EAST RUTHERFORD, N.J.–(BUSINESS WIRE)–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
Revenues increased 51% to just under $4 million from $2.6 million as
compared to the same 2018 fiscal quarter.
Total orders for the quarter increased to $9.7 million and backlog
Gross profit as a percentage of sales increased to 49.5% versus
Operating profit improved to $757k as compared to an operating loss
of $293k for the same 2018 fiscal quarter.
Net income improved to $639k as compared to a net loss of $333k for
the third quarter in the same 2018 fiscal year.
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
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.
TEL-INSTRUMENT ELECTRONICS CORP.
|Cash and cash equivalents||$||161,031||$||307,812|
|Accounts receivable, net||2,271,510||1,095,049|
|Restricted cash to support appeal bond||2,003,883||2,000,866|
|Prepaid expenses and other current assets||240,390||147,746|
|Total current assets||7,771,090||7,821,407|
|Equipment and leasehold improvements, net||128,148||180,763|
|Deferred tax asset, net||63,500||63,500|
|Other long-term assets||35,109||35,109|
|LIABILITIES & STOCKHOLDERS’ DEFICIT|
|Current portion of long-term debt||–||2,124|
|Line of credit||820,000||1,000,000|
|Capital lease obligations – current portion||7,368||6,875|
|Accounts payable and accrued liabilities||1,796,782||2,580,383|
|Deferred revenues – current portion||92,204||60,051|
|Accrued legal damages||5,216,647||5,059,990|
|Accrued payroll, vacation pay and payroll taxes||315,575||447,863|
|Total current liabilities||8,271,576||9,157,286|
|Capital lease obligations – long-term||1,295||6,885|
|Deferred revenues – long-term||274,170||337,676|
|Commitments and contingencies|
Preferred stock, 1,000,000 shares authorized, par value $0.10 per
Preferred stock, 500,000 shares 8% Cumulative Series A Convertible
Preferred stock, 166,667 shares 8% Cumulative Series B Convertible
Common stock, 7,000,000 shares authorized, par value $0.10 per
|Paid-in capital in excess of par value, common stock||8,009,843||8,046,975|
|Total stockholders’ deficit||(549,194||)||(1,401,068||)|
|Total liabilities and stockholders’ deficit||$||7,997,847||$||8,100,779|
TEL-INSTRUMENT ELECTRONICS CORP.
|Three Months Ended||Nine Months Ended|
|Cost of sales||2,006,132||1,689,113||4,562,761||5,377,195|
|Selling, general and administrative||530,180||548,391||1,652,116||1,881,072|
|Engineering, research and development||622,082||546,691||1,642,785||1,691,631|
|Total operating expenses||1,211,942||1,229,847||3,429,700||6,233,313|
|Income (loss) from operations||757,662||(293,167||)||20,430||(3,655,473||)|
|Other income (expense):|
|Proceeds from life insurance||–||–||–||92,678|
|Amortization of deferred financing costs||–||(649||)||–||(3,363||)|
|Change in fair value of common stock warrants||(23,000||)||5,000||(23,000||)||95,000|
|Interest expense – judgment||(72,003||)||(30,523||)||(215,226||)||(30,523||)|
|Total other (expense) income||(118,209||)||(40,269||)||(318,460||)||115,357|
|Income (loss) before income taxes||639,453||(333,436||)||(298,030||)||(3,540,116||)|
|Income tax expense||–||–||–||–|
|Net income (loss)||639,453||(333,436||)||(298,030||)||(3,540,116||)|
Deemed dividend related to beneficial conversion feature
of Series B Convertible Preferred Stock
|Preferred stock dividends||(112,807||)||(30,667||)||(232,807||)||(30,667||)|
|Net income (loss) attributable to common shareholders||$||106,646||$||(364,103||)||$||(950,837||)||$||(3,570,783||)|
|Basic income (loss) per common share||$||0.03||$||(0.11||)||$||(0.29||)||$||(1.10||)|
|Diluted income (loss) per common share||$||0.03||$||(0.11||)||$||(0.29||)||$||(1.10||)|
|Weighted average shares outstanding:|
Joseph P. Macaluso
Tel-Instrument Electronics Corp.