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


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EAST RUTHERFORD, N.J.–(BUSINESS WIRE)–
Tel-Instrument Electronics Corp. (“Tel” or the “Company”) (OTCQB: TIKK), a leading designer and manufacturer of avionics test and measurement solutions, today reported net income of $1M ($0.28 per common share) on revenues of $3.6 M for the second quarter of fiscal year 2022 ended September 30, 2021.

Highlights include:

  • Revenues for the second quarter increased $274K, an 8% increase from the year-ago quarter.
  • Gross margins improved by 5.2% to 46.2% from the year-ago quarter of 41.0% due to manufacturing efficiencies, tight cost controls, and product mix pricing.
  • Quarterly operating expenses increased 25% to $1.3M . The increase includes profit sharing and sales commission accruals resulting from increased profitability. Additionally, resulting increases in engineering expenses of $128K as the company prepares for the SDR-OMNI hand-held product line final development.
  • Operating income increased to $385K for the current quarter as compared to $342K in the year ago quarter.
  • Net income increased to $1M, or $0.28 per common share and $0.20 per share on a fully diluted basis.
  • Second quarter EBITDA improved to $1.2M, which includes $722K Second draw PPP loan forgiven taken into other income, versus $375K in the year-ago quarter.
  • Cash balances improved to $6.8M, compared to $5.5M at the start of the fiscal year.
  • Net worth improved to $6.6M from $5.2M at the start of the fiscal year.

Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “We are pleased to report improved operating results for the first quarter, on revenues of $4.1 million. This was generated by strong sales from our military business and a modest rebound in our commercial business. The COVID-19 supply chain issues we experienced in the prior fiscal year appear to be easing and we are cautiously optimistic that this trend will continue. The Company continues to do an excellent job at managing operating expenses with a 4% year-over-year reduction. Backlog remains strong at the end of the first quarter at $6.1 million. We expect the international Mode 5 test set business and orders for the F-35 program to remain strong for the next several years. We are also actively working with the U.S. Navy on a “mid-life” update of our CRAFT test sets which could result in significant revenues 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 test capabilities at an upcoming military test event. This could potentially lead to future software upgrades of all of our Mode 5 test sets in the field.

Our goal over the last several years has been to strengthen our balance sheet and set aside cash sufficient to fully discharge the Aeroflex damage award, as may be necessary, in the event that we are unsuccessful with our pending legal appeal. This has now been accomplished with a $6.8 million cash balance at June 30, 2021. The Company plans to file for full forgiveness of the $722k PPP loan in the second quarter which is expected to result in a balance sheet with zero external debt.

To meet the standards for the next generation of military applications, we have upgraded our 4.5-pound SDR/OMNI hand-held test set to include a much faster processor with improved video graphics processing capability. It has been designed to meet Class 1 environmental specifications which will make it an ideal test set for the military market. The goal of this new test set is to recapture market share in the commercial avionics test set business and expand into the much larger secure communications radio test market. We will be demonstrating this unit to customers starting next month and expect to begin taking commercial orders starting this fall.

With respect to the Aeroflex litigation, we continue to believe that we have strong grounds for the award to be vacated or reduced. The appeal process has been delayed due to the COVID-19 pandemic, but we expect a decision within the next 12 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.

TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

2021

 

 

March 31,

2021

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

4,758,819

 

 

$

3,485,275

 

Accounts receivable, net

 

 

1,318,276

 

 

 

1,933,321

 

Inventories, net

 

 

3,051,343

 

 

 

3,437,989

 

Restricted cash to support appeal bond

 

 

2,011,050

 

 

 

2,011,050

 

Prepaid expenses and other current assets

 

 

259,556

 

 

 

263,067

 

Total current assets

 

 

11,399,044

 

 

 

11,130,702

 

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

 

169,388

 

 

 

200,769

 

Operating lease right-of-use assets

 

 

1,867,505

 

 

 

1,922,805

 

Deferred tax asset, net

 

 

2,521,926

 

 

 

2,675,040

 

Other long-term assets

 

 

35,109

 

 

 

35,110

 

Total assets

 

$

15,992,972

 

 

$

15,964,426

 

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Operating lease liabilities – current portion

 

$

194,469

 

 

$

201,883

 

Accounts payable

 

 

384,559

 

 

 

906,149

 

Deferred revenues – current portion

 

 

154,382

 

 

 

150,709

 

Accrued expenses ‐- vacation pay, payroll and payroll withholdings

 

 

542,074

 

 

 

457,232

 

Accrued legal damages

 

 

5,940,943

 

 

 

5,889,023

 

Accrued expenses – other

 

 

331,848

 

 

 

365,975

 

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 revenues – long-term

 

 

329,886

 

 

 

332,428

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

10,273,774

 

 

 

10,746,897

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, 1,000,000 shares authorized, par value $0.10 per share

 

 

 

 

 

 

 

 

Preferred stock, 500,000 shares 8% Cumulative Series A Convertible

Preferred issued and outstanding, par value $0.10 per share

 

 

3,695,998

 

 

 

3,695,998

 

Preferred stock, 166,667 shares 8% Cumulative Series B Convertible

Preferred issued and outstanding, par value $0.10 per share

 

 

1,147,367

 

 

 

1,147,367

 

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

 

Additional paid-in capital

 

 

7,244,788

 

 

 

7,318,620

 

Accumulated deficit

 

 

(6,694,541

)

 

 

(7,270,042

)

Total stockholders’ equity

 

 

5,719,198

 

 

 

5,217,529

 

Total liabilities and stockholders’ equity

 

$

15,992,972

 

 

$

15,964,426

 

TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

 

June 30,

2021

 

 

June 30,

2020

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

4,132,393

 

 

$

2,939,437

 

Cost of sales

 

 

2,117,646

 

 

 

1,434,826

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

2,014,747

 

 

 

1,504,611

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

554,031

 

 

 

661,251

 

Litigation expenses

 

 

1,181

 

 

 

2,696

 

Engineering, research, and development

 

 

693,575

 

 

 

631,953

 

Total operating expenses

 

 

1,248,787

 

 

 

1,295,900

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

765,960

 

 

 

208,711

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

984

 

 

 

2,846

 

Other income

 

 

13,593

 

 

 

13,854

 

Interest expense – judgment

 

 

(51,920

)

 

 

(75,144

)

Interest expense

 

 

 

 

 

(9,780

)

Total other net (expense)

 

 

(37,343

)

 

 

(68,224

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

728,617

 

 

 

140,487

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

153,116

 

 

 

29,507

 

 

 

 

 

 

 

 

 

 

Net income

 

 

575,501

 

 

 

110,980

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

(80,000

)

 

 

(80,000

)

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

495,501

 

 

$

30,980

 

 

 

 

 

 

 

 

 

 

Basic income per common share

 

$

0.15

 

 

$

0.01

 

Diluted income per common share

 

$

0.11

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

3,255,887

 

 

 

3,255,887

 

Diluted

 

 

5,095,665

 

 

 

3,255,887

 

 

Pauline Romeo

Tel-Instrument Electronics Corp.

(201) 933-1600

Source: Tel-Instrument Electronics Corp.

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