New Jersey | 22-1441806 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
One Branca Road East Rutherford, NJ 07073 |
(Address of principal executive offices) |
(201) 933-1600 |
(Registrant’s telephone number, including area code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
PART I – FINANCIAL INFORMATION | ||
Page | ||
Item 1. | 3 | |
Item 2. | 16 | |
Item 3. | ||
Item 4. | ||
PART II – OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
September 30, 2017 | March 31, 2017 | December 31, 2017 | March 31, 2017 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 130,235 | $ | 287,873 | $ | 263,983 | $ | 287,873 | ||||||||
Accounts receivable, net | 1,067,277 | 1,556,382 | 1,660,757 | 1,556,382 | ||||||||||||
Inventories, net | 4,456,377 | 4,208,179 | 4,309,324 | 4,208,179 | ||||||||||||
Restricted cash to support appeal bond | 2,000,000 | - | ||||||||||||||
Prepaid expenses and other current assets | 77,282 | 188,578 | 107,450 | 188,578 | ||||||||||||
Total current assets | 5,731,171 | 6,241,012 | 8,341,514 | 6,241,012 | ||||||||||||
Equipment and leasehold improvements, net | 176,717 | 161,427 | 197,602 | 161,427 | ||||||||||||
Other long-term assets | 33,509 | 33,509 | 35,109 | 33,509 | ||||||||||||
Total assets | 5,941,397 | 6,435,948 | 8,574,225 | 6,435,948 | ||||||||||||
LIABILITIES & STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||||||||||
LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current portion of long-term debt | 77,802 | 291,991 | 3,696 | 291,991 | ||||||||||||
Line of credit | 1,000,000 | 200,000 | 1,000,000 | 200,000 | ||||||||||||
Capital lease obligations – current portion | 6,564 | 6,268 | 6,718 | 6,268 | ||||||||||||
Accounts payable and accrued liabilities | 2,357,566 | 2,072,955 | 2,431,763 | 2,072,955 | ||||||||||||
Federal and state taxes payable | - | 4,105 | - | 4,105 | ||||||||||||
Deferred revenues – current portion | 45,358 | 123,720 | 54,671 | 123,720 | ||||||||||||
Accrued legal damages | 4,900,000 | 2,800,000 | 4,930,523 | 2,800,000 | ||||||||||||
Accrued payroll, vacation pay and payroll taxes | 417,016 | 527,413 | 396,207 | 527,413 | ||||||||||||
Total current liabilities | 8,804,306 | 6,026,452 | 8,823,578 | 6,026,452 | ||||||||||||
Capital lease obligations – long-term | 10,402 | 13,760 | 8,664 | 13,760 | ||||||||||||
Long-term debt | - | 2,124 | - | 2,124 | ||||||||||||
Deferred revenues – long-term | 366,915 | 352,973 | 353,280 | 352,973 | ||||||||||||
Warrant liability | 5,000 | 95,000 | - | 95,000 | ||||||||||||
Total liabilities | 9,186,623 | 6,490,309 | 9,185,522 | 6,490,309 | ||||||||||||
Commitments | ||||||||||||||||
Stockholders’ (deficit) equity: | ||||||||||||||||
Mezzanine Equity: | ||||||||||||||||
Preferred stock, 1,000,000 shares authorized, par value $0.10 per share, 500,000 shares 8% Cumulative Series A Convertible Preferred issued and outstanding | 2,990,667 | - | ||||||||||||||
Total mezzanine equity | 2,990,667 | - | ||||||||||||||
Stockholders’ (deficit): | ||||||||||||||||
Common stock, 4,000,000 shares authorized, par value $0.10 per share, 3,255,887 shares issued and outstanding, respectively | 325,586 | 325,586 | 325,586 | 325,586 | ||||||||||||
Additional paid-in capital | 8,123,184 | 8,107,369 | ||||||||||||||
Paid-in capital in excess of par value, common stock | 8,099,882 | 8,107,369 | ||||||||||||||
Accumulated deficit | (11,693,996 | ) | (8,487,316 | ) | (12,027,432 | ) | (8,487,316 | ) | ||||||||
Total stockholders’ (deficit) equity | (3,245,226 | ) | (54,361 | ) | ||||||||||||
Total liabilities and stockholders’ (deficit) equity | $ | 5,941,397 | $ | 6,435,948 | ||||||||||||
Total stockholders’ deficit | (3,601,964 | ) | (54,361 | ) | ||||||||||||
Total liabilities, mezzanine equity and stockholders’ deficit | $ | 8,574,225 | $ | 6,435,948 |
Three Months Ended | Six Months Ended | |||||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||
Net sales | $ | 1,787,165 | $ | 5,076,029 | $ | 5,329,242 | $ | 10,418,398 | ||||||||
Cost of sales | 1,387,295 | 3,250,441 | 3,688,082 | 6,716,157 | ||||||||||||
Gross margin | 399,870 | 1,825,588 | 1,641,160 | 3,702,241 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 626,395 | 687,013 | 1,332,681 | 1,460,042 | ||||||||||||
Litigation expenses | 43,333 | 188,125 | 425,845 | 326,840 | ||||||||||||
Legal damages | 2,100,000 | - | 2,100,000 | - | ||||||||||||
Engineering, research and development | 529,667 | 583,771 | 1,144,940 | 1,168,648 | ||||||||||||
Total operating expenses | 3,299,395 | 1,458,909 | 5,003,466 | 2,955,530 | ||||||||||||
(Loss) income from operations | (2,899,525 | ) | 366,679 | (3,362,306 | ) | 746,711 | ||||||||||
Other income (expense): | ||||||||||||||||
Proceeds from life insurance | - | - | 92,678 | - | ||||||||||||
Amortization of deferred financing costs | (1,357 | ) | (1,357 | ) | (2,714 | ) | (2,713 | ) | ||||||||
Change in fair value of common stock warrants | (5,000 | ) | �� | 34,000 | 90,000 | 251,203 | ||||||||||
Interest expense | (14,707 | ) | (17,507 | ) | (24,338 | ) | (35,333 | ) | ||||||||
Total other (expense) income | (21,064 | ) | 15,136 | 155,626 | 213,157 | |||||||||||
(Loss) income before income taxes | (2,920,589 | ) | 381,815 | (3,206,680 | ) | 959,868 | ||||||||||
Income tax expense | - | 109,760 | - | 277,504 | ||||||||||||
Net (loss) income | $ | (2,920,589 | ) | $ | 272,055 | $ | (3,206,680 | ) | $ | 682,364 | ||||||
Basic (loss) income per common share | $ | (0.90 | ) | $ | 0.08 | $ | (0.98 | ) | $ | 0.21 | ||||||
Diluted (loss) income per common share | $ | (0.90 | ) | $ | 0.07 | $ | (0.98 | ) | $ | 0.20 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
Diluted | 3,255,887 | 3,266,133 | 3,255,887 | 3,267,192 |
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Net sales | $ | 2,625,793 | $ | 4,236,519 | 7,955,035 | $ | 14,654,917 | |||||||||
Cost of sales | 1,689,113 | 2,602,268 | 5,377,195 | 9,318,425 | ||||||||||||
Gross margin | 936,680 | 1,634,251 | 2,577,840 | 5,336,492 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 548,391 | 582,880 | 1,881,072 | 2,042,922 | ||||||||||||
Litigation expenses | 134,765 | 282,490 | 560,610 | 609,330 | ||||||||||||
Legal damages | 30,523 | - | 2,130,523 | - | ||||||||||||
Engineering, research and development | 546,691 | 615,007 | 1,691,631 | 1,783,655 | ||||||||||||
Total operating expenses | 1,260,370 | 1,480,377 | 6,263,836 | 4,435,907 | ||||||||||||
(Loss) income from operations | (323,690 | ) | 153,874 | (3,685,996 | ) | 900,585 | ||||||||||
Other income (expense): | ||||||||||||||||
Proceeds from life insurance | - | - | 92,678 | - | ||||||||||||
Amortization of deferred financing costs | (649 | ) | (1,359 | ) | (3,363 | ) | (4,072 | ) | ||||||||
Change in fair value of common stock warrants | 5,000 | 37,000 | 95,000 | 288,203 | ||||||||||||
Interest expense | (14,097 | ) | (11,620 | ) | (38,435 | ) | (46,953 | ) | ||||||||
Total other income (expense) | (9,746 | ) | 24,021 | 145,880 | 237,178 | |||||||||||
(Loss) income before income taxes | (333,436 | ) | 177,895 | (3,540,116 | ) | 1,137,763 | ||||||||||
Income tax expense | - | 36,382 | - | 313,886 | ||||||||||||
Net (loss) income | (333,436 | ) | 141,513 | (3,540,116 | ) | 823,877 | ||||||||||
Preferred stock dividends | (30,667 | ) | - | (30,667 | ) | - | ||||||||||
Net (loss) income attributable to common shareholders | $ | (364,103 | ) | $ | 141,513 | $ | (3,570,783 | ) | $ | 823,877 | ||||||
Basic (loss) income per common share | $ | (0.11 | ) | $ | 0.04 | $ | (1.10 | ) | $ | 0.25 | ||||||
Diluted (loss) income per common share | $ | (0.11 | ) | $ | 0.03 | $ | (1.10 | ) | $ | 0.23 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
Diluted | 3,255,887 | 3,265,135 | 3,255,887 | 3,266,532 |
Six Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | September 30, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net (loss) income | $ | (3,206,680 | ) | $ | 682,364 | $ | (3,540,116 | ) | $ | 823,877 | ||||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||||||
Deferred income taxes | - | 277,504 | - | 317,509 | ||||||||||||
Depreciation and amortization | 38,112 | 71,390 | 53,221 | 95,209 | ||||||||||||
Provision for inventory obsolescence | 25,000 | 15,000 | 50,000 | 20,000 | ||||||||||||
Amortization of deferred financing costs | 2,714 | 2,713 | 3,363 | 4,072 | ||||||||||||
Change in fair value of common stock warrant | (90,000 | ) | (251,203 | ) | (95,000 | ) | (288,203 | ) | ||||||||
Non-cash stock-based compensation | 15,815 | 16,358 | 23,180 | 24,536 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Decrease (increase) in accounts receivable | 489,105 | (406,895 | ) | (104,375 | ) | 396,430 | ||||||||||
(Increase) decrease in inventories | (273,198 | ) | 988,244 | (151,145 | ) | 185,145 | ||||||||||
Decrease in prepaid expenses & other assets | 108,582 | 42,789 | ||||||||||||||
Decrease (increase) in prepaid expenses & other assets | 76,165 | (28,774 | ) | |||||||||||||
Increase (decrease) in accounts payable and other accrued expenses | 284,611 | (678,052 | ) | 358,808 | (299,359 | ) | ||||||||||
Decrease in federal and state taxes | (4,105 | ) | (53,623 | ) | (4,105 | ) | (53,623 | ) | ||||||||
Decrease in accrued payroll, vacation pay & withholdings | (110,397 | ) | (257,011 | ) | (131,206 | ) | (224,072 | ) | ||||||||
(Decrease) increase in deferred revenues | (64,420 | ) | 405,073 | (68,742 | ) | 338,792 | ||||||||||
Increase in accrued legal damages | 2,100,000 | - | 2,130,523 | - | ||||||||||||
Restricted cash for appeal bond | (2,000,000 | ) | ||||||||||||||
Decrease in other long-term liabilities | - | (7,800 | ) | - | (7,800 | ) | ||||||||||
Net cash (used in) provided by operating activities | (684,861 | ) | 846,851 | (3,399,429 | ) | 1,303,739 | ||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of equipment | (53,402 | ) | (30,303 | ) | (89,396 | ) | (37,070 | ) | ||||||||
Net cash used in investing activities | (53,402 | ) | (30,303 | ) | (89,396 | ) | (37,070 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from line of credit | 800,000 | - | 800,000 | - | ||||||||||||
Proceeds from issuance of preferred stock, net of expenses | 2,960,000 | - | ||||||||||||||
Payment of warrant liability | - | (720,000 | ) | - | (720,000 | ) | ||||||||||
Repayment of long-term debt | (216,313 | ) | (205,838 | ) | (290,419 | ) | (322,894 | ) | ||||||||
Repayment of subordinated notes - related parties | - | �� | (25,000 | ) | - | (25,000 | ) | |||||||||
Repayment of capitalized lease obligations | (3,062 | ) | (7,809 | ) | (4,646 | ) | (9,254 | ) | ||||||||
Net cash provided by (used in) financing activities | 580,625 | (958,647 | ) | 3,464,935 | (1,077,148 | ) | ||||||||||
Net decrease in cash and cash equivalents | (157,638 | ) | (142,099 | ) | (23,890 | ) | 189,521 | |||||||||
Cash and cash equivalents at beginning of period | 287,873 | 972,633 | 287,873 | 972,633 | ||||||||||||
Cash and cash equivalents at end of period | $ | 130,235 | $ | 830,534 | $ | 263,983 | $ | 1,162,154 | ||||||||
Supplemental cash flow information: | ||||||||||||||||
Taxes paid | $ | 5,000 | $ | 50,000 | $ | 5,000 | $ | 87,374 | ||||||||
Interest paid | $ | 36,477 | $ | 32,642 | $ | 50,374 | $ | 107,768 |
September 30, 2017 | March 31, 2017 | December 31, 2017 | March 31, 2017 | |||||||||||||
Government | $ | 660,135 | $ | 1,392,482 | $ | 1,461,090 | $ | 1,392,482 | ||||||||
Commercial | 414,642 | 171,400 | 207,167 | 171,400 | ||||||||||||
Less: Allowance for doubtful accounts | (7,500 | ) | (7,500 | ) | (7,500 | ) | (7,500 | ) | ||||||||
$ | 1,067,277 | $ | 1,556,382 | $ | 1,660,757 | $ | 1,556,382 |
September 30, 2017 | March 31, 2017 | December 31, 2017 | March 31, 2017 | |||||||||||||
Purchased parts | $ | 3,682,890 | $ | 3,197,378 | $ | 3,839,370 | $ | 3,197,378 | ||||||||
Work-in-process | 1,040,989 | 1,272,235 | 817,543 | 1,272,235 | ||||||||||||
Finished goods | 87,498 | 68,566 | 32,411 | 68,566 | ||||||||||||
Less: Inventory reserve | (355,000 | ) | (330,000 | ) | (380,000 | ) | (330,000 | ) | ||||||||
$ | 4,456,377 | $ | 4,208,179 | $ | 4,309,324 | $ | 4,208,179 |
Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||
September 30, 2017 | September 30, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Basic net (loss) income per share computation: | ||||||||||||||||
Net (loss) income | $ | (2,920,589 | ) | $ | 272,055 | $ | (364,103 | ) | $ | 141,513 | ||||||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
Basic net (loss) income per share | $ | (0.90 | ) | $ | 0.08 | $ | (0.11 | ) | $ | 0.04 | ||||||
Diluted net (loss) income per share computation | ||||||||||||||||
Net (loss) income | $ | (2,920,589 | ) | $ | 272,055 | $ | (364,103 | ) | $ | 141,513 | ||||||
Add: Change in fair value of warrants | - | 34,000 | - | 37,000 | ||||||||||||
Diluted (loss) income | $ | (2,920,589 | ) | 238,055 | $ | (364,103 | ) | 104,513 | ||||||||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | 3,255,887 | 3,255,887 | ||||||||||||
Incremental shares attributable to the assumed exercise of outstanding stock options and warrants | - | 10,246 | - | 9,248 | ||||||||||||
Total adjusted weighted-average shares | 3,255,887 | �� | 3,266,133 | 3,255,887 | 3,265,135 | |||||||||||
Diluted net (loss) income per share | $ | (0.90 | ) | $ | 0.07 | $ | (0.11 | ) | $ | 0.03 |
Nine Months Ended | Nine Months Ended | |||||||
December 31, 2017 | December 31, 2016 | |||||||
Basic net (loss) income per share computation: | ||||||||
Net (loss) income | $ | (3,570,783 | ) | $ | 823,877 | |||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | ||||||
Basic net(loss)income per share | $ | (1.10 | ) | $ | 0.25 | |||
Diluted net (loss) income per share computation | ||||||||
Net (loss) income | $ | (3,570,783 | ) | $ | 823,877 | |||
Change in fair value of warrants | - | 70,000 | ||||||
Diluted (loss) income | $ | (3,570,783 | ) | 753,877 | ||||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | ||||||
Incremental shares attributable to the assumed exercise of outstanding stock options and warrants | - | 10,645 | ||||||
Total adjusted weighted-average shares | 3,255,887 | 3,266,532 | ||||||
Diluted net (loss) income per share | $ | (1.10 | ) | $ | 0.23 |
Six Months Ended | Six Months Ended | |||||||
September 30, 2017 | September 30, 2016 | |||||||
Basic net income per share computation: | ||||||||
Net (loss) income | $ | (3,206,680 | ) | $ | 682,364 | |||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | ||||||
Basic net income per share | $ | (0.98 | ) | $ | 0.21 | |||
Diluted net income per share computation | ||||||||
Net income | $ | (3,206,680 | ) | $ | 682,364 | |||
Change in fair value of warrants | - | 33,000 | ||||||
Diluted income | $ | (3,206,680 | ) | 649,364 | ||||
Weighted-average common shares outstanding | 3,255,887 | 3,255,887 | ||||||
Incremental shares attributable to the assumed exercise of outstanding stock options and warrants | - | 11,305 | ||||||
Total adjusted weighted-average shares | 3,255,887 | 3,267,192 | ||||||
Diluted net (loss) income per share | $ | (0.98 | ) | $ | 0.20 |
September 30, 2017 | September 30, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Convertible preferred stock | 1,000,000 | - | ||||||||||||||
Stock options | 77,000 | 75,000 | 75,000 | 71,000 | ||||||||||||
Warrants | 50,000 | - | 50,000 | - | ||||||||||||
127,000 | 75,000 | 1,125,000 | 71,000 |
Three Months Ended September 30, 2017 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||||||||||||||||||||||
Three Months Ended December 31, 2017 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,028,693 | $ | 758,472 | $ | 1,787,165 | $ | - | $ | 1,787,165 | $ | 1,825,744 | $ | 800,049 | $ | 2,625,793 | $ | - | $ | 2,625,793 | ||||||||||||||||||||
Cost of sales | 660,589 | 726,706 | 1,387,295 | - | 1,387,295 | 1,013,481 | 675,632 | 1,689,113 | - | 1,689,113 | ||||||||||||||||||||||||||||||
Gross margin | 368,104 | 31,766 | 399,870 | - | 399,870 | 812,263 | 124,417 | 936,680 | - | 936,680 | ||||||||||||||||||||||||||||||
Engineering, research, and development | 529,667 | - | 529,667 | 546,691 | - | 546,691 | ||||||||||||||||||||||||||||||||||
Selling, general and administrative | 277,518 | 348,877 | 626,395 | 225,610 | 322,781 | 548,391 | ||||||||||||||||||||||||||||||||||
Litigation costs | 43,333 | 43,333 | 134,765 | 134,765 | ||||||||||||||||||||||||||||||||||||
Legal damages | 2,100,000 | 2,100,000 | 30,523 | 30,523 | ||||||||||||||||||||||||||||||||||||
Amortization of deferred financing costs | - | 1,357 | 1,357 | - | 649 | 649 | ||||||||||||||||||||||||||||||||||
Change in fair value of common stock warrants | - | 5,000 | 5,000 | - | (5,000 | ) | (5,000 | ) | ||||||||||||||||||||||||||||||||
Proceeds from life insurance | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Interest expense, net | - | 14,707 | 14,707 | - | 14,097 | 14,097 | ||||||||||||||||||||||||||||||||||
Total expenses | 807,185 | 2,513,274 | 3,320,459 | 772,301 | 497,815 | 1,270,116 | ||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | (407,315 | ) | $ | (2,513,274 | ) | $ | (2,920,589 | ) | $ | 164,379 | $ | (497,815 | ) | $ | (333,436 | ) |
Three Months Ended September 30, 2016 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 4,338,764 | $ | 737,265 | $ | 5,076,029 | $ | - | $ | 5,076,029 | ||||||||||
Cost of sales | 2,665,561 | 584,880 | 3,250,441 | - | 3,250,441 | |||||||||||||||
Gross margin | 1,673,203 | 152,385 | 1,825,588 | - | 1,825,588 | |||||||||||||||
Engineering, research, and development | 583,771 | - | 583,771 | |||||||||||||||||
Selling, general and administrative | 346,108 | 340,905 | 687,013 | |||||||||||||||||
Litigation costs | 188,125 | 188,125 | ||||||||||||||||||
Amortization of deferred financing costs | - | 1,357 | 1,357 | |||||||||||||||||
Change in fair value of common stock warrants | - | (34,000 | ) | (34,000 | ) | |||||||||||||||
Interest expense, net | - | 17,507 | 17,507 | |||||||||||||||||
Total expenses | 929,879 | 513,894 | 1,443,773 | |||||||||||||||||
Income (loss) before income taxes | $ | 895,709 | $ | (513,894 | ) | $ | 381,815 |
Six Months Ended September 30, 2017 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 4,001,019 | $ | 1,328,223 | $ | 5,329,242 | $ | - | $ | 5,329,242 | ||||||||||
Cost of sales | 2,475,742 | 1,212,340 | 3,688,082 | - | 3,688,082 | |||||||||||||||
Gross margin | 1,525,277 | 115,883 | 1,641,160 | - | 1,641,160 | |||||||||||||||
Engineering, research, and development | 1,144,940 | - | 1,144,940 | |||||||||||||||||
Selling, general and administrative | 636,185 | 696,496 | 1,332,681 | |||||||||||||||||
Litigation costs | 425,845 | 425,845 | ||||||||||||||||||
Legal damages | 2,100,000 | 2,100,000 | ||||||||||||||||||
Amortization of deferred financing costs | - | 2,714 | 2,714 | |||||||||||||||||
Change in fair value of common stock warrants | - | (90,000 | ) | (90,000 | ) | |||||||||||||||
Proceeds from life insurance | (92,678 | ) | (92,678 | ) | ||||||||||||||||
Interest expense, net | - | 24,338 | 24,338 | |||||||||||||||||
Total expenses | 1,781,125 | 3,066,715 | 4,847,840 | |||||||||||||||||
Income (loss) before income taxes | $ | (139,965 | ) | $ | (3,066,715 | ) | $ | (3,206,680 | ) |
Six Months Ended September 30, 2016 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 9,210,384 | $ | 1,208,014 | $ | 10,418,398 | $ | - | $ | 10,418,398 | ||||||||||
Cost of sales | 5,770,479 | 945,678 | 6,716,157 | - | 6,716,157 | |||||||||||||||
Gross margin | 3,439,905 | 262,336 | 3,702,241 | - | 3,702,241 | |||||||||||||||
Engineering, research, and development | 1,168,648 | - | 1,168,648 | |||||||||||||||||
Selling, general and administrative | 689,990 | 770,052 | 1,460,042 | |||||||||||||||||
Litigation expenses | 326,840 | 326,840 | ||||||||||||||||||
Amortization of deferred financing costs | - | 2,713 | 2,713 | |||||||||||||||||
Change in fair value of common stock warrants | - | (251,203 | ) | (251,203 | ) | |||||||||||||||
Interest expense, net | - | 35,333 | 35,333 | |||||||||||||||||
Total expenses | 1,858,638 | 883,735 | 2,742,373 | |||||||||||||||||
Income (loss) before income taxes | $ | 1,843,603 | $ | (883,735 | ) | $ | 959,868 |
Three Months Ended December 31, 2016 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 3,771,384 | $ | 465,135 | $ | 4,236,519 | $ | - | $ | 4,236,519 | ||||||||||
Cost of sales | 2,297,157 | 305,111 | 2,602,268 | - | 2,602,268 | |||||||||||||||
Gross margin | 1,474,227 | 160,024 | 1,634,251 | - | 1,634,251 | |||||||||||||||
Engineering, research, and development | 615,007 | - | 615,007 | |||||||||||||||||
Selling, general and administrative | 256,599 | 326,281 | 582,880 | |||||||||||||||||
Litigation costs | 282,490 | 282,490 | ||||||||||||||||||
Amortization of deferred financing costs | - | 1,359 | 1,359 | |||||||||||||||||
Change in fair value of common stock warrants | - | (37,000 | ) | (37,000 | ) | |||||||||||||||
Interest expense, net | - | 11,620 | 11,620 | |||||||||||||||||
Total expenses | 871,606 | 584,750 | 1,456,356 | |||||||||||||||||
Income (loss) before income taxes | $ | 762,645 | $ | (584,750 | ) | $ | 177,895 |
Nine Months Ended December 31, 2017 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 5,826,763 | $ | 2,128,272 | $ | 7,955,035 | $ | - | $ | 7,955,035 | ||||||||||
Cost of sales | 3,489,223 | 1,887,972 | 5,377,195 | - | 5,377,195 | |||||||||||||||
Gross margin | 2,337,540 | 240,300 | 2,577,840 | - | 2,577,840 | |||||||||||||||
Engineering, research, and development | 1,691,631 | - | 1,691,631 | |||||||||||||||||
Selling, general and administrative | 861,795 | 1,019,277 | 1,881,072 | |||||||||||||||||
Litigation costs | 560,610 | 560,610 | ||||||||||||||||||
Legal damages | 2,130,523 | 2,130,523 | ||||||||||||||||||
Amortization of deferred financing costs | - | 3,363 | 3,363 | |||||||||||||||||
Change in fair value of common stock warrants | - | (95,000 | ) | (95,000 | ) | |||||||||||||||
Proceeds from life insurance | (92,678 | ) | (92,678 | ) | ||||||||||||||||
Interest expense, net | - | 38,435 | 38,435 | |||||||||||||||||
Total expenses | 2,553,426 | 3,564,530 | 6,117,956 | |||||||||||||||||
Income (loss) before income taxes | $ | 24,414 | $ | (3,564,530 | ) | $ | (3,540,116 | ) |
Nine Months Ended December 31, 2016 | Avionics Government | Avionics Commercial | Avionics Total | Corporate Items | Total | |||||||||||||||
Net sales | $ | 12,981,768 | $ | 1,673,149 | $ | 14,654,917 | $ | - | $ | 14,654,917 | ||||||||||
Cost of sales | 8,067,636 | 1,250,789 | 9,318,425 | - | 9,318,425 | |||||||||||||||
Gross margin | 4,914,132 | 422,360 | 5,336,492 | - | 5,336,492 | |||||||||||||||
Engineering, research, and development | 1,783,655 | - | 1,783,655 | |||||||||||||||||
Selling, general and administrative | 946,589 | 1,096,333 | 2,042,922 | |||||||||||||||||
Litigation costs | 609,330 | 609,330 | ||||||||||||||||||
Amortization of deferred financing costs | - | 4,072 | 4,072 | |||||||||||||||||
Change in fair value of common stock warrants | - | (288,203 | ) | (288,203 | ) | |||||||||||||||
Interest expense, net | - | 46,953 | 46,953 | |||||||||||||||||
Total expenses | 2,730,244 | 1,468,485 | 4,198,729 | |||||||||||||||||
Income (loss) before income taxes | $ | 2,606,248 | $ | (1,468,485 | ) | $ | 1,137,763 |
- | Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. |
- | Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars. |
- | Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
· | Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. |
· | Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method. |
· | Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). |
September 30, 2017 | Level I | Level II | Level III | Total | ||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | ||||||||
Warrant liability | - | - | 5,000 | 5,000 | ||||||||||||
Total Liabilities | $ | - | $ | - | $ | 5,000 | $ | 5,000 |
December 31, 2017 | Level I | Level II | Level III | Total | ||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | ||||||||
Warrant liability | - | - | - | - | ||||||||||||
Total Liabilities | $ | - | $ | - | $ | - | $ | - |
March 31, 2017 | Level I | Level II | Level III | Total | ||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | ||||||||
Warrant liability | - | - | 95,000 | 95,000 | ||||||||||||
Total Liabilities | $ | - | $ | - | $ | 95,000 | $ | 95,000 |
Level 3 Reconciliation | Balance at beginning of period | (Gains) and losses for the period (realized and unrealized) | Purchases, issuances, sales and settlements, net | Transfers in or out of Level 3 | Balance at the end of period | Balance at beginning of period | (Gains) and losses for the period (realized and unrealized) | Purchases, issuances, sales and settlements, net | Transfers in or out of Level 3 | Balance at the end of period | ||||||||||||||||||||||||||||||
Warrant liability | $ | 95,000 | $ | (90,000 | ) | $ | - | $ | - | $ | 5,000 | $ | 95,000 | $ | (95,000 | ) | $ | - | $ | - | $ | - | ||||||||||||||||||
Total Liabilities | $ | 95,000 | $ | (90,000 | ) | $ | - | $ | - | $ | 5,000 | $ | 95,000 | $ | (95,000 | ) | $ | - | $ | - | $ | - |
Exhibit No. | Description | |
3.1 | ||
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document* | |
101.SCH | Taxonomy Extension Schema Document* | |
101.CAL | Taxonomy Extension Calculation Linkbase Document* | |
101.DEF | Taxonomy Extension Definition Linkbase Document* | |
101.LAB | Taxonomy Extension Label Linkbase Document* | |
101.PRE | Taxonomy Extension Presentation Linkbase Document* |
TEL-INSTRUMENT ELECTRONICS CORP. | ||||
Date: | By: | /s/ Jeffrey C. O’Hara | ||
Name: Jeffrey C. O’Hara | ||||
Title: Chief Executive Officer Principal Executive Officer |
Date: | By: | /s/ Joseph P. Macaluso | ||
Name: Joseph P. Macaluso | ||||
Title: Principal Financial Officer Principal Accounting Officer |