New Jersey
|
22-1441806
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
One Branca Road
East Rutherford, NJ 07073
|
(Address of principal executive offices)
|
(201) 933-1600
|
(Registrant’s telephone number, including area code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
ý
|
PART I – FINANCIAL INFORMATION
|
||
Page
|
||
Item 1.
|
3 | |
Item 2.
|
14 | |
Item 3.
|
19 | |
Item 4.
|
19 | |
PART II – OTHER INFORMATION
|
||
Item 1.
|
20 | |
Item 1A.
|
20 | |
Item 2.
|
20 | |
Item 3.
|
20 | |
Item 4.
|
20 | |
Item 5.
|
21 | |
Item 6.
|
21 | |
22 |
December 31,
2014
|
March 31,
2014
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
331,991
|
232,118
|
|||||
Accounts receivable, net
|
614,239
|
2,095,640
|
||||||
Inventories, net
|
4,583,365
|
4,025,391
|
||||||
Prepaid expenses and other current assets
|
463,661
|
263,592
|
||||||
Deferred financing costs
|
5,429
|
108,321
|
||||||
Deferred income tax asset
|
1,089,538
|
1,089,538
|
||||||
Total current assets
|
7,088,223
|
7,814,600
|
||||||
Equipment and leasehold improvements, net
|
310,566
|
450,873
|
||||||
Deferred financing costs – long-term
|
10,149
|
48,142
|
||||||
Deferred income tax asset – non-current
|
2,484,379
|
2,273,068
|
||||||
Other long-term assets
|
32,317
|
47,670
|
||||||
Total assets
|
9,925,634
|
10,634,353
|
||||||
LIABILITIES & STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt, net of debt discount
|
382,169
|
718,848
|
||||||
Capital lease obligations – current portion
|
16,188
|
53,608
|
||||||
Accounts payable and accrued liabilities
|
3,728,861
|
3,332,181
|
||||||
Progress billings
|
256,816
|
775,475
|
||||||
Deferred revenues – current portion
|
81,388
|
37,452
|
||||||
Accrued payroll, vacation pay and payroll taxes
|
527,228
|
444,238
|
||||||
Total current liabilities
|
4,992,650
|
5,361,802
|
||||||
Subordinated notes payable - related parties
|
250,000
|
250,000
|
||||||
Capital lease obligations – long-term
|
8,971
|
21,320
|
||||||
Long-term debt
|
807,859
|
596,526
|
||||||
Deferred revenues – long-term
|
133,650
|
133,650
|
||||||
Warrant liability
|
423,059
|
354,309
|
||||||
Other long-term liabilities
|
45,600
|
56,100
|
||||||
Total liabilities
|
6,661,789
|
6,773,707
|
||||||
Commitments
|
||||||||
Stockholders' equity:
|
||||||||
Common stock, 4,000,000 shares authorized, par value $.10 per share,
3,256,887 and 3,251,387 shares issued and outstanding, respectively
|
325,686
|
325,136
|
||||||
Additional paid-in capital
|
8,042,893
|
7,987,100
|
||||||
Accumulated deficit
|
(5,104,734
|
)
|
(4,451,590
|
)
|
||||
Total stockholders' equity
|
3,263,845
|
3,860,646
|
||||||
Total liabilities and stockholders' equity
|
$
|
9,925,634
|
$
|
10,634,353
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 31,
2014
|
December 31,
2013
|
December 31,
2014
|
December 31,
2013
|
|||||||||||||
Net sales
|
$
|
5,030,097
|
$
|
4,089,029
|
11,746,847
|
$
|
11,323,585
|
|||||||||
Cost of sales
|
3,484,310
|
2,693,342
|
8,211,499
|
7,465,991
|
||||||||||||
Gross margin
|
1,545,787
|
1,395,687
|
3,535,348
|
3,857,594
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
825,261
|
697,919
|
2,364,488
|
2,022,579
|
||||||||||||
Engineering, research and development
|
494,721
|
449,477
|
1,476,343
|
1,378,426
|
||||||||||||
Total operating expenses
|
1,319,982
|
1,147,396
|
3,840,831
|
3,401,005
|
||||||||||||
Income (loss) from operations
|
225,805
|
248,291
|
(305,483
|
)
|
456,589
|
|||||||||||
Other income (expense):
|
||||||||||||||||
Amortization of debt discount
|
(14,373
|
)
|
(27,120
|
)
|
(75,308
|
)
|
(75,707
|
)
|
||||||||
Loss on extinguishment of debt
|
(188,102
|
)
|
-
|
(188,102
|
)
|
(26,600
|
)
|
|||||||||
Amortization of deferred financing costs
|
(13,648
|
)
|
(27,827
|
)
|
(67,808
|
)
|
(81,987
|
)
|
||||||||
Change in fair value of common stock warrants
|
37,330
|
(229,726
|
)
|
(68,750
|
)
|
(272,499
|
)
|
|||||||||
Interest income
|
-
|
129
|
-
|
163
|
||||||||||||
Interest expense
|
(39,137
|
)
|
(50,828
|
)
|
(159,004
|
)
|
(252,295
|
)
|
||||||||
Total other income (expense)
|
(217,930
|
)
|
(335,372
|
)
|
(558,972
|
)
|
(708,925
|
)
|
||||||||
Income (loss) before income taxes
|
7,875
|
(87,081
|
)
|
(864,455
|
)
|
(252,336
|
)
|
|||||||||
Income tax expense (benefit)
|
28,819
|
58,852
|
(211,311
|
)
|
51,843
|
|||||||||||
Net loss
|
$
|
(20,944
|
)
|
$
|
(145,933
|
)
|
$
|
(653,144
|
)
|
$
|
(304,179
|
)
|
||||
Basic loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
$
|
(0.20
|
)
|
$
|
(0.10
|
)
|
||||
Diluted loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
$
|
(0.20
|
)
|
$
|
(0.10
|
)
|
||||
Weighted average shares outstanding:
|
||||||||||||||||
Basic
|
3,255,028
|
3,247,387
|
3,253,045
|
3,189,123
|
||||||||||||
Diluted
|
3,255,028
|
3,247,387
|
3,253,045
|
3,189,123
|
Nine months ended
|
||||||||
December 31,
2014
|
December 31,
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(653,144
|
)
|
$
|
(304,179
|
)
|
||
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
Deferred income taxes
|
(211,311
|
)
|
50,503
|
|||||
Depreciation and amortization
|
134,837
|
153,818
|
||||||
Provision for inventory obsolescence
|
5,000
|
-
|
||||||
Amortization of debt discount
|
75,308
|
75,707
|
||||||
Amortization of deferred financing costs
|
67,808
|
81,987
|
||||||
Loss on extinguishment of debt
|
188,102
|
26,600
|
||||||
Change in fair value of common stock warrant
|
68,750
|
272,499
|
||||||
Non-cash interest associated with conversion of note
|
-
|
21,003
|
||||||
Non-cash stock-based compensation
|
29,733
|
48,519
|
||||||
Changes in assets and liabilities:
|
||||||||
Decrease (increase) in accounts receivable
|
1,481,401
|
(572,034
|
)
|
|||||
(Increase) decrease in inventories, net
|
(548,963
|
)
|
1,731,581
|
|||||
Increase in prepaid expenses & other
|
(184,716
|
)
|
(28,077
|
)
|
||||
Increase (decrease) in accounts payable and other accrued liabilities
|
423,290
|
(2,137,411
|
)
|
|||||
Increase (decrease) in accrued payroll, vacation pay & withholdings
|
82,990
|
(48,090
|
)
|
|||||
(Decrease) increase in deferred revenues
|
43,936
|
107,000
|
||||||
(Decrease) increase in progress billings
|
(518,659
|
)
|
795,050
|
|||||
Decrease in other long-term liabilities
|
(10,500
|
)
|
-
|
|||||
Net cash provided by operating activities
|
473,862
|
274,476
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of equipment
|
(8,541
|
)
|
(11,595
|
)
|
||||
Net cash used in investing activities
|
(8,541
|
)
|
(11,595
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from note payable – related party
|
-
|
100,000
|
||||||
Proceeds from the exercise of stock options
|
-
|
23,370
|
||||||
Proceeds from term loan
|
1,200,000
|
-
|
||||||
Deferred financing costs
|
(16,287
|
)
|
-
|
|||||
Repayment of long-term debt
|
(1,499,392
|
)
|
(424,245
|
)
|
||||
Repayment of capitalized lease obligations
|
(49,769
|
)
|
(55,956
|
)
|
||||
Net cash used in financing activities
|
(365,448
|
)
|
(356,831
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
99,873
|
(93,950
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
232,118
|
310,297
|
||||||
Cash and cash equivalents at end of period
|
$
|
331,991
|
$
|
216,347
|
||||
Supplemental cash flow information:
|
||||||||
Taxes paid
|
$
|
20,500
|
$
|
-
|
||||
Interest paid
|
$
|
141,180
|
$
|
276,546
|
||||
Supplemental non-cash information:
|
||||||||
Converted accounts payable to equity
|
26,610
|
-
|
||||||
Converted debt to equity
|
$
|
-
|
$
|
700,000
|
||||
Converted accrued interest to equity
|
$
|
-
|
$
|
37,400
|
December 31,
2014
|
March 31,
2014
|
|||||||
Government
|
$
|
519,018
|
$
|
1,982,215
|
||||
Commercial
|
122,503
|
140,707
|
||||||
Less: Allowance for doubtful accounts
|
(27,282
|
)
|
(27,282
|
)
|
||||
$
|
614,239
|
$
|
2,095,640
|
December 31,
2014
|
March 31,
2014
|
|||||||
Purchased parts
|
$
|
3,360,506
|
$
|
3,085,070
|
||||
Work-in-process
|
1,387,572
|
1,134,714
|
||||||
Finished goods
|
45,287
|
10,607
|
||||||
Less: Inventory reserve
|
(210,000
|
)
|
(205,000
|
)
|
||||
$
|
4,583,365
|
$
|
4,025,391
|
Three Months Ended
|
Three Months Ended
|
|||||||
December 31,
2014
|
December 31,
2013
|
|||||||
Basic net loss per share computation:
|
||||||||
Net loss
|
$
|
(20,944
|
)
|
$
|
(145,933
|
)
|
||
Weighted-average common shares outstanding
|
3,255,028
|
3,247,387
|
||||||
Basic net loss per share
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
||
Diluted net loss per share computation:
|
||||||||
Net loss
|
$
|
(20,944
|
)
|
$
|
(145,933
|
)
|
||
Weighted-average common shares outstanding
|
3,255,028
|
3,247,387
|
||||||
Incremental shares attributable to the assumed exercise of outstanding stock options
|
-
|
-
|
||||||
Total adjusted weighted-average shares
|
3,255,028
|
3,247,387
|
||||||
Diluted net loss per share
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
Nine Months Ended
|
Nine Months Ended
|
|||||||
December 31,
2014
|
December 31,
2013
|
|||||||
Basic net loss per share computation:
|
||||||||
Net loss
|
$
|
(653,144
|
)
|
$
|
(304,179
|
)
|
||
Weighted-average common shares outstanding
|
3,253,045
|
3,189,123
|
||||||
Basic net loss per share
|
$
|
(0.20
|
)
|
$
|
(0.10
|
)
|
||
Diluted net loss per share computation:
|
||||||||
Net loss
|
$
|
(653,144
|
)
|
$
|
(304,179
|
)
|
||
Weighted-average common shares outstanding
|
3,253,045
|
3,189,123
|
||||||
Incremental shares attributable to the assumed exercise of outstanding stock options
|
-
|
-
|
||||||
Total adjusted weighted-average shares
|
3,253,045
|
3,189,123
|
||||||
Diluted net loss per share
|
$
|
(0.20
|
)
|
$
|
(0.10
|
)
|
Three Months Ended
December 31, 2014
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
$
|
4,455,399
|
$
|
574,698
|
$
|
5,030,097
|
-
|
$
|
5,030,097
|
|||||||||||
Cost of sales
|
3,015,359
|
468,951
|
3,484,310
|
-
|
3,484,310
|
|||||||||||||||
Gross margin
|
1,440,040
|
105,747
|
1,545,787
|
-
|
1,545,787
|
|||||||||||||||
Engineering, research, and development
|
494,721
|
-
|
494,721
|
|||||||||||||||||
Selling, general and administrative
|
323,862
|
501,399
|
825,261
|
|||||||||||||||||
Amortization of debt discount
|
-
|
14,373
|
14,373
|
|||||||||||||||||
Amortization of deferred financing costs
|
-
|
13,648
|
13,648
|
|||||||||||||||||
Loss on extinguishment of debt
|
-
|
188,102
|
188,102
|
|||||||||||||||||
Change in fair value of common stock warrants
|
-
|
(37,330
|
)
|
(37,330
|
)
|
|||||||||||||||
Interest expense, net
|
-
|
39,137
|
39,137
|
|||||||||||||||||
Total expenses
|
818,583
|
719,329
|
1,537,912
|
|||||||||||||||||
Income (loss) before income taxes
|
$
|
727,204
|
$
|
(719,329
|
)
|
$
|
7,875
|
Three Months Ended
December 31, 2013
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
$
|
3,797,272
|
291,757
|
4,089,029
|
-
|
4,089,029
|
||||||||||||||
Cost of sales
|
2,415,427
|
277,915
|
2,693,342
|
-
|
2,693,342
|
|||||||||||||||
Gross margin
|
1,381,845
|
13,842
|
1,395,687
|
-
|
1,395,687
|
|||||||||||||||
Engineering, research, and development
|
449,477
|
449,477
|
||||||||||||||||||
Selling, general, and administrative
|
375,255
|
322,664
|
697,919
|
|||||||||||||||||
Amortization of debt discount
|
27,120
|
27,120
|
||||||||||||||||||
Amortization of deferred financing costs
|
27,827
|
27,827
|
||||||||||||||||||
Change in fair value of common stock warrants
|
229,726
|
229,726
|
||||||||||||||||||
Interest (income) expense, net
|
50,699
|
50,699
|
||||||||||||||||||
Total expenses
|
824,732
|
658,036
|
1,482,768
|
|||||||||||||||||
Income (loss) before income taxes
|
$
|
570,955
|
$
|
(658,036)
|
$
|
(87,081
|
)
|
Nine Months Ended
December 31, 2014
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
$
|
10,002,850
|
$
|
1,743,997
|
$
|
11,746,847
|
-
|
$
|
11,746,847
|
|||||||||||
Cost of sales
|
6,800,031
|
1,411,468
|
8,211,499
|
-
|
8,211,499
|
|||||||||||||||
Gross margin
|
3,202,819
|
332,529
|
3,535,348
|
-
|
3,535,348
|
|||||||||||||||
Engineering, research, and development
|
1,476,343
|
-
|
1,476,343
|
|||||||||||||||||
Selling, general and administrative
|
899,579
|
1,464,909
|
2,364,488
|
|||||||||||||||||
Amortization of debt discount
|
-
|
75,308
|
75,308
|
|||||||||||||||||
Amortization of deferred financing costs
|
-
|
67,808
|
67,808
|
|||||||||||||||||
Loss on extinguishment of debt
|
188,102
|
188,102
|
||||||||||||||||||
Change in fair value of common stock warrants
|
-
|
68,750
|
68,750
|
|||||||||||||||||
Interest expense, net
|
-
|
159,004
|
159,004
|
|||||||||||||||||
Total expenses
|
2,375,922
|
2,023,881
|
4,399,803
|
|||||||||||||||||
Income (loss) before income taxes
|
$
|
1,159,426
|
$
|
(2,023,881
|
)
|
$
|
(864,455
|
)
|
Nine Months Ended
December 31, 2013
|
Avionics
Government
|
Avionics
Commercial
|
Avionics
Total
|
Corporate
Items
|
Total
|
|||||||||||||||
Net sales
|
10,054,033
|
1,269,552
|
11,323,585
|
-
|
11,323,585
|
|||||||||||||||
Cost of Sales
|
6,497,178
|
968,813
|
7,465,991
|
-
|
7,465,991
|
|||||||||||||||
Gross Margin
|
3,556,855
|
300,739
|
3,857,594
|
-
|
3,857,594
|
|||||||||||||||
Engineering, research, and development
|
1,378,426
|
1,378,426
|
||||||||||||||||||
Selling, general and administrative
|
933,033
|
1,089,546
|
2,022,579
|
|||||||||||||||||
Amortization of debt discount
|
75,707
|
75,707
|
||||||||||||||||||
Amortization of deferred financing costs
|
81,987
|
81,987
|
||||||||||||||||||
Loss on extinguishment of debt
|
26,600
|
26,600
|
||||||||||||||||||
Change in fair value of common stock warrants
|
272,499
|
272,499
|
||||||||||||||||||
Interest expense, net
|
252,132
|
252,132
|
||||||||||||||||||
Total expenses
|
2,311,459
|
1,798,471
|
4,109,930
|
|||||||||||||||||
Income (loss) before income taxes
|
$ |
1,546,135
|
$ |
(1,798,471
|
)
|
$ |
(252,336
|
)
|
·
|
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
|
·
|
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
|
|
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
|
·
|
Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
|
·
|
Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method.
|
·
|
Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
|
December 31, 2014
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Total Assets
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Warrant liability
|
-
|
-
|
423,059
|
423,059
|
||||||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
423,059
|
$
|
423,059
|
March 31, 2014
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Total Assets
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Warrant liability
|
-
|
-
|
354,309
|
354,309
|
||||||||||||
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
354,309
|
$
|
354,309
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Expected
Volatility
|
Remaining
Life in Years
|
Risk Free
Interest Rate
|
Warrant
Liability
|
||||||||||||||||||||||||||
09-10-2010
|
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
6.70
|
28.51
|
%
|
9
|
2.81
|
%
|
$
|
267,848
|
|||||||||||||||||||||
09-10-2010
|
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
6.70
|
28.51
|
%
|
5
|
1.59
|
%
|
$
|
13,808
|
|||||||||||||||||||||
07-26-2012
|
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
3.90
|
42.04
|
%
|
7
|
0.94
|
%
|
$
|
66,193
|
|||||||||||||||||||||
07-26-2012
|
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
3.90
|
42.04
|
%
|
7
|
0.94
|
%
|
$
|
26,477
|
|||||||||||||||||||||
11-20-2012
|
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
3.50
|
42.45
|
%
|
6.83
|
1.09
|
%
|
$
|
21,441
|
|||||||||||||||||||||
02-14-2013
|
09-10-2019
|
20,000
|
$
|
3.58
|
$
|
3.80
|
41.25
|
%
|
6.58
|
1.43
|
%
|
$
|
23,714
|
|||||||||||||||||||||
07-12-2013
|
09-10-2019
|
20,000
|
$
|
3.33
|
$
|
3.32
|
40.26
|
%
|
6.17
|
2.00
|
%
|
$
|
19,523
|
|||||||||||||||||||||
08-12-2013
|
09-10-2019
|
20,000
|
$
|
3.69
|
$
|
3.69
|
40.20
|
%
|
6.08
|
2.01
|
%
|
$
|
21,587
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Expected
Volatility
|
Remaining
Life in Years
|
Risk Free
Interest Rate
|
Warrant
Liability
|
||||||||||||||||||||||||||
09-10-2010
|
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
123,564
|
|||||||||||||||||||||
09-10-2010
|
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
4.42
|
43.35
|
%
|
1.45
|
0.44
|
%
|
$
|
2,498
|
|||||||||||||||||||||
07-26-2012
|
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
77,626
|
|||||||||||||||||||||
07-26-2012
|
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
31,050
|
|||||||||||||||||||||
11-20-2012
|
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
29,892
|
|||||||||||||||||||||
02-14-2013
|
09-10-2019
|
20,000
|
$
|
3.58
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
29,310
|
|||||||||||||||||||||
07-12-2013
|
09-10-2019
|
20,000
|
$
|
3.33
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
31,163
|
|||||||||||||||||||||
08-12-2013
|
09-10-2019
|
20,000
|
$
|
3.69
|
$
|
4.42
|
43.35
|
%
|
5.45
|
1.73
|
%
|
$
|
29,206
|
Date of
Warrant
|
Expiration
Date
|
Number of
Warrants
|
Exercise
Price
|
Fair Market Value
Per Share
|
Put Option Value
|
Market Price Option
|
Remaining
Life in Years
|
Warrant
Liability
|
||||||||||||||||||||||||||
09-10-2010
|
09-10-2019
|
136,920
|
$
|
6.70
|
$
|
5.34
|
$
|
138,289
|
NA
|
4.70
|
$
|
138,289
|
||||||||||||||||||||||
09-10-2010
|
09-10-2015
|
10,416
|
$
|
6.70
|
$
|
5.34
|
|
NA
|
NA
|
0.70
|
$
|
3,270*
|
|
|||||||||||||||||||||
07-26-2012
|
09-10-2019
|
50,000
|
$
|
3.35
|
$
|
5.34
|
$
|
20,200
|
39,800
|
4.70
|
$
|
39,800
|
||||||||||||||||||||||
07-26-2012
|
09-10-2019
|
20,000
|
$
|
3.35
|
$
|
5.34
|
$
|
50,500
|
99,500
|
4.70
|
$
|
99,500
|
||||||||||||||||||||||
11-20-2012
|
09-10-2019
|
20,000
|
$
|
3.56
|
$
|
5.34
|
$
|
20,200
|
35,600
|
4.70
|
$
|
35,600
|
||||||||||||||||||||||
02-14-2013
|
09-10-2019
|
20,000
|
$
|
3.58
|
$
|
5.34
|
$
|
20,200
|
33,400
|
4.70
|
$
|
33,400
|
||||||||||||||||||||||
07-12-2013
|
09-10-2019
|
20,000
|
$
|
3.33
|
$
|
5.34
|
$
|
20,200
|
40,200
|
4.70
|
$
|
40,200
|
||||||||||||||||||||||
08-12-2013
|
09-10-2019
|
20,000
|
$
|
3.69
|
$
|
5.34
|
$
|
20,200
|
33,000
|
4.70
|
$
|
33,000
|
·
|
CRAFT 708 and 719
: The Company currently has approximately $10.3 million of open orders from the U.S. Navy on the CRAFT program (multi-purpose test set including Mode 5 test capability). The CRAFT test set replaces seven obsolete U.S. Navy test sets that collectively cost approximately $300,000, making the CRAFT test set an excellent value to the government. This unit has been well received by the end users. The Company has 180 CRAFT 708 units on order from the original contract with a remaining value of about $4 million. In late 2013, the U.S. Navy issued a follow-on $9.5 million Indefinite Delivery Indefinite Quantity (“IDIQ”) contract. At this time, the U.S. Navy has issued purchase orders for a total of 247 CRAFT 708 and CRAFT 719 units on this follow-on contract with a value of about $7.5 million. These new orders are at a higher price as compared to the initial U.S. Navy contract, and we believe that it should improve our gross margin as these units begin to be shipped in volume. Management also believes that the CRAFT program also has significant potential for sales into the balance of the U.S. Military, NATO, and internationally, as the new Mode 5 IFF systems are installed in overseas aircraft platforms. The Joint Strike Fighter (“JSF”) program by itself is expected to generate significant CRAFT orders as this program continues to ramp up limited rate production.
|
·
|
TS-4530A
: The booked backlog on the TS-4530A program (Mode 5 IFF test set) is approximately $17 million. This is comprised of 688 complete units (“SETS”) and 1,800 upgrade assemblies (“KITS”). The U.S. Army ordered about 50% of the maximum quantity of SETS, so any additional U.S. Army KIT or SET orders would be at higher commercial prices. The U.S. Army has requested that TIC increase the production of KITS to 150 units per month starting in 2015 to ensure that they do not lose any funding for several KIT delivery orders which expire late in calendar year 2015. The U.S. Army has indicated that it expects to authorize full rate production for the SETS in the April timeframe. TIC continues to actively market the TS-4530A product both domestically and overseas, and has received a limited amount of orders outside the U.S. Army contract.
|
·
|
ITATS
: The booked backlog on the ITATS (automated TACAN bench test set) program is 85 units at a value of around $4.5 million. The Company began ITATS production in the second quarter and continues to ramp up production and believes full rate production of five units per month will begin in December 2014. We also continue to market this unit to other domestic and international customers, and have begun to receive higher priced commercial orders for this state-of-the-art TACAN bench test set.
|
·
|
Legacy Products:
The Company continues to ship other legacy products including a redesign of our DME-P bench test set which is sold exclusively in Europe. TIC has also received a
$600,000 order from the U.S. Army for 35 T-47NH units which is part of a 235 unit IDIQ order received several years ago. The U.S. Army T-47NH order should be shipped in the fiscal quarter ending March 31, 2015
.
|
Exhibit No.
|
Description
|
|
10.1
|
||
31.1
|
||
31.2
|
||
32.1
|
||
32.2
|
||
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
Taxonomy Extension Schema Document*
|
|
101.CAL
|
Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
Taxonomy Extension Label Linkbase Document*
|
|
101.PRE
|
Taxonomy Extension Presentation Linkbase Document*
|
TEL-INSTRUMENT ELECTRONICS CORP.
|
|||||
|
|||||
Date: February 17, 2015
|
By:
|
/s/ Jeffrey C. O’Hara
|
|||
Name: Jeffrey C. O’Hara
|
|||||
Title: Chief Executive Officer
Principal Executive Officer
|
Date: February 17, 2015
|
By:
|
/s/ Joseph P. Macaluso
|
|||
Name: Joseph P. Macaluso
|
|||||
Title: Principal Financial Officer
Principal Accounting Officer
|
Address where notices to Tel-Instrument Electronics Corp, are to be sent:
East Rutherford, NJ 07073
|
Address where notices to the Bank are to be sent:
Doc Retention -GCF
CT2-515-BB-03
70 Batterson Park Road
Farmington, CT 06032
|
1.
|
I have reviewed this Form 10-Q of Tel-Instrument Electronics Corp;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
|
|
4.
|
Along with the Principal Financial Officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 17, 2015
|
By:
|
/s/ Jeffrey C. O’Hara
|
|
Jeffrey C. O’Hara
|
|||
Principal Executive Officer
Tel-Instrument Electronics Corp
|
1.
|
I have reviewed this Form 10-Q of Tel-Instrument Electronics Corp;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
|
|
4.
|
Along with the Principal Executive Officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 17, 2015
|
By:
|
/s/ Joseph P. Macaluso
|
|
Joseph P. Macaluso
|
|||
Principal Financial Officer
Tel-Instrument Electronics Corp
|
(1)
|
Such Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in such Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 17, 2015
|
By:
|
/s/ Jeffrey C. O’Hara
|
|
Jeffrey C. O’Hara
|
|||
Principal Executive Officer
Tel-Instrument Electronics Corp
|
|||
(1)
|
Such Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in such Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 17, 2015
|
By:
|
/s/ Joseph P. Macaluso
|
|
Joseph P. Macaluso
|
|||
Principal Financial Officer
Tel-Instrument Electronics Corp
|