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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year Commission File No.
ended March 31, 2002 33-18978

TEL-INSTRUMENT ELECTRONICS CORP.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

New Jersey 22-1441806
- ------------------------ ------------------------------------
(State of incorporation) (IRS Employer Identification Number)

728 Garden Street
Carlstadt, New Jersey 07072
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (201) 933-1600

Securities registered pursuant to Section 12(b) of the Act:

None
- ---------------------

Securities registered pursuant to Section 12(g) of the Act:

None
- ---------------------

Indicate by checkmark 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 [ ].

The aggregate market value of the voting Common Stock (par value $.10 per share)
held by non-affiliates on June 10, 2002 was $2,392,796 using the price of the
last trade on June 10, 2002.

2,135,751 shares of Common Stock were outstanding as of June 10, 2002.

Total Pages - 45

Exhibit Index - pages 43-44


1


PART I

Item 1. Business

General

Tel-Instrument Electronics Corp. ("Tel" or the "Company") designs,
manufactures, and sells test equipment, both domestically and
internationally, to the general aviation and commercial aviation
market and to the government/military aviation market. The Company
has been in business since 1947. In the last 5 years, the Company's
revenues have increased by approximately 150% and its income before
taxes has tripled.

Tel's instruments are used to test navigation and communications
equipment installed in aircraft, both on the flight line ("ramp
testers") and in the maintenance shop ("bench testers"), and range
in list price from $7,500 to $75,000 per unit. Tel continues to
develop new products in anticipation of customers' needs. The
development of multifunction testers, for example, has made it
easier for customers to perform ramp tests with less training. In
recent years the Company has become the dominant manufacturer and
supplier of IFF (Identification Friend or Foe) flight line test
equipment, discussed below. The Company is currently working on the
next generation of IFF test sets in anticipation of U.S. and NATO
requirements for more sophisticated IFF testing.

For the year ended March 31, 2002, sales increased approximately 30%
to $9,731,081 and net income before taxes increased approximately
53% to $1,585,689 (see Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations).

Over the last 5 years, the Company has significantly improved its
financial condition, increased revenues, profits and cash flow,
firmly established itself as one of the leading suppliers in the
avionics test equipment industry, and improved its market position.

The Company continues actively to pursue opportunities in both the
commercial and government markets, both domestic and international,
and expends substantial amounts to develop new and improved
products. The Company has been actively responding to customer
requests by adapting its product designs or developing new products.
Exploration of opportunities in other government and commercial
markets also continues in an attempt to broaden the Company's
product line. As previously announced, the Company engaged Semaphore
Capital Advisors LLC (formerly Crary Partners LLC) to render
investment-banking services to the Company, and in June 2002
extended the term of its agreement for twelve months. Semaphore will
assist the Company in the extended period in pursuing growth through
acquisitions and alliances of compatible businesses or technologies.

During fiscal year 2002, Company shipments of the AN/APM-480 IFF
Transponder/Interrogator test set to the U.S. Navy represented 54%
of total sales. Since obtaining the contract, the Company has
received orders from the U.S. Navy for a total of 1,059 units and
there are 241 units remaining subject to the U.S. Navy's option
under the contract. Any options not exercised by February 11, 2003
will expire.


2


Item 1. Business (Continued)

General (Continued)

The AN/APM-480 is a militarized avionics ramp tester used to
simulate IFF Transponder/Interrogator and TCAS (Traffic Alert and
Collision Avoidance system) functions to provide "go, no-go" testing
of avionics test equipment in military aircraft, on the flight line
and aircraft carrier deck. The Company has begun development of the
next generation of more sophisticated IFF testers in anticipation
that the U.S. Navy will issue a contract in the future to upgrade
these units. Although there is no assurance that the Company will
receive any such sales contracts which may be issued by the U.S.
Navy, the Company believes that it is well positioned to obtain such
contracts.

While the government sales increased significantly, commercial sales
decreased due to the financial difficulties encountered in the
commercial airline industry and the consequences of the September
11th tragedy.

The table below sets forth the composition of Tel's sales for the
last three fiscal years.

Commercial Government Total
---------- ---------- -----
March 31, 2002 $1,981,298 $7,749,783 $9,731,081
March 31, 2001 $3,033,281 $4,475,620 $7,508,901
March 31, 2000 $1,957,859 $3,172,923 $5,130,782

Foreign commercial sales are made direct, through American export
agents or the Company's international distributors at a discount
reflecting the 20% selling commission under written or oral,
year-to-year arrangements. For the years ended March 31, 2002, 2001
and 2000, foreign commercial sales were 20%, 17%, and 20%,
respectively, of total commercial sales.

The Company has an exclusive distribution agreement with Muirhead
Avionics and Accessories, Ltd, based in the United Kingdom, to
represent the Company in parts of Europe. Sales to Muirhead
represented approximately 4%, 3%, and 5% of total sales for the
fiscal years 2002, 2001, and 2000, respectively.

In May 1999, the Company received a $396,262 order for its DME/P
ramp test units from a customer in Italy. These units were delivered
in the first quarter of fiscal year 2001. The Company received a
contract for $680,000 (subsequently increased to $956,000) to
develop a DME/P bench test set from this same customer with
deliveries scheduled for the second quarter of fiscal year 2003.

Tel also sells its products in Australia and New Zealand, has
recently signed an agreement to distribute its products in Spain and
Portugal, and is exploring distribution in other areas.

Domestic commercial sales are made directly or through distributors.
No direct commercial customer accounted for more than 10% of
commercial sales in fiscal years 2002 and 2001. One direct domestic
commercial customer accounted for 11% of commercial sales in fiscal
year 2000. There are no written agreements with domestic
distributors, who receive a 15%-20% discount for stocking, selling
and, in some cases, supporting these products. Tel gives a 5% to 10%
discount to non-stocking distributors,


3


Item 1. Business (Continued)

General (Continued)

and independent sales representatives, depending on their sales
volume and promotional effort. One domestic distributor accounted
for approximately 19%, 29%, and 10% of commercial sales for the
years ended March 31, 2002, 2001, and 2000, respectively.

Set forth below is Tel's backlog at March 31, 2002, 2001, and 2000.

Commercial Government Total
---------- ---------- -----
March 31, 2002 $186,690 $ 8,346,557 $ 8,533,247
March 31, 2001 $633,761 $13,029,317 $13,663,078
March 31, 2000 $665,072 $14,355,429 $15,020,501

Tel believes that most of the backlog at March 31, 2002 will be
delivered during the next 12-18 months.

Reduction in backlog is a result of having delivered approximately
50% of the 1,059 units ordered by the U.S. Navy for the AN/APM-480
IFF test sets, and the general decline, started late summer of 2001,
in the commercial market discussed above. Also discussed above, the
Company is working on the next generation of test units, including a
more sophisticated IFF test set, and has retained Semaphore Capital
Advisors to assist it in broadening its markets and products through
acquisitions or alliances.

All of the backlog is pursuant to purchase orders and all of the
government contracts are fully funded. However, government contracts
are always susceptible to termination by the government for
convenience.

Tel obtains its purchased parts from a number of suppliers. These
materials are standard in the industry and Tel foresees no
difficulty in obtaining purchased parts, as needed, at acceptable
prices.

Markets and Competition

The Company manufactures and sells commercial and military products
as the same avionics business, using best commercial practice in
manufacturing products for the government. Most of Tel's military
test sets are similar to the Company's commercial test sets.

The general aviation market consists of some 1,000 repair and
maintenance service shops, at private and commercial airports in the
United States, which purchase test equipment to assist in the repair
of aircraft electronics. The commercial aviation market consists of
approximately 80 domestic and foreign commercial airlines.

The civilian market for avionic test equipment is dominated by three
manufacturers, including Tel, IFR, a division of Aeroflex, Inc., and
JC Air, a division of Goodrich Corporation. This market is
relatively small and highly competitive. Tel has generally been
successful because of its high quality products, prices, and
responsive service. Tel also provides customers with calibration and
repair services.

The Company has entered into distribution arrangements with Muirhead
to distribute in


4


Item 1. Business (Continued)

Markets and Competition (continued)

Europe and with Milspec Services in Australia and New Zealand.
Additionally, the Company entered into an agreement with M.P.G.
Instruments s.r.l., wherein this distributor will have the exclusive
sales rights for DME/P ramp and bench test units. The Company
continues to explore additional opportunities in other parts of the
world.

Future domestic market growth will depend in part on whether the
U.S. Federal Aviation Administration (FAA) implements plans to
upgrade the U.S. air traffic control system and on continuing recent
trends towards more sophisticated avionics systems, both of which
would require the design and manufacture of new test equipment. The
Company continues to analyze the needs of the market, to develop new
and improved instruments to meet emerging FAA requirements, and to
redesign models to add functions and reduce the cost. The Company
believes its test equipment is recognized by its customers for its
quality, durability, reliability, and affordability.

Military Markets

The military market is large, but is dominated by large corporations
with substantially greater resources than Tel. Tel competitively
bids for government contracts on the basis of the uniqueness of its
products and "small business set asides" (i.e., statutory provisions
requiring the military to entertain bids only from statutorily
defined small businesses), and on bids for sub-contracts from major
government suppliers.

Tel has increased its efforts to obtain such subcontracts and
meeting end user needs by modifying commercial designs to satisfy
special government/military requirements. This approach has enabled
Tel to sell the T-30D, T-36M, T-48I, T-47 family, and T-49 family to
government agencies and prime contractors.

In recent years the Company has become the dominant supplier for the
U.S. Military as well as throughout the NATO countries for flight
line IFF test equipment. The Company is currently working on the
next generation of IFF test sets.

Tel has no patents or licenses which are material to its business.

Engineering, Research and Development

In the fiscal years ended March 31, 2002, 2001, and 2000, Tel spent
$1,521,219, $1,047,305, and $1,051,833, respectively, on the
engineering, research and development of new and improved products.
None of these amounts were sponsored by customers. Tel's management
believes that continued and increased expenditures for engineering,
research and development are necessary to enable Tel to expand its
sales and profits.

The increase in expenditures in fiscal year 2002 is the result of an
increase in staff and an increase in the Company's development
efforts. Engineering, research and development expenditures in 2002
were directed, in addition to the next generation IFF test sets,
toward the development of a multi-function commercial bench tester,
and new products for other targeted markets, such as the T-36C,
TR-220, and T-47S. The Company owns all of these designs.


5


Item 1. Business (Continued)

Personnel

At June 10, 2002, Tel had thirty employees in manufacturing,
materials management, and quality assurance, nine in administration
and sales, and ten in research and development, none of whom belongs
to a union. While the job market is tight, especially for technical
personnel, Tel has generally been able to add personnel as required.
The Company also uses several part-time consultants on an as needed
basis.

Item 2. Properties

During the fourth quarter of fiscal year 2001, the Company expanded
its facilities and increased its manufacturing capacity by leasing
the additional space in the lower level of its current building. The
Company now leases 19,564 square feet in Carlstadt, New Jersey as
its manufacturing plant and administrative offices, pursuant to a
ten-year lease expiring in February, 2011. Tel is unaware of any
environmental problems in connection with its location and, because
of the nature of its manufacturing activities, does not anticipate
such problems.

Item 3. Pending Legal Proceedings

There are no material pending legal proceedings.


6


PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters

Market Information

There has been no established public trading market for Registrant's
Common Stock. Subsequent to the public offering of the Company's
Common Stock in December 1988, the Common Stock has traded
sporadically in the over-the-counter market. During the fiscal year
ended March 31, 2002, the Company's Common Stock had the high and
low bids of $2.50 and $1.08, respectively. These quotations reflect
inter-dealer prices, without retail markup or commission and may not
necessarily represent actual transactions. On June 10, 2002, the bid
was $2.15 and the ask was $2.30.

Approximate Number of Equity Security Holders

Number of Record
Holders as of
Title of Class March 31, 2002
---------------------------------------------------------------
Common Stock, par value 814
$.10 per share

Dividends

Registrant has not paid dividends on its Common Stock and does not
expect to pay such dividends in the foreseeable future.


7


Item 6. Selected Financial Data

TEL-INSTRUMENT ELECTRONICS CORP.
SUMMARY OF FINANCIAL INFORMATION



Years Ended March 31,
----------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- -----------

Statement of Operations Data:
Net revenues $ 9,731,081 $ 7,508,901 $ 5,130,782 $ 3,484,499 $ 3,959,242
----------- ----------- ----------- ----------- -----------
Operating costs and expenses:
Cost of sales 4,684,147 3,704,572 2,489,769 1,559,992 1,559,542
Selling, general and administrative 1,858,843 1,622,881 1,165,844 920,547 909,505
Engineering, research and development 1,521,219 1,047,305 1,051,833 1,204,077 902,250
----------- ----------- ----------- ----------- -----------
8,064,209 6,374,758 4,707,446 3,684,616 3,371,297
----------- ----------- ----------- ----------- -----------

Income (loss) from operations 1,666,872 1,134,143 423,336 (200,117) 587,945

Other expenses, net (81,183) (95,026) (64,378) (44,149) (68,847)
----------- ----------- ----------- ----------- -----------

Diluted income/(loss) before income taxes 1,585,689 1,039,117 358,958 (244,266) 519,098

Provision for (benefit from) income taxes 557,999 (295,888) (241,595) (97,585) (58,719)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 1,027,690 $ 1,335,005 $ 600,553 ($ 146,681) $ 577,817
=========== =========== =========== =========== ===========
Diluted income/(loss) per common share $ 0.48 $ 0.63 $ 0.28 ($ 0.07) $ 0.28
=========== =========== =========== =========== ===========

Years Ended March 31,
----------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ----------- ----------- ----------- -----------

Balance Sheet Data:
Working capital $3,154,081 $1,766,360 $ 921,130 $ 507,582 $ 864,061

Total assets 6,233,572 5,934,646 3,932,765 2,218,508 1,941,141

Long-term debt 152,183 218,345 301,682 266,486 300,000

Stockholders' equity 3,900,794 2,862,348 1,522,047 919,093 1,060,068



8


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

A number of the statements made by the Company in this report may be
regarded as "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.

Forward-looking statements include, among others, statements
concerning the Company's outlook, pricing trends and forces within
the industry, the completion dates of capital projects, expected
sales growth, cost reduction strategies and their results, long-term
goals of the Company and other statements of expectations, beliefs,
future plans and strategies, anticipated events or trends and
similar expressions concerning matters that are not historical
facts.

All predictions as to future results contain a measure of
uncertainty and accordingly, actual results could differ materially.
Among the factors that could cause a difference are: changes in the
general economy; changes in demand for the Company's products or in
the costs and availability of its raw materials; the actions of
competitors; the success of our customers; technological change;
changes in employee relations; government regulations; litigation,
including its inherent uncertainty; difficulties in plant operations
and materials transportation; environmental matters; and other
unforeseen circumstances. A number of these factors are discussed in
the Company's filings with the Securities and Exchange Commission.

Critical Accounting Policies

In preparing our financial statements and accounting for the
underlying transactions and balances, we apply our accounting
policies as disclosed in Note 2 of our Notes to Financial
Statements. The Company's accounting policies that require a higher
degree of judgment and complexity used in the preparation of
financial statements include:

Revenue recognition - revenues are recognized at the time of
shipment to, or acceptance by customer provided title and risk of
loss is transferred to the customer. Provisions, when appropriate,
are made where the right to return exists. Revenues under service
contracts are recognized when the services are performed.

Property and equipment - property and equipment are stated at cost,
less accumulated depreciation. Depreciation is provided using the
straight-line method over the estimated useful lives of the
respective assets over periods ranging from three to eight years.
Useful lives are estimated at the time the asset is acquired and are
based upon historical experience with similar assets as well as
taking into account anticipated technological or other changes.
Leasehold improvements are amortized over the term of the lease or
the useful life of the asset, whichever is shorter.

Inventory reserves - inventory reserves are estimated for excess,
slow-moving and obsolete inventory as well as inventory whose
carrying value is in excess of net realizable value.


9


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Critical Accounting Policies (continued)

These estimates are based on current assessments about future
demands, market conditions and related management initiatives. If
market conditions and actual demands are less favorable than those
projected by management, additional inventory write-downs may be
required.

Accounts receivable - the Company performs ongoing credit
evaluations of its customers and adjusts credit limits based on
customer payment and current credit worthiness, as determined by
review of their current credit information. The Company continuously
monitors credits and payments from its customers and maintains
provision for estimated credit losses based on its historical
experience and any specific customer issues that have been
identified. While such credit losses have historically been within
our expectation and the provision established, the Company cannot
guarantee that it will continue to receive positive results.

Income taxes - deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of
assets and liabilities and are measured using enacted tax rates and
laws that will be in effect when such differences are expected to
reverse. The measurement of deferred tax assets is reduced, if
necessary, by a valuation allowance for any tax benefit which is not
more likely than not to be realized. The effect on deferred tax
assets and liabilities of a change in tax rate is recognized in the
period that such tax rate changes are enacted.

Results of Operations 2002 Compared to 2001

Overview

For the year ended March 31, 2002 sales increased 29.6% to
$9,731,081 and net income before taxes increased 52.6% to $1,585,689
from $1,039,117. During fiscal year 2002 shipments of the AN/APM-480
IFF (Identification, Friend or Foe) Transponder Set Test Sets (TSTS)
to the U.S. Navy represented 54% of total sales. The Company has
received orders for 1,059 units and there are 241 units remaining
subject to the U.S. Navy's option under the contract. Any options
not exercised by February 11, 2003 will then expire. A total of 520
have been shipped and revenue recognized as of March 31, 2002. The
balance of the units ordered by the U.S. Navy should be shipped
within the next 12-18 months. This contract, as anticipated,
represents a significant portion of the Company's revenues in fiscal
year 2002 and has contributed greatly to the increase in the
Company's operating profits. The Company increased research and
development expenditures in order to develop new products for future
sales including the T-47S test set, a commercial bench test set, and


10


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations 2002 Compared to 2001 (continued)

Overview (continued)

new products for other targeted markets. The Company also continues
work on the next generation of IFF test sets. As a result of the
continuing improvement in operating results, the Company's financial
position has significantly improved.

The Company continues to actively pursue avionics test opportunities
in both the commercial and government markets both domestically and
internationally, and is also exploring opportunities in other
government and commercial markets in order to broaden the Company's
product and market base. As previously announced, the Company has
engaged Semaphore Capital Advisors LLC (formerly Crary Partners LLC)
to render investment-banking services to the Company and in June
2002 extended the term of that agreement to provide that Semaphore
will assist the Company to grow through acquisitions and alliances.

Sales

Sales increased $2,222,180 (29.6%) to $9,731,081 for the year ended
March 31, 2002 as compared to the year ended March 31, 2001. This
continues the growth of sales over the last five years.

Government sales increased $3,274,163 (73.2%) to $7,749,783 for the
year ended March 31, 2002 as compared to the prior fiscal year,
primarily as a result of the shipment of the AN/APM-480 IFF test
sets to the U.S. Navy.

Commercial sales decreased $1,051,983 (34.7%) to $1,981,298 for the
fiscal year ended March 31, 2002 as compared to the fiscal year
ended March 31, 2001. This decrease is primarily the result of the
completion of a major contract with a freight carrier, and the
inability to replace this contract with comparable new business due
to the financial difficulties encountered in the commercial airline
industry and the consequences of the September 11th tragedy.

Gross Margin

Gross margin increased $1,242,605 (32.7%) to $5,046,934 for the
fiscal year ended March 31, 2002 as compared to the prior fiscal
year. The increase in gross margin, for the most part, is attributed
to the higher volume and, to a lesser extent, to the production
efficiencies obtained as a result of the higher volume. Gross margin
as a percentage of sales for the fiscal year ended March 31, 2002
was 51.9% as compared to 50.7% for the fiscal year ended March 31,
2001.


11


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)

Results of Operations 2002 Compared to 2001 (continued)

Operating Expenses

Selling, general and administrative expenses increased $235,962
(14.5%) for the year ended March 31, 2002 as compared to the prior
fiscal year, as a result, for the most part, to an increase in sales
and marketing activities, including the addition of new personnel,
an increase in commission expenses, higher professional fees, and an
increase in facility costs associated with the Company adding the
lower level of the building to its lease.

Engineering, research and development expenses increased $473,914
(45.3%) for the year ended March 31, 2002 as compared to last fiscal
year. The higher level of expenditures results from the completing
the design of the T-47S test set, continuing development of a
commercial bench test set, new products for other targeted markets
and enhancements to existing products. The Company has also begun
work on the next generation of IFF test sets.

Income Taxes

For the year ended March 31, 2002, the Company recorded a provision
for income taxes of $557,999, which represents primarily the
effective federal and state tax rate on the Company's net income
before taxes. For the year ended March 31, 2001, the Company, in
accordance with FASB 109, recorded a net tax benefit of $295,888,
which represented: (1) the effective federal and state tax rate on
the Company's net income before taxes, and (2) the reduction of its
deferred tax valuation allowance and other items and credited this
amount to benefit from income taxes. The Company does not for fiscal
year 2002 and did not for fiscal year 2001 have a significant
federal tax liability (see Note 9 to the Financial Statements).

Although income before taxes was $546,572 higher in fiscal year
2002, than fiscal year 2001, income after taxes declined in fiscal
year 2002 as a result of crediting the 2001 tax provision with a
benefit from a change in the valuation allowance in accordance with
FASB 109.

Tel has used up its net operating losses through March 31, 2002 and
has, therefore, not paid significant federal income taxes. Tel will
begin to pay federal income taxes in fiscal year 2003.

Results of Operations 2001 Compared to 2000

Overview

For the year ended March 31, 2001 sales increased over fiscal year
2000 by 46% to $7,508,901 and net income before taxes increased 189%
to $1,039,117 from $358,958.


12


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Results of Operations 2001 Compared to 2000 (continued)

During fiscal year 2001, the Company began shipments of the
AN/APM-480 IFF (Identification, Friend or Foe) Transponder Set Test
Sets (TSTS) to the U.S. Navy. The Company received orders from the
U.S. Navy for a total of 960 units of which a total of 128 units
were shipped during fiscal year 2001 and the revenue recognized.

During fiscal year 2001, the Company began shipment to a major
freight carrier (through a domestic distributor) of T-30D ILS
(Instrument Landing System) and T-49C TCAS commercial test sets. The
total order exceeded $900,000, and the Company shipped approximately
$600,000 of this order during fiscal year 2001, and expects to ship
the balance of this order during the first half of fiscal year 2002.
In addition, during the fiscal year 2001 the Company shipped all of
the T-76 DME/P (precision distance measuring equipment) ramp test
sets under the contract, totaling approximately $400,000, with
Marconi Communications through our Italian intermediary, M.P.G.
Instruments s.r.l.

Sales

Sales increased $2,378,119 (46.4%) to $7,508,901 for the year ended
March 31, 2001 as compared to the year ended March 31, 2000.

Government sales increased $1,302,697 (41.1%) for the year ended
March 31, 2001 as compared to the prior fiscal year. Government
sales increased as a result of the shipment of the AN/APM-480 IFF
test sets to the U.S. Navy, the T-36M and the T-76 DME/P ramp test
sets. These increases were partially offset by lower foreign sales
of the T-47 family of IFF test sets and of sales of the T-49CF
military TCAS units.

Commercial sales increased $1,075,422 (54.9%) to $3,033,281 for the
fiscal year ended March 31, 2001 as compared to the fiscal year
ended March 31, 2000. The increase in commercial sales is primarily
attributed to the shipment of commercial test sets to a major
freight carrier and an increase in ILS and TCAS test set shipments.

Gross Margin

Gross margin increased $1,163,316 (44.0%) for the fiscal year ended
March 31, 2001 as compared to the prior fiscal year. The increase in
gross margin, for the most part, is attributed to the higher volume.
However, gross margin, as a percentage of sales, was reduced by the
introduction of new products, such as the AN/APM 480 and the T-76,


13


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Results of Operations 2001 Compared to 2000 (continued)

and the associated learning curve in building these new and more
sophisticated products, and lower gross profit on the AN/APM 480
contract. The gross margin percentage for the fiscal year ended
March 31, 2001 was 50.7% as compared to 51.5% for the fiscal year
ended March 31, 2000.

Operating Expenses

Selling, general and administrative expenses increased $457,037
(39.2%) for the year ended March 31, 2001 as compared to the prior
fiscal year. This increase is attributed to higher sales and
marketing expenses, and an increase in accrued compensation expense.

Engineering, research and development expenses decreased $4,528 for
the year ended March 31, 2001 as compared to fiscal year 2000.
Similar to fiscal year 2000, certain resources were directed towards
revenue-producing activities and, therefore, not included in
engineering, research and development expenses. However, the Company
continued to develop new products and provide a foundation for the
future, including work on a universal test set and beginning work on
the next generation of IFF test sets.

Income Taxes

For the year ended March 31, 2001, the Company, in accordance with
FASB 109, recorded a net tax benefit of $295,888, which represents:
(1) the effective federal and state tax rate on the Company's net
income before taxes, and (2) reduction of its deferred tax valuation
allowance and other items and credited this amount to benefit from
income taxes. For the year ended March 31, 2000, the Company
recorded a net tax benefit of $241,595, which represents: (1) the
effective federal and state tax rate on the Company's net income
before taxes and (2) reduced its valuation allowance and other items
in the amount of $385,000 and credited this amount to benefit from
income taxes. The Company currently does not have a significant
federal tax liability (see Note 9 to the Financial Statements).

Liquidity and Capital Resources

Working capital increased $1,387,721 (79%) during fiscal year 2002
to $3,154,081 as compared to $1,766,360 at March 31, 2001. For the
year ended March 31, 2002, the Company generated cash from
operations in the amount of $1,378,566 as compared to $725,864 in
the prior fiscal year. This increase in cash from operations is
primarily attributed to the improvement in the Company's operating
income as a result of the higher sales volume, and is after a
reduction during the year in accounts payable of $730,047.


14


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)

Liquidity and Capital Resources (continued)

The Company expanded its line of credit to $1,000,000 from $600,000
from Fleet Bank. The line of credit bears an interest rate of 0.5%
above the lender's prevailing base rate, which is payable monthly,
based upon the outstanding balance. As of March 31, 2002 the Company
had no outstanding balance. At March 31, 2001, the Company had
borrowed $250,000 against its line of credit, which was repaid
during fiscal year 2002. The line of credit is collateralized by
substantially all of the assets of the Company and expires in August
2002. The credit facility requires the Company to maintain certain
financial covenants. As of March 31, 2002, the Company was in
compliance with all financial covenants.

Based upon the current backlog, its existing credit line, and cash
balance, the Company believes that it has sufficient working capital
to fund its operating plans for the next twelve months. However, as
the Company pursues additional opportunities, the need for
additional capital may arise. The Company will evaluate its
alternatives when these opportunities arise. The Company has also
retained Semaphore Capital Advisors as its investment bankers to
help pursue acquisitions and alliances and, if needed, to help raise
capital. The Company maintains its cash balance in a money market
account, in the event the cash is needed for acquisition. There was
no significant impact on the Company's operations as a result of
inflation for the fiscal year ended March 31, 2002.


15


Item 8. Financial Statements and Supplementary Data

Pages
-----
(1) Financial Statements:

Report of Independent Accountants 17

Balance Sheets - March 31, 2002 and 2001 18

Statements of Operations - Years Ended 19
March 31, 2002, 2001 and 2000

Statements of Changes in Stockholders' 20
Equity - Years Ended March 31,
2002, 2001 and 2000

Statements of Cash Flows - Years Ended 21
March 31, 2002, 2001 and 2000

Notes to Financial Statements 22-37

(2) Financial Statement Schedule:

II - Valuation and Qualifying Accounts 38


Financial statement schedules not included in this annual report on
Form 10-K have been omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.


16


Report of Independent Accountants

To the Stockholders and Board of Directors of
Tel-Instrument Electronics Corp.

In our opinion, the financial statements listed in the accompanying
index present fairly, in all material respects, the financial
position of Tel-Instrument Electronics Corp. (the "Company") at
March 31, 2002 and 2001, and the results of its operations and its
cash flows for each of the three years in the period ended March 31,
2002, in conformity with accounting principles generally accepted in
the United States of America. In addition, in our opinion, the
financial statement schedule included in the accompanying index
presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related financial
statements. These financial statements and the financial statement
schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Florham Park, New Jersey
June 13, 2002


17


TEL-INSTRUMENT ELECTRONICS CORP.

Balance Sheets



ASSETS March 31, 2002 March 31, 2001
-------------- --------------

Current assets:
Cash and cash equivalents $ 1,198,191 $ 433,438
Accounts receivable, net of allowance for doubtful
accounts of $36,598 at March 31, 2002
and $11,598 at March 31, 2001 937,849 1,264,383
Inventories, net 2,481,680 2,351,648
Prepaid expenses and other current assets 47,956 43,568
Deferred income tax benefit - current 669,000 527,276
------------ -----------
Total current assets 5,334,676 4,620,313

Office and manufacturing equipment, net 822,010 674,656
Other assets 76,886 35,354
Deferred income tax benefit -- 604,323
------------ -----------

Total assets $ 6,233,572 $ 5,934,646
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Convertible note payable - related party - current portion $ 250,000 $ 200,000
Convertible subordinated note - related party 7,500 15,000
Line of credit -- 250,000
Capitalized lease obligations - current portion 108,845 77,826
Accounts payable 212,126 942,173
Deferred revenues 518,103 267,630
Accrued payroll, vacation pay and deferred wages 399,437 535,850
Accrued expenses - related parties 149,370 196,973
Taxes payable 37,356 63,215
Other accrued expenses 497,858 305,286
------------ -----------
Total current liabilities 2,180,595 2,853,953

Convertible note payable - related party 100,000 150,000
Capitalized lease obligations - excluding current portion 52,183 68,345
------------ -----------
Total liabilities 2,332,778 3,072,298

Commitments and contingencies -- --

Stockholders' equity
Common stock, par value $.10 per share, 2,133,351 and 2,124,351
issued and outstanding as of March 31, 2002 and 2001, respectively 213,338 212,438
Additional paid-in capital 3,941,967 3,932,111
Accumulated deficit (254,511) (1,282,201)
------------ -----------

Total stockholders' equity 3,900,794 2,862,348
------------ -----------
Total liabilities and stockholders' equity $ 6,233,572 $ 5,934,646
============ ===========


The accompanying notes are an integral part of the financial statements


18


TEL-INSTRUMENT ELECTRONICS CORP.
Statements of Operations



For the years ended March 31,
2002 2001 2000
---- ---- ----

Sales - commercial, net $1,981,298 $3,033,281 $1,957,859
Sales - government, net 7,749,783 4,475,620 3,172,923
---------- ---------- ----------

Total Sales 9,731,081 7,508,901 5,130,782

Cost of sales 4,684,147 3,704,572 2,489,769
---------- ---------- ----------

Gross margin 5,046,934 3,804,329 2,641,013

Operating expenses:
Selling, general and administrative 1,858,843 1,622,881 1,165,844
Engineering, research and development 1,521,219 1,047,305 1,051,833
---------- ---------- ----------

Total operating expenses 3,380,062 2,670,186 2,217,677
---------- ---------- ----------

Income from operations 1,666,872 1,134,143 423,336

Other income/(expense):
Interest income 15,103 23,877 9,682
Interest expense (52,361) (78,478) (37,136)
Interest expense - related parties (43,925) (40,425) (36,924)
---------- ---------- ----------

Income before income taxes 1,585,689 1,039,117 358,958

Income tax expense (benefit) 557,999 (295,888) (241,595)
---------- ---------- ----------

Net income $1,027,690 $1,335,005 $ 600,553
========== ========== ==========

Income per common share:
Basic $ 0.48 $ 0.63 $ 0.28
========== ========== ==========
Diluted $ 0.48 $ 0.63 $ 0.28
========== ========== ==========

Weighted average number of shares outstanding
Basic 2,127,782 2,115,134 2,110,983
========== ========== ==========
Diluted 2,159,986 2,117,686 2,146,402
========== ========== ==========


The accompanying notes are an integral part of the financial statements.


19


TEL-INSTRUMENT ELECTRONICS CORP.
Statements Of Changes In Stockholders' Equity



Common Stock Additional
Number of Shares Paid-In Accumulated
Authorized Issued Amount Capital Deficit Total
---------- ------ ------ ------- ------- -----

Balances at April 1, 1999 4,000,000 2,109,957 $210,998 $3,925,854 $(3,217,759) $ 919,093

Net income 600,553 600,553
Issuance of common stock in connection
with the exercise of stock options 3,333 334 2,067 2,401
--------- --------- -------- ---------- ----------- ----------
Balances at March 31, 2000 4,000,000 2,113,290 $211,332 $3,927,921 $(2,617,206) $1,522,047

Net income 1,335,005 1,335,005
Issuance of common stock in connection
with the exercise of stock options 11,061 1,106 4,190 5,296
--------- --------- -------- ---------- ----------- ----------

Balances at March 31, 2001 4,000,000 2,124,351 $212,438 $3,932,111 $(1,282,201) $2,862,348

Net income 1,027,690 1,027,690
Issuance of common stock upon conversion
of convertible subordinated note 5,000 500 7,000 7,500
Issuance of common stock in connection
with the exercise of stock options 4,000 400 2,856 3,256
--------- --------- -------- ---------- ----------- ----------

Balances at March 31, 2002 4,000,000 2,133,351 $213,338 $3,941,967 $ (254,511) $3,900,794
========= ========= ======== ========== ========== ==========


The accompanying notes are an integral part of the financial statements.


20


TEL-INSTRUMENT ELECTRONICS CORP.

Statements Of Cash Flows


For the years ended March 31,
2002 2001 2000
----------- --------- ---------

Cash flows from operating activities:
Net income $1,027,690 $1,335,005 $600,553
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Deferred income taxes 462,599 (393,500) (241,595)
Depreciation and amortization 210,489 129,887 70,303
Provision for losses on accounts receivable 25,000 -- (3,987)
Provision for inventory obsolescence 12,517 28,672 14,504
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 301,534 (164,958) (456,717)
Increase in inventories (142,549) (893,435) (787,689)
(Increase) decrease in prepaid expenses and other assets (21,837) 10,726 (21,545)
(Decrease) increase in accounts payable (730,047) 195,310 444,428
(Decrease) increase in taxes payable (25,859) 63,215 --
Increase in deferred revenues, and other
accrued expenses 259,029 414,942 284,970
----------- --------- ---------
Net cash provided by (used in) operating
Activities 1,378,566 725,864 (96,775)
----------- --------- ---------
Cash flows from investing activities:
Additions to office and manufacturing equipment (238,603) (396,057) (125,948)
Increase in cash surrender value of life insurance (24,083) (5,000) (24,494)
----------- --------- ---------

Net cash used in investing activities (262,686) (401,057) (150,442)
----------- --------- ---------
Cash flows from financing activities:
Proceeds from loan on insurance policy -- -- 129,456
Proceeds from exercise of warrants and options 3,256 5,296 2,401
Proceeds from drawing on line of credit -- -- 250,000
Repayment of line of credit (250,000) -- --
Repayment of capitalized lease obligations (104,383) (69,501) (32,421)
----------- --------- ---------

Net cash (used in) provided by financing activities (351,127) (64,205) 349,436
----------- --------- ---------

Net increase in cash and cash equivalents 764,753 260,602 102,219

Cash and cash equivalents, beginning of year 433,438 172,836 70,617
----------- --------- ---------

Cash and cash equivalents, end of year $ 1,198,191 $ 433,438 $ 172,836
=========== ========= =========
Supplemental information:
Taxes paid $ 140,314 $ 34,157 $ --
=========== ========= =========
Interest paid $ 69,757 $ 80,730 $ 68,744
=========== ========= =========
Assets acquired through capitalized leases $119,240 $ 57,614 $164,326
=========== ========= =========


The accompanying notes are an integral part of the financial statements.


21


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements

1. Business, Organization, and Liquidity

Business and Organization:

Tel-Instrument Electronics Corp. ("Tel" or the "Company") has been in
business since 1947. The Company designs, manufactures, and markets
avionic test equipment for the general and commercial aviation markets and
for the government/military aviation markets. The Company's instruments
are used to test navigation and communication equipment installed in
aircraft. The Company sells its equipment to both the domestic and
international markets.

2. Summary of Significant Accounting Policies

Revenue Recognition:

Revenues are recognized at the time of shipment to, or acceptance by
customer provided title and risk of loss is transferred to the customer.
Provisions, when appropriate, are made where the right to return exists.
Revenues under service contracts are recognized when the services are
performed.

The Company recognizes revenue in accordance with Staff Accounting
Bulletin No. 101, "Revenue Recognition Financial Statements" (SAB101).
SAB101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial
statements. The adoption of SAB101 did not have a material impact on its
financial position or statement of operations. Shipping and handling costs
charged to customers were not material.

Payments received prior to the delivery of units or services performed are
recorded as deferred revenues on the accompanying balance sheet.

Cash and Cash Equivalents:

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash
equivalents are carried at cost which approximates market value.

Financial Instruments:

The carrying amounts of cash and cash equivalents and other current assets
and liabilities approximate fair value due to the short-term maturity of
these investments. The Company does not determine an estimated fair value
for its related party debt, since such debt does not have a readily
determinable market.


22


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

2. Summary of Significant Accounting Policies (continued)

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts
receivable. The Company's customer base is primarily comprised of
airlines, distributors, and the U.S. Government. As of March 31, 2002, the
Company believes it has no risk related to its concentration within its
accounts receivable. (See Note 12 to Financial Statements).

Inventories:

Inventories are stated at the lower of cost or market. Cost is determined
on a first-in, first-out basis. In accordance with industry practice,
service parts inventory is included in current assets, although service
parts are carried for established requirements during the serviceable
lives of the products and, therefore, not all parts are expected to be
sold within one year.

Office and Manufacturing Equipment:

Office and manufacturing equipment are stated at cost. Depreciation and
amortization is provided on a straight-line basis over periods ranging
from 3 to 8 years.

Maintenance, repairs, and renewals that do not materially add to the value
of the equipment nor appreciably prolong its life are charged to expense
as incurred.

Leasehold improvements are amortized over the term of the lease or the
useful life of the asset, whichever is shorter.

When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and the resulting
gain or loss is included in the Statements of Operations.

Engineering, Research and Development Costs:

Engineering, research and development costs are expensed as incurred.

Income Per Common Share:

The Company's basic income per share is based on net income for the
relevant period, divided by the weighted-average number of common shares
outstanding during the period. Diluted income per share is based on net
income for the relevant period, divided by the weighted average number of
common shares outstanding during the period, including common share
equivalents, such as outstanding stock options and warrants using the
treasury stock method.


23


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

2. Summary of Significant Accounting Policies (continued)

Accounting for Income Taxes:

Deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and
are measured using enacted tax rates and laws that will be in effect when
such differences are expected to reverse. The measurement of deferred tax
assets is reduced, if necessary, by a valuation allowance for any tax
benefit which is not more likely than not to be realized. The effect on
deferred tax assets and liabilities of a change in tax rate is recognized
in the period that such tax rate changes are enacted.

Stock Option Plan:

The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations.
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Under SFAS 123 the Company provides pro forma
net income and pro forma earnings per share disclosures for employee stock
option grants made since fiscal 1996 as if the fair-value-based method as
defined in SFAS No. 123 has been applied.

Long-Lived Assets To Be Disposed Of:

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." The standard provides accounting and
reporting requirements for the impairment of all long-lived assets
(including discontinued operations) and it also extends the reporting
requirements for discontinued operations of APB 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," to all components of an entity. The primary purpose of SFAS
No. 144 is to establish guidelines to create a consistent accounting model
for the impairment of long-lived assets to be disposed of and to clarify
some implementation issues of SFAS No. 121. The provisions of this
Statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001.


24


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

2. Summary of Significant Accounting Policies (continued)

Comprehensive Income

SFAS No.130 "Reporting Comprehensive Income," SFAS No. 130 establishes
standards of reporting and display of comprehensive income and its
components (revenues, expenses, gains, and losses) in a full set of
general purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements.

Business Combinations

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations." This statement addresses financial accounting and reporting
for business combinations. All business combinations in the scope of this
statement are to be accounted for using only the purchase method. The
provisions of this statement apply to all business combinations initiated
after June 30, 2001 and those accounted for using the purchase method for
which the date of acquisition is July 1, 2001 or later. The adoption of
SFAS 141 has had no impact on the Company's financial statements.

Goodwill and Other Intangibles

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangibles". This statement addresses financial accounting and reporting
for acquired goodwill and other intangible assets. It addresses how
intangible assets that are acquired individually or with a group of other
assets, but not those acquired in a business combination, should be
accounted for in financial statements upon their acquisition. This
statement also addresses how goodwill and other intangibles should be
accounted for after they have been initially recognized in the financial
statements. The provisions of this statement are to be applied starting
with fiscal years beginning after December 15, 2001. In addition, goodwill
and intangible assets acquired after June 30, 2001 will be subject
immediately to the non-amortization and amortization provisions of this
statement. The adoption of SFAS 142 has had no impact on the Company's
financial statements.

Accounting for Asset Retirement Obligations

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This standard requires that obligations
associated with the retirement of a tangible long-lived asset be recorded
as a liability when those obligations are incurred, with the amount of the
liability initially measured at fair value. Upon initially recognizing a
liability for an asset retirement obligation, an entity must capitalize
the


25


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

2. Summary of Significant Accounting Policies (continued)

Accounting for Asset Retirement Obligations (continued)

cost by recognizing an increase in the carrying amount of the related
long-lived asset. Over time, this liability is accreted to its present
value, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles
the obligation for its recorded amount or incurs a gain or loss upon
settlement. The provisions of this statement will be effective for
financial statements issued for fiscal years beginning after June 15,
2002. We do not expect that the adoption of this statement will have a
material impact on our results of operations, financial position or cash
flows.

Segments:

The Company adopted SFAS No. 131 ("SFAS 131") "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 supersedes FAS 14,
Financial Reporting for Segments of a Business Enterprise, replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal organization that is used by management
for making operating decisions and assessing performance as the source of
the Company's reportable segments. SFAS 131 also requires disclosure about
products and services, geographical areas, and major customers. The
adoption of SFAS 131 did not affect the Company's result of operations or
financial position, but did affect the disclosure of segment information
(see Note 14 to Financial Statements).

Use of Estimates:

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
that management make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. The most significant estimates include income
taxes, warranty claims, inventory and accounts receivable valuations.

Risks and Uncertainties:

The Company's operations are subject to a number of risks, including but
not limited to changes in the general economy, demand for the Company's
products, the success of its customers, research and development results,
reliance on the government markets and the renewal of its line of credit.
The Company has a major contract with the U.S. Navy, which like all
government contracts, is subject to termination.


26


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

3. Accounts Receivable

The following table sets forth the components of accounts receivable:

March 31,
2002 2001
---- ----

Government $ 735,757 $ 883,767
Commercial 238,690 392,214
Less: Allowance for doubtful accounts (36,598) (11,598)
----------- -----------

$ 937,849 $ 1,264,383
=========== ===========

4. Inventories

Inventories consist of:

March 31,
2002 2001
---- ----

Purchased parts $ 913,917 $ 1,072,191
Work-in-process 1,584,701 1,352,252
Finished goods 68,375 --
Less: Reserve for obsolescence (85,313) (72,795)
----------- -----------

$ 2,481,680 $ 2,351,648
=========== ===========

Work-in-process inventory includes $1,390,960 and $1,102,205 for
government Contract contracts at March 31, 2002 and 2001, respectively.

5. Office and Manufacturing Equipment

Office and manufacturing equipment consists of the following:

March 31,
2002 2001
----- ----

Leasehold Improvements $ 328,372 $ 312,583
Machinery and equipment 900,710 749,598
Automobiles 16,514 --
Sales equipment 239,041 183,853
Assets under capitalized leases 367,623 248,383
Less: Accumulated depreciation and
Amortization (1,030,250) (819,761)
----------- -----------

$ 822,010 $ 674,656
=========== ===========


27


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

6. Accrued Expenses

Accrued payroll, vacation pay and deferred wages consists of the
following:

March 31,
---------------------
2002 2001
-------- --------

Accrued profit sharing $223,876 $334,626
Accrued vacation pay 123,432 113,437
Accrued salary and payroll taxes 52,129 47,266
Deferred salary and wages and interest -- 40,521
-------- --------

$399,437 $535,850
======== ========

Other accrued expenses of $497,858 and $305,286 at March 31, 2002 and
2001, respectively, consist primarily of interest, professional service
costs for legal, accounting, and independent sales representative
commissions, and of product related costs, such as warranty.

7. Line of Credit

The Company has a line of credit of $1,000,000, maturing on August 30,
2002. Interest is payable monthly at an annual interest rate of half of
one percent (0.5%) above the lender's prevailing base rate. The Company's
interest rate was 5.25% and 8% at March 31, 2002 and 2001, respectively.
The line is collateralized by substantially all of the assets of the
Company. The credit facility requires the Company to maintain certain
financial covenants. As of March 31, 2002, the Company was in compliance
with all financial covenants and had no outstanding borrowings. At March
31, 2001, the Company had an outstanding balance of $250,000.


28


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

8. Capitalized Lease Obligations

The Company has entered into lease commitments for equipment that meet the
requirements for capitalization. The equipment has been capitalized and
shown in office and manufacturing equipment in the accompanying balance
sheets. The related obligations are also recorded in the accompanying
balance sheets and are based upon the present value of the future minimum
lease payments with interest rates ranging from 9% to 18%. The net book
value of equipment acquired under capitalized lease obligations amounted
to $236,387 and $177,133 respectively, at March 31, 2002 and 2001. As of
March 31, 2002 and 2001, accumulated amortization under capital leases
were $131,236 and $71,250, respectively.

Commitments under these leases for the years subsequent to March 31, 2002
are as follows:


2003 $ 129,318
2004 57,545
2005 33,040
---------

Total minimum lease payments 219,903
Less amounts representing interest (58,875)
---------
Present value of net minimum lease payments 161,028
Less current portion (108,845)
---------
Long-term capital lease obligation $ 52,183
=========


29


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

9. Income Taxes

Income tax expense (benefit):

March 31, March 31, March 31,
2002 2001 2000
--------- --------- ---------
Current:
Federal $ (1,695) $ 38,955 $ --

State and Local 96,441 59,155 --
--------- --------- ---------

Total Current Tax Provision $ 94,746 $ 98,110 $ --
========= ========= =========

Deferred:
Federal $ 457,241 $(397,998) $(220,595)

State and Local 6,012 4,000 (21,000)
--------- --------- ---------

Total Expense (Benefit) $ 557,999 $(295,888) $(241,595)
========= ========= =========

The components of the Company's deferred taxes at March 31, 2002 and 2001
are as follows:

March 31, March 31,
2002 2001
---------- ----------
Deferred tax assets:
AMT carryforwards and credits $ 252,000 $ 685,000
Asset reserves 49,000 34,000
Deferred wages and accrued interest 189,000 250,000
Provision for estimated expenses 179,000 163,000
---------- ----------

Total deferred tax asset $ 669,000 $1,132,000
========== ==========

As of March 31, 2002, the Company has no Federal tax net operating loss
carryforwards. The recognized deferred tax asset is based upon the
expected utilization of its benefit from the reversal of tax asset
temporary differences.


30


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

9. Income Taxes (Continued)

The foregoing amounts are management's estimates and the actual results
could differ from those estimates. Future profitability in this
competitive industry depends on continually obtaining and fulfilling new
profitable purchase agreements and modifying products. The inability to
obtain new profitable contracts or the failure of the Company's
engineering development efforts could reduce estimates of future
profitability, which could affect the Company's ability to realize the
deferred tax assets.

A reconciliation of the income tax expense at the statutory Federal tax
rate of 34% to the income tax expense recognized in the financial
statements is as follows:

March 31
------------------------------
2002 2001 2000
---- ---- ----

Income tax expense - statutory rate $ 539,134 $ 353,300 $ 122,403
Income tax expenses - state and local,
net of federal benefit 67,619 41,682 (13,860)
Change in valuation allowance -- (724,901) (320,595)
Federal income tax credit (30,000) (16,000) (30,000)
Other (18,754) 50,031 457
--------- --------- ---------

Income tax provision (benefit) 557,999 $(295,888) $(241,595)
========= ========= =========

10. Related Party Transactions

On March 31, 1997, the Company's Chairman/President renegotiated the terms
of the non-current note payable-related party. This note, along with
$250,000 of other accrued expenses due to the Company's
Chairman/President, were converted into seven $50,000 convertible
subordinated notes (the "Notes") totaling $350,000. The Notes are due in
consecutive years beginning March 31, 1999 with the last note due March
31, 2005. In April 2002, Notes, which were scheduled to mature through
March 31, 2002, were extended to September 30, 2002. The Notes bear
interest at a rate of 10% per annum, payable semi-annually on the last day
of September and March of each year. The Company is required to prepay the
outstanding balance of the Notes and any accrued interest thereon, if the
Company sells all or substantially all of its assets. The Notes can be
converted into newly issued common shares of the Company at the conversion
price of $2.50 per share. The conversion prices shall be adjusted for any
stock dividends, stock issuances or capital reorganizations. The Notes may
be redeemed by the Company prior to maturity upon giving written notice of
not less than 30 days or more than 60 days at a redemption price equal to
120% of the principal if redeemed two years or more prior to the maturity
date or 110% of the principal if redeemed more than one year, but less
than two years prior to the maturity date.


31


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

10. Related Party Transactions (Continued)

Accrued payroll, vacation pay and deferred wages and related interest
includes $41,450 and $72,461 at March 31, 2002 and 2001, respectively,
which is due to officers of the Company.

Accrued expenses-related parties includes (a) interest and professional
fees of approximately $19,000 and $90,000 due to a non-employee
officer/stockholder of the Company at March 31, 2002 and 2001,
respectively; (b) professional fees of approximately $9,000 and $4,000 to
a director/stockholder of the Company at March 31, 2002 and 2001
respectively; (c) $121,000 and $103,000 respectively at March 31, 2002 and
2001 for interest and other expenses due to the Company's
Chairman/President. Tel has obtained professional services from a
non-employee officer/stockholder with the related fees amounting to
$66,834, $57,966, and $46,164 for the years ended March 31, 2002, 2001,
and 2000, respectively. Additionally, Tel obtained professional services
from a director/stockholder with the related fees amounting to $88,300,
$77,500, and $84,000 for fiscal years 2002, 2001, and 2000, respectively.

The Company's $30,000 convertible subordinated note-related party matured
on March 31, 1997. The Company renegotiated such note and satisfied
$15,000 of this obligation. In March 2002 the holder of this note
converted $7,500 into common stock and extended the maturity date of the
remaining $7,500 until March 31, 2003. This note accrues interest
semi-annually at a rate of 7%. The subordinate note is for past
professional fees and services to an officer/stockholder of the Company.
The notes are convertible to common stock at the option of the holder at
$1.50 per share, at any time prior to maturity.

11. Commitments and Contingencies

The Company rents its office space and manufacturing facility under a
lease agreement. In March 2001, the Company expanded its facility by
leasing the entire building, thereby increasing its facility to 19,564
square feet from 11,164. The new lease expires in February 2011. Under
terms of the lease, the Company pays all real estate taxes and utility
costs for the premises.

In addition, the Company has an agreement to lease equipment for use in
the operations of the business under operating leases.

The following is a schedule of future minimum rental payments for
operating leases for the five years subsequent to the year ended March 31,
2002.

2003 $128,843
2004 130,935
2005 132,165
2006 134,652
2007 138,694
2008 and thereafter 584,287


32


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

11. Commitments and Contingencies (continued)

Total rent expense, including real estate taxes, was approximately
$159,000, $97,000, and $101,000 for the years ended March 31, 2002, 2001
and 2000, respectively.

12. Significant Customer Concentrations

For the fiscal year ended March 31, 2001, one customer represented 12% of
total sales or 29% of commercial sales. This customer did not represent
over 10% of sales for fiscal years 2002 and 2000. For the fiscal year
ended March 31, 2000, one customer represented over 12% of total sales
which included commercial sales of approximately $35,000 and government
sales of $587,000. This customer did not represent over 10% of sales for
either fiscal year 2002 or 2001. As of March 31, 2002, two individual
account balances represented 20% and 17% of the Company's outstanding
accounts receivable. As of March 31, 2001, two individual account balances
represent 16% and 10% of the Company's accounts receivable. Receivables
from the U.S. Government, including unbilled revenues, represented
approximately 39% and 28%, respectively, of total receivables for the
fiscal years ended March 31, 2002 and 2001.

13. Stock Option Plan

A summary of the status of the Company's stock option plans for the fiscal
years 2002, 2001, and 2000 and changes during the years are presented
below: (in number of options):

March 31,
--------------------------------
2002 2001 2000
-------- -------- --------
Held at beginning of year 82,650 85,311 45,344
Granted 94,900 8,400 61,800
Exercised (4,000) (11,061) (3,333)
Canceled or expired (7,850) -- (18,500)
-------- -------- --------

Held at end of year 165,700 82,650 85,311
======== ======== ========


33


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

13. Stock Option Plan (Continued)

As of March 31, 2002, the Company had the following options outstanding:

Number of Weighted Average
Options Exercise Remaining Options Exercisable
Outstanding Price Contract Life (years) At March 31, 2002
----------- -------- --------------------- -------------------
5,000 $2.3750 1.2 5,000
8,400 2.2800 3.6 1,680
25,400 2.0900 4.7 --
20,000 1.8500 4.2 4,000
11,400 1.8400 2.7 4,560
45,250 1.8000 4.2 9,050
3,200 1.6600 2.2 1,600
42,650 1.5265 2.7 17,060
2,000 1.3750 1.0 2,000
2,400 1.2500 0.1 2,400
------- ------
165,700 47,350
======= ======

For the years ended March 31, 2002, 2001, and 2000, 47,350, 22,720, and
19,151, respectively, of options were outstanding, vested, and
exercisable.

The per share weighted-average fair value of stock options granted for the
years 2002, 2001, and 2000 were $1.67, $2.02, and $1.43, respectively, on
the date of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions: expected dividend yield of 0.0%,
risk-free interest rate of 5%, volatility factor of 135%, and an expected
life of 5 years. The Company applies Accounting Principles Board Opinion
No. 25 in accounting for its stock options and, accordingly, no
compensation expense has been recognized for its stock options in the
accompanying financial statements. Had the Company determined compensation
cost based on the fair market value at the grant date for its stock
options under SFAS No. 123, the Company's net income would not have been
materially affected. The pro forma amounts are indicated below:

2002 2001 2000
---- ---- ----
Net income - as reported $1,027,690 $1,335,005 $600,553
Net income - pro forma 972,374 1,308,005 583,899

Basic earnings per share - as reported 0.48 0.63 0.28
Basic earnings per share - pro forma 0.46 0.62 0.28

Diluted earnings per share - as reported 0.48 0.63 0.28
Diluted earnings per share - pro forma 0.45 0.62 0.27


34


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

13. Stock Option Plan (Continued)

In June 1998, the Board of Directors of the Company adopted a new 1998
Stock Option Plan ("the Plan") which reserves for issuance up to 250,000
shares of its Common Stock. The Plan, which has a term of ten years from
the date of adoption is administered by the Board of Directors or by a
committee appointed by the Board of Directors. The selection of
participants, allotment of shares, and other conditions related to the
purchase of options is determined by the Board of Directors. Options
granted under the Plan are exercisable up to a period of 5 years from the
date of grant at an exercisable price which is not less than the fair
market value of the common stock at the date of grant, except to a
shareholder owning 10% or more of the outstanding common stock of the
Company, at which the exercise price may not be less than 110% of the fair
value of the common stock at the date of grant. At March 31, 2002, 126,350
options for common stock are available for future grant.

14. Segment Information

In 1999, the Company adopted SFAS 131. Information has been presented for
the Company's two reportable segments, government and commercial.

The Company evaluates the performance of its segments and allocates
resources to them based on gross margin. There are no inter-segment
revenues.

The Company is organized primarily on the basis of its avionics products.
The government segment consists primarily of the sale of test equipment to
the U.S. and foreign governments and militaries either direct or through
distributors. The commercial segment consists of sales of test equipment
to domestic and foreign airlines and to commercial distributors. Segment
assets include accounts receivable and work-in-process inventory. Asset
information, other than accounts receivable and work-in-process inventory,
is not reported, since the Company does not produce such information
internally. All long-lived assets are located in the U.S.


35


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

14. Segment Information (Continued)

The table below presents information about reportable segments for the
years ending March 31:

2002
- ----
Corporate/
Reconciling
Government Commercial Items Total
---------- ---------- ---------- ----------
Revenues $7,749,783 $1,981,298 $ -- $9,731,081
Cost of Sales 3,745,720 938,427 -- 4,684,147
---------- ---------- ---------- ----------

Gross Margin $4,004,063 $1,042,871 $ 5,046,934
---------- ---------- ----------

Engineering, research,
and development 1,521,219 1,521,219
Selling, general, and
administrative 1,858,843 1,858,843

Interest expense, net 81,183 81,183
----------

Income before income taxes $1,585,689
==========

Segment Assets $2,126,717 $ 395,833 $3,461,245 $6,233,572
========== ========== ========== ==========

2001
- ----
Corporate/
Reconciling
Government Commercial Items Total
---------- ---------- ---------- ----------
Revenues $4,475,620 $3,033,281 $ -- $7,508,901
Cost of Sales 2,274,152 1,430,420 -- 3,704,572
---------- ---------- ---------- ----------

Gross Margin $2,201,468 $1,602,861 $ -- $3,804,329
---------- ---------- ----------

Engineering, research,
and development 1,047,305 1,047,305
Selling, general, and
administrative 1,622,881 1,622,881

Interest expense, net 95,026 95,026
----------

Income before income taxes $1,039,117
==========

Segment Assets $1,985,972 $ 630,663 $3,318,011 $5,934,646
========== ========== ========== ==========

2000
- ----
Corporate/
Reconciling
Government Commercial Items Total
---------- ---------- ---------- ----------
Revenues $3,172,923 $1,957,859 $ -- $5,130,782
Cost of Sales 1,596,453 893,316 -- 2,489,769
---------- ---------- ---------- ----------

Gross Margin $1,576,470 $1,064,543 $ -- 2,641,013
---------- ---------- ----------

Engineering, research,
and development 1,051,833 1,051,833

Selling, general, and
administrative 1,165,844 1,165,844

Interest expense, net 64,378 64,378
----------

Income before income taxes $ 358,958
==========

Segment Assets $1,163,321 $ 545,928 $2,223,516 $3,932,765
========== ========== ========== ==========


36


TEL-INSTRUMENT ELECTRONICS CORP.

Notes To Financial Statements (Continued)

14. Segment Information (Continued)

The Company primarily develops and designs test equipment for the avionics
industry and as such, the Company's products and designs cross segments.
The Company's general and administrative costs and marketing strategies
are not segment specific. As a result, selling, general, and
administrative expenses are not managed on a segment basis. Net interest
includes expenses on debt and income earned on cash balances both
maintained at the corporate level.

Foreign sales are based on the country in which the customer is located.
Foreign sales were approximately $1,007,000, $1,717,000, and $1,581,000
for the years ended March 31, 2002, 2001, and 2000, respectively. All
other sales were to customers located in the U.S.

For the fiscal year ended March 31, 2000, one domestic commercial customer
accounted for approximately 11% of total commercial sales. One domestic
distributor accounted for 19%, 20% and 10% of commercial sales for the
years ended March 31, 2002, 2001, and 2000, respectively. No end user
customer accounted for more than 10% of commercial sales for these years.
Foreign commercial sales were 17%, 20%, and 19% of total commercial sales
for the years ended March 31, 2001, 2000, and 1999, respectively. Sales to
an international distributor accounted for approximately 12% of total
sales in fiscal year 2000. For the fiscal years ended March 31, 2002 and
2001, sales to these distributors did not exceed 10% of total sales.

Sales to the U.S. Government were approximately $6,128,000, $2,527,000,
and $912,000 for the years ended March 31, 2002, 2001, and 2000,
respectively.


37


TEL-INSTRUMENT ELECTRONICS CORP.

Schedule II - Valuation and Qualifying Accounts

Balance at Charged to
Beginning Costs and Balance at
Description of Period Expenses Deductions End of Period

Year ended March 31, 2002:
Allowance for doubtful
accounts $ 11,598 $ 25,000 $ -- $ 36,598
======== ======== ======= ========

Allowance for obsolete
inventory $ 72,795 $ 95,000 $82,482(1) $ 85,313
======== ======== ======= ========

Year ended March 31, 2001:
Allowance for doubtful
accounts $ 11,598 $ -- $ -- $ 11,598
======== ======== ======= ========

Allowance for obsolete
inventory $ 44,124 $ 63,000 $34,329(1) $ 72,795
======== ======== ======= ========


Year ended March 31, 2000:
Allowance for doubtful
accounts $ 15,585 $ (3,987) $ -- $ 11,598
======== ======== ======= ========

Allowance for obsolete
inventory $ 29,620 $ 20,500 $ 5,996(1) $ 44,124
======== ======== ======= ========


(1) Amounts represent disposals of obsolete inventory.


38


TEL-INSTRUMENT ELECTRONICS CORP.

PART III

Item 10. Directors and Executive Officers of the Registrant

Year First
Elected a
Name (age) Position Director
- ---------- -------- --------

Harold K. Fletcher (1) Chairman of the Board, 1982
(77) President and Chief
Executive Officer since
1982.

George J. Leon Director; Investment 1986
(58) Manager and beneficiary of
the George Leon Family Trust
(investments) since 1986.

Robert J. Melnick Director and Chief Operating Officer 1998
(67) and Vice President since 1999;
Marketing and Management Consultant
for the Company since 1991.

Jeff C. O'Hara (1) Director; Financial Consultant from 1998
(44) 2001, Chief Financial Officer
from 1999-2000 of
Alarm Security
Group; Financial
Consultant from 1996 to
1998.

Robert H. Walker Director; Retired Executive Vice 1984
(66) President, Robotic Vision
Systems, Inc. (design and
manufacture of robotic
vision systems),
1983-1998.

(1) Mr. O'Hara is the son-in-law of Mr. Fletcher


39


TEL-INSTRUMENT ELECTRONICS CORP.

Item 10. Directors and Executive Officers of the Registrant (Continued)

Officers
--------
Donald S. Bab Secretary and General Counsel since 1982.

Richard J. Wixson Vice President and Director of
Manufacturing, employed by Tel in his present
capacity since 1987.

Item 11. Executive Compensation

The following table and accompanying notes set forth information
concerning compensation for the fiscal years ended March 31, 2002,
2001, and 2000.

Stock (1)Other
Name and Principal Position Year Salary Options Compensation
- --------------------------------------------------------------------------------
Harold K. Fletcher 2002 $140,000 $24,000
Chairman of Board 2001 130,000 $22,400
President and Chief 2000 130,000 $11,700
Executive Officer

(1) Represents bonus based on the Company's profitability. Fiscal year 2002
bonus is estimated. See Note 10 of Notes to the Financial Statements.


40


TEL-INSTRUMENT ELECTRONICS CORP.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to the Company
with respect to the beneficial ownership as of March 31, 2002, by (i)
all persons who are beneficial owners of five percent (5%) or more of
the Company's Common Stock, (ii) each director and nominee, (iii) the
Named Executive Officers, and (iv) all current directors and executive
officers as a group.

Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
- ---------------- ------------------ ------------
5% Holders
- ----------

Fairview Cemetery 139,545(9) 6.5%
Rice Family 137,000(9) 6.4%
Henry Partners LP 121,000(9) 5.7%

Named Directors and Officers
- ----------------------------

Harold K. Fletcher, Director 496,102(2) 23.2%
728 Garden Street
Carlstadt, New Jersey 07072

George J. Leon, Director 310,187(3) 14.5%
116 Glenview
Toronto, Ontario
Canada M4R1P8

Robert J. Melnick, Director 28,040(4) 1.3%
57 Huntington Road
Basking Ridge, New Jersey 07920

Jeff C. O'Hara, Director 106,540(5) 5.0%
853 Turnbridge Circle
Naperville, IL 60540

Robert H. Walker, Director 29,863(6) 1.4%
27 Vantage Court
Port Jefferson, NY 11777

Donald S. Bab, Secretary 73,194(7) 3.4%
330 Madison Avenue
New York, New York 10017

All Officers and Directors 1,089,726(8) 50.6%
as a Group (7 persons)

(1) The class includes 2,135,751 shares outstanding. The common stock deemed
to be owned which is not outstanding but subject to currently exercisable
options


41


TEL-INSTRUMENT ELECTRONICS CORP.

Item 12. Security Ownership of Certain Beneficial Owners and Management
(Continued)

held by the individual named is deemed to be outstanding for the purpose
of determining the percentage of all outstanding stock owned.

(2) Includes 24,681 shares owned by Mr. Fletcher's wife, 4,254 shares owned by
his son, 261,295 owned by a family partnership in which Mr. Fletcher is a
partner. Mr. Fletcher disclaims beneficial ownership of the shares owned
by his wife and son and by the partnership.

(3) Includes 300,267 shares owned by the George Leon Family Trust, of which
Mr. Leon is trustee and a beneficiary, and 2,120 shares subject to
currently exercisable stock option. Mr. Leon disclaims beneficial
ownership of the shares owned by the trust.

(4) Includes 8,040 shares subject to currently exercisable stock options

(5) Includes 1,040 shares subject to currently exercisable stock options.

(6) Includes 3,680 shares subject to currently exercisable stock options.

(7) Includes 2,560 shares subject to currently exercisable stock options. Mr.
Bab also has a convertible debenture in the amount of $7,500 that is
convertible into common stock at $1.50 per share.

(8) Includes 14,880 shares subject to currently exercisable options held by
all executive offices and directors of the Company (including those
individually named above).

(9) The Company is exempt from the shareholder reporting requirements of the
Securities Exchange Act of 1934, and therefore, these totals are Company
estimates.

Item 13. Certain Relationships and Related Transactions

The disclosures required by this item are contained in Note 10 to the
Notes Financial Statements included on pages 31 and 32 of this
document.


42


TEL-INSTRUMENT ELECTRONICS CORP.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

a.) The following documents are filed as a part of this report:

Pages
-----
(1) Financial Statements:

Report of Independent Accountants 17

Balance Sheets - March 31, 2002 and 2001 18

Statements of Operations - Years Ended 19
March 31, 2002, 2001 and 2000

Statements of Changes in Stockholders' 20
Equity - Years Ended March 31, 2002,
2001 and 2000

Statements of Cash Flows - Years Ended 21
March 31, 2002, 2001 and 2000

Notes to Financial Statements 22-37

(2) Financial Statement Schedule 38
II - Valuation and Qualifying Accounts

(3) Agreement with Semaphore Capital Advisors dated November 28,
2001 and amendment dated as of June 1, 2002.

(4) 10% convertible subordinated note between Registrant and
Harold K. Fletcher.

(5) 1998 stock option plan and option agreement.

b.) Report on Form 8-K regarding transcript of an interview of the
Company's President on CEOcast was submitted on March 25, 2002 under
Item 9.


c.) Exhibits identified in parentheses below on file with the Securities
and Exchange Commission, are incorporated herein by reference as
exhibits hereto.

* (3.1) Tel-Instrument Electronics Corp.'s Certificate of
Incorporation, as amended.

* (3.2) Tel-Instrument Electronics Corp.'s By-Laws, as amended.


43


TEL-INSTRUMENT ELECTRONICS CORP.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K


* (3.3) Tel-Instrument Electronics Corp.'s Restated Certificate
of Incorporation dated November 8, 1996.

* (4.1) Specimen of Tel-Instrument Electronics Corp.'s Common
Stock Certificate.

* (4.2) Specimen of Tel-Instrument Electronics Corp.'s
Convertible Preferred Stock Certificate.

(10.1) 7%, $30,000 Convertible Subordinated Note dated March
31, 1992 between Registrant and Donald S. Bab.

(10.2) Distributor Agreement with Muirhead Avionics &
Accessories Ltd.

(10.3) Naval Air Warfare Center Aircraft Division Contract No.
N68335-97-D-0060

(10.4) Lease dated March 1, 2001 by and between Registrant and
210 Garibaldi Group.

* Incorporated by reference to Registration 33-18978 dated November 7, 1988.

The Company will furnish, without charge to a security holder, upon
request, copy of the documentary portions which are incorporated by
reference, and will furnish any other exhibit at cost.


44


TEL-INSTRUMENT ELECTRONICS CORP.

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.

TEL-INSTRUMENT ELECTRONICS CORP.

(Registrant)

Dated: July 10, 2002 By: /s/ Harold K. Fletcher
----------------------
President and Director
(Principal Executive
Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated and by signature hereto.

Signature Title Date
- --------- ----- ----

/s/ Harold K. Fletcher Director July 10, 2002
- ---------------------------
/s/ Harold K. Fletcher

/s/ Joseph P. Macaluso Principal Accounting Officer July 10, 2002
- ---------------------------
/s/ Joseph P. Macaluso

/s/ George J. Leon Director July 10, 2002
- ---------------------------
/s/ George J. Leon

/s/ Robert J. Melnick Director July 10, 2002
- ---------------------------
/s/ Robert J. Melnick

/s/ Jeff O'Hara Director July 10, 2002
- ---------------------------
/s/ Jeff O'Hara

/s/ Robert H. Walker Director July 10, 2002
- ---------------------------
/s/ Robert H. Walker

Supplemental Information to be Furnished with Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.

No annual report to security holders covering the fiscal year ended March 31,
2002, except in the form set forth in this Form 10-K, has been prepared. No
proxy statement, form of proxy, or other proxy soliciting material has been sent
to shareholders with respect to any annual or other meeting of shareholders. No
annual report or proxy material is contemplated.


45