New Jersey
|
22-1441806
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
One Branca Road
East Rutherford, NJ 07073
|
(Address of principal executive offices)
|
(201) 933-1600
|
(Registrant’s telephone number, including area code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
ý
|
PART I – FINANCIAL INFORMATION
|
||
Page
|
||
Item 1.
|
||
3 | ||
Item 2.
|
||
14 | ||
Item 3.
|
||
17 | ||
Item 4.
|
||
17 | ||
PART II – OTHER INFORMATION
|
||
Item 1.
|
18 | |
Item 1A.
|
18 | |
Item 2.
|
18 | |
Item 3.
|
18 | |
Item 4.
|
18 | |
Item 5.
|
18 | |
Item 6.
|
19 | |
20 |
June 30, 2013
|
March 31, 2013
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
193,950
|
310,297
|
|||||
Accounts receivable, net
|
970,052
|
557,879
|
||||||
Inventories, net
|
5,477,243
|
6,241,181
|
||||||
Prepaid expenses and other
|
87,042
|
115,852
|
||||||
Deferred financing costs
|
108,321
|
108,321
|
||||||
Deferred income tax asset
|
1,238,421
|
1,238,421
|
||||||
Total current assets
|
8,075,029
|
8,571,951
|
||||||
Equipment and leasehold improvements, net
|
534,607
|
587,958
|
||||||
Deferred financing costs – long-term
|
129,383
|
156,463
|
||||||
Deferred income tax asset – non-current
|
2,564,059
|
2,546,190
|
||||||
Other assets
|
56,872
|
56,872
|
||||||
Total assets
|
11,359,950
|
11,919,434
|
||||||
LIABILITIES & STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion long-term debt
|
598,663
|
1,229,643
|
||||||
Capital lease obligations – current portion
|
77,231
|
74,508
|
||||||
Accounts payable
|
2,815,982
|
4,272,431
|
||||||
Progress billing
|
858,050
|
-
|
||||||
Deferred revenues – current portion
|
11,930
|
18,460
|
||||||
Accrued payroll, vacation pay and payroll taxes
|
431,904
|
442,522
|
||||||
Accrued expenses
|
1,643,586
|
1,525,538
|
||||||
Total current liabilities
|
6,437,346
|
7,563,102
|
||||||
Subordinated notes payable-related parties
|
350,000
|
250,000
|
||||||
Capital lease obligations – long-term
|
55,695
|
76,055
|
||||||
Deferred revenues – long-term
|
236
|
1,045
|
||||||
Warrant liability
|
173,758
|
198,330
|
||||||
Long-term debt, net of debt discount
|
1,051,976
|
1,134,549
|
||||||
Total liabilities
|
8,069,011
|
9,223,081
|
||||||
Commitments
|
||||||||
Stockholders' equity:
|
||||||||
Common stock, par value $.10 per share, 3,211,739 and 3,011,739 issued and outstanding
as of June 30, 2013 and March 31, 2013, respectively
|
321,171
|
301,171
|
||||||
Additional paid-in capital
|
7,768,658
|
7,108,300
|
||||||
Accumulated deficit
|
(4,798,890
|
)
|
(4,713,118
|
)
|
||||
Total stockholders' equity
|
3,290,939
|
2,696,353
|
||||||
Total liabilities and stockholders' equity
|
$
|
11,359,950
|
$
|
11,919,434
|
Three Months Ended
|
||||||||
June 30, 2013
|
June 30, 2012
|
|||||||
Net sales
|
$
|
3,199,975
|
$
|
1,177,288
|
||||
Cost of sales
|
2,013,817
|
893,594
|
||||||
Gross margin
|
1,186,158
|
283,694
|
||||||
Operating expenses:
|
||||||||
Selling, general and administrative
|
653,250
|
653,888
|
||||||
Engineering, research and development
|
480,377
|
578,604
|
||||||
Total operating expenses
|
1,133,627
|
1,232,492
|
||||||
Income (loss) from operations
|
52,531
|
|
(948,798
|
)
|
||||
Other income (expense):
|
||||||||
Amortization of debt discount
|
(22,987
|
)
|
(13,392
|
)
|
||||
Amortization of deferred financing costs
|
(27,080
|
)
|
(27,080
|
)
|
||||
Change in fair value of common stock warrants
|
24,572
|
249,394
|
||||||
Loss on extinguishment of debt
|
(26,600
|
)
|
-
|
|||||
Interest expense
|
(104,077
|
)
|
(92,468
|
)
|
||||
Total other income (expense)
|
(156,172
|
)
|
116,454
|
|||||
Loss before income taxes
|
(103,641
|
)
|
(832,344
|
)
|
||||
Income tax benefit
|
(17,869
|
)
|
(163,544
|
)
|
||||
Net loss
|
$
|
(85,772
|
)
|
$
|
(668,800
|
)
|
||
Net loss per share:
|
||||||||
Basic loss per common share
|
$
|
(0.03
|
)
|
$
|
(0.25
|
)
|
||
Diluted loss per common share
|
$
|
(0.03
|
)
|
$
|
(0.25
|
)
|
||
Weighted average shares outstanding:
|
||||||||
Basic
|
3,079,871
|
2,698,984
|
||||||
Diluted
|
3,079,871
|
2,698,984
|
Three months ended
|
||||||||
June 30, 2013
|
June 30, 2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(85,772
|
)
|
$
|
(668,800
|
)
|
||
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
Deferred income taxes
|
(17,869
|
)
|
(163,845
|
)
|
||||
Depreciation and amortization
|
53,351
|
53,231
|
||||||
Amortization of debt discount
|
22,987
|
13,392
|
||||||
Amortization of deferred financing costs
|
27,080
|
27,080
|
||||||
Loss on extinguishment of debt
|
26,600
|
|||||||
Change in fair value of common stock warrant
|
(24,572
|
)
|
(249,394
|
)
|
||||
Non-cash stock-based compensation
|
16,358
|
22,277
|
||||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in accounts receivable
|
(412,173
|
)
|
1,155,190
|
|||||
Decrease in unbilled government receivables
|
-
|
12,173
|
||||||
Decrease (increase) in inventories
|
763,938
|
(2,078,021
|
)
|
|||||
Decrease in prepaid expenses & other
|
28,810
|
85,668
|
||||||
Increase (decrease) in accounts payable
|
(1,456,449
|
)
|
970,865
|
|||||
(Decrease) increase in accrued payroll, vacation pay & withholdings
|
(10,618
|
)
|
44,469
|
|||||
Decrease in deferred revenues
|
(7,339
|
)
|
(10,169
|
)
|
||||
Increase in progress billings
|
858,050
|
-
|
||||||
Increase in accrued expenses
|
155,448
|
540,561
|
||||||
Net cash used in operating activities
|
(62,170
|
)
|
(245,323
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of equipment
|
-
|
(648
|
)
|
|||||
Net cash used in investing activities
|
-
|
(648
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from note payable – related party
|
100,000
|
-
|
||||||
Proceeds from the exercise of stock options
|
-
|
98,935
|
||||||
Repayment of long-term debt
|
(136,540
|
)
|
(85,059
|
)
|
||||
Repayment of capitalized lease obligations
|
(17,637
|
)
|
(14,426
|
)
|
||||
Net cash used in financing activities
|
(54,177
|
)
|
(550
|
)
|
||||
Net decrease in cash and cash equivalents
|
(116,347
|
)
|
(246,521
|
)
|
||||
Cash and cash equivalents at beginning of period
|
310,297
|
413,195
|
||||||
Cash and cash equivalents at end of period
|
$
|
193,950
|
$
|
166,674
|
||||
Supplemental cash flow information:
|
||||||||
Taxes paid
|
$
|
-
|
$
|
-
|
||||
Interest paid
|
$
|
101,554
|
$
|
83,809
|
||||
Supplemental non-cash information:
|
||||||||
Converted debt to equity
|
$
|
600,000
|
$
|
-
|
||||
Converted accrued interest to equity
|
$
|
37,400
|
$
|
June 30,
2013
|
March 31,
2013
|
|||||||
Government
|
$
|
813,376
|
$
|
423,165
|
||||
Commercial
|
173,958
|
153,654
|
||||||
Less: Allowance for doubtful accounts
|
(17,282
|
)
|
(18,940
|
)
|
||||
$
|
970,052
|
$
|
557,879
|
June30,
2013
|
March 31,
2013
|
|||||||
Purchased parts
|
$
|
4,227,353
|
$
|
4,418,989
|
||||
Work-in-process
|
1,404,489
|
1,636,325
|
||||||
Finished goods
|
45,401
|
385,867
|
||||||
Less: Inventory reserve
|
(200,000
|
)
|
(200,000
|
)
|
||||
$
|
5,477,243
|
$
|
6,241,181
|
Three Months Ended
|
Three Months Ended
|
|||||||
June 30,
2013
|
June 30,
2012
|
|||||||
Basic net loss per share computation:
|
||||||||
Net loss
|
$
|
(85,772
|
)
|
$
|
(668,800
|
)
|
||
Weighted-average common shares outstanding
|
3,079,871
|
2,698,984
|
||||||
Basic net loss per share
|
$
|
(0.03
|
)
|
$
|
(0.25
|
)
|
||
Diluted net loss per share computation:
|
||||||||
Net loss
|
$
|
(85,772
|
)
|
$
|
(668,800
|
)
|
||
Weighted-average common shares outstanding
|
3,079,871
|
2,698,984
|
||||||
Incremental shares attributable to the assumed exercise of outstanding stock options
|
-
|
-
|
||||||
Total adjusted weighted-average shares
|
3,079,871
|
2,698,984
|
||||||
Diluted net loss per share
|
$
|
(0.03
|
)
|
$
|
(0..25
|
)
|
Three Months Ended
June 30, 2013
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
2,802,842
|
397,133
|
3,199,975
|
-
|
3,199,975
|
|||||||||||||||
Cost of Sales
|
1,662,246
|
351,571
|
2,013,817
|
-
|
2,013,817
|
|||||||||||||||
Gross Margin
|
1,140,596
|
45,562
|
1,186,158
|
-
|
1,186,158
|
|||||||||||||||
Engineering, research, and development
|
480,377
|
480,377
|
||||||||||||||||||
Selling, general and administrative
|
264,145
|
389,105
|
653,250
|
|||||||||||||||||
Amortization of debt discount
|
22,987
|
22,987
|
||||||||||||||||||
Amortization of deferred financing costs
|
27,080
|
27,080
|
||||||||||||||||||
Loss on extinguishment of debt
|
26,600
|
26,600
|
||||||||||||||||||
Change in fair value of common stock warrants
|
(24,572
|
)
|
(24,572
|
)
|
||||||||||||||||
Interest expense, net
|
104,077
|
104,077
|
||||||||||||||||||
Total expenses
|
744,522
|
545,277
|
1,289,799
|
|||||||||||||||||
Income (loss) before income taxes
|
441,636
|
(545,277
|
)
|
(103,641
|
)
|
Three Months Ended
June 30, 2012
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
549,966
|
627,322
|
1,177,288
|
-
|
1,177,288
|
|||||||||||||||
Cost of Sales
|
315,929
|
577,665
|
893,594
|
-
|
893,594
|
|||||||||||||||
Gross Margin
|
234,037
|
49,657
|
283,694
|
-
|
283,694
|
|||||||||||||||
Engineering, research, and development
|
578,604
|
578,604
|
||||||||||||||||||
Selling, general, and administrative
|
316,989
|
336,899
|
653,888
|
|||||||||||||||||
Amortization of debt discount
|
13,392
|
13,392
|
||||||||||||||||||
Amortization of deferred financing costs
|
27,080
|
27,080
|
||||||||||||||||||
Change in fair value of common stock warrants
|
(249,394
|
)
|
(249,394
|
)
|
||||||||||||||||
Interest (income) expense, net
|
|
92,468
|
92,468
|
|||||||||||||||||
Total expenses
|
895,593
|
220,445
|
1,116,038
|
|||||||||||||||||
Loss before income taxes
|
(611,899
|
)
|
(220,445
|
)
|
(832,344
|
)
|
·
|
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.
|
·
|
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).
|
June 30, 2013
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Total Assets
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Warrant liability
|
-
|
-
|
173,758
|
173,758
|
||||||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
173,758
|
$
|
173,758
|
March 31, 2013
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Total Assets
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Warrant liability
|
-
|
-
|
198,330
|
198,330
|
||||||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
198,330
|
$
|
198,330
|
Level 3 Reconciliation
|
Beginning at beginning of period
|
Gains and losses for the period
(realized and unrealized)
|
Purchases, issuances, sales
and settlements, net
|
Transfers in or out of Level 3
|
Balance at the end of period
|
|||||||||||||||
Warrant liability
|
198,330
|
(24,572
|
)
|
-
|
-
|
173,758
|
||||||||||||||
Total Liabilities
|
$
|
198,330
|
$
|
(24,572
|
)
|
$
|
-
|
$
|
-
|
$
|
173,758
|
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
|
41.25
|
%
|
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
|
$
|
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
|
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
|
$
|
3.30
|
40.41
|
%
|
6.20
|
1.96
|
%
|
$
|
69,139
|
||||||||||||||||||||
09-10-2010 |
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
3.30
|
40.41
|
%
|
2.30
|
0.36
|
%
|
$
|
1,188
|
||||||||||||||||||||
07-26-2012 |
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
3.30
|
40.41
|
%
|
6.08
|
1.96
|
%
|
$
|
47,801
|
||||||||||||||||||||
07-26-2012 |
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
3.30
|
40.41
|
%
|
6.08
|
1.96
|
%
|
$
|
19,120
|
||||||||||||||||||||
11-20-2012 |
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
3.30
|
40.41
|
%
|
6.25
|
1.96
|
%
|
$
|
18,511
|
||||||||||||||||||||
02-14-2013 |
09-10-2019
|
20,000
|
$
|
3.67
|
$
|
3.30
|
40.41
|
%
|
6.20
|
1.96
|
%
|
$
|
17,999
|
Exhibit No.
|
Description
|
|
31.1
|
||
31.2
|
||
32.1
|
||
32.2
|
||
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**
|
TEL-INSTRUMENT ELECTRONICS CORP.
|
|||||
Date: August 14, 2013
|
By:
|
/s/ Jeffrey C. O’Hara
|
|||
Name: Jeffrey C. O’Hara
|
|||||
Title: Chief Executive Officer
Principal Executive Officer
|
Date: August 14, 2013
|
By:
|
/s/ Joseph P. Macaluso
|
|||
Name: Joseph P. Macaluso
|
|||||
Title: Principal Financial Officer
Principal Accounting Officer
|
1.
|
I have reviewed this Form 10-Q 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 present in this report;
|
|
4.
|
Along with the Principal Financial Officer, I am 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-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, 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 financing 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.
|
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 the registrant’s board of directors (or persons performing the equivalent functions):
|
|
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 involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 14, 2013
|
By:
|
/s/ Jeffrey C. O’Hara
|
|
Jeffrey C. O’Hara
|
|||
Principal Executive Officer
Tel-Instrument Electronics Corp
|
1.
|
I have reviewed this Form 10-Q 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 present in this report;
|
|
4.
|
Along with the Principal Executive Officer, I am 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-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, 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 financing 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.
|
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 the registrant’s board of directors (or persons performing the equivalent functions):
|
|
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 involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 14, 2013
|
By:
|
/s/ Joseph P. Macaluso
|
|
Joseph P. Macaluso
|
|||
Principal Financial Officer
Tel-Instrument Electronics Corp
|
(1)
|
Such Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, 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 such Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 14, 2013
|
By:
|
/s/ Jeffrey C. O’Hara
|
|
Jeffrey C. O’Hara
|
|||
Principal Executive Officer
Tel-Instrument Electronics Corp
|
|||
(1)
|
Such Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, 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 such Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 14, 2013
|
By:
|
/s/ Joseph P. Macaluso
|
|
Joseph P. Macaluso
|
|||
Principal Financial Officer
Tel-Instrument Electronics Corp
|
Note 12 - New Accounting Pronouncements
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] |
Note 12
– New Accounting Pronouncements
For
the three months ended June 30, 2013, there have been no
significant accounting pronouncements or changes in
accounting pronouncements that have become effective that are
expected to have a material impact on the Company’s
financial position, operations or cash flows.
|
Note 5 - Loss Per Share
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
Note 5
– Loss Per Share
Net
(loss) income per share has been computed according to FASB
ASC 260, “Earnings per Share,” which requires a
dual presentation of basic and diluted earnings (loss) per
share (“EPS”). Basic EPS represents net (loss)
income divided by the weighted average number of common
shares outstanding during a reporting period. Diluted EPS
reflects the potential dilution that could occur if
securities, including warrants and options, were converted
into common stock. The dilutive effect of outstanding
warrants and options is reflected in earnings per share by
use of the treasury stock method. In applying the treasury
stock method for stock-based compensation arrangements, the
assumed proceeds are computed as the sum of the amount the
employee must pay upon exercise and the amounts of average
unrecognized compensation costs attributed to future
services.
Diluted
loss per share for the three months ended June 30, 2013 and
2012 does not include common stock equivalents, as these
stock equivalents would be anti-dilutive.
|
Note 3 - Accounts Receivable, net (Details) - Schedule of Accounts, Notes, Loans and Financing Receivable (USD $)
|
Jun. 30, 2013
|
Mar. 31, 2013
|
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Less: Allowance for doubtful accounts | $ (17,282) | $ (18,940) |
970,052 | 557,879 | |
Government Receivables [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | 813,376 | 423,165 |
Commercial Receivables [Member]
|
||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable | $ 173,958 | $ 153,654 |
Note 13 - Subsequent Event
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] |
Note 13
– Subsequent Event
In
June 2013, a related party received a note payable from the
Company in exchange for $100,000 which the Company used for
working capital needs. On July 24, 2013, the related party
converted its note payable in the amount of $100,000 into
31,348 shares of the Company’s common stock at a price
of $3.19 per share. The price was approved by the Board of
Directors and was the same price as the 200,000 shares issued
to the Private Investor upon the conversion of debt on May
31, 2013. The fair value of these shares at the date of
conversion was $3.86 per share. As such, in July 2013, the
Company recorded additional interest expense of
$21,003.
|
Note 6 - Long-Term Debt (Details) (USD $)
|
3 Months Ended | 0 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Mar. 31, 2013
|
Jul. 12, 2013
Subsequent Event [Member]
Consideration for Waiver of Non-Compliance of Covenants, March 31, 2013 [Member]
BCA Mezzanine Fund LLP Promissory Note [Member]
|
Jun. 30, 2013
Principal Amount [Member]
Private Investor Securities Purchase Agreement [Member]
|
Jun. 30, 2013
Penalty Fee [Member]
Private Investor Securities Purchase Agreement [Member]
|
Jun. 30, 2013
Accrued Interest [Member]
Private Investor Securities Purchase Agreement [Member]
|
Jun. 30, 2011
BCA Mezzanine Fund LLP Promissory Note [Member]
|
Jun. 30, 2013
Private Investor Securities Purchase Agreement [Member]
|
Mar. 31, 2013
Private Investor Securities Purchase Agreement [Member]
|
|
Note 6 - Long-Term Debt (Details) [Line Items] | ||||||||||
Debt Instrument, Face Amount | $ 2,500,000 | $ 600,000 | ||||||||
Debt Instrument, Covenant Compliance | Company was not in compliance with four covenants related to maintaining agreed upon financial ratios for fixed charges, leverage and debt service as well as a requirement for earnings before interest, taxes, depreciation and amortization (EBITDA). | |||||||||
Class of Warrant or Rights, Granted (in Shares) | 20,000 | 50,000 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | $ 3.33 | $ 3.35 | ||||||||
Warratns, expiration date | Sep. 10, 2019 | Sep. 10, 2019 | ||||||||
Debt Instrument, Unamortized Discount | 19,523 | |||||||||
Proceeds from Debt, Net of Issuance Costs | 489,000 | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 14.00% | |||||||||
Common Stock, Par or Stated Value Per Share (in Dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | |||||||
Debt Conversion, Converted Instrument, Amount | 600,000 | 25,000 | 12,400 | 637,400 | ||||||
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | 200,000 | |||||||||
Debt Instrument, Convertible, Conversion Price (in Dollars per share) | $ 3.187 | |||||||||
Share Price (in Dollars per share) | $ 3.32 | |||||||||
Gains (Losses) on Extinguishment of Debt | $ (26,600) | $ 0 | $ 26,600 | |||||||
Debt Instrument, Description | As further consideration to the Private Investor, the Company agreed that each time the Company issues any new Common Stock in the next two years (excluding the exercise of existing stock options and warrants currently outstanding), at a price lower than $3.187 per share purchase price, the Company will issue additional shares to the Private Investor, for no additional consideration, based on the differential between the $3.187 price and the price paid for the newly issued stock. |
Note 5 - Loss Per Share (Details) - Schedule of Earnings Per Share, Basic and Diluted (USD $)
|
3 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||
Net loss (in Dollars) | $ (85,772) | $ (668,800) |
Weighted-average common shares outstanding | 3,079,871 | 2,698,984 |
Basic net loss per share (in Dollars per share) | $ (0.03) | $ (0.25) |
Net loss (in Dollars) | $ (85,772) | $ (668,800) |
Weighted-average common shares outstanding | 3,079,871 | 2,698,984 |
Incremental shares attributable to the assumed exercise of outstanding stock options | 0 | 0 |
Total adjusted weighted-average shares | 3,079,871 | 2,698,984 |
Diluted net loss per share (in Dollars per share) | $ (0.03) | $ (0.25) |
Note 9 - Fair Value Measurements (Details) - Schedule of Fair Value, Liabilities Measured on a Recurring Basis, Unobservable Input Reconciliation (USD $)
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at beginning of period | $ 198,330 |
Gains and losses for the period (realized and unrealized) | (24,572) |
Purchases, issuances, sales and settlements, net | 0 |
Transfer in or out of Level 3 | 0 |
Balance at end of period | 173,758 |
Warrant Liability [Member]
|
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at beginning of period | 198,330 |
Gains and losses for the period (realized and unrealized) | (24,572) |
Purchases, issuances, sales and settlements, net | 0 |
Transfer in or out of Level 3 | 0 |
Balance at end of period | $ 173,758 |
Note 4 - Inventories, net (Details) - Schedule of Inventory, Current (USD $)
|
Jun. 30, 2013
|
Mar. 31, 2013
|
---|---|---|
Schedule of Inventory, Current [Abstract] | ||
Purchased parts | $ 4,227,353 | $ 4,418,989 |
Work-in-process | 1,404,489 | 1,636,325 |
Finished goods | 45,401 | 385,867 |
Less: Inventory reserve | (200,000) | (200,000) |
$ 5,477,243 | $ 6,241,181 |
Note 1 - Basis of Presentation
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Business Description and Basis of Presentation [Text Block] |
Note 1
– Basis of Presentation
In
the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial
position of Tel-Instrument Electronics Corp (the
“Company” or “TIC”) as of June 30,
2013, the results of operations for the three months ended
June 30, 2013 and June 30, 2012, and statements of cash flows
for the three months ended June 30, 2013 and June 30,
2012. These results are not necessarily indicative
of the results to be expected for the full
year. The financial statements have been prepared
in accordance with the requirements of Form 10-Q and
consequently do not include disclosures normally made in an
Annual Report on Form 10-K. The March 31, 2013
balance sheet included herein was derived from the audited
financial statements included in the Company’s annual
report on Form 10-K as of that date. Accordingly,
the financial statements included herein should be reviewed
in conjunction with the financial statements and notes
thereto included in the Company’s Annual Report on Form
10-K for the fiscal year ended March 31, 2013.
|
Note 3 - Accounts Receivable, net
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
Note 3
– Accounts Receivable, net
The
following table sets forth the components of accounts
receivable:
|
Note 6 - Long-Term Debt
|
3 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure Text Block [Abstract] | |
Long-term Debt [Text Block] |
Note 6
– Long-Term Debt
In
September 2010, the Company entered into an agreement with
BCA Mezzanine Fund LLP (“BCA”) to loan the
Company $2,500,000 in the form of a Promissory Note (the
“Note”). The Note contains a number of
affirmative and negative covenants which restrict our
operations. For the quarter ended June 30, 2013,
the Company was not in compliance with four covenants related
to maintaining agreed upon financial ratios for fixed
charges, leverage and debt service as well as a requirement
for earnings before interest, taxes, depreciation and
amortization (EBITDA). However, the Company received a waiver
from BCA on each of the above mentioned covenants.
In
consideration for the waiver for non-compliance of the
financial covenants at March 31, 2013, on July 12, 2013 BCA
received warrants to purchase 20,000 shares of the
Company’s common stock. The common stock underlying the
warrants is exercisable at a price of $3.33 per share and the
warrants expire on September 10, 2019. Determining the
warrant value 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 value
of the warrant will be recorded as a debt discount of
$19,523, and will be amortized over the remaining life of the
loan.
On
July 26, 2012 the Company entered into a securities purchase
agreement (the “Securities Purchase Agreement”)
with a private investor (the “Private
Investor”). Pursuant to the terms of the
Purchase Agreement, the Company issued (i) a senior secured
promissory note in favor of the Private Investor in the
aggregate principal amount of $600,000, approximately
$489,000 net of expenses, accruing interest at a rate of 14%
per annum and (ii) a common stock purchase warrant to
purchase 50,000 shares of the Company’s common stock,
par value $0.10 per share. The Note, together with all unpaid
interest and principal was due on March 31,
2013. The common stock underlying the warrant is
exercisable at a price of $3.35 per share and the warrant
expires on September 10, 2019. In conjunction with the
Purchase Agreement the Company entered into an (i) Investor
Rights Agreement, (ii) Securities Agreement, (iii)
Intercreditor Agreement and (iv) Subordination Agreement. The
Company reported the foregoing on its Current Report on Form
8-K on August 3, 2012.
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 $3.187 per share. The fair value of these shares at
the date of conversion was $3.32 per share. As such, the
Company recorded a loss on the extinguishment of debt in the
amount of $26,600 and this amount is included in the
accompanying statement of operations for the three months
ended June 30, 2013. As further consideration to the Private
Investor, the Company agreed that each time the Company
issues any new Common Stock in the next two years (excluding
the exercise of existing stock options and warrants currently
outstanding), at a price lower than $3.187 per share purchase
price, the Company will issue additional shares to the
Private Investor, for no additional consideration, based on
the differential between the $3.187 price and the price paid
for the newly issued stock.
|
Note 4 - Inventories, net
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] |
Note 4
–Inventories, net
Inventories
consist of:
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Note 7 - Segment Information (Details)
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3 Months Ended |
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Jun. 30, 2013
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Segment Reporting [Abstract] | |
Number of Reportable Segments | 2 |
Note 9 - Fair Value Measurements (Details) - Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques (USD $)
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12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
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Jun. 30, 2013
|
Mar. 31, 2013
|
Mar. 31, 2011
Fair Value Valuation at Inception [Member]
Warrant Issued 09-10-2010 [Member]
|
Mar. 31, 2011
Fair Value Valuation at Inception [Member]
Warrant Issued 09-10-2010 #2 [Member]
|
Mar. 31, 2013
Fair Value Valuation at Inception [Member]
Warrant Issued 07-26-2012 [Member]
|
Mar. 31, 2013
Fair Value Valuation at Inception [Member]
Warrant Issued 07-26-2012 #2 [Member]
|
Mar. 31, 2013
Fair Value Valuation at Inception [Member]
Warrant Issued 11-20-2012 [Member]
|
Mar. 31, 2013
Fair Value Valuation at Inception [Member]
Warrant Issued 02-14-2013 [Member]
|
Jun. 30, 2013
Warrant Issued 09-10-2010 [Member]
|
Mar. 31, 2013
Warrant Issued 09-10-2010 [Member]
|
Jun. 30, 2013
Warrant Issued 09-10-2010 #2 [Member]
|
Mar. 31, 2013
Warrant Issued 09-10-2010 #2 [Member]
|
Jun. 30, 2013
Warrant Issued 07-26-2012 [Member]
|
Mar. 31, 2013
Warrant Issued 07-26-2012 [Member]
|
Jun. 30, 2013
Warrant Issued 07-26-2012 #2 [Member]
|
Mar. 31, 2013
Warrant Issued 07-26-2012 #2 [Member]
|
Jun. 30, 2013
Warrant Issued 11-20-2012 [Member]
|
Mar. 31, 2013
Warrant Issued 11-20-2012 [Member]
|
Jun. 30, 2013
Warrant Issued 02-14-2013 [Member]
|
Mar. 31, 2013
Warrant Issued 02-14-2013 [Member]
|
|
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||||||||||||||||||||
Expiration Date | Sep. 10, 2019 | Sep. 10, 2015 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2015 | Sep. 10, 2015 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | Sep. 10, 2019 | ||
Number of Warrants (in Shares) | 136,920 | 10,416 | 50,000 | 20,000 | 20,000 | 20,000 | 136,920 | 136,920 | 10,416 | 10,416 | 50,000 | 50,000 | 20,000 | 20,000 | 20,000 | 20,000 | 20,000 | 20,000 | ||
Exercise Price (in Dollars per Share) | $ 6.70 | $ 6.70 | $ 3.35 | $ 3.35 | $ 3.56 | $ 3.58 | $ 6.70 | $ 6.70 | $ 6.70 | $ 6.70 | $ 3.35 | $ 3.35 | $ 3.35 | $ 3.35 | $ 3.56 | $ 3.56 | $ 3.67 | $ 3.67 | ||
Fair Value Per Share (in Dollars per share) | $ 6.70 | $ 6.70 | $ 3.90 | $ 3.90 | $ 3.50 | $ 3.80 | $ 3.30 | $ 3.50 | $ 3.30 | $ 3.50 | $ 3.30 | $ 3.50 | $ 3.30 | $ 3.50 | $ 3.30 | $ 3.50 | $ 3.30 | $ 3.50 | ||
Expected Volatality | 28.51% | 28.51% | 42.04% | 42.04% | 42.45% | 41.25% | 40.41% | 41.45% | 40.41% | 41.45% | 40.41% | 41.45% | 40.41% | 41.45% | 40.41% | 41.45% | 40.41% | 41.45% | ||
Remaining Life in Years | 9 years | 5 years | 7 years | 7 years | 6 years 302 days | 6 years 211 days | 6 years 73 days | 6 years 164 days | 2 years 109 days | 2 years 164 days | 6 years 29 days | 6 years 120 days | 6 years 29 days | 6 years 120 days | 6 years 3 months | 6 years 6 months | 6 years 73 days | 6 years 164 days | ||
Risk Free Interest Rate | 2.81% | 1.59% | 0.94% | 0.94% | 1.09% | 1.43% | 1.96% | 1.24% | 0.36% | 0.25% | 1.96% | 1.24% | 1.96% | 1.24% | 1.96% | 1.24% | 1.96% | 1.24% | ||
Warrant Liability (in Dollars) | $ 173,758 | $ 198,330 | $ 267,848 | $ 13,808 | $ 66,193 | $ 26,477 | $ 21,441 | $ 23,714 | $ 69,139 | $ 81,080 | $ 1,188 | $ 1,870 | $ 47,801 | $ 53,269 | $ 19,120 | $ 21,307 | $ 18,511 | $ 20,664 | $ 17,999 | $ 20,140 |