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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 33-18978
TEL-INSTRUMENT ELECTRONICS CORP
(Exact name of the Registrant as specified in Charter)
New Jersey 22-1441806
(State of Incorporation) (I.R.S. Employer ID Number)
728 Garden Street, Carlstadt, New Jersey 07072
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone No. including Area Code: 201-933-1600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of the issuer's common stock, as of
the latest practical date:
2,135,801 shares of Common stock, $.10 par value as of February 7, 2003.
TEL-INSTRUMENT ELECTRONICS CORPORATION
TABLE OF CONTENTS
PAGE
----
Item 1. Financial Statements (Unaudited):
Condensed Comparative Balance Sheets
December 31, 2002 and March 31, 2002 1
Condensed Comparative Statements of Operations -
Three and Nine Months Ended December 31, 2002 and 2001 2
Condensed Comparative Statements of Cash Flows -
Nine Months Ended December 31, 2002 and 2001 3
Notes to Condensed Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
Item 4. Controls and Procedures 10
Part II Other Information
Item 4. Submission of matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Certifications 13-14
Item 1 - Financial Statements
TEL-INSTRUMENT ELECTRONICS CORPORATION
CONDENSED COMPARATIVE BALANCE SHEETS
December 31, 2002 and March 31, 2002
ASSETS (Unaudited)
December 31, 2002 March 31, 2002
----------------- --------------
Current assets:
Cash $2,448,086 $1,198,191
Accounts receivable, net of allowance for doubtful
accounts of $36,598 at December 31, 2002 and
March 31, 2002 1,879,409 937,849
Inventories 1,809,884 2,481,680
Prepaid expenses and other current assets 56,200 47,956
Deferred income tax benefit - current 561,629 669,000
---------- ----------
Total current assets 6,755,208 5,334,676
Property, plant, and equipment, net 724,412 822,010
Other assets 82,461 76,886
---------- ----------
Total assets $7,562,081 $6,233,572
========== ==========
LIABILITIES & STOCKHOLDERS EQUITY
Current liabilities:
Note payable - related party - current portion $ 150,000 $ 250,000
Convertible subordinated notes - related party 7,500 7,500
Capitalized lease obligations - current portion 63,692 108,845
Deferred revenues 592,232 518,103
Accrued payroll, vacation pay, deferred wages,
payroll taxes and interest on deferred wages 463,739 399,437
Accounts payable and accrued expenses 1,532,484 896,710
---------- ----------
Total current liabilities 2,809,647 2,180,595
Notes payable - related party - non-current portion 100,000 100,000
Capitalized lease obligations - excluding current portion -- 52,183
---------- ----------
Total liabilities 2,909,647 2,332,778
Stockholders' equity:
Common stock 213,583 213,338
Additional paid-in capital 3,944,812 3,941,967
Retained earnings (accumulated deficit) 494,039 (254,511)
---------- ----------
Total stockholders' equity 4,652,434 3,900,794
---------- ----------
Total liabilities and stockholders' equity $7,562,081 $6,233,572
========== ==========
See accompanying notes to condensed financial statement.
1
TEL-INSTRUMENT ELECTRONICS CORPORATION
CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2002 Dec. 31, 2001
------------- ------------- ------------- -------------
Sales
Government, net $ 2,435,114 $ 1,601,158 $7,448,690 $5,061,879
Commercial, net 631,689 438,195 1,450,748 1,725,645
----------- ----------- ---------- ----------
Total Sales 3,066,803 2,039,353 8,899,438 6,787,524
Cost of sales 1,437,563 1,009,736 4,209,428 3,436,913
----------- ----------- ---------- ----------
Gross margin 1,629,240 1,029,617 4,690,010 3,350,611
Operating expenses:
Selling, general & administrative 803,872 399,761 2,167,533 1,249,656
Engineering, research, & development 391,690 318,867 1,260,736 1,113,417
----------- ----------- ---------- ----------
Total operating expenses 1,195,562 718,628 3,428,269 2,363,073
Income from operations 433,678 310,989 1,261,741 987,538
Other income (expense):
Interest income 17,954 968 33,743 10,296
Interest expense (15,653) (19,580) (48,941) (63,155)
----------- ----------- ---------- ----------
Income before taxes 435,979 292,377 1,246,543 934,679
Provision for income taxes, net 174,173 116,806 497,993 373,405
----------- ----------- ---------- ----------
Net income $ 261,806 $ 175,571 $ 748,550 $ 561,274
=========== =========== ========== ==========
Basic and diluted income
per common share $ 0.12 $ 0.08 $ 0.35 $ 0.26
Dividends per share None None None None
Weighted average shares outstanding
Basic 2,135,801 2,128,351 2,135,536 2,127,111
Diluted 2,159,985 2,158,264 2,158,985 2,157,024
See accompanying notes to condensed financial statements.
2
TEL-INSTRUMENT ELECTRONICS CORPORATION
CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended Nine Months Ended
December 31, 2002 December 31,2001
----------------- -----------------
Cash flows from operating activities
Net income $ 748,550 $ 561,274
Adjustments to reconcile net income to cash used
In operating activities:
Deferred income taxes 107,371 272,179
Depreciation 188,135 155,335
Reserve for obsolescence 45,000 --
Changes in assets or liabilities:
Increase in accounts receivable, net (941,560) (126,550)
Decrease (increase) in inventories, net 626,796 (204,154)
(Increase) decrease in prepaid expenses
and other current assets (8,244) 19,239
Increase in other assets (5,575) (17,447)
Increase in deferred revenues 74,129 821,181
Increase (decrease) in accrued payroll,
vacation pay, deferred wages,
Payroll taxes and interest on deferred wages 64,302 (60,226)
Increase (decrease) in accounts payable and
accrued expenses 635,774 (573,076)
---------- ----------
Net cash provided by operations 1,534,678 847,755
---------- ----------
Cash flows from investing activities:
Cash purchases of property, plant and equipment (90,537) (210,660)
---------- ----------
Net cash used in investing activities (90,537) (210,660)
---------- ----------
Cash flows from financing activities:
Proceeds from exercise of stock options 3,090 3,256
Repayment of note payable - related party (100,000) --
Repayment of notes payable to bank -- (150,000)
Repayment of capitalized lease obligations (97,336) (65,683)
---------- ----------
Net cash used in financing activities (194,246) (212,427)
---------- ----------
Net increase in cash 1,249,895 424,668
Cash at beginning of period 1,198,191 433,438
---------- ----------
Cash at end of period $2,448,086 $ 858,106
========== ==========
Interest paid $ 77,243 $ 43,772
========== ==========
Taxes paid $ 428,029 $ 121,676
========== ==========
Assets acquired through capital leases $ -- $ 61,857
========== ==========
See accompanying notes to condensed financial statements.
3
TEL-INSTRUMENT ELECTRONICS CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1 Basis of Presentation
In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position of Tel-Instrument
Electronics Corp as of December 31, 2002, the results of operations for the
three and nine months ended December 31, 2002 and December 31, 2001, and
statements of cash flows for the nine months ended December 31, 2002 and
December 31, 2001. These results are not necessarily indicative of the results
to be expected for the full year.
The financial statements have been prepared in accordance with the requirements
of Form 10-Q and consequently do not include disclosures normally made in an
Annual Report on Form 10-K. The March 31, 2002 results included herein have been
derived from the audited financial statements included in the Company's annual
report on Form 10-K. Accordingly, the financial statements included herein
should be reviewed in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2002.
Note 2 Accounts Receivable
The following table sets forth the components of accounts receivable:
December 31, 2002 March 31, 2002
----------------- --------------
Commercial $ 385,263 $ 238,690
Government 1,530,744 735,757
Allowance for Bad Debts (36,598) (36,598)
----------- ----------
Total $ 1,879,409 $ 937,849
=========== ==========
Note 3 Inventories
Inventories consist of:
December 31, 2002 March 31, 2002
----------------- --------------
Purchased Parts $ 655,114 $ 913,917
Work-in-Process 1,225,997 1,584,701
Finished Goods 59,086 68,375
Less: Reserve for Obsolescence (130,313) (85,313)
--------- -----------
Total $1,809,884 $ 2,481,680
========== ===========
4
TEL-INSTRUMENT ELECTRONICS CORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 4 Earnings Per 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, divided by
the weighted average number of common shares outstanding during the period,
including common share equivalents, such as outstanding stock options.
Note 5 Government and Commercial Sales
The Company is organized on the basis of its avionics products. The government
market consists primarily of the sale of test equipment to U.S. and foreign
governments and militaries, either direct or through distributors. The
commercial market consists of sales of test equipment to domestic and foreign
airlines and to commercial distributors. The commercial market also includes
sales related to repairs and calibration which have a lower gross margin. The
Company primarily develops and designs test equipment for the avionics industry
and, as such, the Company's products and designs may be sold in the government
and commercial markets.
The table below presents information about sales and gross margin. Cost of sales
includes certain allocation factors for indirect costs.
Three Months Ended Three Months Ended
December 31, 2002 December 31, 2001
Government Commercial Government Commercial
---------- ---------- ----------- -----------
Sales $2,435,114 $ 631,689 $ 1,601,158 $ 438,195
Cost of Sales 1,126,062 311,501 819,142 190,594
---------- ---------- ----------- ----------
Gross Margin $1,309,052 $ 320,188 $ 782,016 $ 247,601
========== ========== =========== ==========
Nine Months Ended Nine Months Ended
December 31, 2002 December 31, 2001
Government Commercial Government Commercial
---------- ---------- ---------- ----------
Sales $7,448,690 $1,450,748 $ 5,061,879 $1,725,645
Cost of Sales 3,436,478 772,950 2,648,907 788,006
---------- ---------- ----------- ----------
Gross Margin $4,012,212 $ 677,798 $ 2,412,972 $ 937,639
========== ========== =========== ==========
5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
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 cost and availability of its raw materials;
the actions of its 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 previous
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 included in our Form 10-K. 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 or write-downs are estimated for excess,
slow-moving and obsolete inventory as well as inventory whose carrying value is
in excess of net realizable value. 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.
Warranty reserves - warranty reserves are estimated based upon historical rates
and specific items that are identifiable and can be estimated at time of sale.
While warranty costs have historically been within our expectations and the
provisions established, future warranty costs could be in excess of our warranty
reserves. A significant increase in these costs could adversely affect our
operating results for the period and the periods these additional costs
materialize. Warranty reserves are adjusted from time to time when actual
warranty claim experience differs from estimates.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Critical Accounting Policies (continued)
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. These amounts are periodically
evaluated. The deferred tax asset 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.
Overview
For the nine months ended December 31, 2002, sales increased 31% to $8,899,438
and net income before taxes increased 33% to $1,246,543. In the prior fiscal
year and in accordance with Staff Accounting Bulletin No.101, "Revenue
Recognition in Financial Statements" ("SAB101"), government revenues of
approximately $578,000, for units requiring a software upgrade prior to
shipment, were deferred until the fourth quarter when the upgrade was completed.
Deliveries of the AN/APM 480 IFF (Identification, Friend or Foe) Transponder
Test Set to the U.S. Navy continue and accounted for 56.3% of total sales for
the nine months ended December 31, 2002. In February 2003, the U.S. Navy
exercised the remaining options for approximately $1,450,000. The Company now
has received orders for all 1,300 units under the contract. The Company has
shipped 863 units through December 31, 2002 and expects shipments under this
contract to continue until sometime in the fourth quarter of calendar year 2003.
Government sales remain strong primarily as a result of the deliveries of the
AN/APM 480 to the U.S. Navy. This program firmly established the Company as one
of the leading suppliers in the avionics test equipment industry, and improved
its market position.
The current backlog is approximately $7,500,000 and is expected to be shipped
within the next twelve months.
The Company continues to invest heavily in new product development to meet the
expected demands of its customers and remain one of the leaders in the industry.
The Company continues its work on the next generation of IFF test sets in
anticipation of U.S. and NATO requirements for more sophisticated IFF testing
and believes that most of the AN/APM-480's will need to be upgraded in the
future to accommodate this more sophisticated IFF testing. The Company recently
introduced the TR-220, a Multi-Function ramp test set and the T-36C Nav/Comm
ramp test set, into the commercial market. The T-47S and the T-47G
Multi-Function ramp testers were introduced into the military market. The
Company also continues development of a new bench test set.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Overview (continued)
As previously announced, the Company strengthened its management team with the
addition of a new Chief Operating Officer and a Director of Business
Development. The Company has been active in responding to customer requests for
quotation, in addition to adapting its product designs to respond to these
requests. The Company continues actively to pursue opportunities in both the
commercial and government markets, both domestically and internationally.
Exploration of opportunities in other government and commercial markets also
continues in an attempt to broaden the Company's product line. The Company
continues its efforts with Semaphore Capital Advisors LLC to pursue growth
through acquisitions and alliances of compatible businesses or technologies.
Results of Operations
Sales
For the three months ended December 31, 2002, net sales increased $1,027,450
(50.4%) as compared to the three months ended December 31, 2001. In the December
31, 2001 fiscal period and in accordance with of Staff Accounting Bulletin
No.101, "Revenue Recognition in Financial Statements" ("SAB101"), government
revenues of approximately $578,000, for units requiring a software upgrade prior
to shipment, were deferred until the fourth quarter when the upgrade was
completed. Government sales increased $833,956 (52.1%) to $2,435,114 as compared
to $1,601,158 for the three months ended December 31, 2001. The increase in
government sales is mainly attributed to the shipment of the AN/APM 480 to the
U.S. Navy, which accounted for 50.7% of the total sales for the current quarter.
Government sales in the third quarter also increased as a result of shipments of
the T-30D to the U.S. Government. Commercial sales increased $193,494 (44.2%)
for the third quarter ended December 31, 2002 as compared to the third quarter
of the previous fiscal year. This increase is primarily the result of an
increase in sales of the Company's T-49C Transponder/TCAS ramp test set, as a
result of a sales promotion, and the introduction of the TR-220 Multi-Function
test set.
For the nine months ended December 31, 2002, net sales increased $2,111,914
(31.1%) as compared to the nine months ended December 31, 2001. In the prior
fiscal year and in accordance with Staff Accounting Bulletin No.101, "Revenue
Recognition in Financial Statements" ("SAB101"), government revenues of
approximately $578,000, for units requiring a software upgrade prior to
shipment, were deferred until the fourth quarter when the upgrade was completed.
Government sales increased $2,286,811 (47.2%) to $7,448,690 as compared to
$5,061,879 for the nine months ended December 31, 2001. The increase in
government sales is mainly attributed to the shipment of the AN/APM 480 to the
U.S. Navy, which accounted for 56.3% of the total sales for the nine months
ended December 31, 2002. Government sales for the nine months also increased as
a result of shipments of the T-36M and the AN/APM 480 to customers other than
the U.S. Navy. However, these increases were partially offset by a decline in
other government products. Commercial sales decreased $274,897 (15.9%) for the
nine months ended December 31, 2002 as compared to the first nine months of the
previous fiscal year. This decrease is primarily the result of the completion of
a contract to a major freight carrier, and the inability as yet to replace this
contract with a new contract due to the financial difficulties encountered
within the commercial airline industry. This decrease was partially offset by an
increase in sales of the Company's Transponder/TCAS ramp test set, as a result
of a sales promotion, and the introduction of the TR-220 Multi-Function test set
during the current quarter. However, the commercial market remains weak,
primarily as a result of the financial condition of most of the commercial
airlines.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
Results of Operations (continued)
Gross Margin
Gross margin dollars increased $599,623 (58.2%) for the three months ended
December 31, 2002 as compared to the same period last year. This increase, for
the most part, is attributed to the increase in sales volume and, to a lesser
extent, to production efficiencies obtained as a result of the higher volume.
The gross margin percentage for the three months ended December 31, 2002 was
53.1% as compared to 50.5% for the three months ended December 31, 2001.
Gross margin dollars increased $1,339,399 (40%) for the nine months ended
December 31, 2002 as compared to the same period last year. This increase, for
the most part, is attributed to the increase in sales volume, higher prices for
limited units of the AN/APM 480, and, to a lesser extent, to production
efficiencies obtained as a result of the higher volume. The gross margin
percentage for the nine months ended December 31, 2002 was 52.7% as compared to
49.4% for the nine months ended December 31, 2001.
Operating Expenses
Selling, general and administrative expenses increased $404,111 (101.l%) and
$917,877 (73.5%), respectively, for the three and nine months ended December 31,
2002 as compared to the three and nine months ended December 31, 2001. These
increases are attributed to added sales and marketing activities, higher
commission expenses, the addition of a Customer Support Manager, a new sales
representative, and a Director of Business Development, including relocation
expenses for the Director of Business Development. Selling, general and
administrative expenses also increased as a result of higher legal and audit
fees and investment-banking services. The Company also strengthened its staff
with the addition of a new Chief Operating Officer (COO). Fiscal year 2003
expenses include recruitment and relocation costs for the COO. The addition of
these personnel will add to the Company's expenses, but management believes
these additions are necessary for the Company to continue its growth and
diversification and to provide for an orderly succession of key personnel.
Engineering, research and development expenses increased $72,823 (22.8%) and
$147,317 (13.2%) for the same periods. The higher level of expenditures is
associated with an increase in research and development activities, including
the TR-220 Multi-Function ramp test set, enhancements of existing products,
including the T-36C, T-47G and the T-49C, as well as continued effort on the
next generation of IFF test sets.
Income Taxes
Income taxes increased $57,367 and $124,588, respectively, for the three and
nine months ended December 31, 2002 as compared to the same periods last year.
These increases are a result of an improvement in the Company's income. The
provision for income taxes represents the effective federal and state tax rate
on the Company's income before taxes. The Company has used up all its net
operating loss carryforwards and the Company will pay federal taxes this fiscal
year.
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)
Liquidity and Capital Resources
At December 31, 2002 the Company had positive working capital of $3,945,561 as
compared to $3,154,081 at March 31, 2002. For the nine months ended December 31,
2002, cash provided by operations was $1,534,678 as compared to $847,755 for the
nine months ended December 31, 2001. This increase in cash from operations is
primarily attributable to an increase in the Company's net income, a reduction
in inventories resulting from an increase in sales, and an increase in accounts
payable and accrued expenses offset partially by an increase in accounts
receivable.
The Company increased its line of credit to $1,750,000 from Fleet Bank in
November 2002. 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. At December 31, 2002, the Company had no outstanding
balance. The line of credit is collateralized by substantially all of the assets
of the company. The credit facility requires the Company to maintain certain
financial covenants. As of December 31, 2002, the Company was in compliance with
all financial covenants. The line of credit expires at September 30, 2003.
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 at least 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 primarily in a money market account for use
in operations or in the event that it needs these funds for an acquisition.
There was no significant impact on the Company's operations as a result of
inflation for the nine months ended December 31, 2002.
These financial statements should be read in conjunction with the Company's
Annual Report on Form 10-K to the Securities and Exchange Commission for the
fiscal year ended March 31, 2002.
Item 4. Controls and Procedures
The Company adopted disclosure controls and procedures, as called for by the
recently adopted legislation and rules of the Securities and Exchange
Commission. Under rules promulgated by the S.E.C., disclosure controls and
procedures are defined as "those controls or other procedures of the issuer that
are designed to ensure that information required to be disclosed by the issuer
in the reports filed or submitted by it under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms." The Chief Executive Officer and the Principal
Accounting Officer of the Company evaluated the Company's disclosure controls
and procedures at January 31, 2003, and concluded that they are effective.
Furthermore, there were no significant changes in the Company's internal
controls, or in other factors that could significantly affect these controls
after January 31, 2003, the date of the evaluation by the Chief Executive
Officer and the Principal Accounting Officer.
10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (Continued)
Part II Other Information
Item 4 Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on December 12, 2002 (the
"Annual Meeting").
(b) Not applicable because (i) proxies for the Annual Meeting were not
solicited pursuant to Regulation 14A under the Securities Exchange Act of
1934; (ii) there was no solicitation in opposition to management's
nominees as listed in the Company's proxy statement; and (iii) all of such
nominees were elected.
(c) At the Annual Meeting, the Company's shareholders voted in favor of
re-electing management's nominees for election as directors of the Company
as follows:
For Against
--- -------
Harold K. Fletcher 1,513,534 0
George J. Leon 1,513,534 0
Robert J. Melnick 1,513,534 0
Jeff C. O'Hara 1,513,534 0
Robert H. Walker 1,513,534 0
The shareholders also voted all 1,513,534 shares in favor of ratifying the audit
committee's appointment of BDO Seidman LLP, as the Company's independent
auditors for the fiscal year ending March 31, 2003.
(d) Not applicable
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None.
b. Reports on Form 8-K.
Report on Form 8-KA regarding changes in certifying auditors was
submitted on November 20, 2002 under Item 4.
Report on Form 8-K regarding changes in certifying auditors was
submitted on November 20, 2002 under Item 4.
Report on Form 8-K regarding changes in certifying auditors was
submitted on December 11, 2002 under Item 4.
11
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEL-INSTRUMENT ELECTRONICS CORP.
Date: February 14, 2002 By: /s/ Harold K. Fletcher
----------------------
/s/ Harold K. Fletcher
Chairman and President
Date: February 14, 2002 By: /s/ Joseph P. Macaluso
----------------------
/s/ Joseph P. Macaluso
Principal Accounting Officer
12
Tel-Instrument Electronics Corp
CEO Certification
I, Harold K. Fletcher, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tel-Instrument
Electronics Corp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant is made
known to us by others within registrant, particularly during
the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: February 11, 2003 /s/ Harold K. Fletcher
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/s/ Harold K. Fletcher
Chairman and President
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Tel-Instrument Electronics Corp
CFO Certification
I, Joseph P. Macaluso, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tel-Instrument
Electronics Corp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant is made
known to us by others within registrant, particularly during
the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: February 11, 2003 /s/ Joseph P. Macaluso
----------------------
/s/ Joseph P. Macaluso
Principal Accounting Officer
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