Tel-Instrument Electronics Corp Announces Third Quarter Results, AIMS Testing Completed for the TS-4

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Tel-Instrument Electronics Corp Announces Third Quarter Results, AIMS Testing Completed for the TS-4530A Program and Expected Production Release for the ITATS Program

EAST RUTHERFORD, N.J.--(BUSINESS WIRE)-- Tel-Instrument Electronics Corp ("TIC" or the "Company") (NYSE MKT: TIK) announced results for its third quarter and first nine months of fiscal year 2013 as well as two milestones on the TS-4530A and ITATS programs.

Financial Overview


For the three months ended December 31, 2012, sales decreased $1,323,215 to $2,350,020, as compared to $3,673,235 for the same period in the prior year. The Company recorded a net loss of $545,177 or $0.19 per share for the three months ended December 31, 2012, as compared to net income of $97,431 or $0.04 per share for the three months ended December 31, 2011

The Company recorded sharply reduced revenues and a significant loss for the nine months ended December 31, 2012 due mainly to the limited production for the CRAFT 708 program and delays in securing a production release for the TS-4530A program from the U.S. Army. For the nine months ended December 31, 2012, sales decreased $5,415,542 to $5,922,258, as compared to $11,337,800 for the same period in the prior year. The Company recorded a net loss of $1,643,682 or $0.59 per share for the nine months ended December 31, 2012, as compared to net income of $119,952 or $0.04 per share (fully-diluted) for the nine months ended December 31, 2011.

The production delays for the CRAFT and TS-4530A programs have negatively impacted the Company's cash flow. As such, the Company secured additional short-term financing in July for $600,000, received a progress payment from the government on the CRAFT program for approximately $990,000 (which has been repaid as of December 31, 2012), received an equity purchase for $500,000 from the Company's Chief Executive Officer, a director and an affiliate to the Company, and in November 2012 received approximately $500,000 from an investment group in exchange for approximately 149,254 shares of newly issued common stock.

Update of Major Programs

The Company has resolved the issues on the CRAFT program, and has received U.S. Navy approval to increase CRAFT production levels, and is now in the process of ramping up production. The Company has also started to receive additional orders from the Navy for additional CRAFT units. In February 2013, TIC received a $435,000 order for 16 CRAFT 719 units. TIC also expects additional orders from the Navy for CRAFT 708 units.

In February 2013, the TS-4530A test set completed testing conducted by the Department of Defense (DOD) AIMS Program Office on the TS-4530A Flight Line Test Set. TIC anticipates receipt of the official AIMS certification letter in the near future. With this critical milestone completed, TIC is working with the U.S. Army to secure a near-term production release as well as a progress payment. The TS-4530A program is a critical program with almost $20,000,000 of booked production orders.

The AN/ARM-206 ITATS development program is completed and the Company completed its Production Readiness Review with the U.S. Navy in February 2013. A production release is expected in the next two weeks. The Company currently has orders for 102 units for approximately $5.3 million. It is expected that shipments will commence in the first half of calendar year 2013.

If the Company is unable to obtain production releases within a reasonable period of time and/or our vendors or lenders begin to pursue legal action demanding payments, it would result in a material adverse effect on the Company's operations and its ability to pay its obligations. As such, the Company may need to pursue additional sources of financing and/or additional progress payments.

TIC encourages everyone to read the full results of operations contained in the Form 10-Q filed on February 19, 2013 at 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 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.

 

TEL-INSTRUMENT ELECTRONICS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

  

December 31,
2012

March 31,
2012

(unaudited)
ASSETS
 
Current assets:
Cash and cash equivalents$98,794413,195
Accounts receivable, net652,9161,694,636
Unbilled government receivables1,051,6571,780,381
Inventories, net6,804,0315,023,975
Prepaid expenses and other93,874220,255
Deferred debt expense148,727108,321
Deferred income tax asset 1,099,169 1,288,631
Total current assets9,949,16810,529,394
 
Equipment and leasehold improvements, net607,546706,870
Deferred debt expenses - long-term183,544264,784
Deferred income tax asset - non-current2,057,765948,489
Other assets 56,872 56,872
Total assets 12,854,895 12,506,409
 
LIABILITIES & STOCKHOLDERS' EQUITY
 
Current liabilities:
Current portion long-term debt1,187,534542,382
Capital lease obligations - current portion72,02364,675
Accounts payable4,373,4313,223,291
Deferred revenues - current portion24,42634,767
Accrued payroll, vacation pay and payroll taxes369,455440,116
Accrued expenses 1,174,606 1,702,052
Total current liabilities7,201,4756,007,283
 
Subordinated notes payable-related parties250,000250,000
Capital lease obligations94,607149,582
Deferred revenues1,8534,637
Warrant liability200,634355,290
Long-term debt, net of debt discount 1,333,377 1,490,302
Total liabilities 9,081,946 8,257,094
 
Commitments
 
Stockholders' equity:

Common stock, par value $.10 per share, 3,000,639 and 2,684,215 issued and outstanding as of December 31, 2012 and March 31, 2012, respectively

300,061268,421
Additional paid-in capital7,057,1175,921,441
Accumulated deficit (3,584,229) (1,940,547
Total stockholders' equity 3,772,949 4,249,315
Total liabilities and stockholders' equity$12,854,895$12,506,409
 
 

TEL-INSTRUMENT ELECTRONICS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

  
Three Months EndedNine Months Ended

December 31,
2012

 

December 31,
2011

December 31,
2012

 

December 31,
2011

(Restated)
Net sales$2,350,020$3,673,2355,922,258$11,337,800
Cost of sales 1,896,652 2,227,856 4,582,773 6,547,563
 
Gross margin453,3681,445,3791,339,4854,790,237
 
Operating expenses:
Selling, general and administrative587,146724,6361,927,3802,191,332
Engineering, research and development 481,055 633,136 1,608,459 2,160,107
Total operating expenses 1,068,201 1,357,772 3,535,839 4,351,439
 
Income (loss) from operations(614,833)87,607(2,196,354)438,798
 
Other income (expense):
Amortization of debt discount(37,948)(13,386)(82,349)(40,177)
Amortization of debt expense(68,384)(27,081)(152,175)(81,241)
Financing Costs(21,441)-(47,918)-
Change in fair value of common stock warrants19,710130,433268,76766,738
Gain on sale of capital asset-500-500
Proceeds from life insurance policy---300,029
Interest income420224433418
Interest expense (126,489) (103,155) (349,989) (302,265)
Total other income (expense) (234,132) (12,465) (363,231) (55,998)
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