Exhibit 99.1

Quarter Ended December 31, 2017 as Compared to December 31, 2016

For the three months ended December 31, 2017, total net sales decreased $1,610,726 (38.0%) to $2,625,793, as compared to $4,236,519 for the three months ended December 31, 2016. Avionics government sales decreased $1,945,640 (51.6%) to $1,825,744 for the three months ended December 31, 2017, as compared to $3,771,384 for the three months ended December 31, 2016. The decrease in sales is mostly attributed to the decrease in shipment of the U.S. Army TS-4530A Kits and Sets, and the CRAFT units associated with the U.S. Navy programs, which contracts have now been completed, partially offset by the increase in sales associated with the initial shipments of the T-47/M5. Commercial sales increased $334.914 (72.0%) to $800,049 for the three months ended December 31, 2017 as compared to $465,135 for the three months ended December 31, 2016. This increase is attributed to increased shipments of the TR-220 to a major U.S. airline as well as increased revenues from our repair and calibration business.

For the three months ended December 31, 2017, total gross margin decreased $697,571 (42.7%) to $936,680 as compared to $1,634,251 for the three months ended December 31, 2016, primarily as a result of the lower volume as well as labor and overhead variances as a result of the lower volume. The gross margin percentage for the three months ended December 31, 2017 was 35.7%, as compared to 38.6% for the three months ended December 31, 2016.

Selling, general and administrative expenses decreased $34,489 (5.9%) to $548,391, for the three months ended December 31, 2017, as compared to $582,880 for the three months ended December 31, 2016. These decreases were primarily attributed to lower salaries and related expenses offset partially by higher commission fees, shareholder communication expenses and consulting fees.

Litigation expenses decreased $147,725 to $134,765 for the three months ended December 31, 2017 as compared to $282,490 for the three months ended December 31, 2016. The litigation expenses in the quarter ended December 31, 2017 related to the additional motions filed with the court to correct the damages award and securing the appeal bond.

Engineering, research and development expenses decreased $68,316 (11.1%) to $546,691 for the three months ended December 31, 2017 as compared to $615,007 for the three months ended December 31, 2016. The Company continues to invest in new products by taking advantage of our CRAFT and TS-4530A technology to develop smaller hand-held products, which will broaden our product line for both commercial and military applications. The Company has completed its development of the T-47/M5 Mode 5 test set, which began initial shipments in the quarter ended December 31, 2017, and which we believe will compete effectively in the international market.

The Company recorded a loss from operations of $323,690 for the quarter ended December 31, 2017, as compared to income from operations of $153,874 for the quarter ended December 31, 2016.  

Mr. Jeffrey O’Hara, President and CEO of Tel, stated, “After a sharp drop in second quarter revenues, revenues increased 47% in the third quarter to $2.6 million which is still below our estimated quarterly break-even revenue level of approximately       $3 million. The positive news is that we are starting to see increased quote and sales activity in both our domestic and international markets with bookings for the third quarter increasing to $3.2 million. We have several large potential military orders in the pipe-line including a possible multi-million dollar follow-on test set order from the U.S. DOD, which if secured, should lead to improved revenues and profitability starting in the 2019 fiscal year starting April 1, 2018. We continue to actively target the international Mode 5 market and our recent “Drive-to-Mode 5” marketing incentive plan for our international Mode 5 customers has resulted in several medium size orders for our new T-47/M5 product which we announced in December. We are committed to aggressively pursuing this business and continue to meet with key international customers. My meetings with customers in the Far East last month were very positive and we expect to capture the lion’s share of the Mode 5 test set business in these key markets. We are also seeing steady sales on our TS-4530A test set, and expect a volume CRAFT order from Lockheed Martin for the F-35 program later this spring. We have also released a new Remote Client software application for all of our Mode 5 products that will generate increased revenues and help improve our gross margins. Finally, the Company continues to see strong market activity on our TR-220 air traffic control (“ATC”) test set, and we expect the commercial portion of our business to continue to remain solid as a result of the 2020 FAA ADS-B mandate.”

“With respect to the Aeroflex litigation, we plan to appeal the decision if the Judge does not change the result or vacate the damage award based on our latest motions. A hearing on this motion is expected on February 27, 2018 and a final decision is expected within the next two to three months. The Judge could deny our motions, reduce the amount of damages or even order a new trial. Once a final decision has been rendered, the Company has 30 days to file an appeal. The Company has posted a $2,000,000 bond to prevent Aeroflex from enforcement actions until a final decision has been rendered by the Court. This $2 million bond amount would remain in place during any appeal process. The Company believes it has excellent grounds to appeal this verdict. The appeal process would be expected to take several years to complete. We believe that we will have approximately 2-3 years to generate sufficient cash or secure additional financing to support the repayment of the remaining $2.9 million not covered by the $2 million appeal bond, if we do not prevail with the appeal.”

 

(Unaudited)