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Tel-Instrument Electronics Corp. Reports Net Income of $1M  for Second Quarter 2022

EAST RUTHERFORD, NJ – (BUSINESS WIRE) – Tel-Instrument Electronics Corp. (Tel or Company) (OTCQB: TIKK), a leading designer and manufacturer of avionics testing and measurement solutions, today reported net income of $ 1 million ($ 0.28 per ordinary share) with revenue of $ 3 million. $ 6 million for the second quarter of fiscal 2022, which ended Sept. 30, 2021.

Highlights include:

  • Revenue for the second quarter increased by 274 thousand dollars, which is an 8% increase over the previous quarter.

  • Gross margins improved by 5.2% to 46.2% from 41.0% in the previous quarter due to production efficiency, strict cost control and product mix pricing.

  • Quarterly operating expenses increased 25 percent to $ 1.3 million. The increase includes profit sharing and the accumulation of sales commissions as a result of increased profitability. In addition, as a result, engineering costs increase by $ 128,000 as the company prepares for the final development of the SDR-OMNI manual product line.

  • Operating income increased to $ 385K in the current quarter from $ 342K in the previous quarter.

  • Net income rose to $ 1 million, or $ 0.28 per ordinary share, and $ 0.20 per share on a fully diluted basis.

  • EBITDA for the second quarter improved to $ 1.2 million, which includes a $ 722,000 simplified second-hand PPP loan taken in other income, compared to $ 375,000 in the quarter a year ago.

  • Cash balances improved to $ 6.8 million from $ 5.5 million at the beginning of the fiscal year.

  • Net worth improved to $ 6.6 million from $ 5.2 million at the beginning of the fiscal year.

Mr Jeffrey O’Hara, President and CEO of Tel-Instrument, said: “We are pleased to report improved first-quarter operating results with revenue of $ 4.1 million. This was generated by strong sales from our military business and a modest recovery in our trading business. The problems with the COVID-19 supply chain that we experienced in the previous fiscal year seem to be diminishing, and we are cautiously optimistic that this trend will continue. The company continues to do an excellent job in managing operating costs with a reduction of 4% compared to the previous year. The lag remained strong at the end of the first quarter at $ 6.1 million. We expect international test kits for Mode 5 and orders for the F-35 program to remain strong over the next few years. We are also actively working with the US Navy to update our CRAFT test kits, which could generate significant revenue over the next five to 10 years. We also continue to invest in our market-leading Mode 5 products and plan to demonstrate new Mode 5 Level 2B testing capabilities at an upcoming military test event. This could potentially lead to future software upgrades to all of our Mode 5 test kits in the field.

Our goal over the last few years has been to strengthen our balance sheet and set aside enough money to fully enforce Aeroflex’s damages judgment, if necessary, should we fail with our pending lawsuit. This has already been achieved with a $ 6.8 million cash balance as of June 30, 2021. The company plans to apply for a full remission of the $ 722,000 PPP loan in the second quarter, which is expected to lead to a zero external debt balance.

To meet the standards for next-generation military applications, we’ve upgraded our 4.5-pound SDR / OMNI handheld test kit to include a much faster processor with improved video graphics processing capability. It is designed to meet Class 1 environmental specifications, making it an ideal test kit for the military market. The goal of this new set of tests is to regain market share in the avionics test kit business and expand into the much larger market for secure test radio tests. We will demonstrate this device to customers from next month and expect to start accepting commercial orders this fall.

With regard to the litigation with Aeroflex, we continue to believe that we have good reason to have the award canceled or reduced. The appeal process has been delayed due to the COVID-19 pandemic, but we expect a decision within the next 12 months.

For Tel-Instrument Electronics Corp.

Tel-Instrument is a leading designer and manufacturer of avionics testing and measurement solutions for global commercial air transport, general aviation and government / military aerospace and defense markets. Tel-Instrument provides tools for testing, measuring, calibrating and repairing a wide range of on-board navigation and communication equipment. For more information, please visit our website at www.telinstrument.com.

This press release includes statements that are not historical in nature and can be characterized as “statements for the future”, including those related to future financial and operating results, benefits and synergies of combined companies, statements about the Company’s prospects, price trends , and industry strengths, completion dates of capital projects, expected sales growth, cost reduction strategies and their results, the Company’s long-term goals and other statements of expectations, beliefs, future plans and strategies, expected events or trends, and the like. expressions on issues that are not historical facts. All forecasts of future results contain a measure of uncertainty and, accordingly, actual results may differ significantly. Among the factors that could make a difference are: changes in the general economy; changes in the demand for the Company’s products or in the price and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee attitudes; government regulations; litigation, including its inherent uncertainty; difficulties in the operation of the plant and materials; transport, environmental issues; and other unforeseen circumstances. A number of these factors have been discussed in the company’s previous documents to the US Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements as a result of events occurring after the date of this press release. The secure port for forward-looking statements contained in the Securities Litigation Reform Act 1995 (the “Act”) protects companies from liability for their forward-looking statements if they meet the requirements of the Act.

TEL-INSTRUMENT ELECTRONICS AD.

MULTIPLE CONSOLIDATED BALANCE

June 30,

2021

March 31,

2021

(unaudited)

ASSETS

Current assets:

Cash

$

4,758,819

$

3,485,275

Receivables, net

1,318,276

1,933,321

Inventories, net

3,051,343

3,437,989 th most common

Limited cash in support of a guarantee of appeal

2,011,050

2,011,050

Prepaid expenses and other current assets

259,556 th most common

263,067 th most common

Total current assets

11,399,044

11,130,702

Improvements to equipment and leasing properties, net

169,388

200 769

Assets entitled to use operating leases

1,867,505 th most common

1,922,805 th most common

Deferred tax asset, net

2,521,926

2,675,040 th most common

Other fixed assets

35,109 th most common

35,110 th most common

The total amount of assets

$

15,992,972

$

15,964,426

LIABILITIES AND SHARE CAPITAL

Current liabilities:

Operating lease liabilities – current part

$

194,469 th most common

$

201,883 th most common

Obligations

384,559

906,149

Deferred income – current part

154,382 th most common

150 709

Accrued expenses — pay for leave, payroll and withholding of salaries

542,074 th most common

457,232

Accumulated legal damages

5,940,943

5,889,023

Accrued expenses – other

331,848

365,975 th most common

Total current liabilities

7,548,275

7,970,971

Operating lease liabilities – long-term

1,673,036

1,720,921

Long-term debt – PPP

722,577

722,577

Deferred income – long-term

329,886

332,428

Total liabilities

10,273,774

10,746,897

Commitments and contingencies

Equity:

Preference shares, permitted 1,000,000 shares, par value $ 0.10 per share

Preference shares, 500,000 shares 8% Cumulative Series A Convertible

Preferred issued and outstanding, par value $ 0.10 per share

3,695,998

3,695,998

Preference shares, 166,667 shares 8% Cumulative Series B Convertible

Preferred issued and outstanding, par value $ 0.10 per share

1,147,367

1,147,367

Ordinary shares, permitted 7,000,000 shares, par value $ 0.10 per share,

3 255 887 issued shares and respectively in circulation

325,586

325,586

Additional paid-in capital

7,244,788

7,318,620

Accumulated deficit

(6,694,541

)

(7,270,042

)

Total equity

5,719,198

5,217,529

Total liabilities and equity

$

15,992,972

$

15,964,426

TEL-INSTRUMENT ELECTRONICS AD.

MULTIPLE CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

Three months are over

June 30,

2021

June 30,

2020

Net sales

$

4,132,393

$

2,939,437

Cost of sales

2,117,646 th most common

1,434,826

Gross profit

2,014,747

1,504,611 th most common

Operating expenses:

Sale, general and administrative

554,031

661,251

Legal expenses

1,181 th most common

2,696 th most common

Engineering, research and development

693,575

631,953

Total operating expenses

1,248,787

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