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): February 06, 2019
TEL-INSTRUMENT ELECTRONICS CORP.
(Exact name of registrant as specified in its charter)
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New Jersey |
001-31990 |
22-1441806 |
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(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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 8, 2019, Tel-Instrument Electronics Corp. (“TIC”) (NYSE MKT: TIK) announced its financial results for the third quarter of fiscal year 2019.
A copy of the Company’s press release is attached hereto as Exhibit 99.1.
Item 8.01. Other Events
On February 6, 2016, Tel-Instrument Electronics Corp (“Tel”, “Tel-Instrument” or the “Company”) (NYSE American: TIK) , reported that it received an initial purchase order totaling $520,000 from its European Distributor, Muirhead Avionics (“Muirhead”) for Mode 5 test sets from the contract awarded by the German military. This is a seven-year procurement contract with anticipated orders for the 2019 calendar year of approximately $3.5 million in total.
A copy of the press release is attached as Exhibit 99.9 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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99.1 * |
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99.2* |
*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.
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TEL-INSTRUMENT ELECTRONICS CORP. |
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Date: February 8, 2019 |
By: |
/s/ Joseph P. Macaluso |
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Name: Joseph P. Macaluso |
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Title: Principal Accounting Officer |
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Exhibit 99.1
Tel-Instrument Electronics Corp. Reports $639K Of
Net Income for Third Quarter of FY 2019
East Rutherford, NJ – February 8, 2019 – Tel-Instrument Electronics Corp. (“Tel”, “Tel-Instrument” or the “Company”) (NYSE American: TIK), a leading designer and manufacturer of avionics test and measurement solutions, today announced its financial results for the third quarter of fiscal year 2019.
Highlights for Third Quarter of Fiscal Year 2019
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Revenues increased 51% to just under $4 million from $2.6 million as compared to the same 2018 fiscal quarter. |
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Total orders for the quarter increased to $9.7 million and backlog at December 31, 2018 increased to almost $7 million. |
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Gross profit as a percentage of sales increased to 49.5% versus 35.7% as compared to the same 2018 fiscal quarter. |
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Operating profit improved to $757k as compared to an operating loss of $293k for the same 2018 fiscal quarter. |
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Net income improved to $639k as compared to a net loss of $333k for the third quarter in the same 2018 fiscal year. |
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Net income attributable to common shareholders included a one-time deemed dividend charge of $420k incurred as a result of the Series B Preferred Convertible Stock issuance. This non-cash charge had no impact on stockholders’ equity. |
Jeff O’Hara, Tel’s President and CEO said, “We are pleased to report a return to solid profitability in our latest quarter. The Company continues to build momentum while broadening our worldwide presence. Our team continues to work hard in pursuing new opportunities, developing new products and improving our manufacturing processes, while maintaining tight cost controls. The favorable product mix and tight cost controls resulted in Tel approaching its 50% gross margin target in the latest quarter. The near-term goal for the Company is to continue to increase revenues and profitability and to further rebuild our balance sheet that was negatively impacted by the Aeroflex litigation and damages award. The recent $1 million issuance of Series B Preferred Stock was crucial, as it has allowed us to quickly ramp up production and take full advantage of opportunities now in play for the Company. We continue to work hard on our domestic and international Mode 5 marketing efforts and we are pleased to report that our new T-47/M5 test set is making major in-roads in several key international markets. The $9.7 million of new orders for the third quarter will allow us to continue our growth path for the fourth quarter and into the 2020 fiscal year. We were particularly excited to finally secure the initial $520k purchase order from the German military this week after extensive delays resulting from a competitor’s unsuccessful protest. Based on customer input, we anticipate total bookings in CY 2019 from the German contract will total approximately $3.5 million. We also have several other large domestic and international contracts in play that we hope to announce in the next few months. Based on current backlog and expected contracts, we anticipate continued improvement in revenues and profitability for the balance of this fiscal year and for the next fiscal year.
The Company continues to be excited about its new handheld avionics flight-line test set, the “SDR-OMNI”. The world’s first “All-in-One” Avionics Test Set utilizes true software-designed radio technology that enables it to test all common avionics functions in one 4.5 pound test set. The SDR/OMNI has very wide frequency to accommodate new commercial and military waveforms in an industry leading 4-pound package. This is half the weight of competitive test sets. It utilizes the latest touch screen technology and has the capability to replace all TIC commercial test sets and military flight-line test sets with one handheld product. We expect to begin shipments of the initial product later this summer. The Company’s goal is to use this hardware platform to move into the much larger digital radio communication test set market.
With respect to the Aeroflex litigation, we expect to file our appeal brief this month and it will likely take several years to reach a final decision. We believe that we have strong arguments for this award to be reduced or dismissed based on errors made during the trial and/or standing issues. Importantly, the legal expense associated with this litigation will be largely behind us after the current fiscal quarter. While we believe we have strong legal arguments, winning on appeal is always an uphill battle and we are working hard to generate sufficient cash-flow to satisfy the damages award in the event we are not successful.”
The Company encourages investors to read our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 8, 2019 at www.sec.gov.
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.
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Contact: |
Joseph P. Macaluso |
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Tel-Instrument Electronics Corp. |
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(201) 933-1600 |
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
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December 31, 2018 |
March 31, 2018 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 161,031 | $ | 307,812 | ||||
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Accounts receivable, net |
2,271,510 | 1,095,049 | ||||||
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Inventories, net |
3,094,276 | 4,269,934 | ||||||
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Restricted cash to support appeal bond |
2,003,883 | 2,000,866 | ||||||
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Prepaid expenses and other current assets |
240,390 | 147,746 | ||||||
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Total current assets |
7,771,090 | 7,821,407 | ||||||
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Equipment and leasehold improvements, net |
128,148 | 180,763 | ||||||
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Deferred tax asset, net |
63,500 | 63,500 | ||||||
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Other long-term assets |
35,109 | 35,109 | ||||||
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Total assets |
7,997,847 | 8,100,779 | ||||||
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LIABILITIES & STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Current portion of long-term debt |
- | 2,124 | ||||||
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Line of credit |
820,000 | 1,000,000 | ||||||
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Capital lease obligations – current portion |
7,368 | 6,875 | ||||||
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Accounts payable and accrued liabilities |
1,796,782 | 2,580,383 | ||||||
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Deferred revenues – current portion |
92,204 | 60,051 | ||||||
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Accrued legal damages |
5,216,647 | 5,059,990 | ||||||
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Warrant liability |
23,000 | - | ||||||
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Accrued payroll, vacation pay and payroll taxes |
315,575 | 447,863 | ||||||
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Total current liabilities |
8,271,576 | 9,157,286 | ||||||
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Capital lease obligations – long-term |
1,295 | 6,885 | ||||||
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Deferred revenues – long-term |
274,170 | 337,676 | ||||||
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Total liabilities |
8,547,041 | 9,501,847 | ||||||
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Commitments and contingencies |
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Stockholders’ deficit: |
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Preferred stock, 1,000,000 shares authorized, par value $0.10 per share |
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Preferred stock, 500,000 shares 8% Cumulative Series A Convertible Preferred issued and outstanding, par value $0.10 per share |
3,215,998 | 3,035,998 | ||||||
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Preferred stock, 166,667 shares 8% Cumulative Series B Convertible Preferred issued and outstanding, par value $0.10 per share |
1,007,036 | - | ||||||
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Common stock, 7,000,000 shares authorized, par value $0.10 per share, 3,255,887 shares issued and outstanding, respectively |
325,586 | 325,586 | ||||||
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Paid-in capital in excess of par value, common stock |
8,009,843 | 8,046,975 | ||||||
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Accumulated deficit |
(13,107,657 |
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(12,809,627 |
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Total stockholders’ deficit |
(549,194 |
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(1,401,068 |
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Total liabilities and stockholders’ deficit |
$ | 7,997,847 | $ | 8,100,779 | ||||
TEL-INSTRUMENT ELECTRONICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
Nine Months Ended |
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December 31, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
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Net sales |
$ | 3,975,736 | $ | 2,625,793 | 8,012,891 | $ | 7,955,035 | |||||||||
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Cost of sales |
2,006,132 | 1,689,113 | 4,562,761 | 5,377,195 | ||||||||||||
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Gross margin |
1,969,604 | 936,680 | 3,450,130 | 2,577,840 | ||||||||||||
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Operating expenses: |
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Selling, general and administrative |
530,180 | 548,391 | 1,652,116 | 1,881,072 | ||||||||||||
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Litigation expenses |
59,680 | 134,765 | 134,799 | 560,610 | ||||||||||||
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Legal damages |
- | - | - | 2,100,000 | ||||||||||||
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Engineering, research and development |
622,082 | 546,691 | 1,642,785 | 1,691,631 | ||||||||||||
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Total operating expenses |
1,211,942 | 1,229,847 | 3,429,700 | 6,233,313 | ||||||||||||
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Income (loss) from operations |
757,662 | (293,167 |
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20,430 | (3,655,473 |
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Other income (expense): |
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Interest income |
1,010 | - | 3,017 | - | ||||||||||||
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Proceeds from life insurance |
- | - | - | 92,678 | ||||||||||||
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Amortization of deferred financing costs |
- | (649 |
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- | (3,363 |
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Change in fair value of common stock warrants |
(23,000 |
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5,000 | (23,000 |
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95,000 | ||||||||||
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Interest expense - judgment |
(72,003 |
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(30,523 |
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(215,226 |
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(30,523 |
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Interest expense |
(24,216 |
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(14,097 |
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(83,251 |
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(38,435 |
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Total other (expense) income |
(118,209 |
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(40,269 |
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(318,460 |
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115,357 | |||||||||
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Income (loss) before income taxes |
639,453 | (333,436 |
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(298,030 |
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(3,540,116 |
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Income tax expense |
- | - | - | - | ||||||||||||
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Net income (loss) |
639,453 | (333,436 |
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(298,030 |
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(3,540,116 |
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Deemed dividend related to beneficial conversion feature of Series B Convertible Preferred Stock |
(420,000 |
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- | (420,000 |
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- | ||||||||||
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Preferred stock dividends |
(112,807 |
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(30,667 |
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(232,807 |
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(30,667 |
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Net income (loss) attributable to common shareholders |
$ | 106,646 | $ | (364,103 |
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$ | (950,837 |
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$ | (3,570,783 |
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Basic income (loss) per common share |
$ | 0.03 | $ | (0.11 |
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$ | (0.29 |
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$ | (1.10 |
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Diluted income (loss) per common share |
$ | 0.03 | $ | (0.11 |
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$ | (0.29 |
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$ | (1.10 |
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Weighted average shares outstanding: |
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Basic |
3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
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Diluted |
3,409,657 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
Exhibit 99.2
Tel-Instrument Electronics Corp. Receives Initial $520,000
Mode 5 Test Set Order for the German Military
East Rutherford, NJ – February 7, 2019 – Tel-Instrument Electronics Corp. (“Tel”, “Tel-Instrument” or the “Company”) (NYSE American: TIK), a leading designer and manufacturer of avionics test and measurement solutions, today reported that it received an initial purchase order totaling $520,000 from its European Distributor, Muirhead Avionics (“Muirhead”) for Mode 5 test sets from the contract awarded by the German military. This is a seven-year procurement contract with anticipated orders for the 2019 calendar year of approximately $3.5 million in total.
Jeff O’Hara, Tel’s President and CEO said, “We are pleased to announce that the German military has selected one of TIC’s market-leading Mode 5 test sets for its flight-line testing requirements. This multi-year contract was originally announced last summer but had been delayed due to an unsuccessful protest from a competitor. The initial test sets will be delivered this summer, and we anticipate that additional orders will bring TIC’s 2019 calendar year bookings for this customer to approximately $3.5 million. This was an important win for our Company and we believe it will further our continued growth and profitability going into our next fiscal year. We continue to work on other substantial domestic and international orders that we hope to secure over the next few months.”
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.
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Contact: |
Joseph P. Macaluso |
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Tel-Instrument Electronics Corp. |
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(201) 933-1600 |