.9% and 7.4% of revenues for the years ended
March 31, 2013 and 2012, respectively. These revenues are for
units that are periodically returned for annual calibrations
and/or for repairs after the warranty period has expired. The
Company does not recognize any revenue from repairs and
calibrations when the units are originally shipped. Revenues
on repairs and calibrations are recognized at time the
repaired or calibrated unit is shipped as it is at this time
that the work is completed. The Company’s terms are
F.O.B. Plant, and as such, delivery has occurred, and revenue
recognized, when picked up and acknowledged by a common
carrier.
Due
to the unique nature of the Intermediate Level TACAN Test Set
(“ITATS”) contract, wherein a significant portion
of this contract was not delivered for over a year, revenues
under this contract (approximately $5 million) were
recognized on a percentage-of-completion basis, which
recognizes sales and profit as they are earned, rather than
at the time of shipment. Revenues and profits were
estimated using the cost-to-cost method of accounting where
revenues are recognized and profits recorded based upon the
ratio of costs incurred to estimate of total costs at
completion. The ratio of costs incurred to date to the
estimate of total costs at completion was applied to the
contract value to determine the revenues and profits. When
adjustments in estimated contract revenues or estimated costs
at completion are required, any changes from prior estimates
are recognized by recording adjustments in the current period
for the inception-to-date effect of the changes on current
and prior periods. The Company also received progress
billings on this program, which is a funding mechanism by the
government to assist contractors on long-term contracts prior
to delivery. These progress payments are applied to Unbilled
Government Receivables resulting from revenues recognized
under percentage-of-completion accounting. As of March 31,
2013, the section of this contract was completed, the
customer was billed, and the unbilled government receivables
were cleared. All other invoices on the program will be for
production items, and revenues will be recognized at the time
of shipment to, or acceptance by the customer, provided title
and risk of loss is transferred to the customer
Shipping
and handling costs charged to customers are classified as
sales, and the shipping and handling costs incurred are
included in cost of sales.
Payments
received prior to the delivery of units or services performed
are recorded as deferred revenues.
Fair
Value of Financial Instruments:
The
Company estimates that the fair value of all financial
instruments at March 31, 2013 and March 31, 2012, as defined
in Financial Accounting Standards Board (“FASB”)
ASC 825 “Financial Instruments”, does not differ
materially, except for the items discussed below, from the
aggregate carrying values of its financial instruments
recorded in the accompanying consolidated balance sheets. The
estimated fair value amounts have been determined by the
Company using available market information and appropriate
valuation methodologies. Considerable judgment is required in
interpreting market data to develop the estimates of fair
value.
The
carrying amounts reported in the consolidated balance sheets
as of March 31, 2013 and March 31, 2012 for cash, accounts
receivable and accounts payable approximate the fair value
because of the immediate or short-term maturity of these
financial instruments. Each reporting period we
evaluate market conditions including available interest
rates, credit spreads relative to our credit rating and
liquidity in estimating the fair value of our debt. After
considering such market conditions, we estimate that the fair
value of debt approximates its carrying value.
Concentrations
of Credit Risk:
Cash held in
banks: The Company maintains cash balances at a
financial institution that is insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to federally
insured limits. At times balances may exceed FDIC insured
limits. The Company has not experienced any losses in such
accounts.
Accounts
Receivable: The Company’s avionics customer base
is primarily comprised of airlines, distributors, and the
U.S. Government. As of March 31, 2013, the Company believes
it has no significant risk related to its concentration
within its accounts receivable.
Unbilled
Government Receivables:
Unbilled
government receivables represent unbilled costs primarily
related to revenues on our long-term ITATS contract that have
been recognized on a percentage-of-completion basis for
accounting purposes, but not yet billed to customers. This
amount is offset partially by performance-based billings and
progress billings that are charged as an offset to the
related receivables balance.
Inventories:
Inventories
are stated at the lower of cost or market. Cost is
determined on a first-in, first-out
basis. Inventories are written down if the
estimated net realizable value is less than the recorded
value. The Company reviews the carrying cost of inventories
by product to determine the adequacy of reserves for
obsolescence. In accounting for inventories, the Company must
make estimates regarding the estimated realizable value of
inventory. The estimate is based, in part, on the
Company’s forecasts of future sales and age of
inventory. In accordance with industry practice, service
parts inventory is included in current assets, although
service parts are carried for established requirements during
the serviceable lives of the products and, therefore, not all
parts are expected to be sold within one year.
Equipment
and Leasehold Improvements:
Office
and manufacturing equipment are stated at cost, net of
accumulated depreciation. Depreciation and
amortization are provided on a straight-line basis over
periods ranging from 3 to 8 years.
Leasehold
improvements are amortized over the term of the lease or the
useful life of the asset, whichever is shorter.
Maintenance,
repairs, and renewals that do not materially add to the value
of the equipment nor appreciably prolong its life are charged
to expense as incurred.
When
assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in the
Statements of Operations.
Engineering,
Research and Development Costs:
Engineering,
research and development costs are expensed as
incurred.
Advertising
Expenses:
Advertising
expenses consist primarily of costs for direct advertising.
The Company expenses all advertising costs as incurred, and
classifies these costs under selling, general and
administrative expenses. Advertising costs
amounted to $200 for the years ended March 31, 2013 and 2012,
respectively.
Deferred
Revenues:
Amounts
billed in advance of the period in which the service is
rendered or product delivered are recorded as deferred
revenue. At March 31, 2013 and 2012, deferred
revenues totaled $19,505 and $39,404, respectively. See above
for additional information regarding our revenue recognition
policies.
Net
(Loss) Income Per Common Share:
Basic
net (loss) income per share attributable to common
stockholders is computed by dividing net (loss) income by the
weighted-average number of common shares outstanding during
the period. Diluted income per share is computed
by dividing net income by the weighted-average number of
common shares outstanding during the period, including common
stock equivalents, such as stock options and warrants using
the treasury stock method. Diluted loss per share
is computed by dividing net loss by the weighted-average
number of common shares outstanding during the period and
excludes the anti-dilutive effects of common stock
equivalents.
Accounting
for Income Taxes:
The
Company accounts for income taxes using the asset and
liability method described in FASB ASC 740, “Income
Taxes”. Deferred tax assets arise from a variety of
sources, the most significant being: a) tax losses that can
be carried forward to be utilized against profits in future
years; b) expenses recognized for financial reporting
purposes but disallowed in the tax return until the
associated cash flow occurs; and c) valuation changes of
assets which need to be tax effected for book purposes but
are deductible only when the valuation change is
realized.
Deferred
tax assets and liabilities are determined based on
differences between financial reporting and tax bases of
assets and liabilities and are measured using enacted tax
rates and laws that are expected to be in effect when such
differences are expected to reverse. The
measurement of deferred tax assets is reduced, if necessary,
by a valuation allowance for
any
tax benefit which is not more likely than not to be realized.
In assessing the need for a valuation allowance, future
taxable income is estimated, considering the realization of
tax loss carryforwards. Valuation allowances related to
deferred tax assets can also be affected by changes to tax
laws, changes to statutory tax rates and future taxable
income levels. In the event it was determined that the
Company would not be able to realize all or a portion of our
deferred tax assets in the future, we would reduce such
amounts through a charge to income in the period in which
that determination is made. Conversely, if we were to
determine that we would be able to realize our deferred tax
assets in the future in excess of the net carrying amounts,
we would decrease the recorded valuation allowance through an
increase to income in the period in which that determination
is made. In its evaluation of a valuation
allowance the Company takes into account existing contracts
and backlog, and the probability that options under these
contract awards will be exercised as well as sales of
existing products. The Company prepares profit projections
based on the revenue and expenses forecast to determine that
such revenues will produce sufficient taxable income to
realize the deferred tax assets.
The
Company accounts for uncertainties in income taxes under ASC
740-10-50 which prescribes a recognition threshold and
measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be
taken in a tax return. ASC 740-10 requires that the Company
determine whether the benefits of its tax positions are
more-likely-than-not of being sustained upon audit based on
the technical merits of the tax position. The Company
recognizes the impact of an uncertain income tax position
taken on its income tax return at the largest amount that is
more-likely-than-not to be sustained upon audit by the
relevant taxing authority. The implementation of ASC 740-10
had no impact on the Company’s results of operations or
financial position.
Despite
the Company’s belief that its tax return positions are
consistent with applicable tax laws, one or more positions
may be challenged by taxing authorities. Settlement of any
challenge can result in no change, a complete disallowance,
or some partial adjustment reached through negotiations or
litigation.
Interest
and penalties related to income tax matters, if applicable,
will be recognized as income tax expense. During the years
ended March 31, 2013 and 2012 the Company did not incur
any expense related to interest or penalties for income tax
matters, and no such amounts were accrued as of
March 31, 2013 and 2012.
Stock-based
Compensation:
The
Company accounts for stock-based compensation utilizing the
modified prospective method under FASB ASC 718 which requires
the measurement of stock-based compensation based on the fair
value of the award on the date of grant. The Company
recognizes compensation cost on awards on a straight-line
basis over the vesting period, typically four years. The
Company estimates the fair value of each option granted using
the Black-Scholes option-pricing model.
Additional
information and disclosure are provided in Note 14.
Long-Lived
Assets:
The
Company assesses the recoverability of the carrying value of
its long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount
of an asset to future, undiscounted cash flows expected to be
generated by an asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value
less costs to sell. No impairment losses have been recognized
for the years ended March 31, 2013 and 2012,
respectively.
Use
of Estimates:
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires that management make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. The most significant estimates include
income taxes, percentage-of- completion sales recognition,
warranty claims, inventory and accounts receivable
valuations.
Reclassifications:
Certain
prior year amounts have been reclassified to conform to the
current year presentation.
Accounts
Receivable:
The
Company performs ongoing credit evaluations of its customers
and adjusts credit limits based on customer payment and
current credit worthiness, as determined by review of their
current credit information. The Company
continuously monitors credit limits for and payments from its
customers and maintains provision for estimated credit losses
based on its
historical
experience and any specific customer issues that have been
identified. While such credit losses have
historically been within the Company’s expectation and
the provision established, the Company cannot guarantee that
this will continue.
Warranty
Reserves:
Warranty
reserves are based upon historical rates and specific items
that are identifiable and can be estimated at time of
sale. While warranty costs have historically been
within the Company’s expectations and the provisions
established, future warranty costs could be in excess of the
Company’s warranty reserves. A significant
increase in these costs could adversely affect the
Company’s operating results for the period and the
periods these additional costs
materialize. Warranty reserves are adjusted from
time to time when actual warranty claim experience differs
from estimates. For the year ended March 31, 2013 warranty
costs were $203,783 as compared to $230,028 for the year
ended March 31, 2012. These warranty reserves are included in
Accrued Expenses – other in the accompanying
consolidated balance sheets.
Risks
and Uncertainties:
The
Company’s operations are subject to a number of risks,
including but not limited to changes in the general economy,
demand for the Company’s products, the success of its
customers, research and development results, reliance on the
government and commercial markets, litigation, and the
renewal of its line of credit. The Company has
major contracts with the U.S. Government, which like all
government contracts are subject to termination.
New
Accounting Pronouncements:
No
recently issued accounting pronouncements had or are expected
to have a material impact on the Company’s consolidated
financial statements.
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5. Equipment and Leasehold Improvements
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Property, Plant and Equipment Disclosure [Text Block] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] |
5.
Equipment and Leasehold Improvements
Equipment
and leasehold improvements consist of the following:
Depreciation
and amortization expense related to the assets above for the
years ended March 31, 2013 and 2012 was $228,069 and $168,667
respectively.
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16. Segment Information (Details)
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12 Months Ended |
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Mar. 31, 2013
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Segment Reporting Disclosure [Text Block] | |
Number of Reportable Segments | 2 |
3. Accounts Receivable
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Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
3. Accounts
Receivable
The
following table sets forth the components of accounts
receivable:
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17. Quarterly Results of Operations (Unaudited) (Tables)
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Quarterly Financial Information [Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information [Table Text Block] | Quarterly consolidated data for the years ended March 31, 2013
and 2012 is as follows:
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Accounting Policies, by Policy (Policies)
|
12 Months Ended |
---|---|
Mar. 31, 2013
|
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Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Principles
of Consolidation:
The
consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in
the United States, and include the Company and its
wholly-owned subsidiary. All significant inter-company
accounts and transactions have been eliminated. |
Revenue Recognition, Policy [Policy Text Block] | Revenue
Recognition:
Revenues
are recognized at the time of shipment to, or acceptance by
the customer, provided title and risk of loss is transferred
to the customer. Provisions, when appropriate, are
made where the right to return exists.
Revenues
for repairs and calibrations of the Company’s products
represent 14.9% and 7.4% of revenues for the years ended
March 31, 2013 and 2012, respectively. These revenues are for
units that are periodically returned for annual calibrations
and/or for repairs after the warranty period has expired. The
Company does not recognize any revenue from repairs and
calibrations when the units are originally shipped. Revenues
on repairs and calibrations are recognized at time the
repaired or calibrated unit is shipped as it is at this time
that the work is completed. The Company’s terms are
F.O.B. Plant, and as such, delivery has occurred, and revenue
recognized, when picked up and acknowledged by a common
carrier.
Due
to the unique nature of the Intermediate Level TACAN Test Set
(“ITATS”) contract, wherein a significant portion
of this contract was not delivered for over a year, revenues
under this contract (approximately $5 million) were
recognized on a percentage-of-completion basis, which
recognizes sales and profit as they are earned, rather than
at the time of shipment. Revenues and profits were
estimated using the cost-to-cost method of accounting where
revenues are recognized and profits recorded based upon the
ratio of costs incurred to estimate of total costs at
completion. The ratio of costs incurred to date to the
estimate of total costs at completion was applied to the
contract value to determine the revenues and profits. When
adjustments in estimated contract revenues or estimated costs
at completion are required, any changes from prior estimates
are recognized by recording adjustments in the current period
for the inception-to-date effect of the changes on current
and prior periods. The Company also received progress
billings on this program, which is a funding mechanism by the
government to assist contractors on long-term contracts prior
to delivery. These progress payments are applied to Unbilled
Government Receivables resulting from revenues recognized
under percentage-of-completion accounting. As of March 31,
2013, the section of this contract was completed, the
customer was billed, and the unbilled government receivables
were cleared. All other invoices on the program will be for
production items, and revenues will be recognized at the time
of shipment to, or acceptance by the customer, provided title
and risk of loss is transferred to the customer
Shipping
and handling costs charged to customers are classified as
sales, and the shipping and handling costs incurred are
included in cost of sales.
Payments
received prior to the delivery of units or services performed
are recorded as deferred revenues. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair
Value of Financial Instruments:
The
Company estimates that the fair value of all financial
instruments at March 31, 2013 and March 31, 2012, as defined
in Financial Accounting Standards Board (“FASB”)
ASC 825 “Financial Instruments”, does not differ
materially, except for the items discussed below, from the
aggregate carrying values of its financial instruments
recorded in the accompanying consolidated balance sheets. The
estimated fair value amounts have been determined by the
Company using available market information and appropriate
valuation methodologies. Considerable judgment is required in
interpreting market data to develop the estimates of fair
value.
The
carrying amounts reported in the consolidated balance sheets
as of March 31, 2013 and March 31, 2012 for cash, accounts
receivable and accounts payable approximate the fair value
because of the immediate or short-term maturity of these
financial instruments. Each reporting period we
evaluate market conditions including available interest
rates, credit spreads relative to our credit rating and
liquidity in estimating the fair value of our debt. After
considering such market conditions, we estimate that the fair
value of debt approximates its carrying value. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash held in
banks: The Company maintains cash balances at a
financial institution that is insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to federally
insured limits. At times balances may exceed FDIC insured
limits. The Company has not experienced any losses in such
accounts. |
Receivables, Policy [Policy Text Block] | Accounts
Receivable: The Company’s avionics customer base
is primarily comprised of airlines, distributors, and the
U.S. Government. As of March 31, 2013, the Company believes
it has no significant risk related to its concentration
within its accounts receivable. |
Trade and Other Accounts Receivable, Unbilled Receivables, Policy [Policy Text Block] | Unbilled
Government Receivables:
Unbilled
government receivables represent unbilled costs primarily
related to revenues on our long-term ITATS contract that have
been recognized on a percentage-of-completion basis for
accounting purposes, but not yet billed to customers. This
amount is offset partially by performance-based billings and
progress billings that are charged as an offset to the
related receivables balance. |
Inventory, Policy [Policy Text Block] | Inventories:
Inventories
are stated at the lower of cost or market. Cost is
determined on a first-in, first-out
basis. Inventories are written down if the
estimated net realizable value is less than the recorded
value. The Company reviews the carrying cost of inventories
by product to determine the adequacy of reserves for
obsolescence. In accounting for inventories, the Company must
make estimates regarding the estimated realizable value of
inventory. The estimate is based, in part, on the
Company’s forecasts of future sales and age of
inventory. In accordance with industry practice, service
parts inventory is included in current assets, although
service parts are carried for established requirements during
the serviceable lives of the products and, therefore, not all
parts are expected to be sold within one year. |
Property, Plant and Equipment, Policy [Policy Text Block] | Equipment
and Leasehold Improvements:
Office
and manufacturing equipment are stated at cost, net of
accumulated depreciation. Depreciation and
amortization are provided on a straight-line basis over
periods ranging from 3 to 8 years.
Leasehold
improvements are amortized over the term of the lease or the
useful life of the asset, whichever is shorter.
Maintenance,
repairs, and renewals that do not materially add to the value
of the equipment nor appreciably prolong its life are charged
to expense as incurred.
When
assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the
accounts and the resulting gain or loss is included in the
Statements of Operations. |
Research and Development Expense, Policy [Policy Text Block] | Engineering,
Research and Development Costs:
Engineering,
research and development costs are expensed as
incurred. |
Advertising Costs, Policy [Policy Text Block] | Advertising
Expenses:
Advertising
expenses consist primarily of costs for direct advertising.
The Company expenses all advertising costs as incurred, and
classifies these costs under selling, general and
administrative expenses. Advertising costs
amounted to $200 for the years ended March 31, 2013 and 2012,
respectively. |
Revenue Recognition, Deferred Revenue [Policy Text Block] | Deferred
Revenues:
Amounts
billed in advance of the period in which the service is
rendered or product delivered are recorded as deferred
revenue. At March 31, 2013 and 2012, deferred
revenues totaled $19,505 and $39,404, respectively. See above
for additional information regarding our revenue recognition
policies. |
Earnings Per Share, Policy [Policy Text Block] | Net
(Loss) Income Per Common Share:
Basic
net (loss) income per share attributable to common
stockholders is computed by dividing net (loss) income by the
weighted-average number of common shares outstanding during
the period. Diluted income per share is computed
by dividing net income by the weighted-average number of
common shares outstanding during the period, including common
stock equivalents, such as stock options and warrants using
the treasury stock method. Diluted loss per share
is computed by dividing net loss by the weighted-average
number of common shares outstanding during the period and
excludes the anti-dilutive effects of common stock
equivalents. |
Income Tax, Policy [Policy Text Block] | Accounting
for Income Taxes:
The
Company accounts for income taxes using the asset and
liability method described in FASB ASC 740, “Income
Taxes”. Deferred tax assets arise from a variety of
sources, the most significant being: a) tax losses that can
be carried forward to be utilized against profits in future
years; b) expenses recognized for financial reporting
purposes but disallowed in the tax return until the
associated cash flow occurs; and c) valuation changes of
assets which need to be tax effected for book purposes but
are deductible only when the valuation change is
realized.
Deferred
tax assets and liabilities are determined based on
differences between financial reporting and tax bases of
assets and liabilities and are measured using enacted tax
rates and laws that are expected to be in effect when such
differences are expected to reverse. The
measurement of deferred tax assets is reduced, if necessary,
by a valuation allowance for
any
tax benefit which is not more likely than not to be realized.
In assessing the need for a valuation allowance, future
taxable income is estimated, considering the realization of
tax loss carryforwards. Valuation allowances related to
deferred tax assets can also be affected by changes to tax
laws, changes to statutory tax rates and future taxable
income levels. In the event it was determined that the
Company would not be able to realize all or a portion of our
deferred tax assets in the future, we would reduce such
amounts through a charge to income in the period in which
that determination is made. Conversely, if we were to
determine that we would be able to realize our deferred tax
assets in the future in excess of the net carrying amounts,
we would decrease the recorded valuation allowance through an
increase to income in the period in which that determination
is made. In its evaluation of a valuation
allowance the Company takes into account existing contracts
and backlog, and the probability that options under these
contract awards will be exercised as well as sales of
existing products. The Company prepares profit projections
based on the revenue and expenses forecast to determine that
such revenues will produce sufficient taxable income to
realize the deferred tax assets.
The
Company accounts for uncertainties in income taxes under ASC
740-10-50 which prescribes a recognition threshold and
measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be
taken in a tax return. ASC 740-10 requires that the Company
determine whether the benefits of its tax positions are
more-likely-than-not of being sustained upon audit based on
the technical merits of the tax position. The Company
recognizes the impact of an uncertain income tax position
taken on its income tax return at the largest amount that is
more-likely-than-not to be sustained upon audit by the
relevant taxing authority. The implementation of ASC 740-10
had no impact on the Company’s results of operations or
financial position.
Despite
the Company’s belief that its tax return positions are
consistent with applicable tax laws, one or more positions
may be challenged by taxing authorities. Settlement of any
challenge can result in no change, a complete disallowance,
or some partial adjustment reached through negotiations or
litigation.
Interest
and penalties related to income tax matters, if applicable,
will be recognized as income tax expense. During the years
ended March 31, 2013 and 2012 the Company did not incur
any expense related to interest or penalties for income tax
matters, and no such amounts were accrued as of
March 31, 2013 and 2012. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-based
Compensation:
The
Company accounts for stock-based compensation utilizing the
modified prospective method under FASB ASC 718 which requires
the measurement of stock-based compensation based on the fair
value of the award on the date of grant. The Company
recognizes compensation cost on awards on a straight-line
basis over the vesting period, typically four years. The
Company estimates the fair value of each option granted using
the Black-Scholes option-pricing model.
Additional
information and disclosure are provided in Note 14. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived
Assets:
The
Company assesses the recoverability of the carrying value of
its long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount
of an asset to future, undiscounted cash flows expected to be
generated by an asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value
less costs to sell. No impairment losses have been recognized
for the years ended March 31, 2013 and 2012,
respectively. |
Use of Estimates, Policy [Policy Text Block] | Use
of Estimates:
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires that management make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. The most significant estimates include
income taxes, percentage-of- completion sales recognition,
warranty claims, inventory and accounts receivable
valuations. |
Reclassification, Policy [Policy Text Block] | Reclassifications:
Certain
prior year amounts have been reclassified to conform to the
current year presentation. |
Guarantees, Indemnifications and Warranties Policies [Policy Text Block] | Warranty
Reserves:
Warranty
reserves are based upon historical rates and specific items
that are identifiable and can be estimated at time of
sale. While warranty costs have historically been
within the Company’s expectations and the provisions
established, future warranty costs could be in excess of the
Company’s warranty reserves. A significant
increase in these costs could adversely affect the
Company’s operating results for the period and the
periods these additional costs
materialize. Warranty reserves are adjusted from
time to time when actual warranty claim experience differs
from estimates. For the year ended March 31, 2013 warranty
costs were $203,783 as compared to $230,028 for the year
ended March 31, 2012. These warranty reserves are included in
Accrued Expenses – other in the accompanying
consolidated balance sheets. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Risks
and Uncertainties:
The
Company’s operations are subject to a number of risks,
including but not limited to changes in the general economy,
demand for the Company’s products, the success of its
customers, research and development results, reliance on the
government and commercial markets, litigation, and the
renewal of its line of credit. The Company has
major contracts with the U.S. Government, which like all
government contracts are subject to termination. |
New Accounting Pronouncements, Policy [Policy Text Block] | New
Accounting Pronouncements:
No
recently issued accounting pronouncements had or are expected
to have a material impact on the Company’s consolidated
financial statements. |
6. Accounts Payable and Accrued Expenses (Tables)
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Mar. 31, 2013
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Accrued Employee Related Liabilities [Member]
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6. Accounts Payable and Accrued Expenses (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] | Accrued vacation pay, deferred wages, payroll and payroll
withholdings consist of the following:
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Accrued Expenses, Other [Member]
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6. Accounts Payable and Accrued Expenses (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] | Accrued expenses - other consist of the following:
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Accrued Expenses, Related Party [Member]
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6. Accounts Payable and Accrued Expenses (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] | Accrued expenses – related parties consists of the
following:
|
15. Net Diluted (Loss) Income Per Share (Details)
|
12 Months Ended |
---|---|
Mar. 31, 2012
|
|
Earnings Per Share [Text Block] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 51,500 |
12. Significant Customer Concentrations (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Concentration Risk Disclosure [Text Block] | |||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | The following table presents net sales by U.S. and foreign
countries:
|
14. Stock Option Plans (Details) - Schedule of Nonvested Share Activity (USD $)
|
12 Months Ended |
---|---|
Mar. 31, 2013
|
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14. Stock Option Plans (Details) - Schedule of Nonvested Share Activity [Line Items] | |
Granted | 5,000 |
Nonvested Shares [Member]
|
|
14. Stock Option Plans (Details) - Schedule of Nonvested Share Activity [Line Items] | |
Non-vested at April 1, 2012 | 43,500 |
Granted | 10,000 |
Vested | (28,200) |
Forfeited | (19,640) |
Non-vested at March 31, 2013 | 81,340 |
Nonvested Weighted-Average Grant-Date Fair Value [Member]
|
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14. Stock Option Plans (Details) - Schedule of Nonvested Share Activity [Line Items] | |
Non-vested at April 1, 2012 (in Dollars per share) | $ 6.25 |
Granted (in Dollars per share) | $ 3.50 |
Vested (in Dollars per share) | $ 5.11 |
Forfeited (in Dollars per share) | $ 7.24 |
Non-vested at March 31, 2013 (in Dollars per share) | $ 6.40 |
7. Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities (USD $)
|
Mar. 31, 2013
|
Mar. 31, 2012
|
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Deferred tax assets: | ||
Net operating loss carryforwards | $ 3,086,000 | $ 1,761,000 |
Tax credits | 279,000 | 239,000 |
Allowance for doubtful accounts | 7,000 | 13,000 |
Reserve for inventory obsolescence | 69,000 | 72,000 |
Inventory capitalization | 183,000 | 92,000 |
Deferred payroll and accrued interest | 0 | 16,000 |
Vacation accrual | 95,000 | 96,000 |
Warranty reserve | 100,000 | 97,000 |
Deferred revenues | 2,000 | 9,000 |
Stock options | 32,000 | 29,000 |
Non-compete agreement | 14,000 | 17,000 |
Depreciation | (82,000) | (154,000) |
Deferred tax asset | 3,785,000 | 2,287,000 |
Less valuation allowance | 1,000 | 50,000 |
Deferred tax asset, net | 3,784,000 | 2,237,000 |
Deferred tax asset – current | 1,238,421 | 1,288,631 |
Deferred tax asset – long-term | $ 2,546,190 | $ 948,489 |