UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 29, 2013
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number: 001-34816
TECHNICAL COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts | 04-2295040 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
100 Domino Drive, Concord, MA | 01742-2892 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (978) 287-5100
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock as of the latest practicable date. 1,838,716 shares of Common Stock, $0.10 par value, outstanding as of August 9, 2013.
Page | ||||||
PART I |
Financial Information |
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Item 1. |
Financial Statements: |
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1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||||
Item 3. |
21 | |||||
Item 4. |
21 | |||||
PART II |
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Item 1. |
22 | |||||
Item 1A. |
22 | |||||
Item 2. |
22 | |||||
Item 3. |
22 | |||||
Item 4. |
22 | |||||
Item 5. |
22 | |||||
Item 6. |
22 | |||||
23 |
2
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
June 29, 2013 | September 29, 2012 | |||||||
Assets |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 991,259 | $ | 2,056,311 | ||||
Marketable securities |
4,440,748 | 4,668,864 | ||||||
Accounts receivable - trade, less allowance of $25,000 at June 29, 2013 and September 29, 2012 |
467,949 | 1,380,472 | ||||||
Inventories |
2,931,124 | 2,633,408 | ||||||
Income taxes receivable |
1,207,997 | 859,336 | ||||||
Deferred income taxes |
893,768 | 618,078 | ||||||
Other current assets |
248,689 | 170,729 | ||||||
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Total current assets |
11,181,534 | 12,387,198 | ||||||
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Equipment and leasehold improvements |
4,172,856 | 4,084,886 | ||||||
Less: accumulated depreciation and amortization |
(3,777,360 | ) | (3,632,288 | ) | ||||
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Equipment and leasehold improvements, net |
395,496 | 452,598 | ||||||
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Total Assets |
$ | 11,577,030 | $ | 12,839,796 | ||||
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Liabilities and Stockholders Equity |
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Current Liabilities: |
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Accounts payable |
$ | 231,047 | $ | 167,313 | ||||
Customer deposits |
16,025 | 52,372 | ||||||
Accrued liabilities: |
||||||||
Accrued compensation and related expenses |
282,300 | 316,751 | ||||||
Accrued expenses |
120,146 | 176,281 | ||||||
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Total current liabilities |
649,518 | 712,717 | ||||||
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Commitments and contingencies |
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Stockholders Equity: |
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Common stock, par value $0.10 per share; 7,000,000 shares authorized; 1,838,716 shares issued and outstanding at June 29, 2013 and September 29, 2012 |
183,872 | 183,872 | ||||||
Additional paid-in capital |
3,735,915 | 3,569,731 | ||||||
Accumulated other comprehensive (loss) income |
(11,901 | ) | 10,042 | |||||
Retained earnings |
7,019,626 | 8,363,434 | ||||||
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|
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Total stockholders equity |
10,927,512 | 12,127,079 | ||||||
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Total Liabilities and Stockholders Equity |
$ | 11,577,030 | $ | 12.839.796 | ||||
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended | ||||||||
June 29, 2013 | June 23, 2012 | |||||||
Net sales |
$ | 969,694 | $ | 733,693 | ||||
Cost of sales |
376,512 | 161,482 | ||||||
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Gross profit |
593,182 | 572,211 | ||||||
Operating expenses: |
||||||||
Selling, general and administrative |
739,397 | 788,335 | ||||||
Product development |
586,164 | 1,350,170 | ||||||
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|
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Total operating expenses |
1,325,561 | 2,138,505 | ||||||
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Operating loss |
(732,379 | ) | (1,566,294 | ) | ||||
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Other income: |
||||||||
Interest income |
11,953 | 5,494 | ||||||
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|
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Loss before benefit for income taxes |
(720,426 | ) | (1,560,800 | ) | ||||
Benefit for income taxes |
(198,647 | ) | (645,941 | ) | ||||
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Net loss |
$ | (521,779 | ) | $ | (914,859 | ) | ||
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Net loss per common share: |
||||||||
Basic |
$ | (0.28 | ) | $ | (0.50 | ) | ||
Diluted |
$ | (0.28 | ) | $ | (0.50 | ) | ||
Weighted average shares: |
||||||||
Basic |
1,838,716 | 1,832,287 | ||||||
Diluted |
1,838,716 | 1,832,287 | ||||||
Dividends paid per common share: |
| $ | 0.10 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
Nine Months Ended | ||||||||
June 29, 2013 | June 23, 2012 | |||||||
Net sales |
$ | 3,112,149 | $ | 6,791,104 | ||||
Cost of sales |
927,884 | 1,580,321 | ||||||
|
|
|
|
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Gross profit |
2,184,265 | 5,210,783 | ||||||
Operating expenses: |
||||||||
Selling, general and administrative |
2,209,939 | 2,525,293 | ||||||
Product development |
2,230,973 | 3,299,024 | ||||||
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Total operating expenses |
4,440,912 | 5,824,317 | ||||||
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Operating loss |
(2,256,647 | ) | (613,534 | ) | ||||
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Other income: |
||||||||
Interest income |
28,279 | 8,591 | ||||||
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|
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Loss before benefit for income taxes |
(2,228,368 | ) | (604,943 | ) | ||||
Benefit for income taxes |
(1,068,432 | ) | (252,857 | ) | ||||
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Net loss |
$ | (1,159,936 | ) | $ | (352,086 | ) | ||
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Net loss per common share: |
||||||||
Basic |
$ | (0.63 | ) | $ | (0.19 | ) | ||
Diluted |
$ | (0.63 | ) | $ | (0.19 | ) | ||
Weighted average shares: |
||||||||
Basic |
1,838,716 | 1,829,363 | ||||||
Diluted |
1,838,716 | 1,829,363 | ||||||
Dividends paid per common share: |
$ | 0.10 | $ | 0.30 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
June 29, 2013 | June 23, 2012 | June 29, 2013 | June 23, 2012 | |||||||||||||
Net loss |
$ | (521,779 | ) | $ | (914,859 | ) | $ | (1,159,936 | ) | $ | (352,086 | ) | ||||
Other comprehensive (loss) income, net of tax |
(26,095 | ) | 9,469 | (21,943 | ) | (3,275 | ) | |||||||||
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Comprehensive loss |
$ | (547,874 | ) | $ | (905,390 | ) | $ | (1,181,879 | ) | $ | (355,361 | ) | ||||
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The accompanying notes are an integral part of these consolidated financial statements.
4
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended | ||||||||
June 29, 2013 | June 23, 2012 | |||||||
Operating Activities: |
||||||||
Net loss |
$ | (1,159,936 | ) | $ | (352,086 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization |
145,072 | 179,960 | ||||||
Amortization of premium on available for sale securities |
38,937 | | ||||||
Share-based compensation |
166,184 | 190,002 | ||||||
Deferred income taxes |
(275,690 | ) | | |||||
Changes in certain operating assets and liabilities: |
||||||||
Accounts receivable |
912,523 | 708,684 | ||||||
Inventories |
(297,716 | ) | 517,500 | |||||
Income taxes receivable |
(348,661 | ) | (283,865 | ) | ||||
Other current assets |
(77,960 | ) | (121,507 | ) | ||||
Customer deposits |
(36,347 | ) | (88,936 | ) | ||||
Accounts payable and other accrued liabilities |
(26,852 | ) | (418,742 | ) | ||||
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|
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|
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Net cash (used in) provided by operating activities |
(960,446 | ) | 331,010 | |||||
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Investing Activities: |
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Additions to equipment and leasehold improvements |
(87,970 | ) | (148,859 | ) | ||||
Proceeds from maturities of marketable securities |
1,711,799 | 292,000 | ||||||
Purchases of marketable securities |
(1,544,563 | ) | (4,822,757 | ) | ||||
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Net cash provided by (used in) investing activities |
79,266 | (4,679,616 | ) | |||||
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Financing Activities: |
||||||||
Proceeds from exercise of stock options |
| 19,500 | ||||||
Dividends paid |
(183,872 | ) | (549,469 | ) | ||||
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Net cash used in financing activities |
(183,872 | ) | (529,969 | ) | ||||
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Net decrease in cash and cash equivalents |
(1,065,052 | ) | (4,878,575 | ) | ||||
Cash and cash equivalents at beginning of the period |
2,056,311 | 9,231,717 | ||||||
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Cash and cash equivalents at end of the period |
$ | 991,259 | $ | 4,353,142 | ||||
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Supplemental Disclosures: |
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Interest paid |
$ | | $ | | ||||
Income taxes paid |
506 | 30,000 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT OF FAIR PRESENTATION
Interim Financial Statements . The accompanying interim unaudited condensed consolidated financial statements of Technical Communications Corporation (the Company or TCC) and its wholly-owned subsidiary include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented and in order to make the financial statements not misleading. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of the results to be expected for the fiscal year ending September 28, 2013.
Certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by Securities and Exchange Commission (SEC) rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Companys consolidated financial statements and the notes thereto in the Companys Quarterly Reports on Form 10-Q for the quarters ended March 30, 2013 and December 29, 2012 and its Annual Report on Form 10-K for the fiscal year ended September 29, 2012 as filed with the SEC.
We follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the FASB. The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification TM - sometimes referred to as the Codification or ASC.
NOTE 1. | Summary of Significant Accounting Policies and Significant Judgments and Estimates |
Basis of Presentation . The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods.
On an ongoing basis, management evaluates its estimates and judgments, including but not limited to those related to revenue recognition, inventory reserves, receivable reserves, investment securities, income taxes, fair value of financial instruments and share-based compensation. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
The accounting policies that management believes are most critical to aid in fully understanding and evaluating our reported financial results include the following:
Revenue Recognition
Product revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable, delivery of the product to the customer has occurred and we have determined that collection of the fee is probable. Title to the product generally passes upon shipment of the product, as the products are shipped FOB shipping point, except for certain foreign shipments for which title passes upon entry of the product into the first port in the buyers country. If the product requires installation to be performed by TCC, all revenue related to the product is deferred and recognized upon completion of the installation. We provide for a warranty reserve at the time the product revenue is recognized.
We perform funded research and development and technology development for commercial companies and government agencies under both cost reimbursement and fixed-price contracts. Cost reimbursement contracts provide for the reimbursement of allowable costs and, in some situations, the payment of a fee. These contracts may contain incentive clauses providing for increases or decreases in the fee depending on how actual costs compare with a budget. Revenue from reimbursement contracts is recognized as services are performed. On fixed-price contracts that are expected to exceed one year in duration, revenue is recognized pursuant to the proportional performance method based upon the proportion of actual costs incurred to the total estimated costs for the contract. In each type of contract, we receive periodic progress payments or payments upon reaching interim milestones, and we retain the rights to the intellectual property developed in government contracts. All payments to TCC for work performed on contracts with agencies of the U.S. government are subject to audit and adjustment by the Defense Contract Audit Agency. Adjustments are recognized in the period made. When current estimates of total contract revenue and contract costs for a product development contract indicate a loss, a provision for the entire loss on the contract is recorded. Any losses incurred in performing funded research and development projects are recognized as funded research and development expenses.
Cost of product revenue includes material, labor and overhead. Costs incurred in connection with funded research and development are included in cost of sales. Product development costs are charged to billable engineering services, bid and proposal efforts or support of business development activities, as appropriate. Product development costs charged to billable projects are recorded as cost of sales, engineering costs charged to bid and proposal efforts are recorded as selling expenses, and product development costs charged to business development activities are recorded as marketing expenses. Product development costs consist primarily of personnel costs, outside contractor and engineering services, supplies and materials.
Inventory
We value our inventory at the lower of actual cost (based on first-in, first-out (FIFO)) to purchase and/or manufacture or the current estimated market value (based on the estimated selling prices, less the cost to sell) of the inventory. We periodically review inventory quantities on hand and record a provision for excess and/or obsolete inventory based primarily on our estimated forecast of product demand, as well as historical usage. Due to the custom and specific nature of certain of our products, demand and usage for products and materials can fluctuate significantly. A significant decrease in demand for our products could result in a short-term increase in the cost of inventory purchases and an increase in excess inventory quantities on hand. In addition, our industry is characterized by rapid technological change, frequent new product development and rapid product obsolescence, any of which could result in an increase in the amount of obsolete inventory quantities on hand. Therefore, although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have a significant negative impact on the value of our inventory and would reduce our reported operating results.
Accounts Receivable
Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on a specific analysis of accounts in the receivable portfolio and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required, which would reduce net income. The allowance recorded for accounts receivable at June 29, 2013 and September 29, 2012 was $25,000.
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
Investment Securities
The Company accounts for investment securities in accordance with FASB ASC 320, Investments - Debt and Equity Securities. All investment securities must be classified as one of the following: held-to-maturity, available-for-sale, or trading. The Company holds certain marketable securities classified as available-for-sale and, as such, carries the investments at fair value, with unrealized holding gains and losses reported in stockholders equity as a separate component of accumulated other comprehensive income (loss). The cost of securities sold is determined based on the specific identification method. Realized gains and losses, and declines in value judged to be other than temporary, are included in investment income. The purchase discount or premium is amortized to income or expense, respectively, over the life of the securities.
Accounting for Income Taxes
The preparation of our consolidated financial statements requires us to estimate our income taxes in each of the jurisdictions in which we operate, including those outside the United States, which may subject the Company to certain risks that ordinarily would not be expected in the United States. The income tax accounting process involves estimating our actual current exposure together with assessing temporary differences resulting from differing treatments of items, such as deferred revenue, for tax and accounting purposes. These differences result in the recognition of deferred tax assets and liabilities. We must then record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.
Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. We have recorded a valuation allowance against our deferred tax assets of $1.1 million as of June 29, 2013 due to uncertainties related to our ability to utilize these assets. The valuation allowance is based on our estimates of taxable income by jurisdiction and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to adjust our valuation allowance. Any such adjustment could materially impact our financial position and results of operation.
Due to the nature of our current operations in foreign countries (selling products into these countries with the assistance of local representatives), the Company has not been subject to any foreign taxes in recent years. Also, it is not anticipated that we will be subject to foreign taxes in the near future.
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
Fair Value of Financial Instruments
In determining the fair value of financial instruments, the Company follows the provisions of FASB ASC 820, Fair Value Measurements and Disclosures . FASB ASC 820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. The topic provides a consistent definition of fair value which focuses on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The topic also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The three level hierarchy is as follows:
Level 1 | - | Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. | ||
Level 2 | - | Pricing inputs are either quoted prices for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. | ||
Level 3 | - | Pricing inputs are unobservable for the investment, that is, inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing the asset or liability. |
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investments level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.
The Companys available-for-sale securities are comprised of investments in municipal bonds, brokered certificates of deposit and mutual funds. These securities represent ownership in individual bonds in municipalities within the United States, certificates of deposit in U.S. banks and money market funds held in a brokerage account. The fair value of these investments is based on quoted prices from recognized pricing services (e.g. Standard & Poors, Bloomberg, etc.) or, in the case of mutual funds, at their closing net asset values.
The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Companys accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During the nine months ended June 29, 2013 there were no transfers between levels.
The following table sets forth by level, within the fair value hierarchy, the financial instruments carried at fair value as of June 29, 2013 and September 29, 2012, in accordance with the fair value hierarchy as defined above.
Total |
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant Other
Observable Inputs (Level 2) |
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June 29, 2013 (Unaudited) |
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Debt and certificates of deposits: |
||||||||||||
Municipal bonds |
$ | 1,950,877 | $ | | $ | 1,950,877 | ||||||
Certificates of deposit |
2,489,871 | | 2,489,871 | |||||||||
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Total debt instruments |
4,440,748 | | 4,440,748 | |||||||||
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Mutual funds: |
||||||||||||
Money market funds |
337,673 | 337,673 | | |||||||||
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|
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Total mutual funds |
337,673 | 337,673 | | |||||||||
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Total investments |
$ | 4,778,421 | $ | 337,673 | $ | 4,440,748 | ||||||
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9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
September 29, 2012
Debt and certificates of deposits: |
||||||||||||
Municipal bonds |
$ | 1,925,371 | $ | | $ | 1,925,371 | ||||||
Certificates of deposit |
2,743,493 | | 2,743,493 | |||||||||
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Total debt instruments |
4,668,864 | | 4,668,864 | |||||||||
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Mutual funds: |
||||||||||||
Money market funds |
1,340,440 | 1,340,440 | | |||||||||
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Total mutual funds |
1,340,440 | 1,340,440 | | |||||||||
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Total investments |
$ | 6,009,304 | $ | 1,340,440 | $ | 4,668,864 | ||||||
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Assets and liabilities measured at fair value on a nonrecurring basis are recognized at fair value subsequent to initial recognition when they are deemed to be impaired. As of June 29, 2013 and September 29, 2012, the Companys assets and liabilities subject to measurement at fair value on a nonrecurring basis are equipment and leasehold improvements. Neither was deemed to be impaired or measured at fair value on a nonrecurring basis.
Short-Term Debt
The Company maintains a line of credit agreement with Bank of America (the Bank) for a line of credit not to exceed the principal amount of $600,000. The line is supported by a financing promissory note. The loan is a demand loan with interest payable at the Banks prime rate plus 1% on all outstanding balances. During the fiscal year ended September 29, 2012, the Company failed to comply with its tangible net worth covenant with respect to the line of credit. The Bank waived the violation and the parties amended the agreement on February 8, 2013 to lower the tangible net worth requirement. In addition, the line is now only available to support new letters of credit issued by the Company. Future standby letters of credit will be required to be secured with cash. The Company has no borrowings against this line of credit; however, there is an outstanding standby letter of credit which is secured by the line amounting to $14,903 at June 29, 2013.
Share-Based Compensation
Share-based compensation cost is measured at the grant date based on the calculated fair value of the award. The expense is recognized over the employees requisite service period, generally the vesting period of the award. The related excess tax benefit received upon the exercise of stock options, if any, is reflected in the Companys statement of cash flows as a financing activity rather than an operating activity. There were no excess tax benefits for the three and nine month periods ended June 29, 2013 and June 23, 2012.
The Company selected the Black-Scholes option pricing model as the method for determining the estimated fair value of its stock awards. The Black-Scholes method of valuation requires several assumptions: (1) the expected term of the stock award, (2) the expected future stock price volatility over the expected term, (3) a risk-free interest rate and (4) the expected dividend rate. The expected term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Companys common stock and the risk free interest rate is based on the U.S. Treasury Note rate. The Company utilizes a forfeiture rate based on an analysis of its actual experience. The forfeiture rate is not material to the calculation of share-based compensation.
The fair value of options at date of grant was estimated with the following assumptions (unaudited):
Three and Nine Months Ended | ||||||||
June 29, 2013 | June 23, 2012 | |||||||
Option term |
6.5 years | 6.5 years | ||||||
Risk-free interest rate |
0.71% to 0.79 | % | 0.83 to 0.94 | % | ||||
Stock price volatility |
66 | % | 68 | % | ||||
Dividend yield |
| 4 | % |
10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
There were 16,500 options granted during the nine months ended June 29, 2013, and 17,000 options granted during the nine months ended June 23, 2012. The weighted average grant date fair value for the options granted during such nine month periods was $2.89 and $4.47, respectively.
The following table summarizes share-based compensation costs included in the Companys condensed consolidated income statements for the three and nine month periods ended June 29, 2013 and June 23, 2012 (unaudited):
June 29, 2013 | June 23, 2012 | |||||||||||||||
3 months | 9 months | 3 months | 9 months | |||||||||||||
Cost of sales |
$ | 4,079 | $ | 12,227 | $ | 4,065 | $ | 12,192 | ||||||||
Selling, general and administrative expenses |
11,910 | 75,688 | 61,111 | 88,980 | ||||||||||||
Product development expenses |
23,656 | 78,269 | 29,358 | 88,830 | ||||||||||||
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Total share-based compensation expense before taxes |
$ | 39,645 | $ | 166,184 | $ | 94,534 | $ | 190,002 | ||||||||
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As of June 29, 2013 and June 23, 2012, there was $328,683 and $521,669, respectively, of unrecognized compensation cost related to options granted. The unrecognized compensation cost will be recognized as the options vest. The weighted average period over which the compensation cost is expected to be recognized is 2.36 years and 3.2 years, respectively.
The Company had the following stock option plans outstanding as of June 29, 2013: the Technical Communications Corporation 2001 Stock Option Plan, the 2005 Non-Statutory Stock Option Plan and the 2010 Equity Incentive Plan. There were an aggregate of 750,000 shares authorized for issuance under these plans, of which options to purchase 257,582 shares were outstanding at June 29, 2013. Vesting periods are at the discretion of the Board of Directors and typically range between zero and five years. Options under these plans are granted with an exercise price equal to fair market value at time of grant and have a term of ten years from the date of grant.
As of June 29, 2013, there were no shares available for new option grants under the 2001 Stock Option Plan; there were 33,028 shares available for grant under the 2005 Non-Statutory Stock Option Plan; and there were 54,406 shares available for grant under the 2010 Equity Incentive Plan.
The following table summarizes stock option activity during the first nine months of fiscal 2013 (unaudited):
Options Outstanding | ||||||||||||||||||
Number of Shares | Weighted Average | Weighted Average | ||||||||||||||||
Unvested | Vested | Total | Exercise Price | Contractual Life | ||||||||||||||
Outstanding, September 29, 2012 |
93,418 | 151,784 | 245,202 | $ | 9.12 | 6.99 years | ||||||||||||
Grants |
1,000 | | 1,000 | 5.40 | ||||||||||||||
Vested |
(1,400 | ) | 1,400 | | 8.40 | |||||||||||||
Cancellations/forfeitures |
(1,257 | ) | (838 | ) | (2,095 | ) | 11.51 | |||||||||||
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Outstanding, December 29, 2012 |
91,761 | 152,346 | 244,107 | $ | 9.09 | 6.75 years | ||||||||||||
Grants |
1,500 | 14,000 | 15,500 | 4.73 | ||||||||||||||
Vested |
(4,600 | ) | 4,600 | | 6.61 | |||||||||||||
Cancellations/forfeitures |
(855 | ) | (570 | ) | (1,425 | ) | 11.51 | |||||||||||
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Outstanding, March 30, 2013 |
87,806 | 170,376 | 258,182 | $ | 8.81 | 6.69 years | ||||||||||||
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Grants |
| | | | ||||||||||||||
Vested |
(800 | ) | 800 | | 8.59 | |||||||||||||
Cancellations/forfeitures |
| (600 | ) | (600 | ) | 0.99 | ||||||||||||
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Outstanding, June 29, 2013 |
87,006 | 170,576 | 257,582 | $ | 8.83 | 6.46 years | ||||||||||||
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11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
Information related to the stock options vested and expected to vest as of June 29, 2013 is as follows (unaudited):
Range of Exercise Prices |
Number of
Shares |
Weighted-Average
Remaining Contractual Life (years) |
Weighted
Average Exercise Price |
Exercisable
Number of Shares |
Exercisable
Weighted- Average Exercise Price |
|||||||||||||||
$2.01 - $3.00 |
15,288 | 2.19 | $ | 3.00 | 15,288 | $ | 3.00 | |||||||||||||
$3.01 - $4.00 |
16,600 | 3.08 | $ | 3.66 | 16,600 | $ | 3.66 | |||||||||||||
$4.01 - $5.00 |
28,900 | 7.68 | $ | 4.79 | 26,300 | $ | 4.78 | |||||||||||||
$5.01 - $10.00 |
54,400 | 5.99 | $ | 7.43 | 49,440 | $ | 7.41 | |||||||||||||
$10.01 - $15.00 |
142,394 | 7.24 | $ | 11.41 | 62,948 | $ | 11.29 | |||||||||||||
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257,582 | 6.46 | $ | 8.83 | 170,576 | $ | 7.68 | ||||||||||||||
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The aggregate intrinsic value of the Companys in-the-money outstanding and exercisable options as of June 29, 2013 and June 23, 2012 was $222,176 and $277,555, respectively. Unvested common stock options are subject to the risk of forfeiture until the fulfillment of specified conditions.
NOTE 2. | Inventories |
Inventories consisted of the following:
June 29, 2013 | September 29, 2012 | |||||||
(unaudited) | ||||||||
Finished goods |
$ | 8,015 | $ | 38,406 | ||||
Work in process |
899,126 | 642,159 | ||||||
Raw materials |
2,023,983 | 1,952,843 | ||||||
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$ | 2,931,124 | $ | 2,633,408 | |||||
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NOTE 3. | Income Taxes |
During the nine months ended June 29, 2013 and June 23, 2012, the Company recorded an income tax benefit based on its expected effective tax rate for its fiscal year. The effective tax rate for the first nine months of fiscal year 2013 was decreased to 48% from 57.7% in the second quarter of fiscal 2013 due to a revision of the full year pre-tax forecast in the third fiscal quarter of 2013 and the tax benefit recorded related to the research credit, which was extended on January 2, 2013 by the America Taxpayer Relief Act of 2012. The effective tax rate excluding discrete events for the nine months ended June 29, 2013 was 42.9%. This compares to 41.8% for the same period of fiscal 2012.
Deferred tax assets consist of tax credits, inventory differences and other temporary differences. The Companys valuation allowance is related to the temporary differences associated with its inventory. The Company has determined that the tax benefit related to its obsolete inventory will not likely be realized, and therefore has provided a full valuation allowance against the related deferred tax asset. It is the Companys intention to maintain the related inventory items for the foreseeable future to support equipment in the field, and therefore cannot determine when the tax benefit, if any, will be realized.
12
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
NOTE 4. | Earnings Per Share |
Basic and diluted earnings per share were calculated as follows (unaudited):
June 29, 2013 | June 23, 2012 | |||||||||||||||
3 months | 9 months | 3 months | 9 months | |||||||||||||
Net loss |
$ | (521,779 | ) | $ | (1,159,936 | ) | $ | (914,859 | ) | $ | (352,086 | ) | ||||
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Weighted average shares outstanding - basic |
1,838,716 | 1,838,716 | 1,832,287 | 1,829,363 | ||||||||||||
Dilutive effect of stock options |
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Weighted average shares outstanding - diluted |
1,838,716 | 1,838,716 | 1,832,287 | 1,829,363 | ||||||||||||
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Basic net loss per share |
$ | (0.28 | ) | $ | (0.63 | ) | $ | (0.50 | ) | $ | (0.19 | ) | ||||
Diluted net loss per share |
$ | (0.28 | ) | $ | (0.63 | ) | $ | (0.50 | ) | $ | (0.19 | ) |
Outstanding potentially dilutive stock options, which were not included in the earnings per share calculations because their inclusion would have been anti-dilutive, were 257,582 at June 29, 2013 and 268,852 at June 23, 2012.
NOTE 5. | Major Customers and Export Sales |
During the quarter ended June 29, 2013, the Company had three customers that represented 86% (41%, 30% and 15%, respectively) of net sales as compared to the quarter ended June 23, 2012, during which three customers represented 83% (42%, 24%, and 17%, respectively) of net sales. During the nine month period ended June 29, 2013, the Company had two customers that represented 72% (41%, and 31%, respectively) of net sales as compared to the nine month period ended June 23, 2012, during which one customer represented 84% of net sales.
A breakdown of foreign and domestic net sales is as follows (unaudited):
June 29, 2013 | June 23, 2012 | |||||||||||||||
3 months | 9 months | 3 months | 9 months | |||||||||||||
Domestic |
$ | 532,214 | $ | 2,591,866 | $ | 377,292 | $ | 5,907,328 | ||||||||
Foreign |
437,480 | 520,283 | 356,401 | 883,776 | ||||||||||||
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Total sales |
$ | 969,694 | $ | 3,112,149 | $ | 733,693 | $ | 6,791,104 | ||||||||
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The Company sold products into four countries during the three month period ended June 29, 2013 and five countries during the three month period ended June 23, 2012. The Company sold products into five countries during the nine month period ended June 29, 2013 and six countries during the nine month period ended June 23, 2012. A sale is attributed to a foreign country based on the location of the contracting party. Domestic revenue may include the sale of products shipped through domestic resellers or manufacturers to international destinations. The table below summarizes our foreign revenues by country as a percentage of total foreign revenue (unaudited).
June 29, 2013 | June 23, 2012 | |||||||||||||||
3 months | 9 months | 3 months | 9 months | |||||||||||||
Saudi Arabia |
65.6 | % | 69.3 | % | 34.6 | % | 37.7 | % | ||||||||
Jordan |
| 1.3 | % | 0.3 | % | 35.7 | % | |||||||||
Egypt |
34.1 | % | 28.6 | % | 50.2 | % | 20.2 | % | ||||||||
Thailand |
| | 14.2 | % | 5.7 | % | ||||||||||
Other |
0.3 | % | 0.8 | % | 0.7 | % | 0.7 | % |
13
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Contd)
A summary of foreign revenue, as a percentage of total foreign revenue by geographic area, is as follows (unaudited):
June 29, 2013 | June 23, 2012 | |||||||||||||||
3 months | 9 months | 3 months | 9 months | |||||||||||||
North America (excluding the U.S.) |
| 0.6 | % | | | |||||||||||
Central and South America |
| | | 0.3 | % | |||||||||||
Europe |
| | | | ||||||||||||
Mid-East and Africa |
100 | % | 99.4 | % | 85.8 | % | 93.9 | % | ||||||||
Far East |
| | 14.2 | % | 5.8 | % |
NOTE 6. | Cash Equivalents and Marketable Securities |
The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. Substantially all cash equivalents are invested in money market mutual funds. Money market mutual funds held in a brokerage account are considered available-for-sale. The Company accounts for marketable securities in accordance with FASB ASC 320, Investments - Debt and Equity Securities. All marketable securities must be classified as one of the following: held-to-maturity, available-for-sale, or trading. The Company classifies its marketable securities as available-for-sale and, as such, carries the investments at fair value, with unrealized holding gains and losses reported in stockholders equity as a separate component of accumulated other comprehensive income (loss). The cost of securities sold is determined based on the specific identification method. Realized gains and losses, and declines in value judged to be other than temporary, are included in investment income. The purchase discount or premium is amortized to income or expense, respectively, over the life of the securities.
As of June 29, 2013, available-for-sale securities consisted of the following (unaudited):
Cost |
Accrued
Interest |
Gross Unrealized |
Estimated
Fair Value |
|||||||||||||||||
Gains | Losses | |||||||||||||||||||
Money market funds |
$ | 337,673 | $ | | $ | | $ | | $ | 337,673 | ||||||||||
Certificates of deposit |
2,493,054 | 1,989 | | 5,172 | 2,489,871 | |||||||||||||||
Municipal bonds |
1,921,692 | 27,817 | 1,368 | | 1,950,877 | |||||||||||||||
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$ | 4,752,419 | $ | 29,806 | $ | 1,368 | $ | 5,172 | $ | 4,778,421 | |||||||||||
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The contractual maturities of these investments as of June 29, 2013 were as follows (unaudited):
Cost | Fair Value | |||||||
Within 1 year |
$ | 3,035,743 | $ | 3,034,021 | ||||
After 1 year through 5 years |
1,716,676 | 1,744,400 | ||||||
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$ | 4,752,419 | $ | 4,778,421 | |||||
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The Companys available-for-sale securities were included in the following captions in the condensed consolidated balance sheets:
June 29, 2013 | September 29, 2012 | |||||||
(unaudited) | ||||||||
Cash and cash equivalents |
$ | 337,673 | $ | 361,584 | ||||
Marketable securities |
4,440,748 | 4,668,864 | ||||||
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$ | 4,778,421 | $ | 5,030,448 | |||||
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14
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
Certain statements contained herein or as may otherwise be incorporated by reference herein that are not purely historical constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to statements regarding anticipated operating results, future earnings, and the Companys ability to achieve growth and profitability. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including but not limited to future changes in export laws or regulations; changes in technology; the effect of foreign political unrest; the ability to hire, retain and motivate technical, management and sales personnel; the risks associated with the technical feasibility and market acceptance of new products; changes in telecommunications protocols; the effects of changing costs, exchange rates and interest rates; and the Companys ability to secure adequate capital resources. Such risks, uncertainties and other factors could cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For a more detailed discussion of the risks facing the Company, see the Companys filings with the SEC, including its Quarterly Report on Form 10-Q for the quarters ended March 30, 2013 and December 29, 2012 and its Annual Report on Form 10-K for the fiscal year ended September 29, 2012.
Overview
The Company designs, manufactures, markets and sells communications security equipment that utilizes various methods of encryption to protect the information being transmitted. Encryption is a technique for rendering information unintelligible, which information can then be reconstituted if the recipient possesses the right decryption key. The Company manufactures several standard secure communications products and also provides custom-designed, special-purpose secure communications products for both domestic and international customers. The Companys products consist primarily of voice, data and facsimile encryptors. Revenue is generated principally from the sale of these products, which have traditionally been to foreign governments either through direct sale, pursuant to a U.S. government contract or made as a sub-contractor to domestic corporations under contract with the U.S. government. We have also sold these products to commercial entities and U.S. government agencies. We generate additional revenues from contract engineering services performed for certain government agencies, both domestic and foreign, and commercial entities.
Critical Accounting Policies and Significant Judgments and Estimates
There have been no material changes in the Companys critical accounting policies or critical accounting estimates since September 29, 2012, nor have we adopted any accounting policy that has or will have a material impact on our consolidated financial statements. For further discussion of our accounting policies see Note 1, Summary of Significant Accounting Policies and Significant Judgments and Estimates in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended September 29, 2012 as filed with the SEC.
15
Results of Operations
Three Months ended June 29, 2013 as compared to Three Months ended June 23, 2012
Net Sales
Net sales for the quarter ended June 29, 2013 were $970,000, compared to $734,000 for the quarter ended June 23, 2012, an increase of 32%. Sales for the third quarter of fiscal 2013 consisted of $532,000, or 55%, from domestic sources and $438,000, or 45%, from international customers as compared to the same period in fiscal 2012, during which sales consisted of $377,000, or 51%, from domestic sources and $357,000, or 49%, from international customers.
Foreign sales consisted of shipments to four countries during the quarter ended June 29, 2013 and five countries during the quarter ended June 23, 2012. A sale is attributed to a foreign country based on the location of the contracting party. Domestic revenue may include the sale of products shipped through domestic resellers or manufacturers to international destinations. The table below summarizes our principal foreign sales by country during the third quarters of fiscal 2013 and 2012:
2013 | 2012 | |||||||
Egypt |
$ | 149,000 | $ | 179,000 | ||||
Saudi Arabia |
287,000 | 123,000 | ||||||
Thailand |
| 51,000 | ||||||
Other |
2,000 | 4,000 | ||||||
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$ | 438,000 | $ | 357.000 | |||||
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Revenue for the third quarter of fiscal 2013 was primarily derived from the sale of engineering services amounting to $400,000; we also had sales of our Ethernet IP encryptor for deployment into the Middle East amounting to $263,000, a spare parts order shipped to Egypt amounting to $149,000 and a domestic order for our narrowband radio encryptors amounting to $65,000.
Revenue for the third quarter of fiscal 2012 was primarily derived from the sale of the Companys narrowband radio encryptors to a U.S. radio manufacturer for deployment into Afghanistan amounting to $311,000 and to an additional domestic customer amounting to $55,000. In addition, we sold spare parts to two foreign customers amounting to $229,000 and we had sales of our frame relay and internet protocol encryptor products to two customers amounting to $122,000 during the period.
Gross Profit
Gross profit for the third quarter of fiscal 2013 was $593,000, compared to gross profit of $572,000 for the same period of fiscal 2012, a 4% increase. Gross profit expressed as a percentage of sales was 61% for the third quarter of fiscal 2013 and 78% for the third quarter of fiscal 2012. The decrease in the gross profit percentage was primarily the result of the sale of lower margin engineering services work during the quarter ended June 29, 2013.
Operating Costs and Expenses
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the third quarter of fiscal 2013 were $739,000, compared to $788,000 for the same quarter of fiscal 2012. This decrease of $49,000 or 6% was attributable to a decrease in selling and marketing expenses of $55,000, offset by an increase in general and administrative expenses of $6,000 during the third quarter of the 2013 fiscal year.
The decrease in selling and marketing costs for the three months ended June 29, 2013 was primarily attributable to decreases in product evaluation costs of $26,000, personnel-related costs of $28,000, travel related costs of $21,000, product demonstration costs of $13,000 and outside consulting expenses of $13,000 for the period. These decreases were partially offset by increases in outside commissions and third party sales agreements amounting to $47,000.
16
The increase in general and administrative costs during the third quarter of 2013 was primarily attributable to an increase in outside consulting costs of $4,000 for the period.
Product Development Costs
Product development costs for the quarter ended June 29, 2013 were $586,000, compared to $1,350,000 for the quarter ended June 23, 2012, a decrease of $764,000 or 57%. The decrease was attributable to project development cost decreases in outside contractor costs of $359,000 and project material cost decreases of $39,000. During the quarter there was an increase of billable engineering services work, which decreased product development costs by $380,000. There were also decreases in recruiting costs of $30,000 and personnel-related costs of $30,000 during the third quarter of fiscal 2013. These decreases were partially offset by a decrease in engineering support of business development activities and a decrease in manufacturing support of engineering services, which increased product development costs by approximately $31,000 and $58,000, respectively for the period.
Product development costs are charged to billable engineering services, bid and proposal efforts or support of business development activities, as appropriate. Product development costs charged to billable projects are recorded as cost of sales, engineering costs charged to bid and proposal efforts are recorded as selling expenses, and product development costs charged to business development activities are recorded as marketing expenses.
The Company actively sells its engineering services in support of funded research and development. The receipt of these orders is sporadic, although such programs can span over several months. In addition to these programs, the Company also invests in research and development to enhance its existing products or to develop new products, as it deems appropriate. There was $400,000 of billable engineering services revenue generated during the third quarter of fiscal 2013 and no such revenue generated during the same period of fiscal 2012.
Net Income
The Company generated a net loss of $522,000 for the third quarter of fiscal 2013, compared to a net loss of $915,000 for the same period of fiscal 2012. This 43% decrease in net loss is primarily attributable to a 38% decrease in operating expenses, which was partially offset by a 69% decrease in income tax benefit recognized during the third quarter of fiscal 2013. The Company recorded an income tax benefit of $199,000 for the period based on its expected effective tax rate of 48% for the 2013 fiscal year. This compares to a tax benefit of $646,000 recorded in same period of fiscal 2012.
The Company recorded a net operating loss of $732,000 before accounting for such tax benefit for the third quarter of fiscal 2013, compared to a net operating loss of $1,566,000 for the same period of fiscal 2012. This 53% decrease in net operating loss is primarily attributable to a 38% decrease in operating expenses during the third quarter of fiscal 2013.
The effects of inflation and changing costs have not had a significant impact on sales or earnings in recent years. As of June 29, 2013, none of the Companys monetary assets or liabilities was subject to foreign exchange risks. The Company usually includes an inflation factor in its pricing when negotiating multi-year contracts with customers.
Nine Months ended June 29, 2013 as compared to Nine Months ended June 23, 2012
Net Sales
Net sales for the nine months ended June 29, 2013 were $3,112,000, compared to $6,791,000 for the nine months ended June 23, 2012, a decrease of 54%. Sales for the first nine months of fiscal 2013 consisted of $2,592,000, or 83%, from domestic sources and $520,000, or 17%, from international customers as compared to the same period in fiscal 2012, during which sales consisted of $5,907,000, or 87%, from domestic sources and $884,000, or 13%, from international customers.
Foreign sales consisted of shipments to five countries during the nine months ended June 29, 2013 and six countries for the nine months ended June 23, 2012. A sale is attributed to a foreign country based on the location of the contracting party. Domestic revenue may include the sale of products shipped through domestic resellers or manufacturers to international destinations.
17
The table below summarizes our principal foreign sales by country during the first nine months of fiscal 2013 and 2012:
2013 | 2012 | |||||||
Saudi Arabia |
$ | 360,000 | $ | 333,000 | ||||
Jordan |
7,000 | 316,000 | ||||||
Egypt |
149,000 | 179,000 | ||||||
Other |
4,000 | 56,000 | ||||||
|
|
|
|
|||||
$ | 520,000 | $ | 884,000 | |||||
|
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|
Revenue for the nine months ended June 29, 2013 was derived in part from the sale of the Companys narrowband radio encryptors to a U.S. radio manufacturer for deployment into Afghanistan amounting to $955,000. In addition, we sold engineering services amounting to $1,240,000 and we had sales of our link encryptor into the Middle East amounting to $204,000 during the period. We also had sales of our Ethernet IP encryptor for deployment into the Middle East amounting to $263,000, a spare parts order shipped to Egypt amounting to $149,000 and a domestic order for our narrowband radio encryptors amounting to $65,000. Royalty income for the first nine months of fiscal 2013 amounted to $45,000.
Revenue for the nine months ended June 23, 2012 was primarily derived from the sale of the Companys narrowband radio encryptors to a U.S. radio manufacturer for deployment into Afghanistan amounting to $5,682,000 and to an additional domestic customer amounting to $113,000. In addition we sold our secure telephone, fax, and data encryptors to a foreign customer amounting to $314,000 and we had sales of our frame relay and internet protocol encryptor products to three customers amounting to $225,000. We also had sales of our link encryptors into the Middle East for $93,000 and we sold spare parts to three foreign customers amounting to $287,000 during the first nine months of fiscal 2012.
Gross Profit
Gross profit for the first nine months of fiscal 2013 was $2,184,000, compared to gross profit of $5,211,000 for the same period of fiscal 2012. Gross profit expressed as a percentage of sales was 70% for the first nine months of fiscal 2013 and 77% for the first nine months of fiscal 2012. The decrease in the gross profit percentage was primarily the result of the sale of lower margin engineering services work during the nine months ended June 29, 2013.
Operating Costs and Expenses
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first nine months of fiscal 2013 were $2,210,000, compared to $2,525,000 for the same period of fiscal 2012. This decrease of $315,000 or12% was attributable to a decrease in selling and marketing expenses of $335,000, offset by an increase in general and administrative expenses of $20,000 during the first nine months of the 2013 fiscal year.
The decrease in selling and marketing costs for the nine months ended June 29, 2013 was primarily attributable to a decrease in product evaluation costs of $266,000, as well as decreases in personnel-related costs of $63,000, travel related costs of $63,000 and outside consulting costs of $42,000. These decreases were partially offset by an increase in outside commissions and sales and marketing agreements of $104,000 for the period.
The increase in general and administrative costs during the first nine months of 2013 was primarily attributable to increases in personnel-related costs of $63,000, recruiting fees of $22,000 and outside consulting costs of $4,000 for the period. These increases were partially offset by decreases in charitable contributions of $19,000 and professional and other public company fees of $65,000 for the nine months ended June 29, 2013.
18
Product Development Costs
Product development costs for the nine months ended June 29, 2013 were $2,231,000, compared to $3,299,000 for the nine months ended June 23, 2012, a decrease of $1,068,000 or 32%. The decrease was attributable to decreases in outside contractor costs of $625,000 and personnel-related costs of $35,000. There was also a decrease in recruiting costs of $80,000 and in project material costs of $26,000 during the first nine months of fiscal 2013. During the period there was an increase of billable engineering services work, which decreased product development costs by $698,000. These decreases were offset by a decrease in engineering support of business development activities and a decrease in manufacturing support of engineering services, which increased product development costs by approximately $159,000 and $249,000, respectively for the period.
Product development costs are charged to billable engineering services, bid and proposal efforts or support of business development activities, as appropriate. Product development costs charged to billable projects are recorded as cost of sales, engineering costs charged to bid and proposal efforts are recorded as selling expenses, and product development costs charged to business development activities are recorded as marketing expenses.
The Company actively sells its engineering services in support of funded research and development. The receipt of these orders is sporadic, although such programs can span over several months. In addition to these programs, the Company also invests in research and development to enhance its existing products or to develop new products, as it deems appropriate. There was $1,240,000 of billable engineering services revenue generated during the first nine months of fiscal 2013 and no such revenue generated during the same period of fiscal 2012.
Net Income
The Company generated a net loss of $1,160,000 for the first nine months of fiscal 2013, compared to a net loss of $352,000 for the same period of fiscal 2012. This 229% increase in net loss is primarily attributable to a 54% decrease in sales volume, which was partially offset by a 24% decrease in operating expenses during the first nine months of fiscal 2013. The Company recorded an income tax benefit of $1,068,000 during the first nine months of fiscal 2013 based on its expected effective tax rate of 48% for the 2013 fiscal year. This compares to a tax benefit of $253,000 recorded in the nine month period ended June 23, 2012.
The effects of inflation and changing costs have not had a significant impact on sales or earnings in recent years. As of June 29, 2013, none of the Companys monetary assets or liabilities was subject to foreign exchange risks. The Company usually includes an inflation factor in its pricing when negotiating multi-year contracts with customers.
Liquidity and Capital Resources
Cash and cash equivalents decreased by $1,065,000 to $991,000 as of June 29, 2013, from a balance of $2,056,000 at September 29, 2012. This decrease was primarily attributable to a net loss of $1,160,000, increases in income taxes receivable of $349,000 and inventories of $298,000, capital acquisitions of $88,000 and the payment of cash dividends of $184,000 during the first nine months of the year. This decrease was partially offset by a decrease in accounts receivable of $913,000.
As noted above the Company paid cash dividends of $184,000 during the first nine months of fiscal 2013. The payment of these dividends was based on the profits generated by the Company during prior periods. It is not the Companys intention to pay dividends on a regular basis unless future profits warrant such actions. The Board of Directors decided on December 6, 2012 that it would suspend consideration of future dividends until such time as the Companys revenue and profit performance justified it.
It is anticipated that our cash balances and cash generated from operations will be sufficient to fund our near-term research and development and marketing activities. We also believe that, in the long term, an anticipated improvement in business prospects, current billable activities and cash from operations will be sufficient to meet the development goals of the Company, although we can give no assurances. Although expected to continue to be depressed during the remainder of fiscal 2013, any material increase in activities - either billable or new product related - will require additional resources, which we may not be able to fund through cash from operations. In circumstances where resources will be insufficient, the Company will look to other sources of financing, including debt and/or equity investments.
19
Backlog at June 29, 2013 and June 23, 2012 amounted to $4,852,000 and $1,316,000, respectively. The orders in backlog at June 29, 2013 are expected to ship over the next six months depending on customer requirements and product availability.
The Company has a line of credit agreement with Bank of America (the Bank) for a line of credit not to exceed the principal amount of $600,000. The line is supported by a financing promissory note. The loan is a demand loan with interest payable at the Banks prime rate plus 1% on all outstanding balances. The loan is secured by all assets of the Company (excluding consumer goods) and requires the Company to maintain its deposit accounts with the Bank, as well as comply with certain other covenants. As a result of the Companys failure to comply with its tangible net worth covenant with respect to the line of credit, the parties amended the agreement on February 8, 2013 to lower the tangible net worth requirement. In addition, the line is now only available to support new letters of credit issued by the Company. Future standby letters of credit will be required to be secured with cash. There were no cash borrowings against the line during the nine months ended June 29, 2013, or the fiscal year ended September 29, 2012. However, a standby letter of credit in the amount of $14,903 was issued in December 2012 and is secured by the line of credit with the Bank as noted.
Certain foreign customers require the Company to guarantee bid bonds and performance of products sold. These guaranties typically take the form of standby letters of credit. Guaranties are generally required in amounts of 5% to 10% of the purchase price and last in duration from three months to one year. At June 29, 2013, the Company had two outstanding letters of credit amounting to $32,786, one of which is secured by a cash certificate of deposit amounting to $17,883. The second in the amount of $14,903 is secured by the Companys line of credit as noted above.
In April 2007, the Company entered into a lease for its current facilities. This lease is for 22,800 square feet located at 100 Domino Drive, Concord, MA. The Company has been a tenant in this space since 1983. This is the Companys only facility and houses all manufacturing, research and development, and corporate operations. The initial term of the lease was for five years through March 31, 2012 at an annual rate of $159,000. In addition the lease contains options to extend the lease for two and one half years through September 30, 2014 and another two and one half years through March 31, 2017, at an annual rate of $171,000. Rent expense for the nine month periods ended June 29, 3013 and June 23, 2012 was $128,000 and $122,000, respectively. On September 30, 2011 the Company exercised its option to extend the lease for the period April 1, 2012 through September 30, 2014.
In fiscal 2012, the Companys internal product development expenses were higher than prior years but in line with its planned commitment to research and development, and reflected the costs of product testing and production readiness efforts. During the first nine months of fiscal 2013, development expenses decreased by 32% as compared to fiscal 2012. This trend is expected to continue during the remainder of fiscal 2013, with development expenses for the year expected to be approximately 34% lower than fiscal year 2012. It is expected that research and development expenses in fiscal 2014 will be lower than in fiscal 2013 given that planned major product developments will be complete. Nevertheless, there will continue to be significant technical effort focused on product enhancements and applications engineering in support of specific business development and sales initiatives.
By the end of fiscal 2013, the Company anticipates completing the development of three new products - the HSE 6000 radio encryptor, the Cipher X 7211 100Mbs - 1Gbs IP Encryptor (CX7211) and the DSD 72B Optical Encryptor - and continue the process of reorienting some of its development investment toward collaborative product developments with major original equipment manufacturers (OEMs). The Company began establishing these technical partnerships in 2012, which continue to develop albeit at a slower pace than originally projected. TCC believes that the resulting products will be imbedded proprietary encryption solutions that will significantly enhance the value of the OEMs products and allow TCC encryption to be carried to the market by major equipment providers.
HSE 6000: In 2013, the Company will have completed development and pilot production of the HSE 6000, a low-cost, battery-powered man-borne encryptor that provides highly secure communications between personnel and base command units. The HSE 6000 is designed for the rugged environments of military and police operations and can function with most VHF and HF radios systems. The HSE 6000 can interoperate with the TCC DSP 9000 Radio Encryption System which is deployed extensively throughout the world. Customer demonstrations have been conducted in several countries. The HSE6000 has several derivative forms that are being considered for research and development investment in 2014.
20
CX7211: The Company also anticipates completing in fiscal 2013 the major development of an advanced, 100Mbs through 1Gbs IP encryptor and the KEYNET Management system to service private network markets for government, military and satellite users. The initial release of this new network product, named the CX7211, has been sold and installed in selected customer networks with excellent results. The CX7211 allows its throughput capacity to be easily increased as network loads increase. TCC believes this feature makes the CX7211 very cost-effective for new installations and very easy to expand when the market demands it. TCC is continuing with the development of new software features for the CX7211 that will expand the systems capabilities and applications.
With the completion of these new products, the Company expects to focus its technical efforts going forward on three principal areas: development of solutions that meet the needs of OEMs; product enhancements that include expanded features, planned capability and applications growth; and product customizations that tailor our products to meet the unique needs of our customers. TCC believes that we either have or can obtain the personnel and capital resources needed to accomplish these objectives.
Other than those stated above, there are no plans for significant internal product development or significant capital expenditures during the remainder of fiscal 2013.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable.
Item 4. | Controls and Procedures |
Evaluation of disclosure controls and procedures. The Companys chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this quarterly report. Based on that review and evaluation, the chief executive officer and chief financial officer have concluded that the Companys current disclosure controls and procedures, as designed and implemented, are effective to ensure that such officers are provided with information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act and that such information is recorded, processed, summarized and reported within the specified time periods.
Changes in internal control over financial reporting . There were no changes in the Companys internal control over financial reporting that occurred during the quarter ended June 29, 2013 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
21
Item 1. | Legal Proceedings |
There were no legal proceedings pending against or involving the Company or its subsidiary during the period covered by this quarterly report.
Item 1A. | Risk Factors |
Not applicable.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Not applicable.
Item 3. | Defaults Upon Senior Securities |
Not applicable.
Item 4. | Mine Safety Disclosures |
Not applicable.
Item 5. | Other Information |
Not applicable.
Item 6. | Exhibits |
22
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TECHNICAL COMMUNICATIONS CORPORATION | ||||||||
(Registrant) | ||||||||
August 13, 2013 |
By: |
/s/ Carl H. Guild, Jr. |
||||||
Date | Carl H. Guild, Jr., President and Chief Executive Officer | |||||||
August 13, 2013 |
By: |
/s/ Michael P. Malone |
||||||
Date | Michael P. Malone, Chief Financial Officer |
23
Exhibit 10.1
Confidential
Authorized For Local Reproduction Previous Edition Is Not Usable |
Standard Form 1449 (Rev. 5/2011) Prescribed By GSA-FAR (48 CFR) 53.212 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
19. Item No. |
20. Schedule Of Supplies/Services |
21. Quantity | 22. Unit |
23. Unit Price |
24. Amount | |||||
32a. Quantity In Column 21 Has Been | ||||||||
¨ Received | ¨ Inspected | ¨ Accepted, And Conforms To The Contract, Except As Noted: |
32b. Signature Of Authorized Government Representative | 32c. Date | 32d. Printed Name and Title of Authorized Government Representative | ||||||||||||||||||
32e. Mailing Address of Authorized Government Representative |
32f. Telephone Number of Authorized Government Representative
|
|||||||||||||||||||
32g. E-Mail of Authorized Government Representative
|
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33. Ship Number | 34. Voucher Number | 35. Amount Verified Correct For | 36. Payment | 37. Check Number | ||||||||||||||||
Partial | Final | ¨ Complete | ¨ Partial | ¨ Final | ||||||||||||||||
38. S/R Account No.
|
39. S/R Voucher Number | 40. Paid By | ||||||||||||||||||
41a. I Certify This Account Is Correct And Proper For Payment |
42a. Received By (Print)
|
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41b. Signature And Title Of Certifying Officer | 41c. Date |
42b. Received At (Location)
|
||||||||||||||||||
42c. Date Recd (YY/MM/DD) | 42d. Total Containers | |||||||||||||||||||
Standard Form 1449 (Rev. 5/2011) Back
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 2 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
SUPPLEMENTAL INFORMATION
Buyer Name: LONNY MATESKY
Buyer Office Symbol/Telephone Number: CCAP-SCD/ (410) 278-4256
Type of Contract: Firm Fixed Price
Kind of Contract: Supply Contracts and Priced Orders
Type of Business: Other Small Business Performing in U.S.
Surveillance Criticality Designator: C
FMS REQUIREMENT
*** End of Narrative A0000 ***
SUPPLEMENTAL INFORMATION
Buyer Name: LONNY MATESKY
Buyer Office Symbol/Telephone Number: CCAP-SCD/ (410) 278-4256
Coolest #6245
1. This contract is for a Foreign Military Sale (FMS) requirement for the country of Egypt, under FMS CASE EG-B-UZE. The purpose of this contract is to procure up-grade kits, test equipment, and associated training for the Egyptian Armed Forces.
2. The contract type is Firm Fixed Price (FFP). The items being procured are non-developmental items and will be governed by FAR Part 12.
3. Per the FMS the Government awards this contract on a sole source basis to Technical Communications Corporation (TCC).
3. Early deliveries for hardware CLINs (0001-0010) at no additional cost to the Government is acceptable.
4. All other terms and conditions are contained herein.
*** END OF NARRATIVE A0001 ***
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 3 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 4 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
ITEM NO | SUPPLIES/SERVICES | QUANTITY | UNIT | UNIT PRICE | AMOUNT | |||||||||||||||||||
GENERIC NAME DESCRIPTION: SW (EPROM) CPU SW EP |
||||||||||||||||||||||||
CLIN CONTRACT TYPE: | ||||||||||||||||||||||||
Firm Fixed Price |
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PSC: 5820
|
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PRON: J52SAH581G PRON AMD: 01 ACRN: AA | ||||||||||||||||||||||||
AMS CD: UZE011 | ||||||||||||||||||||||||
FMS COUNTRY/CASE: EG/UZE
|
||||||||||||||||||||||||
Please see SOW 3.1 and Appendix A for the description and quantity of items. | ||||||||||||||||||||||||
(End of narrative B001)
|
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Packaging and Marking | ||||||||||||||||||||||||
Inspection and Acceptance |
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INSPECTION: | Origin | ACCEPTANCE: | Origin | |||||||||||||||||||||
Deliveries or Performance |
||||||||||||||||||||||||
DOC
REL CD |
MILSTRIP |
SUPPL
ADDR |
SIG CD |
MARK FOR |
TP CD |
|||||||||||||||||||
001 | BEGH4N2242D002 | BZ3UZE | L | BEGH00 | 3 | |||||||||||||||||||
PROJ CD |
BRK BLK PT |
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BEG003 | ||||||||||||||||||||||||
DEL REL CD |
QUANTITY |
DEL DATE |
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001 | (*****) | (*****) | ||||||||||||||||||||||
FOB POINT: | Origin | |||||||||||||||||||||||
SHIP TO: | ||||||||||||||||||||||||
(BEG003) | RADIANT GLOBAL LOGISTICS | |||||||||||||||||||||||
7465 CANDLEWOOD ROAD SUITE M | ||||||||||||||||||||||||
HANOVER MD 21076-3183 | ||||||||||||||||||||||||
MARK FOR: | EGYPTIAN MINISTRY OF DEFENSE | |||||||||||||||||||||||
SIGNAL DEPARTMENT | ||||||||||||||||||||||||
EL NASER CITY CAIRO EGYPT | ||||||||||||||||||||||||
0003 | TCC MUX Cable to MPS | |||||||||||||||||||||||
GENERIC NAME DESCRIPTION: TCC MUX Cable to MPS | ||||||||||||||||||||||||
CLIN CONTRACT TYPE: | ||||||||||||||||||||||||
Firm Fixed Price | ||||||||||||||||||||||||
PSC: 5820 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 5 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 6 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 7 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 8 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 9 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 10 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
ITEM NO | SUPPLIES/SERVICES | QUANTITY | UNIT | UNIT PRICE | AMOUNT | |||||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||||||||||
DOC REL CD |
MILSTRIP |
SUPPL ADDR |
SIG CD |
MARK FOR |
TP CD |
|||||||||||||||||||||||
001 |
BEGH4N2242D008 | BZ3UZE | L | BEGH00 | 3 | |||||||||||||||||||||||
PROJ CD |
BRK BLK PT |
|||||||||||||||||||||||||||
BEG003 |
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DEL REL CD |
QUANTITY |
DEL DATE |
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001 |
(*****) | (*****) | ||||||||||||||||||||||||||
FOB POINT: | Destination | |||||||||||||||||||||||||||
SHIP TO: |
||||||||||||||||||||||||||||
(BEG003) | RADIANT GLOBAL LOGISTICS | |||||||||||||||||||||||||||
7465 CANDLEWOOD ROAD SUITE M | ||||||||||||||||||||||||||||
HANOVER MD 21076-3183 | ||||||||||||||||||||||||||||
MARK FOR: | EGYPTIAN MINISTRY OF DEFENSE | |||||||||||||||||||||||||||
SIGNAL DEPARTMENT | ||||||||||||||||||||||||||||
EL NASER CITY CAIRO EGYPT | ||||||||||||||||||||||||||||
0007 | BY PASS ADAPTER FOR DSD 72A-SP(TI) | (*****) | EA | (*****) | (*****) | |||||||||||||||||||||||
|
|
|
|
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GENERIC NAME DESCRIPTION: TCC BY PASS Adapter |
||||||||||||||||||||||||||||
CLIN CONTRACT TYPE: | ||||||||||||||||||||||||||||
Firm Fixed Price | ||||||||||||||||||||||||||||
PSC: 5820 | ||||||||||||||||||||||||||||
PRON: J52SAH651G PRON AMD: 01 ACRN: AA | ||||||||||||||||||||||||||||
AMS CD: UZE011 | ||||||||||||||||||||||||||||
FMS COUNTRY/CASE: EG/UZE | ||||||||||||||||||||||||||||
Please see SOW 3.1 and Appendix A for the description and quantity of items. | ||||||||||||||||||||||||||||
(End of narrative B001) | ||||||||||||||||||||||||||||
Packaging and Marking | ||||||||||||||||||||||||||||
Inspection and Acceptance | ||||||||||||||||||||||||||||
INSPECTION: Destination ACCEPTANCE: Destination | ||||||||||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||||||||||
DOC REL CD |
MILSTRIP |
SUPPL ADDR |
SIG CD |
MARK FOR |
TP CD |
|||||||||||||||||||||||
001 | BEGH4N2242D009 | BZ3UZE | L | BEGH00 | 3 | |||||||||||||||||||||||
PROJ CD |
BRK BLK PT |
|||||||||||||||||||||||||||
BEG003 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 12 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
ITEM NO | SUPPLIES/SERVICES | QUANTITY | UNIT | UNIT PRICE | AMOUNT | |||||||||||||||||||||||
DEL REL CD |
QUANTITY |
DEL DATE |
||||||||||||||||||||||||||
001 | (*****) | (*****) | ||||||||||||||||||||||||||
FOB POINT: | Destination | |||||||||||||||||||||||||||
SHIP TO: | ||||||||||||||||||||||||||||
(BEG003) | RADIANT GLOBAL LOGISTICS | |||||||||||||||||||||||||||
7465 CANDLEWOOD ROAD SUITE M |
||||||||||||||||||||||||||||
HANOVER | MD 21076-3183 | |||||||||||||||||||||||||||
MARK FOR: | EGYPTIAN MINISTRY OF DEFENSE | |||||||||||||||||||||||||||
SIGNAL DEPARTMENT |
||||||||||||||||||||||||||||
EL NASER CITY CAIRO EGYPT |
||||||||||||||||||||||||||||
0008AB |
TCC MODEL 70-4 AUTOMATED TEST | (*****) | EA | (*****) | (*****) | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
GENERIC NAME DESCRIPTION: AUTOMATED TEST EQUIPMENT |
||||||||||||||||||||||||||||
PRON: J52SAH671G PRON AMD: 01 ACRN: AA | ||||||||||||||||||||||||||||
AMS CD: UZE011 |
||||||||||||||||||||||||||||
PSC: 5820 |
||||||||||||||||||||||||||||
FMS COUNTRY/CASE: EG/UZE |
||||||||||||||||||||||||||||
Please see SOW 3.1 and Appendix A for the description and quantity of items. | ||||||||||||||||||||||||||||
(End of narrative B001) | ||||||||||||||||||||||||||||
Packaging and Marking | ||||||||||||||||||||||||||||
Inspection and Acceptance | ||||||||||||||||||||||||||||
INSPECTION: Destination ACCEPTANCE: Destination | ||||||||||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||||||||||
DOC REL CD |
MILSTRIP |
SUPPL ADDR |
SIG CD |
MARK FOR |
TP CD |
|||||||||||||||||||||||
001 | BEGH4N2242D011 | BZ3UZE | L | BEGH00 | 3 | |||||||||||||||||||||||
PROJ CD |
BRK BLK PT |
|||||||||||||||||||||||||||
BEG003 | ||||||||||||||||||||||||||||
DEL REL CD |
QUANTITY |
DEL DATE |
||||||||||||||||||||||||||
001 | (*****) | (*****) | ||||||||||||||||||||||||||
FOB POINT: Destination |
||||||||||||||||||||||||||||
SHIP TO: |
||||||||||||||||||||||||||||
(BEG003) | RADIANT GLOBAL LOGISTICS | |||||||||||||||||||||||||||
7465 CANDLEWOOD ROAD SUITE M |
||||||||||||||||||||||||||||
HANOVER | MD 21076-3183 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
ITEM NO | SUPPLIES/SERVICES | QUANTITY | UNIT |
UNIT
PRICE |
AMOUNT | |||||||||||||||||||||||
MARK FOR: | EGYPTIAN MINISTRY OF DEFENSE | |||||||||||||||||||||||||||
SIGNAL DEPARTMENT | ||||||||||||||||||||||||||||
EL NASER CITY CAIRO EGYPT | ||||||||||||||||||||||||||||
0010 |
TEST EQUIPMENT FOR E1-E2-E3-D1 | (*****) | EA | (*****) | (*****) | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
GENERIC NAME DESCRIPTION: TCC BER TEST EQUIPMENT | ||||||||||||||||||||||||||||
CLIN CONTRACT TYPE: | ||||||||||||||||||||||||||||
Firm Fixed Price | ||||||||||||||||||||||||||||
PSC: 5820 | ||||||||||||||||||||||||||||
PRON: J52SAH691G PRON AMD: 01 ACRN: AC | ||||||||||||||||||||||||||||
AMS CD: UZE013 | ||||||||||||||||||||||||||||
FMS COUNTRY/CASE: EG/UZE | ||||||||||||||||||||||||||||
Please see SOW 3.1 and Appendix A for the description and quantity of items. | ||||||||||||||||||||||||||||
(End of narrative B001) | ||||||||||||||||||||||||||||
A quantity of two (2) Part Number 401-25912, BER Test Cables, are included in the price and will ship with the purchase of BER Test Equipment Part Number 401- 25757. See SOW Appendix A for additional information. | ||||||||||||||||||||||||||||
(End of narrative B002) | ||||||||||||||||||||||||||||
Packaging and Marking | ||||||||||||||||||||||||||||
Inspection and Acceptance | ||||||||||||||||||||||||||||
INSPECTION: Destination ACCEPTANCE: Destination | ||||||||||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||||||||||
DOC REL CD |
MILSTRIP |
SUPPL ADDR |
SIG CD |
MARK FOR |
TP CD |
|||||||||||||||||||||||
001 | BEGH4N2242D013 | BZ3UZE | L | BEGH00 | 3 | |||||||||||||||||||||||
PROJ CD |
BRK BLK PT |
|||||||||||||||||||||||||||
BEG003 | ||||||||||||||||||||||||||||
DEL REL
|
QUANTITY |
DEL DATE |
||||||||||||||||||||||||||
001 | (*****) | (*****) | ||||||||||||||||||||||||||
FOB POINT: | Destination | |||||||||||||||||||||||||||
SHIP TO: | ||||||||||||||||||||||||||||
(BEG003) | RADIANT GLOBAL LOGISTICS | |||||||||||||||||||||||||||
7465 CANDLEWOOD ROAD SUITE M | ||||||||||||||||||||||||||||
HANOVER | MD 21076-3183 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
ITEM NO | SUPPLIES/SERVICES | QUANTITY | UNIT | UNIT PRICE | AMOUNT | |||||||||||||||
(End of narrative B001) | ||||||||||||||||||||
Inspection and Acceptance | ||||||||||||||||||||
INSPECTION: Origin ACCEPTANCE: Origin | ||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||
DLVR SCH
|
QUANTITY |
PERF COMPL DATE |
||||||||||||||||||
001 | (*****) | (*****) | ||||||||||||||||||
(*****) | ||||||||||||||||||||
0013 | CONTRACT DATA REQUIREMENTS LIST | (*****) | (*****) | (*****) | ||||||||||||||||
|
|
|||||||||||||||||||
GENERIC NAME DESCRIPTION: CDRL | ||||||||||||||||||||
PSC: 5820 | ||||||||||||||||||||
The Contracts Data Requirements List, Exhibit A, is found in Section J. | ||||||||||||||||||||
(End of narrative B001) | ||||||||||||||||||||
Inspection and Acceptance | ||||||||||||||||||||
INSPECTION: Origin ACCEPTANCE: Origin | ||||||||||||||||||||
Deliveries or Performance | ||||||||||||||||||||
DLVR SCH
|
QUANTITY |
PERF COMPL DATE |
||||||||||||||||||
001 | (*****) | (*****) | ||||||||||||||||||
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
The contractor shall perform all work in accordance with the Statement of Work, Attachment 0001, located in Section J.
*** END OF NARRATIVE C0001 ***
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
PACKAGING AND MARKING
Packaging/packing shall be in accordance with ASTM D 3951-10, Standard Practice for Commercial Packaging, Level of Protection (LOP): Commercial, Level of Pack (LPK): Commercial, Quantity Unit Pack (QUP): 001. Marking shall be in accordance with MIL-STD-129P.
*** END OF NARRATIVE D0001 ***
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
INSPECTION AND ACCEPTANCE
Regulatory Cite |
Title |
Date |
||||
1 | 52.246-2 | INSPECTION OF SUPPLIES FIXED-PRICE | AUG/1996 | |||
2 | 52.246-4 | INSPECTION OF SERVICES FIXED-PRICE | AUG/1996 | |||
3 | 52.246-16 | RESPONSIBILITY FOR SUPPLIES | APR/1984 | |||
4 | 52.246-11 | HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT | FEB/1999 |
The Contractor shall comply with the higher-level quality standard selected below. [If more than one standard is listed, the offeror shall indicate its selection by checking the appropriate block.]
Title
American National Standard, Quality
Management Systems
Number
ANSI/ISO/ASQ(E)
Q90001-2008
Date
15 November 2008
Tailoring
Requires Approval of
the Contracting Officer
(End of Clause)
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
CONTRACT ADMINISTRATION DATA
LINE
|
PRON/AMS CD/MIPR |
OBLG
STAT |
JO NO/ACCT ASSIGN |
ACRN |
OBLIGATED
AMOUNT |
|||||||
0001 |
J52SAH571G UZE011 | 2 | 2RGZUA | AA | (*****) | |||||||
0002 |
J52SAH581G UZE011 | 2 | 2RGZUB | AA | (*****) | |||||||
0003AA |
J52SAH591G UZE011 | 2 | 2RGZUC | AA | (*****) | |||||||
0003AB |
J52SAH601G UZE011 | 2 | 2RGZUD | AA | (*****) | |||||||
0004AA |
J52SAH611G UZE011 | 2 | 2RGZUE | AA | (*****) | |||||||
0004AB |
J52SAH621G UZE011 | 2 | 2RGZUF | AA | (*****) | |||||||
0005 |
J52SAH631G UZE011 | 2 | 2RGZUG | AA | (*****) | |||||||
0006 |
J52SAH641G UZE011 | 2 | 2RGZUH | AA | (*****) | |||||||
0007 |
J52SAH651G UZE011 | 2 | 2RGZUI | AA | (*****) | |||||||
0008AA |
J52SAH661G UZE011 | 2 | 2RGZUJ | AA | (*****) | |||||||
0008AB |
J52SAH671G UZE011 | 2 | 2RGZUK | AA | (*****) | |||||||
0009 |
J52SAH681G UZE012 | 2 | 2RGZUL | AB | (*****) | |||||||
0010 |
J52SAH691G UZE013 | 2 | 2RGZUM | AC | (*****) | |||||||
0011 |
J52SAH701G UZE014 | 2 | 2RGZUN | AD | (*****) | |||||||
0012 |
J52SAH711G UZE015 | 2 | 2RGZUO | AE | (*****) | |||||||
|
|
|||||||||||
TOTAL |
$ | 3,646,399.00 |
ACRN |
ACCOUNTING CLASSIFICATION |
OBLIGATED
AMOUNT |
||||||
AA |
9711 X8242EGO1X627510UZE 01131EAEGS28043 | W15GK8 | (*****) | |||||
AB |
9711 X8242EGO1X627510UZE 01231EAEGS28043 | W15GK8 | (*****) | |||||
AC |
9711 X8242EGO1X627510UZE 01331EAEGS28043 | W15GK8 | (*****) | |||||
AD |
9711 X8242EGO1X627510UZE 01431EAEGS28043 | W15GK8 | (*****) | |||||
AE |
9711 X8242EGO1X627510UZE 01531EAEGS28043 | W15GK8 | (*****) | |||||
|
|
|||||||
TOTAL |
$ | 3,646,399.00 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Page 21 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
LINE
|
ACRN |
EDI/SFIS ACCOUNTING CLASSIFICATION |
||||||||||||||||||||||
0001 | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH571G | 2RGZUA | S28043 | |||||||||||||||||
0002 | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH581G | 2RGZUB | S28043 | |||||||||||||||||
0003AA | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH591G | 2RGZUC | S28043 | |||||||||||||||||
0003AB | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH601G | 2RGZUD | S28043 | |||||||||||||||||
0004AA | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH611G | 2RGZUE | S28043 | |||||||||||||||||
0004AB | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH621G | 2RGZUF | S28043 | |||||||||||||||||
0005 | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH631G | 2RGZUG | S28043 | |||||||||||||||||
0006 | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH641G | 2RGZUH | S28043 | |||||||||||||||||
0007 | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH651G | 2RGZUI | S28043 | |||||||||||||||||
0008AA | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH661G | 2RGZUJ | S28043 | |||||||||||||||||
0008AB | AA | 97110X0X8242EGO1 | W15GK8 | X627510UZE011 | 31EAJ52SAH671G | 2RGZUK | S28043 | |||||||||||||||||
0009 | AB | 97110X0X8242EGO1 | W15GK8 | X627510UZE012 | 31EAJ52SAH681G | 2RGZUL | S28043 | |||||||||||||||||
0010 | AC | 97110X0X8242EGO1 | W15GK8 | X627510UZE013 | 31EAJ52SAH691G | 2RGZUM | S28043 | |||||||||||||||||
0011 | AD | 97110X0X8242EGO1 | W15GK8 | X627510UZE014 | 31EAJ52SAH701G | 2RGZUN | S28043 | |||||||||||||||||
0012 | AE | 97110X0X8242EGO1 | W15GK8 | X627510UZE015 | 31EAJ52SAH711G | 2RGZUO | S28043 |
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
SPECIAL CONTRACT REQUIREMENTS
RIGHTS IN TECHNICAL DATA AND SOFTWARE PROVIDED TO A FOREIGN GOVERNMENT
The parties hereto recognize that any technical data and computer software being purchased hereunder will be provided to a foreign government. The parties further recognize that the clauses in this contract dealing with rights in technical data and computer software, along with those addressing indemnification for patent infringement, may be drafted in terms of rights and obligations flowing to the United States Government. Accordingly, the Contractor agrees to grant, and by incorporation of this clause in the contract document, does grant, that foreign government the same rights in technical data and computer software as is granted to the United States Government by operation of those clauses in the contract document dealing with rights in technical data and computer software except that no rights to computer software source code for the foreign government are provided in this contract. Further, the Contractor hereby extends to that foreign government the same degree of indemnification for patent infringement which it affords the United States pursuant to the terms of this contract. For purposes of contract administration, the parties agree that the clauses will be administered with the foreign government in such a manner as best approximates that set out with respect to the United States Government.
*** END OF NARRATIVE H0001 ***
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
CONTRACT CLAUSES
Regulatory Cite |
Title |
Date |
||||
1 | 52.203-12 |
LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS |
OCT/2010 | |||
2 | 52.204-4 |
PRINTED OR COPIED DOUBLE-SIDED ON POSTCONSUMER FIBER CONTENT PAPER |
MAY/2011 | |||
3 | 52.212-4 |
CONTRACT TERMS AND CONDITIONS COMMERCIAL ITEMS |
FEB/2012 | |||
4 | 52.227-1 |
AUTHORIZATION AND CONSENT |
DEC/2007 | |||
5 | 52.227-2 |
NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT |
DEC/2007 | |||
6 | 52.227-9 |
REFUND OF ROYALTIES |
APR/1984 | |||
7 | 252.204-7008 |
EXPORT-CONTROLLED ITEMS |
APR/2010 | |||
8 | 252.227-7015 |
TECHNICAL DATA COMMERCIAL ITEMS |
DEC/2011 | |||
9 | 252.227-7016 |
RIGHTS IN BID OR PROPOSAL INFORMATION |
JAN/2011 | |||
10 | 252.227-7025 |
LIMITATIONS ON THE USE OR DISCLOSURE OF GOVERNMENT-FURNISHED INFORMATION MARKED WITH RESTRICTIVE LEGENDS |
MAR/2011 | |||
11 | 252.227-7027 |
DEFERRED ORDERING OF TECHNICAL DATA OR COMPUTER SOFTWARE |
APR/1988 | |||
12 | 252.227-7037 |
VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA |
JUN/2012 | |||
13 | 252.232-7003 |
ELECTRONIC SUBMISSION OF PAYMENT REQUESTS AND RECEIVING REPORTS |
JUN/2012 | |||
14 | 52.212-5 |
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS COMMERCIAL ITEMS |
JAN/2013 |
(a) The Contractor shall comply with the following Federal Acquisition Regulation (FAR) clauses, which are incorporated in this contract by reference, to implement provisions of law or Executive orders applicable to acquisitions of commercial items:
(1) | 52.222-50, Combating Trafficking in Persons (FEB 2009) (22U.S.C. 7104(g)). |
Alternate I (Aug 2007) of 52.222-50 (22 U.S.C. 7104(g)).
(2) | 52.233-3, Protest After Award (AUG 1996) (31 U.S.C. 3553). |
(3) | 52.233-4, Applicable Law for Breach of Contract Claim (OCT 2004) (Pub. L. 108-77, 108-78). |
(b) The Contractor shall comply with the FAR clauses in this paragraph (b) that the contracting officer has indicated as being incorporated in this contract by reference to implement provisions of law or Executive orders applicable to acquisitions of commercial items:
X (1) 52.203-6, Restrictions on Subcontractor Sales to the Government (Sep 2006), with Alternate I (Oct 1995)(41 U.S.C. 253g and 10 U.S.C. 2402).
(2) 52.203-13, Contractor Code of Business Ethics and Conduct (Apr 2010) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
(3) 52.203-15, Whistleblower Protections under the American Recovery and Reinvestment Act of 2009 (Jun 2010) (Section 1553 of Pub. L. 111-5). (Applies to contracts funded by the American Recovery and Reinvestment Act of 2009.)
X (4) 52.204-10, Reporting Executive Compensation and First-Tier Subcontract Awards (Aug 2012) (Pub. L. 109-282) (31 U.S.C. 6101 note).
(5) 52.204-11, American Recovery and Reinvestment Act Reporting Requirements (JUL 2010) (Pub. L. 111-5).
X (6) 52.209-6, Protecting the Governments Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (DEC 2010) (31 U.S.C. 6101 note).
X (7) 52.209-9, Updates of Publicly Available Information Regarding Responsibility Matters (FEB 2012) (41 U.S.C. 2313).
(8) 52.209-10, Prohibition on Contracting with Inverted Domestic Corporations (MAY 2012) (section 740 of Division C of Public Law 111-117, section 743 of Division D of Public Law 111-8, and section 745 of Division D of Public Law 110-161)
(9) 52.219-3, Notice of Total HUBZone Set-Aside or Sole-Source Award (Nov 2011) (15 U.S.C. 657a).
(10) 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns (Jan 2011) (if the offeror elects to waive the preference, it shall so indicate in its offer) (15 U.S.C. 657a).
(11) [Reserved]
(12) (i) 52.219-6, Notice of Total Small Business Set-Aside (Nov 2011) (15 U.S.C. 644).
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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(ii) Alternate I (Nov 2011) of 52.219-6.
(iii) Alternate II (Nov 2011) of 52.219-6.
(13) (i) 52.219-7, Notice of Partial Small Business Set-Aside (June 2003) (15 U.S.C. 644).
(ii) Alternate I (Oct 1995) of 52.219-7.
(iii) Alternate II (Mar 2004) of 52.219-7.
X (14) 52.219-8, Utilization of Small Business Concerns (Jan 2011) (15 U.S.C. 637(d)(2) and (3)).
(15) (i) 52.219-9, Small Business Subcontracting Plan (Jan 2011) (15 U.S.C. 637 (d)(4)).
(ii) Alternate I (Oct 2001) of 52.219-9.
(iii) Alternate II (Oct 2001) of 52.219-9.
(iv) Alternate III (Jul 2010) of 52.219-9.
(16) 52.219-13, Notice of Set-Aside of Orders (NOV 2011) (15 U.S.C. 644(r)).
(17) 52.219-14, Limitations on Subcontracting (Nov 2011) (15 U.S.C. 637(a)(14)).
(18) 52.219-16, Liquidated Damages Subcontracting Plan (JAN 1999) (15 U.S.C. 637(d)(4)(F)(i)).
(19) (i) 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns (Oct 2008)(10 U.S.C. 2323) (if the offeror elects to waive the adjustment, it shall so indicate in its offer).
(ii) Alternate I (June 2003) of 52.219-23.
(20) 52.219-25, Small Disadvantaged Business Participation ProgramDisadvantaged Status and Reporting (Dec 2010)(Pub. L. 103-355, section 7102, and 10 U.S.C. 2323).
(21) 52.219-26, Small Disadvantaged Business Participation ProgramIncentive Subcontracting (Oct 2000) (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323).
(22) 52.219-27, Notice of Total Service-Disabled Veteran-Owned Small Business Set-Aside (Nov 2011) (15 U.S.C. 657 f)
X (23) 52.219-28, Post Award Small Business Program Rerepresentation (APR 2012) (15 U.S.C. 632(a)(2)).
(24) 52.219-29 Notice of Total Set-Aside for Economically Disadvantaged Women-Owned Small Business (EDWOSB) Concerns (Apr 2012) (15 U.S.C. 637(m)).
(25) 52.219-30 Notice of Total Set-Aside for Women-Owned Small Business (WOSB) Concerns Eligible Under the WOSB Program (Apr 2012) (15 U.S.C. 637(m)).
X (26) 52.222-3, Convict Labor (June 2003) (E.O. 11755).
X (27) 52.222-19, Child LaborCooperation with Authorities and Remedies (Mar 2012) (E.O. 13126).
X (28) 52.222-21, Prohibition of Segregated Facilities (Feb 1999).
X (29) 52.222-26, Equal Opportunity (Mar 2007) (E.O. 11246).
X (30) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sep 2010) (38 U.S.C. 4212).
X (31) 52.222-36, Affirmative Action for Workers with Disabilities (Oct 2010) (29 U.S.C. 793).
X (32) 52.222-37, Employment Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sep 2010) (38 U.S.C. 4212).
X (33) 52.222-40, Notification of Employee Rights Under the National Labor Relations Act (DEC 2010) (E.O. 13496).
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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(34) 52.222-54, Employment Eligibility Verification (Jul 2012). (Executive Order 12989). (Not applicable to the acquisition of commercially available off-the-shelf items or certain other types of commercial items as prescribed in 22.1803.)
(35) (i) 52.223-9, Estimate of Percentage of Recovered Material Content for EPA-Designated Items (May 2008) (42 U.S.C. 6962(c)(3)(A)(ii)). (Not applicable to the acquisition of commercially available off-the-shelf items.)
(ii) Alternate I (May 2008) of 52.223-9 (42 U.S.C. 6962(i)(2)(C)). (Not applicable to the acquisition of commercially available off-the-shelf items.)
(36) 52.223-15, Energy Efficiency in Energy-Consuming Products (Dec 2007) (42 U.S.C. 8259b).
(37) (i) 52.223-16, IEEE 1680 Standard for the Environmental Assessment of Personal Computer Products (DEC 2007) (E.O. 13423).
(ii) Alternate I (DEC 2007) of 52.223-16.
X (38) 52.223-18, Encouraging Contractor Policies to Ban Text Messaging While Driving (AUG 2011) (E.O. 13513).
(39) 52.225-1, Buy American Act Supplies (Feb 2009)(41 U.S.C. 10a-10d).
(40) (i) 52.225-3, Buy American Act Free Trade Agreements Israeli Trade Act (NOV 2012) (41 U.S.C. 10a-10d, 19 U.S.C. 3301 note, 19 U.S.C. 2112 note, 19 U.S.C. 3805 note, Pub. L. 108-77, 108-78, 108-286, 108-302, 109-53, 109-169, 109-283, and 110-138).
(ii) Alternate I (MAR 2012) of 52.225-3.
(iii) Alternate II (MAR 2012) of 52.225-3.
(iv) Alternate III (NOV 2012) of 52.225-3.
(41) 52.225-5, Trade Agreements (NOV 2012) (19 U.S.C. 2501, et seq., 19 U.S.C. 3301 note).
X (42) 52.225-13, Restrictions on Certain Foreign Purchases (Jun 2008) (E.o.s, proclamations, and statutes administered by the Office of Foreign Assets Control of the Department of the Treasury).
(43) 52.226-4, Notice of Disaster or Emergency Area Set-Aside (Nov 2007) (42 U.S.C. 5150).
(44) 52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Area (Nov 2007)(42 U.S.C. 5150).
(45) 52.232-29, Terms for Financing of Purchases of Commercial Items (Feb 2002)(41 U.S.C. 255(f), 10 U.S.C. 2307(f)).
(46) 52.232-30, Installment Payments for Commercial Items (Oct 1995)(41 U.S.C. 255(f), 10 U.S.C. 2307(f)).
X (47) 52.232-33, Payment by Electronic Funds Transfer Central Contractor Registration (Oct. 2003)(31 U.S.C. 3332).
(48) 52.232-34, Payment by Electronic Funds Transfer Other Than Central Contractor Registration (May 1999)(31 U.S.C. 3332).
(49) 52.232-36, Payment by Third Party (FEB 2010)(31 U.S.C. 3332).
(50) 52.239-1, Privacy or Security Safeguards (Aug 1996)(5 U.S.C. 552a).
(51) (i) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels (Feb 2006)(46 U.S.C. Appx 1241(b) and 10 U.S.C. 2631).
(ii) Alternate I (Apr 2003) of 52.247-64.
(c) The Contractor shall comply with the FAR clauses in this paragraph (c), applicable to commercial services, that the Contracting Officer has indicated as being incorporated in this contract by reference to implement provisions of law or executive orders applicable to acquisitions of commercial items:
(1) 52.222-41, Service Contract Act of 1965, (Nov 2007)(41 U.S.C. 351, et seq.).
(2) 52.222-42, Statement of Equivalent Rates for Federal Hires (May 1989)(29 U.S.C. 206 and 41 U.S.C. 351, et seq.).
(3) 52.222-43, Fair Labor Standards Act and Service Contract Act Price Adjustment (Multiple Year and Option Contracts) (Sep 2009) (29 U.S.C.206 and 41 U.S.C. 351, et seq.).
(4) 52.222-44, Fair Labor Standards Act and Service Contract Act Price Adjustment (Sep 2009)(29 U.S.C. 206 and 41 U.S.C. 351, et seq.).
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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(5) 52.222-51, Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment Requirements (Nov 2007) (41 U.S.C. 351, et seq.).
(6) 52.222-53, Exemption from Application of the Service Contract Act to Contracts for Certain ServicesRequirements (Feb 2009) (41 U.S.C. 351, et seq.).
(7) 52.222-17, Nondisplacement of Qualified Workers (JAN 2013) (E.O.13495).
(8) 52.226-6, Promoting Excess Food Donation to Nonprofit Organizations. (Mar 2009) (Pub. L. 110-247).
(9) 52.237-11, Accepting and Dispensing of $1 Coin (Sep 2008) (31 U.S.C. 5112(p)(1)).
(d) Comptroller General Examination of Record. The Contractor shall comply with the provisions of this paragraph (d) if this contract was awarded using other than sealed bid, is in excess of the simplified acquisition threshold, and does not contain the clause at 52.215-2, Audit and Records Negotiation.
(1) The Comptroller General of the United States, or an authorized representative of the Comptroller General, shall have access to and right to examine any of the Contractors directly pertinent records involving transactions related to this contract.
(2) The Contractor shall make available at its offices at all reasonable times the records, materials, and other evidence for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in FAR Subpart 4.7, Contractor Records Retention, of the other clauses of this contract. If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. Records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract shall be made available until such appeals, litigation, or claims are finally resolved.
(3) As used in this clause, records include books, documents, accounting procedures and practices, and other data, regardless of type and regardless of form. This does not require the Contractor to create or maintain any record that the Contractor does not maintain in the ordinary course of business or pursuant to a provision of law.
(e) (1) Notwithstanding the requirements of the clauses in paragraphs (a), (b), (c) and (d) of this clause, the Contractor is not required to flow down any FAR clause, other than those in this paragraph (e)(1) in a subcontract for commercial items. Unless otherwise indicated below, the extent of the flow down shall be as required by the clause
(i) 52.203-13, Contractor Code of Business Ethics and Conduct (Apr 2010) (Pub. L. 110-252, Title VI, Chapter 1 (41 U.S.C. 251 note)).
(ii) 52.219-8, Utilization of Small Business Concerns (Dec 2010)(15 U.S.C. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. If the subcontract (except subcontracts to small business concerns) exceeds $650,000 ($1.5 million for construction of any public facility), the subcontractor must include 52.219-8 in lower tier subcontracts that offer subcontracting opportunities.
(iii) 52.222-17, Nondisplacement of Qualified Workers (JAN 2013) (E.O. 13495). Flow down required in accordance with paragraph (l) of FAR clause 52.222-17.
(iv) 52.222-26, Equal Opportunity (Oct 2010)(E.O. 11246).
(v) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans (Sep 2010) (38 U.S.C. 4212).
(vi) 52.222-36, Affirmative Action for Workers with Disabilities (June 1998)(29 U.S.C. 793).
(vii) 52.222-40, Notification of Employee Rights Under the National Labor Relations Act (DEC 2010) (E.O. 13496).
(viii) 52.222-41, Service Contract Act of 1965, (Nov 2007), flow down required for all subcontracts subject to the Service Contract Act of 1965 (41 U.S.C. 351, et seq.)
(ix) 52.222-50, Combating Trafficking in Persons (FEB 2009) (22 U.S.C. 7104(g)).
Alternate I (Aug 2007) of 52.222-50 (22 U.S.C. 7104(g)).
(x) 52.222-51, Exemption from Application of the Service Contract Act to Contracts for Maintenance, Calibration, or Repair of Certain Equipment Requirements (Nov 2007) (41 U.S.C. 351, et seq.)
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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(xi) 52.222-53, Exemption from Application of the Service Contract Act to Contracts for Certain Services Requirements (Feb 2009) (41 U.S.C. 351, et seq.)
(xii) 52.222-54, Employment Eligibility Verification (Jul 2012).
(xiii) 52.226-6, Promoting Excess Food Donation to Nonprofit Organizations. (Mar 2009) (Pub. L. 110-247). Flow down required in accordance with paragraph (e) of FAR clause 52.226-6.
(xiv) 52.247-64, Preference for Privately-Owned U.S. Flag Commercial Vessels (Feb 2006)(46 U.S.C. Appx 1241(b) and 10 U.S.C. 2631). Flow down required in accordance with paragraph (d) of FAR clause 52.247-64.
(2) While not required, the contractor may include in its subcontracts for commercial items a minimal number of additional clauses necessary to satisfy its contractual obligations.
(End of Clause)
15 | 52.227-3 | PATENT INDEMNITY (APR 1984) ALTERNATE II (APR 1984) | APR/1984 |
(a) The Contractor shall indemnify the Government and its officers, agents, and employees against liability, including costs, for infringement of any United States patent (except a patent issued upon an application that is now or may hereafter be withheld from issue pursuant to a Secrecy Order under 35 U.S.C. 181) arising out of the manufacture or delivery of supplies, the performance of services, or the construction, alteration, modification, or repair of real property (hereinafter referred to as construction work) under this contract, or out of the use or disposal by or for the account of the Government of such supplies or construction work.
(b) This indemnity shall not apply unless the Contractor shall have been informed as soon as practicable by the Government of the suit or action alleging such infringement and shall have been given such opportunity as is afforded by applicable laws, rules, or regulations to participate in its defense. Further, this indemnity shall not apply to
(1) An infringement resulting from compliance with specific written instructions of the Contracting Officer directing a change in the supplies to be delivered or in the materials or equipment to be used, or directing a manner of performance of the contract not normally used by the Contractor;
(2) An infringement resulting from addition to or change in supplies or components furnished or construction work performed that was made subsequent to delivery or performance; or
(3) A claimed infringement that is unreasonably settled without the consent of the Contractor, unless required by final decree of a court of competent jurisdiction.
(c) This patent indemnification shall cover the following items:
This patent indemnification shall be applicable to any patent claims or suits against the Government arising out of any activity occurring pursuant to this contract regarding the making, use, or sale of any items, or materials; or the practicing of any processes; which, in either case, have been sold or offered for sale by the contractor or its subcontractors hereunder to the public, in the commercial open market, and to such items, materials, or processes with relatively minor modifications thereto.
(End of Clause)
16 | 252.212-7001 |
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS APPLICABLE TO DEFENSE ACQUISITIONS OF COMMERCIAL ITEMS |
FEB/2013 |
(a) The Contractor agrees to comply with the following Federal Acquisition Regulation (FAR) clause which, if checked, is included in this contract by reference to implement a provision of law applicable to acquisitions of commercial items or components.
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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52.203-3, Gratuities (APR 1984) (10 U.S.C. 2207).
(b) The Contractor agrees to comply with any clause that is checked on the following list of Defense FAR Supplement clauses which, if checked, is included in this contract by reference to implement provisions of law or Executive orders applicable to acquisitions of commercial items or components.
(1) X 252.203-7000, Requirements Relating to Compensation of Former DoD Officials (SEP 2011) (Section 847 of Pub. L. 110-181).
(2) 252.203-7003, Agency Office of the Inspector General (DEC 2012) (section 6101 of Pub. L. 110-252, 41 U.S.C. 3509).
(3) X 252.205-7000, Provision of Information to Cooperative Agreement Holders (DEC 1991) (10 U.S.C. 2416).
(4) 252.219-7003, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (DoD Contracts) (AUG 2012) (15 U.S.C. 637).
(5) 252.219-7004, Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan (Test Program) (JAN 2011) (15 U.S.C. 637 note).
(6) (i) 252.225-7001, Buy American Act and Balance of Payments Program (DEC 2012) (41 U.S.C. 10a-10d, E.O. 10582).
(ii) Alternate I (OCT 2011) of 252.225-7001.
(7) 252.225-7008, Restriction on Acquisition of Specialty Metals (JUL 2009) (10 U.S.C. 2533b).
(8) 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals (JUN 2012) (10 U.S.C. 2533b).
(9) X 252.225-7012, Preference for Certain Domestic Commodities (FEB 2013) (10 U.S.C. 2533a).
(10) 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools (JUN 2005) (10 U.S.C. 2533a).
(11) 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings (Jun 2011) (Section 8065 of Public Law 107-117 and the same restriction in subsequent DoD appropriations acts).
(12) 252.225-7017, Photovoltaic Devices (DEC 2012) (Section 846 of Pub. L. 111-383).
(13) (i) 252.225-7021, Trade Agreements (DEC 2012) (19 U.S.C. 2501-2518 and 19 U.S.C. 3301 note).
(ii) Alternate I (OCT 2011) of 252.225-7021.
(iii) Alternate II (OCT 2011) of 252.225-7021.
(14) 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales (APR 2003) (22 U.S.C. 2779).
(15) X 252.225-7028, Exclusionary Policies and Practices of Foreign Governments (APR 2003) (22 U.S.C. 2755).
(16) (i) 252.225-7036, Buy American Act Free Trade Agreements Balance of Payments Program (DEC 2012) (41 U.S.C. 10a-10d and 19 U.S.C. 3301 note).
(ii) Alternate I (JUN 2012) of 252.225-7036.
(iii) Alternate II (NOV 2012) of 252.225-7036.
(iv) Alternate III (JUN 2012) of 252.225-7036.
(v) Alternate IV (NOV 2012) of 252.225-7036.
(vi) Alternate V (NOV 2012) of 252.225-7036.
(17) 252.225-7038, Restriction on Acquisition of Air Circuit Breakers (JUN 2005) (10 U.S.C. 2534(a)(3)).
(18) 252.225-7039, Contractors Performing Private Security Functions (JUN 2012) (Section 862 of Pub. L. 110-181, as amended by section 853 of Pub. L. 110-417 and sections 831 and 832 of Pub. L. 111-383).
(19) X 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns (SEP 2004) (Section 8021 of Public Law 107-248 and similar sections in subsequent DoD appropriations acts).
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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(20) 252.227-7013, Rights in Technical Data Noncommercial Items (FEB 2012), if applicable (see 227.7103-6(a)).
(21) X 252.227-7015, Technical Data Commercial Items (DEC 2011) (10 U.S.C. 2320).
(22) X 252.227-7037, Validation of Restrictive Markings on Technical Data (JUN 2012) (10 U.S.C. 2321).
(23) X 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports (MAR 2008) (10 U.S.C. 2227).
(24) 252.237-7010, Prohibition on Interrogation of Detainees by Contractor Personnel (NOV 2010) (Section 1038 of Pub. L. 111-84).
(25) 252.237-7019, Training for Contractor Personnel Interacting with Detainees (DEC 2010) (Section 1092 of Public Law 108-375).
(26) X 252.243-7002, Requests for Equitable Adjustment (DEC 2012) (10 U.S.C. 2410).
(27) 252.246-7004, Safety of Facilities, Infrastructure, and Equipment for Military Operations (OCT 2010) (Section 807 of Public Law 111-84).
(28) 252.247-7003, Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer (SEP 2010) (Section 884 of Public Law 110-417).
(29) (i) 252.247-7023, Transportation of Supplies by Sea (MAY 2002) (10 U.S.C. 2631).
(ii) Alternate I (MAR 2000) of 252.247-7023.
(iii) Alternate II (MAR 2000) of 252.247-7023.
(iv) Alternate III (MAY 2002) of 252.247-7023.
(30) 252.247-7024, Notification of Transportation of Supplies by Sea (MAR 2000) (10 U.S.C. 2631).
(31) 252.247-7027, Riding Gang Member Requirements (OCT 2011) (Section 3504 of Pub. L. 110-417).
(c) In addition to the clauses listed in paragraph (e) of the Contract Terms and Conditions Required to Implement Statutes or Executive Orders Commercial Items clause of this contract (FAR 52.212-5), the Contractor shall include the terms of the following clauses, if applicable, in subcontracts for commercial items or commercial components, awarded at any tier under this contract:
(1) 252.225-7039, Contractors Performing Private Security Functions (JUN 2012) (Section 862 of Pub. L. 110-181, as amended by section 853 of Pub. L. 110-417 and sections 831 and 832 of Pub. L. 111-383).
(2) 252.227-7013, Rights in Technical Data Noncommercial Items (FEB 2012), if applicable (see 227.7103-6(a)).
(3) 252.227-7015, Technical Data Commercial Items (DEC 2011), if applicable (see 227.7102-4(a)).
(4) 252.227-7037, Validation of Restrictive Markings on Technical Data (JUN 2012), if applicable (see 227.7102-4(c)).
(5) 252.237-7010, Prohibition on Interrogation of Detainees by Contractor Personnel (NOV 2010) (Section 1038 of Pub. L. 111-84).
(6) 252.237-7019, Training for Contractor Personnel Interacting with Detainees (SEP 2006) (Section 1092 of Public Law 108-375).
(7) 252.247-7003, Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer (SEP 2010) (Section 884 of Public Law 110-417).
(8) 252.247-7023, Transportation of Supplies by Sea (MAY 2002) (10 U.S.C. 2631).
(9) 252.247-7024, Notification of Transportation of Supplies by Sea (MAR 2000) (10 U.S.C. 2631).
(End of clause)
17 | 252.225-7027 | RESTRICTION ON CONTINGENT FEES FOR FOREIGN MILITARY SALES | APR/2003 |
(a) Except as provided in paragraph (b) of this clause, contingent fees, as defined in the Covenant Against Contingent Fees clause of this contract, are generally an allowable cost, provided the fees are paid to
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
(1) A bona fide employee of the Contractor; or
(2) A bona fide established commercial or selling agency maintained by the Contractor for the purpose of securing business.
(b) For foreign military sales, unless the contingent fees have been identified and payment approved in writing by the foreign customer before contract award, the following contingent fees are unallowable under this contract:
(1) For sales to the Government(s) of Egypt, contingent fees in any amount.
(2) For sales to Governments not listed in paragraph (b)(1) of this clause, contingent fees exceeding $50,000 per foreign military sale case.
(End of clause)
18 | 252.232-7006 | WIDE AREA WORKFLOW PAYMENT INSTRUCTIONS | JUN/2012 |
(a) Definitions. As used in this clause
Department of Defense Activity Address Code (DoDAAC) is a six position code that uniquely identifies a unit, activity, or organization.
Document type means the type of payment request or receiving report available for creation in Wide Area WorkFlow (WAWF).
Local processing office (LPO) is the office responsible for payment certification when payment certification is done external to the entitlement system.
(b) Electronic invoicing. The WAWF system is the method to electronically process vendor payment requests and receiving reports, as authorized by DFARS 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports.
(c) WAWF access. To access WAWF, the Contractor shall
(1) Have a designated electronic business point of contact in the Central Contractor Registration at https://www.acquisition.gov; and
(2) Be registered to use WAWF at https://wawf.eb.mil/ following the step-by-step procedures for self-registration available at this Web site.
(d) WAWF training. The Contractor should follow the training instructions of the WAWF Web-Based Training Course and use the Practice Training Site before submitting payment requests through WAWF. Both can be accessed by selecting the Web Based Training link on the WAWF home page at https://wawf.eb.mil/.
(e) WAWF methods of document submission. Document submissions may be via Web entry, Electronic Data Interchange, or File Transfer Protocol.
(f) WAWF payment instructions. The Contractor must use the following information when submitting payment requests and receiving reports in WAWF for this contract/order:
(1) Document type. The Contractor shall use the following document type(s).
COMBINATION INVOICE AND RECEIVING REPORT
(2) Inspection/acceptance location. The Contractor shall select the following inspection/acceptance location(s) in WAWF, as specified by the contracting officer.
ORIGIN AND DESTINATION
(3) Document routing. The Contractor shall use the information in the Routing Data Table below only to fill in applicable fields in WAWF when creating payment requests and receiving reports in the system.
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 31 of 32 REPRINT |
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Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
Routing Data Table* |
||||
Field Name in WAWF |
Data to be entered in WAWF | |||
Pay Official DoDAAC |
N/A | |||
Issue By DoDAAC |
W15P7T | |||
Admin DoDAAC |
N/A | |||
Inspect By DoDAAC |
N/A | |||
Ship To Code |
BEG003 | |||
Ship From Code |
BEG003 | |||
Mark For Code |
BEGH00 | |||
Service Approver (DoDAAC) |
W15P7T | |||
Service Acceptor (DoDAAC) |
W15P7T | |||
Accept at Other DoDAAC |
N/A | |||
LPO DoDAAC |
N/A | |||
DCAA Auditor DoDAAC |
N/A | |||
Other DoDAAC(s) |
N/A |
(4) Payment request and supporting documentation. The Contractor shall ensure a payment request includes appropriate contract line item and subline item descriptions of the work performed or supplies delivered, unit price/cost per unit, fee (if applicable), and all relevant back-up documentation, as defined in DFARS Appendix F, (e.g. timesheets) in support of each payment request.
(5) WAWF email notifications. The Contractor shall enter the email address identified below in the Send Additional Email Notifications field of WAWF once a document is submitted in the system.
N/A
(g) WAWF point of contact. (1) The Contractor may obtain clarification regarding invoicing in WAWF from the following contracting activitys WAWF point of contact.
RENEE WILLIS-WILLIAMS RENEE.Y.WILLISWILLIAMS.CIV@MAIL.MIL
(2) For technical WAWF help, contact the WAWF helpdesk at 866-618-5988.
(End of clause)
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Confidential
CONTINUATION SHEET |
Reference No. of Document Being Continued
PIIN/SIIN W15P7T-13-C-D519 MOD/AMD |
Page 32 of 32 REPRINT |
||||
Name of Offeror or Contractor: TECHNICAL COMMUNICATIONS CORPORATION |
LIST OF ATTACHMENTS
List of Addenda |
Title |
Date |
Number of Pages |
Transmitted By |
||||
Exhibit A | CONTRACT DATA REQUIREMENTS LIST (CDRL) | 13-JAN-2013 | 001 | |||||
Attachment 0001 | STATEMENT OF WORK | 26-APR-2013 | 009 | |||||
Attachment 0002 | STANDARD COMMERCIAL WARRANTY | 26-APR-2013 | 001 |
Exhibit A
CDRL | Description | pages | ||
A001 | Training Conduct Support Documentation | 1 |
*** END OF NARRATIVE J0001 ***
THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
Exhibit 31.1
CERTIFICATION
I, Carl H. Guild, Jr., certify that:
(1) | I have reviewed this quarterly report on Form 10-Q of Technical Communications Corporation; |
(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 presented in this report; |
(4) | The registrants other certifying officer and I are 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 13a-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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Carl H. Guild, Jr. |
Carl H. Guild, Jr. |
President and Chief Executive Officer |
Date: August 13, 2013 |
Exhibit 31.2
CERTIFICATION
I, Michael P. Malone, certify that:
(1) | I have reviewed this quarterly report on Form 10-Q of Technical Communications Corporation; |
(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 presented in this report; |
(4) | The registrants other certifying officer and I are 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 13a-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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Michael P. Malone |
Michael P. Malone |
Chief Financial Officer |
Date: August 13, 2013 |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. § 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned President and Chief Executive Officer and Chief Financial Officer of Technical Communications Corporation (the Company) certifies that, to his knowledge:
1) | the Companys Quarterly Report on Form 10-Q for the quarter ended June 29, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Companys Quarterly Report on Form 10-Q for the quarter ended June 29, 2013 fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Carl H. Guild, Jr. |
/s/ Michael P. Malone |
|||
Carl H. Guild, Jr. | Michael P. Malone | |||
President and Chief Executive Officer | Chief Financial Officer | |||
Date: August 13, 2013 | Date: August 13, 2013 |