8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 18, 2016

TEL-INSTRUMENT ELECTRONICS CORP.

(Exact name of registrant as specified in its charter)

New Jersey	001-31990	22-1441806
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Branca Road

East Rutherford, New Jersey 07073

(Address of principal executive offices)

(201) 933-1600

(Telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On August 18, 2016, Tel-Instrument Electronics Corp. (“TIC”) (NYSE MKT: TIK) announced its financial results for the first quarter ended June 30, 2016.

A copy of the Company’s press release is attached hereto as Exhibit 99.1.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.         Description

99.1*                    Press release dated August 18, 2016, “Tel-Instrument Electronics Corp. Reports Net Income of $410,000 or $0.13 per Share for the First Quarter of Fiscal 2017”

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TEL-INSTRUMENT ELECTRONICS CORP.
Date: August 18, 2016	By:	/s/ Joseph P. Macaluso
		Name: Joseph P. Macaluso
		Title: Principal Accounting Officer

EX-99.1

Exhibit 99.1 

Tel-Instrument Electronics Corp. Reports Net Income of $410,000 or $0.13 per Share for the First Quarter of Fiscal 2017

East Rutherford, NJ – August 18, 2016 – Tel-Instrument Electronics Corp. (“Tel”, “Tel-Instrument” or the “Company”) (NYSE MKT: TIK), a leading designer and manufacturer of avionics test and measurement solutions, today reported its financial results for the first quarter ended June 30, 2016.

Highlights for First Quarter of Fiscal Year 2017

· Revenues decreased 8.6% to $5.34 million from $5.85 million in the first quarter of FY 2017.

· Gross margin percentage improved to 35.1% versus 31.1% for the same quarter last year.

· Gross margin increased to $1.88 million, a $61k improvement over the first quarter of 2016.

· Operating income decreased to $380k as compared to $457k in the first quarter of FY 2016.

· Non-GAAP Adjusted EBITDA was $423k as compared to $506k in the first quarter last year.

· Settled BCA warrants for $720k, realized a $217k benefit compared to March 31, 2016.

· Pre-tax income in the first quarter of $578k versus $494k in the year-ago period.

· Net Income for the first quarter was $410k or $0.13 per share as compared to $279k or $0.09 per share in the first quarter of FY 2016.

· Tax accrual of $168k for the first quarter is a non-cash item due to the Company’s large NOL.

Revenues for the three months ended June 30, 2016 decreased 8.6% to $5,342,369 from $5,845,919 for the three months ended June 30, 2015.The decrease in revenues is mostly attributed to the decrease in shipment of the TS-4530A KITS, as that contract has now been completed, and lower sales of the T-760/T-76 test sets partially offset by increased shipments of the TS-4530A SETS.

Gross margin increased $61,358 or 3.4% to $1,876,653 for the three months ended June 30, 2016 as compared to $1,815,295 for the three months ended June 30, 2015. This increase is mostly attributed to increased prices on CRAFT units offset partially by lower sales volume. Gross margin percentage for the three months ended June 30, 2016 was 35.1%, as compared to 31.1% for the three months ended June 30, 2015.

Selling, general and administrative expenses increased by $46,056 (5.3%) to $911,744 for the three months ended June 30, 2016, as compared to $865,688 for the three months ended June 30, 2015. This increase was primarily attributable to a $73,000 increase in legal expenses associated with the Aeroflex Wichita, Inc. (“Aeroflex”) litigation compared to the year-ago quarter. Total litigation costs for the quarter were $143,000 as the Company incurred higher costs in preparation for the summary judgment hearing that is scheduled to be heard on August 25, 2016.

Engineering, research and development expenses increased $92,745 (18.8%) to $584,877 for the three months ended June 30, 2016, as compared to $492,132 for the three months ended June 30, 2015. This increase is almost completely related to the new hand-held avionics and radio test set now under development.

Mr. Jeffrey O’Hara, President and CEO of Tel, stated, “We reported solid revenues and improved profitability for the first quarter of fiscal year 2017. Revenues decreased as a result of the successful completion of the TS-4530A KITS production program.  The Navy portion of the ITATS program was also substantially completed in the first quarter. Both of these programs were won on competitive bids and generated very low gross margins.

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We are focused on capturing the lion’s share of the international Mode 5 market. The international Mode 5 test equipment markets have also been picking up with recent activity in both the Far East and European markets, and we believe our current product offerings, plus the new T-47M5, will be very competitive. We believe that Tel is well positioned for this business as our CRAFT and TS-4530A flight-line test sets have been endorsed by the U.S. military and we have already delivered test sets into 18 international markets. The new T-47M5 product is also being offered as a retro-fit kit for our large base of installed Mode 4 IFF test sets. We are also seeing increased market interest in our other military and commercial test sets including the ITATS TACAN bench test set and our new TR-36 Nav/Com product. These sales should be at attractive margins as we look to return to our traditional 50% gross margin levels starting next fiscal year.

We continue to work on our next generation multi-purpose hand-held test set with the initial product currently scheduled to be introduced in the fourth quarter of the current fiscal year. This product will be the hardware platform that will have the capabilities that address both our current avionic test set market as well as the much larger radio test set market. We believe that this new product family will be extremely competitive and will help drive the long term growth of our business.

The BCA warrants have been a drag on Tel’s profitability for the last several years, and we believe that their exercise will result in a cleaner balance sheet and more predictable financial reporting going forward. We expect to pay off the entire $720,000 negotiated amount this quarter.

“We are excited and optimistic about our near and long-term prospects,” Mr. O’Hara concluded.

The Company encourages investors to read its full results of operations as contained in our Quarterly Report on Form 10-Q filed on August 18, 2016 at www.sec.gov.

Conference Call

The Companywill host a conference call and webcast today, Thursday, August 18, 2016 at 9:00 a.m. Eastern Time to discuss the Company’s fiscal first quarter 2017 results.

To access the live webcast, log onto Tel-Instrument’s website at:

https://www.telinstrument.com/learn-about-telinstrument/investor-relations.html.

To participate in the call by phone, dial (877) 407-8035 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8035.

A replay of the teleconference will be available until September 18, 2016 and may be accessed by dialing (877) 660-6853. International callers may dial (201) 612-7415.  Callers should use conference ID: 13643708.

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About Tel-Instrument Electronics Corp

Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com.

# # #

This press release includes statements that are not historical in nature and may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits, and synergies of the combined companies, statements concerning the Company’s outlook, pricing trends, and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies, and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ materially.  Among the factors which could cause a difference are:  changes in the general economy; changes in demand for the Company’s products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances.  A number of these factors are discussed in the Company’s previous filings with the U.S. Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 (the “Act”) protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

Contact:	Joseph P. Macaluso	John Nesbett or Jennifer Belodeau
	Tel-Instrument Electronics Corp.	Institutional Marketing Services (IMS)
	(201) 933-1600	(203) 972-9200
		jnesbett@institutionalms.com

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TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2016			March 31, 2016
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	412,570		$	972,633
Accounts receivable, net		2,265,966			1,454,361
Inventories, net		4,048,284			4,679,032
Prepaid expenses and other current assets		763,851			128,071
Deferred income tax asset		578,507			578,507
Total current assets		8,069,178			7,812,604
Equipment and leasehold improvements, net		183,815			193,518
Deferred income tax asset – non-current		1,897,382			2,065,126
Other long-term assets		35,515			36,871
Total assets		10,185,890			10,108,119
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		424,710			418,255
Warrant liability - current		720,000			-
Capital lease obligations – current portion		5,844			10,232
Accounts payable and accrued liabilities		2,066,056			2,401,500
Federal and state taxes payable		-			53,623
Deferred revenues – current portion		498,926			48,766
Accrued payroll, vacation pay and payroll taxes		760,691			836,589
Total current liabilities		4,476,227			3,768,965
Subordinated notes payable - related parties		-			25,000
Capital lease obligations – long-term		18,514			20,524
Long-term debt		195,977			304,560
Deferred revenues – long-term		203,820			172,703
Warrant liability – long-term		199,000			1,136,203
Other long-term liabilities		1,500			7,800
Total liabilities		5,095,038			5,435,755
Commitments
Stockholders' equity:
Common stock, 4,000,000 shares authorized, par value $0.10 per share, 3,255,887 shares issued and outstanding, respectively		325,586			325,586
Additional paid-in capital		8,082,834			8,074,655
Accumulated deficit		(3,317,568	)		(3,727,877	)
Total stockholders' equity		5,090,852			4,672,364
Total liabilities and stockholders' equity	$	10,185,890		$	10,108,119

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TEL-INSTRUMENT ELECTRONICS CORP.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	June 30, 2016			June 30, 2015
Net sales	$	5,342,369		$	5,845,919
Cost of sales		3,465,716			4,030,624
Gross margin		1,876,653			1,815,295
Operating expenses:
Selling, general and administrative		911,744			865,688
Engineering, research and development		584,877			492,132
Total operating expenses		1,496,621			1,357,820
Income from operations		380,032			457,475
Other income (expense):
Amortization of deferred financing costs		(1,356	)		(1,357	)
Change in fair value of common stock warrants		217,203			67,760
Interest expense		(17,826	)		(29,634	)
Total other income (expense)		198,021			36,769
Income before income taxes		578,053			494,244
Income tax provision		167,744			215,178
Net income	$	410,309		$	279,066
Net income per share:
Basic income per common share	$	0.13		$	0.09
Diluted income per common share	$	0.10		$	0.02
Weighted average shares outstanding:
Basic		3,255,887			3,256,887
Diluted		3,274,829			3,320,442

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TEL-INSTRUMENT ELECTRONICS CORP.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(Unaudited)

	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2016			2015
Net income	$	410,309		$	276,066
Income tax provision		167,744			215,178
Depreciation and amortization		35,010			42,413
Amortization  of deferred financing costs		1,356			1,357
Change on fair value of common stock warrants		(217,203	)		(67,760	)
Interest, net		17,826			29,,634
Non-cash stock-based compensation		8,179			6,466
Non-GAAP Adjusted EBITDA	$	423,221		$	506,354

The term EBITDA consists of net income (loss) plus interest, taxes, depreciation and amortization, amortization of debt discount and deferred financing charges, change in fair value of warrants, and non-cash stock-based compensation. EBITDA is not a measure of financial performance under generally accepted accounting principles, and should not be considered in isolation from, or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles, or as a measure of profitability or liquidity. Additionally, EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our ability to service debt, and to fund capital expenditures, and provides investors a helpful measure for analyzing its operating performance. The table above sets forth a reconciliation of EBITDA to net income (loss), which is the most directly comparable measure of financial performance, calculated under generally accepted accounting principles.

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