Technical Communications Corporation (NasdaqCM: TCCO) today announced
its results for the fiscal year and quarter ended October 3, 2015. For
the quarter ended October 3, 2015, the Company reported a net loss of
$(1,170,000), or $(0.64) per share, on revenue of $931,000, compared to
a net loss of $(299,000), or $(0.16) per share, on revenue of $1,559,000
for the quarter ended September 27, 2014. For the year ended October 3,
2015, the Company reported a net loss of $(1,822,000), or $(0.99) per
share, on revenue of $5,942,000, compared to a net loss of $(2,565,000),
or $(1.39) per share, on revenue of $6,139,000 for the year ended
September 27, 2014.
During the fourth quarter of fiscal 2015, the Company recorded a special
charge related to the write-off of excess inventory of $667,000. Excess
inventory charges were the result of weakening demand for certain older
product lines. Net loss for the fourth quarter of fiscal 2015 was
$(503,000), excluding this special charge, compared to the net loss of
$(299,000) for the same period in the previous year. The net loss for
fiscal year 2015 was $(1,155,000), excluding the special charge,
compared to the net loss of $(2,565,000) for the previous year.
Commenting on corporate performance, Carl H. Guild, Jr., President and
Chief Executive Officer of TCC, said, “The market for high-end
communications security systems is competitive and subject to long
government procurement cycles, unpredictable order fulfillment lead
times, and fluctuating market conditions. While TCC has a pipeline of
potential contracts and initiatives in development, the timing and
outcome of these potential contracts is unknown. As a result, in fiscal
2015 we began to closely monitor and reduce operating expenses as
appropriate, while strategically continuing to invest in business
development efforts, develop strategic relationships and expand our
sales channel network.”
Mr. Guild continued, “Providing custom cryptographic products, services
and solutions continues to be an important market niche for the Company
and, we believe, a competitive differentiator. Moving forward, we expect
our expertise in engineering services, custom and national algorithm
integration, systems design and integration, and custom training
services to produce recurring revenue from established customers as well
as provide new business opportunities. In fiscal 2015, TCC received
$1,000,000 in contracts for such engineering services. Delivery under
these contracts began in fiscal 2015 and is expected to be completed in
fiscal 2016.”
In fiscal 2016, TCC announced its next-generation CipherTalk®
secure mobile phone, which provides military-grade encrypted and
stealthy voice and text communications. The solution is based on a
hardened Android™ (Android is a trademark of Google Inc.)
platform, which combines user functionality with maximum-level security
features, differentiating it from several competitors. The target
audience for the CipherTalk is governments and corporations that need to
protect highly sensitive mobile phone communications. TCC believes its
CipherTalk secure mobile phone positions the Company to meet growing
demand for high-end secure mobile voice and text communications globally.
Fiscal Year 2015 Highlights
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Delivered on several contracts received in fiscal 2015 from Datron
Worldwide Communications, Inc., a radio communications manufacturer,
as part of an original equipment manufacturer relationship for our DSP
9000 radio encryption equipment.
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Received a $3.3 million order for our DSD 72A-SP bulk encryption
system from the Government of Egypt. TCC expects follow-on sales as
this customer continues to upgrade its network and requires new
systems and services for additional communications security
applications.
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Received a $432,000 contract for our DLE 7050 link encryption system
from an established customer for deployment into Saudi Arabia.
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Provided engineering services to government and commercial customers
to customize TCC products, developed technology for customer-specific
security applications, and delivered customized product training
services.
Escalating turmoil around the world presents both significant
opportunities and challenges for TCC. The threat of terrorism and other
political unrest increases the demand for security products that provide
both strategic and tactical benefits, and are readily available. At the
same time, political disruptions can cause unpredictable and erratic
delays in the processing of procurements and delivery of products. The
combined effects present a situation that challenges both our sales
capture teams and our production capabilities. The Company believes
these market conditions will provide opportunities to build a successful
future through its efforts to enlarge and enhance its product line and
expand its customer base by both identifying new customers for existing
and new products and offering such products to current customers
About Technical Communications Corporation
For over 50 years, TCC has specialized in superior-grade secure
communications systems and customized solutions, supporting our CipherONE® best-in-class
criteria, to protect highly sensitive voice, data and video transmitted
over a wide range of networks. Government entities, military agencies
and corporate enterprises in 115 countries have selected TCC's proven
security to protect their communications. Learn more: www.tccsecure.com.
Statements made in this press release or as may otherwise be
incorporated by reference herein 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 ability to achieve growth and profitability. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, including but not limited to the effect of foreign political
unrest; domestic and foreign government policies and economic
conditions; future changes in export laws or regulations; changes in
technology; 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 Company's 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 Company’s filings with the Securities and Exchange
Commission, including its Quarterly Reports on Form 10-Q for the
quarters ended June 27, 2015, March 28, 2015 and December 27, 2014, and
its Annual Report on Form 10-K for the fiscal year ended October 3, 2015
to be filed with the Commission and the “Risk Factors” section included
therein.
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Technical Communications Corporation
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Condensed consolidated income statements
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Quarter Ended
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(Unaudited)
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10/03/2015
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9/27/2014
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Net sales
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$
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931,000
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$
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1,559,000
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Gross (loss) profit
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(119,000
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)
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963,000
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S, G & A expense
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660,000
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656,000
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Product development costs
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394,000
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617,000
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Operating loss
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(1,174,000
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)
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(309,000
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)
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Income tax provision
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-
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-
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Net loss
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(1,170,000
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)
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(299,000
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Net loss per share:
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Basic
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$
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(0.64
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)
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$
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(0.16
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)
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Diluted
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$
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(0.64
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)
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$
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(0.16
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)
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Year Ended
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(Unaudited)
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10/03/2015
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9/27/2014
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Net sales
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$
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5,942,000
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$
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6,139,000
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Gross profit
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3,365,000
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4,105,000
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S, G & A expense
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2,940,000
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2,980,000
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Product development costs
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2,300,000
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2,729,000
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Operating loss
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(1,875,000
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)
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(1,605,000
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)
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Income tax (benefit) provision
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(35,000
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)
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990,000
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Net loss
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(1,822,000
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)
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(2,565,000
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)
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Net loss per share:
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Basic
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$
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(0.99
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)
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$
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(1.39
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)
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Diluted
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$
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(0.99
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)
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$
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(1.39
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)
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Condensed consolidated balance sheets
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10/03/2015
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9/27/2014
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(Unaudited)
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(derived from audited
financial statements)
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Cash and current marketable securities
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$ 2,947,000
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$ 4,938,000
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Accounts receivable, net
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1,791,000
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403,000
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Inventories, net
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1,851,000
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2,721,000
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Deferred & refundable income taxes
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-
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-
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Other current assets
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133,000
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210,000
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Total current assets
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6,722,000
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8,272,000
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Marketable securities
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762,000
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1,105,000
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Property and equipment, net
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257,000
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432,000
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Cost method investment
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275,000
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-
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Total assets
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$ 8,016,000
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$ 9,809,000
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Accounts payable
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180,000
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173,000
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Accrued expenses and other current liabilities
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463,000
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568,000
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Total current liabilities
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643,000
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741,000
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Total stockholders’ equity
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7,373,000
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9,068,000
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Total liabilities and stockholders’ equity
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$ 8,016,000
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$ 9,809,000
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