-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CnJcxL5mbi+rCFKiy8hFvN1KLSLZy2bLeK3cTi4BSOltMwEGNXDNNyjJwzZFkjNF W1LgZ3DVRYuOO6G7N+5GVw== 0000891092-03-002130.txt : 20030813 0000891092-03-002130.hdr.sgml : 20030813 20030813162600 ACCESSION NUMBER: 0000891092-03-002130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEL INSTRUMENT ELECTRONICS CORP CENTRAL INDEX KEY: 0000096885 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 221441806 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-18978 FILM NUMBER: 03841593 BUSINESS ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 BUSINESS PHONE: 2019331600 MAIL ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 10-Q 1 e15493_10q.txt FORM 10-Q 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 June 30, 2003 |_| 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: 2,142,801 shares of Common stock, $.10 par value as of August 11, 2003. TEL-INSTRUMENT ELECTRONICS CORPORATION TABLE OF CONTENTS PAGE ---- Item 1. Financial Statements (Unaudited): Condensed Comparative Balance Sheets June 30, 2003 and March 31, 2003 1 Condensed Comparative Statements of Operations - Three Months Ended June 30, 2003 and 2002 2 Condensed Comparative Statements of Cash Flows - Three Months Ended June 30, 2003 and 2002 3 Notes to Condensed Financial Statements 4-6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Conditions 7-10 Item 4. Controls and Procedures 11 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 11 Signatures 11 Certifications 12-13 Item 1 - Financial Statements TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE BALANCE SHEETS (Unaudited)
ASSETS June 30, 2003 March 31, 2003 ------------- -------------- Current assets: Cash and cash equivalents $1,842,908 $1,680,124 Accounts receivable, net of allowance for doubtful accounts of $36,598 at June 30, 2003 and March 31, 2003 2,013,879 1,966,815 Inventories, net 2,372,239 2,262,147 Prepaid expenses and other current assets 80,093 42,587 Deferred income tax benefit - current 597,741 535,448 ---------- ---------- Total current assets 6,906,860 6,487,121 Property, plant and equipment, net 716,001 726,594 Other assets 277,389 97,462 ---------- ---------- Total assets 7,900,250 7,311,177 ========== ========== LIABILITIES & STOCKHOLDERS EQUITY Current liabilities: Note payable - related party - current portion 200,000 200,000 Convertible subordinated notes - related party 7,500 7,500 Capitalized lease obligations - current portion 29,583 28,637 Accounts payable 589,349 503,216 Deferred revenues 55,594 51,203 Accrued payroll, deferred wages, vacation pay and payroll taxes 494,708 436,630 Income taxes payable 269,485 103,924 Accrued expenses 985,423 1,001,124 ---------- ---------- Total current liabilities 2,631,642 2,332,234 Notes payable - related party - non-current portion 50,000 50,000 Capitalized lease obligations - excluding current portion 14,166 21,069 ---------- ---------- Total liabilities 2,695,808 2,403,303 Stockholders' equity: Common stock 214,283 213,583 Additional paid-in capital 3,958,737 3,944,812 Retained earnings 1,031,422 749,479 ---------- ---------- Total stockholders' equity 5,204,442 4,907,874 ---------- ---------- Total liabilities and stockholders' equity $7,900,250 $7,311,177 ========== ==========
See accompanying notes to condensed financial statements -1- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended ------------------ June 30, 2003 June 30, 2002 ------------- ------------- Sales - government $ 1,869,489 $ 2,405,708 Sales - commercial 1,188,417 444,025 ----------- ----------- Total sales 3,057,906 2,849,733 Cost of sales 1,286,522 1,385,283 ----------- ----------- Gross margin 1,771,384 1,464,450 Operating expenses: Selling, general and administrative 734,999 573,068 Engineering, research and development 567,910 451,727 ----------- ----------- Total operating expenses 1,302,909 1,024,795 ----------- ----------- Income from operations 468,475 439,655 Other income (expense): Interest income 10,722 6,476 Interest expense (8,985) (17,408) ----------- ----------- Income before taxes 470,212 428,723 Provision for income taxes 188,269 171,276 ----------- ----------- Net income 281,943 257,447 =========== =========== Basic and diluted income per common share $ 0.13 $ 0.12 =========== =========== Dividends per share None None Weighted average shares outstanding Basic 2,138,551 2,135,151 Diluted 2,169,585 2,161,770 See accompanying notes to condensed financial statements -2- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS (Unaudited)
Three Months ended ------------------ June 30, 2003 June 30, 2002 ------------- ------------- Cash flows from operating activities: Net income $ 281,943 $ 257,447 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes (62,293) 57,690 Depreciation 60,313 62,636 Changes in assets and liabilities: Increase in accounts receivable (47,064) (190,873) (Increase) decrease in inventories (110,092) 297,747 (Increase ) decrease in prepaid expenses & other current assets (37,506) 3,125 (Increase) decrease in other assets (7,501) 3,143 Increase in accounts payable 86,133 29,637 Increase in income taxes payable 165,561 -- Increase in accrued payroll, deferred wages, vacation pay and payroll taxes 58,078 55,724 (Decrease) increase in deferred revenues and accrued expenses (11,310) 228,473 ----------- ----------- Net cash provided by operating activities 376,262 804,749 ----------- ----------- Cash flows from investing activities: Purchases of property, plant and equipment (49,720) (36,679) ----------- ----------- Net cash used in investing activities (49,720) (36,679) ----------- ----------- Cash flows from financing activities: Proceeds from the exercise of stock options 14,625 3,000 Repayment of loan on life insurance policy (172,426) -- Repayment of capitalized lease obligations (5,957) (39,042) ----------- ----------- Net cash used in financing activities (163,758) (36,042) ----------- ----------- Net increase in cash and cash equivalents 162,784 732,028 Cash and cash equivalents at beginning of period 1,680,124 1,198,191 ----------- ----------- Cash and cash equivalents at end of period $ 1,842,908 $ 1,930,219 =========== =========== Taxes paid $ 85,000 -- Interest paid $ 23,362 $ 16,327
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 necessary to present fairly the financial position of Tel-Instrument Electronics Corp. as of June 30, 2003, the results of operations for the three months ended June 30, 2003 and June 30, 2002, and statements of cash flows for the three months ended June 30, 2003 and June 30, 2002. 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, 2003 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, 2003. Note 2 Accounts Receivable, net Accounts receivable, net consist of: June 30, 2003 March 31, 2003 ------------- -------------- Commercial $ 730,023 $ 555,076 Government 1,320,454 1,448,337 Less: Allowance for bad debts (36,598) (36,598) ------------ ------------ $ 2,013,879 $ 1,966,815 ============ ============ Note 3 Inventories, net Inventories, net consist of: June 30, 2003 March 31, 2003 ------------- -------------- Purchased parts $ 969,041 $ 1,074,442 Work-in-process 1,500,422 1,289,578 Finished Goods 30,589 10,940 Less: Reserve for obsolescence (127,813) (112,813) ------------ ----------- $ 2,372,239 $ 2,262,147 ============ ============ -4- TEL-INSTRUMENT ELECTRONICS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS (continued) Note 4 Earnings Per Share The Company's basic income per common 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 common 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 Stock Options 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 and 148, "Accounting for Stock-Based Compensation" ("SFAS 123 and 148"). Under SFAS 123 and 148 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. The Company currently does not plan to adopt the fair value based method prescribed by SFAS123. The Company estimates the fair value of each option using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield of 0.0%, risk-free interest rate of 3.5% and volatility at 50% and an expected life of 5 years. 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 pro forma amounts are indicated below:
Three Months Ended Three Months Ended June 30, 2003 June 30, 2002 Net income - as reported $281,943 $257,447 Less fair value of stock options (17,333) (18,035) -------- -------- Net income - pro forma 264,610 239,412 ======== ======== Basic earnings per share - as reported 0.13 0.12 Basic earnings per share - pro forma 0.12 0.11 Diluted earnings per share - as reported 0.13 0.12 Diluted earnings per share - pro forma 0.12 0.11
-5- TEL-INSTRUMENT ELECTRONICS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS (continued) Note 6 Government and Commercial Sales Information has been presented for the Company's two reportable activities, government and commercial. The Company is organized primarily 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 both 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 June 30, 2003 June 30, 2002 Government Commercial Government Commercial ---------- ---------- ---------- ---------- Sales $1,869,489 1,188,417 $2,405,708 444,025 Cost of sales 726,926 559,596 1,133,885 251,398 ---------- --------- ---------- ------- Gross margin $1,142,563 628,821 $1,271,823 192,627 ========== ========= ========== ======= -6- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION 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 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 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 reserves or inventory write-downs may be required. -7- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) 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. Warranty reserves - warranty reserves are 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. 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. Overview For the first quarter ended June 30, 2003, sales increased 7.3% to $3,057,906 and net income increased 9.5% to $281,943. Deliveries of the AN/APM-480 IFF (Identification, Friend or Foe) Transponder Set Test Set (TSTS) to the U.S. Navy continue, but accounted for only 27.7% of sales for the quarter ended June 30, 2003 as compared to 65.2% of sales for the quarter ended June 30, 2002. The Company, in agreement with the U.S. Navy, has temporarily decreased the number of units it is currently shipping monthly in anticipation of these units being returned for upgrades and enhancements, in respect of which the Company has increased its warranty reserves. Shipments under this contract should continue until the fourth quarter of the current fiscal year. This program firmly established the Company as one of the leading suppliers in the avionics test equipment industry, and improved its market position. Commercial sales also increased substantially during this period as a result of the introduction of the TR-220 Multi-Function test set and a sales promotion of the T-49C Transponder/TCAS test set. Investment in new product development continues in order to meet the expected needs of its customers and remain as 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. The Company anticipates that most of the AN/APM-480's will need to be returned and modified, in the future, to accommodate the more sophisticated IFF testing. Although there is no assurance that the Company will receive any such contracts, the Company believes that it is well positioned to obtain such contracts. The -8- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) Overview (continued) recently introduced TR-220, a commercial Multi-Function ramp test set has been favorably received by the marketplace. 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 avionics 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. Sales For the three months ended June 30, 2003, total sales increased $208,173 (7.3%) to $3,057,906 as compared to the three months ended June 30, 2002. Government sales decreased $536,219 (22.3%) to $1,869,489 as compared to $2,405,708 for the first three months of the prior fiscal year. The decrease in government sales is mainly attributed to the decrease in the shipment of the AN/APM 480 to the U.S. Navy. Deliveries of the AN/APM-480 IFF to the U.S. Navy continue, but accounted for only 27.7% of sales for the quarter ended June 30, 2003 as compared to 65.2% of sales for the quarter ended June 30, 2002. The Company, in agreement with the U.S. Navy, has temporarily decreased the number of units it is currently shipping monthly in anticipation of these units being returned for upgrades and enhancements. Shipments under this contract should continue until the fourth quarter of the current fiscal year. This decrease was partially offset by an increase in sales in other government products, such as the T-47SH, T-36M, and the T-76. Commercial sales increased (167.6%) to $1,188,417 for the three months ended June 30, 2003, as compared to $444,025 for the three months ended June 30, 2002. Commercial sales increased during this period as a result of the introduction of the TR-220 Multi-Function test set and a sales promotion of the T-49C Transponder/TCAS test set. However, the commercial market remains weak, primarily as a result of the weak financial position of most commercial airlines. As such, management does not believe that this significant growth in commercial sales will continue. Gross Margin Gross margin dollars increased $306,934 (21%) for the three months ended June 30, 2003 as compared to the same three months in the prior fiscal year. The increase in gross margin is attributed to an increase in sales volume, higher margins on certain products and to production efficiencies obtained as a result of the higher volume. The gross margin percentage for the three months ended June 30, 2003 was 57.9% as compared to 51.4% for the three months ended June 30, 2002. Operating Expenses Selling, general and administrative expenses increased $161,931 (28.3%) for the three months ended June 30, 2003, as compared to the three months ended June 30, 2002. This increase is attributed to a higher level of sales and marketing activities and the additions of a Customer Support Manager and a West Coast Regional Sales Manager. Selling, general and administrative expenses also increased as a result of the -9- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) Operating Expenses (continued) addition of a new Chief Operating Officer, an increase in legal fees associated with an appeal of an award of a significant contract by the U.S. Army to another contractor, and an increase in consulting services. Engineering, research and development expenses increased $116,931 (28.3%). The higher level of expenditures is associated with an increase in research and development activities, including the continued effort on the next generation of IFF test sets, a new transponder/interrogator bench test set, and enhancements to existing products. Income Taxes A provision for income taxes was recorded in the amount of $188,269 for the three months ended June 30, 2003 as compared to a tax provision of $171,276 for the three months ended June 30, 2002. These amounts represent the effective federal and state tax rate of approximately 40% on the Company's net income before taxes. The Company has used all of its net operating loss carryforwards and the Company will pay federal taxes this fiscal year. Liquidity and Capital Resources At June 30, 2003 the Company had working capital of $4,275,218 as compared to $4,154,887 at March 31, 2003. For the three months ended June 30, 2003, cash provided by operations was $376,262 as compared to $804,749 for the three months ended June 30, 2002. This decline in cash from operations is primarily attributed to an increase in inventories and a decrease in accrued expenses as compared to the same period last year. The Company has a line of credit of $1,750,000 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 June 30, 2003 the Company had no outstanding balance. The line of credit is collateralized by substantially all of the assets of the Company and expires in September 2003. The credit facility requires the Company to maintain certain financial covenants. As of June 30, 2003, the Company was in compliance with all financial covenants. The Company is in the process of renewing this line. 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 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 three months ended June 30, 2003. 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, 2003. -10- 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 May 30, 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 May 30, 2003, the date of the evaluation by the Chief Executive Officer and the Principal Accounting Officer. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K a. Exhibits None. b. Reports on Form 8-K. None. 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: August 13, 2003 By: /s/ Harold K. Fletcher ---------------------------- /s/ Harold K. Fletcher Chairman and President Date: August 13, 2003 By: /s/ Joseph P. Macaluso ---------------------------- /s/ Joseph P. Macaluso Principal Accounting Officer -11- 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 officer 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 officer 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 officer 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: August 13, 2003 /s/ Harold K. Fletcher ---------------------- /s/ Harold K. Fletcher Chairman and President -12- 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 officer 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 officer 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 officer 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: August 13, 2003 /s/ Joseph P. Macaluso ---------------------------- /s/ Joseph P. Macaluso Principal Accounting Officer -13- -----END PRIVACY-ENHANCED MESSAGE-----