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Technical Communications Corporation Completes Restatement of Prior Financial Statements; Files Form 10-K for the year ended September 29, 2018 and Forms 10-Q/A for Fiscal 2018; and Files Forms 10-Q for the quarters ended December 29, 2018 and March…

/EIN News/ -- CONCORD, Mass., June 21, 2019 (GLOBE NEWSWIRE) -- Technical Communications Corporation (NasdaqCM: TCCO) today announced the filing of its Annual Report on Form 10-K for the fiscal year ended September 29, 2018 with the Securities and Exchange Commission. The Form 10-K contains financial statements for fiscal year 2018 and restated information for fiscal year 2017. The Company also filed its Quarterly Reports on Form 10-Q for the quarters ended December 29, 2018 and March 30, 2019.

TCC had announced financial information and results of operations for the fiscal year and quarter ended September 29, 2018 in a Current Report on Form 8-K filed on December 10, 2018. Subsequent to such filing, management conducted a review of TCC’s revenue recognition policies, including its interpretations of ASC 605, Revenue Recognition, among other matters. Based upon this review, the Audit Committee of TCC’s Board of Directors, on the recommendation of management after consultation with the Company’s independent registered public accounting firm, concluded that the Company should modify the application of its revenue recognition policies, specifically in connection with a services contract. This modification resulted in the restatement of the previously announced financial information for the fiscal year and quarter ended September 29, 2018 as set forth in the Form 8-K filed on December 10, 2018, as well as a restatement of the financial information included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and Quarterly Reports on Form 10-Q for the fiscal quarters ended December 30, 2017, March 31, 2018 and June 30, 2018.  The Company filed Quarterly Reports on Forms 10-Q/A for such periods today to reflect the restatements.

The Company believes that the restatement will have no impact on total revenue recognized over the life of the service contract that is currently in effect. Furthermore, TCC believes, based on information available to date, that the restatement will have no impact on the timing or magnitude of cash flows from operations. The impact of the modification of revenue recognition was to recognize $484,000 of revenue originally recorded in TCC’s fiscal year ended September 30, 2017 in the fiscal year ended September 29, 2018, and to recognize $1,623,000 of revenue originally recorded in the Company’s fiscal year ended September 29, 2018 in the fiscal year ending September 28, 2019. As of September 29, 2018, the Company had $2,107,000 of deferred revenue recorded on its balance sheet as a result of these modifications.

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 Forms 10-Q/A for the quarters ended December 30, 2017, March 31, 2018 and June 30, 2018 and its Annual Report on Form 10-K for the fiscal year ended September 29, 2018 filed with the Commission and the “Risk Factors” section included therein (as the same may be amended from time to time).

Technical Communications Corporation
         
Condensed consolidated statements of operations
         
  Three Months Ended
  (Unaudited)
  03/30/2019 03/31/2018 12/29/2018 12/30/2017
         
Net revenue $ 1,928,000   $ 804,000   $ 1,112,000   $ 837,000  
Gross profit   799,000     243,000     399,000     292,000  
Selling, general and administrative   595,000     531,000     545,000     460,000  
Product development costs   36,000     153,000     107,000     166,000  
Operating income (loss)   168,000     (441,000)     (253,000)     (334,000)  
Net income (loss)   173,000     (439,000)     (248,000)     (332,000)  
Net income (loss) per share:        
Basic $ 0.09   $   (0.24)   $   (0.13)   $   (0.18)  
Diluted $ 0.09   $    (0.24)   $   (0.13)   $   (0.18)  
       
  Six Months Ended    
  (Unaudited)    
  03/30/2019 03/31/2018    
         
Net revenue $ 3,041,000   $ 1,640,000      
Gross profit   1,199,000     535,000      
Selling, general and administrative   1,140,000     991,000      
Product development costs   144,000     318,000      
Operating loss   (85,000)     (774,000)      
Net loss   (75,000)     (771,000)      
Net loss per share:        
Basic $   (0.04)   $   (0.42)      
Diluted $   (0.04)   $   (0.42)      
         


Condensed consolidated balance sheets      
  03/30/2019 12/29/2018 09/29/2018
  (Unaudited) (Unaudited) (Unaudited)
       
Cash and marketable securities $ 1,765,000   $ 1,748,000   $ 1,982,000
Accounts receivable - trade   285,000     202,000     560,000
Inventory   1,043,000     1,373,000     1,369,000
Other current assets   137,000     96,000     142,000
Total current assets   3,230,000     3,419,000     4,053,000
Property and equipment, net   33,000     40,000     49,000
                 
Total assets $ 3,263,000   $ 3,459,000   $ 4,102,000
                 
Accounts payable $ 248,000   $ 168,000   $ 188,000
Deferred revenue   1,249,000     1,722,000     2,107,000
Accrued expenses and other current liabilities   290,000     275,000     274,000
Total current liabilities   1,787,000     2,165,000     2,569,000
Total stockholders’ equity   1,476,000     1,294,000     1,533,000
Total liabilities and stockholders’ equity $ 3,263,000   $ 3,459,000   $ 4,102,000
                 


Condensed consolidated statements of operations (Restated)
             
  Three Months Ended
  (Unaudited)
  9/29/2018
9/30/2017
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Net revenue $ 1,717,000   $ (580,000)   $ 1,137,000   $ 1,125,000   $ (435,000)   $ 690,000  
Gross profit (loss)   836,000     (593,000)     243,000     162,000     (435,000)     (273,000)  
Selling, general and administrative   481,000     (53,000)     428,000     476,000       476,000  
Product development costs   132,000     (54,000)     78,000     206,000       206,000  
Operating income (loss)   223,000     (486,000)     (263,000)     (520,000)     (435,000)     (955,000)  
Net income (loss)   228,000     (487,000)     (259,000)     (518,000)     (435,000)     (953,000)  
Net income (loss) per share:            
Basic   $0.12     ($0.26)     ($0.14)     ($0.28)     ($0.24)     ($0.52)  
Diluted   $0.12     ($0.26)     ($0.14)     ($0.28)     ($0.24)     ($0.52)  
             
             
             
  Year Ended
  (Unaudited)
  9/29/2018
9/30/2017
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Net revenue $ 5,307,000   $ (1,622,000)   $ 3,685,000   $ 4,209,000   $ (484,000)   $ 3,725,000  
Gross profit   2,636,000     (1,664,000)     972,000     2,291,000     (484,000)     1,807,000  
Selling, general and administrative   1,994,000     (53,000)     1,941,000     2,145,000       2,145,000  
Product development costs   547,000     (26,000)     521,000     1,584,000       1,584,000  
Operating income (loss)   95,000     (1,585,000)     (1,490,000)     (1,438,000)     (484,000)     (1,922,000)  
Net income (loss)   105,000     (1,585,000)     (1,480,000)     (1,429,000)     (484,000)     (1,913,000)  
Net income (loss) per share:            
Basic   $0.06     ($0.86)     ($0.80)     ($0.78)     ($0.26)     ($1.04)  
Diluted   $0.06     ($0.86)     ($0.80)     ($0.78)     ($0.26)     ($1.04)  
             
             
             
Condensed consolidated balance sheets (Restated)          
             
  9/29/2018
9/30/2017
  (Unaudited)
(Unaudited)
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Cash and marketable securities $ 1,982,000     $ 1,982,000   $ 1,657,000     $ 1,657,000  
Accounts receivable - trade   560,000       560,000     730,000       730,000  
Inventory   1,369,000       1,369,000     1,358,000       1,358,000  
Other current assets   142,000       142,000     136,000       136,000  
Total current assets   4,053,000       4,053,000     3,881,000       3,881,000  
Property and equipment, net   49,000       49,000     54,000       54,000  
Total assets $ 4,102,000     $ 4,102,000   $ 3,935,000     $ 3,935,000  
                                     
Accounts payable $ 173,000     15,000   $ 188,000   $ 109,000     $ 109,000  
Accrued expenses and other current liabilities   327,000     (53,000)     274,000     326,000       326,000  
Deferred revenue   -   2,107,000*     2,107,000     -     484,000     484,000  
Total current liabilities   500,000     2,069,000     2,569,000     435,000     484,000     919,000  
Total stockholders’ equity   3,602,000   (2,069,000)*     1,533,000     3,500,000     (484,000)     3,016,000  
Total liabilities and stockholders’ equity $ 4,102,000         $ 4,102,000   $ 3,935,000         $ 3,935,000  
                                     
*Cumulative adjustment of the restatement for fiscal years ended September 29, 2018 and September 30, 2017
             


Condensed consolidated statements of operations (Restated)          
  Three Months Ended 12/30/2017      
  (Unaudited)      
  As reported Adjustment As adjusted      
             
Net revenue $ 1,117,000   $   (280,000)   $ 837,000        
Gross profit   572,000     (280,000)     292,000        
Selling, general and administrative   460,000       460,000        
Product development costs   166,000       166,000        
Operating loss   (54,000)     (280,000)     (334,000)        
Net loss   (52,000)     (280,000)     (332,000)        
Net loss per share:            
Basic   ($0.03)     ($0.15)     ($0.18)        
Diluted   ($0.03)     ($0.15)     ($0.18)        
             
  Three Months Ended 03/31/2018 Six Months Ended 03/31/2018
  (Unaudited)  (Unaudited) 
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Net revenue $ 930,000   $   (126,000)   $ 804,000   $ 2,046,000   $   (406,000)   $ 1,640,000  
Gross profit   351,000     (108,000)     243,000     923,000     (388,000)     535,000  
Selling, general and administrative   531,000       531,000     991,000       991,000  
Product development costs   135,000     18,000     153,000     300,000     18,000     318,000  
Operating loss   (315,000)     (126,000)     (441,000)     (369,000)     (406,000)     (775,000)  
Net loss   (313,000)     (126,000)     (439,000)     (365,000)     (406,000)     (771,000)  
Net loss per share:            
Basic   ($0.17)     ($0.07)     ($0.24)     ($0.20)     ($0.22)     ($0.42)  
Diluted   ($0.17)     ($0.07)     ($0.24)     ($0.20)     ($0.22)     ($0.42)  
             
             
  Three Months Ended 06/30/2018 Nine Months Ended 06/30/2018
  (Unaudited) (Unaudited) 
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Net revenue $ 1,544,000   $   (637,000)   $ 907,000   $ 3,590,000   $   (1,042,000)   $ 2,548,000  
Gross profit (loss)   877,000     (683,000)     194,000     1,790,000     (1,061,000)     729,000  
Selling, general and administrative   522,000       522,000     1,513,000       1,513,000  
Product development costs   114,000     10,000     124,000     415,000     27,000     442,000  
Operating income (loss)   241,000     (693,000)     (452,000)     (128,000)     (1,098,000)     (1,226,000)  
Net income (loss)   243,000     (693,000)     (450,000)     (123,000)     (1,098,000)     (1,221,000)  
Net income (loss) per share:            
Basic   $0.13     ($0.37)     ($0.24)     ($0.07)     ($0.59)     ($0.66)  
Diluted   $0.13     ($0.37)     ($0.24)     ($0.07)     ($0.59)     ($0.66)  
             


Condensed consolidated balance sheets (Restated)
       
  12/30/2017
  (Unaudited)
  As reported Adjustment As adjusted
         
Cash and marketable securities $ 1,889,000       $ 1,889,000
Accounts receivable - trade   323,000         323,000
Inventory   1,403,000         1,403,000
Other current assets   112,000         112,000
Total current assets   3,727,000         3,727,000
Property and equipment, net   41,000         41,000
Total assets $ 3,768,000       $ 3,768,000
               
Accounts payable $ 76,000       $ 76,000
Accrued expenses and other current liabilities   240,000         240,000
Deferred revenue     -   764,000     764,000
Total current liabilities   316,000   764,000     1,080,000
Total stockholders’ equity   3,452,000   (764,000)     2,688,000
Total liabilities and stockholders’ equity $ 3,768,000       $ 3,768,000
               


  3/31/2018 6/30/2018
  (Unaudited) (Unaudited)
  As reported Adjustment As adjusted As reported Adjustment As adjusted
             
Cash and marketable securities $ 1,543,000       $ 1,543,000   $ 1,460,000       $ 1,460,000
Accounts receivable - trade   316,000         316,000     598,000         598,000
Inventory   1,475,000         1,475,000     1,555,000   (56,000)     1,499,000
Other current assets   140,000         140,000     172,000         172,000
Total current assets   3,474,000         3,474,000     3,785,000         3,729,000
Property and equipment, net   63,000         63,000     59,000         59,000
Total assets $ 3,537,000       $ 3,537,000   $ 3,844,000       $ 3,788,000
                               
Accounts payable $ 80,000       $ 80,000   $ 131,000       $ 131,000
Accrued expenses and other current liabilities   345,000         345,000     350,000         350,000
Deferred revenue   -   890,000     890,000     -   1,527,000     1,527,000
Total current liabilities   425,000   890,000     1,315,000     481,000   1,527,000     2,008,000
Total stockholders’ equity   3,112,000   (890,000)     2,222,000     3,363,000   (1,583,000)     1,780,000
Total liabilities and stockholders’ equity $ 3,537,000       $ 3,537,000   $ 3,844,000       $ 3,788,000
                               

Technical Communications Corporation 
100 Domino Driver 
Concord, MA  01742 – 2892

Michael P. Malone
Chief Financial Office
(978) 287-5100
www.tccsecure.com


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