Tel-Instrument Electronics Reports Third Quarter 2021 Results and Receipt of $2.3 Million of Test Set Orders

February 16, 2021 8:30 AM EST

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EAST RUTHERFORD, N.J.--(BUSINESS WIRE)-- Tel-Instrument Electronics Corp. (“Tel”, “TIC” or the “Company”) (OTCQB: TIKK), a leading designer and manufacturer of avionics test and measurement solutions, today reported net income of $499,633 on revenues of $2,672,742 for the third quarter of fiscal year 2021 ending December 31, 2020. These earnings were favorably impacted by a one-time PPP loan forgiveness. The Company also announced the receipt of two recent domestic orders totaling $2.3 million.

Highlights include:

  • Revenues decreased 44% from the year-ago quarter, with sharp decreases in both commercial and military sales. The decline in military sales was due in large part to late vendor deliveries caused by the COVID-19 pandemic.
  • Gross margins were 38% as compared to 47% from the year-ago quarter mainly as a result of lower volumes.
  • SGA expenses increased by $131k (22%) due to one-time professional fees that were incurred in the quarter.
  • Engineering expenses decreased by $88k as a result of time spent on a funded engineering program.
  • The Company reported an operating loss of $224k compared to a $1 million operating profit in the year ago period.
  • Net income of $499,633 which was favorably impacted by PPP loan forgiveness in the amount of $722,577.
  • Basic earnings per share of $0.13 as compared to $0.25 for the same quarter last year.
  • Backlog increased to $5.7 million at December 31, 2020 compared to $4.2 million in the year-ago quarter.
  • Cash balances of $4.96 million, including restricted cash, with all external bank debt repaid in the quarter.
  • Stockholders’ equity increased to $5.5 million.

Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “Sales were negatively impacted in the third quarter due largely to the impact of COVID-19 on our supply chain and labor force. The pandemic has resulted in a significant reduction in our commercial test set bookings and we experienced numerous delays in the receipt of needed parts to fulfill open military orders. With the resurgence of the COVID-19 virus across the country, managing our supply chain and manufacturing operations will remain a challenge for the remainder of this fiscal year. Having said that, the material supply situation appears to be improving and the Company is looking at a strong rebound in sales and profitability starting in the 2022 fiscal year which begins April 1, 2021.

We continue to seek new opportunities, and our core Mode 5 business remains strong. We recently received two legacy test set orders totaling $2.3 million that will ship in the first quarter of the 2022 fiscal year. We are also in discussions with a key customer on product upgrades that could represent strong sales and profitability starting in the 2023 fiscal year.

Our balance sheet and financial position continues to strengthen, and we are well positioned to discharge the Aeroflex damage award in the event that we are unsuccessful with our pending legal appeal. The Company received a $722,577 government loan from the Payroll Protection Program in May 2020 and this was fully forgiven in December 2020. The loan has allowed us to continue development work on the SDR/OMNI test set despite the poor near-term outlook for commercial aviation market.

Given the sharp decline in the commercial market, the Company is increasing its engineering focus on military communication applications. We have upgraded the design of our 4.5-pound SDR/OMNI hand-held test set to include a much faster processor with improved video graphics processing capability. This change will allow us the technological capability to compete in much larger markets where we have previously not had any presence. Our goal is to introduce a military communications test set in the first half of 2021 while still working to introduce a commercial avionics test set later this year.”

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

 

 

 

December 31,
2020

 

 

March 31,
2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

2,941,731

 

 

$

3,126,195

 

Accounts receivable, net

 

 

1,881,122

 

 

 

1,411,644

 

Inventories, net

 

 

2,930,864

 

 

 

3,092,679

 

Restricted cash to support appeal bond

 

 

2,011,050

 

 

 

2,008,544

 

Prepaid expenses and other current assets

 

 

239,447

 

 

 

382,428

 

Total current assets

 

 

10,004,214

 

 

 

10,021,490

 

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

 

230,308

 

 

 

263,750

 

Operating lease right-of-use assets

 

 

146,907

 

 

 

306,740

 

Deferred tax asset, net

 

 

2,648,897

 

 

 

2,712,780

 

Other long-term assets

 

 

35,109

 

 

 

35,109

 

Total assets

 

$

13,065,435

 

 

$

13,339,869

 

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Line of credit

 

$

-

 

 

$

680,000

 

Operating lease liabilities – current portion

 

 

146,907

 

 

 

214,793

 

Accounts payable and accrued liabilities

 

 

681,118

 

 

 

1,035,023

 

Deferred revenues – current portion

 

 

116,399

 

 

 

145,168

 

Accrued legal damages

 

 

5,837,673

 

 

 

5,657,549

 

Finance lease obligations – current portion

 

 

-

 

 

 

49

 

Accrued payroll, vacation pay and payroll taxes

 

 

457,749

 

 

 

512,732

 

Total current liabilities

 

 

7,239,846

 

 

 

8,245,314

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities – long-term

 

 

-

 

 

 

91,947

 

Deferred revenues – long-term

 

 

300,923

 

 

 

327,132

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

7,540,769

 

 

 

8,664,393

 

 

 

 

 

 

 

 

 

 

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

 

 

 

3,515,998

 

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

issued and outstanding, par value $0.10 per share

 

 

1,147,367

 

 

 

1,087,367

 

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

 

 

7,392,453

 

 

 

7,616,624

 

Accumulated deficit

 

 

(7,036,738

)

 

 

(7,870,099

)

Total stockholders’ equity

 

 

5,524,666

 

 

 

4,675,476

 

Total liabilities and stockholders’ equity

 

$

13,065,435

 

 

$

13,339,869

 

TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

December 31,
2020

 

 

December 31,
2019

 

 

December 31,
2020

 

 

December 31,
2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,672,742

 

 

$

4,733,135

 

 

$

8,948,575

 

 

$

11,951,765

 

Cost of sales

 

 

1,661,653

 

 

 

2,520,653

 

 

 

5,066,052

 

 

 

6,284,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

1,011,089

 

 

 

2,212,482

 

 

 

3,882,523

 

 

 

5,667,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

740,696

 

 

 

609,394

 

 

 

1,866,756

 

 

 

1,847,028

 

Litigation expenses

 

 

1,998

 

 

 

16,830

 

 

 

10,208

 

 

 

118,890

 

Engineering, research and development

 

 

492,432

 

 

 

580,517

 

 

 

1,678,940

 

 

 

1,631,359

 

Total operating expenses

 

 

1,235,126

 

 

 

1,206,741

 

 

 

3,555,904

 

 

 

3,597,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(224,037

)

 

 

1,005,741

 

 

 

326,619

 

 

 

2,070,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,591

 

 

 

2,065

 

 

 

6,316

 

 

 

4,083

 

Other income

 

 

758

 

 

 

-

 

 

 

14,612

 

 

 

-

 

Gain on forgiveness of PPP loan

 

 

722,577

 

 

 

-

 

 

 

722,577

 

 

 

-

 

Change in fair value of common stock warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(73,000

)

Interest expense - judgment

 

 

(52,490

)

 

 

(84,715

)

 

 

(180,124

)

 

 

(255,821

)

Interest expense

 

 

(8,030

)

 

 

(15,514

)

 

 

(27,190

)

 

 

(44,117

)

Total other income (expense)

 

 

664,406

 

 

 

(98,164

)

 

 

536,191

 

 

 

(368,855

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

440,369

 

 

 

907,577

 

 

 

862,810

 

 

 

1,701,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

 

(59,264

)

 

 

-

 

 

 

29,449

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

499,633

 

 

 

907,577

 

 

 

833,361

 

 

 

1,701,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

 

(80,000

)

 

 

(80,000

)

 

 

(240,000

)

 

 

(240,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

419,633

 

 

$

827,577

 

 

$

593,361

 

 

$

1,461,587

 

 

Basic income per common share

 

$

0.13

 

 

$

0.25

 

 

$

0.18

 

 

$

0.45

 

Diluted income per common share

 

$

0.10

 

 

$

0.18

 

 

$

0.16

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,255,887

 

 

 

3,255,887

 

 

 

3,255,887

 

 

 

3,255,887

 

Diluted

 

 

5,095,665

 

 

 

4,975,665

 

 

 

5,065,665

 

 

 

4,824,652

 

 

Pauline Romeo
Tel-Instrument Electronics Corp.
(201) 933-1600 (Ext 309)

Source: Tel-Instrument Electronics Corp.



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